Juan A. Rueda v. Randall W. Holland ( 2015 )


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  •                                                                                ACCEPTED
    01-14-00919
    FIRST COURT OF APPEALS
    HOUSTON, TEXAS
    3/12/2015 10:53:32 PM
    CHRISTOPHER PRINE
    CLERK
    NO. 01-14-00919-CV
    FILED IN
    1st COURT OF APPEALS
    IN THE                              HOUSTON, TEXAS
    FIRST COURT OF APPEALS AT                3/12/2015 10:53:32 PM
    HOUSTON, TEXAS                      CHRISTOPHER A. PRINE
    Clerk
    JUAN A. RUEDA, Appellant
    vs.
    RANDALL W. HOLLAND, Appellee
    On Appeal from the 11th Judicial District Court of
    Harris County, Texas
    The Honorable Mike D. Miller, Presiding Judge
    Trial Court Case Number 2012-41959
    RANDALL W. HOLLAND’S BRIEF ON THE MERITS
    Kristin Bays
    State Bar No. 00787914
    kristin@baysandbays.com
    J. Randal Bays
    State Bar No. 01943900
    randy@baysandbays.com
    1503 Hailey
    Conroe, Texas 77301
    Phone: (936) 760-7670
    Fax: (936) 760-7671
    ATTORNEYS FOR RANDALL                      W.
    HOLLAND
    -i-
    IDENTITY OF PARTIES AND COUNSEL
    The following is a complete list of all parties to the trial court’s order that is the
    subject of this appeal, as well as the names and addresses of all trial and appellate
    counsel:
    Juan A. Rueda                                            Appellant and Plaintiff Below
    William H. Luck, Jr.                     Mr. Rueda’s Trial and Appellate Counsel
    Bill. Luck@sbcglobal.net
    1412B Stonehollow Drive
    Houston, Texas 77339
    Phone: 281-358-7611
    Fax: 281-358-0299
    Randall W. Holland                                      Appellee and Defendant Below
    Kristin Bays                                      Mr. Holland’s Appellate Counsel
    kristin@baysandbays.com
    J. Randal Bays
    randy@baysandbays.com
    1503 Hailey
    Conroe, Texas 77301
    Phone: 936-760-7670
    Fax: 936-760-7671
    Michael Boltz                                        Mr. Holland’s Trial Counsel
    Boltz@boltzlaw.com
    1400 Woodloch Forest Drive
    The Woodlands, Texas 77380
    Phone: 832-381-3070
    Fax: 832-218-2400
    The Honorable Mark Davidson                                                      Arbitrator
    Mark_Davidson@justex.net
    201 Caroline, 17th Floor
    Houston, Texas 77002
    Houston, Texas 77056
    Phone: 713-368-6600
    -ii-
    Enviro-Grow Nursery, Inc.                                  Defendant below
    Rick L. Hawks                Enviro-Grow Nursery, Inc/’s Trial Counsel
    attomeyrickhawks@gmail.com
    PO Box 1729
    Tomball, Texas 77377-1729
    Phone: 281-251-3198
    Fax: 281-251-1019
    -iii-
    TABLE OF CONTENTS
    IDENTITY OF PARTIES AND COUNSEL. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ii
    TABLE OF CONTENTS.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . iv
    INDEX OF AUTHORITIES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . v
    RECORD CITATION ABBREVIATIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . vii
    STATEMENT OF THE CASE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . vii
    ISSUE PRESENTED.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . viii
    STATEMENT OF FACTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
    SUMMARY OF THE ARGUMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
    STANDARD OF REVIEW. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
    ARGUMENT.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
    AS A MATTER OF LAW, THE UNSIGNED ARBITRATOR’S
    DRAFT OPINION IS NOT AN ARBITRATION AWARD. . . . . . . . . . . . . 8
    A.       Texas Law Requires A Final Arbitration Award To Be a Signed,
    Written Document Which Is Delivered to the Parties. . . . . . . . . . . . . . 8
    B.       Until There Is an Arbitration Award, an Arbitrator Is Free to
    Change His/Her Mind. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
    PRAYER FOR RELIEF. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
    CERTIFICATE OF COMPLIANCE.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
    CERTIFICATE OF SERVICE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
    -iv-
    INDEX OF AUTHORITIES
    TEXAS CASES                                                                                                Page
    Texas Supreme Court
    Austin v. Healthtrust, Inc., 
    967 S.W.2d 400
    (Tex. 1998). . . . . . . . . . . . . . . . . . . . 16
    Callahan & Assocs. v. Orangefield Indep. Sch. Dist.,
    
    92 S.W.3d 841
    (Tex. 2002). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
    City of Midland v. O’Bryant, 
    18 S.W.3d 209
    (Tex. 2000). . . . . . . . . . . . . . . . . . . 16
    City of San Antonio v. McKenzie Constr. Co.,
    
    136 Tex. 315
    , 
    150 S.W.2d 989
    (1946).. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
    CVN Group, Inc. v. Delgado, 
    95 S.W.3d 234
    (Tex. 2002). . . . . . . . . . . . . . . . . . . . 7
    East Tex. Salt Water Disposal Co. v. Werline, 
    307 S.W.3d 267
