Court Opinion

ID: 4641874
Source: CourtListenerOpinion
Date Created: 2020-12-11 08:16:13.668901+00
Date Added: 2024-06-11T08:00:25.688083
License: Public Domain

In The

                                 Court of Appeals

                     Ninth District of Texas at Beaumont

                               __________________

                               NO. 09-20-00153-CV
                               __________________

               IN RE THOMAS N. CAMPBELL, ET AL
__________________________________________________________________

                           Original Proceeding
           284th District Court of Montgomery County, Texas
                    Trial Cause No. 18-12-15871-CV
__________________________________________________________________

                           MEMORANDUM OPINION

      Relators Thomas N. Campbell, Christy W. Kolva, Foster Management,

L.L.C., and Foster Timber, LTD. filed a petition for writ of mandamus, in which

they ask this Court to (1) quash the trial court’s orders granting a two-month

continuance of relators’ application to confirm the arbitration award and permitting

the Scatena defendants 1 to conduct post-arbitration discovery, and (2) order the trial

      1
       The real parties in interest are Robin S. Rouse, Terrill A. Scatena, Sabrina
Rouse, Neil F. Campbell, Jr., Benjamin Campbell, and JP Morgan Chase Bank, N.A.
We will refer to real parties in interest Robin S. Rouse, Terrill A. Scatena, and
Sabrina Rouse as “the Scatena defendants.”
                                          1
court to “promptly consider” the final award the arbitrator entered in relators’ favor.

For the reasons explained herein, we conditionally grant the petition for writ of

mandamus.

                                   BACKGROUND

      Relators assert that the underlying proceeding was arbitrated pursuant to the

rules of the American Arbitration Association (“AAA”). On March 23, 2020, after

a thirteen-month arbitration, the arbitrator, Theodore F. Weiss, entered an award in

relators’ favor “that dissolves a family timber business hobbled by generations of

family rancor[]” and orders liquidation of the business. On December 19, 2019,

during the pendency of the arbitration, the Scatena defendants’ attorney objected by

letter to Weiss serving as arbitrator. In the letter, the Scatena defendants asserted that

(1) in 1995, Weiss and relators’ lead attorney were co-defendants in a case that was

reversed on appeal, (2) Weiss and relators’ lead attorney, Robin Gibbs, attended the

same law school, and they both served on Law Review, although Gibbs was one

class year behind Weiss, and (3) Weiss’s son practices law at a firm established by

lawyers who previously practiced at the firm representing relators. The Scatena

defendants argued that the arbitration “may have been materially prejudiced because

the Arbitrator is unable to be impartial and independent.”

                                            2
      Weiss responded that one of his sons knew Marshal Hoda, a second-year

associate at relators’ counsel’s law firm and a member of relator’s trial team. Weiss

stated that his son and Hoda realized while playing on the same team in a lawyers’

basketball league that Hoda was working on an arbitration in which Weiss is the

arbitrator, and “[t]hey agreed at that time that they would not discuss the case.”

Weiss also stated that although both he and Gibbs were on Law Review, he did not

recall working with Gibbs on Law Review, but he stated that “it is possible” that he

did. Relators responded that Weiss’s supplemental disclosure confirmed that there

is no basis for questioning Weiss’s impartiality, and relators characterized the

interactions between Weiss’s son and members of relators’ law firm as “casual and

random” and stated that such interactions “would not lead any reasonable person to

question Mr. Weiss’s ability to rule impartially[.]”

      AAA’s Administrative Review Council (“ARC”) reviewed the Scatena

defendants’ objection to Weiss serving as arbitrator, and on January 8, 2020, ARC

“determined that Arbitrator Weiss shall be reaffirmed as an arbitrator[.]” ARC

explained that its “rule on disqualification provides that an arbitrator shall be subject

to disqualification for partiality or lack of independence, inability or refusal to

perform his or her duties with diligence and in good faith, and any grounds for

                                           3
disqualification provided by applicable law.” ARC also explained that “the AAA’s

decision regarding an objection to an arbitrator is conclusive.”

