### TEXAS COURT OF APPEALS, THIRD DISTRICT, AT AUSTIN

NO. 03
- 23
- 00430
- CV

yDrink LLC , Appellant

v. Soltero Sapire Murrell PLLC, Appellee

FROM THE 419TH DISTRICT COURT OF TRAVIS COUNTY NO. D-1- GN -22-001772, THE HONORABLE JESSICA MANGRUM, JUDGE PRESIDING

M E M O R A N D U M O P I N I O N
yDrink LL C appeal s from the district court ’ s judgment confirming an arbitration award in favor of Soltero Sapire Murrell PLLC (“ SSM ” ) in an attorney ’ s fees dispute. yDrink
argues that the district court erred by con f irming the award because the arbitrator exceed ed his
p owers
. We affirm.

BACKGROUN D 1 yDrink is an “alcohol data research firm that aggregates and provides alcohol sales dat a” to subscribers for an annual fe e. Yoed Anise started the company using data

co mpiled by the Comptroller of Public Accounts.

1 W e draw these undisputed facts from the pleadings and the evidence admitted by the district court in the proceeding to confirm the award.2 Souther n Glaze r ’ s Wine and S p irits (Glazer ’ s)

— the large st distributor of wine and spirit s in Texas

— became a client in 20 0 8

. Gl az er ’ s terminated the relationship i n 2013 o ver a pricing dispute and set up it s own i n - house informa tion service to compete with yDrink. By the end of 2018, Glaze r ’ s was ready to replace its in

- house sys tem. yDrink made sales presentations to Glazer ’ s in 201 8 and 2019. Following a presentation by Anise at Glazer ’ s corporate office s, r e presentativ es o f Glaz er ’ s told the Comptroller that Anise had impe rsonated a government official during the presentation. The Comptroller blocked yDrink ’ s access to the data it required , and a grand jury indicted Anise for impersonating a government off i c i al. The char g es were dism issed , and y D rink retained SSM to investigate suing Glaz er ’ s. Based on the results of SSM ’ s in vestigation , yDrink decided to pursue a civil suit against Glazer ’ s
. The parties negotiated a co ntingent fee arrangement , which th ey m em orialized
i n an enga gement l etter. y Drink agreed to

pay [SSM ] a contingen t fee of 35% of any gross recovery in the Matter

. . . . Recovery is meant to include anything of value [yDrink] receives through settlement, judgment, or any other means a ttr ibu t a ble to any a ctions ta ken by [SSM]

. . . . I f the recov ery is unliquidated, such as an agreement to provide benefits in the future, t he value of the recovery means the present value of the p roperty or benefit recovered as of the date of settlement or ju dgm e n t. If any recovery includes no n - moneta ry considerat ion, including but not limited to goods or services (whether tangible or intangible), the parties will agree on the fair value of tha t non

- monetary consideration from which to calculate the recove ry and d erive the c ontingen t fee

.
Anise explained in a decla ration submitted to the arbitrat or that he agreed to that arrangement because he thought it was possible that the dispute could end in either monetary damages or Glazer ’ s agreeing to resubscribe t o y Dri n k ’ s services

. yDrin k , represented by SSM, sued Gla zer ’ s in Aug ust 2020 and the parties to that suit reached a settlement the following year. As relevant here, G l a zer ’ s executed a n Application3 Service Provider Agreement ( “ ASPA ” ) agre eing to pay fo r t hree y D rink products collecti ve ly known as yDrink Complete

. The ASPA had a five

- year term, with an escal ating annual fee due on April 1st

. After Glaz er ’s paid the annual fee, $ 345,000 for the first year, y Drink and SSM disagreed about how to calcu late SS M ’s 35 % contingent fee share. SSM argues that it was

en titled to 35% of each payment from G laz er ’ s when yDrink receives the m while yDrink argued that SSM is entitled to 35% of its profits on each payment

