## NUMBER 13 - 20 - 00 160 - C V COURT OF APPEALS THIRTEENTH DISTRICT OF TEXAS CORPUS CHRISTI

– EDINBURG
SUPERIOR HEALTHPLAN, INC. AND BANKERS RESERVE LIFE INS

. CO

. OF WISCONSON , Appellant s ,
v. LEGACY HOME HEALTH AGENCY , INC., LEGACY THERAPY CENTER, INC., LEGACY HOME CARE SERVICES, INC., AND LEGACY ADULT DAY CARE, INC., Appellee s .

On appeal from the 139 th District Court of Hidalgo C ounty, Texas.



## MEMORANDUM OPINION
Before Justices Benavides , Longoria , and Tijerina Memorandum Opinion by Justice Benavides Superior Healthplan, Inc. and Bankers Reserve Life Ins. Co. of Wisconsin2

(collectively, Superior) appeal from a judgment confirming an arbitration award in favor of Legacy Home He alth Agency, Inc. (Legacy), Legacy Therapy Center, Inc., Legacy Home Care Services, Inc. , and Legacy Adult Care, Inc. ( the Ancillary Entities ). In what we construe as two separate issues , Superior contends that the arbitrator exceeded his authority by awarding Legacy (1) co sts and (2) attorney’s fees contrary to the terms of the arbitration agreement

. We affirm.
I. B ACKGROUND Superior is a managed care organization, and Legacy and the Ancillary Entities

are medical providers owned by the same individual . Superior and Legacy entered a n

“ Ancillary Services Provider Agreement ” ( the Agreement) that con tains a Texas choice

of

- law provision. The Agreement also contains an arbitration clause , which provides that “[t]he arbitrator s shall have no right to

. . . ignore the terms of this Agreement and shall be bound by controlling [Texas] law.” The clause further provides that “[e]ach party shall bear its own costs related to the arbitration except that the costs imposed by the AAA shall be shared equally.” Superior and the Ancillary Entities entered similar agreements. After t he business relationship between Legacy and Superior soured , Superior notified Legacy and the Ancillary Entities that it was terminating their respective contracts “for cause.” Legacy and the A ncillary E ntities filed suit for breach of contract , alleging that Superior ’s purported “cause” was pretextual and that the terminations were instead motivated by impermissible retaliation

. Superior countersu ed for breach of contract and declaratory relief, among other claims . The parties entered a Rule 11 Agreement to compel arbitration , and the trial court signed an a greed order to that effect

.3

At the conclusion of an eighteen

- day arbitration hearing, the arbitrator found for Legacy on its breach of contract claim , awarding it $ 3, 463 , 4 0 1 in total damages and
st atutory attorney’s fees in an amount to be stipulated by the parties or proven through written submission. 1 The arbitrator also found that Superior had breached its contracts with the Ancillary Entities ; however, because the Ancillary Entities failed to prove any damages, the arbitrator ultimately denied th eir claims. Finally, the arbitrator found against Superior on all its claims , specifically noting in the award that Superior had requested both attorney’s fees and costs under the Texas Declaratory Judgment Act. With the parties u nable to agree on the issue of attorney’s fees, Legacy and the Ancillary Entities , jointly represented by the same counsel , filed a combined request for fees and costs . Superior filed an objection , arguing that Legacy failed to segregate its fees and costs from the non - prevailing Ancillary Entit i es in accordance with Texas law

. Legacy responded that its claim was inextricably intertwined with those of the Ancillary Entities but allowed that 5% of the work performed was specific to the Ancillary Entities

. The arbitrator largely agreed with Legacy , finding that because the prevailing and

non - prevailing parties commonly alleged and proved that Superior wrongfully terminat ed the ir contract s in blanket retaliation, the claims were sufficiently intertwined to make precise, discrete , segregation impossible. 2 Based on this finding, the arbitrator concluded that segregation was “not required under Texas law.” A fter reviewing the evidence , however, the arbitrator determine d that 10% of the work performed and costs incurred

1 The arbitrator explained the award in a fifty

- page written decision.
2 The arbitrator issued a supplemental award concerning attorney’s fees and costs.4

w ere specific to the Ancillary Entities, and he reduced the award of attorney’s fees and
costs to Legacy accordingly. 3 Legacy moved the trial court to confirm and enter judgment on the award . Superior asked the trial court to vacate the portion of the award concerning attorney’s fees and
costs , arguing, as it does here, that the arbitrator failed to follow Texas law on segregation of attorney’s fees and costs . The trial court confirmed the entire award, and this appeal ensued.
II. S TANDARD OF R EVIEW A court must con firm an arbitrator’s award unless a party offers grounds for vacating, modifying, or correcting the award. See T EX

. C IV

. P RAC

. & R EM

. C ODE A NN

. § § 171.087, 171 .088, 171 .091. Among other reasons, a court shall vacate an award when an arbitrator ex ceeds their power. Id. § 171.088(a)(3). A trial court’s decision to confirm an arbitration award is reviewed de novo. O’Grady v. N at’l Union Fire Ins. Co. of Pittsburgh, P.A. , 506 S.W.3d 121, 124 (Tex. App.

