General Universal Systems, Inc. v. Merrill Lynch Pierce Fenner & Smith, Inc.

• Court: Court of Appeals of Texas
• Decided: April 17, 2003
• Docket: 14-01-00509-CV
• Status: Published

Opinion

Affirmed and Memorandum Opinion filed April 17, 2003

Affirmed and Memorandum Opinion filed April 17, 2003.

In The

Fourteenth Court of Appeals

____________

NO. 14-01-00509-CV

GENERAL UNIVERSAL SYSTEMS, INC., Appellant

V.

MERRILL LYNCH, PIERCE, FENNER & SMITH, INC., Appellee

On Appeal from the 151st District

Harris County, Texas

Trial Court Cause No. 2000-10220

M E M O R A N D U M   O P I N I O N

Appellant, General Universal Systems, Inc. (“GUS”), appeals a judgment on an arbitration award rendered pursuant to the regulations of the National Association of Securities Dealers (“NASD”).  The trial court awarded appellee, Merrill Lynch, Pierce, Fenner & Smith, Inc., $4,904.38 for the principal due, the NASD fee of $575.00, prejudgment and postjudgment interest, and $1,050.00 in attorneys’ fees as provided under the NASD award.  GUS argues the pleadings are insufficient because, in the body of the pleadings, Merrill Lynch sought judgment against Dr. Eli Nassar (GUS=s president), rather than against GUS.  GUS also claims due process and statutory violations based on allegedly inadequate notice of the arbitration proceedings.  We conclude the pleadings are sufficient to support the judgment, and GUS received adequate notice of the arbitration award but did not make proper and timely challenge to it.  We affirm.

DISCUSSION

Issue One:  Sufficiency of the Pleadings

In issue one, GUS contends the pleadings in state district court are insufficient to support the judgment because in the body of its pleadings, Merrill Lynch sought judgment against Nassar, rather than against GUS.  Merrill Lynch argues the judgment does conform to the pleadings because Merrill Lynch sought judgment under the award, which was attached to its application for entry of judgment.

  We view the pleadings as a whole.  Wilson v. McCracken, 713 S.W.2d 394, 395 (Tex. App.CHouston [14th Dist.] 1986, no writ).  The application for entry of judgment on arbitration award is styled, “Merrill Lynch, Pierce, Fenner & Smith, Inc., vs. General Universal Systems, Inc.”  GUS is listed as the only defendant under the parties section in the application. The arbitration award on which Merrill Lynch sought to recover was referenced in, and attached to, the application for entry of judgment.  The final judgment states it was Aon Arbitration Award.@  In the Arbitration Award, GUS is identified as the sole respondent; and Merrill Lynch, as the sole claimant.  The Award recites that the respondent is liable and shall pay to the claimant $4,904.38, interest at the rate of ten percent per annum, the filing fee of $575.00, and $1,050.00 in attorneys= fees.  We agree with Merrill Lynch that the judgment does conform to the pleadings.  See Cockrell v. Estavez, 737 S.W.2d 138, 139 (Tex. App.CSan Antonio 1987, no writ) (looking to attached document in process of rejecting appellant=s claim judgment did not conform to the pleadings).

We overrule issue one.

Issues Two through Four: Sufficiency of Notice of the Arbitration and of the Award

In issue two, GUS contends it was denied due process by not being served with any notice of the arbitration proceeding.  In issue three, GUS contends Merrill Lynch did not comply with the Texas Arbitration Act because it did not give GUS notice of the request for arbitration by registered or certified mail.  In issue four, GUS contends Merrill Lynch presented no evidence of proper notice of the arbitration request, proceedings, or award to support entry of judgment on the award.

The account at issue involves the purchase, sale, and holding of securities.  Accordingly, Merrill Lynch argues the Federal Arbitration Act, not the Texas Arbitration Act, applies.  See Thomas James Assocs., Inc., v. Owens, 1 S.W.3d 315, 319 (Tex. App.CDallas 1999, no pet.).  GUS points to no provision in the Federal Arbitration Act requiring service of the statement of claim or the award by registered or certified mail, and we have found none.

In addition, arbitration was before the NASD.  Under the NASD rules, after the claimant files the necessary documents and deposit, the director of arbitration is to serve “promptly by mail or otherwise” a copy of the submission agreement and one copy of the statement of claim on the respondent.  See NASD Code of Arbitration Procedure Rule10314(a)  According to the award, GUS was served with the statement of claim and overdue notice by regular mail.

Finally, GUS is seeking vacation of the arbitration award, either through reversal and rendition or, alternatively, through a remand for a new arbitration proceeding.  Although the Texas Arbitration Act may allow vacation of an arbitration award if the hearing was conducted in violation of the notice provisions in section 171.044, the Federal Arbitration Act does not contain a similar provision.  See Tex. Civ. Prac. & Rem. Code Ann. '' 171.044, .088 (Vernon Supp. 2003).  Cf.  9 U.S.C.A. ' 10 (West 1999); Gingiss Int’l, Inc. v. Bormet, 58 F.3d 328, 332 (7th Cir. 1995) (holding inadequate notice not a ground for vacation of an award under Federal Arbitration Act section 10).

Even were GUS=s claim subject to the provisions of the Texas Arbitration Act, however, his motion to vacate was untimely filed under that act, which  provides that a party must make application to vacate “not later than the 90th day after the date of delivery of a copy of the award to the applicant.”  Tex. Civ. Prac. & Rem. Code Ann. ' 171.088(b) (Vernon Supp. 2003).  The ninety day requirement in ' 171.088 has been referred to as a limitations period.  See Louisiana Natural Gas Pipeline, Inc., v. Bludworth Bond Shipyard, Inc., 875 S.W.2d 458, 462 (Tex. App.CHouston [1st Dist.] 1994, writ denied). After the limitations period has expired, a party cannot ask a court to vacate an arbitration award. Id.

The citation in the present case shows Merrill Lynch=s application for judgment on the award was served March 16, 2000.^[1]  The award was attached as Exhibit A to the application for judgment.  Nassar, GUS=s registered agent, testified a customer told Nassar about the process server leaving the papers.  Nassar further testified he “took these papers and . . . found out that it was a service on General Universal Systems.”  Even if one assumes Nassar did not receive notice of the award until March 16, 2000, his motion to vacate the award, filed 95 days later on June 19, 2000, was untimely.^[2]

We overrule appellant=s issues two through four.

We affirm the judgment of the trial court.

/s/        John S. Anderson

Justice

Judgment rendered and Memorandum Opinion filed April 17, 2003.

Panel consists of Justices Yates, Anderson, and Fowler.

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^[1]  In his affidavits, R. Wayne Bruce, the process server, stated he served the citation on March 14, 2000.  According to the citation, however, March 14, 2000, was the date Bruce received the citation. 

^[2]  Nassar=s motion to vacate was also untimely under the Federal Arbitration Act.  See 9 U.S.C.A. ' 12 (West 1999) (providing notice of motion to vacate must be served within three months after award is filed or delivered).