Crossmark, Inc. v. Hazar

124 S.W.3d 422, 2004 Tex. App. LEXIS 390, 2004 WL 64691
CourtCourt of Appeals of Texas
DecidedJanuary 15, 2004
Docket05-02-01169-CV
StatusPublished
Cited by99 cases

This text of 124 S.W.3d 422 (Crossmark, Inc. v. Hazar) 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
Crossmark, Inc. v. Hazar, 124 S.W.3d 422, 2004 Tex. App. LEXIS 390, 2004 WL 64691 (Tex. Ct. App. 2004).

Opinion

OPINION

Opinion by

Justice MOSELEY.

The issues in this appeal center on the judicial confirmation of an arbitration *427 award, and conversely, the grounds for vacating or modifying such an award. Appellant Crossmark, Inc. (“Crossmark”) appeals the trial court’s final judgment, based in part on a prior interlocutory summary judgment, that confirms an arbitration award in favor of appellees John and Jim Hazar (the “Hazars”). In six issues, Crossmark asserts the trial court: (1) erred by confirming a piecemeal arbitration award; (2) erred by refusing to join an indispensable party; (3) erred by confirming an arbitration award that violated public policy; 2 (4) erred by refusing to modify the arbitration award based on an “evident miscalculation of numbers;” and (5) erred by increasing the arbitration award to include additional attorneys’ fees for enforcing and appealing the confirmation of an arbitration award. For reasons stated below, we modify the judgment to delete the award of attorneys’ fees for confirming the award, for appealing to this Court, and for potentially appealing to the supreme court. As modified, we affirm the trial court’s judgment.

Backgkound

Through a Bill of Sale and Assignment Agreement (“sales agreement”), Cross-mark purchased the assets of Action Brokerage, Inc. (“Action”), a consumer products brokerage company owned and operated by the Hazars. In addition to the sales agreement with Action, Cross-mark entered into separate confidentiality and non-competition agreements (“non-competition agreements”) with each of the Hazars. All three agreements contained arbitration clauses.

Under the non-competition agreements, in return for the Hazars’ agreements not to compete for a period of ten years, Crossmark agreed to pay each of the Ha-zars $600,000, payable in equal monthly payments over the ten-year period. The agreements also provided that if Cross-mark breached its obligations under the non-competition agreements, the Hazars had the right to “accelerate the balance of any amounts owed” to them.

The sales agreement defined the term “assets,” but a dispute arose over whether this definition included Action’s accounts receivable (representing contractual rights to earned but unpaid commissions). Six months after the purchase, Crossmark reduced its payments to the Hazars under the non-competition agreements. (In their brief, the Hazars state Crossmark stopped making payments altogether.) 3

Pursuant to the arbitration clauses in the non-competition agreements, the Ha-zars instituted an arbitration proceeding before a panel of three arbitrators. In that proceeding, Crossmark filed: a response raising defenses, including prior breach of agreements by the Hazars and failure of consideration; a counterclaim against the Hazars; and a third-party claim against Action seeking to join it in the arbitration proceeding. Crossmark argued that Action had breached the sales agreement, justifying Crossmark’s reduction in payments to the Hazars under the non-competition agreements.

The parties’ briefs indicate that the arbitration panel held a preliminary hearing and stated it would not join Crossmark’s claims against Action into the pending arbitration; according to the Hazars’ brief, *428 this took place on July 7, 2000, some months before the arbitration hearing began on October 31, 2000. The Hazars’ brief also indicates the panel advised Crossmark that if it filed a separate arbitration proceeding against Action based on the sales agreement, the arbitration panel would consider a motion to consolidate the two proceedings.

According to Crossmark’s brief, shortly before the arbitration hearing it again sought to assert its claims against Action in the pending arbitration proceeding, and moved to postpone the arbitration hearing. According to the Hazars’ brief, this occurred four business days before the scheduled hearing; the arbitrators heard these motions, denied them, and proceeded with the hearing.

After hearing witnesses and reviewing documentary evidence, the arbitrators awarded the Hazars: (1) $570,000 each, which equaled the unpaid portion of the $600,000 consideration payable to each of the Hazars under the non-competition agreements; (2) attorneys fees; and (3) “post-Award” interest. The award also denied Crossmark’s counterclaim against the Hazars and dismissed Crossmark’s third-party claim against Action stating:

The Arbitrators decline to entertain either the third party claim filed by Crossmark against Action ... or the arbitration proceeding initiated by Crossmark against Action for want of jurisdiction and without prejudice to the rights of any party.

The Hazars filed an application in the trial court to confirm the arbitration award. Crossmark answered and counterclaimed seeking to have the award vacated, or at least modified. The Hazars then filed a motion to confirm the arbitration award, but Crossmark filed an objection arguing that the motion could only be made as a motion for summary judgment under rule 166a because it relied on evidence beyond the pleadings.. In response the Hazars moved for summary judgment confirming the award.

Crossmark filed a response to the Ha-zars’ motion and a cross-motion for partial summary judgment. • Crossmark also filed a third-party claim naming Action as a party, asserting its claims for breach of the sales agreement. Action answered and filed a motion to compel arbitration of Crossmark’s claims against it under the sales agreement.

The summary judgment record includes affidavits from lawyers involved in the arbitration testifying as to what occurred during the arbitration process, and attaching some of the documents filed in the arbitration proceeding. Both parties objected to these affidavits in whole or in part below, but the trial court did not rule on any of those objections. We note the summary judgment record does not include a transcription of the arbitration proceedings or a complete record of the documents that were filed in the arbitration.

The trial court granted the Hazars’ motion for summary judgment confirming the award. The trial court also severed Cross-mark’s claims against Action into a separate suit, compelled arbitration of those claims, and abated that suit pending the arbitration. The Hazars then moved for summary judgment on Crossmark’s counterclaims and defenses (which claims and defenses, sought to vacate or modify the award). Crossmark filed a response and a cross-motion for summary judgment. The trial court subsequently granted the Ha-zars’ motion for summary judgment as to Crossmark’s counterclaims, denied Cross-mark’s cross-motion for summary judgment as moot, denied Crossmark’s other motions, and entered a final judgment in favor of the Hazars. The final judgment incorporated the prior summary judgment *429 confirming the arbitration award, and awarded the Hazars additional attorneys’ fees for confirming the arbitration award and conditional attorneys’ fees for appeals of the judgment confirming the award. Crossmark perfected its appeal to this court.

Law Applicable to Arbitration Proceedings

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Cite This Page — Counsel Stack

Bluebook (online)
124 S.W.3d 422, 2004 Tex. App. LEXIS 390, 2004 WL 64691, Counsel Stack Legal Research, https://law.counselstack.com/opinion/crossmark-inc-v-hazar-texapp-2004.