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Electronically Filed
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Hidalgo County District Clerks
Reviewed By: Oscar Castillo
CAUSE NO. C-2778-23-I
AREA DESIGN AND § IN THE JUDICIAL DISTRICT
CONSTRUCTION, L.L.C. §
Plaintiff, §
§
v. § 398TH DISTRICT COURT
§
FERNANDO LOPEZ §
Defendant. § HIDALGO COUNTY, TEXAS
THIRD AMENDED APPLICATION TO VACATE ARBITRATION AWARD
Plaintiff Area Design and Construction, L.L.C., timely files this application under TEX.
CIV. P. REM. CODE. §171.088, to vacate the arbitration award delivered on March 6, 2024, by
arbitrator Paula Fisher Baldwin, Esq.
PROCEDURAL BACKGROUND
1. On November 3, 2020, Fernando Lopez and Area Design entered a Residential
Construction Contract wherein Area Design agreed to design and construct Lopez’s home located
“Home”).
2. On February 11, 2021, Lopez and Area Design entered into a new Residential Construction
Contract (the "Contract") wherein the parties amended the terms of the November 3, 2020,
contract. Note, the entire contract was written by Leslie Torres from Area Design, who is not a
lawyer. Further, the contract addressed only the selection of an arbitrator and nothing more.
And, thereafter the process that was to take place if an arbitrator could not be decided on.
3. During the Home’s construction, a controversy arose between Lopez and Area Design
regarding the Contract, but the parties were unable to resolve the dispute.
4. On July 13, 2024, under TEX. CIV. P. REM. CODE. §171.085, Area Design filed a petition
1
against Lopez seeking to initiate arbitration proceedings—as directed by the Contract. Note,
1
In the March 6, 2024 award, the Arbitrator grossly mischaracterizes Area Design’s original
petition as a “suit in breach of the express ‘Disputes’ provision” of the Contract, which merely
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there is no language in the contract in question that the proceeding would do anything other than
choose an arbitrator, thus, surely there was no intent that it would be binding as required under
TEX. CIV. P. REM. CODE. §154.027(b) which clearly states:
a. “If the parties stipulate in advance, the award is binding and is enforceable in
the same manner as any contract obligation. If the parties do not stipulate
in advance that the award is binding, the award is not binding and
serves only as a basis for the parties further settlement negotiation.”
5. An evidentiary arbitration proceeding was held on February 6, 2024, continuing into
February 7, 2024, and ending on February 13, 2024, in accordance with the parties’ arbitration
agreement. The parties complied with the agreement's requirements regarding the conduct of the
Arbitration proceedings.
6. On March 6, 2024, the Arbiter found Lopez to be the prevailing party in the arbitration and
delivered a Final Award against Area Design in the net amount of $436,042.16. A detailed
breakdown of the arbitrator’s award is attached as Exhibit “A”.
ARBITRATION PROCEEDINGS
7. At arbitration, Lopez sought declaratory relief to declare the liens asserted by Area Design
on Lopez’s home null and void. Lopez further alleged a cause of action against Area Design for
breach of contract based on Area Design’s purported defective construction of Lopez’s home.
Lopez sought to recover reasonable and necessary costs to perform repairs to the Home, as well as
increased construction costs, building materials, labor costs, and lost rent due to alleged delays
that Lopez attributed to Area Design.
illustrates the Arbiter’s impartiality against Area Design from the outset of arbitration as the
initiation of arbitration was not an issue between the parties requiring the arbiter’s resolution.
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8. Area Design denied liability and asserted claims against Lopez for breach of contract,
fraud, and unjust enrichment as Area Design made good faith efforts to construct the home within
the confines of the Contract.
9. At arbitration, Area Design requested that the Arbitrator permit Area Design to have a
certified court reporter record a transcript of the arbitration proceedings, but the Arbitrator
summarily denied Area Design’s request.
10. Area Design provided evidence to illustrate the COVID-19 pandemic caused delays in
receiving building materials, increased costs of building materials due to supply-chain issues, and
hailstorms caused setbacks and delays in construction—which Lopez summarily attributed to Area
Design. Further, Area Design introduced admissible evidence which directly refuted Lopez’s
position and purported “expert testimony,” and damage models, which the Arbitrator summarily
accepted despite Lopez’s experts obvious failure to meet the threshold requirements for reliability,
relevance, or plain logic. Despite all the uncontroverted testimony and exhibits (explained in detail
by Area Design), Lopez’s flawed experts’ testimony entirely debunked at arbitration, the arbitrator
returned an astonishing finding of liability against Area Design.
11. In addition to said evidence, Area Design provided and entered into evidence a detailed
project schedule, attached herein as Exhibit “B”. All tangible evidence presented at the Arbitration
hearing is attached hereto as Exhibit “C”.
12. Uncontroverted evidence showed that Defendant Lopez contributed to delays due to
change orders of grand proportions. This was in conjunction with testimony provided by banker
Hugo Hernandez, who advised that COVID-19 caused delays in several projects/loans he oversaw
in his position as a mortgage loan officer. There was additional testimony provided by the
subcontractor roofer, Antonio Martinez, advising he constructed the partial roof up until being
dismissed by Defendant Lopez. Afterward, his brother was apparently contracted as a roofer to
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examine the roof by Defendant Lopez’s new contractor. Unbeknownst to Defendant Lopez’s new
contractor, the alleged roofer who evaluated the roof was the Fired contractor’s brother. The Fired
contractor contacted his brother, and he denied ever examining the roof. That evidence by
Defendant Lopez’s new contractor was a Big Lie. The brother of Antonio Martinez, Heriberto
Martinez would not come to testify as he was instructed not to do so at the risk of losing future
contracting jobs. Not surprisingly Defendant Lopez never called him on rebuttal.
