ssp-holdings-limited-partnership-dba-circle-k-and-stripes-llc-successor ( 2014 )

Fourth Court of Appeals
San Antonio, Texas
OPINION
No. 04-13-00712-CV
SSP HOLDINGS LIMITED PARTNERSHIP
d/b/a Circle K and Stripes LLC, successor by merger to SSP Partners,
a Texas General Partnership,
Appellant
v.
Yolanda Lopez and
Yolanda LOPEZ and Jesus Lopez,
Appellees
From the 49th Judicial District Court, Webb County, Texas
Trial Court No. 2004-CVT-00-1507-D1
The Honorable Joe Lopez, Judge Presiding
Opinion by: Sandee Bryan Marion, Justice
Sitting: Sandee Bryan Marion, Justice
Patricia O. Alvarez, Justice
Luz Elena D. Chapa, Justice
Delivered and Filed: April 30, 2014
REVERSED AND REMANDED
There have been two arbitration proceedings arising from the underlying lawsuit. This
accelerated appeal is from the trial court’s order vacating an arbitration panel’s final decision in
favor of appellants in the second proceeding. 1 In its order, the trial court found that the final
decision was procured by undue means, the arbitrators engaged in misbehavior, and the arbitrators
1
There is no dispute that this arbitration proceeding is governed by the Federal Arbitration Act (the “FAA”).
04-13-00712-CV
exceeded their powers. On appeal, appellants challenge all three grounds for the trial court’s order.
We reverse the trial court’s order vacating the arbitration decision, remand the cause, and order
the trial court to confirm the arbitration decision.
BACKGROUND
Yolanda Lopez and her husband sued SSP Holdings Limited Partnership (“SSPH-LP”) for
personal injuries Yolanda allegedly suffered in the course and scope of her employment. The trial
court ordered Yolanda to initiate arbitration proceedings on her claims against the company, but
stayed her husband’s loss of consortium claim. In the first arbitration proceeding, SSPH-LP
moved for summary judgment on the grounds that Yolanda’s negligence and premises liability
claims were time-barred under the terms of the parties’ arbitration agreement. In a February 12,
2008, order, arbitrator Lynne Gomez denied the motion for summary judgment concluding the
applicable limitations period may have been tolled. SSPH-LP moved for reconsideration, and
Yolanda responded.
On March 17, 2008, Gomez signed an order granting the motion for reconsideration and
the motion for summary judgment. In this order, Gomez noted Yolanda was not arguing the
limitations period was tolled, but instead, she argued her claim was not time-barred. Gomez
disagreed with Yolanda’s arguments, concluded Yolanda did not initiate arbitration until almost
five years after her injury occurred, and therefore, her claim was not timely filed in accordance
with the parties’ agreed arbitration procedure. Yolanda appealed. In an April 9, 2010, final
decision, the arbitration appeals panel determined Yolanda’s claims were barred by the statute of
limitations. The trial court denied Yolanda’s motion to vacate the arbitration panel’s final
decision, and, on October 12, 2010, confirmed the final decision, and dismissed Yolanda’s claims
and causes of action “with prejudice to their re-filing, in whole or in part.” The court did not
dismiss Yolanda’s husband’s claim.
-2-
04-13-00712-CV
After the first arbitration, Yolanda and her husband amended their suit to add Stripes LLC 2
as a defendant, and Yolanda rejoined the lawsuit. Stripes filed an application for an order for
arbitration, which the trial court granted. In its March 1, 2012, order, the trial court ordered that
Stripes “may initiate proceedings with the American Arbitration Association by filing the
appropriate demand and other notices . . . .” The order also stated that Stripes’ failure to timely
initiate arbitration proceedings “SHALL result in denial of [Stripes’ application], and the
resumption of all proceedings before this Court.”
Stripes served its demand for the second arbitration in which it described its claim as
follows:
Stripes LLC seeks no affirmative relief whatsoever in this arbitration but only a
declaration under the Texas Uniform Declaratory Judgment Act . . . that it is not
liable to Respondent, Mrs. Lopez on any claims she has asserted or may assert
against it based on her alleged October 18, 2002 on-the-job injury. . . . Stripes
LLC seeks only a declaration that it is not liable to Mrs. Lopez on any claims against
it because (1) such claims are barred by the applicable statute of limitations (the
Texas two-year statute of limitations in Section 16.003(a) of the Texas Civil
Practice and Remedies Code); (2) such claims are barred by res judicata and
collateral estoppel from the April 9, 2010 Final Award On Appeal . . . and the
October 12, 2010 Order Confirming Arbitration Award[;] and (3) such claims are
barred because Claimant Stripes LLC is the successor in interest to SSP Holdings
Limited Partnership, as admitted in Paragraph 6 of Exhibit A. Stripes LLC is not
seeking any attorney’s fees, costs or expenses, or any other form of affirmative
relief.
