REVERSED AND RENDERED and Opinion Filed March 7, 2024
S In The Court of Appeals Fifth District of Texas at Dallas No. 05-22-01190-CV
JOHN CLENDENING, Appellant V. BLUCORA, INC., Appellee
On Appeal from the County Court at Law No. 5 Dallas County, Texas Trial Court Cause No. CC-22-03304-E
MEMORANDUM OPINION Before Justices Molberg, Reichek, and Smith Opinion by Justice Smith
Appellant John Clendening appeals the trial court’s order confirming an
arbitration award. In one issue, appellant argues that the trial court erred by
confirming the award because the award exceeded the arbitrator’s authority and
directly contradicted the parties’ agreement. We agree.
Factual and Procedural Background
Appellant is the former CEO of appellee Blucora, Inc. His employment
agreement provided that any employment-related disputes between him and appellee
were to be resolved in binding arbitration. In 2020, appellant filed an arbitration claim against appellee seeking damages, and appellee filed counterclaims against
appellant. The parties settled their disputes and entered into a Settlement Agreement
and Release on January 21, 2022.
The agreement mandated appellee to make specific payments to appellant and
mandated appellant to perform certain obligations; both parties were to perform by
set dates and times. Specifically, appellant had to provide answers to interrogatories
by 12:00 p.m. on January 22, 2022. If appellee found the answers acceptable,
appellee was to make another payment to appellant. If not, appellee could terminate
the settlement agreement or seek further information from appellant. Appellant
could also terminate the agreement for appellee failing to make a payment. If either
party terminated the agreement, the agreement would be deemed void and arbitration
would continue as if no settlement had been reached. If the parties complied to each
other’s satisfaction, they would file a joint motion to dismiss with prejudice all
claims in the arbitration proceeding.
Appellant provided interrogatory responses to appellee on January 22, 2022.
Appellee was not satisfied with the answers, and the parties filed further claims
against each other in arbitration. On March 9, 2022, the arbitrator emailed the parties
and informed them that appellee’s motion for an expedited resolution was denied.
The arbitrator further informed the parties:
I am aware that operative dates in the settlement agreement have now passed. Therefore, as a consequence of this ruling, the parties would need to confer, to at least attempt to come up with an agreed
–2– understanding of the date for the final payment called for by the settlement agreement, as well as dates for any interview and/or potential eventual deposition of [appellant].
On March 22, the parties submitted a joint agreed motion to dismiss as
provided by the Settlement Agreement. The arbitrator granted the motion on April
1. On April 6, appellee submitted a motion to compel appellant to provide more
complete answers and to attend a four-hour deposition. The arbitrator held a hearing
on the motion on May 11. The arbitrator granted the motion to compel on June 8,
explicitly concluding that (1) after entering the April 1 order, he retained jurisdiction
to rule on any motion to compel under “Paragraph 1(h) of the Settlement
Agreement”; (2) “it is determined that the arbitrator retained and still has jurisdiction
to consider the requested relief”; and (3) “the arbitrator retained jurisdiction to grant
such relief.” The arbitrator directed the parties to conference and attempt to reach
an agreement on the logistics of the date and time of the deposition. The parties
were to provide the arbitrator with a status report on June 15.
On June 24, appellant filed a motion in the trial court to vacate the arbitrator’s
June 8 order granting appellee’s motion to compel appellant’s deposition, which the
parties refer to as the arbitration award. Appellee filed a competing motion to affirm.
The parties did not challenge the arbitrator’s April 1, 2022 order granting the parties’
joint agreed motion to dismiss. After a hearing, the trial court denied appellant’s
motion to vacate and confirmed the arbitration award. This appeal followed.
–3– Arbitrator’s Powers
Appellant argues that the arbitrator exceeded his authority by ordering the
deposition without jurisdiction to do so and that the arbitrator’s award ordering the
deposition directly contradicts with the agreed deadline for the deposition to occur.