ARGUMENT & AUTHORITIES
I. The non-binding Arbitration agreement merely serves as a basis for the parties’
further settlement negotiations.
13. The Federal Arbitration Act (FAA) applies only when a contract relates to interstate
commerce. See Jack B. Anglin Co. v. Tipps, 842 S.W.2d 266, 269-70 (Tex. 1992); Stewart Title
Guar. Co. v. Mack, 945 S.W.2d 330, 333 (Tex.App.-Houston [1st Dist.] 1997, writ dism'd w.o.j.).
14. In Texas, the surrender of a legal right constitutes valid consideration. See Northern
Natural Gas Co. v. Conoco, Inc., 986 S.W.2d 603, 607 (Tex. 1998). If the Court reads the contract
of Area Design and Fernando Lopez there is NO SURRENDERING of any legal right under the
provision in focus.
15. “If the parties stipulate in advance [to be bound by the arbitration proceedings], the award
is binding and is enforceable in the same manner as any contract obligation. If the parties do
not stipulate in advance that the award is binding, the award is not binding and
serves only as a basis for the parties’ further settlement negotiations.” TEX. CIV.
P. REM. CODE. § 154.027 (emphasis added). On its face, the parties made no agreement
to be bound by arbitration and the arbitrator’s award should be dismissed on this basis alone. See
id.
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Residential Construction Contract, at Sec. XVI, attached as Exhibit “C”
16. Notwithstanding TEX. CIV. P. REM. CODE. § 154.027, arbitration agreements are interpreted
under traditional contract principles. See J.M. Davidson, Inc. v. Webster, 128 S.W.3d 223, 227
(Tex. 2003). “Although [the Texas Supreme Court] ha[s] repeatedly expressed a strong
presumption favoring arbitration, the presumption arises only after the party seeking to compel
arbitration [or its award] proves that a valid arbitration agreement exists.” J.M. Davidson, Inc., 128
S.W.3d at 227. Thus, a party seeking to enforce an arbitrator’s award, must show the arbitration
agreement meets all requisite contract elements—which Lopez cannot. "Whether an agreement
imposes a duty on the parties to arbitrate a dispute is a matter of contract interpretation and, thus,
is a question of law for the court." See J.M. Davidson, Inc. v. Webster, 49 S.W.3d 507, 511-
12 (Tex.App.-Corpus Christi 2001, pet. filed) (citing Tenet Healthcare Ltd. v. Cooper, 960 S.W.2d
386, 388 (Tex.App.-Houston [14th Dist.] 1998, writ dism'd w.o.j.); Kline v. O'Quinn, 874 S.W.2d
776, 782 (Tex.App.-Houston [14th Dist.] 1994, writ denied)).
17. “Under Texas law, parties enter into a binding contract when the following elements exist:
(1) an offer; (2) an acceptance in strict compliance with the terms of the offer; (3) a meeting of the
minds; (4) each party's consent to the terms; and (5) execution and delivery of the contract with
the intent that it be mutual and binding.” Labor Ready Cent. III, L.P. v. Gonzalez, 64 S.W.3d 519,
522 (Tex. App.—Corpus Christi 2001, no pet.).
A. The parties could not have mutually agreed to “binding” as the term “binding” is
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absent from the contract.
18. As stated supra, the purported arbitration provision is silent on whether the outcome of any
arbitration would be binding upon the parties. See Residential Construction Contract, at Sec. XVI,
attached as Exhibit “D”. At best, the contract requires the parties to agree to a single arbitrator,
and in the event of disagreement as to an arbitrator, the parties will submit the dispute to the
American Arbitration Association “for resolution,” but fails to specify whether the “resolution” of
the dispute by the AAA arbitrator is binding on the parties.
19. IMPORTANTLY NOTE THE FOLLOWING FACTS:
a. Please read the Contract Provision in question:
i. It merely provides for the process for selecting an
Arbitrator in the event they are not able to agree on an
Arbitrator outside of the American Arbitration Association
AAA;
ii. There is No provision saying “any controversy or claim
arising out of or relating to this contract” as provided by all
the American Arbitration Association AAA recommended
clauses;
iii. There is No provision saying that the arbitration “shall be
settled by arbitration administered by the American
Arbitration Association AAA in accordance with its
Commercial Arbitration rules” as provided by all the
American Arbitration Association AAA recommended
clauses;
iv. There is No provision that in any way stipulates in advance
BINDING Arbitration as required by 154.027; and
v. There is No language that a “judgement on the award
rendered by the arbitrator may be entered in any court
having jurisdiction thereof” as seen in every American
Arbitration Association AAA clause recommended.
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II. The Arbitrator exceeded her powers and failed to comply with Sections 171.047 and
171.088 when she refused to allow Area Design the opportunity to record the arbitration
proceedings, thus severing Area Design’s appellate remedies.
20. “On application of a party, the court shall vacate an award if… the rights of a party were
prejudiced by: evident partiality by an arbitrator appointed as a neutral arbitrator…[or] the
arbitrators:…exceeded their powers…refused to hear evidence material to the controversy; or
conducted the hearing contrary to… Section 171.047.” TEX. CIV. P. REM. CODE. §171.088. Under
Sec. 171.047, “a party at the hearing is entitled to: be heard; present evidence material to the
controversy; and cross-examine any witness.” TEX. CIV. P. REM. CODE. §171.047.
