Opinion
No. 01-03-01335-CV
Opinion issued October 27, 2005.
The arbitration proceeding was not transcribed by a court reporter.
On Appeal from the 152nd District Court, Harris County, Texas, Trial Court Cause No. 2000-64325.
Panel consists of Justices TAFT, KEYES, and HANKS.
MEMORANDUM OPINION
This is an appeal from a final judgment that confirms an arbitration award relating to the enforcement of a severance payment provision. Robert M. Tyson and Dana Tyson, appellees, sued Robert T. Brockman and Rental Systems, Inc., appellants, for fraud, breach of contract, and fraudulent concealment. The case was arbitrated, and the arbitration panel rendered an award for the Tysons. In two points of error, Brockman and Rental Systems contend that (1) the trial court erred in confirming the arbitration award because the arbitration panel committed a gross mistake by applying the law of novation and mutual mistake and (2) the trial court erred in confirming the award when the arbitration panel abused its discretion and exceeded its authority by ignoring the terms and procedures of the governing contract in determining the remedy. We affirm.
Background
On April 15, 1991, Brockman and Robert and Dana Tyson entered into an agreement that created Rental Systems, Inc. — a business that rented personal computers, electronic equipment, and associated services. Tyson provided the concept for the business, and Brockman provided the capital and commercial expertise.
The 1991 agreement provided that, in the event that Tyson was terminated, resigned, or died, he would receive a Business Appreciation Incentive of 20% of the "Gain in Value" of Rental Systems. Dana Tyson was also a signatory to this agreement. In 1993, Tyson and Brockman purportedly entered into an Executive Compensation Plan that extinguished the old contract and served as the new, controlling contract. The 1993 Plan provided that, in the event that Tyson was terminated, resigned, or died, he would be provided payment of a "Compensation Value" based on the net book value of the company. Dana Tyson was not a signatory to the 1993 Plan.
On November 4, 1999, Tyson's employment terminated. Alleging that his signature on the 1993 Plan was forged or otherwise obtained by fraud or deceit, Tyson requested that he be provided for under the 1991 agreement. Rental Systems disagreed, and Tyson filed suit to recover the Tysons' severance payment under the 1991 contract, alleging fraud, breach of contract, and fraudulent concealment. Rental Systems filed a motion to compel arbitration that was granted. During the four-day arbitration proceeding, Brockman testified that the 1993 Plan was created because the 1991 contract was lost. The Tysons, however, testified that the 1991 contract was not lost, and they produced a copy of the contract during the proceeding.
The Arbitration Panel held that the 1993 Plan was unenforceable and that the 1991 agreement controlled.
In their reply brief, Brockman and Rental Systems added a third issue for consideration: whether this Court should consider new evidence consisting of a signed 1990 Agreement that Tyson should have produced during discovery but did not. They argue that Tyson "spoliated" the 1990 Agreement in an attempt to conceal an agreed-to compensation plan that was similar to that found in the 1993 Plan.
An appellant is required to present all issues to be considered on appeal in appellant's brief. Tex.R.App.P. 38.1, 38.3. New issues presented in a reply brief will not be considered by the appeals court. Barrios v. State, 27 S.W.3d 313, 322 (Tex.App.-Houston [1st Dist.] 2000, pet. ref'd). Furthermore, because the 1990 Agreement was attached as an appendix to the reply brief and is not part of the appellate record in this case, we may not consider it. See Wright v. Sage Eng'g, Inc., 137 S.W.3d 238, 254 (Tex.App.-Houston [1st Dist.] 2004, pet. denied).
Standard of Review
There is no dispute among the parties that they entered into a valid, binding arbitration agreement. Texas law favors arbitration. Brazoria County v. Knutson, 176 S.W.2d 740, 743 (Tex. 1943). Statutory arbitration is cumulative of the common law. J.J. Gregory Gourmet Servs. v. Antone's Import Co., 927 S.W.2d 31, 33 (Tex.App.-Houston [1st Dist.] 1995, no writ). Our review of an arbitration award is extremely narrow. IPCO-G.C. Joint Venture v. A.B. Chance Co., 65 S.W.3d 252, 255 (Tex.App.-Houston [1st Dist.] 2001, pet. denied). Common law allows a trial court to set aside an arbitration award "only if the decision is tainted with fraud, misconduct, or gross mistake as would imply bad faith and failure to exercise honest judgment." Teleometrics Int'l, Inc. v. Hall, 922 S.W.2d 189, 193 (Tex.App.-Houston [1st Dist.] 1995, writ denied). Because arbitration is favored as a means of dispute resolution, courts indulge every reasonable presumption in favor of upholding the award. Id.; Wetzel v. Sullivan, King Sabom, P.C., 745 S.W.2d 78, 81 (Tex.App.-Houston [1st Dist.] 1988, no writ).
