Gary Zars, Individually and d/b/a Gary's Pool & Patio Store and d/b/a U.S. Pools v. Wayne Davis & Joann Davis--Appeal from 225th Judicial District Court of Bexar County

MEMORANDUM OPINION

No. 04-05-00800-CV

Gary ZARS, Individually and d/b/a Gary's Pool & Patio Store and d/b/a U.S. Pools ,

Appellant

v.

Wayne DAVIS and JoAnn Davis ,

Appellees

From the 225th Judicial District Court, Bexar County, Texas

Trial Court No. 2002-CI-18122

Honorable John D. Gabriel , Jr., Judge Presiding

Opinion by: Phylis J. Speedlin , Justice

Sitting: Sandee Bryan Marion , Justice

Phylis J. Speedlin , Justice

Rebecca Simmons , Justice

Delivered and Filed: October 18, 2006

AFFIRMED

Gary Zars appeals the trial court's judgment entered in favor of Wayne Davis and JoAnn Davis ("Davis"). We affirm.

Background

Davis originally sued Zars for breach of contract in violation of the Texas Deceptive Trade Practices Act. The case was arbitrated on November 24, 2004 and the arbitrator delivered the final amended award in favor of Davis on December 30, 2004. Davis filed a motion to confirm the arbitration award on March 30, 2005, the ninetieth day after the arbitration award was delivered. SeeTex. Civ. Prac. & Rem. Code Ann. 171.087 (Vernon 2005). On April 14, 2005, 105 days after the award was delivered, Zars filed an answer and counterclaim or plea of vacation/modification of award. Davis subsequently filed an answer, motion to strike, and motion for sanctions based on the untimely filing of the motion to modify or vacate the arbitration award. See Tex. Civ. Prac. & Rem. Code Ann. 171.088(b), 171.091(b) (Vernon 2005). On July 1, 2005, a hearing was held on Davis's motion to confirm the arbitration award. The trial court confirmed the arbitration award, and granted Davis's motion to strike Zars's plea of vacation/modification. Additionally, the trial court awarded Davis attorney's fees in response to the motion for sanctions. This appeal ensued.

Discussion

Under the Texas General Arbitration Act (TGAA), a court must confirm an arbitration award upon application of a party unless grounds are urged for vacating, modifying, or correcting the award within the time limits specified in other sections. See Tex. Civ. Prac. & Rem. Code Ann. 171.087. A motion to vacate or modify an arbitration award must be made within 90 days of the delivery of the award. See Tex. Civ. Prac. & Rem. Code Ann. 171.088(b), 171.091(b). The 90-day period is a limitations period after which a party no longer has a right to petition a court to modify or vacate an arbitration award. Blue Cross Blue Shield of Tex. v. Juneau, 114 S.W.3d 126, 135 (Tex. App.--Austin 2003, no pet.); Louisiana Natural Gas Pipeline, Inc. v. Bludworth Bond Shipyard, Inc., 875 S.W.2d 458, 462 (Tex. App.--Houston [1st Dist.] 1994, writ denied).

Here, a copy of the amended arbitration award was delivered to both parties by fax on December 30, 2004. Accordingly, any motion for vacation or modification was due by March 30, 2005. Zars filed an answer and counterclaim for vacation/modification on April 14, 2005, in excess of 90 days after the award was delivered. Zars argues, however, that his counterclaim was timely filed under section 16.069 of the Texas Civil Practice and Remedies Code. See Tex. Civ. Prac. & Rem. Code Ann. 16.069 (Vernon 1997). Section 16.069 provides:

(a) If a counterclaim or cross claim arises out of the same transaction or occurrence that is the basis of an action, a party to the action may file the counterclaim or cross claim even though as a separate action it would be barred by limitation on the date the party's answer is required.

(b) The counterclaim or cross claim must be filed not later than the 30th day after the date on which the party's answer is required.

Id. Zars argues that section 16.069 is applicable because his counterclaim: was a direct response to Davis's motion to confirm the arbitration award; involves the same transaction and occurrence; and was filed within 30 days of Davis's motion to confirm. We are unpersuaded by Zars's argument. To begin with, "[c]onfirmation of an arbitration award is part and parcel of the arbitration process." Kline v. O'Quinn, 874 S.W.2d 776, 784 (Tex. App.--Houston [14th Dist.] 1994, writ denied). Zars cannot argue that Davis's filing of the motion to confirm the arbitration award spurred his filing of a counterclaim. A motion to confirm an arbitration award is a procedure authorized by the Texas Civil Practice and Remedies Code that gives a successful party the full force and power of a judgment to assist in collecting its award. See Tex. Civ. Prac. & Rem. Code Ann. 171.092(a) (Vernon 2005); Hamm v. Millennium Income Fund, L.L.C., 178 S.W.3d 256, 263 (Tex. App.--Houston [1st Dist.] 2005, pet. denied).

