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A recent ruling by the Sixth District Court of Appeals of Texas has created a split in that state over whether or not an appeals court has jurisdiction to review a trial court order vacating an award while a rehearing on the matter is still pending.
In Werline v. East Texas Salt Water Disposal Co., No. 06-06-0039-CV, 2006 WL 3715907 (Tex. App. Dec. 18, 2006), Werline prevailed in arbitration against his former employer in a breach of contract dispute. The trial court, however, denied Werline's motion to confirm and ordered a rehearing after vacating the arbitration award.
In general, Texas appellate courts are only authorized to review final decisions of trial courts. A six-year-old decision by the Fourteenth District Court of Appeals of Texas interpreted the Texas Arbitration Act (TAA) as not granting jurisdiction over an interlocutory appeal of an order denying confirmation, vacating the award, and directing a rehearing. See Prudential Secs., Inc. v. Vondergoltz, 14 S.W.3d 329 (Tex. App. 2000). Under the TAA, parties can appeal an order "(3) confirming or denying confirmation of an award" or "(5) vacating an award without directing a rehearing." Tex. Civ. Prac. & Rem. Code Ann. §171.098(a) (emphasis added).
The Vondergoltz court found that an "order denying confirmation of an arbitration award" was identical to an "order vacating an award." In other words, the Fourteenth District essentially added the phrase "without directing a rehearing" to the end of subsection (3).
The Court rejected the Fourteenth District's logic in Vondergoltz, found that it had jurisdiction over the appeal, and rendered judgment confirming the arbitration award in Werline's favor. According to the Court, the Vondergoltz interpretation would render subsection (3) completely meaningless. In fact, interlocutory appeals would be permissible only when the trial court ignored statutory procedures and denied a motion to confirm without also vacating the award.
More appropriate was the approach taken by a Missouri court, which found that both vacatur and the denial of a motion to confirm were clear grounds for appeal that could not be extinguished by a court's order for a rehearing. See Nat'l Ave. Bldg. Co. v. Stewart, 910 S.W.2d 334, 338 (Mo. App. 1995). To hold otherwise would saddle the arbitral process with an infinite chain of unsuccessful appeals, since the trial court would only need to order a rehearing to deny appellate jurisdiction.
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