— Corpus Christi

– Edinburg 2016, pet. denied). Texas law strongly favors arbitration. Forest Oil Corp. v. McAllen , 268 S.W.3d 51,
56 (Tex. 2008) (citing Prudential Sec. Inc. v. Marshall , 909 S.W.2d 896, 898 (Tex. 1995) (per curiam) ). “Subjecting arbitration awards to judicial review adds expense and delay, thereby diminishing the benefits of arbitration as an efficient, economical system for resolving disputes.” O’Grady , 506 S.W. 3d at 125 (quot ing In re Guardianship of Cantu de Villarreal , 330 S.W.3d 11, 17 (Tex. App.

— Corpus Christi

– Edinburg 2010, no pet.) )

.

3 The Ancillary Entities ’ request s for attorney’s fees and costs were denied.5

Accordingly , we indulge all reasonable presumptions in favor of the award, and judicial review of an arbitration award is “ extraordinarily narrow.” Id. at 124 (quoting In re Cantu , 330 S.W.3d at 17).
II I

. C OSTS By its first issue, Superior argues that because the arbitration agreement required each party to b ear its own costs , the arbitrator exceeded his authority by award ing costs
to Legacy . Legacy responds that this issue is not properly before us , not only because Superior itself requested costs from the arbitrator , but also because Superior failed to object to the arbitrator or complain to the district court that the agreement prohibited cost shifting

. We agree that this issue has been waived

. The arbitration agreement provide s that “[e]ach party shall bear its own costs related to the arbitration.” 4 Nevertheless, both Legacy and Superior expressly requested

an award of costs. 5 In other words, Superior took th e position during arbitration that awarding costs was within the contractual scope of the arbitrator ’s authority. Now, for the first time, Superior contends that the arbitrator never had any such authority. Error preservation is not unique to trial proceedings; a party challenging an arbitration award on appeal must first raise a timely objection with the arbitrator just “as if the award were a court judgment on appeal

. ” Nafta Trader s, Inc. v. Quinn , 339 S.W. 3d 84, 101 (Tex. 2011) ( Nafta Traders ) ; id. at 101 n.80 (explaining that Rule 33 of the Texas Rule of Appellate Procedure governs appeals from arbitration awards); see T EX

. R. A PP

.

4 Superior concedes in its reply brief that this clause did not limit the arbitrator ’s authority to award attorney’s fee s , only costs

.

5 Superior requested $215,000 .00 in costs ; Legacy requested $178,482.08.6

P. 33 .1 (a)(1) ( requiring a timely objection as a prerequisite to presenting a complaint on appeal)

. Failure to do so constitutes waiver. Quinn v. Nafta Traders, Inc. , 360 S.W.3d 713, 719

– 20 (Tex. App.

— Dallas 2012, pet. denied) ( Quin n ) (holding on remand that Nafta waived certain points of error by failing to present them to the arbitrator )

. Additionally, “ a party seeking to vacate an arbitration award must present any grounds for doing so to the trial court [;] otherwise, those complaints are waived on appeal. ” Black v. Shor , 443 S.W.3d 154, 163 (Tex. App.

— Corpus Christi

– Ed inburg 2013, pet. denied) (citing T EX

. R.
A PP

. P. 33 .1 ; Ewing v. Act Catastrophe

– Tex. L.C. , 375 S.W.3d 545, 549 (Tex. App.

— Houston [14th Dist.] 2012, pet. denied) ). Here, Superior did not object to the arbitrator that any award of costs would e xceed his authority under the arbitration agreement

. See Quinn , 360 S.W.3d at 719

– 20

. Likewise, Superior did not raise this as a ground for vacating the award in the district
court

. See Black

, 443 S.W.3d at 163

. Moreover, w hether Superior’s conduct amount ed
to a judicial admission, an invited error, or implicated some other equitable principl e , we agree with Legacy that it would be unfair to allow Superior to raise this point on appeal after Superior itself requested an award of costs

. See Pleasant Glade Assembly of God v. Schubert , 264 S.W.3d 1, 6 (Tex. 2008) (explaining that the judicial admission doctrine prevents the use of self

- contradiction in a proceeding to gain an unfair advantage ); Tittizer v. Union Gas Corp. , 171 S.W.3d 857, 862 (Tex. 2005) (per curiam) (“[A] party cannot complain on appeal that the t rial court took a specific action that the complaining party requested, a doctrine commonly referred to as ‘the invited error’ doctrine.”) ; Centex/Vestal v. Friendship W. Baptist Church , 314 S.W.3d 677, 686 (Tex. App.