21. At the outset, Area Design requested—but was summarily denied- the opportunity to
record the arbitration proceedings and memorialize them in an official transcript, thus severing
Area Design’s appellate remedies. This is so because “[w]ithout a transcript of the arbitration
proceedings, [appellate courts] cannot determine whether a party asked the arbitrators during the
proceedings to decide issues regarding the [contested issues].” Ctr. Rose Partners, Ltd. v. Bailey,
587 S.W.3d 514, 529 (Tex. App.—Houston [14th Dist.] 2019, no pet.); see also Kline v. O'Quinn,
874 S.W.2d 776, 783 (Tex. App.—Houston [14th Dist.] 1994, writ denied) (concluding that
without a record of the arbitration proceedings the court was not able to determine what claims the
parties submitted or what evidence the parties offered).
22. The arbitrator’s summary denial of Area Design’s request further violated Area Design’s
ability to present evidence material to the controversy under TEX. CIV. P. REM. CODE. §171.047,
albeit on application to vacate the Arbitrator’s award in the instant litigation. On this basis alone,
the Court should Vacate the Arbitrator’s award due to the arbitrator’s unilateral and arbitrary
election to exceed her powers by denying Area Design’s ability to accurately transcribe the
arbitration proceedings and prejudicing its rights for the purposes of appeal and its attempt to
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vacate an award—not supported by the evidence.
III. The arbitrator intentionally overlooked the facts and violated numerous provisions
under Civil Practice and Remedies Code Section 171.088
23. Area Design contents the arbitrator and/or Defendant Lopez grossly violated the
following:
Civil Practice and Remedies Code section 171.047 Rights of a Party at Hearing:
a. The arbitrator and/or Lopez did not allow Area Design to present evidence
material to the controversy and did not allow the recording of material evidence
during the proceeding.
b. Thus, Area Design was not allowed to not cross examine witnesses because of
threats made to one of the witnesses.
IV. VACATING THE AWARD: The Court SHALL vacate an award if:
a. Civil Practice and Remedies Code section 171.088 (a)(1) the award is obtained by
Undue Means;
b. Civil Practice and Remedies Code section 171.088 (a)(2) the rights of a party
were prejudiced by: (C) misconduct or willful misbehavior of an arbitrator;
c. Civil Practice and Remedies Code section 171.088 (a)(3)(A) the arbitrator
exceeded his power;
d. Civil Practice and Remedies Code section 171.088 (a)(3)(C) the arbitrator refused
to hear evidence material to the controversy; or
e. Civil Practice and Remedies Code section 171.088 (a)(3)(D) the arbitrator
conducted the hearing contrary to Civil Practice and Remedies Code section
171.047, in a manner that substantially prejudiced the rights of a party.
24. The arbitrator completely ignored the facts:
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f. Project Schedule and Calendar that was an exhibit and she said it did not exist;
1) There was NO contrary evidence to the entries.
g. Rick J. Lester expert’s gross miscalculations.
1) He had only constructed 2 houses like this;
2) The expert admitted he was wrong; and
3) The Formula he used was totally wrong of which he would not admit or
deny, but was testified to correctly by the designers and the sellers of the
roofing materials.
h. Armando Rodriguez expert fraudulent testimony.
1) He testified that roof was defective based on what his roofer told him;
2) He realized it was his roofers brother who constructed the roof in
question; and
3) He stopped the roofer brother, Heriberto Martinez from coming to testify
by threats.
i. The only evidence presented of delay was Lopez and his wife saying it was taking
too long.
j. Testimony of their Banker explained the problem with COVID and supply chain
issues:
1) The banker explained to Lopez that contractors were walking off jobs;
2) The banker calmed Lopez down and convinced him to stay with Area
Design;
3) That there was trouble getting people to go work at the job sight and it
was confirmed by Area Design;
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4) He affirmed and explained problems with the Pandemic and Supply
chain problems and gave two (2) examples of other situations that the
bank was going through;
k. General Contractor and Subcontractors Testimony that the job was 90% done;
l. That the Expert’s calculated the numbers completely wrong;
m. She ignored the facts and awarded 70% of what the house was being built for;
n. No evidence that it had to be demolished and Award did not say so;
o. She ignored the contract and dispensed her own idea of an award based on
imaginary facts.
p. See attached hereto as Exhibit “G” Affidavit of Leslie Torres and Exhibit “H”
Bobby R. Garcia.
STANDARD OF REVIEW
25. In J.M. Davidson, Inc. v. Webster, 49 S.W.3d 507, 511-12 (Tex.App.-Corpus Christi
2001, pet. filed) the Court reviewed the trial court's determination concerning the existence
of an arbitration agreement under an abuse of discretion standard. Roosth, 27 S.W.3d at
207; ANCO Ins. Servs., 27 S.W.3d at 3; Hardin Const. Group, Inc. v. Strictly Painting,
Inc., 945 S.W.2d 308, 312 (Tex.App.-San Antonio 1997, orig. proceeding [mand. denied]).