In the arbitration proceeding, Stripes again moved for summary judgment and requested a
declaratory judgment on its claims as described above. 3 The hearing arbitrator denied the motion
2
Apparently, SSPH-LP was the wrong entity to sue because Yolanda’s employer was actually an affiliate company,
SSP Partners. Yolanda sued SSPH-LP on October 18, 2004. She contended SSPH-LP never alleged any defect in
parties or the absence of an employment relationship. According to Yolanda, SSPH-LP stated for the first time in its
December 3, 2007 motion for summary judgment in the arbitration proceedings that it was not her employer and it did
not operate the Circle K store at which she worked. Yolanda contended this was the first time SSPH-LP alleged SSP
Partners employed her and operated the store. SSPH-LP and SSP Partners both later merged into Stripes LLC, which
became the successor to both.
3
More specifically, Stripes’ limitations argument was that Yolanda reported an on-the-job injury on October 18, 2002;
she and her husband filed their lawsuit on October 18, 2004; and Yolanda filed her arbitration demand on August 17,
-3-
04-13-00712-CV
on the grounds that the parties’ arbitration agreement did not contemplate declaratory judgments
or give the arbitrator authority to issue enforceable declaratory judgments. Stripes moved for
reconsideration and the hearing arbitrator found that although he had the authority to render a
declaratory decision, he concluded he could not do so in this case because the case involved tort
liability. Stripes then initiated an appellate arbitration proceeding before a panel of appellate
arbitrators.
The arbitration panel determined the hearing arbitrator had the authority to render
declaratory decisions in tort actions. The panel then concluded (1) Yolanda’s claims were barred
by the applicable statute of limitations, (2) re-arbitration of matters already arbitrated in the first
arbitration were barred by res judicata, collateral estoppel, or issue/claim preclusion, and (3)
Yolanda’s claims were barred by the arbitration panel’s April 9, 2010, award and the trial court’s
October 12, 2010, order confirming the decision.
Back in the trial court, the Lopezes filed a motion to vacate the arbitration award and moved
for sanctions, and Stripes responded. The trial court vacated the award for the following reasons:
(1) The final award was procured by undue means because “Stripes submitted only
defensive issues to arbitration rather than the entirety of the dispute as had been
requested by [Stripes] in its Application for Order for Arbitration, and as had been
ordered by the” trial court;
(2) The arbitrators engaged in misbehavior “by which the rights of [Yolanda] have
been prejudiced, making vacation of the Award proper under 9 U.S.C. § 10(a)(3),”
and
(3) The arbitrators “exceeded their powers, or so imperfectly executed them, that a
mutual, final, and definite award upon the subject matter submitted was not made,
making vacation of the Award also proper under 9 U.S.C. § 10(a)(4).”
2007. The parties’ arbitration agreement provides that “the party seeking arbitration must give written notice of any
claim to the other party within the applicable statute of limitations” and “[n]either filing nor serving a lawsuit stops
the applicable statute of limitations from continuing to run.” Stripes argued that regardless of which entity Yolanda
asserts her negligence claims against, those claims accrued on October 18, 2002 and she was required to initiate
arbitration against any entity regarding her negligence claims by October 18, 2004. Stripes concluded that Yolanda’s
negligence claims were barred by the applicable two-year statute of limitations because she did not initiate arbitration
until August 17, 2007, five years after her claim accrued.
-4-
04-13-00712-CV
The trial court ordered that all issues raised on appeal be reheard before a new panel of arbitrators.
The court denied sanctions. Stripes now appeals.
JURISDICTION
As a threshold matter, Yolanda contends this court lacks jurisdiction over this appeal
because the arbitration decision is interlocutory and no statute authorizes an appeal. We disagree.
The Texas Civil Practice and Remedies Code, which provides as follows, authorizes an
interlocutory appeal such as the one here:
In a matter subject to the Federal Arbitration Act (9 U.S.C. Section 1 et seq.), a
person may take an appeal or writ of error to the court of appeals from the judgment
or interlocutory order of a district court, county court at law, or county court under
the same circumstances that an appeal from a federal district court’s order or
decision would be permitted by 9 U.S.C. Section 16. 4
TEX. CIV. PRAC. & REM. CODE ANN. § 51.016 (West Supp. 2013). This section became effective
September 1, 2009. The notes to section 51.016 provide as follows:
(a) Except as provided by this section, the change in law made by this Act applies
to an action filed on or after the effective date of this Act or pending on the effective
date of this Act.
(b) The change in law made by this Act does not apply to the appeal of an
interlocutory order in an action pending on the effective date of this Act if the
appeal of the order is initiated before the effective date of this Act.
See Acts 2009, 81st Leg., ch. 820, § 1.
Yolanda argues section 51.016 is not applicable here because that section applies only to
appeals of an interlocutory order in an action filed on or after September 1, 2009. Again, we
disagree because the date the interlocutory appeal is filed controls, not the date the lawsuit is filed.
