What is a “reasoned award” in arbitration - Houston Court of Appeal panel splits three ways on issue of first impression in review of arbitral award

Stages Stores, Inc. v Gunnerson, 

No. 01-13-00708-CV (Tex.App.- Houston [1st Dist.] Oct. 8, 2015)(op on reh'g)

Court's Opinion in Stages Stores, Inc. v, Gunnerson

 
A Houston Court of Appeals panel, on motion for rehearing, today handed down three opinions in appeal and cross-appeal of trial court's ruling on competing motion to confirm and set aside an arbitration award in an employment dispute. 

The authors of majority opinion, concurrence, and dissent disagree on meaning of "reasoned award" in dispute over whether arbitrator properly performed responsibility of resolving the case. The majority decides to reverse confirmation of the arbitral award and remand the case to the court below with instructions to the trial court to send the case back to the arbitrator to further address one particular issue raised by the defense. 
  
Justice Keyes wrote a vigorous dissent, arguing that the majority's approach, by heightening judicial review of arbitral decisionmaking and increasing the scrutiny of awards, thwarts the very rationale of arbitration, which is supposed to result in less costly, less formal, and more expeditious resolution of disputes. This case has already been dealt with in arbitration, in the trial court, in the court of appeals, and no end is yet in sight. Since the FAA is involved, it might even make it all the way to the U.S. Supreme Court. 

DISSENTING OPINION 

Opinion issued October 8, 2015

In The

Court of Appeals

For The

First District of Texas

————————————

NO. 01-13-00708-CV

———————————

STAGE STORES, INC., Appellant

V.

JON GUNNERSON, Appellee

On Appeal from the 61st District Court

Harris County, Texas

Trial Court Case No. 2013-21878

DISSENTING OPINION

I respectfully dissent. This case construes, as a matter of first impression in
Texas state court, the standards for a “reasoned award” in arbitrations brought
under the Federal Arbitration Act (FAA). See 9 U.S.C. §§ 1–16.

 I believe the majority’s decision to
reverse and remand this case is contrary to the controlling federal authority that the
lead opinion relies upon and purports to follow. I believe the award is sufficient to
satisfy the standards of a reasoned award under the FAA and that it is a mistake to
send this case back to the arbitrator to address her rejection of one of appellant
Stage Stores, Inc.’s defenses in making her award. Both the lead opinion and the
concurrence mistake an argument, which need not be addressed in a reasoned
award, and an issue, which must be disposed of in a reasoned award—as was done
here. In my view, affirmance of the arbitration award is the natural result of the
argument from federal authority relied upon in the lead opinion and the natural
holding under controlling federal authority. It is the disposition that is incorrect.
I would affirm the trial court’s confirmation of the arbitration award.

Background

Following an arbitration of an employment dispute between Stage Stores
and former employee, appellee Jon Gunnerson, the arbitrator issued a reasoned
award disposing of Gunnerson’s claim that Stage Store’s wrongfully refused to pay
benefits due to him based on his “good reason” for terminating his employment
contract. The lead opinion sets out the four specific rulings made by the arbitrator:
(1) that a valid contract existed between the parties; (2) that Stage’s
“actions in restructuring the organization and removing [Gunnerson]
from a direct reporting relationship to the CEO diminished
[Gunnerson’s] status, thereby allowing [Gunnerson] to terminate his
position for good reason pursuant to paragraph 4 of the Agreement”;
(3) that Gunnerson was entitled to recover attorneys’ fees; and (4) that

Gunnerson “failed to meet his burden of proof regarding the present
value of future stock options.” Slip Op. at 5.

Stage Stores applied to vacate this arbitration award, essentially arguing that,
in failing to specifically address each of its defenses to Gunnerson’s claim, the
arbitrator exceeded her powers or so imperfectly executed them that a mutual,
final, and definite award upon the subject matter submitted was not made. See Slip
Op. at 7 (citing 9 U.S.C. § 10(a)(4)). The trial court denied Stage’s application
seeking to vacate the arbitration award and granted Gunnerson’s application to
confirm the award.