Under this standard, the Davidson Court held at 49 S.W.3d 507, 511-12:
“[We] must uphold the trial court's decision unless we conclude that the trial court
could reasonably have reached only one decision.” Roosth, 27 S.W.3d at 207; Hardin, 945
S.W.2d at 312. Where, as here, the trial court does not enter findings of facts and
conclusions of law, we must affirm the trial court's decision if there is sufficient evidence
to support it upon any legal theory asserted. Pepe Internat'l Dev. Co. v. Garcia, 915 S.W.2d
925, 929 (Tex.App.-Houston [1st Dist.] 1996, no writ). Even if we would have decided the
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issue differently, we cannot disturb the trial court's finding unless it is shown to be arbitrary
and unreasonable. Walker, 827 S.W.2d at 840. Legal conclusions, however, are
reviewed de novo. Id; Pony Express Courier Corp. v. Morris, 921 S.W.2d 817,
820 (Tex.App.-San Antonio 1996, no writ). Whether an agreement imposes a duty on the
parties to arbitrate a dispute is a matter of contract interpretation and a question of law for
the court. Tenet Healthcare Ltd. v. Cooper, 960 S.W.2d 386, 388 (Tex.App.-
Houston [14th Dist.] 1998, writ dism'd w.o.j.); Kline v. O'Quinn, 874 S.W.2d 776,
782 (Tex.App.-Houston [14th Dist.] 1994, writ denied).”
RELIEF REQUESTED
26. Because the alternative dispute was non-binding, see attached here to as Exhibit “E”
Construction Industry Arbitration Rules and Mediation Procedures and Exhibit “F” AAA
Standard Arbitration Clauses, the arbitrator’s summary denial of Area Design’s request to
perfect the record with a certified court reporter to transcribe the arbitration proceedings
was in excess of the arbitrator’s power and further violated Area Design’s ability to present
evidence material to the controversy under TEX. CIV. P. REM. CODE. §171.047, and further
violations enumerated above, Area Design requests this Court vacate the Arbitrator’s
award and for all other relief requested under equity and law.
Respectfully submitted,
LAW OFFICE OF BOBBY GARCIA, P.C.
P.O. Box 5729
McAllen, Texas 78502
Telephone: (956)668-7400
Facsimile: (956)668-7500
E-Service email: litigation@bobbygarcia.com
______________________________
BOBBY GARCIA
Texas State Bar No. 07645210
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New York SBN: 5387485
Federal Bar No.: 14531
Of Counsel:
ARTURO “AJ” GARCIA
Texas State Bar No. 24102964
Federal Bar No.: 3622745
RICK A. ECKERSON
Texas State Bar No. 00793671
Federal Bar No. 19375
ATTORNEYS FOR PLAINTIFF
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CERTIFICATE OF SERVICE
I hereby certify that a true and correct copy of the foregoing document has been forwarded to
all counsel of record for Defendant, on this March 18, 2024:
___________________________
Bobby Garcia
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Exhibits
Exhibit “A” – Arbitrator’s Award
Exhibit “B” – Project Schedule
Exhibit “C” – Arbitration Hearing Tangible Evidence
https://www.dropbox.com/scl/fo/avp3vyr5tajgt0izyv3nu/h?rlkey=594zv31kz4bkb9hvwwyfpgf2i&dl=0
https://www.dropbox.com/scl/fo/2g2hstm23bpx4ewfx56gy/h?rlkey=5hszwih8j07tbfl37oyg9xgvs&dl=0
Exhibit “D” – Residential Construct Contract
Exhibit “E” – Construction Industry Arbitration Rules and Mediation Procedures
Exhibit “F” – AAA Standard Arbitration Clauses
Exhibit “G” – Affidavit of Leslie Torres
Exhibit “H” – Affidavit of Bobby R. Garcia
Page 14 of 14
Automated Certificate of eService
This automated certificate of service was created by the efiling system.
The filer served this document via email generated by the efiling system
on the date and to the persons listed below. The rules governing
certificates of service have not changed. Filers must still provide a
certificate of service that complies with all applicable rules.
Audra Dominguez on behalf of Roberto Rene Garcia
Bar No. 7645210
adominguez@bobbygarcia.com
Envelope ID: 85685868
Filing Code Description: Amended Filing
Filing Description: THIRD AMENDED APPLICATION TO VACATE
ARBITRATION AWARD
Status as of 3/19/2024 8:13 AM CST
Associated Case Party: Area Design and Construction, L.L.C.
Name BarNumber Email TimestampSubmitted Status
Bobby Garcia litigation@bobbygarcia.com 3/18/2024 9:10:32 PM SENT
Associated Case Party: Fernando Lopez
Name BarNumber Email TimestampSubmitted Status
Rodolfo RudyCanche rudycanche@canchelaw.com 3/18/2024 9:10:32 PM SENT
Pam Munoz pam@canchelaw.com 3/18/2024 9:10:32 PM SENT
Erick Lucio elucio@hamiltonlucio.com 3/18/2024 9:10:32 PM SENT
Bryant Touchy btouchy@hamiltonlucio.com 3/18/2024 9:10:32 PM SENT
Rebecca Garcia rgarcia@hamiltonlucio.com 3/18/2024 9:10:32 PM SENT
Case Contacts
Name BarNumber Email TimestampSubmitted Status
BOBBY GARCIA BGARCIA@BOBBYGARCIA.COM 3/18/2024 9:10:32 PM SENT
AUDRA DOMINGUEZ ADOMINGUEZ@BOBBYGARCIA.COM 3/18/2024 9:10:32 PM SENT
Preview