See J.B. Hunt Transp., Inc. v. Hartman, 307 S.W.3d 804, 808 n.3 (Tex. App.—San Antonio 2010,
4
Under the FAA, “[a]n appeal may be taken from . . . an order . . . modifying, correcting, or vacating an award . . . .”
9 U.S.C. § 16(a)(1)(E).
-5-
04-13-00712-CV
no pet.) (“However, section 51.016 only applies to an appeal initiated on or after September 1,
2009. Because the proceedings in this court were initiated prior to the effective date of section
51.016, this provision is not applicable to the case at hand, and the petition for writ of mandamus
is the appropriate vehicle for this court to consider J.B. Hunt’s complaint.”); In re Hydro Mgmt.
Sys., L.L.C., No. 04-09-00808-CV, 2009 WL 5062320, at *1 (Tex. App.—San Antonio Dec. 23,
2009, orig. proceeding) (petition for writ of mandamus filed December 16, 2009 dismissed because
section 51.016 applied; therefore, relator had adequate remedy by appeal). In this case, the notice
of appeal was filed on October 16, 2013; therefore, section 51.016 applies and this court has
jurisdiction over this appeal.
STANDARD OF REVIEW
We review de novo a trial court’s decision to confirm or vacate an arbitration award under
the FAA. In re Chestnut Energy Partners, Inc., 300 S.W.3d 386, 397 (Tex. App.—Dallas 2009,
pet. denied); Myer v. Americo Life, Inc., 232 S.W.3d 401, 407 (Tex. App.—Dallas 2007, no pet.);
see also In re Labatt Food Serv., L.P., 279 S.W.3d 640, 643 (Tex. 2009) (orig. proceeding)
(applying de novo standard to review trial court’s resolution of whether an arbitration provision
under the FAA was enforceable). In applying this standard of review, we review the entire record.
Chestnut Energy Partners, 300 S.W.3d at 397. All reasonable presumptions are indulged in favor
of the arbitration award, and none against it. Id. An arbitration award is presumed valid and
entitled to great deference and our review of the arbitration award is “extraordinarily narrow.”
Myer, 232 S.W.3d at 407-08. In a de novo review, the trial court’s decision is given no deference.
Quick v. City of Austin, 7 S.W.3d 109, 116 (Tex. 1998). The party seeking to vacate the arbitration
award bears the ultimate burden of proving the grounds for vacatur. Cambridge Legacy Group,
Inc. v. Jain, 407 S.W.3d 443, 449 (Tex. App.—Dallas 2013, pet. denied).
-6-
04-13-00712-CV
GROUNDS TO VACATE FAA ARBITRATION AWARD
“Under the FAA, courts may vacate an arbitrator’s decision ‘only in very unusual
circumstances.’” Oxford Health Plans, LLC v. Sutter, 133 S. Ct. 2064, 2068 (2013) (quoting First
Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 942 (1995)). Under the terms of the FAA, an
arbitration award must be confirmed unless it is vacated, modified, or corrected under one of the
limited grounds set forth in sections 10 and 11 of the FAA. See 9 U.S.C. §§ 9-11 (West 2009).
Under section 10, which is applicable in this case, a court may vacate an arbitration decision upon
the application of any party to the arbitration where:
(1) the award was procured by corruption, fraud, or undue means;
(2) there was evident partiality or corruption in the arbitrators, or either of them;
(3) the arbitrators were guilty of misconduct in refusing to postpone the hearing,
upon sufficient cause shown, or in refusing to hear evidence pertinent and material
to the controversy; or of any other misbehavior by which the rights of any party
have been prejudiced; or
(4) the arbitrators exceeded their powers, or so imperfectly executed them that a
mutual, final, and definite award upon the subject matter submitted was not made.
9 U.S.C. § 10(a). The Lopezes moved to vacate the final decision on grounds one, three and four.
However, because the Lopezes concede on appeal that undue means (their first ground) was not a
proper basis for vacatur in this case, we address only whether the arbitration panel engaged in
misconduct, exceeded its powers, or so imperfectly executed its powers that a mutual, final, and
definite award upon the submitted subject matter was not made.
MISCONDUCT AND EXCEEDING AUTHORITY
The trial court did not specify how the arbitration panel exceeded its authority or so
imperfectly executed its powers that a mutual, final, and definite award upon the subject matter
submitted was not made. However, the court did provide three reasons the arbitration panel
engaged in improper conduct. Therefore, it appears the trial court combined the grounds of
exceeding authority with engaging in improper conduct, which we address below.
-7-
04-13-00712-CV
A. Arbitration Panel’s “Opinion”
The parties’ arbitration agreement required the appellate arbitrators’ decision to “include a
brief, written opinion addressing the issues before them.” The trial court found the panel engaged
in improper conduct because it summarily reversed the decision from which the appeal was taken
and granted all relief requested by Stripes without any explanation for the award in contravention
of the provision in the employee benefit plan that requires the arbitrators to provide a brief, written
opinion addressing the issues before them.
