Center Rose Partners, Ltd., Individually and Derivatively as a Member of Rose Acquisition LLC, David Felt, Nicole Felt, and Lloyd Hall v. Jerry W. Bailey and David Sonnier

Motion to Dismiss Denied; Affirmed and Majority and Dissenting Opinions
filed November 7, 2019.
In the
Fourteenth Court of Appeals
NO. 14-17-00739-CV
CENTER ROSE PARTNERS, LTD., INDIVIDUALLY AND
DERIVATIVELY AS A MEMBER OF ROSE ACQUISITION LLC, DAVID
FELT, NICOLE FELT, AND LLOYD HALL, Appellants
V.
JERRY W. BAILEY AND DAVID SONNIER, Appellees
On Appeal from the 61st District Court
Harris County, Texas
Trial Court Cause No. 2014-32793
DISSENTING OPINION
The court’s judgment denies the motion to dismiss filed by appellees Jerry W.
Bailey and David Sonnier. Because I would grant this motion and dismiss for want
of jurisdiction as to appellants Center Rose Partners, Ltd., David Felt, and Nicole
Felt, I respectfully dissent.
After Center Rose, individually and derivatively as a member of Rose
Acquisition LLC, filed suit against Bailey, Sonnier, and Lloyd Hall, Bailey and
Sonnier moved to compel arbitration. In their motion to compel, Bailey and Sonnier
alleged that Center Rose was a member of Rose Acquisition LLC and that Rose
Acquisition was governed by a Membership Agreement signed by appellant David
Felt for Center Rose.1 Bailey and Sonnier invoked arbitration pursuant to the
arbitration provision contained in the Membership Agreement:
If the parties have been unable to resolve any dispute or controversy
arising out of this Agreement, then any such dispute or controversy
shall be settled by arbitration in Houston, Texas by a panel of three
arbitrators in accordance with the rules of the American Arbitration
Association, whose decisions shall be final, binding and non-
appealable. The three arbitrators shall be selected pursuant to the rules
of the American Arbitration Association from a panel of independent
and disinterested persons with at least five years [sic] experience in
significant corporate, business or accounting matters. The expenses of
both parties in the arbitration, including reasonable attorneys’ fees and
arbitration expenses, shall be paid by the prevailing party. If each party
prevails in part, the arbitrators will determine the appropriate allocation
of expenses among the parties. Judgement upon the award rendered by
arbitrators may be entered in any court having jurisdiction thereof, and
the parties consent to the jurisdiction of the Texas courts for this
purpose.
(Emphasis added).2
After the trial court granted the motion to compel arbitration, Bailey and
Sonnier, individually and derivatively as members of Rose Acquisition, instituted
arbitration proceedings against Center Rose and the Felts. All these parties submitted
to arbitration, and the arbitration panel issued its award.
1
L.J. Black for Rose Acquisition also signed the Membership Agreement, as well as
Bailey, Black, and Black’s spouse.
2
The Regulations for Rose Acquisition contain a virtually identical arbitration provision.
The Regulations were signed by Black, Bailey, Hall, and David Felt for Center Rose.
2
After the panel issued its award, Bailey and Sonnier filed their motion to
confirm the arbitration award in the trial court. Center Rose filed an application to
vacate the arbitration award. The Felts filed a plea in intervention and an application
to vacate the arbitration award.
The trial court denied Center Rose’s application. The trial court issued a final
judgment, incorporating by reference the arbitration award and adopting all of the
findings contained in the award. Center Rose then requested findings of fact and
conclusions of law, moved for reconsideration of its application to vacate, and
moved for a new trial. The Felts (as nonparties) filed a motion to modify the
judgment. Hall filed a motion for new trial. The trial court denied Center Rose’s
motion to reconsider and Hall’s motion for new trial, as well as the Felts’ motion to
modify. Center Rose, the Felts, and Hall filed notices of appeal.
In their motion to dismiss, Bailey and Sonnier argued that this court lacks
jurisdiction over Center Rose because Center Rose contractually waived the right to
appeal. Bailey and Sonnier relied on the arbitration agreements in both the
Membership Agreement and the Regulations,3 which were signed by Center Rose.
According to Bailey and Sonnier, in those provisions, Center Rose expressly agreed
that the arbitration panel’s “decisions shall be final, binding, and non-appealable.”4
I agree with Bailey and Sonnier because I believe this panel’s decision is
controlled by Bennett v. Commission for Lawyer Discipline, 489 S.W.3d 58 (Tex.
App.—Houston [14th Dist.] 2016, no pet). In Bennett, a client submitted a fee
3
Bailey and Sonnier, individually and derivatively as members of Rose Acquisition,
invoked the arbitration provision in the Regulations as the basis for their demand for arbitration
against Center Rose and the Felts.
4
Bailey and Sonnier further argued that the Felts also were bound by the waiver based on
their express participation in the arbitration and their exercise of rights pursuant to the arbitration
clauses.
3
dispute with his prior attorney to arbitration proceedings and prevailed. Id. at 63–64.
The attorney retainer and dispute resolution agreement at issue included this
arbitration provision:
Our dispute shall be determined by arbitration in Houston, Texas before
a panel selected by, and per the rules of the Houston Bar Association
Fee Dispute Committee, in accordance with the laws of the State of
Texas for Agreements made in and to be performed in Texas.
“Disputes” shall include, without limitation, those involving fees, costs,
billing, and breach of ethical or fiduciary duties. The arbitration shall
be administered by the Houston Bar Association Fee Dispute
Committee, pursuant to its Rules and Regulations. Judgment on the
award may be entered in any court having jurisdiction and shall include
an award for attorney’s fees, and a premium charge if sought, along
with any fees and expenses associated with the seeking of injunctive
relief. . . . By the signatures on this contract, the Client and Bennett
agree that the arbitrator’s decision in any such arbitration shall be
binding, conclusive, and non-appealable pursuant to the Rules and
Regulations of the Houston Bar Association Fee Dispute Committee.
Please note that arbitration may result in the client’s waiver of
significant rights, such as the right to a jury trial, the possible
waiver of broad discovery, and the loss of the right to appeal.
Id. at 63 (second emphasis in orig.).
This court—when directly faced with the issue of whether the attorney had
contractually foreclosed bringing an appeal from the district court’s judgment
confirming the arbitration award in favor of the client—construed the above
language and held that the unambiguous arbitration agreement did not permit the
appeal to an appellate court. See id. at 68–70. In doing so, we highlighted “Texas’s
fundamental public policy in favor of a broad freedom to contract, which allows
parties to allocate risks as they see fit as long as their agreement does not violate the
law or public policy.” Id. at 69.
For better or worse, I cannot conclude that “non-appealable” here means
4
something different from “non-appealable” in Bennett. For this reason, I respectfully
dissent from this court’s denial of the motion to dismiss.5
/s/ Charles A. Spain
Justice
Panel consists of Chief Justice Frost and Justices Spain and Poissant (Spain., J.,
dissenting).
5
I encourage the Supreme Court of Texas to take this or a similar case and give guidance
to how potential parties to an arbitration can—if they so desire—unambiguously agree to foreclose
further review of an arbitral award, whether that be to an appellate arbitral panel, to the district
court for anything other than confirmation of the award, or to an appellate court.
5