Electronically Filed 3/18/2024 9:10 PM Hidalgo County District Clerks Reviewed By: Oscar Castillo CAUSE NO. C-2778-23-I AREA DESIGN AND § IN THE JUDICIAL DISTRICT CONSTRUCTION, L.L.C. § Plaintiff, § § v. § 398TH DISTRICT COURT § FERNANDO LOPEZ § Defendant. § HIDALGO COUNTY, TEXAS THIRD AMENDED APPLICATION TO VACATE ARBITRATION AWARD Plaintiff Area Design and Construction, L.L.C., timely files this application under TEX. CIV. P. REM. CODE. §171.088, to vacate the arbitration award delivered on March 6, 2024, by arbitrator Paula Fisher Baldwin, Esq. PROCEDURAL BACKGROUND 1. On November 3, 2020, Fernando Lopez and Area Design entered a Residential Construction Contract wherein Area Design agreed to design and construct Lopez’s home located “Home”). 2. On February 11, 2021, Lopez and Area Design entered into a new Residential Construction Contract (the "Contract") wherein the parties amended the terms of the November 3, 2020, contract. Note, the entire contract was written by Leslie Torres from Area Design, who is not a lawyer. Further, the contract addressed only the selection of an arbitrator and nothing more. And, thereafter the process that was to take place if an arbitrator could not be decided on. 3. During the Home’s construction, a controversy arose between Lopez and Area Design regarding the Contract, but the parties were unable to resolve the dispute. 4. On July 13, 2024, under TEX. CIV. P. REM. CODE. §171.085, Area Design filed a petition 1 against Lopez seeking to initiate arbitration proceedings—as directed by the Contract. Note, 1 In the March 6, 2024 award, the Arbitrator grossly mischaracterizes Area Design’s original petition as a “suit in breach of the express ‘Disputes’ provision” of the Contract, which merely Page 1 of 14 Electronically Filed 3/18/2024 9:10 PM Hidalgo County District Clerks Reviewed By: Oscar Castillo there is no language in the contract in question that the proceeding would do anything other than choose an arbitrator, thus, surely there was no intent that it would be binding as required under TEX. CIV. P. REM. CODE. §154.027(b) which clearly states: a. “If the parties stipulate in advance, the award is binding and is enforceable in the same manner as any contract obligation. If the parties do not stipulate in advance that the award is binding, the award is not binding and serves only as a basis for the parties further settlement negotiation.” 5. An evidentiary arbitration proceeding was held on February 6, 2024, continuing into February 7, 2024, and ending on February 13, 2024, in accordance with the parties’ arbitration agreement. The parties complied with the agreement's requirements regarding the conduct of the Arbitration proceedings. 6. On March 6, 2024, the Arbiter found Lopez to be the prevailing party in the arbitration and delivered a Final Award against Area Design in the net amount of $436,042.16. A detailed breakdown of the arbitrator’s award is attached as Exhibit “A”. ARBITRATION PROCEEDINGS 7. At arbitration, Lopez sought declaratory relief to declare the liens asserted by Area Design on Lopez’s home null and void. Lopez further alleged a cause of action against Area Design for breach of contract based on Area Design’s purported defective construction of Lopez’s home. Lopez sought to recover reasonable and necessary costs to perform repairs to the Home, as well as increased construction costs, building materials, labor costs, and lost rent due to alleged delays that Lopez attributed to Area Design. illustrates the Arbiter’s impartiality against Area Design from the outset of arbitration as the initiation of arbitration was not an issue between the parties requiring the arbiter’s resolution. Page 2 of 14 Electronically Filed 3/18/2024 9:10 PM Hidalgo County District Clerks Reviewed By: Oscar Castillo 8. Area Design denied liability and asserted claims against Lopez for breach of contract, fraud, and unjust enrichment as Area Design made good faith efforts to construct the home within the confines of the Contract. 9. At arbitration, Area Design requested that the Arbitrator permit Area Design to have a certified court reporter record a transcript of the arbitration proceedings, but the Arbitrator summarily denied Area Design’s request. 10. Area Design provided evidence to illustrate the COVID-19 pandemic caused delays in receiving building materials, increased costs of building materials due to supply-chain issues, and hailstorms caused setbacks and delays in construction—which Lopez summarily attributed to Area Design. Further, Area Design introduced admissible evidence which directly refuted Lopez’s position and purported “expert testimony,” and damage models, which the Arbitrator summarily accepted despite Lopez’s experts obvious failure to meet the threshold requirements for reliability, relevance, or plain logic. Despite all the uncontroverted testimony and exhibits (explained in detail by Area Design), Lopez’s flawed experts’ testimony entirely debunked at arbitration, the arbitrator returned an astonishing finding of liability against Area Design. 11. In addition to said evidence, Area Design provided and entered into evidence a detailed project schedule, attached herein as Exhibit “B”. All tangible evidence presented at the Arbitration hearing is attached hereto as Exhibit “C”. 12. Uncontroverted evidence showed that Defendant Lopez contributed to delays due to change orders of grand proportions. This was in conjunction with testimony provided by banker Hugo Hernandez, who advised that COVID-19 caused delays in several projects/loans he oversaw in his position as a mortgage loan officer. There was additional testimony provided by the subcontractor roofer, Antonio Martinez, advising he constructed the partial roof up until being dismissed by Defendant Lopez. Afterward, his brother was apparently contracted as a roofer to Page 3 of 14 Electronically Filed 3/18/2024 9:10 PM Hidalgo County District Clerks Reviewed By: Oscar Castillo examine the roof by Defendant Lopez’s new contractor. Unbeknownst to Defendant Lopez’s new contractor, the alleged roofer who evaluated the roof was the Fired contractor’s brother. The Fired contractor contacted his brother, and he denied ever examining the roof. That evidence by Defendant Lopez’s new contractor was a Big Lie. The brother of Antonio Martinez, Heriberto Martinez would not come to testify as he was instructed not to do so at the risk of losing future contracting jobs. Not surprisingly Defendant Lopez never called him on rebuttal. ARGUMENT & AUTHORITIES I. The non-binding Arbitration agreement merely serves as a basis for the parties’ further settlement negotiations. 