Wetzel v. Sullivan, King & Sabom, P.C.

HOYT, SMITH, LEVY and Before JACK JJ. OPINION HOYT, Justice. appeal This an is accelerated from an interlocutory granting application order an stay proceedings pursuant arbitration to (Ver- B

Tex.Rev.Civ.Stat.Ann. art. non § 1973). 238-2, Tex.Rev.Civ.Stat. art. A(2) 1973), (Vernon grants specifically § jurisdiction appeal this Court from stay to consider an granting application an order an arbitration, appeal such is taken "m the manner and to the same extent judgments from orders or in a civil action.” 238-2, See Article B.§ (“Wetzel”) partner was a Don A. Wetzel Sullivan, firm of and shareholder King (“SKS”), Sabom, P.C. until his with- & firm in March of 1985. drawal from the agree to the firm and the could Because value of Wetzel’s stock in the possible of fees from two proper allocation cases, filed arbi- contingent fee for As- the American Arbitration tration with sociation of (“AAA”), pursuant to the terms agreement. seeking a declarato- this action SKS filed defining rights and obli- ry judgment injunctive for gations parties, and attempting to Wetzel from prohibit relief to dispute. issues in The trial arbitrate the court conducted ant stay quently hearing summary pursu- 225, B, on SKS’s motion article § proceedings, and subse- the arbitration 8,May stay granted requested findings fact of Although Wetzel filed, law, none and conclusions required are that none and we conclude under 42(a)(1). Tex.R.App.P. outset, disagree At the review as to whether standard or the evidence” “sufficiency this case We hold that “abuse discretion.” of “no evidence.” of review that standard Pipe Eng’g v. Pecos Interstate See Gulf line, (Tex.App. 680 S.W.2d 879 — Houston 1984, writ). A “no evidence” [1st Dist.] appellate court consid point requires the tending only inferences er the evidence and and to support finding under attack Ann to the Storey, Cook, disregard Jo and inferences Sheehy, Richard all evidence Alviar, McFall, Houston, Davis & appellant. contrary. 821, for Garza (Tex.1965). Rrist, Kinney, Riedmueller, Puckett & Riedmueller, Riordan, Norman ton, Mary The trial court Hous- there appellee. determine whether “summarily” to (or an may stay Corporation arbitrate and and the Stockholder moving party arbitration when the representative). estab- lishes agreement. there is no such provides, compensation agreement The Article B. Texas General Arbitra- § part, as follows: Act, tion Tex.Rev.Civ.Stat.Ann. art. 224 (5). Except as herein oth- Arbitration. (Vernon Supp.1988),provides that: or provided, any erwise claim controver- A any written to submit exist- relating to this sy arising out ing controversy provi- to arbitration or a shall, agreement any hereof or breach sion in a written contract to to submit request of the EMPLOY- upon the either any controversy arbitration thereafter EMPLOYEE, to submitted ER OR and settled be arising valid, between the en- Houston, in by arbitration irrevocable, and upon forceable save Texas, of with the rules in accordance grounds such as at law equity exist or in Association the American Arbitration then from the revocation of any contract. Any pursu- made in decision effect. binding shall be arbitration ant and conclusive such provides Article 224-11 further that: upon employer and the in No Article 224 agreement described employee. the that unless notice shall be arbitrated However, shareholders’ neither the subject to arbitration under contract agree- compensation agreement nor the capital typed in underlined this Act is letters, six signed by president and ment were the rubber-stamped prominent- isor Therefore, as- SKS of the shareholders. serted, ly, page of the contract. on the first found, there that and the trial court that, at time of The record reflects the by agreement as no written was secretary drafted incorporation, its SKS’s art. agreement prepared a shareholders’ and that contracts are val asserts the compensation agreement. These and a signed by all id, though they not even were agreements circulated to all the were signed agree the parties, because shareholders, exe- were and documents through ments, accepted them and SKS capac- in his by cuted Mr. Sabom individual conduct, in the acts, acquiescence or their terms Schuehle, attested, capacity in his as ity. He also v. Valasquez contract. See the signa- the corporation, of the secretary 1, (Tex.Civ.App.— 3 562 S.W.2d although corporate president, ture of the Moreover, 1977, writ). he no Antonio San president’s signature appear did the not conclusively es argues the evidence that ac- documents were the documents. These the accepted terms that SKS tablishes incor- companied by a memorandum that conduct, acts, acqui by its or the contracts rectly document had been stated that each exchanged through various letters escence corporation. signed of the Share- on behalf referring to arbitration the between or pensation requested sign the doc- holders were com agreement and to the shareholders’ return them Mr. Sabom. uments and evidence, Wetzel agreement. As he left the fact that when points to the agreement Both the shareholders’ and included a firm, compensation his part of compensation agreement the provided $26,000. payment of prominently on their face: NOTICE: THIS Finally, Wetzel in contends that AGREEMENT IS SUBJECT ARBI- TO absence plea denying of verified the exe TRATION UNDER THE TEXAS GENER- agreements, cution of the SKS cannot con AL the Page ARBITRATION ACT. four of validity test of the contracts. How provides: shareholders’ ever, absence of a verification a defect Any or controversy arising claim out of that is waived if in trial not raised relating or to the determination of value Galaznik, court. 379, v. Galaznik 685 S.W.2d 2, shall, upon under this Article the re- 1985, (Tex.App. 383 Antonio no quest of either — San purchasers, the individual writ). Corporation (or or the Stockholder his representative), be submitted to and urges SKS instruments not were by Houston, settled arbitration executed and were intended to effec be in accordance with the rules Amer- signatures tive without the parties. ican Arbitration Association then ef- See Rea v. Simmons & Simmons Constr. Any fect. decision made pursuant Co., 747, 275 (Tex.Civ.App.— S.W.2d 751 binding such arbitration shall be and con- Antonio), 353, aff'd, San 155 Tex. 286 purchasers, on the clusive individual (1955). Additionally, S.W.2d 415 con- 704, 2, 1708, 1. Ch. § Tex.Gen. re- 1979 Laws 817, 1,1987 pealed by ch. § Tex.Gen. Laws 5670.

