FAA Award Confirmation in State Court: FIA Card Services, N.A. v. Sweet (Tex.App. - Houston 2009)(FAA arbitration award confirmation suit in county court okay)

HOUSTON COURT OF APPEALS REVERSES DISMISSAL OF CREDIT CARD COMPANY'S
SUIT FOR JUDICIAL CONFIRMATION OF ARBITRATION AWARD OBTAINED AGAINST CARD
HOLDER
FIA Card Se rv ices, NA v. Sweet (Tex.App.- Houston [14th Dist.] Jun. 23, 2009)
(Frost) (credit card issuer may seek confirmation of arbitration under FAA in county court at
law [state court]) (Dismissal of the law suit for want of jurisdiction was error).
Decision: TRIAL COURT REVERSED AND CASE REMANDED:
Opinion by Justice Kem Thompson Frost
Panel members: Justices Frost, Brown and Boyce
14-08-00111-CV FIA Card Services, Et Al [formerly known as MBNA America Bank, National
Association]
v. Gregory R. Sweet
Appeal from County Civil Court at Law No 1 of Harris County
Trial Court Judge: R. Jack Cagle
Trial Court Case #: 894890
Representative of Appellant: Attorney Michael J. Adams
Representative of Appellee: None (proceded pro se)
ALSO SEE: Other Consumer Credit Card Debt Suits - Appellate Caselaw

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FIA CARD SERVICES, N.A. fka MBNA AMERICA BANK, N.A.,
Appellant

V.

GREGORY R. SWEET, Appellee

On Appeal from the County Civil Court at Law No. 1
Harris County, Texas
Trial Court Cause No. 894890

MEMORANDUM OPINION

This is an appeal from the dismissal of a suit to confirm an arbitration award. Concluding the
trial court erred in dismissing the case for lack of subject-matter jurisdiction, we reverse and
remand.

I. Background

In opening a line of credit with appellant FIA Card Services, N.A. (hereinafter "FIA Card
Services"), appellee Gregory R. Sweet agreed to be bound by an arbitration agreement
containing the following language: "This arbitration agreement is made pursuant to a
transaction involving interstate commerce and shall be governed by the Federal Arbitration
Act, 9 U.S.C. §1-16 ('FAA'). Judgment upon any arbitration award may be entered in any
court having jurisdiction." Pursuant to this agreement, when a dispute later arose between the
parties, an arbitration proceeding was conducted before the National Arbitration Forum. FIA
Card Services was awarded $12,119.67 against Sweet. FIA Card Services sought
confirmation and enforcement of the arbitration award by initiating this suit in the Harris County
Court at Law Number 1.

The trial court sua sponte dismissed the case, apparently concluding that section 9 of the
Federal Arbitration Act, 9 U.S.C. §1-16 (“Federal Act"), deprived it of subject-matter jurisdiction
to confirm the award.

II. Issue and Analysis

In a single appellate issue, FIA Card Services argues that the trial court had subject-matter
jurisdiction to confirm the arbitration award and therefore improperly dismissed the case. A
court must have subject-matter jurisdiction to decide a case. Tex. Ass'n of Bus. v. Tex. Air
Control Bd., 852 S.W.2d 440, 443 (Tex. 1993). Whether jurisdiction exists is a question of law,
which we review de novo. Mayhew v. Town of Sunnyvale, 964 S.W.2d 922, 928 (Tex. 1998).

Generally, the Federal Act applies to a written provision in a contract “evidencing a transaction
involving commerce" to settle a dispute by arbitration. 9 U.S.C.A. §2 (West 2009). When, as
in this case, the parties expressly agree that their arbitration agreement shall be governed by
the Federal Act, the parties are not required to establish that the transaction at issue involves
or affects interstate commerce. See In re Choice Homes, Inc., 174 S.W.3d 408, 412 (Tex. App.
- Houston [14th Dist.] 2005, orig. proceeding).

