Court Opinion

ID: 59640
Source: CourtListenerOpinion
Date Created: 2010-04-26 03:23:40+00
Date Added: 2024-06-11T17:19:50.176347
License: Public Domain

IN THE UNITED STATES COURT OF APPEALS
                    FOR THE FIFTH CIRCUIT United States Court of Appeals
                                                   Fifth Circuit

                                                                            FILED
                                                                          March 11, 2008

                                        No. 07-10343                  Charles R. Fulbruge III
                                                                              Clerk

NETKNOWLEDGE TECHNOLOGIES LLC doing business as
NK SOFT.COM CORP

                            Plaintiff
v.

RAPID TRANSMIT TECHNOLOGIES, also known as WaKuL Inc

                            Third Party Plaintiff - Appellee

v.

ERICSSON INC

                            Third Party Defendant - Appellant

                   Appeal from the United States District Court
                        for the Northern District of Texas
                                  3:02-CV-2406

Before WIENER, BARKSDALE, and DENNIS, Circuit Judges.
PER CURIAM:*
       This matter reaches us on appeal following the district court’s review of
the Arbitrator’s award of damages, attorneys’ fees, and costs in favor of Rapid

       *
         Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH CIR.
R. 47.5.4.
                                  No. 07-10343

Transit Technologies a/k/a WaKuL, Inc. (“WaKuL”) and against Ericsson, Inc.
The district court granted WaKuL’s motion to confirm the Arbitrator’s award
and concurrently denied Ericsson’s motion to vacate the award.             After
considering the parties’ written and oral arguments, we AFFIRM for the reasons
assigned by the district court:
      1.    The Arbitrator did not exceed his authority by awarding damages
            to WaKuL in excess of the Master Purchase Agreement (“MPA”)’s
            limitation of liability provision because he determined that the
            limitation of liability provision was void due to fraudulent
            inducement.
      2.    To succeed on its argument that the Arbitrator manifestly
            disregarded Texas law when it determined that the MPA’s merger
            clause did not preclude WaKuL’s fraudulent inducement claim,
            Ericsson had to show “the existence of a clearly governing principle”
            that is “well defined, explicit, and clearly applicable.” See Brabham
            v. A.G. Edwards & Sons Inc., 376 F.3d 377, 381-82 (5th Cir. 2004).
            It failed to do so. This court has not read Schlumberger Tech. Corp.
            v. Swanson, 959 S.W.2d 171 (Tex. 1997), and its progeny as
            standing for the principle that, under Texas law, the presence of a
            merger clause categorically bars a fraudulent inducement claim
            under the contract, as Ericsson contends. See Dunbar Med. Sys.,
            Inc. v. Gammex Inc., 216 F.3d 441, 449 & n.11 (5th Cir. 2000); see
            also Gen. Retail Servs., Inc. v. Wireless Toyz Franchise, L.L.C., No.
            06-20395, 2007 WL 2909565, at *13 (5th Cir. Oct. 5, 2007)
            (unpublished). Rather, Schlumberger and its progeny make clear
            that the proper inquiry into whether the presence of a merger clause

                                       2
                          No. 07-10343

     bars a fraudulent inducement claim is a fact-specific one, precisely
     of the kind engaged in by the Arbitrator here. Accordingly, the
     Arbitrator did not manifestly disregard Texas law on merger
     clauses.
3.   The Arbitrator did not exceed his authority by awarding WaKuL
     attorneys’ fees pursuant to the MPA’s arbitration provision. The
     arbitration provision plainly provided the Arbitrator with the
     authority to award attorneys’ fees to the prevailing party. See MPA,
     at ¶ 17 (“Arbitration . . . shall include an award of attorneys’ fees
     (and the amount of such fees) to the prevailing party.”). Moreover,
     both parties requested attorneys’ fees while this matter was before
     the Arbitrator, thereby permitting the Arbitrator to award
     attorneys’ fees under the Rules of the American Arbitration
     Association. See Commercial Arbitration Rule R-43(d)(ii).
AFFIRMED.

                                3