    (Tex. 2010). . . . . . 7
    Ed Rachal Foundation v. D’Unger, 
    207 S.W.3d 330
    (Tex. 2006). . . . . . . . . . . . . . 16
    Ritchie v. Rupe, 
    443 S.W.3d 856
    (Tex. 2014). . . . . . . . . . . . . . . . . . . . . . . . . . . 1, 16
    Twyman v. Twyman, 
    855 S.W.2d 619
    (Tex. 1993). . . . . . . . . . . . . . . . . . . . . . . . . 16
    Texas Courts of Appeals                                                                                    Page
    Cooper v. Bushong,
    
    10 S.W.3d 20
    (Tex. App. – Austin 1999, pet denied). . . . . . . . . . . . . . . . . . 9-10, 15
    In re Chestnut Energy Partners, Inc.,
    
    300 S.W.3d 386
    (Tex. App. – Dallas 2009, pet. denied). . . . . . . . . . . . . . . . . . . . . . 7
    Sydow v. Verner, Liipfert, Bernhard, McPherson and Hand, Chartered,
    
    218 S.W.3d 162
    (Tex. App. – Houston [14th Dist.] 2007, no pet.). . . . . . . . . . 17-18
    -v-
    TEXAS STATUTES and RULES                                                                                             Page
    TEX. CIV. PRAC. & REM. CODE §171.041. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
    TEX. CIV. PRAC. & REM. CODE §171.053(a). . . . . . . . . . . . . . . . . . 5, 8, 9, 11, 14, 15
    TEX. CIV. PRAC. & REM. CODE §171.053(b). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
    TEX. CIV. PRAC. & REM. CODE §171.054(a)(1). . . . . . . . . . . . . . . . . . . . . . 17, 19 n.3
    TEX. CIV. PRAC. & REM. CODE §171.087. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
    TEX. CIV. PRAC. & REM. CODE §171.088. . . . . . . . . . . . . . . . . . . . . . . . . . . 7, 13-14
    TEX. CIV. PRAC. & REM. CODE §171.091. . . . . . . . . . . . . . . . . . . . . . . . . . . 7, 19 n.3
    TEX. CIV. PRAC. & REM. CODE §171.098(a)(3). . . . . . . . . . . . . . . . . . . . . . . . . . . 6-7
    AMERICAN ARBITRATION ASSOCIATION RULES                                                                               Page
    Rule R-40. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12, 13
    Rule R-46. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4, 5, 6, 8, 9, 12, 14, 15
    Rule R-49. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
    Rule R-50. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
    FEDERAL CASES                                                                                           Page
    AO Techsnabexport v. Globe Nuclear Servs. & Supply CNSS,
    404 Fed. Appx. 793 (4th Cir. 2010). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
    A/S Siljestad v. Hideca Trading, Inc.,
    
    678 F.2d 391
    (2d Cir. 1982) (per curiam). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
    Florasynth, Inc. v. Pickholz, 
    750 F.2d 171
    (2d Cir. 1984). . . . . . . . . . . . . . . . . . . . 7
    Michaels v. Mariforum Shipping, S.A., 
    624 F.2d 411
    (2d Cir. 1980). . . . . . . . . . . 10
    -vi-
    RECORD CITATION ABBREVIATIONS
    “CR” refers to citations from the Clerk’s Record. The number immediately
    following “CR” is the page of the Record.
    “RR” refers to citations from the Reporter’s Record. The number immediately
    following “RR” is the page of the Record.
    STATEMENT OF THE CASE
    This case is an appeal from a trial court take nothing judgment (CR221),
    rendered as a result of the confirmation of the “FINAL AWARD OF
    ARBITRATOR”, signed by Judge Mark Davidson (the Arbitrator) on July 9, 2014
    (CR151-52). The Arbitrator attached to his “FINAL AWARD OF ARBITRATOR”
    a draft of an opinion entitled “FINAL AWARD OF ARBITRATOR – NOT SIGNED
    OR ADOPTED” which gave Appellant a money judgment (CR153-56). On October
    7, 2014, Appellee requested that the trial court confirm by judgment the “FINAL
    AWARD OF ARBITRATOR” (CR107-110). Appellant contested such motion on the
    theory that the draft opinion should be treated as the final arbitration award (CR140-
    44). The trial court signed a judgment confirming the “FINAL AWARD OF
    ARBITRATOR” (CR221). On November 14, 2014, Appellant filed his Notice of
    Appeal (CR229-31).
    -vii-
    ISSUE PRESENTED
    1.    The trial court did not err in signing a judgment based upon the only award
    signed by the Arbitrator because Texas law requires an arbitration award to be signed
    and a trial court to confirm an arbitration award, but the trial court would have erred
    by signing a judgment based upon the preliminary draft opinion which was never
    signed, never delivered, and never adopted.
    -viii-
    STATEMENT OF FACTS
    Appellant Juan A. Rueda (“Rueda”) and Appellee Randall W. Holland
    (“Holland”) were shareholders in a nursery business called Enviro-Grow Nursery,
    Inc., with Rueda holding a 49% interest and Holland holding a 51% interest (CR153).
    On July 23, 2012, Rueda sued Holland for minority shareholder oppression (CR5-11).
    Holland invoked the parties’ 1995 arbitration agreement (CR14-19), and, on July 31,
    2013, the trial court abated the case and ordered the parties to arbitration through the
    American Arbitration Association (“AAA”) (CR106).