Section 9 of the Federal Act provides in pertinent part:

If the parties in their agreement have agreed that a judgment of the court shall be entered
upon the award made pursuant to the arbitration, and shall specify the court, then at any time
within one year after the award is made any party to the arbitration may apply to the court so
specified for an order confirming the award, and thereupon the court must grant such an order
unless the award is vacated, modified, or corrected as prescribed in sections 10 and 11 of this
title. If no court is specified in the agreement of the parties, then such application may be made
to the United States court in and for the district within which such award was made.
9 U.S.C.A. §9 (2009).

The language of the parties' arbitration agreement provides that A[j]udgment upon any
arbitration award may be entered in any court having jurisdiction." Because the parties have
not specified a court in which a party may seek rendition of judgment on an arbitration award,
the parties, under section 9 of the Federal Act, may seek confirmation of an award in a United
States court in and for the district within which such award was made. See id; Palisades
Acquisition XVI, LLC v. Chatman, ___ S.W.3d ____, No. 14-08-00108-CV, 2009 WL 1660485,
at *2 (Tex. App.- Houston [14th Dist.] June 16, 2009, no pet. h.); see also Mauldin v. MBNA
Am. Bank, N.A., No. 02-07-00208-CV, 2008 WL 4779614, at *4 (Tex. App.- Fort Worth Oct. 30,
2008, no pet.) (mem. op.). “Under this unambiguous language, a party may seek confirmation
of the arbitration award in federal court but is not required to do so." Palisades Acquisition
XVI, LLC, 2009 WL 1660485, at *2.

The Federal Act is enforced by both state and federal courts. See Moses H. Cone Mem'l
Hosp. v. Mercury Constr. Corp., 460 U.S.1, 26 n.32, 103 S. Ct. 927, 942 n.32, 74 L. Ed. 2d
765 (1983); Palisades Acquisition XVI, LLC, 2009 WL 1660485, at *3 (providing that section 9
of the Federal Act does not limit subject-matter jurisdiction to the federal courts); see also
Mauldin, 2008 WL 4779614, at *5 (same). Under the unambiguous language of section 9,
Congress does not confer exclusive jurisdiction upon federal courts as to an arbitration
agreement that fails to specify a court in which a party may seek rendition of judgment on the
arbitration award. See 9 U.S.C.A. §9; Moses H. Cone Mem'l Hosp., 460 U.S. at 25-26 & n.32,
103 S. Ct. at 942 & n.32; Palisades Acquisition XVI, LLC, 2009 WL 1660485, at *3. Thus,
section 9 does not operate to deprive the county court at law of subject-matter jurisdiction.

Under the Texas Government Code, "a statutory county court exercising civil jurisdiction
concurrent with the constitutional jurisdiction of the county court has concurrent jurisdiction
with the district court in . . . civil cases in which the matter in controversy exceeds $500 but
does not exceed $100,000 . . . as alleged on the face of the petition." Tex. Gov't Code Ann.
§25.0003 (Vernon Supp. 2009). As alleged in this case, the amount in controversy exceeds
$500 but does not exceed $100,000. Although the Texas Government Code contains some
limitations concerning the jurisdiction of a Harris County civil court at law, none of them apply
to the case under review. See Tex. Gov't Code Ann. §25.0003(b) (prohibiting jurisdiction of a
statutory county court over causes and proceedings concerning roads, bridges, and public
highways); Tex. Gov't Code Ann. §25.1032(a) (Vernon 2004) (prohibiting jurisdiction over
probate matters); Palisades Acquisition XVI, LLC, 2009 WL 1660485, at *3. Therefore, the trial
court had subject-matter jurisdiction over this case. See Palisades Acquisition XVI, LLC, 2009
WL 1660485, at *3.

The trial court erred in dismissing the case for lack of subject-matter jurisdiction.

FIA Card Services's sole issue is sustained, the trial court's judgment of dismissal is reversed,
and this case is remanded for further proceedings.

/s/      Kem Thompson Frost

Justice

Panel consists of Justices Frost, Brown, and Boyce

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