81 evidence also re- agreements The ratify that it did not the shareholders. tends and is not ever distributed. copies no estopped deny their effective- vealed ness. everyone paid testified that Sabom set pursuant the formula calculation generally favored Arbitration He testified documents. also out those courts, pre by every and reasonable incorporation, and prior firm’s that the to the indulged uphold sumption will be arbi agree- the shareholders’ preparation proceedings. Bap v. tration Manes Dallas agreement, an out- compensation ment College, (Tex.App.— tist S.W.2d upon partner paid based going be would n.r.e.); 1982, Carpenter Dallas writ ref d as in the same formula recited the exact Co., Ins. North River Although agreements agreements. (Tex.Civ.App.—Houston Dist.] [14th guidelines, Sabom stated that were used n.r.e.). Although d an writ ref money $26,000 “an amount reflected any particular need not be in get like he needed that Wetzel felt form, party a duty is under to arbitrate going.” testi- practice Sabom further new fied that by language previously unless clear he has shareholders, he the told so, agreed clearly appear it do and must meet- the next “probably at [shareholders’] that the intention of the was to to arbitrators and to not been ing,” the documents had that dispute submit their corporation. signed on behalf of the Manes, by be S.W.2d at 145. that decision. 638 bound Henri, and shareholder Both William Sullivan, SKS, president Charles and agreement if a written Even director, nei- testified that shareholder and writing not executed and no exists that writing, to agreed, orally or in ther had satisfies the Texas General Arbitration Wetzel. arbitrate with Act, right a common law to arbitration is agreement testimony appropriate reviewing enforceable if an the under In standard, initially submit to we Lacy shown. L.H. the “no evidence” Lubbock, City supports Co. v. the 559 S.W.2d 348 that the evidence conclude (Tex.1977); however, ruling; v. are com Tygrett, Gerdes 584 S.W.2d trial court’s we 1979, (Tex.Civ.App.—Texarkana estopped 350 writ). Moreover, from pelled to hold that party may specifically denying a of the the existence agreements, agreement despite enforce an arbitration ratified the as because it matter of party’s attempted the other revocation. law. Demolishing Olshan Angleton Co. v. In party when a Ratification occurs Dist., 179, dep. (Tex.App.—Houston 684 School S.W.2d 184 by recognizes validity the contract 1984, writ [14th Dist.] it, it, acting affirmatively performing under under n.r.e.). ref d acknowledging it. United McBride, (S.D. 596 F.Supp. States v. Tex.1983). have reviewed the record de We exchanged The letters between sup termine whether SKS’s claims are parties consistently referred to the the agreements: ment to ported When, by any evidence. as 3, pay May 1985—“interim case, findings instant there are no of fact pursuant Article 3 of Share you law, conclusions we must affirm the Agreement and the remainder— holders’ judgment if there is sufficient evidence to compensation agreement”; pursuant asserted, support upon any legal theory it 28, preliminary 1985—“Enclosed June every by and must resolve issue raised (a) compensation buy-out for your date agreement, February on: support judgment. evidence in of the See (b) purchase agreement”; stock (Tex. Bliss, Lassiter percentage of 1986—“That 1977). arriving at ownership was used share The record does contain that the evidence your buy-out price the Shareholder’s under documents never were executed. William with arrangement agreement....” “The SKS, Henri, president of that testified out contingency fees is as set respect to the proposed documents were drafts. The trial agreement....” compensation in the conflicting regarding court heard evidence re Moreover, paid the check to Wetzel agreed whether all of the shareholders the “per being payment was made flected that provisions in the shareholders’ and compen agreement and the shareholders’ compensation agreements. The memoran- agreement.” sation accompanying dum the documents stated validity of the disputed the agreements SKS never signed by once were for arbitra- filed Wetzel agreements until everyone, copies would be to all distributed nego- Throughout years their two tion. tiation, cent. A closer examination of the record agreements as SKS treated reveals that Wetzel's interest was not re- ac- though they in effect. SKS also duced, but percent 5.51 figure pursuant and issued stock cepted benefits represented Wetzel’s ownership interest record reflects agreements. The to the that under the shares of of net opposed SKS as to his share accept- agreements, profits corporation. of the ownership interest. in his ed a reduction At the time light In conclusion, of this Wetzel’s inter- partnership, the firm was a est or ownership will be by dictated percent inter- was entitled to 12½ agreement. Considering that the only is- est, shareholders’ but under the sue before us was whether the agreement, percent- compensation and age arbitrate, were that we determine reduced to 5.51%. ownership interest and related issues accepted the benefits Because SKS will be during resolved arbitration, pursu- agreements agreements and treated the agreement. ant to the years approximately two before valid for Wetzel filed for arbitration, we conclude as a mat- that ratification was established ter of law. point of error is sus- Appellant’s first

