Opinion
No. 12-04-00333-CV
Opinion delivered February 8, 2006.
Appeal from the Fourth Judicial District Court of Rusk County, Texas.
Panel consisted of WORTHEN, C.J., GRIFFITH, J., and DeVASTO, J.
MEMORANDUM OPINION
Appellant East Texas Salt Water Disposal Company, Inc. ("ETSWD") challenges the trial court's judgment confirming an arbitration award for land damages in favor of Appellees Vernon Hughes, Bill Tyra, and Ed Wiesner. We affirm.
Hughes is the original plaintiff in this case. Tyra and 19 others intervened in Hughes's suit on November 14, 1991, alleging that ETSWD conducted operations on their properties and that the properties suffered the same damages as Hughes's property. On June 19, 1992, Wiesner and four others intervened in Hughes's suit, alleging the same causes of action and damages as the other plaintiffs. Altogether, 33 litigants, including Tyra and Wiesner, intervened in Hughes's suit. All of the litigants assert the same claim for damage to their real property; therefore, for the sake of simplicity, we will refer to all Appellees collectively as "Hughes."
Background
On February 19, 1988, Hughes sued ETSWD for damages to his real property that occurred after ETSWD allegedly 1) wrongfully removed oil dirt from his property and failed to replace it, 2) changed the topography of his land and failed to protect that land from erosion, 3) moved and rerouted fences and "other appurtenances" on his land and failed to properly replace them, and 4) converted topsoil from his property without adequate compensation. Hughes sought the difference in market value of his property before and after ETSWD's operations as the measure of his damages. ETSWD answered his suit with a general denial.
On March 12, 1991, Hughes amended his original petition and, in addition to his original allegations, charged that ETSWD also allowed "asbestos and asbestos related materials to be placed in the soil causing an unreasonable risk to the health of the persons on the land and adjacent to it." Hughes additionally sought the cost to repair the harm done to the land as another measure of damages.
On November 14, Hughes filed a second amended original petition and alternatively alleged that ETSWD placed asbestos "in proximity to [Hughes] and on his property" and failed to 1) adequately safeguard him and his property from the dangers of asbestos and 2) warn him of the dangers inherent in asbestos products. Hughes also alleged that ETSWD "disturbed, removed, altered and disseminated asbestos fibers" across his property in the course of its operations and that ETSWD was negligent and grossly negligent in failing to remove the asbestos from his property.
On December 17, 1991, Hughes served three requests for admission on ETSWD. On January 15, 1992, ETSWD obtained an extension until January 26 to respond to the requests. ETSWD did not file and serve responses to the requests for admissions until February 11, sixteen days after the responses were due. The requests were deemed admitted, and ETSWD moved to strike the deemed admissions. The trial court denied ETSWD's motion on October 29, 1992.
On April 12, 1995, ETSWD filed a motion for reconsideration of the trial court's denial of its motion to strike the deemed admissions. The trial court denied the motion on May 4. ETSWD renewed its motion to strike the previously deemed admissions on June 30, 1997, and the trial court denied it that morning. The claims asserted by Hughes, Tyra, and Wiesner went to trial with the deemed admissions in place.
A second group of eight intervenors proceeded to trial in July of 1999. Prior to this trial, ETSWD again sought to withdraw the deemed admissions, and the trial court denied this request. In 2002, ETSWD filed a petition for a writ of mandamus in this court, complaining of the trial court's denial of its motion to strike the deemed admissions. In an opinion dated April 25, 2002, this court denied ETSWD's petition based on the doctrine of laches because ETSWD had not sought relief over a ten year period. See In re East Texas Salt Water Disposal Co. , 72 S.W.3d 445, 449 (Tex.App.-Tyler 2002, orig. proceeding).
The Settlement Agreement
Following voir dire and the beginning of the trial, the parties entered into a settlement agreement in open court on July 1, 1997. The settlement agreement was dictated by the attorneys for each of the parties as follows:
[HUGHES'S COUNSEL]: Your Honor, we wish to dictate into the record the agreement, all material terms necessary to settle the claims of Vernon Hughes, Ed Wiesner, Billy Ray Tyra and B.J. Marchbanks in this case. The parties stipulate and agree that they've reached agreement on all material terms. If at any later time any term should be found to be left for future agreement, we believe that the terms of this agreement supplies [sic] mechanism[s] to provide that term, but in the event that it does not, the parties agree that insofar as they have reached agreement on these terms, these terms are binding on the parties, East Texas Salt Water, Vernon Hughes, Ed Wiesner, Billy Ray Tyra and B.J. Marchbanks, and they are as follows:
Within 30 days from this date, East Texas Salt Water will establish and deposit into a fund, to be designated a cleanup fund, the sum of one million dollars. The parties will, by agreement in writing within 30 days of this date, agree on the appointment of a technical neutral, whose powers and responsibilities will be set out in the technical neutral protocol, which will be attached to the settlement documents when they're prepared in this case. If the parties cannot agree in writing on the appointment of a technical neutral within 30 days, by written motion filed by either party, Your Honor will have the right to appoint a technical neutral to serve in this case.