      As discussed above, on March 23, 2020, Weiss entered a final award in

relators’ favor that dissolved the business and ordered its liquidation. On the same

date, relators filed an application to confirm the arbitration award. The Scatena

defendants filed an objection to the arbitration award, requested post-arbitration

discovery, and moved for continuance, and asked the trial court to schedule the case

“for an oral and evidentiary hearing[] rather than submission.” Specifically, they

asserted that their “rights were prejudiced by the evident partiality of the Arbitrator

because the Arbitrator and [relators’ law firm] failed to disclose” that Weiss and

Gibbs were classmates at law school and peers on Law Review; Weiss’s son works

for a firm founded by two partners who previously practiced at relators’ counsel’s

firm; and Weiss’s son “is friends with Marshal Hoda” and they played on the same

basketball team while the arbitration was pending; and Weiss’s son has recently been

involved in two cases with relators’ counsel, Gibbs. The Scatena defendants asserted

that they were entitled to post-arbitration discovery to flesh out relevant undisclosed

facts regarding its claim of evident partiality. The Scatena defendants also filed a

motion to vacate the arbitration award, in which they again asserted, inter alia,

                                          4
Weiss’s alleged “evident partiality[.]” Real party in interest Neil F. Campbell, Jr.

also moved to vacate the arbitration award for alleged evident partiality.

      On April 20, 2020, the trial court signed an order granting the Scatena

defendants’ motion for continuance, in which the trial court ordered that “all

[a]pplications related to the arbitration shall be discussed at the Zoom hearing

currently scheduled for April 30, 2020[.]” 2 At the Zoom hearing on April 30,

relators’ counsel argued that the Scatena defendants first raised the issue of evident

partiality on the eve of final argument in the arbitration proceeding, and he explained

that the Scatena defendants’ objection was based upon counsel’s attendance at law

school with Weiss fifty years ago, where they might have worked together on Law

Review, and that Weiss’s son played on a recreational basketball team with Marshal

Hoda. Relators’ counsel asserted that the ARC reviewed the matter and determined

that no evident partiality existed, and that ARC’s ruling is conclusive. According to

relators’ counsel, the Scatena defendants did not cite “to a single case on anything

like these facts permitting discovery and not a single case has ever suggested that

you would reverse an ARC determination.” The Scatena defendants’ counsel

asserted that they desired to depose Hoda, and relators’ counsel argued that the

      2
       Relators’ application to confirm the arbitration award was included within
the scope of the trial court’s April 20 order.
                                           5
Scatena defendants had not demonstrated materiality or financial interests that have

“anything to do with partiality.” Relators’ counsel argued that the parties committed

to arbitrate the issue of partiality.

       Relators’ counsel filed a motion for protective order, in which counsel

asserted, among other things, that (1) the AAA’s rejection of the Scatena defendants’

partiality theories precludes their reconsideration by the trial court and renders their

discovery requests irrelevant; (2) the Scatena defendants’ partiality theories are

legally invalid, and their discovery requests are therefore immaterial; and (3) the

Scatena defendants have not provided clear evidence of impropriety, which “is

required to conduct post-arbitration discovery[.]” In response to the motion for

protective order, the Scatena defendants asserted that each of their requests seek

discovery regarding the undisclosed relationships between Weiss and his sons with

relators’ firm, “which infected the arbitration process.” They also argued that

relators’ law firm “did not disclose that Marshal Hoda would be involved in this

proceeding. In fact, . . . they did not involve Mr. Hoda in this case until April 2019,

once the Arbitrator’s appointment was inevitable.”

       On June 3, 2020, the trial court conducted a hearing on various matters,

including the motion for protection. Relators’ counsel argued at the hearing that he

sought “to quash the discovery that has been issued across the board to Gibbs &

                                           6
Bruns, to the arbitrator Ted Weiss, to the Frizzell firm, King & Spalding, Jim Weiss,

David Weiss, and Marshal Hoda for a deposition.” Relators’ counsel asserted at the

hearing that the requested discovery is legally irrelevant and “therefore,

impermissible and/or unavailable.” According to relators’ counsel, ARC’s ruling is

dispositive because the Scatena defendants “do not attack the partiality of the five

independent ARC officials, which is a predicate.”

