Court of Appeals of Texas, Second District, Fort Worth
PRESCRIPTION HEALTH NETWORK, LLC, AND WILLIAM M. BLACKSHEAR JR., M.D. APPELLANTS
TOBY R. ADAMS, LISA B. ADAMS, AND ADAMS MARKETING CONSULTING, INC. APPELLEES
THE 442ND DISTRICT COURT OF DENTON COUNTY TRIAL COURT NO.
WALKER, GABRIEL, and PITTMAN, JJ.
T. PITTMAN, JUSTICE
Prescription Health Network, LLC (PHN) and William M.
Blackshear Jr., M.D. (collectively, the PHN Defendants)
appeal from the trial court's judgment confirming an
arbitration award in favor of Appellees Toby R. Adams, Lisa
B. Adams, and Adams Marketing Consulting, Inc. (AMC)
(collectively, the Adams Plaintiffs). We affirm.
Factual and Procedural Background
11, 2013, the Adams Plaintiffs filed a lawsuit in the trial
court asserting claims for common law fraud, fraud by
nondisclosure, fraudulent inducement, negligent
misrepresentation, breach of contract, tortious interference,
civil conspiracy, and violations of the Texas Deceptive Trade
Practices Act (DTPA), Tex. Bus. & Com. Code Ann.
§§ 17.41-17.63 (West 2011 & Supp. 2016),
arising from a franchise agreement (the Franchise Agreement)
entered between the parties on June 8, 2012. The Franchise
Agreement concerned a Prescription Weight Loss Clinic that
was being offered by the PHN Defendants to the Adams
Plaintiffs. In addition to the Franchise Agreement, PHN and
AMC entered a "Social Media Marketing Services
Agreement" that set forth certain obligations between
the parties related to their agreement to do business.
Defendants moved to compel arbitration based on the
arbitration clause in the Franchise Agreement that provided
if a dispute among the parties was not resolved by mediation,
the parties would resolve their dispute through arbitration
governed by the Federal Arbitration Act (FAA), 9 U.S.C.A.
§§ 1- 16 (West 2009). On October 30, 2013, the
trial court granted the motion and stayed the litigation
pending the outcome of the arbitration.
parties submitted their dispute to a three-member arbitration
panel (the Arbitration Panel). After a three-day hearing
conducted September 17 to 19, 2014 and the submission of
prehearing and posthearing briefs, the Arbitration Panel
entered a "reasoned award" on October 30, 2014 (the
Award). In the Award, the Arbitration Panel stated that it
would interpret and enforce the Franchise Agreement under
Florida law per its choice-of-law provisions but that it
would apply Texas law to the tort claims asserted by the
Adams Plaintiffs in accordance with the "most
significant relationship" test.
Arbitration Panel found that AMC did not comply with the
Franchise Agreement and found that $2, 100.25 was due to PHN
from AMC for PHN's unreimbursed costs for product
purchases and fees. The Arbitration Panel also found that AMC
did not comply with the Franchise Agreement by not paying PHN
the balance of the initial franchise fees and royalties.
However, the panel denied recovery of these fees and
royalties to the PHN Defendants and held that any sums paid
by AMC to PHN for the franchise fees and royalties would be
offset by the damages it awarded to AMC on its claim against
the PHN Defendants for violating the Florida Deceptive and
Unfair Trade Practices Act (FDUTPA), Fla. Stat. §§
501.201-501.213 (West 2016). The panel then concluded that
the PHN Defendants violated the FDUTPA and breached the
Social Media Marketing Services Agreement.
Arbitration Panel awarded $41, 045.90 to AMC on its FDUTPA
and breach of the Social Media Marketing Services Agreement
claims and reduced the amount by the $2, 100.25 that the
panel found was owed to PHN for product purchases and fees
under the Franchise Agreement. As a result, the panel awarded
AMC actual damages in the amount of $38, 945.65, recoverable
jointly and severally from the PHN Defendants. In February
2015, the Arbitration Panel issued a supplemental award
concerning attorney's fees and costs, awarding AMC $90,
150 in attorney's fees and $45, 402 in costs, also
recoverable jointly and severally from the PHN Defendants.