Appellee responds that the arbitrator had jurisdiction to order the deposition even
though it was past the deadline in the Settlement Agreement. Specifically, appellee
contends that appellant waived any argument that the agreement required strict
adherence to the deadlines because appellant participated, without objection, to the
informal interview long after its January 25, 2022 deadline, and it was appellee’s
dissatisfaction with appellant’s answers in the informal interview that led appellee
to file the motion to compel appellant’s deposition. Appellee further responds that
the arbitrator was faced with new claims arising after the operative dates had passed
and, thus, was construing and applying the contract when he reached a legal
determination that appellee could still seek a deposition. Appellee notes, “If
[appellant] were right that the February 2022 date was an absolute limit on the
arbitrator’s power, then he could effectively strip the arbitrator of jurisdiction simply
by running out the clock.”
We review a trial court’s decision to confirm an arbitration award de novo.
Ancor Holdings, LLC v. Peterson, Goldman & Villani, Inc., 294 S.W.3d 818, 826
(Tex. App.—Dallas 2009, no pet.). The parties agree that the Settlement Agreement
is “governed by the substantive laws of the State of Texas,” but dispute whether the
–4– Texas Arbitration Act (TAA) or the Federal Arbitration Act (FAA) applies in this
case. The employment agreement, under which arbitration began, provided that it
was governed by the laws of Delaware. Both agreements provided that the dispute
was to be resolved under the rules of the American Arbitration Association.
Regardless of which Act applies, our disposition would be the same in this case as
both acts provide for vacatur of an arbitration award where the arbitrator exceeded
his powers. See 9 U.S.C. § 10(a)(4) (FAA permits a court to vacate an arbitration
award “where the arbitrators exceeded their powers, or so imperfectly executed them
that a mutual, final, and definite award upon the subject matter submitted was not
made”); TEX. CIV. PRAC. & REM. CODE ANN. § 171.088(a)(3)(A) (TAA provides that
court shall vacate an award if arbitrators exceeded their powers); see also White v.
Siemens, 369 S.W.3d 911, 915 (Tex. App.—Dallas 2012, no pet.) (explaining that
we need not determine which act applies because our conclusion would be the same
under either act).
An arbitrator exceeds his powers where the arbitrator exceeds his contractual
authority. Ancor Holdings, 294 S.W.3d at 830. “It is well established that courts
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REVERSED AND RENDERED and Opinion Filed March 7, 2024
S In The Court of Appeals Fifth District of Texas at Dallas No. 05-22-01190-CV
JOHN CLENDENING, Appellant V. BLUCORA, INC., Appellee
On Appeal from the County Court at Law No. 5 Dallas County, Texas Trial Court Cause No. CC-22-03304-E
MEMORANDUM OPINION Before Justices Molberg, Reichek, and Smith Opinion by Justice Smith
Appellant John Clendening appeals the trial court’s order confirming an
arbitration award. In one issue, appellant argues that the trial court erred by
confirming the award because the award exceeded the arbitrator’s authority and
directly contradicted the parties’ agreement. We agree.
Factual and Procedural Background
Appellant is the former CEO of appellee Blucora, Inc. His employment
agreement provided that any employment-related disputes between him and appellee
were to be resolved in binding arbitration. In 2020, appellant filed an arbitration claim against appellee seeking damages, and appellee filed counterclaims against
appellant. The parties settled their disputes and entered into a Settlement Agreement
and Release on January 21, 2022.
The agreement mandated appellee to make specific payments to appellant and
mandated appellant to perform certain obligations; both parties were to perform by
set dates and times. Specifically, appellant had to provide answers to interrogatories
by 12:00 p.m. on January 22, 2022. If appellee found the answers acceptable,
appellee was to make another payment to appellant. If not, appellee could terminate
the settlement agreement or seek further information from appellant. Appellant
could also terminate the agreement for appellee failing to make a payment. If either
party terminated the agreement, the agreement would be deemed void and arbitration
would continue as if no settlement had been reached. If the parties complied to each
other’s satisfaction, they would file a joint motion to dismiss with prejudice all
claims in the arbitration proceeding.
Appellant provided interrogatory responses to appellee on January 22, 2022.
Appellee was not satisfied with the answers, and the parties filed further claims
against each other in arbitration. On March 9, 2022, the arbitrator emailed the parties
and informed them that appellee’s motion for an expedited resolution was denied.
The arbitrator further informed the parties:
I am aware that operative dates in the settlement agreement have now passed. Therefore, as a consequence of this ruling, the parties would need to confer, to at least attempt to come up with an agreed
–2– understanding of the date for the final payment called for by the settlement agreement, as well as dates for any interview and/or potential eventual deposition of [appellant].