    Acting as the sole arbitrator, The Honorable Judge Mark Davidson
    (“Arbitrator”) considered the case at an arbitration trial which occurred on May 7,
    2014 and June 5, 2014 (CR151). After completing the arbitration trial, the Arbitrator
    indicated he was going to rule by June 26, 2014 (RR1:10/10-12). Just two days before
    that (on June 24, 2014), Holland’s counsel discovered the Supreme Court’s recent
    Ritchie v. Rupe, 
    443 S.W.3d 856
    (Tex. 2014) opinion, and immediately filed a brief
    with the Arbitrator to advise that Ritchie eliminated Rueda’s cause of action for
    shareholder oppression (RR1:10/13-16).
    The next day (June 25, 2014), the Arbitrator re-opened the arbitration with no
    objections to his doing so (see RR1:12/10-11; RR1:10/17-18). The Arbitrator called
    Page 1 of 21
    for briefing on Ritchie1 (RR1:12/12-13), then, on July 9, 2014, the Arbitrator signed
    the “FINAL AWARD OF ARBITRATOR” holding that Rueda take nothing based
    upon the Ritchie opinion (“Award”) (CR151-52).
    The Arbitrator sent to the AAA his Award with an attachment, that being a draft
    of an opinion entitled “FINAL AWARD OF ARBITRATOR – NOT SIGNED OR
    ADOPTED”(“Draft”) (CR153-56). The AAA administrator delivered the Award and
    its attachment to the parties, explaining:
    Attached is the duly executed Award in the above matter [the Award].
    Judge Davidson has also asked me to forward his original ruling which
    was drafted prior to the Richie v. Rupe decision and which was
    supplanted by the final Award [the Draft]. (CR145 (emphasis supplied)).
    The Draft never saw the light of day except as an attachment to the Award.2 So why
    did the Arbitrator attach a draft to his award? It was to explain why he ruled against
    Holland on his frivolous lawsuit claim:
    I attach the ruling I had written and submitted to the AAA the day
    before Richie v. Rupe was announced by the Texas Supreme Court.
    The Richie case, by its terms, overruled years of precedents from the
    Courts of Appeals that created a common law cause of action for
    1
    The Arbitrator refers to this opinion as “Richie”, instead of “Ritchie”.
    2
    CR145 (Luck affidavit: “Attached as Exhibit “2” [CR147-50] and as Exhibit “3” [CR151-56] are
    the two decisions from Judge Mark Davidson that were both attached to Ms. Kidd’s [AAA’s
    administrator] July 9, 2014 e-mail.”); RR1:4/21-5/1 (Mr. Luck: AAA administrator sent both the
    Award and Draft simultaneously); RR1:7/7-14 (“The Court: On the day that you [Rueda] contend
    it [the Draft] became final, what did you get? Did you get a fax, a piece of paper, an e-mail? What
    did you get? Anything? Mr. Luck: Nothing that day. It was when he – on July 9...Got them both
    at the same time.”).
    Page 2 of 21
    shareholder oppression. My preliminary opinion, as you will see,
    awarded the Claimant [Rueda] a judgment on that theory. The Richie
    case takes away that theory, and his judgment.
    *****
    The Respondent [Holland] has countered for his attorney’s fees, claiming
    that this is a frivolous claim. First, but for the timing of the Richie
    opinion, he would have a judgment entered against him. Second, I was
    aware of the Court of Appeals opinion, and, relied, in part, on it for the
    reasoning of my preliminary opinion. The Claimant relied on existing
    case law. That defeats a claim of a frivolous claim as a matter of law.
    (CR151-52 (emphasis in original)).
    Once Rueda lost, he grabbed on to the Draft like a life raft. On July 10, 2014,
    he filed a motion with the Arbitrator to disregard the Award, insisting that the Draft
    was complete in all respects except for being signed, and, because it preceded the
    Award, it was the arbitration award (RR1:10/20-21). The Arbitrator was succinct in
    his denial of that motion:
    I will give it to you right now.
    “The motion to Disregard and withdraw the Arbitrator’s
    Award is denied. The transmittal of a draft of a preliminary
    opinion that was never adopted, signed or sent to all
    counsel is not a binding ruling. Claimant’s [Rueda’s]
    motion is without merit, and is respectfully denied.”
    and Have a Great Day!
    Mark Davidson
    (CR209). In that same vein, the Arbitrator explained via the title he chose for the
    Draft that it was “NOT SIGNED OR ADOPTED” (CR153). He characterized the
    Draft in the Award as being a “preliminary opinion” (i.e., not a final one) (CR151).
    He drafted a letter which embodied his preliminary opinion and concluded with a
    Page 3 of 21
    typewritten “Respectfully submitted” and a typewritten “MARK DAVIDSON”
    (CR147-50), but the large space where his signature would go was left blank (CR150;
    RR1:1/6-19). The Arbitrator was clear – the Draft was not an arbitration award, but
    was, instead, his initial pre-Ritchie impression, never signed or adopted, and used only
    as an attachment to his Award in order to explain why Rueda’s claims were not
    frivolous (CR146; CR151; CR153; CR209).