Discussion

Stage Stores complains that the arbitrator failed to mention one of its
defenses in the award, namely that the contract at issue required notice of the
grounds supporting good reason and an opportunity to cure before Gunnerson’s
contract could be terminated. It contends that, under the doctrine of functus officio,
which declares that arbitral judgments must be complete, it is entitled to a new
arbitral proceeding. The panel concludes that it “cannot fill in this gap for the
arbitrator,” but that it “can, however, have the trial court remand it to the arbitrator
to decide an issue which was raised but not completely adjudicated by the original
award.” Slip Op. at 28–29 (emphasis added).

I would hold that the parties raised no issue that the arbitrator did not
completely decide. Only a defense was not mentioned, and that defense was
necessarily rejected by the disposition of the encompassing issue. The arbitrator
did dispose of the issue raised by Stage Stores. She stated in the arbitration award
that Gunnerson was “allow[ed] to terminate his position for good reason pursuant
to paragraph 4 of the Agreement,” and she set out that Gunnerson was entitled to
receive his attorney’s fees but that he failed to meet his burden of proof regarding
the present value of stock purchases. The issue of whether he was allowed to
terminate his position has been completely decided, and there is no basis for
returning this case to the arbitrator.

Stage Stores’ real complaint is that the arbitrator did not specifically address
an argument—not the issue requiring resolution. And this assertion is insufficient
to establish that that arbitrator “exceeded [her] powers, or so imperfectly executed
them that a mutual, final, and definite award upon the subject matter submitted was
not made,” as required to vacate the award here. See 9 U.S.C. § 10(a)(4). By
deciding the actual issue submitted—i.e., that Stage Stores’ “actions in
restructuring the organization and removing [Gunnerson] from a direct reporting
relationship to the CEO diminished [Gunnerson’s] status, allow[ed] [him] to
terminate his position for good reason pursuant to paragraph 4 of the
Agreement”—the arbitrator necessarily decided Stage Stores’ defenses challenging

Gunnerson’s showing of good cause for termination. Nothing can be added to the
award to make it complete by sending it back to the arbitrator to hear a defense she
has already heard and rejected—as the lead opinion acknowledges.
Remand in this case is, in my view, directly contrary to the spirit and
purpose of the FAA, the federal case law construing reasoned arbitral awards, and
the functus officio doctrine the lead opinion seeks to apply. None of the law cited
in the lead opinion supports returning a case to the arbitrator to address each
argument made by the parties. Rather, all of the cases cited in the opinion hold to
the contrary. In my view, Stage Stores’ argument is identical to the type of
challenge to a reasoned award in federal arbitration that controlling federal
opinions have consistently found to be without merit. I disagree, therefore, that
remand is supported by the law controlling reasoned awards subject to the FAA.
The functus officio doctrine is the “rule that bars an arbitrator from revisiting
the merits of an award once the award has been issued.” Brown v. Witco Corp.,
340 F.3d 209, 218 (5th Cir. 2003) (cited in lead opinion, Slip Op. at 10–11). The
exceptions are limited. An arbitrator can (1) correct a mistake which is apparent on
the face of his award; (2) decide an issue which has been submitted but which has
not been completely adjudicated by the original award; or (3) clarify or construe an
arbitration award that seems complete but proves to be ambiguous in its scope and
implementation. Id. at 219. In Brown, the Fifth Circuit added that, “in the absence
of any contractual provision or formal arbitration rule expressly to the contrary,”
an arbitrator “may exercise his power to clarify the terms of an award when he is
asked to do so by parties mutually and without any party’s objection within a
reasonable period of time.” Id. None of these circumstances applies here. The
reasoned award requested by the parties and made by the arbitrator presents no
mistake on its face, decides each issue submitted, and contains no ambiguity that
prevents its being readily implemented. Therefore, the circumstances requiring
remand to the arbitrator under exceptions to the functus officio doctrine as
enunciated in Brown do not exist.

