Sandeep Patel and Aman Jafar, M.D. v. Zaki Moin, M.D.
14-15-00851-CV
| Tex. App. | Aug 11, 2016Background
- Three individuals (Moin, Jafar, Patel) formed Curative Health Concepts, LLC in 2010; they executed an Operating Agreement containing a broad arbitration clause.
- Curative Health failed to obtain Medicare certification; it contracted with St. Michael’s (in which Patel and Jafar had an interest) to bill under St. Michael’s certification; both businesses later failed.
- Moin sued Patel and Jafar (and others) alleging breach of fiduciary duty and breach of the Operating Agreement for steering business to St. Michael’s and misusing Curative Health assets.
- Parties (including Odhav and Noor) signed a one‑page Agreement for Binding Arbitration covering claims pending before the trial court; Chandresh Patel and St. Michael’s were not signatories.
- Arbitrator found Patel and Jafar breached the contract and awarded Moin $140,073 (plus attorney’s fees) for breach of contract; found Moin’s lost‑profit fiduciary‑duty claim too speculative; awarded Odhav and Noor fees/costs as prevailing parties.
- Trial court confirmed the award; Patel and Jafar appealed (arguing the $140,073 exceeded arbitrator authority), and Moin cross‑appealed (challenging the sanctions awarded to Odhav and Noor).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the $140,073 award exceeded arbitrator's authority | Moin: award is compensatory lost profits for breach of the Operating Agreement | Patel/Jafar: award is restitution or otherwise outside scope because Moin did not plead restitution and arbitration agreement covered only pending claims | Court: award falls within arbitrable contract claims; doubts resolved for arbitration — no exceedance of authority |
| Whether arbitrator erred by relying on St. Michael’s profits as proxy for Curative Health lost profits | Moin: proxy was proper to measure damages for the breach | Patel/Jafar: arbitrator previously rejected speculative lost profits, so using St. Michael’s profits is inconsistent and legally erroneous | Court: disagreement with reasoning is a legal error, not a basis to vacate an award under narrow review; upheld award |
| Whether the arbitrator exceeded authority by awarding fees to non‑Operating Agreement parties (Odhav/Noor) | Moin: awarding fees to Odhav/Noor was error because they were not parties to the Operating Agreement; procedural/Rule 13 defects | Odhav/Noor: arbitrator found claims against them groundless and sanctioned under arbitration rules | Court: gross mistake or failure to explain is not a statutory ground for vacatur under the TAA; sanctions cannot be vacated on that basis |
| Proper standard and scope of judicial review of arbitration awards | Moin: seeks vacation/modification based on alleged errors/failure of explanation | Patel/Jafar: argued arbitrator exceeded authority on scope question | Court: review is de novo but extraordinarily narrow; arbitrator exceeding authority requires deciding matters not before them; misinterpretation or legal mistakes do not justify vacatur |
Key Cases Cited
- D.R. Horton–Tex., Ltd. v. Bernhard, 423 S.W.3d 532 (Tex. App.—Houston [14th Dist.] 2014) (arbitrator exceeds authority only when disregarding contract; misinterpretation is insufficient)
- Prima Paint Corp. v. Flood & Conklin Mfg. Co., 388 U.S. 395 (1967) (policy favoring arbitration limits courts’ review of arbitration awards)
- Moses H. Cone Mem’l Hosp. v. Mercury Constr. Corp., 460 U.S. 1 (1983) (doubts concerning arbitrability resolved in favor of arbitration)
- Nafta Traders, Inc. v. Quinn, 339 S.W.3d 84 (Tex. 2011) (arbitrators derive authority from parties’ agreement; scope depends on appointment instrument)