. T he parties subsequently executed a
contract ( “ Arb itrat i o n Agreement ”) agre eing that “ [a] ny controversy or claim arising out of or related to [SSM ’s re presentation of yDrink] , the Dispute , or the Engagement Letter, including but not limited to any claim conc erning its i nterpret ation, shall be resolved by arbit r a tion. ” The Arbitration Agreement provide s tha t t he Commercial Arbitration Rules of the American Arbitration Associa tion ( “AA A Rules ” ) apply and that “ [a] ny decisions by the Arbitrator relating to or resolving the Dispute shall be final and bindi ng upon t h e Parties. ” The arbitrator conducted a hearing in August 2021 and afterwards issued an award siding with SSM ( “ 2021 Award ” )

. T he arbitrator explained in the 2021 Award that

“ [ n ] othing in the engagement letter suggests that SSM ’ s 35% fee is to be ca lcula t e d after exami ning yDrink ’ s costs and determin ing yDrink ’ s profit on the ASP A ” and “ such an exercise is the exact opposite of the common understanding of ‘ gross recovery
. ’ ” The arbitrator then addressed yDrink ’s argument that this construction wa s i mprac t i cal because the “AS PA is not guarantee d for t he full five years

. ” The arbitrator disagreed b ecause the Engagement Letter

“ obligates yDrink to pay 35% to SSM only as yDrink receives payments from Glazer’s. If, fo r any reason, the A SPA does not su rvi ve th e full five years or if Glazer’s fails to pay, the n yDrink has no obligation to pay SSM. ” Put more succinctly , “ SSM ’s fee wil l be 35% of the money4 yDrink receives, as and when yDrink receives it. ” Applyin g this reasoning, the arbitrator awarded SSM 35% o f the payment Glazer ’s already made and “ 35% o f t he actual payments that yDrink receives from Glazer’s during the remaining term of the ASPA, when and as yDrink receives such payments

. ”
In 2022 , yDrink decided to re tire yDrink Complete and introd uce a new p r oduct called yDrink Integral

. Because the sys tems supporting the products were incompatible , yDrink require d all its subscribe r s to upgrade to yDrink Inte g ral . As part of this process, y Drink and each subscriber terminated th e existing agreem ent betwee n them and executed a Data Subscription Ag ree ment ( “ DSA ” ) for y D rink Integral

. Glazer ’ s elected to upgrade to y Dr ink Integral and executed both an agree ment ter mi nating the ASPA and a DSA.
O n April 1, 2022, SSM informed yDrink that another paym ent was due

. yDrin k respond ed that its payment obligatio n e nded with the termination of the ASPA because the 2021 Award states that “ i f, for any reason, the A SPA does not survive the full five years or if Glazer’s fails to pay, then yDrink has no obligati on to pay S S M

. ” T he following week, SSM submitted a letter to the arbitrator ex pla ining the situation and asking him to order yDrink to explain why it had not violated th e 2021 Award. yDrink sued in Travis County D istrict Cour t for declaratory relief th at the
t ermin a t ion a greement terminated the ASPA and yDrink therefore had no fur the r payment obligations under the 2021 Award. SSM moved under the Texas Arbitration Act (TAA) to

com pel arb itration of yDrink ’ s clai m for declaratory judgment

. See generally Te x. Civ. Pr a c
. & Rem. Code § § 171.001

– .098. y Drink fi led a n amended petition with a claim to confirm the
2021 Award

. SSM responded with a motion to remand the 2021 Award to the arbitrator
to clarify whether yDrink ’ s payment obligation survived the t erm ina tion of th e ASPA.5 See id. § 171.054 ( permitting arbitrators to “ modify or correct ” award on s ubmission from court considering a motion to confirm, v acate, or modify award under TAA ). The district court compell ed arbitration on yDrink ’ s c laim for decl ara tory judgmen t and remand ed th e 202 1 Award for clarification

. 2 T he arbit rator clarified by order tha t terminating the ASPA did not end yDrink ’ s pay ment obligations. After hearing evidence and consider ing post

