HOUSTON – A Texas appeals court has returned a nearly $1 million award of an arbitration panel to developers of The Belfiore in Houston despite a would-be resident's claim that they're not entitled to it, according to a recent opinion handed down by the court.
The Texas 1st District Court of Appeals reversed a ruling by the 334th District Court in Harris County that vacated the arbitration award and rendered its judgment confirming the award, according to the appeals court's 21-page opinion issued March 6.
"We conclude that, based on the record, the arbitration panel did not reversibly err when it enforced the liquidated-damages provisions in the purchase contracts; that is, its decision was consistent with Texas law," appeals court Justice Laura Carter Higley wrote in the court's opinion. "We hold that the panel did not exceed its authority in rendering the arbitration award. Accordingly, we hold that the trial court erred when it vacated the arbitration award and failed to grant Belfiore's application to confirm the award."
Appeals Court Justice Evelyn Keyes and Justice Terry Jennings concurred in the opinion.
Belfiore Developers appealed the trial court's decision to grant a motion to vacate the arbitration award filed by Elvia Besil Sampieri and Haffan Properties. Haffan Properties is a company founded and owned by Sampieri and in February 2016, Sampieri assigned her interest in the purchase contracts to it.
The developers started building the 26-story luxury condominium building in Houston, The Belfiore, in February 2014 with 46 residential units, according to the background portion of the appeals court's opinion.
"Belfiore developed the high-rise with the following purchaser in mind: wealthy people with large homes who want to downsize but still want adequate living space," the opinion said.
Each unit in the Belfiore contains about 4,500 square feet of living area, not including the 700-square-foot terrace and amenities such as 24-hour concierge and valet services, according to the opinion.
In October the same year, Sampieri signed separate purchase contracts to buy two units in The Belfiore for a combined price of $5.18 million, of which she paid 20 percent up front, according to the opinion. In August 2015, Sampieri agree to a more than $600,000 construction rider on one of the two units where she and her family planned to live, of which she paid half, according to the opinion.
Construction of The Belfiore "was substantially completed in February 2016" and closing on Sampieri's units were set to close the following month, according to the opinion.
"However, Sampieri failed to close on the properties and failed to pay Belfiore the remainder of the purchase price for the condominium units," the opinion said.
Belfiore Developers notified Sampieri that she was in default on her purchase contracts and sought to exercise the "liquidated-damages" provision of the contracts and asked the title company to release Sampieri's initial payments, which amounted to about 20 percent of the purchase prices, according to the opinion.
Sampieri disputed whether Belfiore Developers was entitled to 20 percent, arguing that the liquidated-damages provision was not enforceable, according to the opinion.
"As a result of the dispute, the funds were not released by the title company to Belfiore," the opinion said.
Sampieri filed for arbitration, another provision in the contracts, and a three-member arbitration panel later found the liquidated-damages provision to be enforceable and awarded Belfiore Developers the 20 percent initial payment amounts, according to the opinion.
Sampieri filed a motion in 334th District Court in Harris County to vacate the arbitration panel's ruling, arguing the panel had exceeded its authority, claiming "they did not have the power to make an award inconsistent with Texas law," the opinion said.
"She asserted that the arbitrators had exceeded their authority because their enforcement of the liquidated-damages clause was not consistent with Texas law; thus, she claimed, the award must be vacated as required by the Texas Arbitration Act," the opinion states.
For its part, Belfiore Developers maintained the panel "did not exceed its powers by issuing an award inconsistent with Texas law" but that its action was consistent with state law, "that is, the panel's decision was not an error of law," the opinion said.
The 334th District vacated the arbitration award and Belfiore Developers appealed. The appeals court sided with Belfiore Developers.
"In sum, the evidence demonstrated that the liquidated damages were a reasonable forecast of the damages Belfiore would sustain in the event Sampieri breached the purchase contracts by failing to close," the opinion said.