The Eleventh Circuit in Cat Charter, LLC v. Schurtenberger—a case
likewise relied upon in the lead opinion—described the requirements of a reasoned
award. It stated, “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,” so that “a ‘reasoned award is something short of findings and conclusions
but more than a simple result.’” 646 F.3d 836, 844 (11th Cir. 2011) (quoting
Sarofim v. Trust Co. of the W., 440 F.3d 213, 215 n.1 (5th Cir. 2006)); see also
Rain CII Carbon, LLC v. ConocoPhillips Co., 674 F.3d 469, 473 (5th Cir. 2012)
(accord). Thus, the Cat Charter court concluded, “Strictly speaking, then, a
listing or mention of expressions or statements offered as a justification of an act—
the ‘act’ here being, of course, the decision of the [arbitration] Panel.” 646 F.3d at
844 (emphasis in original.)

In Cat Carter, the appellate court refused to return the case to the arbitrator
in response to the defendants’ complaint that the award’s statement that the
plaintiffs had proved their claims “by the greater weight of the evidence” added no
explanatory value to the award “on what is most certainly a ‘bare’ or ‘standard’
award.” Id. The court held, to the contrary, that the arbitrators’ statement in the
award was “greater than what is required in a ‘standard award,’ and that is all we
need decide.’” Id. at 845. It pointed out that if the parties had wanted a greater
explanation they could have requested findings of fact and conclusions of law, but
they did not. Id. The Cat Charter court concluded:

We decline to narrowly interpret what constitutes a reasoned award to
overturn an otherwise apparently seamless proceeding. The parties
received precisely what they bargained for—a speedy, fair resolution
of a discrete controversy by an impartial panel of arbitrators skilled in
the relevant areas of the law. To vacate the Award and remand for an
entirely new proceeding would insufficiently respect the value of
arbitration and inject the courts further into the arbitration process
than Congress has mandated.
Id. at 846.

The Fifth Circuit cited this conclusion approvingly in Rain CII Carbon,
which is also relied upon by the lead opinion. 674 F.3d at 473–74. In both Rain CII
Carbon and Cat Charter, the federal circuit court construed federal arbitration law
and found an award that minimally addressed the issues sufficient to withstand a
party’s request for vacatur. See Rain CII Carbon, 674 F.3d at 474 (holding
sufficient for reasoned award “the arbitrator’s statement that, based upon all of the
evidence, he found that the initial price formula should remain in effect” after
delineating in previous paragraph “that Conoco had failed to show that the initial
formula failed to yield market price, a contention that the arbitrator obviously
accepted”); Cat Charter, 646 F.3d at 840–41, 845 (holding sufficient reasoned
award that declared that claimants had proven their Deceptive and Unfair Trade
Practices and breach of contract claim “by the greater weight of the evidence,” that
held that claimants were substantially prevailing parties and respondents were not,
awarded claimants their attorney’s fees, ordered respondents to “jointly and
severally pay” claimants specified damages, fees, costs, and interest, and granted
plaintiffs lien on boat).

The Sixth Circuit, like the Cat Charter court, refused to overturn the award
and to return the case to the arbitrator for clarification, finding that the arbitrator
“minimally satisfied the explanation requirement stated in the arbitration
agreement” by stating, with respect to each of the plaintiff’s three claims that the
plaintiff “has not met his burden of proof.” Green v. Ameritech Corp., 200 F.3d
967, 971, 977–78 (6th Cir. 2000).

By contrast to these cases holding that the requirements for a reasoned
award were satisfied, the Fifth Circuit declined jurisdiction over the trial court’s
order sending a case back to the arbitrators under the functus officio doctrine to
complete the task assigned them in a case where the award issued by the arbitral
panel was “patently ambiguous.” Murchison Capital Partners v. Nuance
Commc’ns, Inc., 760 F.3d 418, 423 (5th Cir. 2014) (stating, where trial court
returned case to arbitrators to determine whether part of determination made in
award was related only to benefit-of-the-bargain damages request of party or also
to out-of-pocket losses, that “declining jurisdiction over the district court’s order
and permitting the arbitration panel to clarify its award is necessary given our
deferential standard of review of arbitration awards”).