- h earing briefi ng , the arbitrator rendered a se cond award ( “ 2 023 Award ” )

. The
20 2 3 Awa rd inc orporate d the clarification order and awarded SSM “ 35% of th e gross payments that yDrink has or will receiv e from Glazer’s, including but not limited to 35% of the gross payments that Glazer’s has or will ma ke to yDrink un d e r the DSA. ” To “ avoid any future

unce rtainty arising from a new contract or other arrangeme nt that yDrink purports to make with Glazer’s, ” the arbitrator reserved “ cont inuing jurisdiction to determine any further disputes between the part ies regarding t h e ir ri ghts and obligations under the E ngagement Le tter. ”
S S M asked the district court to confirm the 2023 Awar d. y Dr ink moved to vacate the 202 3 Award to the extent it entitled SSM to more money tha n it would ha ve recovered un der the 2021 Awa r d i f the AS P A st il l existed. Th e di strict court entered a final judgm ent confirming th e 202 3 Award

.
DISCUSSION
y Dr ink arg ues in t wo issues that the arbitrator exceeded his powers by altering

or expanding the relief granted in the 2021 Award and by uni l at e ral ly reser v i ng

“ continuing jurisdic tion

. ”

2 The same arbitrator presided over both proc eedings

.6 L egal Standards The TAA confers jurisdiction on T e xas courts to e nforce agreeme nt s to arbitrat e and to render judgment on resulting award s
. Tex. Civ. Prac. & Rem. Code § 171.081

. 3

“ Because Texas law favors a rbi t ration, jud i c ial review of an arbitration award is extraordinarily

narrow. ” E as t Tex. Salt Water Disposal Co. v. Werline , 307 S.W.3d 267, 271 (Tex. 2010) . By default, “[u ]nless g rounds are offered for vacating, modifying, or correcting an award , ” t he tr ial
court “ s h a ll confirm the award. ” Tex. Civ. Prac. & Rem. Code § 171.087

. The ground for vacat ing a n award relevant here is that the “ arbitrator s ex ceeded their powers. ” Id. § 171.088 (a)(3)(A). In an ar bitration “ conducted by agreement of the par tie s, the rule is w ell established that ‘ [a]n arbitrator derives his power from the partie s ’ agreement to submit to arbitra tion

. ’ ” Nafta Traders, Inc. v. Quinn , 339 S.W.3d 84, 9 0 (Tex. 2011) ( q uoting City of Pasaden a v. Smith , 292 S.W.3d 14, 20 (Tex. 2009 ) ). T h us, a n arb i t rator “ exceeds his authority when he disregards the contract and dispen ses his own idea of justice. ” D.R. Horton

Tex., Ltd. v. Bernhard , 423 S.W.3d 532, 534 (Te x. App.

— Houston [14th Dist.] 2014, pet. denied)

. The “ proper inquiry is not wh ether the arbi t r ator decided an issue correctly, but rather, whether he had the au thori ty to de cide the issue at al l. ” Forest Oil Corp. v. El Rucio Land
& C attle Co. , 518 S.W.3d 422, 431 (Tex. 2017) ; see Denbury Onshore, LLC v. Texcal Energy
S. Tex. , L .P. , 513 S.W.3d 5 1 1 , 520 (Tex. App.

— Houston [14th Dist.] 2016, no pet.) ( “ Conte ntion s that t he arbitrator ’ s reas oning was legally erroneous or internally inconsistent, or that the arbitrator misinterpreted the contract or misapplied the la w do not provi de a b asis for
vacat i n g an award. ” ).