On appeal, Stripes first relies on several cases that stand for the proposition that arbitrators
are not required to explain their award. However, arbitration is a matter of contract. Rain CII
Carbon, LLC v. ConocoPhillips Co., 674 F.3d 469, 472 (5th Cir. 2012). Parties have the right to
arbitration according to the terms for which they contracted. Western Emp’rs Ins. Co. v. Jefferies
& Co., Inc., 958 F.2d 258, 261 (9th Cir. 1992). Arbitrators who act contrary to express contractual
provisions, have exceeded their powers. Rain, 674 F.3d at 472. However, limitations on an
arbitrator’s authority must be plain and unambiguous. Id. The FAA “requires courts to enforce
privately negotiated agreements to arbitrate, like other contracts, in accordance with their terms.”
Volt Info. Sciences v. Bd. of Trustees of the Leland Stanford Jr. Univ., 489 U.S. 468, 478 (1989).
Therefore, “arbitrators may exceed their power within the meaning of § 10(a)(4) if they fail to
comply with mutually agreed-upon contractual provisions in an agreement to arbitrate.” Cat
Charter, LLC v. Schurtenberger, 646 F.3d 836, 843 (11th Cir. 2011). Whether an arbitrator has
exceeded his authority is a question of law that we review de novo. Green v. Ameritech Corp.,
200 F.3d 967, 974 (6th Cir. 2000). Here, the trial court’s determination that the arbitration panel
violated the parties’ arbitration agreement by granting Stripes relief without any explanation for
the award or providing a brief written opinion addressing the issues before the panel involves an
interpretation of the meaning of “brief written opinion addressing the issues.”
-8-
04-13-00712-CV
As a general rule, an arbitrator need not explain his decision; therefore, in a typical
arbitration where no specific form of award is requested, arbitrators may provide a “standard
award” and simply announce a result. See United Steelworkers v. Enterprise Wheel & Car Corp.,
363 U.S. 593, 598 (1960) (“Arbitrators have no obligation to the court to give their reasons for an
award.”); Teel v. Beldon Roofing & Remodeling Co., 281 S.W.3d 446, 450 (Tex. App.—San
Antonio 2007, pet. denied) (“arbitrators need not give reasons for their awards and even when they
do provide such rationale, courts may not review that reasoning”). “At the other end of the
spectrum, the Arbitration Rules allow parties to request that the arbitrators make ‘findings of fact
and conclusions of law,’ a relatively exacting standard familiar to the federal courts.” Cat Charter,
646 F.3d at 844. “Logically, the varying forms of awards may be considered along a ‘spectrum of
increasingly reasoned awards,’ with a ‘standard award’ requiring the least explanation and
‘findings of fact and conclusions of law’ requiring the most.” Id. A “reasoned award is something
short of findings and conclusions but more than a simple result.” Sarofim v. Trust Co. of the W.,
440 F.3d 213, 215 n.1 (5th Cir. 2006) (citations and internal quotation marks omitted).
In Cat Charter, the parties agreed the arbitrator would provide a “reasoned award.” The
Eleventh Circuit turned to Webster’s Third New International Dictionary to determine whether the
arbitration panel in its case had handed down a satisfactorily reasoned award. 646 F.3d at 844.
The court noted Webster’s defines “reasoned” as “based on or marked by reasoning,” and
“provided with or marked by the detailed listing or mention of reasons.” Id. (citing to WEBSTER’S
THIRD NEW INT’L DICTIONARY: UNABRIDGED 1892 (1993)). The court also noted the word
“‘reason’—as used in this context—is defined as ‘an expression or statement offered as an
explanation of a belief or assertion or as a justification of an act or procedure.” Id. (citing to
WEBSTER’S THIRD NEW INT’L DICTIONARY: UNABRIDGED 1891). The court concluded that
“[s]trictly speaking, then, a ‘reasoned’ award is an award that is provided with or marked by the
-9-
04-13-00712-CV
detailed listing or mention of expressions or statements offered as a justification of an act—the
‘act’ here being, of course, the decision of the Panel.” Id.
In Green, the parties agreed the arbitrator’s award would be accompanied by “an opinion
which explains the arbitrator’s decision with respect to each theory advanced by Plaintiff . . . .”
200 F.3d at 970. The arbitrator rendered a six-page opinion in favor of Ameritech that set forth
the plaintiff’s claims of age and race discrimination and retaliation, and it focused primarily on a
description of the “Corporate Resizing Process,” which allegedly operated in a discriminatory
manner. The opinion concluded as follows:
AGE DISCRIMINATION
Considering all the evidence, the Arbitrator finds that Plaintiff Daniel Green has
not met his burden of proof that the decision to terminate his employment in
November of 1992, constituted age discrimination in violation [of the] Elliott-
Larsen Civil Rights Act.
RACE DISCRIMINATION
Considering all the evidence, the Arbitrator finds that Plaintiff Daniel Green has
not met his burden of proof that the decision to terminate his employment in
November of 1992, constituted race discrimination in violation [of the] Elliott-
Larsen Civil Rights Act.