Here, there is no assertion of ambiguity, nor could there be. The arbitrator
clearly and expressly found “good reason pursuant to paragraph 4 of the
Agreement” for Gunnerson to terminate his position due to Stage Stores’ “actions
in restructuring the organization and removing him from a direct reporting
relationship to the CEO,” and awarded him his attorney’s fees. There is nothing to
clarify with respect to Stage Stores’ defense of notice and opportunity to cure and
nothing to add: the arbitrator rejected Stage Stores’ defense as grounds preventing
Gunnerson from terminating the contract, and it deemed him a prevailing party
entitled to attorneys’ fees. There is thus no basis for applying the exception to the
functus officio doctrine for lack of complete adjudication. The award completely
disposes of the termination issue.

In my view, it is clear that the arbitrator did enough in this case and that
there are no grounds for sending it back to the arbitrator under the ambiguity or
lack of clarity exceptions to the functus officio doctrine. The reasoned award at
issue is at least as comprehensive and detailed as the arbitral awards at issue in
Rain CII Carbon, Cat Charter, and Green. None of those cases sent a completely
decided arbitration award addressing every submitted issue back to the arbitrator
for a second attempt at arbitration, and none required that every argument or
defensive theory—as opposed to every issue—be disposed of. Indeed, one must
seriously question—as the federal courts that decided these federal arbitration law
cases did—what purpose is served by remand other than to introduce into
arbitration the same lengthy and costly court procedures that the parties sought to
avoid by agreeing to arbitration. And, worse, in this case, either the arbitrator will
reach a completely different result on the same facts or the arbitrator will reach the
same results, resulting in duplicative litigation. In neither case will the losing party
have recourse to the courts to second-guess the arbitrator’s second-time-around
decision, unless the state trial judge or appellate panel decides that the law was not
sufficiently explained to satisfy its own independent standards of review and sends
it back for the arbitrator to try yet again to satisfy the state courts on the federal
legal issues of sufficiency of the reasoned award.

The Eleventh Circuit set out in Cat Charter exactly why a reviewing court
should not require the detailed findings and conclusions of law the majority
imposes on the arbitrator in this case when the parties have merely requested a
reasoned award. The court stated:

Our conclusion today holds consistent with the general review
principles embodied in the FAA. The Supreme Court has read §§ 9-11
of the FAA as substantiating a national policy favoring arbitration
with just the limited review needed to maintain
arbitration’s essential virtue of resolving disputes
straightaway. Any other reading opens the door to the
full-bore legal and evidentiary appeals that can render
informal arbitration merely a prelude to a more
cumbersome and time-consuming judicial review
process, and bring arbitration theory to grief in the postarbitration
process.

Cat Charter, 646 F.3d at 845 (quoting Hall Street Assocs., LLC v. Mattel, Inc., 552
U.S. 576, 588, 128 S. Ct. 1396, 1405 (2008) (citations and internal quotation marks
omitted)).

To send this case back to the arbitrator is, to me, to pervert the ends of
federal arbitration as stated by the United States Supreme Court in Hall Street v.
Mattel, and as recognized by the Eleventh Circuit in Cat Charter, and to impose on
arbitrations subject to the FAA heightened state court standards of review of
reasoned arbitration awards that are clearly improper under, and superseded by,
controlling federal law. I, therefore, cannot join either the lead opinion or the
judgment of the majority. Much less can I join the concurrence, which would
require even more of the arbitrator for every reasoned award.

Conclusion

I would affirm the arbitration award.

Evelyn V. Keyes
Justice

Panel consists of Justices Keyes, Higley, and Brown.
Justice Brown, joining the majority and concurring.
Justice Keyes, dissenting.

Judicial Review of Arbitration Awards under the Texas Arb Act (TGAA aka TAA)

Arbitration awards are sometimes properly overturned by the courts even if grounds for judicial review & appeal are very narrow, as seen in a recent case from Houston arising from a probate dispute.
  