Secondly, it is envisioned that we will set up an arbitration panel for disputes arising under this dispute that is comprised of the following: One member selected by the liaison representative for the Plaintiffs and one member selected by the liaison for East Texas Salt Water. Those two arbitrators will then get together and pick the third arbitrator, and disputes under this agreement to be decided by that panel will be decided by the majority vote of them.
The term of the cleanup agreement and expenditures of the fund will be a ten-year cleanup period. The total amount to be spent on cleanup of these four Plaintiffs' properties will not exceed $2,500,000.00 in the ten-year period. The cleanup will occur at the direction of the technical neutral and East Texas Salt Water during the period of the cleanup, who's not obligated to spend more than $250,000.00 in a year on the cleanup at the direction of the technical neutral. This applies to surface and immediate subsurface cleanup only. This applies to operations of East Texas Salt Water and conditions for which they would be legally responsible or which resulted from the operations of East Texas Salt Water Disposal Company only.
Now, there are two halves of that, Your Honor. What that means in plain language is that East Texas Salt Water, by the establishment of this fund, is not obligating themselves to clean up any condition that did not result from their operations. At the same time, any releases in this case are in no way to be construed as releasing any other party, regardless of what privity in which they stand with East Texas Salt Water, of any liability for their own operations that may have caused damage to any of these Plaintiffs' lands.
East Texas Salt Water Disposal Company is entitled to designate the personnel to do the cleanup contemplated by this agreement, subject to the approval of the technical neutral. The cleanup procedures and results to be obtained are likewise subject to the approval of the technical neutral. It will be done at his direction, and the procedures and results are subject to his approval.
The incidental loss and damage claims arising from claims of damage — permanent, temporary — or of any other common law claim for damage arising out of this, other than the cleanup, are to be resolved within the parties by agreement within 90 days. If they're not resolved by agreement between the parties within 90 days, they will be submitted to Judge Joe Clayton in a binding arbitration. Likewise, the attorneys' fees that will be payable under this cause are to be submitted to Judge Clayton for binding arbitration within —
The Honorable Joe D. Clayton, Senior District Judge, Smith County, Texas. Hereinafter, he will be referred to as "Judge Clayton."
[ETSWD COUNSEL]: The same period of time.
[HUGHES'S COUNSEL]: The same. Your Honor, I believe that completes the agreement of the parties.
[ETSWD COUNSELl]: Your Honor, [Hughes's Counsel] had previously furnished a proposed settlement agreement which was not executed due to some other considerations, but he has defined cleanup operations and said that they'll begin upon the execution of the settlement agreement on the property designated by Plaintiff and Intervenors, and they'll be able to signify their request as to which properties the technical neutral shall commence work on.
He's defined cleanup operations as, quote, cleanup operations will include only the cleanup of asbestos-containing material and/or other debris located on the surface of Plaintiffs'/Intervenors' properties in place as a result of work — we modified this somewhat based on our subsequent agreements — as a result of the operation of and conduct of East Texas Salt Water Disposal Company only, and not any other operators or previous operators or other individuals, companies or entities that have committed acts out there on these properties.
[HUGHES'S COUNSEL]: It's my understanding what we mean by that is this, and I think we're all saying the same thing. If it's the surface or immediate subsurface, and it was by an operation that was caused by East Texas Salt Water as a result of one of their operations, then it's subject to the cleanup fund. Nobody else's operation of any damage to the surface or subsurface is involved in this lawsuit, and therefore the releases given are not to cover any — they're not obligated to clean up anybody else's mess, and we're not releasing anybody else out there that made a mess.
[ETSWD COUNSEL]: We've agreed to the cleanup operations that we've talked about. Now, any dispute — and I think the way to say this is to make it a blanket agreement. Any disputes that arise between either Salt Water or the Plaintiff/Intervenors that can't be resolved by the technical neutral shall be bindingly arbitrated by the arbitration panel that we just discussed.