      During the hearing, the following colloquy occurred between the trial judge

and relators’ counsel:

              [TRIAL COURT]: Your position is really they can’t get there
      from here. It matters not how much discovery they do. As a matter of
      law, these relationships will be insufficient and, consequently, there is
      no need to belabor the point. It makes the discovery irrelevant.
              But what if there is enough there to sort of create some concern,
      some suspicion, and the discovery might yield something more? Does
      that fit within those rare cases? . . . What . . . does it take to have that
      clear indication of evident partiality to open the door to discovery?
              [RELATORS’ COUNSEL]: It’s certainly not what you see here.
      . . . And . . . the case law that you’ve seen, it says on the merits, here is
      how little discretion we have to look at anything on the merits,
      including wrong on the law, wrong on the facts, decided it wrong[,] . .
      . applied the law wrong. Those same rules apply there, except you can’t
      even review the ARC. It operates as a separate and independent
      tribunal, and the only way you get to second-guess it is you’ve got to
      prove . . . there is something wrong, from a partiality basis[,] there as
      well.

The Scatena defendants’ counsel argued that the parties agreed to arbitrate with the

AAA, but “[t]here is no agreement to abide by the ARC decision at all.” Relators’

                                           7
counsel responded that AAA rules 18(a) through (c) govern, and relators’ counsel

also asserted that no court “has ever ordered post-arbitration discovery on a law

school overlap theory or vicarious partiality theory.”

      The trial judge stated as follows during the hearing:

      [I]f what we’re focused on are non-disclosures and . . . what this
      discovery is, in my view, is a way to take the next step, to say we know
      that this was not disclosed. We now know this relationship exists.
             So let’s see what that relationship really looks like when we
      examine it under a microscope to see if this . . . non-disclosure is
      heinous. There is . . . money going back and forth between these firms.
      There’s communications between Mr. Hoda and Mr. Weiss. I’m not
      saying that. It’s a hypothetical. But . . . that’s kind of the way that this
      discovery is going, is to see if once you examine the non-disclosed
      thing, . . . it yields evidence of wrongdoing, essentially. Maybe even
      innocent wrongdoing[.]

On June 4, 2020, the trial judge signed a protective order that denied the Scatena

defendants’ subpoena and notices of intent to take deposition by written questions

of (1) arbitrator Theodore Weiss and the Weiss law firm, (2) the law firm of

Reynolds Frizzell, (3) Jim Weiss, (4) David Weiss, (5) Marshal Hoda, and (6) Gibbs

& Bruns, but ordered the oral deposition of Marshal Hoda on June 11, 2020. The

order provided that Hoda’s deposition must not exceed two hours in length and

would be “limited in scope to inquiries pertinent to the facts alleged in the Motion

to Vacate the Arbitration Award.”

                                           8
      Relators filed a petition for writ of mandamus and a motion for emergency

relief, and this Court entered an order staying all proceedings. In their petition for

writ of mandamus, relators argue that (1) the trial court abused its discretion by

ordering the live deposition of a party’s trial counsel to address a non-viable

partiality theory; (2) a party is bound by the ARC’s conclusive rejection of theories

of evident partiality when the party does not challenge the ARC’s decision; (3) the

trial court abused its discretion by ordering a post-arbitration deposition of a second-

year associate on relators’ trial team in the absence of evidence that the arbitrator

acted improperly; and (4) the trial court abused its discretion by delaying considering

relators’ application to confirm the final award by two months to permit post-

arbitration discovery regarding theories of evident partiality.

                                     ANALYSIS

      Mandamus will issue to correct a clear abuse of discretion when there is no

other adequate remedy at law. In re Alcatel USA, Inc., 11 S.W.3d 173, 175 (Tex.