JUDICIAL REVIEW OF ARB AWARDS UNDER THE TEXAS GENERAL ARBITRATION ACT

  
Jones v. Brelsford (Tex.App. -Houston [1st Dist] May 17, 2012) (probate court's order vacating arbitration award affirmed)

EXCERPT FROM OPINION BY JUSTICE HARVEY BROWN

    
Texas law favors the arbitration of disputes. See E. Tex. Salt Water Disposal Co. v. Werline, 307 S.W.3d 267, 271 (Tex. 2010); Brazoria Cnty. v. Knutson, 176 S.W.2d 740, 743 (Tex. 1943) ("Arbitration is a proceeding so favored by Texas law that both our Constitution and statutes provide for the submission of differences to arbitration."). Consequently, judicial review of an arbitration award is extraordinarily narrow and focuses on the integrity of the process, not the propriety of the result. See Women's Reg'l Healthcare, P.A. v. FemPartners of N. Tex., Inc., 175 S.W.3d 365, 367 68 (Tex. App.-Houston [1st Dist.] 2005, no pet.); TUCO, Inc. v. Burlington N. R.R. Co.,912 S.W.2d 311, 315 (Tex. App.-Amarillo 1995), modified on other grounds, 960 S.W.2d 629 (Tex. 1997). A reviewing court may not substitute its judgment for the arbitrator's simply because that court would have reached a different result. Royce Homes, L.P. v. Bates, 315 S.W.3d 77, 85 (Tex. App.-Houston [1st Dist.] 2010, no pet.).We indulge every reasonable presumption to uphold an arbitrator's decision.New Med. Horizons II, Ltd. v. Jacobson, 317 S.W.3d 421, 428 (Tex. App.-Houston [1st Dist.] 2010, no pet.).
  
The parties agree that the Texas General Arbitration Act (TAA) governs this case. See TEX. CIV. PRAC. & REM. CODE ANN. §§ 171.001 .098 (West 2011). Under the TAA, a court must affirm an arbitration award unless a party establishes one of four statutory bases for vacating the award: (1) the award was procured by fraud, corruption, or other undue means; (2) there was evident partiality, corruption, or willful misconduct by the arbitrator that prejudices the rights of a party; (3) the arbitrator exceeded her power, refused to postpone a hearing on a showing of sufficient cause, or refused to hear material evidence; or (4) "there was no agreement to arbitrate, the issue was not adversely determined in a proceeding under Subchapter B, and the party did not participate in the arbitration hearing without raising the objection."[4]Id. §§ 171.087 .088(a); see Women's Reg'l Healthcare, 175 S.W.3d at 367. Our review of an order vacating an arbitrator's award for any of these reasons is de novo. See Grand Homes 96, L.P. v. Loudermilk, 208 S.W.3d 696, 705 (Tex. App.-Fort Worth 2006, pet. denied).
  
Order Vacating the Arbitration Award  
Dianna's complaints about the probate court's order vacating the arbitration award are divided into six sub-issues, each addressing a statutory or common-law ground for vacatur asserted by her siblings—Harold, Susanna, John, and Madge— or the grandchildren. We begin with Dianna's sixth sub-issue, which challenges the vacatur grounds asserted by Madge in her motion attacking "the portions of the arbitration award that require Madge to sign over her interests in real estate to Dianna Brelsford and to appear and sign transfer documents."
  
Madge argues that the arbitrator's award divesting her of a property interest in the ranch subjected her to an arbitration to which she did not agree and in which she did not participate. She asserts that, under these circumstances, the probate court properly vacated the award under sections of the Civil Practice and Remedies Code providing for vacatur if the arbitrator exceeded her powers or if there was no agreement to arbitrate. See TEX. CIV. PRAC. & REM. CODE ANN. § 171.088(a)(3)(A), (a)(4). Dianna asserts that Madge's complaints about the arbitration award are merely "ministerial" and "not a basis to vacate" because Madge had already agreed to transfer her interests to Harold, Susanna, and John. We disagree with Dianna.
  