Secondly, Zars cites the only other Texas case known to us where an appellant attempted to untimely vacate an arbitration award by filing a counterclaim under section 16.069. See Smith v. J-Hite, Inc., 127 S.W.3d 837, 841 (Tex. App.--Eastland 2003, no pet.). Zars argues that Smith is distinguishable because the contract in that case was governed by the Federal Arbitration Act (FAA). Again, Zars is mistaken in his conclusion. Noting that the 3-month statute of limitations in the FAA was comparable to the 90-day statute of limitations in the TGAA, the Smith court held that the FAA's 3-month deadline governs any and all attempts to vacate arbitration awards governed by the FAA. Id. at 842. Similarly, the TGAA 90-day limitations period set forth in sections 171.088 and 171.091 is strictly enforced. See Blue Cross Blue Shield of Tex., 114 S.W.3d at 135; Louisiana Natural Gas Pipeline, Inc., 875 S.W.2d at 462; see also Teleometrics Int'l, Inc., v. Hall, 922 S.W.2d 189, 192 (Tex. App.--Houston [1st Dist.] 1995, writ denied). Zars's counterclaim was merely a disguised motion to vacate, and after the limitations period has expired, a party cannot ask a court to vacate an arbitration award. See Louisiana Natural Gas Pipeline, Inc., 875 S.W.2d at 462. Accordingly, Zars's first issue is overruled.

In his second issue, Zars complains that the trial court erred in awarding sanctions to Davis. We review a trial court's award of sanctions under an abuse of discretion standard. Herring v. Welborn, 27 S.W.3d 132, 143 (Tex. App.--San Antonio 2000, pet. denied). In order for a party seeking sanctions to prevail, there must be little or no basis for claims, no grounds for legal arguments, misrepresentation of law or facts, or legal action that is sought in bad faith. Id. "'Groundless' means without basis in law or fact and not warranted by a good faith argument for extension, modification, or reversal of existing law." Id. (quoting Laub v. Pesikoff, 979 S.W.2d 686, 693 (Tex. App.--Houston [1st Dist.] 1998, pet. denied)).

In response to Davis's request for sanctions, the trial court awarded $2,269.70 in costs and attorney's fees. Zars argues that because the express wording of section 16.069 applied to this case, his counterclaim was made in good faith and the award of sanctions should be denied. We agree that Zars knowingly attempted to circumvent the limitations period set forth in sections 171.088 and 171.091. See Tex. Civ. Prac. & Rem. Code Ann. 171.088(b), 171.091(b). Zars's untimely pleadings forced Davis to respond and incur additional attorney's fees, for which Davis should be compensated. Accordingly, we conclude the trial court did not err in awarding attorney's fees to Davis.

Finally, Zars contends the trial court erred in awarding prejudgment interest at the rate of ten percent per annum. Zars is incorrect in stating that the trial court awarded prejudgment interest. After hearing Davis's motion to confirm the arbitration award, the trial court confirmed the award granted by the arbitrator. The correct method for Zars to attack the prejudgment interest award was to file a motion to modify within the time limits set forth in section 171.091 of the Texas Civil and Practice Remedies Code. See Tex. Civ. Prac. & Rem. Code Ann. 171.091(a), (b) (Vernon 2005). Because Zars failed to timely do so, he has waived his complaint. See Lee v. Rosen, Newey & Von Blon, P.C., No. 14-00-00759-CV, 2002 WL 1953791, at *5 (Tex. App.--Houston [14th Dist.] Aug. 22, 2002, pet. denied) (not designated for publication) (holding that 90-day limitations period of section 171.088 barred appellant from seeking vacation of arbitration award more than seven months after receiving copy of award and waived all complaints about award); see also Kline, 874 S.W.2d at 784 (holding that appellant who failed to complain about arbitration award within 90-day statutory period for modification waived complaint).

Based on the foregoing reasons, we affirm the trial court's judgment.

Phylis J. Speedlin , Justice