3 The par ti es agree that the TAA , r ath e r than the Fe dera l Ar bitration Act , governs th is c ase
. See G.T. Leach Builders, LLC v. Sapphire V.P., LP , 458 S.W.3d 502, 519 n.14 (Tex. 2015 ) ( presu ming TAA appl ies absent argument to con trary ).7 We review a trial court ’ s decision to conf ir

m or vacate an arbitration award for an abuse of discretion , deferring to the trial court ’ s factual findings but reviewing legal questions de novo. Aerotek, Inc. v. Boyd , 6 24 S.W .3d 199, 204 n.1 9 (Tex. 2021) (citing Henry v. Cash Biz,
LP , 551 S.W.3d 111, 115 (Tex. 20 18) ). W hether an ar bitrator exceeded his powers under an arbi tration agreement is a legal question

. Barton v. Fashion Glass & Mirror, Ltd. , 321 S.W.3d 641 , 646 (T ex. App.

— Houston [1 4 t h Dist.] 2010, no pet.)

. We s tart with the presumption that “ a n arbitrator ’ s actions were within his authority ” and “ resolve all doubts in favor of the award. ” Elite Framing v. BBL Builders, L.P. , No. 05

- 15

- 01430

- CV, 2016 WL 33460 41, at *3 (Tex. App

. — D a l las June 15, 20 16, pet. denied) (mem. op. )

. Here, that analys is requires in terpretation of the Arbitration Agreemen t

.

“ Arbitration agreements are interpreted under traditional contract principles.” In re Whataburger
Rest s
. LLC , 645 S. W.3d 188, 194 (Tex

. 2022) (orig. proceeding) (citing J.M. Davidson, Inc.

v. Webster , 128 S.W.3d 223, 227 (Tex. 2003) ). The “plain language” of th e agreement controls, but “[w]ords must be construed ‘in the context in which they are used , ” and w e will “ exa mine and consider t h e entire writing in an effort to harmonize and give effe ct to all the provisions of the contract so that none will be rendered meaningless. ” I d. at 194

– 95 ( citations omitted )

.
No Alter ation o r Expansion of the 2021 Award yD rink fir st argues that the arb i t rator exceeded his powers because the AAA Rule s and Tex as law prohibit arbitrators from revising prior awards on the merits of any claim

. R

ule 5 2 (a) of the AA A Rules provides in relevant part:

Within 20 ca lendar days after the tr ans mi ttal of any award, a ny party, upon notice to the other parties, may request the arbitra tor, through the AAA, interpret the award or correct an y clerical, typographical, or computational errors in the award.8 The arbi trator is no t empowered to re

- determ ine t he merits of any c l a im already decided.
( E m p hasis added ). T exas law similarly “ bars a n arbitrator from revisiting the merits of an award once the award has been issued

. ” Stage Sto res, Inc. v. Gunnerson , 477 S.W.3d 8 48, 856 (Tex. App.

— Houston [1st D ist .] 2015, no pet.)

. y D r ink argues that the arbitrator violated this prohibition because the 20 23 Aw ard alters the relief granted in the 2021 Award. More specifically, the 2021 Award awards SSM 35% of the payment G laz er ’ s had already made and “ 35% of t he ac tual payments that y D r ink receives from Glazer’s during the remaining term of the ASPA, when and as yDrink receives such payments ” but the 2023 Award clarif ies th at yDrink ’ s payment obligation d id not cease with the termination of the ASPA and gr ants SSM 35 % of the payments y D r ink “ has or will receive from Glazer’s, including but not limited to 35% of the gross payments that Glazer’s has or will make to yDrink under the DSA

. ” 4 S S M respon ds that the arbitrat or did not revisit the merits of the 2021 Awa rd but granted relief on a new claim. We agree with SSM

. First, the arbitrator did not violate Rule 52 (a ) or Texas law by clarifying that yDrink ’ s payment obligations did not depend on the existence of the ASPA

. While Rule 52 (a) ’ s twenty

- day period to re que st clarifications had l o ng passed, t he TAA expressly perm its arbitrators to modify or clarify an award “ on submission t o the arbitrators by a
court ” if an application to c onfirm or vacate an award is pending before the court , which was the case here. T e x. Civ. Prac. & Rem. Co d e § 171.054 (b) (2)

. The district court expressl y invoked this provision in its order staying the case, and yDrink does not ex plain why this was error
.

