Barsness v. Scott

126 S.W.3d 232, 2003 Tex. App. LEXIS 9397, 2003 WL 22489646
CourtCourt of Appeals of Texas
DecidedNovember 5, 2003
Docket04-02-00928-CV
StatusPublished
Cited by53 cases

This text of 126 S.W.3d 232 (Barsness v. Scott) is published on Counsel Stack Legal Research, covering Court of Appeals of Texas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Barsness v. Scott, 126 S.W.3d 232, 2003 Tex. App. LEXIS 9397, 2003 WL 22489646 (Tex. Ct. App. 2003).

Opinion

OPINION

Opinion by:

CATHERINE STONE, Justice.

Richard and Cheryl Barsness (the “Barenesses”) seek to have this court set aside a judgment enforcing an arbitration award. We affirm the trial court’s judgment as reformed.

BACKGROUND

Madison Scott purchased from the Bare-nesses their shares of stock in their company, which owned two pizza companies. The purchase agreement acknowledged a pre-existing dispute between the Bareness-es and Mr. Gatti’s, Inc. (a restaurant franchiser) would not be an impediment to the sale. The purchase agreement contained an arbitration provision. This arbitration provision provided:

Any dispute, controversy or claim arising out of or relating to this Agreement shall be finally settled ... by three (3) arbitrators ... An award or determination of the arbitration tribunal shall be final and conclusive upon the parties, judgment thereon may be entered by any court of competent jurisdiction and no appeal thereof shall be made by the parties.

The purchase agreement also included indemnity provisions, which precluded settlement of any third party claims without the consent of the indemnitor. In a separate side agreement, the details of the Mr. Gatti’s dispute were set forth. The parties further agreed that if a judgment was taken against Scott by Mr. Gatti’s, the Barenesses would reimburse Scott for up to one-half of the judgment or settlement.

Mr. Gatti’s sued Scott and the Bareness-es, but they entered into a settlement agreement. Several months later, Mr. Gatti’s filed a motion to set aside the settlement agreement. Before the motion was ruled on, Scott entered into a settlement agreement with Mr. Gatti’s. Scott then brought a cross-claim against Richard Barsness and filed a third party claim against Cheryl Barsness. In the settlement agreement that Scott entered with Mr. Gatti’s, Scott agreed to pay two million dollars in cash to Mr. Gatti’s. In a supplemental agreement between Scott and Mr. Gatti’s, the parties agreed that Scott could satisfy the settlement by executing and delivering a franchise agreement to Mr. Gatti’s. The Barenesses cross-claimed against Scott, and the disputes went to separate arbitrations.

Scott and the Barenesses amended their claims before the arbitration proceedings. Scott claimed that Richard Barsness had misrepresented the quality of his pizza recipes, misled him about the status of his *236 contractual relationship with Mr. Gatti’s, and misrepresented the status of his business tax liability. Scott sought actual and punitive damages for Barsness’s alleged fraud and breach of contract. Scott further sought a declaratory judgment against the Barsnesses concerning Scott’s agreement to pay Mr. Gatti’s two million dollars. Scott pleaded:

Specifically, as a result of litigation between Scott and Gatti’s, Scott has reached a settlement whereby he agreed to pay Gatti’s Two Million Dollars ($2,000,000) in damages. To this end, Madison Scott seeks a declaratory judgment that Bareness is responsible for one-half (½) of this settlement amount as specifically set forth under the stock purchase agreement and the letter agreement of the stock purchase agreement.

Scott also sought a declaratory judgment that “Bareness is responsible for Scott’s attorney’s fees and costs associated with all litigation arising from all inaccuracies in or breach of all representations, warranties, covenants, and/or agreements contained in the contract.”

The Barsnesses’ counterclaim sought relief for Scott’s default on the notes, security interests, and loan letter agreements executed in connection with the stock purchase agreement. The Barsnesses requested recovery based on acceleration of Scott’s indebtedness, foreclosure of security interests, avoidance of lease assignments in contravention of the agreement, and damages for waste.

The arbitration panel heard the Scott versus Bareness controversy during the week of April 1, 2002. The panel issued an order following the arbitration proceeding, which provides in pertinent part as follows:

Findings:
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9. Scott entered into a settlement agreement with Mr. Gatti’s which, among other things, established what he claimed was Barsness’s duty to indemnify him for one-half of the settlement amount, to-wit $1,000,000.00.
[[Image here]]
Conclusions:
10. Neither party is entitled to rescind the transaction that closed October 14, 1999;
11. Bareness committed a violation of § 27.01 [Texas Business and Commerce Code];
12. Barsness’s actions did not rise to the level of malicious, reckless or wanton behavior;
13. Scott is entitled to a reinstatement of the debt instruments held by Bareness, such reinstatement to be effective February 1, 2001;
14. The effect of such reinstatement is to require a recalculation of amounts due to Bareness from Scott under the debt instruments, calculation at the contract rate of nine (9%) percent per annum rather than at a higher default rate; any overpayment that results, if any, regardless of the promissory note to which it applies, shall be credited against the outstanding principal sum of $2,400,000.00;
15. Neither party is the “prevailing party,” in that full relief has not been granted under this arbitration award to either party; and
16. [The order did not include a conclusion for No. 7];
17. [The order did not include a conclusion for No. 8];
18. Bareness shall take nothing with respect to his claims against Scott.
*237 19. All relief not hereby granted is expressly DENIED.
20. Each party is entitled to submit this award to a court of competent jurisdiction for entry as a judgment.

In response to a motion entitled “Application For Modification or Clarification of Award” filed by Scott, the arbitration panel modified its order. The arbitration panel designated Scott as the prevailing party and awarded Scott one dollar as nominal damages and $356,613.76 for attorney’s fees and costs. The order did not otherwise eliminate its prior ruling implicitly denying Scott’s claim for indemnity on the Scott-Mr. Gatti’s settlement. The arbitrators’ award was the same in all respects as its previous order except that it provided:

Conclusions:
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6. The evidence is legally insufficient, and Madison Scott is therefore not entitled to damages in excess of nominal damages.
7. Madison Scott is awarded the nominal sum of $1.00 as damages in this case.
8.

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Cite This Page — Counsel Stack

Bluebook (online)
126 S.W.3d 232, 2003 Tex. App. LEXIS 9397, 2003 WL 22489646, Counsel Stack Legal Research, https://law.counselstack.com/opinion/barsness-v-scott-texapp-2003.