tained. reversed, staying arbitration is The order parties are ordered and the agree- under the arbitration

arbitration ment. LINDEN-ALIMAK, INC., Appellant, REHEARING ON MOTION FOR and for re- motion for clarification On this Court hearing, contends McDonald, Virgil L. Thomas S. shall specify whether arbitration failed to Byrne, Inc. and Traders and Act or the Texas Arbitration proceed under Co., grant SKS's mo- Appellees. common law. We under General Insurance prior opinion, rehearing, clarify our tion but No. 2-87-009-CV. requested relief. Addi- deny other error, points of SKS con- tionally, in four Appeals Court of (1) failing in erred tends that this Court Fort Worth. appeal; dispose all issues raised fully accepted a reduc- (2) finding that Jan. 1988. interest; (3) finding ownership tion deny the exist- estopped that SKS was Rehearing Denied March (4) agreement; and of the arbitration ence in finding of the arbitration ratification agreement as a matter of law. had treated This held that SKS Court binding agreement as an executed and, it and between therefore, deny its execu- estopped to holding that there reaffirm our tion. We by estoppel and exists a written conclude the issue unnecessary speak to that it is agreement be- of whether the extends to and Wetzel also tween SKS shall remaining Arbitration shareholders. Act. Arbitration under the Texas 224-249 arts. See Tex.Rev.Civ.Stat.Ann. 1973 & (Vernon Supp.1988). original opinion, we stated In our in his owner- accepted a reduction

Wetzel ship per- percent to 5.51 from 12.5 interest

Case Details

Case Name: Wetzel v. Sullivan, King & Sabom, P.C.

Court Name: Court of Appeals of Texas

Date Published: Mar 31, 1988

Citation: 745 S.W.2d 78

Docket Number: 01-87-00440-CV

Court Abbreviation: Tex. App.