On March 22, the parties submitted a joint agreed motion to dismiss as
provided by the Settlement Agreement. The arbitrator granted the motion on April
1. On April 6, appellee submitted a motion to compel appellant to provide more
complete answers and to attend a four-hour deposition. The arbitrator held a hearing
on the motion on May 11. The arbitrator granted the motion to compel on June 8,
explicitly concluding that (1) after entering the April 1 order, he retained jurisdiction
to rule on any motion to compel under “Paragraph 1(h) of the Settlement
Agreement”; (2) “it is determined that the arbitrator retained and still has jurisdiction
to consider the requested relief”; and (3) “the arbitrator retained jurisdiction to grant
such relief.” The arbitrator directed the parties to conference and attempt to reach
an agreement on the logistics of the date and time of the deposition. The parties
were to provide the arbitrator with a status report on June 15.
On June 24, appellant filed a motion in the trial court to vacate the arbitrator’s
June 8 order granting appellee’s motion to compel appellant’s deposition, which the
parties refer to as the arbitration award. Appellee filed a competing motion to affirm.
The parties did not challenge the arbitrator’s April 1, 2022 order granting the parties’
joint agreed motion to dismiss. After a hearing, the trial court denied appellant’s
motion to vacate and confirmed the arbitration award. This appeal followed.
–3– Arbitrator’s Powers
Appellant argues that the arbitrator exceeded his authority by ordering the
deposition without jurisdiction to do so and that the arbitrator’s award ordering the
deposition directly contradicts with the agreed deadline for the deposition to occur.
Appellee responds that the arbitrator had jurisdiction to order the deposition even
though it was past the deadline in the Settlement Agreement. Specifically, appellee
contends that appellant waived any argument that the agreement required strict
adherence to the deadlines because appellant participated, without objection, to the
informal interview long after its January 25, 2022 deadline, and it was appellee’s
dissatisfaction with appellant’s answers in the informal interview that led appellee
to file the motion to compel appellant’s deposition. Appellee further responds that
the arbitrator was faced with new claims arising after the operative dates had passed
and, thus, was construing and applying the contract when he reached a legal
determination that appellee could still seek a deposition. Appellee notes, “If
[appellant] were right that the February 2022 date was an absolute limit on the
arbitrator’s power, then he could effectively strip the arbitrator of jurisdiction simply
by running out the clock.”
We review a trial court’s decision to confirm an arbitration award de novo.
Ancor Holdings, LLC v. Peterson, Goldman & Villani, Inc., 294 S.W.3d 818, 826
(Tex. App.—Dallas 2009, no pet.). The parties agree that the Settlement Agreement
is “governed by the substantive laws of the State of Texas,” but dispute whether the
–4– Texas Arbitration Act (TAA) or the Federal Arbitration Act (FAA) applies in this
case. The employment agreement, under which arbitration began, provided that it
was governed by the laws of Delaware. Both agreements provided that the dispute
was to be resolved under the rules of the American Arbitration Association.
Regardless of which Act applies, our disposition would be the same in this case as
both acts provide for vacatur of an arbitration award where the arbitrator exceeded
his powers. See 9 U.S.C. § 10(a)(4) (FAA permits a court to vacate an arbitration
award “where the arbitrators exceeded their powers, or so imperfectly executed them
that a mutual, final, and definite award upon the subject matter submitted was not
made”); TEX. CIV. PRAC. & REM. CODE ANN. § 171.088(a)(3)(A) (TAA provides that
court shall vacate an award if arbitrators exceeded their powers); see also White v.
Siemens, 369 S.W.3d 911, 915 (Tex. App.—Dallas 2012, no pet.) (explaining that
we need not determine which act applies because our conclusion would be the same
under either act).
An arbitrator exceeds his powers where the arbitrator exceeds his contractual
authority. Ancor Holdings, 294 S.W.3d at 830. “It is well established that courts
may set aside awards when the arbitrator exceeds his contractual mandate by acting
contrary to express contractual provisions.” Beaird Indus., Inc. v. Local 2297, Int’l
Union, 404 F.3d 942, 946 (5th Cir. 2005); see, e.g., Townes Telecomms., Inc. v.