13. The Federal Arbitration Act (FAA) applies only when a contract relates to interstate commerce. See Jack B. Anglin Co. v. Tipps, 842 S.W.2d 266, 269-70 (Tex. 1992); Stewart Title Guar. Co. v. Mack, 945 S.W.2d 330, 333 (Tex.App.-Houston [1st Dist.] 1997, writ dism'd w.o.j.). 14. In Texas, the surrender of a legal right constitutes valid consideration. See Northern Natural Gas Co. v. Conoco, Inc., 986 S.W.2d 603, 607 (Tex. 1998). If the Court reads the contract of Area Design and Fernando Lopez there is NO SURRENDERING of any legal right under the provision in focus. 15. “If the parties stipulate in advance [to be bound by the arbitration proceedings], the award is binding and is enforceable in the same manner as any contract obligation. If the parties do not stipulate in advance that the award is binding, the award is not binding and serves only as a basis for the parties’ further settlement negotiations.” TEX. CIV. P. REM. CODE. § 154.027 (emphasis added). On its face, the parties made no agreement to be bound by arbitration and the arbitrator’s award should be dismissed on this basis alone. See id. Page 4 of 14 Electronically Filed 3/18/2024 9:10 PM Hidalgo County District Clerks Reviewed By: Oscar Castillo Residential Construction Contract, at Sec. XVI, attached as Exhibit “C” 16. Notwithstanding TEX. CIV. P. REM. CODE. § 154.027, arbitration agreements are interpreted under traditional contract principles. See J.M. Davidson, Inc. v. Webster, 128 S.W.3d 223, 227 (Tex. 2003). “Although [the Texas Supreme Court] ha[s] repeatedly expressed a strong presumption favoring arbitration, the presumption arises only after the party seeking to compel arbitration [or its award] proves that a valid arbitration agreement exists.” J.M. Davidson, Inc., 128 S.W.3d at 227. Thus, a party seeking to enforce an arbitrator’s award, must show the arbitration agreement meets all requisite contract elements—which Lopez cannot. "Whether an agreement imposes a duty on the parties to arbitrate a dispute is a matter of contract interpretation and, thus, is a question of law for the court." See J.M. Davidson, Inc. v. Webster, 49 S.W.3d 507, 511- 12 (Tex.App.-Corpus Christi 2001, pet. filed) (citing Tenet Healthcare Ltd. v. Cooper, 960 S.W.2d 386, 388 (Tex.App.-Houston [14th Dist.] 1998, writ dism'd w.o.j.); Kline v. O'Quinn, 874 S.W.2d 776, 782 (Tex.App.-Houston [14th Dist.] 1994, writ denied)). 17. “Under Texas law, parties enter into a binding contract when the following elements exist: (1) an offer; (2) an acceptance in strict compliance with the terms of the offer; (3) a meeting of the minds; (4) each party's consent to the terms; and (5) execution and delivery of the contract with the intent that it be mutual and binding.” Labor Ready Cent. III, L.P. v. Gonzalez, 64 S.W.3d 519, 522 (Tex. App.—Corpus Christi 2001, no pet.). A. The parties could not have mutually agreed to “binding” as the term “binding” is Page 5 of 14 Electronically Filed 3/18/2024 9:10 PM Hidalgo County District Clerks Reviewed By: Oscar Castillo absent from the contract. 18. As stated supra, the purported arbitration provision is silent on whether the outcome of any arbitration would be binding upon the parties. See Residential Construction Contract, at Sec. XVI, attached as Exhibit “D”. At best, the contract requires the parties to agree to a single arbitrator, and in the event of disagreement as to an arbitrator, the parties will submit the dispute to the American Arbitration Association “for resolution,” but fails to specify whether the “resolution” of the dispute by the AAA arbitrator is binding on the parties. 19. IMPORTANTLY NOTE THE FOLLOWING FACTS: a. Please read the Contract Provision in question: i. It merely provides for the process for selecting an Arbitrator in the event they are not able to agree on an Arbitrator outside of the American Arbitration Association AAA; ii. There is No provision saying “any controversy or claim arising out of or relating to this contract” as provided by all the American Arbitration Association AAA recommended clauses; iii. There is No provision saying that the arbitration “shall be settled by arbitration administered by the American Arbitration Association AAA in accordance with its Commercial Arbitration rules” as provided by all the American Arbitration Association AAA recommended clauses; iv. There is No provision that in any way stipulates in advance BINDING Arbitration as required by 154.027; and v. There is No language that a “judgement on the award rendered by the arbitrator may be entered in any court having jurisdiction thereof” as seen in every American Arbitration Association AAA clause recommended. Page 6 of 14 Electronically Filed 3/18/2024 9:10 PM Hidalgo County District Clerks Reviewed By: Oscar Castillo II. The Arbitrator exceeded her powers and failed to comply with Sections 171.047 and 171.088 when she refused to allow Area Design the opportunity to record the arbitration proceedings, thus severing Area Design’s appellate remedies. 