Hoskins v. Hoskins
497 S.W.3d 490
| Tex. | 2016Background
- Leonard sued Clifton, Hazel, and Hoskins, Inc. in arbitration challenging conveyances of Tilden Ranch and alleging fraud and breaches of fiduciary duty; parties had agreed to arbitrate under the Texas General Arbitration Act (TAA).
- Bankruptcy court ordered mediation/arbitration per a prior settlement; an arbitrator was appointed and signed a final award dismissing claims against Clifton and the Company and awarding them fees, while some claims against Hazel were severed.
- Leonard sought to vacate the award in trial court on multiple statutory and common-law grounds, chiefly arguing the arbitrator manifestly disregarded the law; the trial court confirmed the award and limited vacatur inquiry to TAA §171.088 grounds.
- The court of appeals affirmed, holding manifest disregard is not a TAA vacatur ground and that no additional hearing was required on Leonard’s supplemental complaint; this Court granted review to resolve a split in the courts of appeals.
- The Texas Supreme Court affirmed: it held the TAA’s enumerated vacatur grounds are exclusive, rejected manifest-disregard vacatur under the TAA, and found no statutory hearing violation from the arbitrator’s refusal to hold a second hearing on the supplemental complaint.
Issues
| Issue | Plaintiff's Argument (Leonard) | Defendant's Argument (Clifton & Company) | Held |
|---|---|---|---|
| Whether courts may apply common-law vacatur grounds (e.g., manifest disregard) alongside the TAA | Manifest-disregard and other common-law grounds remain viable to vacate TAA-governed awards | TAA §171.088 lists exclusive statutory grounds for vacatur; common-law grounds are precluded when arbitration governed by TAA | The TAA’s §171.088 vacatur grounds are exclusive; manifest disregard is not a basis to vacate under the TAA |
| Whether Nafta Traders permits non-statutory vacatur review | Nafta Traders supports broader judicial review for legal error | Nafta Traders applied only where parties contractually limited arbitrator authority; it does not create general common-law vacatur | Nafta Traders is distinguishable; reversible-error review arises only where parties contractually limited arbitrator power and fits within statutory grounds (exceeded powers) |
| Whether the arbitrator’s dismissal of supplemental claims without a new hearing violated TAA hearing rights (§171.047) | Failure to hold a second hearing on supplemental complaint prejudiced Leonard’s rights | Supplemental claims were substantively covered by earlier summary-judgment grounds (standing/limitations); a second hearing would be redundant | No TAA hearing-right violation; no substantial prejudice from no second hearing |
| Whether court should remand to allow statutory arguments if common-law grounds rejected | Leonard asked for remand to argue statutory grounds if common-law found exclusive | Defendants opposed remand; record had been narrowed by Leonard’s appellate choices | Remand denied; Leonard chose to limit appellate arguments and cannot get a second opportunity |
Key Cases Cited
- Nafta Traders, Inc. v. Quinn, 339 S.W.3d 84 (Tex. 2011) (parties may contractually limit arbitrator authority; review for reversible error can fit within TAA vacatur for "exceeded powers")
- Hall Street Associates, L.L.C. v. Mattel, Inc., 552 U.S. 576 (2008) (U.S. Supreme Court held FAA’s statutory vacatur grounds are exclusive for FAA arbitrations; discussed in TAA context)
- L.H. Lacy Co. v. City of Lubbock, 559 S.W.2d 348 (Tex. 1977) (discussed historical dual arbitration system; distinguished because the TAA did not govern the contract there)
- E. Tex. Salt Water Disposal Co. v. Werline, 307 S.W.3d 267 (Tex. 2010) (reiterates that judicial review of arbitration under Texas law is extraordinarily narrow)
- City of Rockwall v. Hughes, 246 S.W.3d 621 (Tex. 2008) (statutory construction principles; de novo review of legal questions)