    Rueda tried again with the trial court to eliminate the Award (CR140-218), but,
    again, met with no success (RR1:14). The trial court was especially focused on the
    fact that the Draft was not signed:
    THE COURT: [A]pparently Davidson said, well, in his mind anyway
    the initial version was a draft....[I]t doesn’t say
    electronically signed by?
    MR. LUCK:  It doesn’t say that, Judge. (RR1:4/5-9)
    *****
    MR. BOLTZ: Your honor, the controlling law in this would be the
    rules of the American Arbitration Association...Rule 46
    it requires for a formal award to be in writing and must
    be signed by the arbitrator.
    THE COURT: ...The question is when was the award made. Then R-
    46, form of award: any award shall be in writing and
    signed by the majority of the arbitrators. (RR1:11/8-19)
    *****
    THE COURT: He didn’t sign it. (RR1:12/9)
    *****
    THE COURT: ...Was it in writing? Yes. Was it signed? No. That is
    what it [Rule R-46] says: Any award shall be in writing
    and signed by the majority of the arbitrators.
    Page 4 of 21
    (RR1:12/14-18)
    *****
    THE COURT: R-46 is pretty clear: Shall be in writing and signed by
    the majority of the arbitrators. (RR1:13/1-2)
    *****
    THE COURT: [T]he rule is pretty specific, it has to be signed, and that
    [Draft] was not signed. I think, therefore – it is
    unbelievably bad luck....I think without that signature it
    wasn’t a final award. (RR1:14/15-22)
    Being convinced that a signature was required, the trial court signed the Judgment
    confirming the only signed Award (RR1:15/9-10):
    [T]he Court enters judgment in accordance with the Final Award [of]
    Arbitrator signed by Mark Davidson on July 9, 2014.
    (CR221 – the italicized words are handwritten by the trial court in the Judgment).
    SUMMARY OF THE ARGUMENT
    It may be an interesting appellate issue....
    They will say, well, the rule requires that it be signed.
    It wasn’t signed. Therefore, it wasn’t final.
    We are done.
    – Judge Mike D. Miller (RR1:14/22-15/1)
    The question in this case is simple – Was the Arbitrator’s Draft an arbitration
    award on the merits which could not be changed and which should have been
    confirmed in a judgment? The answer is equally simple – No.
    Rueda calls the Draft “complete in all respects, with the exception of being
    signed by the [A]rbitrator.” That exception makes all the difference. Both Texas
    Civil Practice and Remedies Code Section 171.053(a) and AAA Rule R-46 require
    Page 5 of 21
    a final arbitration award to be signed in order to be an arbitration award. So when, as
    here, the Arbitrator wrote a “draft” of a “preliminary opinion”, which was not
    delivered to counsel, was not delivered to the parties, and was “not signed or
    adopted”, then that draft is just a draft; it is not an arbitration award for purposes of
    judgment rendition. And when, as here, the Arbitrator signs, dates, and delivers to the
    parties a written award entitled “FINAL AWARD OF ARBITRATOR”, then that is
    the arbitration award on which judgment must be rendered – and it was.
    Rueda asks this Court, as he previously unsuccessfully asked the Arbitrator and
    trial court, to reject the signature requirements of both the AAA Rules and the Code
    because he “believes” that requiring a signature is simply too onerous. The Court
    should not use Rueda’s “belie[f]” to change the statute and give Rueda a money
    judgment on a cause of action which does not exist.
    Nothing went wrong here. The Arbitrator signed, dated, and delivered one
    arbitration award, as the law requires. The trial court confirmed it in the Judgment,
    as the law requires. And this Court should affirm that Judgment, as the law requires.
    STANDARD OF REVIEW
    Was it in writing? Yes. Was it signed? No.
    That is what it [Rule R-46] says:
    Any award shall be in writing and signed by the majority of the arbitrators.
    – Judge Mike D. Miller (RR1:12/14-18)
    This Court has jurisdiction over this appeal (TEX. CIV. PRAC. & REM. CODE
    Page 6 of 21
    §171.098(a)(3)), but review of an arbitration award is “extraordinarily narrow”. East
    Tex. Salt Water Disposal Co. v. Werline, 
    307 S.W.3d 267
    , 271 (Tex. 2010). “‘All
    reasonable presumptions are indulged in favor of the award, and none against it.’”
    CVN Group, Inc. v. Delgado, 
    95 S.W.3d 234
    , 238 (Tex. 2002) (quoting City of San
    Antonio v. McKenzie Constr. Co., 
    136 Tex. 315
    , 
    150 S.W.2d 989
    , 996 (1946)); see
    Florasynth, Inc. v. Pickholz, 
    750 F.2d 171
    , 176 (2d Cir. 1984) (“The confirmation of
    an arbitration award is a summary proceeding that merely makes what is already a
    final arbitration award a judgment of the court”). This Court reviews the trial court’s
    confirmation of the award de novo. In re Chestnut Ener. Partners, Inc., 
    300 S.W.3d 386
    , 397 (Tex. App. – Dallas 2009, pet. denied).