RETALIATION
Considering all the evidence, the Arbitrator finds that Plaintiff Daniel Green has
not met his burden of proving, in accordance with the standards set under the
Elliott-Larsen Civil Rights Act, that retaliation for protected activity was a factor
which made a difference in the decision to terminate his employment in November
of 1992. The Arbitrator finds no evidence to support the Plaintiff’s position that
retaliation was, in any way, a factor in Plaintiff Daniel Green’s termination.
Id. at 971.
Green asked the district court to vacate the award on the grounds, in part, that the arbitrator
breached the parties’ agreement by not explaining the decision with respect to each theory
advanced by the plaintiff. The district court agreed: “Here, the arbitrator did not ‘explain’ his
decision with respect to each one of plaintiff’s theories, as the term ‘explain’ is commonly
understood. Rather, the arbitrator merely announced his decision with respect to each one of
- 10 -
04-13-00712-CV
plaintiff’s theories. The arbitrator’s opinion is totally conclusory and insufficient according to the
terms of the Arbitration Agreement.” Id. at 972. The district court vacated the arbitration
agreement and remanded the matter to a new arbitrator to be selected by the parties.
On appeal, however, the Sixth Circuit reversed the district court’s vacatur. The court noted
“the arbitrator was not required by the agreement ‘fully’ to set forth the facts and his conclusions;
the agreement simply called for an explanation. Although Arbitrator Googasian’s opinion was
brief and conclusory, he did ‘explain’ why Ameritech prevailed on each theory, namely, that Green
had not met his burden of proving that the decision was discriminatory or retaliatory.” Id. at 976.
The court reasoned that “although the arbitrator’s opinion was minimal, it was nevertheless
adequate to satisfy the terms of the agreement.” Id. at 970. The court concluded that “[i]f parties
to an arbitration agreement wish a more detailed arbitral opinion, they should clearly state in the
agreement the degree of specificity required.” Id. at 976.
In this case, the arbitration agreement required the arbitration panel’s decision to “include
a brief, written opinion addressing the issues before them.” The agreement does not define
“opinion,” nor does it use a modifier such as “reasoned.” However, Black’s Law Dictionary
defines “opinion” in a fashion similar to how the Cat Charter court defined a “reasoned award”:
“[a] court’s written statement explaining its decision in a given case, usu[ally] including the
statement of facts, points of law, rationale, and dicta.” BLACK’S LAW DICTIONARY 1125 (8th
2007). The dictionary defines a “memorandum opinion” as “[a] unanimous appellate opinion that
succinctly states the decision of the court; an opinion that briefly reports the court’s conclusion,
usu[ally] without elaboration because the decision follows a well-established legal principle or
does not relate to any point of law.” Id. Turning to the three-page final decision here, the
arbitration panel stated as follows:
- 11 -
04-13-00712-CV
(1) Any and all negligence claims that Yolanda Lopez (“Lopez”) has asserted or
hereafter may assert arising out of the injury which occurred on October 18, 2002
(“Lopez’s claims”) are barred by the statute of limitations;
(2) Lopez’s claims are barred by res judicata, collateral estoppel, or issue/claim
preclusion from the re-arbitration of matters that have already been arbitrated; and
(3) Lopez’s claims are barred by arbitration and award. Specifically, they are
barred by Arbitrator Lynne Gomez’s award dated March 17, 2008. Such award
was affirmed on appeal by a three judge panel on April 9, 2010, and was
subsequently confirmed in Cause No. 2004-CVT-00-1507-D1 in the 49th Judicial
District Court of Webb County, Texas on October 12, 2010.
...
This award is in full settlement of all claims and/or counterclaims submitted to this
Arbitration. All claims not expressly granted herein are hereby denied.
The decision does not address “all issues” in the sense that it does not address Yolanda’s
claims. However, Yolanda’s claims were not before the panel, and, even if they were, whether her
claims were barred was a threshold issue. Therefore, we do not believe the arbitration panel was
required to discuss the merits of her claims once it determined her claims were barred. On the
issue of whether her claims were barred, we believe the final decision does more than merely state
a “result.” Keeping in mind the deference employed when evaluating arbitral awards and that all
doubts must be resolved in favor of arbitration, we conclude the panel sufficiently explained its
decision and issued “a brief, written opinion addressing the issues before them.”
B. Abide by Trial Court’s Order
Stripes’ application to the trial court for the second arbitration requested that the Lopezes
be “ordered to submit their claims, if any, to the American Arbitration Association . . . .” The trial
court’s order granted the application “with respect to claims asserted by” Yolanda, 5 and stated
Stripes “may initiate proceedings with the American Arbitration Association by filing the
5
The court denied the application as to the claims asserted by Yolanda’s husband.