— Dallas 2010, pet.7

denied) (“ A party cannot submit an issue to the arbitration panel and then, when an unfavorable result occurs, claim the arbitrators exceeded their authority in deciding the issue. ”). Superior’s first issue is waived.
IV. A TTORNEY ’ S F EES It is undisputed that the ar bitrator was within his authority to award Legacy attorney’s fees as the prevailing party on its breach of contract claim. See T EX

. C IV

. P RAC

. & R EM

. C ODE A NN

. §§ 38.001(8) (providing for the recovery of reasonable attorney’s fees on a valid claim for breach of contract) , 171.048(c)(2) (requiring an arbitrator to award attorney’s fees if the fees are provided for by law)

. Rather , b y its second issue, Superior

co ntends that the arbitrator exceeded his authorit y by awarding Legacy more fees and
costs than Legacy was entitled to recover under Texas law

. As a threshold matter, Superior argues that we are permitted to review the arbitrator’s award for legal error because the parties contracted for expanded judicial review

.

“ In determining whether an arbitrator has exceeded his authority, the proper inquiry is not whether the arbitrator decided an issue correctly, but rather, whether he had the authority to decide the issue at all. ” Forest Oil Corp. v. El Rucio Land & Cattle Co. , 518 S.W.3d 422, 431 (Tex. 2017) (citing Hoskins v. Hoskins , 497 S.W.3d 490, 494

– 95 (Tex. 2016)). The arbitrator’s authori ty is derived from the arbitration agreement. Nafta Traders , 339 S.W.3d at 90 (citing City of Pasadena v. Smith , 292 S.W.3d 14, 20 (Tex. 2009 ) )

. Generally, “ a mistake of fact or law by the arbitrator in the application of substantive law is not a proper ground for vacating an award.” Black , 443 S.W.3d at 169 (quoting Centex/Vestal , 314 S.W.3d at 683 )

. Parties may contract for expanded judicial review of8

an arbitration award, but there must be a “clear agreement” to do so. Forest Oil Corp. , 518 S.W.3d at 432 (quoting Nafta Traders , 339 S.W.3d at 101 ). Otherwise , “ the default under the TAA .

. . is restricted judicial review.” Nafta Traders , 339 S.W.3d at 101 (citation omitted).
In Nafta Traders

— the case relied on by Superior

— the arbitration agreement stated that the “arbitrator does not have authority (i) to render a decision which contains a reversible error of state or federal law, or (ii) to apply a cause of action or remedy not expressly provided for under existing state or federal law.” Id. at 88. The parties thus essentially agreed “to limit [the] arbitrator ’ s power to that of a judge, whose decisions are reviewable on appeal.” Id. at 93

. Here, Superior contends that the parties contracted for expanded judicial review by agreeing that the arbitrator “shall be bound by controlling [Texas] law.” As we recently
h eld , language that merely requir es the arbitrator to follow Texas law does not express a clear intent to expand judicial review of arbitration awards

. Sanchez v. Dr

. ’s Hosp. at Renaissance, Ltd. , No. 13

- 19

- 00365

- CV, 2021 WL 266614 , at *4 (Tex. App.

— Corpus Christi

– Edinburg Jan. 21, 2021 , no pet. ) (mem. op.) (c iting Forest Oil Corp. , 518 S.W.3d
at 432 ) ; see also Midani v. Smith , No. 09

- 18

- 00009

- CV, 2018 WL 5660571 , at * 4 (Tex. App.

— Beaumont Nov. 1, 2018, pet. denied) (mem. op.) ( agree ment that arbitrator’s decision would be “ governed by ” Texas law did not expand judicial review) ; Holmes Builders at Castle Hills, Ltd. v. Gordon , No. 05

- 16

- 00887

- CV, 2018 WL 1081635 , at *3

– 4 (Tex. App.

— Dallas Feb. 28, 2018, no pet.) (mem. op.) ( agree ment that arbitrator “ shall apply” Texas law did not expand juridical review)

. Thus, w ithout reaching the merits of the9

arbitrator’s award , we determine that the parties did not contract for expanded judicial review. See Sanchez , 2021 WL 266614, at *4. Superior’s second issue is overruled. 6
V

. C ONCLUSION We affirm the trial court’s judgment

.

GINA M. BENAVIDES Justice

Delivered and filed on the 24th day of March , 202 2

.

6 Before the appellate record was filed in this case, Superior pro vided the Court with paper copies of exhibits , totaling 920 pages, that it purportedly tendered in camera to the district court in support of its motion for partial vacatur. On April 1 5 , 2020, Legacy filed a motion to strike, correctly noting that our review is confined to the appellate record filed by the district clerk and the court reporter. See Bedford v. Spassoff , 520 S.W.3d 901, 906 (Tex. 2017) (per curiam) (citing T EX

. R. A PP

. P. 34.5

– . 6). Superior responded that it had merely fil ed “c ourtesy cop ies ” and that Legacy’s motion was “premature” because it expected the exhibits to be included in the appell ate record

. The appellate record subsequently filed with the Court did not include any of the exhibits. We abated the appeal and remanded the matter to the distri ct court to determine whether the record was complete

. T he district court found that the appellate record filed with th is Court accurately reflected the proceedings before the district court and that no supplementation of the record was necessary or appropriate. Accordingly, we grant Legacy’s motion to strike and note that our review was limited to the appellate record

. See id.