[HUGHES'S COUNSEL]: I thought I said that, but if I didn't this is what the agreement is. And in all matters over which the technical neutral is appealable to the arbitration panel that's set up under this agreement, and that arbitration is binding arbitration. The reason I'm saying it that way is because we have a separate procedure for binding arbitration on the attorneys' fees claims and on any potential damage claims that there are. Those are not submitted to the three-judge panel, but anything to do with cleanup is submitted to the three-judge arbitration panel.
[ETSWD COUNSEL]: And any dispute which is brought up with the three-member arbitration panel, the losing party will pay all costs associated with bringing that dispute to the three-member arbitration panel. Is that agreeable?
[HUGHES'S COUNSEL]: That's part of the agreement.
[ETSWD COUNSEL]: That's correct. That's part of the agreement. That's the agreement of the — Your Honor, just to make it clear. As you know, this is part of a larger picture.
THE COURT: Right.
[ETSWD COUNSEL]: We intend or it's the intention of the Defendant that these terms will generally apply in further settlements that may or may not occur. [Hughes's Counsel] cannot reach agreements for parties that are not here before the Court, but I think that we intend that this will be a framework to settle the remaining claims as well.
THE COURT: All right, as far as the costs of this proceeding, that will also go before the arbitrator?
[HUGHES'S COUNSEL]: Yes, sir, that will go before Judge Clayton. We're submitting attorneys' fees, costs.
THE COURT: Attorneys' fees, costs, expenses?
[ETSWD COUNSEL]: Yes, sir.
All of the litigants then testified that they had heard the stipulations and agreements made in open court and that they were asking the court to approve them. The court approved the settlement and asked the parties to submit a document for the court, along with a take-nothing judgment in favor of ETSWD.
The Arbitration Proceedings
The parties presented their respective cases to Judge Clayton during an arbitration proceeding on August 8, 1997. In a letter dated December 8, Judge Clayton awarded Hughes's attorneys $450,000.00 in attorneys' fees, plus taxable court costs, if any, and Hughes's arbitration fee. In a written ruling dated October 18, 1998, Judge Clayton awarded Hughes $88,400.00 for the "loss of sales opportunity" of his property. Judge Clayton also awarded Tyra $11,491.83 and Wiesner $34,861.10 for their "loss of sales opportunity" and stated in the ruling that all of the "awards are to bear statutory prejudgment interest from the date of the filing of this suit."
On November 18, 1997, in order to comport with the July 1 settlement agreement, Hughes filed a "Motion for Appointment of Technical Neutral," asking the court to appoint Larry Snodgrass as the technical neutral in the case. On December 1, ETSWD objected to the appointment of Larry Snodgrass as technical neutral in the case and asked the trial court to appoint a technical neutral. On December 2, the court wrote a letter to counsel for the parties and informed them that if they could not agree on a technical neutral, the court would select the technical neutral from a list of proposed persons submitted by the parties. On December 5, ETSWD submitted Fred Blood, John Barnett, and Brandon Quinn for the court's consideration as the technical neutral. That same day, Hughes filed a supplemental motion for the appointment of a technical neutral, submitting Snodgrass, James Mark Swinnea, A.D. Drew, Kenneth W. Frazier, and Thornhill Associates for the court to consider as the technical neutral. On January 20, 1998, in a letter sent to counsel for the parties, the court appointed James Mark Swinnea as the technical neutral in the case.
The technical neutral appointed in the case is charged with the responsibility of approving the land remediation procedures and monitoring the cleanup of the asbestos material.
On January 5, 1998, Hughes filed a motion to enforce Judge Clayton's arbitration award. On September 14, 1999, the trial court entered an "Alternative Interlocutory Judgment" ("AIJ") that incorporated 1) the July 1, 1997 settlement agreement entered in open court and 2) Judge Clayton's arbitration awards for attorneys' fees and land damage. Specifically, the AIJ states that on July 1, 1997, the parties "voluntarily reached a settlement of the disputed claims and causes of action among them" and that counsel for the parties "dictated the aforementioned settlement, stipulations and settlement agreement before this Court and into the record of this cause." The AIJ further states that the parties testified they approved of and confirmed the settlement, stipulations, and settlement agreement and that the court "did confirm and approve the aforementioned settlement, stipulations and settlement agreement" and "then entered and rendered same as judgment in this cause on that date." The AIJ dictates that the settlement, stipulations, and settlement agreement only apply to Hughes, Tyra, Wiesner, Marchbanks, and ETSWD.