Defendants filed a motion to modify or vacate the Award in
the trial court. They argued that the Award should be vacated
or modified because the Arbitration Panel acted with
"manifest disregard of the law, " "exceeded
their powers, " or awarded damages on a matter not
presented to them. Specifically, the PHN Defendants contended
that the Arbitration Panel stated in the Award that the Adams
Plaintiffs' tort claims would be governed by Texas law,
yet when reviewing the Adams Plaintiffs' deceptive trade
practices claims, the panel applied Florida law under the
FDUTPA rather than Texas law under the DTPA.
Adams Plaintiffs filed a response and motion to confirm the
arbitration award. After a hearing on the competing motions,
the trial court signed a judgment denying the PHN
Defendants' motion and granting the Adams Plaintiffs'
motion to confirm the award in the amount of $175,
issues, the PHN Defendants argue: (1) the Award should be
vacated because the Arbitration Panel "exceeded their
powers", (2) the Award should be vacated because the
Arbitration Panel acted with "manifest disregard",
(3) alternatively, the award should be modified because the
Arbitration Panel acted on a matter not submitted to them,
and (4) the award of attorney's fees and costs to AMC
should be vacated and damages, attorney's fees, and costs
should instead be awarded to the PHN Defendants. In their
reply brief, the PHN Defendants argue for the first time that
the Award should be vacated because the Arbitration Panel
failed to issue a "reasoned award."
Standard of Review for Vacating or Modifying Arbitration
Awards Is Extraordinarily Narrow.
parties agree that the FAA governs this case. See 9
U.S.C.A. §§ 1- 16. Further, there is no dispute
that Texas courts have jurisdiction to consider confirmation
of an arbitration award under the FAA. See Banc of Am.
Inv. Servs., Inc. v. Lancaster, No. 2-06-314-CV, 2007 WL
2460277, at *3 (Tex. App.-Fort Worth Aug. 31, 2007, no pet.)
(mem. op.); see also Credigy Receivables, Inc. v.
Mahinay, 288 S.W.3d 565, 568 (Tex. App.-Houston [14th
Dist.] 2009, no pet.). We review de novo a trial court's
order confirming, modifying, or vacating an arbitration award
under the FAA. Banc of Am. Inv. Servs., 2007 WL
2460277, at *3 (citing McIlroy v. PaineWebber, Inc.,
989 F.2d 817, 819-20 (5th Cir. 1993)). This de novo standard
is intended to give this court full power to give strong
deference to the award. See id. An arbitration award
has the same effect as a judgment of a court of last resort;
accordingly, all reasonable presumptions are indulged in
favor of the award and none against it. CVN Grp., Inc. v.
Delgado, 95 S.W.3d 234, 238 (Tex. 2002). "A party
seeking to vacate an arbitration award bears the burden of
presenting a complete record that establishes grounds for
vacatur." Amoco D.T. Co. v. Occidental Petroleum
Corp., 343 S.W.3d 837, 841 (Tex. App. -Houston [14th
Dist.] 2011, pet. denied).
arbitration award governed by the FAA must be confirmed
unless it is vacated, modified, or corrected under certain
limited grounds. Id.; see Hughes Training, Inc.
v. Cook, 148 F.Supp.2d 737, 742 (N.D. Tex.)
("[R]eview of an arbitration award is extraordinarily
narrow under the FAA"), aff'd, 254 F.3d 588
(5th Cir. 2001), cert. denied, 534 U.S. 1172 (2002).
In fact, this court's review is so limited that "we
may not vacate an award even if it is based upon a mistake in
law or fact." Ancor Holdings, LLC v. Peterson,
Goldman & Villani, Inc., 294 S.W.3d 818, 826 (Tex.
App.-Dallas 2009, no pet.). Due to our deference to
arbitration awards, judicial scrutiny focuses on the
integrity of the process, not the propriety of the result.
Id. (citing Tuco, Inc. v. Burlington N. R.R.
Co., 912 S.W.2d 311, 315 (Tex. App.-Amarillo 1995),
modified on other grounds, 960 S.W.2d 629 (Tex.
1997)). "Ultimately, our review is a determination of
whether the '[a]ward [is] so deficient that it warrant[s]
sending the parties back to square one.'"
Howerton v. Wood, No. 02-15-00327-CV, 2017 WL
710631, at *3 (Tex. App.-Fort Worth Feb. 23, 2017, no ...