    The Texas Arbitration Act requires a court to confirm an arbitrator’s award
    unless a party offers one of the statutory grounds under Section 171.088 (arbitrator
    misconduct) or Section 171.091 (correction of clerical errors) for vacating, modifying,
    or correcting the award. TEX. CIV. PRAC. & REM. CODE §§171.087, 171.088(a), and
    171.091(a); see Callahan & Assocs. v. Orangefield Indep. Sch. Dist., 
    92 S.W.3d 841
    ,
    844 (Tex. 2002). The only ground Rueda has ever offered for vacating the Award is
    his claim that the Arbitrator exceeded his powers as a result of making a decision then
    changing his mind. TEX. CIV. PRAC. & REM. CODE §171.088(a)(3)(A) (“the court
    shall vacate an award if...the arbitrators...exceeded their powers”). So if the Draft was
    Page 7 of 21
    an arbitration award, then the Arbitrator was not permitted to change its substance via
    the Award; but if it was not (and it was not), then the Arbitrator acted within his
    authority, did not exceed his powers, and this “extraordinarily narrow” appeal will end
    in an affirmation of the Judgment.
    ARGUMENT
    AS A MATTER OF LAW, THE UNSIGNED ARBITRATOR’S DRAFT
    OPINION IS NOT AN ARBITRATION AWARD
    While Rueda’s complaint in this appeal is that the trial court erred in “entering
    a judgment on the second decision of the [A]rbitrator” (see Appellant’s Brief at 8), the
    reality is that, per Texas law and the AAA Rules, there was only a first decision of the
    Arbitrator – the Award.
    A.     Texas Law Requires A Final Arbitration Award To Be a Signed, Written
    Document Which Is Delivered to the Parties.
    Until I sign it and it gets entered, it is not effective....
    [T]he rule is pretty specific,
    it has to be signed, and that was not signed.
    I think, therefore – it is unbelievably bad luck.
    ....I think without that signature it wasn’t a final award.
    – Judge Mike D. Miller (RR1:14/15-22)
    Rueda cites AAA Rule R-46 and Civil Practice and Remedies Code Section
    171.053(a), and concludes, “neither...state anywhere” that “a decision is not a binding
    decision of the arbitrator if the formality of the signing of the decision is not done.”
    See Appellant’s Brief at 12-13. But, in fact, that is exactly what they both state.
    Page 8 of 21
    Rule R-46:                       Any award shall be in writing and signed by a
    majority of the arbitrators.
    CR183 (Rule R-46 of the AAA Commercial Rules) (emphasis supplied). This
    arbitration had but one arbitrator, so the majority would be one – and that majority of
    one did not sign the Draft (CR153-56; CR147-50). He did, however, sign the Award
    (CR151).
    Texas Arbitration Act:           The arbitrators’ award must be in writing and
    signed by each arbitrator joining in the award.
    TEX. CIV. PRAC. & REM. CODE §171.053(a) (emphasis supplied). Again, this
    arbitration had but one arbitrator, so each arbitrator joining in the award would be one
    – and that one did not sign the Draft (CR153-56; CR147-50). He did, however, sign
    the Award (CR151).
    That statutory signature requirement is not optional; it is required in order to
    make an award valid:
    Arbitrator’s Award – Existence of a Valid Arbitration Agreement
    Cooper first contends that there is not a valid arbitration award
    terminating Bushong’s parental rights because the award is not in writing
    or signed by the arbitrator. See TEX. CIV. PRAC. & REM. CODE ANN.
    §171.053 (West Supp. 1999) (hereinafter “General Arbitration Act”)
    (arbitrator’s award must be in writing and signed by
    arbitrator)....However, the record reflects that the arbitrator signed an
    award entitled “Arbitration Decision and Award,” which was filed on
    December 1, 1997....Thus, we find these claims to be without merit.
    Cooper v. Bushong, 
    10 S.W.3d 20
    , 24 (Tex. App. – Austin 1999, pet denied)
    Page 9 of 21
    (emphasis supplied); see also 
    id. at 24
    n.10 (“Cooper’s attorney stated at the hearing
    before the district court, ‘we have his [the arbitrator’s] findings in writing.’”).
    But the required signature is not the only thing missing from the Draft. It was
    also never delivered to the parties (CR209), with delivery being another requirement
    of the Code (TEX. CIV. PRAC. & REM. CODE §171.053(b) (“The arbitrators shall
    deliver a copy of the award to each party personally, by registered or certified mail,
    or as provided in the agreement.”); 
    Cooper, 10 S.W.3d at 24
    (“arbitrator shall deliver
    a copy of the award to each party”)) and the AAA Rules (see CR184 (Rule R-49)).
    Although the AAA administrator did deliver the Draft, she did so only as an
    attachment to the Award, not as an award itself. The only award she sent was “the
    duly executed Award in the above matter”– i.e., the Award (CR146).
    Those signature and delivery requirements are no small thing. They are
    designed to make sure that the trial court – and this Court – have the final word on
    what the Arbitrator intended to be his final word. “In order to be ‘final,’ an arbitration
    award must be intended by the arbitrators to be their complete determination of all
    claims submitted to them”. Michaels v. Mariforum Shipping, S.A., 
    624 F.2d 411
    ,
    413-14 (2d Cir. 1980) (discussing FAA); A/S Siljestad v. Hideca Trading, Inc., 
    678 F.2d 391
    , 392 (2d Cir. 1982) (per curiam) (same). Thus, an arbitrator’s identification
    of the arbitration award is critical; the key is when the transformation from “I-think-
    Page 10 of 21
    I’m-gonna” to “I-have” occurs, and that transformation occurs wholly within an
    arbitrator’s mind until the arbitrator puts it in writing, signs his/her name to it, and
    delivers it. TEX. CIV. PRAC. & REM. CODE §171.053(a).