20. “On application of a party, the court shall vacate an award if… the rights of a party were prejudiced by: evident partiality by an arbitrator appointed as a neutral arbitrator…[or] the arbitrators:…exceeded their powers…refused to hear evidence material to the controversy; or conducted the hearing contrary to… Section 171.047.” TEX. CIV. P. REM. CODE. §171.088. Under Sec. 171.047, “a party at the hearing is entitled to: be heard; present evidence material to the controversy; and cross-examine any witness.” TEX. CIV. P. REM. CODE. §171.047. 21. At the outset, Area Design requested—but was summarily denied- the opportunity to record the arbitration proceedings and memorialize them in an official transcript, thus severing Area Design’s appellate remedies. This is so because “[w]ithout a transcript of the arbitration proceedings, [appellate courts] cannot determine whether a party asked the arbitrators during the proceedings to decide issues regarding the [contested issues].” Ctr. Rose Partners, Ltd. v. Bailey, 587 S.W.3d 514, 529 (Tex. App.—Houston [14th Dist.] 2019, no pet.); see also Kline v. O'Quinn, 874 S.W.2d 776, 783 (Tex. App.—Houston [14th Dist.] 1994, writ denied) (concluding that without a record of the arbitration proceedings the court was not able to determine what claims the parties submitted or what evidence the parties offered). 22. The arbitrator’s summary denial of Area Design’s request further violated Area Design’s ability to present evidence material to the controversy under TEX. CIV. P. REM. CODE. §171.047, albeit on application to vacate the Arbitrator’s award in the instant litigation. On this basis alone, the Court should Vacate the Arbitrator’s award due to the arbitrator’s unilateral and arbitrary election to exceed her powers by denying Area Design’s ability to accurately transcribe the arbitration proceedings and prejudicing its rights for the purposes of appeal and its attempt to Page 7 of 14 Electronically Filed 3/18/2024 9:10 PM Hidalgo County District Clerks Reviewed By: Oscar Castillo vacate an award—not supported by the evidence. III. The arbitrator intentionally overlooked the facts and violated numerous provisions under Civil Practice and Remedies Code Section 171.088 23. Area Design contents the arbitrator and/or Defendant Lopez grossly violated the following: Civil Practice and Remedies Code section 171.047 Rights of a Party at Hearing: a. The arbitrator and/or Lopez did not allow Area Design to present evidence material to the controversy and did not allow the recording of material evidence during the proceeding. b. Thus, Area Design was not allowed to not cross examine witnesses because of threats made to one of the witnesses. IV. VACATING THE AWARD: The Court SHALL vacate an award if: a. Civil Practice and Remedies Code section 171.088 (a)(1) the award is obtained by Undue Means; b. Civil Practice and Remedies Code section 171.088 (a)(2) the rights of a party were prejudiced by: (C) misconduct or willful misbehavior of an arbitrator; c. Civil Practice and Remedies Code section 171.088 (a)(3)(A) the arbitrator exceeded his power; d. Civil Practice and Remedies Code section 171.088 (a)(3)(C) the arbitrator refused to hear evidence material to the controversy; or e. Civil Practice and Remedies Code section 171.088 (a)(3)(D) the arbitrator conducted the hearing contrary to Civil Practice and Remedies Code section 171.047, in a manner that substantially prejudiced the rights of a party. 24. The arbitrator completely ignored the facts: Page 8 of 14 Electronically Filed 3/18/2024 9:10 PM Hidalgo County District Clerks Reviewed By: Oscar Castillo f. Project Schedule and Calendar that was an exhibit and she said it did not exist; 1) There was NO contrary evidence to the entries. g. Rick J. Lester expert’s gross miscalculations. 1) He had only constructed 2 houses like this; 2) The expert admitted he was wrong; and 3) The Formula he used was totally wrong of which he would not admit or deny, but was testified to correctly by the designers and the sellers of the roofing materials. h. Armando Rodriguez expert fraudulent testimony. 1) He testified that roof was defective based on what his roofer told him; 2) He realized it was his roofers brother who constructed the roof in question; and 3) He stopped the roofer brother, Heriberto Martinez from coming to testify by threats. i. The only evidence presented of delay was Lopez and his wife saying it was taking too long. j. Testimony of their Banker explained the problem with COVID and supply chain issues: 1) The banker explained to Lopez that contractors were walking off jobs; 2) The banker calmed Lopez down and convinced him to stay with Area Design; 3) That there was trouble getting people to go work at the job sight and it was confirmed by Area Design; Page 9 of 14 Electronically Filed 3/18/2024 9:10 PM Hidalgo County District Clerks Reviewed By: Oscar Castillo 4) He affirmed and explained problems with the Pandemic and Supply chain problems and gave two (2) examples of other situations that the bank was going through; k. General Contractor and Subcontractors Testimony that the job was 90% done; l. That the Expert’s calculated the numbers completely wrong; m. She ignored the facts and awarded 70% of what the house was being built for; n. No evidence that it had to be demolished and Award did not say so; o. She ignored the contract and dispensed her own idea of an award based on imaginary facts. p. See attached hereto as Exhibit “G” Affidavit of Leslie Torres and Exhibit “H” Bobby R. Garcia. STANDARD OF REVIEW 25. In J.M. Davidson, Inc. v. Webster, 49 S.W.3d 507, 511-12 (Tex.App.