The AIJ specifically provided that
• ETSWD "shall establish" a "cleanup fund" in the amount of $1,000,000.00 within 30 days of the date of judgment in the case. The trial court found that ETSWD "previously complied" with the trial court's order by depositing that amount;
• Hughes and ETSWD shall set up an "arbitration panel" consisting of three arbitrators for resolving disputes arising under the "cleanup mechanism" established by the parties;
• The term of the settlement agreement will be ten years from the date of the signing of the AIJ and "the term of and for related expenditures from the aforementioned 'cleanup fund' will also be ten years" from the date of the signing of the AIJ;
• The total amount to be spent on the cleanup of the properties by ETSWD shall not exceed $2,500,000.00 in the ten year term;
• The parties were not able to agree on the appointment of a technical neutral; therefore, the court ordered that James Mark Swinnea, P.E. would serve as the technical neutral;
• All of the cleanup procedures conducted by ETSWD shall be at the direction of the technical neutral, and all expenditures from the cleanup fund shall be directed by the technical neutral;
• ETSWD is entitled to designate the personnel to do the cleanup procedures, with the procedures subject to the direction and approval of the technical neutral;
• If a party disagrees with a decision made by the technical neutral, the party shall have the right to appeal to the arbitration panel;
• The plaintiffs' claims for damages other than the cleanup expenses and reasonable attorneys' fees are to be resolved by binding arbitration, with Judge Clayton serving as the arbitrator;
• Judge Clayton resolved those claims during an arbitration and informed the parties of those awards;
• In light of the arbitration awards, ETSWD is indebted to Hughes in the amount of $88,400.00, plus prejudgment interest at the rate of 10% from February 19, 1988 through October 19, 1998. The prejudgment interest amounts to $94,333.70, resulting in a total award of $182,733.70 to Hughes;
• ETSWD is indebted to Tyra in the amount of $11,491.83, plus prejudgment interest at the rate of 10% from February 19, 1988 through October 19, 1998. The prejudgment interest amounts to $12,263.70, resulting in a total award of $23,755.03 to Tyra;
• ETSWD is indebted to Wiesner in the amount of $34,861.10, plus prejudgment interest at the rate of 10% from February 19, 1988 through October 19, 1998. The prejudgment interest amounts to $37,201.09, resulting in a total award of $72,062.19 to Wiesner;
• Counsel for the plaintiffs are to be awarded $450,000.00 as reasonable attorneys' fees pursuant to the arbitration award by Judge Clayton. The court further found that ETSWD had paid this amount to counsel.
On January 25, 2004, ETSWD filed its "Objections and Responses to Plaintiff and Intervenors'[sic] Motion to Enforce Arbitrator's Award and Motion to Vacate or Modify Award and Interlocutory Judgment." In this motion, ETSWD complained that the September 14, 1999 order was unenforceable because 1) the recovery of attorneys' fees is not authorized by the Texas Arbitration Act, 2) the order was interlocutory and not final, 3) the order awarded prejudgment interest that was different from that awarded by Judge Clayton, and 4) the order failed to comply with the parties' July 1, 1997 agreement.
On June 20, Hughes filed a "Motion to Enforce [the] Arbitrator's Award," requesting that the court enter an order enforcing Judge Clayton's arbitration awards. On October 19, 2004, the court entered an order granting Hughes's motion to enforce the arbitration awards. The order stated that it had taken into consideration both Hughes's motion and ETSWD's January 25 motion objecting to the court's AIJ and that it was denying ETSWD's objections to the AIJ. The order further stated as follows:
IT IS THEREFORE, ORDERED, ADJUDGED and DECREED that the arbitrator's award in this case in favor of the movants Vernon Hughes, Bill Tyra and Ed Wiesner is hereby in all respects CONFIRMED, pursuant to TEX. CIV. PRAC. REM. CODE § 171.087.
IT IS FURTHER ORDERED, ADJUDGED and DECREED that the Defendant's objections thereto are in all respects DENIED.
IT IS FURTHER ORDERED, ADJUDGED and DECREED that the documents [sic] styled "Alternative Interlocutory Judgment," which was signed by this Court on September 14, 1999 is and hereby shall be received as the Final Judgment of this Court based on the arbitrator's award as to Vernon Hughes, Bill Tyra and Ed Wiesner and confirmed hereinabove, pursuant to TEX. CIV. PRAC. REM. CODE § 171.092(a).
IT IS FURTHER ORDERED, ADJUDGED AND DECREED that this matter be severed as to the named Defendants herein and be designated in Cause No. 88-02-064A.