4 yDrink does not contest SSM ’s recovery of a continge ncy f ee from the firs t fo ur DSA payments as long as the extent the total paid by yDrink does not exceed $603,750, plus applicable escalators

.9 T he arbitrator did not revisit the merits of the 2021 Award in the 2023 Award.
T he 2021 Award decided th e meaning of “g ross recovery ” in the Engagemen t Letter and applied it only to the payments from Glazer ’s under the ASPA

. In the 2023 Award, th e arbitra tor resolved SSM ’s new claim that yDrink violated the Engagement L etter throu gh terminating the ASPA and e xecu ting the DSA . As relief for that violation , the arbitrator awarded SSM 35% of the payme n ts yDrink receives from Glazer ’s under th e DSA or another con tract. Nothing in the
2023 Awar d revis its the issues decided in the 2021 Aw ard or purports to modif y the relief granted in the 2021 Award. I n other words , the arbitrator decided and aw arded r elief on a different claim bas ed o n different fac ts

. 5
y D rink a lso argues that the arbitrator exceeded his powers in another respect: th at the award of 35% of the g r o ss paym ents that yDrink has or will receive from Glaz er ’ s,

“ including but not limited to 35% of the gross payments that Glazer’s has or will make to yDr ink

u nder the DSA , ” “ could be read to mean the arbitrator awarded SSM 35% of any ‘ other ’
paymen ts Gla z e r’s ever may make to yDrink, at any time in the future, for reas ons that cannot

ev en be predicted at this time

— essentially a perp etual royalty. ” But we canno t construe this sentence in isolation. See I n re Whataburger Rest s
. , 64 5 S.W.3d at 194

– 95

. R ea d in c ontext of the a rbitrator ’s conclusion that terminating the ASPA and repla cing it wit h t he DSA “was an

5 T hat di stinguishes this case from yDrink ’s mai n authority

— Barsness v. Scott , 126 S.W.3d 2 32 , 235 (Tex. App.

— San An t o nio 2003, pet. denied)

. In that case

— which invo l ved a dispute over the purchase of stock in two companies

— Scott requested money damages , att orne y ’ s fees, and a rec alculation of how much he owed on the purchase

. I d. at 235. A p anel of arbitrators co ncl u d ed that Scott was entit led to the rec alculation and denied all other rel i ef. Id. at 236

– 37. In response t o Scot t ’s “ M o tion for Modifica tion or Clarification of the Award, ” the panel modified the award to designate Sc ott as th e prevailing party an d a war d him one dollar in damages and $ 356,613.76 in at torney ’ s fees. Id. Th e cou rt of appeals held that the arbitration p anel exceeded its pow er s because the issue s of damages and att orney ’ s fees had already been pr esented to the pa ne l and rejected by them

. I d

. at 241. Here, in contra st, t he issues in the second arbitrat ion were not rejected

— or even considered

— in the first arbitration

.10 att empt to avoid yDr ink ’s obligat ions ” under the Engagement Letter, we interpret the “ including but not limited to ” langu age to mean only th at yDrin k ’ s payment obligation s could transfer to any contract that replaces the ASPA

. Reviewing the issue de novo and resolving all doubts in favor of the 2023 Award,

see Elit e Framing , 2016 WL 3346041, at *3 , we conclude that yDrink fa i le d to rebut the presumpti o n that the arbitrator acted within his powers in clarifying the 2021 Award an d ruling that SSM is entitled to 35% of “ the gross payments that yDrink has or will receive fr om Glazer’s, including but not limited to 35% of the gros s p ayments that Glazer’s ha s or will m ake to yDrink under the DSA. ” We overrule yDrink ’ s first issue.
Continuing Jurisdiction yDrink argues in its second issue that the arbitrato r exceeded his power s by reserving “ cont inuing jurisdiction to determine any fur ther disputes between th e parties

r egar ding their rights and obligations under the E ngagement Le tter ” because it conflicts with the Arbitration Agreement ’ s requirement that he render a final award

