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Miller v. Walker

Court of Appeals of Texas, Second District, Fort Worth

February 15, 2018






         I. Introduction

         Appellee Jeremy J. Walker, d/b/a Maverick Wealth Management petitioned the trial court to vacate the attorneys'-fees portion of an arbitration award in favor of Appellant Scott A. Miller, arguing that the panel had exceeded its authority by awarding attorneys' fees that were not recoverable under an arbitration agreement or pursuant to Texas law. In response, Miller moved the trial court to confirm the arbitration award and to sanction Walker for filing a frivolous petition to vacate. The trial court vacated the attorneys' fees and declined to sanction Miller. In two issues, Miller challenges both rulings. We hold that the panel was authorized to award Miller attorneys' fees in light of the parties' submissions requesting attorneys' fees and Walker's failure to advise the panel that it lacked the authority to award Miller attorneys' fees. We also conclude, however, that the trial court did not abuse its discretion by denying Miller's motion for sanctions. Therefore, we will affirm the trial court's judgment insofar as it denied Miller's motion for sanctions, but we will reverse the trial court's judgment vacating the attorneys' fees and render judgment confirming the arbitration award.

         II. Background

         Miller operates a financial-advisory practice as an independent affiliate of Ameriprise Financial Services, Inc. Walker joined the practice in 2009 as an Associate Financial Advisor and signed an "Ameriprise Financial Services, Inc. Associate Financial Advisor Agreement" (AFA Agreement), which among other employment terms, contained a section providing for arbitration of certain claims. Both Miller and Walker are "registered" with-or are considered "Associated Persons" by-the Financial Industry Regulatory Authority (FINRA).

         In May 2015, Walker resigned as an Associate Financial Advisor and, according to Miller, "started a competing business two miles away." Believing that Walker was using confidential information taken from his practice to gain a competitive advantage for his new business in violation of several written agreements, and concluding that FINRA Rule 13200 required the dispute to be arbitrated through FINRA, Miller obtained a temporary restraining order against Walker in state court and concurrently filed a statement of claim with FINRA Dispute Resolution. In his statement of claim, Miller averred that Walker had breached contracts, breached fiduciary duties, and misappropriated trade secrets, and he sought permanent injunctive relief and attorneys' fees. Walker filed an answering statement that contained general and specific denials, affirmative defenses, and his own request for attorneys' fees. Both sides also signed a FINRA Arbitration Submission Agreement, agreeing to "submit the present matter in controversy, as set forth in the attached statement of claim, answers, and all related [other claims], to arbitration in accordance with the FINRA By-Laws, Rules, and Code of Arbitration Procedure." Miller nonsuited his state-court action after a FINRA arbitration panel was selected.

         After a hearing on June 22, 2015, the panel issued an order granting in part Miller's request for a permanent injunction. Later, on August 11, 2015, the panel held a full-day evidentiary hearing on damages, costs, and attorneys' fees. In addition to some testimonial evidence about attorneys' fees, both sides submitted an affidavit or declaration in support of attorneys' fees and costs. Miller's attorney's declaration sought reasonable attorneys' fees in the amount of $95, 965.90, and Walker's attorney's affidavit sought attorneys' fees and costs in the amount of $150, 025.00.

         The panel issued its award on September 1, 2015, awarding Miller compensatory damages in the amount of $76, 238.49 and attorneys' fees and costs in the amount of $95, 965.50. The award stated that Walker was liable for the attorneys' fees "pursuant to Texas Civil Practice and Remedies Code Section 38.001." Walker paid the compensatory-damages portion of the award but filed a petition in state court, pursuant to the Federal Arbitration Act (FAA), to vacate or, alternatively, to modify or correct the attorneys'-fees portion of the award.

         In his petition to vacate, Walker argued that in awarding Miller attorneys' fees, the panel had exceeded its authority under section IX(7) of the AFA Agreement because that provision permitted attorneys' fees incurred in an arbitration to be awarded to Walker or to Ameriprise but not to Miller.[1] According to Walker, "There was simply no authority in the AFA Agreement for the Panel to require Mr. Walker to pay Mr. Miller's attorneys' fees." Citing a choice-of-law provision, Walker alternatively argued that the panel had exceeded its authority under the AFA Agreement by basing its attorneys'-fees award on a Texas statute (civil practice and remedies code section 38.001) instead of on Minnesota law, which does not contain a statute like section 38.001. In his petition to modify or correct the attorneys'-fees portion of the award, Walker argued that the award should be reduced by $17, 400.50 because there was an evident, material miscalculation of figures.

         Miller responded to each of Walker's arguments and additionally asked the trial court to sanction Walker under rule of civil procedure 13 and civil practice and remedies code chapter 10 for filing a frivolous petition to vacate the attorneys' fees. The trial court vacated the attorneys'-fees portion of the award and denied all other relief, including Miller's motion for sanctions and accompanying request for attorneys' fees incurred as a result of Walker's petition to vacate.

         III. Authority to Award Attorneys' Fees

         In his first issue, Miller argues that the panel did not exceed its authority by awarding him attorneys' fees because the arbitration was conducted under FINRA rules, which allow an award of attorneys' fees, not pursuant to the AFA Agreement, which expressly excluded from arbitration the claims that Miller alleged against Walker. Alternatively, Miller contends that even if the AFA Agreement and its section IX(7) controlled, the parties authorized the panel to award him attorneys' fees because both sides submitted requests for attorneys' fees and Walker neither objected to Miller's request for attorneys' fees nor claimed that the panel ...

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