    That appears to have happened with this Arbitrator. There was a time when he
    thought Rueda won and he wrote the Draft to that effect (CR147-50; CR153-56). But
    before he adopted it, signed it, or delivered it, he changed his mind – as judges
    sometimes do (see, e.g., RR1:14/15-16). He then wrote a new Award, and he adopted
    it, signed it, and delivered it (CR146; CR151-52; CR209), forever leaving the Draft
    in the “I-think-I’m-gonna” phase.
    Interestingly, Rueda’s entire argument is cast in terms of assuming the Draft
    was the Arbitrator’s first decision and contending the decision-which-comes-first-is-
    the-arbitration-award. See Appellant’s Brief at 8. But the record does not actually
    reveal that the Draft was the first decision. It might have been, or it might have been
    the third decision, or maybe the sixth. The only thing the record actually reveals is
    that the Draft preceded the Award, but it might not have even immediately preceded
    the Award – there might have been another decision between the two.
    That is precisely why, from a policy perspective, Rueda’s position is
    unworkable. As is the law in Texas, a rule that says the award is the one which is
    signed and delivered makes the identification of the award obvious, definite, and
    Page 11 of 21
    objective. In contrast, a rule that says the award is the arbitrator’s first decision makes
    the identification of the award obscure, uncertain, and subjective. With this latter rule,
    parties and courts would be forced to subpoena arbitrators and their records, and
    evaluate arbitrators’ deliberations, in order to identify what was the first decision.
    And even that would lead to debates about when a thought becomes a decision, and
    whether an arbitrator had decided or was just playing devil’s advocate. A whole
    world of expert testimony would be born, as would a new legal speciality – arbitrator
    psychology. Rueda’s rule would be the Lawyers’ Full Employment Act.
    Instead, this Court should stick to the Texas Legislature’s rule which is much
    easier to manage, require no subpoenas, experts, or arbitration-psychology attorneys,
    and turns on one simple question: Which one is signed? This approach avoids
    Rueda’s ill-advised level of intrusion, and leaves the question of whether the Draft
    came first in the realm of mystery. The Draft could only have become an arbitration
    award if it was adopted, delivered, and, most importantly, signed. It was none of
    those things, so it is not – and never was – an award.
    Strangely, Rueda has already conceded this very point:
    THE COURT: Let me see that. The hearing may be reopened on the
    arbitrator’s initiative at any time before the award
    is made [quoting Rule R-40 (CR181)]. The question is
    when was the award made. Then R-46, form of award:
    Any award shall be in writing and signed by the
    majority of the arbitrators (RR1:11/13-19).
    Page 12 of 21
    *****
    MR. LUCK: That first one [the Draft] was sent. I have no problem –
    THE COURT: He didn’t sign it.
    MR. LUCK: I have no problem with his having authority to
    reopen. At the time he asked us to reopen he asked
    me to respond to Richie. I didn’t know he had
    already decided (RR1:12/7-13).
    Rueda has admitted the Draft was not an award. AAA Rule R-40 says the Arbitrator
    may reopen the arbitration “at any time before the award is made” (CR181 at R-40),
    the Arbitrator reopened after learning about the Ritchie opinion (RR110/17-18), ergo
    he had not made an award at that time, which Rueda admits when he says he has “no
    problem with his having authority to reopen” (RR1:12/10-13). Rueda’s real
    complaint is that he didn’t know the Arbitrator had made a decision, but whether he
    made a decision is of no consequence – all that matters if whether he had made that
    decision into an award. Rueda conceded that he hadn’t.
    Knowing the law is against him, Rueda tries to distance himself from the
    signature requirement, which, he claims, is applicable only to cases involving multiple
    arbitrators, not to this single arbitrator case. See Appellant’s Brief at 12-13. If Rueda
    is right, then he loses the appeal. His only basis to vacate the Award is that the
    Arbitrator exceeded his authority, but, if the use of the plural precludes application to
    the singular, then the statute is inapplicable to this Arbitrator. TEX. CIV. PRAC. &
    REM. CODE §171.088(a)(3)(A) (“the court shall vacate an award if...the
    Page 13 of 21
    arbitrators...exceeded their powers”). Admittedly, this argument is absurd, which is
    why Holland would not make it. Unfortunately, Rueda shows no such restraint.
    Rueda’s argument is wrong. Section 171.053 requires “each arbitrator [who]
    join[s] in the award” to sign (TEX. CIV. PRAC. & REM. CODE §171.053(a)), and Rule
    R-46 requires “a majority of the arbitrators” to sign (CR183 at Rule R-46). These
    provisions pay no heed to how many arbitrators there are, and do not suggest that the
    signature requirement does not apply to a single arbitrator case. All they do is
    describe that those in agreement, however many “those” are, must sign. The Code
    expressly contemplates single arbitrator cases, and makes no distinction as to the
    requirements of Chapter 171 based upon the number of arbitrators. See, e.g., TEX.