We look to the parties' various provisions for dispute resolution to determine the arbitrator's authority to order Madge, a non-participant in the second arbitration, to convey her property interest in the ranch to Dianna instead of Harold, Susanna, and John. See Baker Hughes Oilfield Operations v. Hennig Prod. Co., 164 S.W.3d 438, 443 (Tex. App.-Houston [14th Dist.] 2005, no pet.). Attached to the MSA, which is a global document signed by all of the siblings, the trusts, and the estate, are (1) Dianna'sagreement with Harold, Susanna, and John and (2) Madge's agreement with Harold, Susanna, and John. The MSA and the attached agreements contain different provisions for dispute resolution. The MSA provided "that any dispute as to interpretation of terms of this agreement shall be submitted to binding arbitration. . . ." In the attached agreements, which the parties treat as separate and distinct agreements, Dianna and Madge individually agreed to transfer their interests in family properties, including the ranch, to Harold, Susanna, and John in exchange for payment. They both also agreed to a two-step process in the event of future disputes: "attend a ½ day mediation with Judge Garcia; if no agreement, then Judge Garcia shall serve as arbitrator, and she shall rule in a manner that she believes is fair and just, and her decision is non-appealable and final."
  
Although Dianna's and Madge's individual agreements incorporated nearly identical terms for resolving their disputes with their siblings, Dianna did not sign Madge's agreement with Harold, Susanna, and John, and Madge did not sign Dianna's agreement with Harold, Susanna, and John. Madge is also not a signatory to the agreement entered on the eve of the second arbitration, granting the arbitrator broad authority to decide "any and all issues and/or disputes related to the above causes of action and any and all issues or disputes with regard to any mediation agreement and/or settlement agreement." Only Harold, Susanna, John, and Dianna signed that agreement. Thus, the only agreement to arbitrate signed by both Dianna and Madge is the agreement to submit to arbitration "any dispute as to interpretation of terms of" the MSA between the siblings, the trusts, and the estate.
  
Considering the written submissions to the arbitrator, we note that Madge did not have a dispute with either Dianna or her other siblings "as to interpretation of terms" of their settlement agreement with the trusts and the estate, and Dianna did not allege any such dispute with Madge. In fact, Dianna did not allege any dispute with Madge or any dispute as to the MSA between the siblings, the trusts, and the estate. Although she requested an award of the entire ranch, Dianna's written submission focused exclusively on Harold, Susanna, and John's non-performance and alleged fraudulent inducement of her individual settlement agreement with them. The arbitrator specifically noted in the award that Madge did not participate in the second arbitration because she had settled her disputes with Harold, Susanna, and John. The arbitrator found that "an award of 100% of [the ranch] to Dianna is a partition in kind for her debt under the MSA, for actual and punitive damages from the intentional and repeated breaches of the MSA by Harold, Susanna, and John in the breaches described here." The breaches described in the arbitration award related to breaches of Dianna's settlement with Harold, Susanna, and John and no other agreement. To give effect to her award, however, the arbitrator ordered Madge, along with Harold, Susanna, and John, to execute deeds transferring their interests in the ranch to Dianna. No findings were entered against Madge in the award. Nor can we find any evidence in this record that Harold, Susanna, and John paid Madge and therefore were entitled to demand transfer of Madge's interest in the ranch.
 
Even considering the presumptions in favor of arbitration, we agree with Madge that she did not agree to submit to arbitration of disputes arising from Dianna's agreement with Harold, Susanna, and John. The arbitrator could not order Madge, as part of the second arbitration, to transfer her interest in the ranch to Dianna as a consequence of Harold, Susanna, and John's breaches of an agreement to which Madge was not a party because any dispute as to Madge's interest in the ranch was not properly before the arbitrator. We are not persuaded that simply because Madge had already agreed to transfer her interests to Harold, Susanna, and John, an order that she transfer her interests to someone else is inconsequential. The arbitrator's award required Madge to perform an act that contravened her settlement with Harold, Susanna, and John and undermined their obligation to pay Madge under that agreement. We therefore conclude that the probate court correctly vacated that part of the award giving Dianna full ownership of the ranch and ordering Madge to "execute the deeds . . . to transfer full ownership of [the ranch], its cattle and improvements to [Dianna]" under section 171.008(a)(4). See TEX. CIV. PRAC. & REM. CODE ANN. § 171.088(a)(4) (providing for vacatur of arbitration award when "there was no agreement to arbitrate, the issue was not adversely determined in a proceeding under Subchapter B, and the party did not participate in the arbitration hearing without raising the objection").
 
