BEAUMONT – The Court of Appeals in the 9th District of Texas at Beaumont reversed an order that vacated an arbitration award in a fraud case, stating that an alleged friendship between the plaintiff's lawyer and the arbitrator is irrelevant.
Chief Justice Steve McKeithen authored the Feb. 7 opinion. Chief Justice Hollis Horton and Justice Leanne Johnson concurred.
John and Gwen Sebastian took issue with the 284th District Court's order that vacated the arbitration award they previously received and ordered a new arbitration with a different arbitrator. The Appeals Court agreed and reversed the lower court’s ruling, reinstating the arbitration award.
In their appeal, the couple argued that the award should be reinstated because the defendant Weston Lee Wilkerson didn’t show enough evidence to prove they only received the award because the arbitrator knew their lawyer, as Wilkerson claimed. They also said the lower court should not have vacated the award concerning Wilkerson’s co-defendant, Bliss Builders Inc., because Bliss never filed a motion to vacate.
Wilkerson wanted the award vacated and alleged the arbitrator, Honorable Suzanne Stovall, was partial because of her friendship with Kristin Bays of Bays and Bays Law Firm, who is serving as counsel for the Sebastians. This wasn’t enough to get the court to affirm the removal of the arbitration award.
“Wilkerson failed to show that Stovall and Kristin have a significant social relationship or any other fact that might cause a person to reasonably doubt Stovall’s ability to be impartial nor does the record show a pecuniary interest, direct or indirect, flowing from Kristin to Stovall,” McKeithen wrote.
He added that the friendship wasn’t enough to require Stovall to disclose of it to the defendants.
The Sebastians partnered with Wilkerson and Bliss when they signed a residential construction contract in June 2014. The Sebastians sued less than a year later after finding out that the improvements Bliss performed allegedly had several defects and issues. They requested declaratory judgment and alleged that Wilkerson and Bliss didn’t follow the Texas Property Code, and also sued for fraud damages for alleged violations of the Texas Business and Commerce Code and the Texas Deceptive Trade Practices Act.
The case went to arbitration after the defendants filed a motion to compel arbitration.
Stovall determined that Bliss breached the building contract, Wilkerson participated in fraud when he served as a corporate agent for Bliss, that the liquidation damage clause of the contract is unconscionable, and that Wilkerson and Bliss are responsible for the damages of $135,765 in economic damages, $5,250 in expert witness costs and $50,032 in attorney’s fees. Bliss was also ordered to vacate a lien for $245,672.60.