- 12 -
04-13-00712-CV
appropriate demand and other notices . . . .” In its arbitration demand, Stripes did not submit
Yolanda’s claims, but instead, submitted only its own defenses to Yolanda’s claims. The trial
court found the arbitrators “engaged in misconduct by which the rights of [Yolanda] have been
prejudiced.” The court also found they engaged in improper conduct by ignoring the trial court’s
order that Stripes initiate arbitration by submitting the entirety of the dispute to arbitration rather
than defensive issues only. Presumably, the trial court determined Yolanda’s rights were
prejudiced because the arbitrators allegedly ignored the trial court’s order that Stripes initiate
arbitration by submitting the entirety of the dispute to arbitration.
Under the FAA, an arbitrator is guilty of misconduct “in refusing to postpone the hearing,
upon sufficient cause shown, or in refusing to hear evidence pertinent and material to the
controversy; or of any other misbehavior by which the rights of any party have been prejudiced.”
9 U.S.C. § 10(a)(3) (emphasis added). “To constitute misconduct requiring vacation of an award,
an error in the arbitrator’s determination must be one that is not simply an error of law, but which
so affects the rights of a party that it may be said that [s]he was deprived of a fair hearing.” Laws
v. Morgan Stanley Dean Witter, 452 F.3d 398, 399 (5th Cir. 2006) (citing El Dorado Sch. Dist.
No. 15 v. Cont’l Cas. Co., 247 F.3d 843, 848 (8th Cir. 2001)); see also Apex Fountain Sales v.
Kleinfeld, 818 F.2d 1089, 1094 (3d Cir. 1987) (“Under Federal law, misconduct apart from
corruption, fraud, or partiality in the arbitrators justifies reversal only if it so prejudices the rights
of a party that it denies the party a fundamentally fair hearing.”). Thus, the inquiry here is two-
part: (1) did the arbitration panel engage in misconduct because it ignored the trial court’s order,
and (2) did such misconduct deprive Yolanda of a fair hearing. For the reasons set forth below,
we conclude the panel did not engage in misconduct.
First, the trial court’s order does not specifically order Stripes to submit the “entirety of the
dispute” or preclude Stripes from submitting “only defensive issues.” In fact, the trial court uses
- 13 -
04-13-00712-CV
the permissive “may”—it struck the word “SHALL”—when it “ordered” “that [Stripes] may
SHALL initiate proceedings with the American Arbitration Association by filing the appropriate
demand and other notices . . . .” Second, there is nothing in the order expressly depriving Stripes
of its limitations defense. Therefore, even if Stripes had submitted Yolanda’s claims, whether
those claims were barred by limitations was an issue Stripes also could have submitted and which
the arbitrator would, reasonably, have considered first. See Kerlin v. Sauceda, 263 S.W.3d 920,
925 (Tex. 2008) (“We begin with the threshold issues regarding limitations and fraudulent
concealment, as their resolution is potentially dispositive of the parties’ remaining claims.”).
Finally, an arbitrator’s jurisdiction is defined by both the contract containing the arbitration
clause and the demand for arbitration submitted to initiate the proceedings. See Kergosien v.
Ocean Energy, Inc., 390 F.3d 346, 354 (5th Cir. 2004), overruled on other grounds, 562 F.3d 349
(5th Cir. 2009). Yolanda relies on the following language in the trial court’s order as support for
her argument that the trial court ordered Stripes to initiate arbitration by submitting only her claims,
i.e., “the entirety of the dispute”: “It is ORDERED that [Stripes’] Application for Order for
Arbitration is GRANTED with respect to claims asserted by [Yolanda].” [Emphasis added.]
However, even if we were to broadly read this decretal paragraph as implicitly ordering Stripes to
submit Yolanda’s claims, and not its own defenses, the trial court’s order was not, itself, a demand
for arbitration. Therefore, the arbitration panel drew its authority, not from the order, but from the
parties’ arbitration agreement and the demand submitted by Stripes.
The “Waiver and Arbitration Agreement” provides that an employee who elects to enroll
in the employer’s occupational injury benefit plan agrees that the plan’s benefits, if any, shall be
her “sole and exclusive remedy if [she] sustain[s] personal injuries . . . .” By signing the agreement,
the employee acknowledges she gives up her right to a jury trial on all claims covered by the
agreement and agrees to resolve claims by binding arbitration. The agreement broadly lists claims
- 14 -
04-13-00712-CV
and disputes covered by the agreement, including tort claims. The parties’ “Employee Injury
Benefit Plan Summary Description” requires that “the party seeking arbitration must give written
notice of any claim to the other party within the applicable statute of limitations.” In sum, both
the plan summary and the arbitration agreement speak in terms of claims made by or against the
employee. Thus, ordinarily, when an employee is injured, it is the employee who must initiate
proceedings by filing the appropriate demand with the American Arbitration Association.