Our conclusion that Madge did not agree to arbitrate the issues decided at the second arbitration is dispositive of this appeal. Although we have held invalid only those parts of the arbitrator's award affecting Madge, the entire award must be set aside because, here, the invalid parts of the award are not "distinct and independent" from the remaining parts of the award. City of Waco v. Kelley, 309 S.W.3d 536, 551 (Tex. 2010) ("In an appeal from an arbitration award, if a portion of the award is invalid, the other portion will be unaffected only if the two parts are so distinct and independent that the valid part will truly express the judgment of the arbitrator. But if an invalid portion is not severable and distinct so that the remaining valid part of the award truly expresses the arbitrator's judgment, the entire award is void."); see Gulf Oil Corp. v. Guidry, 327 S.W.2d 406, 409 (Tex. 1959). The arbitrator determined that it was equitable that Dianna be awarded 100 percent ownership of the ranch in satisfaction of the amounts owed by Harold, Susanna, and John for their breaches of contract and fraud. To affirm the remaining portions of the award ordering Harold, Susanna, and John to convey their interests in the ranch would be to affirm an award to Dianna of less than 100 percent ownership of the ranch. Such an award is less than what the arbitrator determined was equitable and would not "truly express the arbitrator's judgment." See Kelley, 309 S.W.3d at 551. Accordingly, we conclude that the entire arbitration award must be set aside and that a new arbitration hearing must be conducted, and we overrule Dianna's sixth sub-issue.
  
Order Appointing a New Arbitrator 
Our holding in this case will require a rehearing of Dianna's dispute with Harold, Susanna, and John. In her second issue, Dianna contends that the trial court erred in appointing a new arbitrator for the rehearing. See Werline, 307 S.W.3d at 270 74 (allowing appeal when trial court denied confirmation of arbitration award, vacated award, and sent dispute to re-arbitration before new arbitrator). We agree. Section 171.089 permits a court to order rehearing before a new arbitrator upon the vacatur of an award "on grounds other than the grounds stated in Section 171.088(a)(4)." See TEX. CIV. PRAC. & REM. CODE ANN. § 171.089(a). The only grounds for vacatur we affirm are stated in section 171.088(a)(4). Id. § 171.088(a)(4). Consequently, the vacatur of the arbitration award in this case will not support the appointment of a new arbitrator for rehearing. See id. § 171.089(a). We sustain Dianna's second issue.
  
Conclusion
  
We affirm the probate court's order vacating the arbitration award, but we reverse the probate court's order appointing a new arbitrator for the rehearing. This case is remanded for further proceedings consistent with this opinion. All outstanding motions are denied as moot.
  
SOURCE: FIRST COURT OF APPEALS - HOUSTON - Nos. 01-11-00265-CV, 01-11-00266-CV - 5/17/12 Dianna Jones v. Harold Petsch Brelsford et al