ETSWD timely filed its notice of appeal on October 21. In one global issue, ETSWD complains that the trial court's AIJ was erroneously adopted as a final judgment because 1) it did not properly conform to the settlement agreement entered in open court on July 1, 1997 and 2) the arbitration awards were erroneous.
ETSWD's sole issue consists of five subissues.
REVIEW OF THE ARBITRATION AWARD AND THE AIJ
In its first three subissues, ETSWD contends that the trial court erred by adopting the arbitration award and AIJ on the basis that 1) the arbitration award was arbitrary and capricious, 2) the arbitration award was not confirmed by the trial court, and 3) the trial court awarded an amount of prejudgment interest greater than the amount awarded by the arbitrator.
Standard of Review
Our review of an arbitration decision is "extremely narrow" because Texas law favors arbitration. IPCO-G. C. Joint Venture v. A.B. Chance Co. , 65 S.W.3d 252, 256 (Tex.App.-Houston [1st Dist.] 2001, pet. denied). An arbitration award has the same effect as the judgment of a court of last resort, and a reviewing court may not substitute its judgment for that of the arbitrator's merely because it would have reached a different result. J.J. Gregory Gourmet Servs., Inc. v. Antone's Import Co. , 927 S.W.2d 31, 33 (Tex.App.-Houston [1st Dist.] 1995, no writ). This is because "[s]ubjecting arbitration awards to judicial review adds expense and delay, thereby diminishing the benefits of arbitration as an efficient, economical system for resolving disputes." CVN Group, Inc. v. Delgado , 95 S.W.3d 234, 238 (Tex. 2002).
Because arbitration is favored as a means of dispute resolution, every reasonable presumption must be indulged to uphold the arbitrator's decision, and none is indulged against it. Id. Review is so limited that a court may not vacate an arbitration award even if it is based upon a mistake of fact or law. Vernon E. Faulconer, Inc. v. HFI Ltd. Partnership , 970 S.W.2d 36, 39 (Tex.App.-Tyler 1998, no pet).
An arbitration award can be vacated if 1) the award was obtained by corruption, fraud, or other undue means; 2) the rights of a party were prejudiced by the evident partiality, corruption, misconduct, or wilful misbehavior of an arbitrator; or 3) the arbitrator exceeded its powers, refused to postpone the hearing after a showing of sufficient cause for the postponement or refused to hear evidence material to the controversy. TEX. CIV. PRAC. REM. CODE ANN. 171.088(a) (Vernon 2005). A party seeking relief under section 171.088 must make an application to vacate the award not later than the ninetieth day after the date of delivery of a copy of the award to the applicant. TEX. CIV. PRAC. REM. CODE ANN. 171.088(b) (Vernon 2005). The ninety day requirement in section 171.088 has been referred to as a limitations period. Louisiana Natural Gas Pipeline, Inc. v. Bludworth Bond Shipyard, Inc. , 875 S.W.2d 458, 462 (Tex.App.-Houston [1st Dist.] 1994, writ denied). After the limitations period has expired, a party cannot ask a court to vacate an arbitration award. Id.
Texas common law allows a reviewing court to set aside an arbitration award "only if the decision is tainted with fraud, misconduct, or gross mistake as would imply bad faith and failure to exercise honest judgment." IPCO-G. C. Joint Venture , 65 S.W.3d at 256. A gross mistake is a mistake that implies bad faith or failure to exercise honest judgment and results in a decision that is arbitrary and capricious. Id. at 261; see also Bailey Williams v. Westfall , 727 S.W.2d 86, 90 (Tex.App.-Dallas 1987, writ ref'd n.r.e.). However, an honest judgment made after due consideration given to conflicting claims, no matter how erroneous, is not arbitrary or capricious. Westfall , 727 S.W.2d at 90. The party seeking to vacate an arbitration award has the burden of demonstrating how the arbitrator made a gross mistake. Anzilotti v. Gene D. Liggin, Inc. , 899 S.W.2d 264, 267 (Tex.App.-Houston [14th Dist.] 1995, no writ).
We will review the arbitration award pursuant to the common law standard of "gross mistake" because ETSWD did not make an application to statutorily vacate or modify the arbitration awards for attorneys' fees and land damage within ninety days of December 12, 1997 (the date of the award for attorneys' fees) or October 19, 1998 (the date of the award for the damage to the properties). See TEX. CIV. PRAC. REM. CODE ANN. 171.088(b); Bludworth Bond Shipyard, Inc. , 875 S.W.2d at 462.
