Stage Stores, Inc. v. Jon Gunnerson

477 S.W.3d 848, 40 I.E.R. Cas. (BNA) 1304, 2015 Tex. App. LEXIS 10419, 2015 WL 5946612
Court of Appeals of Texas·Decided October 8, 2015·No. NO. 01-13-00708-CV·Published·Cited by 22 cases

Opinions

OPINION

Laura Carter Higley, Justice

Following an arbitration hearing and award, Stage Stores, Inc. filed an application to vacate the arbitration award. Jon Gunnerson filed a response and an application to confirm the arbitration award. Gunnerson’s application also sought the award of attorneys’ fees. The trial court denied Stage’s application to vacate the arbitration award, denied Gunnerson’s request for attorneys’ fees, and granted the application to confirm the arbitration award. In one issue on appeal, Stage argues that the trial court erred by denying its application' to vacate the arbitration award on the ground that the arbitrator exceeded her authority. In one issue on cross-appeal, Gunnerson argues that the trial court abused its discretion by denying his request for attorneys’ fees.

We reverse and remand.

Background

Stage Stores is a nationwide department store retailer with brands including “Palais Royal,” “Bealls,” and “Goody’s.” It is headquartered in Houston. Gunnerson was a senior executive for Stage for six years. In February 2010, he was promoted to Senior Vice President Director of Stores for the Houston Division. He entered into an employment contract as a part of obtaining that position.

The employment contract includes an arbitration provision, requiring the parties to submit any disputes relating to the employment contract to arbitration. Arbitration is subject to the Federal Arbitration Act (“FAA”) and the rules of the American Arbitration Association. The provision does not specify a form for the arbitration award.

The contract also contains provisions for various methods of terminating the contract. One method in particular, “By the Executive for Good Reason,” permitted Gunnerson to receive certain financial benefits upon termination. That method also contained certain requirements, including advance notice of the grounds supporting good reason and an opportunity to cure.

On July 2, 2012, Gunnerson submitted a resignation letter to Stage. In the letter, Gunnerson explained that he was invoking the “By the Executive for Good Reason” method for terminating the contract. Stage refused to pay the benefits available under that method. Gunnerson initiated an arbitration proceeding, challenging the refusal.

Gunnerson and Stage selected an arbitrator. After a preliminary hearing, the arbitrator issued a “Report of Preliminary Hearing and Scheduling Order.” In the order, the arbitrator noted that, by agreement of the parties, the form of the award would be a “reasoned award.”

[853]*853In its opening argument at the hearing, Stage Stores raised the notice and cure requirements of the contract as a basis for rejecting Gunnerson’s claim. During Gun-nerson’s testimony at the hearing, both sides questioned him about the notice and cure requirements and whether the requirements had been satisfied. In its closing argument, Stage Stores again raised the notice and cure requirements as a basis for rejecting Gunnerson’s claim.

Following the hearing, the arbitrator issued an initial award. The initial award determined that Gunnerson was entitled to recover his attorneys’ fees and costs, but did not identify the amount awarded. After the arbitrator issued the initial award, the parties submitted briefing on the- matter of Gunnerson’s fees and costs. The trial court then issued a final award.

The only difference between the initial and final awards was that the final award included the amount of fees and costs awarded. The awards are four pages in length. They contain a statement of jurisdiction, an identification of the parties, a statement of the issues, a recitation of certain procedural facts, the arbitrator’s rulings, and the arbitrator’s damage awards.

In the section identifying the issues under consideration, the arbitration award identifies Gunner’s main argument to be that, by “restructuring] the Company’s organization chart such that Gunnerson no longer directly reported to [the CEO] but instead to another Senior V.P....[,] [Stage] materially reduced, decreased or diminished Gunnerson’s nature and status within the Company, thereby providing him with good reason to resign, pursuant to paragraph 4.4.3(iii) of the Agreement.” For Stage, the award identifies two of its main arguments: that Gunnerson “voluntarily elected to leave his job as a result of another job offer, and ... the changes to the organizational structure do not rise to the level of a material reduction, decrease or diminution of his status within the organization.”

In the rulings section, the award provides four specific rulings: (1) -that a valid contract existed between the parties; (2) that Stage’s “actions in restructuring the organization and rem'oving [Gunnerson] from a direct reporting relationship to the CEO diminished [Gunnerson’s] status, thereby allowing [Gunnerson] to terminate his position for good reason pursuant to paragraph 4 of the Agreement”; (3) that Gunnerson was entitled.to recover attorneys’ fees; and (4) that Gunnerson “failed to meet his burden of proof regarding the present value of future stock options.” The arbitration award then includes the specific amount of damages awarded to Gunnerson.

Stage then filed an application to vacate the award- in the trial court. Gunnerson filed a response and an application- to confirm the arbitration award. In his application to confirm the award, Gunnerson requested the trial court to award him attorneys’ fees because Stage’s application to vacate the award was “without justification.” Following a hearing, the trial court denied Stage’s 'application to vacate the award, denied Gunnerson’s request for attorneys’ fees, and granted Gunnerson’s application to confirm the award.

Arbitration Award

In its sole issue on appeal, Stage argues that, the trial court erred by denying its application to vacate the arbitration award.

A. Standard of Review & Applicable Law

The dispute between the parties at arbitration concerned whether a certain provision in Gunnerson’s employment agree[854]*854ment was satisfied. The employment agreement provided that any disputes relating to , the agreement are subject to arbitration according to the FAA.

1. Review of Award

There are two general guiding principles of arbitration that are particularly relevant to our- review here. The first is that arbitration is a matter of contract. Rain CII Carbon, LLC v. Conoco-Phillips Co., 674 F.3d 469, 472 (6th Cir.2012). “Ultimately, arbitrators derive their powers from the parties’agreement.” Cat Charter, LLC v. Schurtenberger, 646 F.3d 836, 843 (11th Cir.2011). Our review of an arbitration award, then, typically focuses on whether it gives effect to the parties’ contractual-arbitration agreement. See id. at 843 n. 13 (“We refer to contractual provisions regarding the scope or form of the arbitration.”).

The second guiding principle is that arbitration is designed as an efficient, less-costly alternative to judicial-litigation. Royce Homes, L.P. v. Bates, 315 S.W.3d 77, 85 (Tex.App.-Houston [1st Dist.] 2010, no pet.). The FAA

substantiates] a national policy favoring arbitration with .just the limited review - needed to. maintain arbitration’s essential virtue of resolving disputes straightaway. Any other reading.

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Stage Stores, Inc. v. Jon Gunnerson, 477 S.W.3d 848, 40 I.E.R. Cas. (BNA) 1304, 2015 Tex. App. LEXIS 10419, 2015 WL 5946612 (Tex. Ct. App. 2015).

477 S.W.3d 848 (Stage Stores, Inc. v. Jon Gunnerson) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

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