    CIV. PRAC. & REM. CODE §171.041(b) (“The court, on application of a party...shall
    appoint one or more qualified arbitrators...”); 
    id. at §171.041(c)
    (“An arbitrator
    [singular] appointed under Subsection (b) has the powers of an arbitrator [singular]
    named in the agreement to arbitrate.”).
    And, realistically, what would be the logic of requiring many arbitrators to sign
    but not a single arbitrator? The idea of having signatures is to confirm what the award
    is; the number of arbitrators making the award is immaterial to that objective.
    Whether one or many, arbitrators are bound by the tenets of Chapter 171, including
    the requirement that those who join in an award must sign it. TEX. CIV. PRAC. & REM.
    Page 14 of 21
    CODE §171.053(a); Cooper, 
    10 S.W.3d 20
    , 24.
    Undaunted, Rueda asks this Court to make new law. He asks this Court to
    ignore the signature requirement because he “believes” it is an unnecessary
    “formality”:
    Rueda believes that requiring a single arbitrator arbitration decision to
    be signed by the arbitrator in order for the decision to be considered as
    the arbitrator’s decision (when neither the Commercial Rules of the
    AAA nor Chapter 171 of the Texas Civil Practice & Remedies Code
    states this) would be adding a level of judicial-type formality to the
    arbitration process (making this a requirement would be similar to a
    judgment in a court of law) – and this type of formality is exactly what
    the arbitration process by its very nature is intended to avoid.
    See Appellant’s Brief at 13. What Rueda “believes” is irrelevant compared to what
    the Texas Legislature and the AAA require. In fact, Rueda cites no authority for the
    proposition that requiring a signature on an award is the “type of formality...the
    arbitration process...is intended to avoid”. There is a reason for that – no such
    authority exists. In fact, the Texas Arbitration Act, which defines “the arbitration
    process”, explicitly includes this signature requirement. TEX. CIV. PRAC. & REM. CODE
    §171.053(a).
    Accepting Rueda’s position would require the Court to change the law to say
    the signature requirement in Section 171.053 (and Rule R-46) is no requirement at all.
    That would be unwarranted, especially given the Supreme Court’s requirement in
    Ritchie that courts exercise great restraint as to making new law in areas covered by
    Page 15 of 21
    statute:
    The Legislature has crafted a statutory scheme governing domestic
    corporations [or, in this case, arbitration]. The statutes are detailed
    and extensive, reflecting legislative policy judgments about when the
    government should step in to impose rights and obligations on the
    parties and when the parties should be free to dictate their own
    rights and obligations vis-à-vis each other and the business. This
    Court has the prerogative to superimpose a common-law cause of
    action upon this statutory framework – though not to alter or
    contravene the statutory framework – but we exercise that power
    sparingly, careful not to upset the Legislative balance of policies, and
    only when warranted by a genuine need. See, e.g., [Ed Rachal
    Foundation v.] D’Unger, 207 S.W.3d [330] at 331 [(Tex. 2006)]; [City
    of Midland v.] O’Bryant, 18 S.W.3d [209] at 216 [(Tex. 2000)]; Austin,
    [v. Healthtrust, Inc.], 967 S.W.2d [400] at 401 [(Tex. 1998)]; see also
    Twyman [v. Twyman], 855 S.W.2d [619] at 630 [(Tex. 1993)] (Hecht, J.,
    joined by Enoch, J., concurring in part and dissenting in part) (“This
    Court, as steward of the common law, possesses the power to recognize
    new causes of action, but the mere existence of that power cannot justify
    its exercise. There must be well-considered, even compelling grounds
    for changing the law so significantly. Where, as here, no such grounds
    are given, the decision is more an exercise of will than of reason.”). We
    find no such necessity here, and therefore decline to recognize a
    common-law cause of action for “shareholder oppression.”
    Ritchie v. Rupe, 
    443 S.W.3d 856
    , 891 (Tex. 2014) (emphasis supplied).
    The situation in Ritchie applies here in three ways: (1) It applies to eliminate
    Rueda’s claimed cause of action in its entirety, so that Rueda’s attempt to have this
    Court allow him a cause of action which the Supreme Court says does not exist should
    fail; (2) It applies to address the fact that the common law cannot be used to “alter or
    contravene” a statute, so that his attempt to have this Court alter and contravene the
    Page 16 of 21
    statutory requirements of signing and delivering an arbitration award should fail; and
    (3) It applies to show that before imposing any change to the law, there must be a
    necessity to do so, so that his attempt to have this Court create a common law holding
    that whatever decision an arbitrator makes first constitutes the final arbitration award
    is hardly necessary – it is, in fact, ill-advised and should fail.
    If Ritchie had not happened, Rueda might have won. But Ritchie did happen,
    and it happened before the Arbitrator had signed and adopted an arbitration award,
    such that the Arbitrator complied with Texas law and gave Rueda nothing on his now
    non-existent shareholder oppression claim. Rueda does not like that, and who can
    blame him? But nothing legally impermissible happened. Rueda seeks an outcome
    where he is permitted to recover on a non-existent cause of action – but the law does
    not provide him such.
    B.     Until There Is an Arbitration Award, an Arbitrator Is Free to Change
    His/Her Mind.
    THE COURT: Which is the one?