Confirmation of the Arbitration Award
We will first address ETSWD's second subissue: that "the trial court erred by entering a judgment on the basis of an arbitration award that had not been confirmed." This contention is erroneous because the trial court's October 19, 2004 order specifically states that
IT IS THEREFORE, ORDERED, ADJUDGED and DECREED that the arbitrator's award in this case in favor of the movants Vernon Hughes, Bill Tyra and Ed Wiesner is hereby in all respects CONFIRMED, pursuant to TEX. CIV. PRAC. REM. CODE § 171.087.
The order clearly confirmed the arbitration awards to Hughes. ETSWD's second subissue is overruled.
Award of Damages for Loss of Sales Opportunity and Remediation
In part of its first subissue, ETSWD contends that the arbitrator made a gross mistake by awarding land damages in addition to the cost of remediation because "the asserted damages occurred prior to their having acquired their lands and the two year statute of limitations attributable to nuisance, negligence, trespass and land damages had already run at the time the claims were filed."
In order to properly preserve a complaint for appellate review, the record must show that 1) the complaint was made to the trial court by a timely request, objection, or motion and 2) that the trial court ruled on or refused to rule on the request, objection, or motion. TEX. R. APP. P. 33.1(a). This statute of limitations defense was never raised in any document filed in the trial court; therefore, ETSWD has waived the issue. ETSWD's first subissue, as it relates to the arbitrator's award of land damages, is overruled.
Award of Attorneys' Fees
In another part of its first subissue, ETSWD maintains that the arbitrator's award of $450,000.00 in attorneys' fees was arbitrary and capricious. Hughes contends that the arbitrator's award was not erroneous.
Arbitrators shall award attorneys' fees as additional sums required to be paid under an arbitration award only if the fees are provided for 1) in the agreement to arbitrate or 2) by law for a recovery in a civil action in the district court on a cause of action on which any part of the award is based. TEX. CIV. PRAC. REM. CODE ANN. § 171.048 (Vernon 2005). When no record of the arbitration proceedings is submitted to the trial court, the court cannot disagree with the implied findings that an award of attorneys' fees is warranted. Monday v. Cox , 881 S.W.2d 381, 384 (Tex.App.-San Antonio 1994, writ denied).
During the court proceedings on July 1, 1997, when the parties entered into the settlement agreement, they expressly stated that the issue of attorneys' fees would be submitted to the arbitrator. Furthermore, with no record of the arbitration proceedings in the clerk's record, we cannot review the award of attorneys' fees. ETSWD's first subissue, as it relates to attorneys' fees, is overruled.
Award of Prejudgment Interest
In Judge Clayton's October 19, 1998 ruling, he stated that "[a]ll awards are to bear statutory prejudgment interest from the date of the filing of this suit." The ruling made no mention of a specific interest rate or a specific amount to be awarded as prejudgment interest. The trial court's final order awards a specific amount of prejudgment interest, which began accruing on February 19, 1988 (the date the lawsuit was filed) through October 19, 1998. In its third subissue, ETSWD contends that the trial court's final order is incorrect because it erroneously awards an amount of prejudgment interest that is greater than the amount awarded by the arbitrator. Therefore, ETSWD argues, the trial court was not authorized to award a specific amount. Hughes argues that the trial court's award of prejudgment interest is the correct amount.
A prevailing party receives prejudgment interest as a matter of course. Baker Hughes Oilfield Operations, Inc. v. Hennig Prod. Co., Inc. , 164 S.W.3d 438, 447 (Tex.App.-Houston [14th Dist.] 2005, no pet.). Judge Clayton awarded prejudgment interest and also included the date on which the prejudgment interest would begin to accrue. This date conforms to the prejudgment calculations required under Texas law. See id. (quoting Johnson Higgins of Texas, Inc. v. Kenneco Energy, Inc. , 962 S.W.2d 507, 531 (Tex. 1998) (holding that prejudgment interest begins to accrue on the earlier of (1) 180 days after the date a defendant receives written notice of a claim or (2) the date suit is filed and is computed as simple interest)). The prejudgment interest rate is equal to the postjudgment interest rate applicable at the time of a judgment. TEX. FIN. CODE ANN. § 304.103 (Vernon Supp. 2005). During the regular 2003 legislative session, the legislature passed House Bills 4 and 2415, both of which contained almost identical amendments to the Finance Code. The amendments reduced the postjudgment interest rate from 10 percent, the rate in effect when Judge Clayton's award was made in 1998, to 5 percent. See Act of June 2, 2003, 78th Leg., R.S., ch. 204, 6.04, 2003 Tex. Gen. Laws 847, 862; see also Act of June 1, 2003, 78th Leg., R.S., ch. 676, 2(a), 2003 Tex. Gen. Laws 2096, 2097 (both codified at TEX. FIN. CODE ANN. § 304.003(c) (Vernon Supp. 2005)); Hayhoe v. Henegar , 172 S.W.3d 642, 645-46 (Tex.App.-Eastland 2005, no pet.).