. SSM respo nds that the Arbitration Agreement gave the a rbi trator a uthority “ o ver y D r ink ’ s com plia nce with the Second Award and any further disputes ” over SSM ’ s fee.
W e agree with SS M. yDrink relies on four provisions of the Arbitration Agreement:

“ [T] he Parties desire to resolve the Dispute fully, finally, an d i rrevocably by arbitratio n as more f ully set forth in this Agreement. ”

“ The Parties agree that the decision by the Arbitrator is final, binding, and not appealable. ”11 “ Any decisions by the Arbitrato r relating to or resolving the Dispute shall be final and bi nding upon the Parties. B oth Parti es w aive the right to appeal the Arbitrator’s decision. ”

“ Each Party shall submit to any court of competent jurisdiction for purposes of the enforcement of any aw ard, order, or judgment. Any award, o rder, or judgment pur suant to any arbitration u nder this Agr eement is final and may be entered and enforced in any court of competent jurisdiction

. ”
yDrink argues that “each p rovision independently, and certainly in the aggregate, ” require s the arbitrator to rend er a “final ” a ward rather than reservi n g co ntinui ng j urisdiction

. We agre e with
y Dr ink tha t the se provisions require the arbitrator to render an award disposing of all the issues submitted to the arbitrator at a particular time. Cf. Collins v. Tex Mall, L.P. , 297 S .W. 3d 409, 415 (Tex. App.

— F o r t Worth 2 009, no pet.) (stating common

- law rule that “ [a]n arbitration award must determine all matters submitted or it will be unenforceable for lack of finality ” (citing P orter v. Irvine , 658 S.W.2d 711, 713

– 14 (Tex. App.

— Hou sto n [1st Dist.] 1983,

no w r i t) ) ).
B ut r equiring the arbitrator to render a final award , specifying how to enforce it , and expressing the intention to fully resolve the subject dispute is not necessaril y inco nsistent with the arbitrator retaining cont inu ing jurisdiction

. The partie s agreed that they would arbitrate
“a ny cont rove rsy or claim arising out of or related to [SSM ’s re presentation of yDrink] , the Dispute , or the Engagement Letter, including but not limited to any claim conc er ning its
i nterpret a tio n
. ” “ Dispute , ” for these p u r poses, means the disagreement “ about the amou nt of [SSM ’ s ] fee ” d ue under the E ngageme nt L etter

. The Arbitration Agreement is not limited to the fee dispute itself but a lso encompasses any controv ersy or claim relating to S S M ’ s representation of yDrink o r the E ngagem ent Letter. Moreover, t h e re i s no requiremen t that the facts supporting the “controversy or claim ” exist at the time the parties executed the Arbitration Agreement

.12 Construing the Arbitratio n Agreement as a who le, it does not preclude the a r bitrator from deciding fu ture disputes th at a re within its scope. See Nafta Traders , 339 S.W.3d at 90 ( “ W hether enforcing an agreement to arbitrate or construing an arbitration clause, courts and arbitrat ors must give effect to the contractual rights an d expectations of the parties. ” (citing
Sto lt

- N ielsen S.A. v. AnimalFeeds Int ’ l Corp. , 559 U.S. 662, 682 (2010) ) ). Thus, by reserving continuing jurisdiction “ to determine any further disputes between the pa rties regarding the ir rights and obligations und e r the E ngagement Le tter , ” the Arbitrato r si mply stated his author ity under the Arbitration Agreement. We overrule yDrink ’ s secon d issue.

CONCLUSION We affirm the district court ’ s judg ment

.

__________________________________ ___ _____ Rosa Lopez Th eofanis , Justice Before Chief J ustice Byrne, Justices Smith and Theofanis
Affirm ed
F i l ed: May 31, 2024