    MR. BOLTZ: The one that says: Final.
    (RR1:7/25-8/2)
    When an arbitration award is made – that is to say when the arbitrator adopts
    a decision, signs it, and delivers it – he/she cannot change its substance. TEX. CIV.
    PRAC. & REM. CODE §171.054(a)(1); Rule R-50 (CR184); Sydow v. Verner, Liipfert,
    Bernhard, McPherson and Hand, Chartered, 
    218 S.W.3d 162
    , 169 (Tex. App. –
    Page 17 of 21
    Houston [14th Dist.] 2007, no pet.). But while an arbitrator is deciding, contemplating,
    considering, thinking about it, and mulling it over, he/she is without constraints to
    change, adapt, vacate, make adjustments and change his/her mind. It is only once
    he/she settles on a decision and affixes his/her signature to it that the deal is done –
    no take backs. It is on this point that Rueda’s appeal turns because he claims that the
    Draft was the arbitration award, such that the Award could not supplant it without
    violating the finality laws. But it was not an arbitration award, as discussed at length
    in 
    (A), supra
    , such that the Arbitrator was free to change it as much and as often as
    he chose without exceeding his authority.
    Here, the Award was the arbitration award, and it was never changed in any
    way. Because there was no change to the arbitration award, the Arbitrator did not
    overstep his bounds, leaving the trial court with no grounds to do anything other than
    what it did – confirm the award.
    The problem is that Rueda’s entire Brief describes a situation which does not
    exist in this case. Here, the Arbitrator made only one award; he was originally headed
    in a direction different from the one he ultimately took, but he changed his mind
    prior to making an award, and that he is permitted to do (compare CR151 to
    CR153-56). Rueda’s entire pitch is that the Arbitrator had no power to change his
    mind, but he does. He only loses that power after he has made a final (a/k/a signed)
    Page 18 of 21
    decision. See, e.g., AO Techsnabexport v. Globe Nuclear Servs. & Supply CNSS, 404
    Fed. Appx. 793, 799 (4th Cir. 2010) (“arbitrators complete their function and lose their
    authority to act after making a final determination on a matter. This principle, known
    as the doctrine of functus officio, prevents an arbitrator from reexamining the merits
    of a final award.”) (emphasis supplied).
    There is no law precluding the Arbitrator from changing his mind; the law only
    precludes him from changing his decision once it if formalized in an award3 – which
    didn’t happen here (CR151-52). In the Judgment, the trial court did not use some
    vague reference to “an” arbitration award; it very deliberately entered its Judgment
    with reference to a particular title of a particular document of a particular date which
    the Arbitrator signed and which he said expressly was his final decision (compare
    CR221 to CR151-52; RR1:15/9-10). This Court should decline to deviate from this
    correct course to, instead, create new law which both                  contravenes the Texas
    Arbitration Act and defies the Ritchie ruling. Instead, this Court should affirm.
    3
    TEX. CIV. PRAC. & REM. CODE §171.054 (a)(1) (an arbitrator has authority to “…modify or correct
    an award…on the grounds stated in Section 171.091…”); 
    id. at §171.091
    (can modify or correct
    award if it “contains...an evident miscalculation of numbers” or “an evident mistake in the
    description of a person, thing, or property referred to in the award”; or if the arbitrator made an
    award on something not submitted, but only if “the award may be corrected without affecting the
    merits of the decision made with respect to the issues that were submitted”; or “the form of the
    award is imperfect in a manner not affecting the merits of the controversy.”).
    Page 19 of 21
    PRAYER FOR RELIEF
    For the reasons in this Brief, Randall W. Holland respectfully requests this
    Court affirm the Judgment, and award him all such other relief to which he is entitled.
    Respectfully submitted,
    BAYS & BAYS
    1503 Hailey
    Conroe, Texas 77301
    Phone: (936) 760-7670
    Fax: (936) 760-7671
    /s/ Kristin Bays
    Kristin Bays
    State Bar No. 00787914
    kristin@baysandbays.com
    J. Randal Bays
    State Bar No. 01943900
    randy@baysandbays.com
    ATTORNEYS FOR RANDALL                      W.
    HOLLAND
    CERTIFICATE OF COMPLIANCE
    Pursuant to Rule 9.4(i), I certify that this Brief was computer-drafted with
    WordPerfect using Times New Roman font, with 14 point font for the text and 12
    point font for the footnotes. I further certify that the word count, as generated by
    WordPerfect, for every word and every part of this Brief, including headings,
    footnotes, and quotations, was counted except for the following:
    the caption, the identity of parties and counsel, the table of contents, the
    index of authorities, the statement of the case, the statement of the issue
    presented, the signature, the proof of service, the certification, this
    certificate of compliance, and the appendix
    total 4,948 words.
    /s/ Kristin Bays
    Kristin Bays
    Page 20 of 21
    CERTIFICATE OF SERVICE
    This certifies that the undersigned served Randall W. Holland’s Brief on the
    Merits on the following counsel of record by e-service on March 12, 2015:
    William H. Luck, Jr.
    Bill. Luck@sbcglobal.net
    1412B Stonehollow Drive
    Houston, Texas 77339
    Lead Counsel for Appellant
    /s/ Kristin Bays
    Kristin Bays
    Page 21 of 21