On appeal, ETSWD does not argue that the actual date inserted or the amount awarded by the trial court is incorrect or that fact issues indicate another date or amount would be more correct. It only argues that "the complaint is not simply that the court failed to correct a miscalculation error pursuant to CPRC § 171.091, but rather that it actually created one."
The Fourteenth Court of Appeals addressed this exact issue in Baker Hughes. In Baker Hughes , the arbitrator awarded prejudgment interest "'at 6% per annum until the date of the Arbitration Award,'" but failed to include the date that prejudgment interest would begin to accrue. Baker Hughes , 164 S.W.3d at 446. In the final judgment, the trial court corrected the award to include an accrual date, inserting the day Baker Hughes filed for arbitration. On appeal, Baker Hughes argued that the trial court committed an error because the court, rather than the arbitration panel, decided the amount of prejudgment interest, which was a substantive legal issue affecting the merits of the controversy. Id. Baker Hughes did not argue that the date inserted by the court was incorrect or that fact issues indicate another date would be correct. Id. at 447. Baker Hughes argued only that the inclusion of the date in the final judgment affected the merits of the controversy. The court noted that "[t]his is not a case in which the arbitrators did not award prejudgment interest, yet a trial court modified the award to include it." Id. The court further noted that the trial court did not modify the award of interest itself; instead, the trial court's judgment merely effectuated the arbitrator's award of interest. Id.
The court held that as evidenced by the award, the arbitrators intended to award prejudgment interest; therefore, the trial court did not resort to speculation regarding the arbitrators' intent. Id. at 448. The trial court only corrected the form of an imperfect award to effectuate that intent, and the court concluded that the trial court did not err in correcting the arbitration award.
In the instant case, Judge Clayton clearly intended to award prejudgment interest on the awards he made following the arbitration. The trial court's final judgment merely corrected the form of an imperfect award to effectuate the arbitrator's intent. Much like the court in Baker Hughes , we conclude that the trial court did not err in awarding prejudgment interest. ETSWD's third subissue is overruled.
REVIEW OF THE SETTLEMENT AGREEMENT AND THE AIJ
In its fourth subissue, ETSWD argues that the settlement agreement and the AIJ materially differ, rendering the court's final judgment "unenforceable." Specifically, ETSWD argues that the AIJ does not comport with the July 1, 1997 settlement agreement in that it 1) only applies to Hughes and not the remaining intervenors, 2) does not designate the properties to be remediated, 3) does not contain definitions of "cleanup operations" or "procedures," 4) does not state how cleanup funds will be expended and by whom, 5) does not address the reasonableness of the technical neutral's fees, and 6) contains a technical neutral protocol that was not agreed to by the parties. Hughes contends that these issues are not supported by the record. We agree.
The Framework Complaint
The settlement agreement entered into on July 1, 1997 specifically settled the claims of Vernon Hughes, Ed Wiesner, Billy Ray Tyra, and B.J. Marchbanks. Counsel for ETSWD also agreed that the settlement agreement would "be a framework to settle the remaining claims as well." None of the remaining intervenors' claims are before the court in the instant case; therefore, no controversy exists.
The Designated Properties
The AIJ and the settlement agreement mandated that the properties of Hughes, Tyra, and Wiesner would be cleaned up and remediated.
Definitions of "Cleanup Operations" or "Procedures"
The July 1, 1997 agreement defined cleanup operations as
[ETSWD COUNSEL]: Your Honor, [Hughes's Counsel] had previously furnished a proposed settlement agreement which was not executed due to some other considerations, but he has defined cleanup operations and said that they'll begin upon the execution of the settlement agreement on the property designated by Plaintiff and Intervenors, and they'll be able to signify their request as to which properties the technical neutral shall commence work on.
He's defined cleanup operations as, quote, cleanup operations will include only the cleanup of asbestos-containing material and/or other debris located on the surface of Plaintiffs'/Intervenors' properties in place as a result of work — we modified this somewhat based on our subsequent agreements — as a result of the operation of and conduct of East Texas Salt Water Disposal Company only, and not any other operators or previous operators or other individuals, companies or entities that have committed acts out there on these properties.
