Stage Stores, Inc. v. Jon Gunnerson
477 S.W.3d 848
| Tex. App. | 2015Background
- Stage Stores (employer) and Jon Gunnerson (executive) had an employment agreement requiring arbitration and (by a scheduling order) a “reasoned award.”
- Gunnerson resigned invoking the contract’s “By the Executive for Good Reason” provision and sought termination benefits; Stage refused, asserting defenses including voluntariness, lack of material diminution, and lack of required written notice/opportunity to cure.
- Parties arbitrated before an agreed arbitrator; the arbitrator issued an initial and then a final four‑page award awarding Gunnerson damages and attorneys’ fees (amount later specified) and ruling on four discrete matters (contract validity, diminution/good‑reason, fees entitlement, failure of proof on stock option valuation).
- Stage moved in court to vacate the award under 9 U.S.C. § 10(a)(4) (arbitrator exceeded authority); Gunnerson moved to confirm and sought attorneys’ fees for a frivolous vacatur motion; the trial court confirmed the award but denied Gunnerson’s fee request and denied Stage’s vacatur.
- The appellate court reversed and remanded: it held the award was not fully a “reasoned award” because it failed to address Stage’s key notice-and-cure defense, and remand to the arbitrator under the functus officio exceptions was required to clarify/complete the award.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the arbitration award satisfied the parties’ agreement to provide a “reasoned award” | Gunnerson: Award contains sufficient explanation (issues, rulings, recitation of reasoning) and thus need not discuss every argument; award is reasoned and should be enforced | Stage: Award omitted reasoning on a central defense (notice and cure), so it fails the agreed‑upon form and must be vacated or at least clarified | Court: Award is generally reasoned but omitted any reasoning on Stage’s notice‑and‑cure defense; remand to arbitrator required under functus officio exceptions to clarify/complete the award |
| Whether remand (rather than vacatur) is appropriate when an award omits reasoning on a submitted, material issue | Gunnerson: Omission does not prevent confirmation; arbitrator effectively decided issue and award is enforceable | Stage: Omission deprived parties of a mutual, final, definite award and warrants vacatur | Court: Vacatur not required; remand for clarification/completion is the proper remedy here |
| Whether the arbitrator exceeded authority by addressing attorneys’ fees in interlocutory award or failing to explain the fee amount | Stage: Arbitrator acted prematurely and final award lacks reasoning on fee amount; this undermines the reasoned‑award requirement | Gunnerson: Arbitrator’s award of full requested fees implies rejection of Stage’s fee arguments | Court: No record support that fees were improperly bifurcated; awarding full requested fees sufficed to show the arbitrator rejected Stage’s arguments; not an independent basis for vacatur |
| Whether Gunnerson was entitled to attorneys’ fees for defending confirmation (motion was "without justification") | Gunnerson: Stage’s vacatur motion was meritless and unjustified, so trial court abused discretion by denying fees | Stage: Its vacatur motion presented cognizable FAA arguments (heavy burden to vacate) | Court: Because appellate court sustained Stage’s issue (remand required), Stage’s challenge was not plainly without merit; trial court did not abuse discretion—fees denied affirmed |
Key Cases Cited
- Cat Charter, LLC v. Schurtenberger, 646 F.3d 836 (11th Cir. 2011) (defines “reasoned award” as more than a bare result but less than findings; award must at least mention justifications for decision)
- Rain CII Carbon, LLC v. ConocoPhillips Co., 674 F.3d 469 (5th Cir. 2012) (reasoned award sits between a standard award and findings; context and surrounding text can supply necessary reasoning)
- Hall Street Assocs., LLC v. Mattel, Inc., 552 U.S. 576 (U.S. 2008) (parties cannot expand vacatur grounds beyond FAA; judicial review of arbitration is narrowly cabined)
- Oxford Health Plans LLC v. Sutter, 133 S. Ct. 2064 (U.S. 2013) (courts vacate arbitration awards only in very unusual circumstances; heavy deference to arbitrators)
- Brown v. Witco Corp., 340 F.3d 209 (5th Cir. 2003) (functus officio doctrine and exceptions: remand permitted to clarify ambiguous or incompletely adjudicated awards)
- Murchison Capital Partners v. Nuance Commc’ns, Inc., 760 F.3d 418 (5th Cir. 2014) (district courts may remand to arbitral panel to clarify patently ambiguous awards)
- Executone Info. Sys., Inc. v. Davis, 26 F.3d 1314 (5th Cir. 1994) (attorneys’ fees may be awarded when a vacatur/challenge to an award is without justification)