Judicial Review of Independent Hearing Examiner's Decision Approved

In winding up the 2008-09 Fiscal Year last week with eleven opinions on Aug. 28, the Texas Supreme Court did not decide any arbitration disputes per se. In one public employment case, however, the High Court delved into the issue of judicial review of arbitration decisions, albeit under a different label. Authorizing Appeal of Arbitrator's Adverse Decision By Another Name At issue was the decision of an independent hearing examiner favorable to a police officer in a disciplinary proceeding. The Court, in a lengthy opinion by Justice Hecht - given additional gravitas with copious footnotes - came down on the side of permitting the city to challenge the hearing examiner's decision. Although the Court is otherwise big on enforcing arbitration and thus limiting the role of the courts, the Court's disposition hardly comes as a surprise, given that the dispute was between a city and a city employee/officer, and the arbitrator-examiner's ruling favored the latter. Says the Court: "[W]e hold that the hearing examiner exceeded his jurisdiction in summarily reversing an officer’s indefinite suspension and reinstating him with back pay and full benefits because the Act requires a hearing examiner to reach a decision based on evidence. Accordingly, we reverse the judgment of the court of appeals and remand the case to the district court for further proceedings." Over the course of several years, the Texas Supreme Court has established a pattern of siding with governmental entities in legal disputes with individuals, and has proven quite adept at devising jurisprudential theories to vindicate the interests of governmental defendants even where - as here - there is no statutory authorization for the city to even appeal from the hearing examiner's decision in the first place. Jurisdictionalization Trend Continues In conceptualizing the question of whether the examiner (arbitrator) did wrong as a matter of jurisdiction, the Court adds another precedent to the collection of new precedents that transform merits-issues into jurisdictional ones, thus providing a convenient basis for dismissal of claims for affirmative relief by plaintiffs (such as Whistleblowers or tort plaintiffs against TxDOT) for want of jurisdiction, or facilitating judicial review and reversal of a ruling unfavorable to governmental entities, such as in this case. The end - giving priority to the power and fiscal interests of government at the expense of the rights of individuals - appears to be sufficient to justify the jurisprudential innovations (at least as long as the opinion is heavily footnoted and thus better protected against charges of result-oriented judicial decisionmaking by fiat). City of Pasadena, TX v. Smith, No. 06-0948 (Tex. Aug. 28, 2009)(Hecht) (disciplinary appeal, authority of hearing examiner, police officer, UDJA and jurisdictional issues) CITY OF PASADENA, TEXAS v. RICHARD SMITH; from Harris County; 1st district (01-05-01157-CV, 263 SW3d 80, 09-14-06) The Court reverses the court of appeals' judgment and remands the case to the trial court. Justice Hecht delivered the opinion of the Court. EXCERPTS FROM THE OPINION BY HECHT: The hearing examiner in this case violated that requirement. His ruling was based entirely on the absence of the department head, a witness the City did not expect to offer. The hearing examiner did not allow evidence to be presented. Nothing in the Act permitted him to rule as he did. Smith argues that the hearing examiner could reasonably have concluded that since section 143.1015(k) requires the presence of the department head at civil service appeal proceedings in Houston, the same rule should apply in other cities. But the Act does not empower a hearing examiner to make rules. He had no authority to impose on the City a requirement that the Act makes quite clear does not apply. Moreover, even when section 143.1015(k) does apply, it does not authorize rendition of a default judgment as an automatic penalty for noncompliance.47 Smith argues that the hearing examiner can be faulted only for a simple mistake of law, but it clearly exceeds a hearing examiner’s jurisdiction to refuse to hear evidence before deciding that a police officer was improperly disciplined, contrary to the express requirement of the Act. * * * The most accurate test we can state is that a hearing examiner exceeds his jurisdiction when his acts are not authorized by the Act or are contrary to it, or when they invade the policy-setting realm protected by the nondelegation doctrine. By that test, the hearing examiner in this case exceeded his jurisdiction, and therefore the City’s appeal to the district court was authorized under section 143.057 (j). The issue remains whether it was timely perfected. Since the Act does not expressly provide for an appeal by a city — we have construed it to do so to avoid constitutional problems — it understandably does not expressly set a deadline for a city’s appeal. We have held that “[w]hen a statute lacks an express limitations period, courts look to analogous causes of action for which an express limitations period is available either by statute or by case law.”51 Here, the parties disagree as to whether a deadline for appeal is jurisdictional or in the nature of limitations, and we need not resolve that issue. In either event, the same rule applies: we look to a provision related to the right of appeal for a deadline.