[HUGHES'S COUNSEL]: It's my understanding what we mean by that is this, and I think we're all saying the same thing. If it's the surface or immediate subsurface, and it was by an operation that was caused by East Texas Salt Water as a result of one of their operations, then it's subject to the cleanup fund. Nobody else's operation of any damage to the surface or subsurface is involved in this lawsuit, and therefore the releases given are not to cover any — they're not obligated to clean up anybody else's mess, and we're not releasing anybody else out there that made a mess.
(Emphasis added). The term "cleanup operations" was defined in the settlement agreement, which was still in force when the AIJ was made a final judgment. See TEX. R. CIV. P. 11; Padilla , 907 S.W.2d at 459.
How the Funds Are to be Expended
The parties agreed during the settlement agreement to give the technical neutral the authority to expend the funds for the cleanup operations. This is also reflected in the final order.
Reasonableness of Fees/Technical Neutral Protocol
The complaints about the reasonableness of the technical neutral's fees and protocol are unfounded. The AIJ does not address any of the technical neutral's fees; it only states that "any term that should be found to be left for future agreement" will be decided by an arbitration panel. ETSWD has not directed us to, nor have we found, anywhere in the record that the parties to the settlement agreement agreed to a fee or disagreed about a fee. Accordingly, no controversy exists with regard to the technical neutral's fees.
With regard to the technical neutral protocol, the AIJ provides, in part, as follows:
• The parties were not able to agree on the appointment of a technical neutral; therefore, the court ordered that James Mark Swinnea, P.E. would serve as the technical neutral;
• All of the cleanup procedures conducted by ETSWD shall be at the direction of the technical neutral, and all expenditures from the cleanup fund shall be directed by the technical neutral;
• ETSWD is entitled to designate the personnel to do the cleanup procedures, with the procedures subject to the direction and approval of the technical neutral; and
• If a party disagrees with a decision made by the technical neutral, then the party shall have the right to appeal to the arbitration panel.
Therefore, the technical neutral protocol set forth in the AIJ does not differ from the agreement made when the parties entered into the July 1, 1997 settlement agreement.
None of ETSWD's complaints subsumed within its fourth subissue are supported by the record. ETSWD's fourth subissue is overruled.
CONSIDERATION FOR THE SETTLEMENT BETWEEN THE PARTIES
In its fifth and final subissue, ETSWD contends that the settlement between the parties fails for want of consideration because there has been no settlement in writing. Hughes maintains that the settlement agreement is enforceable under Rule 11 of the Texas Rules of Civil Procedure.
An agreement to settle a case is enforceable by the trial court if it complies with Rule 11 of the Texas Rules of Civil Procedure. See Padilla v. La France , 907 S.W.2d 454, 460 (Tex. 1995). To comply with Rule 11, the agreement must be either (1) in writing, signed, and filed with the papers as part of the record, or (2) made in open court and entered of record. TEX. R. CIV. P. 11; Padilla , 907 S.W.2d at 459. A valid Rule 11 agreement, whether written or oral, must contain all essential terms of the agreement and must be complete in every material detail. See Padilla , 907 S.W.2d at 460; Neasbitt v. Warren , 105 S.W.3d 113, 116 (Tex.App.-Fort Worth 2003, no pet.); see also Travelers Ins. Co. v. Williams , 603 S.W.2d 258, 261 (Tex.Civ.App.-Corpus Christi 1980, no writ) (requiring that parties agree upon the provisions of a settlement as the court has no power to supply terms, provisions, or essential details). The purpose of the rule is to avoid disputes over the terms of oral settlement agreements. Padilla , 907 S.W.2d at 461.
ETSWD does not contend that the July 1, 1997 settlement agreement read into the record and agreed to by all parties was not a Rule 11 agreement. Instead, ETSWD's final argument ignores the fact that 1) this settlement agreement was entered into on July 1, 1997 and 2) such settlement agreements are binding pursuant to Rule 11. ETSWD cites no authority for the assertion that it should not be bound to the terms of the agreement it made in open court on July 1, 1997. Accordingly, ETSWD's fifth subissue is overruled.
CONCLUSION
ETSWD and Hughes entered into a binding settlement agreement on July 1, 1997. That agreement called for the parties to enter into binding arbitration. Once the arbitration was complete, the trial court incorporated the parties' settlement agreement and Judge Clayton's arbitration ruling into one final order. No reversible error occurred during any of these stages of the litigation between the parties. Accordingly, the judgment of the trial court is affirmed.