Nancy Higginson, Debbie Cheadle, Edward Cheadle, Arthur Cheadle, Wayne Carson, Finney Cheadle, Cheryl Shoop, and Keith Sawaya v. Raeanne Martin, 07-15-00343-CV

Background

Shareholders of closely held Russell E. Womack, Inc. (three family groups) signed a January 1, 2008 Shareholders’ Agreement containing a right of first refusal, a contractual equitable-remedy provision (Section 9.2), and a mediation/arbitration clause (Section 12.5).
In 2013 Martin (Appellee) opted out of a related Voting Trust and received an offer from the Byrnes to buy her shares; competing notices ensued and Martin later purportedly transferred her shares to the Byrnes.
Appellants (other shareholders) sued, obtained a TRO (which expired), and sought to compel arbitration under the Shareholders’ Agreement; the trial court ordered arbitration (excluding the Byrnes).
During arbitration counsel exchanged a proposed signed "Arbitration Award" (approved as to form by counsel) which Appellee claims constituted a settlement; the arbitration panel declined to adopt that form and proceeded to a hearing.
The arbitration panel issued a standard award awarding Appellants $2,000,000 plus fees; Appellants moved to confirm and Appellee moved to vacate, arguing the panel exceeded its authority by (1) awarding damages for a transfer that Section 9.2 rendered void and (2) refusing to accept the parties’ settlement.
The trial court vacated the arbitration award, denied confirmation, and set the case for trial; Appellants appealed and the court of appeals affirmed.

Issues

Issue	Appellants' Argument	Martin's Argument	Held
Did the arbitration panel exceed its authority by awarding monetary damages despite Section 9.2's remedy language?	The panel had authority to award damages; Article 9.2 does not preclude compensable damages and panel interpreted the contract.	Section 9.2 makes a purported transfer void and limits remedies (specific performance/injunctive relief), so damages were beyond arbitrator authority.	Court agreed with Martin: arbitrator lacked jurisdiction to decide if no controversy existed or to grant relief beyond parties' agreement when settlement existed.
Was there a binding settlement that deprived the arbitrators of jurisdiction?	No enforceable Rule 11 settlement existed; the arbitration award was not an in-court, filed, or party-signed Rule 11 agreement.	Counsel-signed proposed award and communications constituted a binding Rule 11 settlement, so arbitrators lacked authority to proceed.	Court deferred to trial court credibility finding that a settlement existed, concluding arbitrators lost jurisdiction; affirmed vacatur.
Should the trial court have confirmed the arbitration award?	Yes — great deference to arbitration; confirmation required absent narrow statutory grounds to vacate.	No — statutory grounds (arbitrators exceeded powers) justified vacatur.	Court: vacatur proper because arbitrators lacked jurisdictional prerequisite (no live dispute).
Was vacatur an abuse of discretion under the Texas Arbitration Act?	Appellants: trial court substituted its judgment for arbitrators.	Martin: Act permits vacatur when arbitrators exceed powers; courts may scrutinize jurisdictional prerequisites.	Court: no abuse; review de novo but gave trial court deference on settlement factfinder; affirmed.

Key Cases Cited

Cambridge Legacy Group, Inc. v. Jain, 407 S.W.3d 443 (Tex. App.--Dallas 2013) (standard for reviewing trial court confirmation/vacatur of awards)
CVN Group, Inc. v. Delgado, 95 S.W.3d 234 (Tex. 2002) (arbitration awards may be vacated only in limited circumstances)
E. Tex. Salt Water Disposal Co. v. Werline, 307 S.W.3d 267 (Tex. 2010) (judicial review of arbitration awards is extraordinarily narrow)
Nafta Traders, Inc. v. Quinn, 339 S.W.3d 84 (Tex. 2011) (arbitrators’ authority derives from parties’ arbitration agreement)
Gulf Oil Corp. v. Guidry, 327 S.W.2d 406 (Tex. 1959) (award in excess of arbitrator’s jurisdiction is void)
Delta Queen Steamboat Co. v. District 2 Marine Engineers, 889 F.2d 599 (5th Cir. 1989) (courts may vacate awards when arbitrators exceed contractual authority)
TUCO, Inc. v. Burlington N. R. Co., 912 S.W.2d 311 (Tex. App.--Amarillo 1995) (focus of review is integrity of arbitration process, not the correctness of result)
Padilla v. La France, 907 S.W.2d 454 (Tex. 1995) (Rule 11 settlements can be binding when signed by duly authorized counsel)
Callahan & Assocs. v. Orangefield Indep. Sch. Dist., 92 S.W.3d 841 (Tex. 2002) (trial court must confirm arbitrator’s award unless grounds for vacatur are shown)