Travis, Wolff & Co., L.L.P., 291 S.W.3d 490, 492–94 (Tex. App.—Dallas 2009, pet.
denied) (arbitration panel acted in direct contravention and exceeded its powers
–5– when it allocated costs between the parties where the agreement expressly prohibited
it from doing so and instead required the panel to designate the non-prevailing party
to bear the costs of both sides).
“Whether enforcing an agreement to arbitrate or construing an arbitration
clause, courts and arbitrators must give effect to the contractual rights and
expectations of the parties. In this endeavor, as with any other contract, the parties’
intentions control.” Stolt-Nielsen S.A. v. AnimalFeeds Int’l Corp., 559 U.S. 662, 682
(2010) (internal quotations and citations omitted). An arbitrator may not ignore the
plain language of the parties’ contract. Ancor Holdings, 294 S.W.3d at 830.
Section 1.e. of the Settlement Agreement at issue here provided:
Upon receipt of the payment [if appellee found appellant’s responses acceptable], . . . Parties will jointly file a motion to dismiss with prejudice all claims in the Arbitration, subject to the continuing jurisdiction outlined in Paragraph 1.h. [Appellant] acknowledges that, if [appellee] files a motion to compel pursuant to Paragraph 1.h., the arbitrator shall rule on such motion as though the Arbitration is ongoing.
The Settlement Agreement further provided that, after payment was made and the
parties filed a joint motion to dismiss, appellee could ask appellant follow-up
questions through an informal conversation, which was not to be recorded. Once
that conversation occurred, or if appellee did not request such conversation, appellee
was to make a final payment to appellant. Section 1.h. of the agreement provided:
–6– If [appellee] does not believe that the Answers are fully complete or is not satisfied by the subsequent conversation with [appellant], the arbitrator in the Arbitration will retain jurisdiction to hear [appellee’s] Motion to Compel seeking to compel [appellant] to provide more complete Answers and provide up to a four-hour deposition (to occur not later than February 27, 2022 on a mutually convenient date) to answer questions under oath.
We conclude that, although the parties agreed the arbitrator retained limited
jurisdiction to hear a motion to compel after they filed their joint motion to dismiss,
the language in Section 1.h. restricted the arbitrator’s authority to order a deposition
“to occur not later than February 27, 2022.” This language is plain and
unambiguous. The fact that the parties failed to contract for a situation where the
deadlines had passed does not create an ambiguity in the language or authorize the
arbitrator to act outside of the parties’ agreement. Here, the arbitrator exceeded his
authority by ordering, in direct contravention of the parties’ agreement, appellant’s
deposition to occur later than February 27, 2022. Therefore, the trial court erred
when it failed to vacate the award. We sustain appellant’s sole issue on appeal.
Conclusion
The arbitrator exceeded his powers by ordering appellant’s deposition after
February 27, 2022, and the trial court erred by denying appellant’s motion to vacate
the award. Therefore, we reverse the trial court’s order confirming the arbitration
award and render judgment vacating the June 8, 2022 arbitration order that granted
appellee’s Motion to Compel Deposition.
–7– The arbitrator’s April 1, 2022 order granting the parties’ joint agreed motion
to dismiss remains in effect.
/Craig Smith/ CRAIG SMITH JUSTICE
221190F.P05
–8– S Court of Appeals Fifth District of Texas at Dallas JUDGMENT
JOHN CLENDENING, Appellant On Appeal from the County Court at Law No. 5, Dallas County, Texas No. 05-22-01190-CV V. Trial Court Cause No. CC-22-03304- E. BLUCORA, INC., Appellee Opinion delivered by Justice Smith. Justices Molberg and Reichek participating.
In accordance with this Court’s opinion of this date, the order of the trial court granting appellee Blucora, Inc.’s motion to affirm the June 8, 2022 arbitration award is REVERSED and judgment is RENDERED that:
appellant John Clendening’s motion to vacate the arbitration award is granted, and the arbitrator’s June 8, 2022 arbitration order granting appellee Blucora, Inc.’s Motion to Compel Deposition is vacated.
The arbitrator’s April 1, 2022 order granting the parties’ joint agreed motion to dismiss remains in effect.
It is ORDERED that appellant JOHN CLENDENING recover his costs of this appeal from appellee BLUCORA, INC.
Judgment entered this 7th day of March 2024.
–9–