Court of Appeals of Texas, Fourth District, San Antonio
the 224th Judicial District Court, Bexar County, Texas Trial
Court No. 2018-CI-04393 Honorable Michael E. Mery, Judge
Sitting: Sandee Bryan Marion, Chief Justice Patricia O.
Alvarez, Justice Liza A. Rodriguez, Justice
PATRICIA O. ALVAREZ, JUSTICE
arbitration dispute, Appellant Jaydeep Shah, M.D., appeals
the trial court's confirmation of an arbitration award in
favor of Appellee Star Anesthesia, P.A. and the denial of
Shah's motion to vacate the arbitration award.
2007, Shah entered into a Professional Services Agreement
with Star Anesthesia to perform anesthesia services and
became a partner and shareholder of Star Anesthesia. The
agreement contained a binding arbitration agreement. On
December 30, 2016, Star Anesthesia terminated its employment
agreement with Shah. The parties submitted their dispute to
binding arbitration pursuant to their agreement. After a
contested hearing, the arbitrator issued a final award in
Star Anesthesia's favor.
Anesthesia filed a motion to confirm the arbitration award;
and Shah subsequently filed a motion to vacate. On June 12,
2018, after hearing arguments, the trial court confirmed the
arbitration award, denied Shah's motion to vacate, and
entered final judgment.
appeal, Shah contends: (1) the arbitrator improperly
considered and ruled on evidence not raised or pled by Star
Anesthesia; (2) the arbitrator improperly failed to find Shah
a prevailing party on Star Anesthesia's counterclaim, and
therefore improperly awarded attorney's fees and costs
only to Star Anesthesia; (3) the awarded attorney's fees
failed to distinguish between fees spent to defend the claim
and those spent to advance counterclaims; and (4) the
arbitrator's attorney's fees award is not supported
by either the arbitration clause or the Federal Arbitration
Statute. We affirm the trial court's judgment.
The Professional Services Agreement
November of 2007, Shah entered into a Professional Services
Agreement with Star Anesthesia to provide anesthesiology
services. The agreement required Shah to "devote [his]
time and loyalty to the Association." Shah was further
prohibited from "contract[ing] with, be[ing] employed
by, or otherwise practic[ing] anesthesiology except with the
Association unless otherwise authorized by the Board of
Directors of the Association."
of the agreement, Star Anesthesia provided management and
administrative services to Shah and its other physicians.
Star Anesthesia was also the exclusive provider of anesthesia
services to Baptist Health System. Star Anesthesia, Baptist
Health System, and Shah entered into a contract in which Shah
received guaranteed collections of $500, 000.00 per year. In
2012, Star Anesthesia's contract with Baptist Health
System was amended; Shah was not a party to the amended
contract. Shah, however, continued to serve as the full-time
pediatric anesthesiologist and benefit from the guaranteed
collections "despite not [being] specifically identified
as the intended beneficiary of [the contract]."
November 2016, after negotiations, Star Anesthesia and
Baptist Health System entered a contract eliminating the
previous $500, 000.00 guaranteed collections. Shah was not
informed of the change prior to the new contract taking
effect on December 1, 2016.
filed suit alleging multiple claims, including breach of
contract, breach of fiduciary duty, fraud, and tortious
interference. Shah sought recovery of attorney's fees and
costs. Star Anesthesia filed a general denial and asserted
multiple affirmative defenses, and counterclaims for breach
of contract, breach of fiduciary duty, and fraud by
hearing was held before the arbitrator in October 2017
regarding whether the written minutes taken during a December
7, 2016 Baptist Health System Department of Pediatric
Medicine Meeting were discoverable. Shah argued the minutes
were not discoverable "because they were privileged as
minutes of a medical peer review." Star Anesthesia
countered the minutes should be "discoverable because
they likely would shed light on whether (1) Dr. Shah made
certain statements at the meeting, and (2) whether those
statements gave rise to his termination for cause under the
moral turpitude provision in his employment agreement."
arbitrator ordered the minutes withheld.
the matter was called for Final Hearing before the
arbitrator, Shah was ordered to testify regarding statements
he made during the December 7, 2016 peer review meeting. The
arbitrator designated the testimony as "highly
confidential" under the existing protective order. In
response to his having to testify to the meeting, Shah urged
that he be allowed to use the written minutes he previously
argued should be "withheld from discovery." Star
Anesthesia argued unfair surprise and the arbitrator did not
allow the minutes into evidence.
arbitrator's award specifically provided the minutes were
not considered in the Final Award.
March 6, 2018, the arbitrator filed a Final Award providing
as follows: The arbitrator found in favor of Star Anesthesia
and against Shah on Shah's breach of contract for, inter
alia, the following reasons:
• Shah was not entitled to participate in the
negotiations or notice of negotiations with Baptist Health
• Shah's comments, "wearing of two hats, and
the actions he took in furtherance of those dueling
loyalties, constituted a conflict of interest, created a
firestorm among the surgeons, and resulted in what became
overwhelming evidence of conduct that would bring [Star
Anesthesia] into public disrepute."
• "Star [Anesthesia] established, by a
preponderance of the evidence, that it had sufficient
justification to terminate Dr. Shah for cause-moral
turpitude-without relying upon statements [Shah] made at the
December 7 meeting."
• Dr. Shah admitted in cross-examination that he had
been afforded all required due process.
arbitrator also found in favor of Star Anesthesia and against
Shah on discrimination under 42 U.S.C. § 1981 claims and
that Shah failed to prove his claims for breach of fiduciary
duty, fraud, and tortious interference.
for the affirmative defense of justification, the arbitrator
did not consider Star Anesthesia's affirmative defenses
"because they were moot in view of the adverse rulings
on Dr. Shah's claims."
other hand, the arbitrator held the evidence conclusively
established Star Anesthesia had actual notice that Shah was
serving as System-wide Medical Director at Baptist Health
System; however, none of the testifying witnesses knew Shah
was being compensated for such role. The arbitrator held the
evidence "established that Star [Anesthesia] considered
Dr. Shah's involvement in the day-to-day affairs of
[Baptist Health System] to be of value to Star [Anesthesia].
For these reasons, [Star Anesthesia] failed to prove its
breach of contract claim by a preponderance of the
evidence." The arbitrator also concluded Star Anesthesia
failed to prove any fiduciary duty existed or was ...