An arbitration award has the same effect as a judgment of a court of last resort, and a court reviewing the award may not substitute its judgment for the arbitrator's merely because the court would have reached a different decision. City of Baytown v. C.L. Winter, Inc., 886 S.W.2d 515, 518 (Tex.App.-Houston [1st Dist.] 1994, writ denied). Every reasonable presumption must be indulged to uphold the arbitrator's decision, and none is indulged against it. Id. A mere mistake of fact or law is insufficient to set aside an arbitration award. J.J. Gregory Gourmet Servs., 927 S.W.2d at 33. In the absence of a statutory or common law ground to vacate or modify an arbitration award, a reviewing court lacks jurisdiction to review other complaints, including the sufficiency of the evidence to support the award. Id.
The party attacking the arbitration award must prove that the arbitration panel exceeded its authority. Prudential Sec. Inc. v. Shoemaker, 981 S.W.2d 791, 793 (Tex.App.-Houston [1st Dist.] 1998, pet. denied). The arbitration panel exceeds its authority by deciding a matter not presented to it. 9 U.S.C. §§ 10(a)(4), 11(b) (2005). The issues before the arbitration panel are framed by the contract between the parties and by the pleadings. Davis v. Prudential Sec. Inc., 59 F.3d 1186, 1193 n. 8 (11th Cir. 1995).
An arbitration award can be vacated if: (1) the award was obtained by corruption, fraud, or other undue means; (2) the rights of a party were prejudiced by the evident partiality, corruption, misconduct, or wilful misbehavior of an arbitrator; or (3) the arbitrator exceeded its powers, refused to postpone the hearing after a showing of sufficient cause for the postponement, or refused to hear evidence material to the controversy. Tex. Civ. Prac. Rem. Code Ann. § 171.088(a) (Vernon 2005). We apply this standard in reviewing the issues raised by Brockman and Rental Systems on appeal.
Novation and Mutual Mistake
In their first point of error, Brockman and Rental Systems contend that the trial court erred in confirming the arbitration award "when the Arbitration Panel committed such gross mistake in wholly failing to apply Texas law regarding novation and mutual mistake." They argue that the "the terms contained in the 1993 Agreement are so inconsistent with the terms contained in the 1991 Agreement that the two cannot subsist together." They further contend that "Tyson never raised fact issues establishing mutual mistake."
While Brockman and Rental Systems' arguments may have merit in a sufficiency review, they are inappropriate for the review of an arbitration award. We have no record from the arbitration; therefore, we have no way of knowing whether a fact issue was raised, or, for that matter, whether certain issues were tried by consent. The law is well-settled that we cannot substitute our judgment for the arbitrator's. See City of Baytown, 886 S.W.2d at 518. That statement presumes that we have facts before us where we could possible render a different decision. Here, with no record of the arbitration proceeding, we have no way of deciding the issue differently, and, even if we did have a record, we recognize that every reasonable presumption must be indulged to uphold the arbitrator's decision, and none is indulged against it. See id.
Accordingly, we overrule point of error one.
Remedy
In point of error two, Brockman and Rental Systems contend that the trial court erred in confirming the award when the Arbitration Panel abused its discretion and exceeded its authority by ignoring the terms and procedures of the governing contract in determining the remedy. Specifically, they argue that the Arbitration Panel "failed to follow the detailed procedures necessary to properly calculate Mr. Tyson's award under the 1991 Agreement" and "haphazardly calculated [the] award upon Mr. Tyson."
Again, these are improper arguments to raise on the appeal of an arbitration award. As we have previously held, a mere mistake of fact or law is insufficient to set aside an arbitration award. See J.J. Gregory Gourmet Servs., 927 S.W.2d at 33.
So, just as with point of error one, we have an inadequate record to determine whether the Arbitration Panel ignored the terms and procedures of the governing contract, but, even if we did have a record from the arbitration, we would be unable to correct any errors in law or fact. See id.
Accordingly, we overrule point of error two.
Conclusion
We affirm the judgment of the trial court.