-Corpus Christi 2001, pet. filed) the Court reviewed the trial court's determination concerning the existence of an arbitration agreement under an abuse of discretion standard. Roosth, 27 S.W.3d at 207; ANCO Ins. Servs., 27 S.W.3d at 3; Hardin Const. Group, Inc. v. Strictly Painting, Inc., 945 S.W.2d 308, 312 (Tex.App.-San Antonio 1997, orig. proceeding [mand. denied]). Under this standard, the Davidson Court held at 49 S.W.3d 507, 511-12: “[We] must uphold the trial court's decision unless we conclude that the trial court could reasonably have reached only one decision.” Roosth, 27 S.W.3d at 207; Hardin, 945 S.W.2d at 312. Where, as here, the trial court does not enter findings of facts and conclusions of law, we must affirm the trial court's decision if there is sufficient evidence to support it upon any legal theory asserted. Pepe Internat'l Dev. Co. v. Garcia, 915 S.W.2d 925, 929 (Tex.App.-Houston [1st Dist.] 1996, no writ). Even if we would have decided the Page 10 of 14 Electronically Filed 3/18/2024 9:10 PM Hidalgo County District Clerks Reviewed By: Oscar Castillo issue differently, we cannot disturb the trial court's finding unless it is shown to be arbitrary and unreasonable. Walker, 827 S.W.2d at 840. Legal conclusions, however, are reviewed de novo. Id; Pony Express Courier Corp. v. Morris, 921 S.W.2d 817, 820 (Tex.App.-San Antonio 1996, no writ). Whether an agreement imposes a duty on the parties to arbitrate a dispute is a matter of contract interpretation and a question of law for the court. Tenet Healthcare Ltd. v. Cooper, 960 S.W.2d 386, 388 (Tex.App.- Houston [14th Dist.] 1998, writ dism'd w.o.j.); Kline v. O'Quinn, 874 S.W.2d 776, 782 (Tex.App.-Houston [14th Dist.] 1994, writ denied).” RELIEF REQUESTED 26. Because the alternative dispute was non-binding, see attached here to as Exhibit “E” Construction Industry Arbitration Rules and Mediation Procedures and Exhibit “F” AAA Standard Arbitration Clauses, the arbitrator’s summary denial of Area Design’s request to perfect the record with a certified court reporter to transcribe the arbitration proceedings was in excess of the arbitrator’s power and further violated Area Design’s ability to present evidence material to the controversy under TEX. CIV. P. REM. CODE. §171.047, and further violations enumerated above, Area Design requests this Court vacate the Arbitrator’s award and for all other relief requested under equity and law. Respectfully submitted, LAW OFFICE OF BOBBY GARCIA, P.C. P.O. Box 5729 McAllen, Texas 78502 Telephone: (956)668-7400 Facsimile: (956)668-7500 E-Service email: litigation@bobbygarcia.com ______________________________ BOBBY GARCIA Texas State Bar No. 07645210 Page 11 of 14 Electronically Filed 3/18/2024 9:10 PM Hidalgo County District Clerks Reviewed By: Oscar Castillo New York SBN: 5387485 Federal Bar No.: 14531 Of Counsel: ARTURO “AJ” GARCIA Texas State Bar No. 24102964 Federal Bar No.: 3622745 RICK A. ECKERSON Texas State Bar No. 00793671 Federal Bar No. 19375 ATTORNEYS FOR PLAINTIFF Page 12 of 14 Electronically Filed 3/18/2024 9:10 PM Hidalgo County District Clerks Reviewed By: Oscar Castillo CERTIFICATE OF SERVICE I hereby certify that a true and correct copy of the foregoing document has been forwarded to all counsel of record for Defendant, on this March 18, 2024: ___________________________ Bobby Garcia Page 13 of 14 Electronically Filed 3/18/2024 9:10 PM Hidalgo County District Clerks Reviewed By: Oscar Castillo Exhibits Exhibit “A” – Arbitrator’s Award Exhibit “B” – Project Schedule Exhibit “C” – Arbitration Hearing Tangible Evidence https://www.dropbox.com/scl/fo/avp3vyr5tajgt0izyv3nu/h?rlkey=594zv31kz4bkb9hvwwyfpgf2i&dl=0 https://www.dropbox.com/scl/fo/2g2hstm23bpx4ewfx56gy/h?rlkey=5hszwih8j07tbfl37oyg9xgvs&dl=0 Exhibit “D” – Residential Construct Contract Exhibit “E” – Construction Industry Arbitration Rules and Mediation Procedures Exhibit “F” – AAA Standard Arbitration Clauses Exhibit “G” – Affidavit of Leslie Torres Exhibit “H” – Affidavit of Bobby R. Garcia Page 14 of 14 Automated Certificate of eService This automated certificate of service was created by the efiling system. The filer served this document via email generated by the efiling system on the date and to the persons listed below. The rules governing certificates of service have not changed. Filers must still provide a certificate of service that complies with all applicable rules. Audra Dominguez on behalf of Roberto Rene Garcia Bar No. 7645210 adominguez@bobbygarcia.com Envelope ID: 85685868 Filing Code Description: Amended Filing Filing Description: THIRD AMENDED APPLICATION TO VACATE ARBITRATION AWARD Status as of 3/19/2024 8:13 AM CST Associated Case Party: Area Design and Construction, L.L.C. Name BarNumber Email TimestampSubmitted Status Bobby Garcia litigation@bobbygarcia.com 3/18/2024 9:10:32 PM SENT Associated Case Party: Fernando Lopez Name BarNumber Email TimestampSubmitted Status Rodolfo RudyCanche rudycanche@canchelaw.com 3/18/2024 9:10:32 PM SENT Pam Munoz pam@canchelaw.com 3/18/2024 9:10:32 PM SENT Erick Lucio elucio@hamiltonlucio.com 3/18/2024 9:10:32 PM SENT Bryant Touchy btouchy@hamiltonlucio.com 3/18/2024 9:10:32 PM SENT Rebecca Garcia rgarcia@hamiltonlucio.com 3/18/2024 9:10:32 PM SENT Case Contacts Name BarNumber Email TimestampSubmitted Status BOBBY GARCIA BGARCIA@BOBBYGARCIA.COM 3/18/2024 9:10:32 PM SENT AUDRA DOMINGUEZ ADOMINGUEZ@BOBBYGARCIA.COM 3/18/2024 9:10:32 PM SENT