Holcim (Texas) Ltd. Partnership v. Humboldt Wedag, Inc.

211 S.W.3d 796, 2006 WL 2883291
CourtCourt of Appeals of Texas
DecidedDecember 27, 2006
Docket10-05-00152-CV, 10-05-00153-CV
StatusPublished
Cited by8 cases

This text of 211 S.W.3d 796 (Holcim (Texas) Ltd. Partnership v. Humboldt Wedag, Inc.) is published on Counsel Stack Legal Research, covering Court of Appeals of Texas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Holcim (Texas) Ltd. Partnership v. Humboldt Wedag, Inc., 211 S.W.3d 796, 2006 WL 2883291 (Tex. Ct. App. 2006).

Opinions

OPINION

FELIPE REYNA, Justice.

Holcim (Texas) Limited Partnership fka Holman Texas Limited Partnership appeals the denial of its petition to vacate an arbitration award between Humboldt Wed-ag, Inc. (“HWI”) and itself. Holcim contends in three issues that the court erred by (1) denying its petition because there was no arbitration agreement between Holcim and HWI; (2) denying its petition because the arbitration panel exceeded its authority by awarding relief based upon claims that were not submitted to it and beyond its jurisdiction; and (3) improperly modifying the arbitration award. Because we find that no arbitration agreement exists between Holcim and HWI, we will reverse and remand.

Background

In September 1998, Holcim entered a turnkey agreement with Watkins for the [799]*799construction of a cement production line at Holcim’s factory in Midlothian. The turnkey agreement required Watkins to provide a fully functional production line. Subsequently, Watkins entered an agreement with HWI as a subcontractor. This agreement required HWI to supply equipment for the project.

The turnkey agreement required Watkins to substantially complete the project by January 2000. Because the production line was not substantially completed several months after this deadline, Holcim terminated the contract with Watkins. Pursuant to an arbitration clause in the turnkey agreement, Holcim filed a claim with the American Arbitration Association against Watkins, seeking repair costs and liquidated damages. Watkins filed a counterclaim against Holcim for breach of the turnkey agreement and a third-party claim against HWI pursuant to an arbitration clause in a purchase agreement between Watkins and HWI.

Watkins’s claim against HWI alleged design, construction, and management failures. HWI counterclaimed against Watkins for breach of the purchase agreement. In this counterclaim, HWI alleged that because of Watkins’s failure to pay HWI the amounts due and owning under the purchase agreement, it had filed a lien against Holcim’s property.

The Arbitration Panel asked for Hol-cim’s position on HWI’s joinder as a party to the arbitration. Holcim objected that HWI was not a necessary party for arbitration of the claims between Holcim and Watkins. Holcim stated that its claim was solely against Watkins for breach of its contractual obligations, and that Watkins’s desire to hold its subcontractor liable for these deficiencies had little relevance to Holcim’s claim against Watkins. However, Holcim agreed to allow Watkins to pursue its third party claim against HWI, provided that the Arbitration Panel bifurcated the proceedings with the first phase addressing the claims between Holcim and Watkins and the second phase addressing the claims between Watkins and HWI.

HWI filed a Statement of Claims and Damages in which it specified the amount of damages sought from Watkins and asserted for the first time a claim against Holcim for trapped funds. HWI alleged that Holcim was required to withhold sufficient funds from its payment to Watkins to satisfy HWI’s claims and that Holcim had in fact withheld these funds HWI asked that the Arbitration Panel order Holcim to pay these funds directly to HWI and not to or through Watkins. HWI stated that, aside from the claim to trapped funds and the lien, it had no other claims against Holcim. HWI never named Holcim as a defendant.

The Arbitration Panel entered an order requiring bifurcated proceedings with the first phase addressing the disputes between Holcim and Watkins and the second phase addressing the disputes among Hol-cim, Watkins, and HWI.

At the conclusion of the first phase, the Arbitration Panel found that Watkins did not substantially complete the project and that Holcim was entitled to recover liquidated damages and costs totaling $4,876,859. The Panel also found that Watkins’s breach of the turnkey agreement was not material and that Watkins was entitled to recover the contract balance of $7,560,730, less Holcim’s damages, leaving Watkins a net recovery of $2,683,871.

Holcim then filed a motion to bar HWI’s claims which were to be addressed in the second phase of arbitration. Holcim contended that HWI’s claims should be denied because: (1) there was no arbitration agreement between Holcim and HWI, (2) [800]*800Holcim was never named as a defendant and had no opportunity to file an answer, and (3) a court of law is the proper forum in which to decide whether a particular claim is subject to arbitration. The panel did not immediately respond to Holcim’s objections, and in the interim Watkins filed for bankruptcy.

The panel later overruled Holcim’s objections, finding that it had jurisdiction, to decide HWI’s claims against Holcim. At the conclusion of the second phase, HWI raised new claims against Holcim, including breach of contract and trust fund theories. Holcim objected to the introduction of these new claims and renewed its objection to the panel’s jurisdiction to decide these issues because of the lack of an arbitration agreement between Holcim and HWI.

After the panel overruled Holcim’s objections, Holcim sought a temporary restraining order and an injunction in district court because of the lack of an arbitration agreement between Holcim and HWI. The court denied Holcim’s motion.

The Panel then issued its final award. It concluded that Watkins was liable to HWI for the net contract balance of $5,495,061. The panel awarded HWI $27,512 for its claims against Holcim and imposed a constructive trust for the benefit of HWI on the $2,683,871 Holcim owed Watkins. The panel directed Holcim to pay this amount directly to HWI and determined that payment of such funds would extinguish Holcim’s debt to Watkins. The panel also found that the contractual obligations between Holcim and HWI were extensive and that Holcim was jointly and severally liable with Watkins to HWI for the contractual retainage fee, which amounted to $4,931,539 of the net contract balance. The panel found that this amount due to HWI was not subject to set-off or netting.

Before the panel issued its final award, HWI filed suit in district court naming Holcim and Watkins as defendants. After the final award issued, HWI moved for the district court to confirm the award. Hol-cim filed another suit in district court naming HWI and Watkins as defendants. Holcim requested that the court vacate the award between Holcim and HWI on the grounds that there was no arbitration agreement.

The trial court heard both cases and confirmed the arbitration award. Holcim filed an interlocutory appeal in both cases.

Interlocutory Appeal or Mandamus

We must first decide whether an interlocutory appeal or a mandamus petition is the appropriate vehicle for the relief sought by Holcim. It is undisputed that the Federal Arbitration Act (FAA) governed the parties’ arbitration proceedings. ‘When Texas courts confront procedural issues involving a case subject to the FAA, however, Texas procedural rules apply instead of federal rules.” J.D. Edwards World Solutions Co. v. Estes, Inc., 91 S.W.3d 836, 839 (Tex.App.-Fort Worth 2002, pet. denied) (citing Jack B. Anglin Co. v. Tipps, 842 S.W.2d 266, 272 (Tex. 1992) (orig. proceeding)).

Section 171.098(a) of the Civil Practice and Remedies Code1 provides:

[801]*801(a) A party may appeal a judgment or decree entered under this chapter or an order:

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Holcim (Texas) Ltd. Partnership v. Humboldt Wedag, Inc.
211 S.W.3d 796 (Court of Appeals of Texas, 2006)

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