However, here, Stripes was ordered to initiate proceedings. Thus, the scope of the arbitration was
defined by the demand submitted by Stripes, and the arbitration panel did not exceed its authority
or engage in misconduct by considering only Stripes’ defenses. 6
C. Granting Summary Judgment
The hearing arbitrator denied Stripes’ motion for summary judgment and dismissed the
proceedings. In its notice of appeal to the appellate arbitrators, Stripes asked the arbitration panel
to issue a final decision on appeal granting its motion for summary judgment. Stripes also asked
the panel to declare the parties’ rights under (1) the arbitration agreement’s provision requiring
initiation of arbitration within the applicable statute of limitations, (2) the April 9, 2010, arbitration
decision that determined Yolanda’s claims were time-barred, and (3) the trial court’s October 12,
2010, order confirming the decision. The arbitration panel determined the hearing arbitrator had
the authority to render declaratory decisions in tort actions. Then, although the hearing arbitrator
did not rule on the merits of Stripes’ motion for summary judgment, the panel concluded (1)
Yolanda’s claims were barred by the applicable statute of limitations, (2) re-arbitration of matters
already arbitrated were barred by res judicata, collateral estoppel, or issue/claim preclusion, and
(3) Yolanda’s claims were barred by the arbitration panel’s April 9, 2010, decision and the trial
6
Because we conclude the arbitration appeals panel did not engage in misconduct, we do not address whether Yolanda
was deprived of a fair hearing.
- 15 -
04-13-00712-CV
court’s October 12, 2010, order confirming the decision. The Lopezes filed a motion to vacate the
arbitration award. The trial court found the arbitration panel engaged in misconduct and exceeded
its powers under the parties’ arbitration agreement, which required the panel to act as a first-level
appellate court, by reviewing the denial of a summary judgment motion, and then granting
summary judgment on grounds not considered by the hearing arbitrator from whose decision the
appeal was taken.
On appeal to this court, Yolanda asserts the only order the arbitration panel could have
properly considered was the hearing arbitrator’s order dismissing Stripes’ request for declaratory
relief. According to Yolanda, based on the arbitration panel’s conclusion that the hearing arbitrator
had the authority to render a declaratory decision, the panel should have reversed the dismissal,
reinstated the claim, and then remanded the claim to a new hearing arbitrator for further
proceedings. At that point, Yolanda contends Stripes could have re-urged its motion for summary
judgment and the new hearing arbitrator could have considered the motion on its merits. Yolanda
argues there is no standard of review by which appellate arbitrators can review the denial of a
motion for summary judgment; therefore, the panel did not apply, and could not have applied, the
same standard of review as a first-level appellate court under similar circumstances. For this same
reason, Yolanda argues the panel had no basis by which to grant the relief Stripes requested in its
motion for summary judgment.
Stripes counters that the arbitration agreement does not require the arbitration panel to “act
as a first-level appellate court.” Stripes contends the agreement simply requires the arbitration
panel to apply the same standard of review, e.g. de novo or abuse of discretion, which a first-level
appellate court would apply “in similar circumstances.” According to Stripes, Yolanda’s argument
that the arbitration panel did not have the power to reverse and render (as opposed to reverse and
remand) involves not the standard of review, but the relief the panel was empowered to award.
- 16 -
04-13-00712-CV
Stripes argues that the arbitration agreement’s language authorizing the panel, by majority vote, to
“affirm, reverse, render, or modify an arbitration award” does not limit the panel to the same relief
as a first-level appellate court, but instead, only requires the panel to apply the same standard of
review a first-level appellate court would apply to the cause of action or defense on appeal in
similar circumstances.
The arbitration agreement specifies the form of an arbitration award. The “General
Procedures” provide as follows:
b. The hearing arbitrator shall apply the substantive law (and the laws of remedies,
if applicable), in the state in which the claim arose, or federal law, or both,
depending on the claims asserted. The hearing arbitrator shall also strictly apply
the Federal Rules of Evidence, except that deposition testimony of a witness may
be used at the arbitration hearing without regard to whether the witness is
unavailable. The hearing arbitrator shall provide brief findings of fact and
conclusions of law. All arbitration decisions and awards shall be kept strictly
confidential and shall not be disclosed to anyone not a witness, attorney, party
representative, or party who actually attended the arbitration hearing.
c. The hearing arbitrator shall have jurisdiction to hear and rule on prehearing
disputes and is authorized to hold prehearing conferences by telephone or in person
as the arbitrator deems necessary. The hearing arbitrator will have the authority to
hear a motion to dismiss and/or a motion for summary judgment by any party and
in doing so shall apply the standards governing such motions under the Federal
Rules of Civil Procedure. . . . .
The “Appeal Procedures” section provides as follows:
g. The appellate arbitrators shall apply the same standard of review as the first-
level appellate court would apply to the cause of action or defense on appeal in
similar circumstances. If both federal and state-law causes of action (and/or
defenses) are before the appellate arbitrators (either in a single appeal or as the
result of a cross-appeal), the appellate arbitrators shall apply only the standards of
review utilized by the United States Court of Appeals for the Fifth Circuit in similar
circumstances.
h. By majority vote, the appellate arbitrators may affirm, reverse, render or modify
an arbitration award. . . . The appellate arbitrators’ decision shall include a brief,
written opinion addressing the issues before them, and such opinion shall be
delivered to the parties and the American Arbitration Association within thirty (30)
days after the conclusion of any briefing schedule or any oral argument or as the
parties may agree. . . . .
- 17 -
04-13-00712-CV
We do not agree with Yolanda that the appellate arbitrators lacked the authority to review
the denial of Stripes’ motion for summary judgment under the circumstances presented here. In
the Fifth Circuit, with exceptions that do not apply here, a party may not immediately appeal a
district court’s decision to deny summary judgment. Gibson v. Kilpatrick, 734 F.3d 395, 399 (5th
Cir. 2013). However, in this case, the denial of Stripes’ motion for summary judgment by the
hearing arbitrator did not result in an unappealable interlocutory judgment. Instead, the decision
resulted in a final order dismissing the only pending claim as follows:
[Stripes] Motion for Reconsideration of Summary Judgment Declaratory
Relief is DENIED; that being the case, and with no other matters now before the
arbitrator for decision, the Claim is hereby DISMISSED.
...
This Award is in full settlement of all claims and counterclaims submitted
to this Arbitration. All claims not expressly granted herein are hereby, denied.
Because the arbitrator’s decision resulted in an order that disposed of all claims by all
parties, it was a final order subject to appeal in accordance with the “Appeals Procedures” in
sections g and h of the arbitration agreement. Therefore, we next address Yolanda’s argument that
the arbitration panel lacked the authority to grant a motion for summary judgment.
In its final decision, the appellate panel found that its authority to resolve the appeal derived
from the Appeal Procedures contained in sections g and h, quoted above. Based upon its
interpretation of this contract language, the panel believed it had the authority to resolve the issues
before it. The issue before the panel was Stripes’ request for a final award in favor of Stripes
“based on [the panel’s] constructions of, and declaring the effect of and the Parties’ rights under”
(1) the April 9, 2010, arbitration decision in which the first arbitration appeals panel concluded the
“Arbitrator correctly concluded that [Yolanda’s] claims were barred by the applicable statute of
limitations” and (2) the trial court’s October 12, 2010, order that confirmed this decision. The
April 9, 2010, nine-page award fully set forth the procedural and factual background, the
- 18 -
04-13-00712-CV
applicable law, and an analysis. The 2010 award also discussed the timeliness of the appeal and
the statute of limitations.
During the 2013 arbitration proceedings and in this appeal, Yolanda does not argue the
arbitration panel could not consider the 2010 decisions of the hearing arbitrator and arbitration
panel. In her answer to Stripes’ motion for summary judgment requesting declaratory relief,
Yolanda argued to the hearing arbitrator that the “earlier ruling [from 2010] has no impact on these
proceedings because [Stripes], rather than [Yolanda], has filed the pending claim for arbitration,
and [Yolanda] does not assert limitations as a defense thereto.” 7 In her motion to vacate the 2013
arbitration panel’s decision, she raised the same argument that denying Stripes the option of
asserting its limitations defense “was only right since it was SSPH-LP and later Stripes who were
responsible for this dispute dragging on as long as it has by having allowed [the lawsuit] to proceed
against a peripheral entity.” She did not argue the 2013 arbitration panel had no authority to review
the award of the 2010 arbitration panel.
We do not, and cannot, overturn the appellate panel’s decision because to do so requires
us “to rely on a finding that [the panel] [misconstrued] the parties’ intent [as expressed in the
parties’ arbitration agreement].” Sutter, 133 S. Ct. at 2070 (arbitrator construed contract that
required binding arbitration of contractual disputes and found it permitted class arbitration).
“Convincing a court of an arbitrator’s error—even his grave error—is not enough. So long as the
arbitrator was ‘arguably construing’ the contract—which this one was—a court may not correct
his mistakes under § 10(a)(4).” Id. (internal citation omitted). Here, we conclude the appellate
panel was “arguably construing” the parties’ arbitration agreement as granting it the authority to
7
Yolanda also argued that, “[b]y compelling Stripes to initiate arbitration proceedings as the claimant, the trial court
could effectively deprive [Stripes], as punishment for its conduct, of the limitations defense that had been used earlier
since a claimant cannot assert limitations against itself.”
- 19 -
04-13-00712-CV
review the April 9, 2010, arbitration decision. Therefore, we cannot conclude the panel engaged
in misconduct and exceeded its powers under the parties’ arbitration agreement. We also conclude,
contrary to the trial court’s finding, that the decision was a final and definite decision because it
resolved the entirety of the dispute between Yolanda and Stripes.
CONCLUSION
For the reasons stated above, we reverse the trial court’s order vacating the “Final Award
of Arbitration Panel,” remand the cause, and order the trial court to confirm the Final Award of
Arbitration Panel.”
Sandee Bryan Marion, Justice
- 20 -