2000 (orig. proceeding). A trial court abuses its discretion when its ruling is “‘so

arbitrary and unreasonable as to amount to a clear and prejudicial error of law.’” In

re CSX Corp., 124 S.W.3d 149, 151 (Tex. 2003) (orig. proceeding) (quoting CSR

Ltd. v. Link, 925 S.W.2d 591, 596 (Tex. 1996)); see also Downer v. Aquamarine

Operators, Inc., 701 S.W.2d 238, 241-42 (Tex. 1985). A trial court has no discretion

                                           9
in determining what the law is or applying the law to the facts. Walker v. Packer,

827 S.W.2d 833, 840 (Tex. 1992); see Thomas James Assocs., Inc. v. Owens, 1

S.W.3d 315, 322 (Tex. App.—Dallas 1999, no pet.) (holding that, with respect to

discovery regarding evident partiality of an arbitrator, it is within the trial court’s

sound discretion to to grant or deny a motion for continuance).

      An arbitrator’s “[e]vident partiality is established by the nondisclosure of

‘facts which might, to an objective observer, create a reasonable impression of the

arbitrator’s partiality’, regardless of whether the nondisclosed information

necessarily shows partiality or bias.” Forest Oil Corp. v. El Rucio Land and Cattle

Co., Inc., 518 S.W.3d 422, 431 (Tex. 2017) (quoting Tenaska Energy, Inc. v.

Ponderosa Pine Energy, LLC, 437 S.W.3d 518, 524 (Tex. 2014)). “However, if an

objective observer could not believe the undisclosed information might create a

reasonable impression of partiality, the information is trivial[,] and the arbitrator did

not exhibit partiality by failing to disclose it.” Amoco D.T. Co. v. Occidental

Petroleum Corp., 343 S.W.3d 837, 844 (Tex. App.—Houston [14th Dist.] 2011, pet.

denied). Although an arbitrator should err in favor of disclosure, he is not required

to disclose trivial matters. Burlington N. RR. Co. v. TUCO, Inc., 960 S.W.2d 629,

637 (Tex. 1997). An arbitrator is only required to disclose material facts, and the

consequences of the arbitrator’s nondisclosure should be directly tied to the

                                           10
materiality of the unrevealed information. Sebastian v. Wilkerson, No. 09-18-00223-

CV, 2019 WL 470087, at *3 (Tex. App.—Beaumont Feb. 7, 2019, no pet.). A

familial or close social relationship might reasonably affect the arbitrator’s

impartiality, and a party should have access to such information. Id. An arbitrator’s

alleged partiality “must be direct, definite, and capable of demonstration rather than

remote, uncertain, and speculative.” Id.

       The Scatena defendants argue that the “uncontradicted evidence” showed that

Weiss’s son and one of relator’s attorneys “are friends and teammates;” Weiss

“engaged in conversation(s) with his son about the pending arbitration and the son’s

relationship with Relators’ attorney . . .;” and “[n]one of this was disclosed until after

the Final Hearing in the Arbitration.” We disagree. Rather, the evidence merely

demonstrates that Weiss’s son and Hoda are social acquaintances who played a few

games together as members of a recreational basketball team; Weiss’s son and Hoda

conversed enough to ascertain that Weiss was serving as arbitrator, and they agreed

not to discuss the case; and Weiss and relators’ lead attorney, Gibbs, attended the

same law school one year apart decades ago, and both served on Law Review. We

conclude that such connections are distant, trivial, and attenuated, and they are

immaterial because they would not create in an objective observer a reasonable

impression of the arbitrator’s partiality. See Forest Oil Corp., 518 S.W.3d at 431;

                                           11
TUCO, Inc., 960 S.W.2d at 637; Sebastian, 2019 WL 470087, at *2-4 (concluding

that a party’s attorney and the arbitrator’s status as friends on Facebook, membership

in the same local bar association, and a campaign contribution from the arbitrator to

a party’s attorney did not create bias or the appearance of impropriety as to

arbitrator).

       Because the complained-of connections between (1) Weiss and Gibbs and (2)

Weiss’s son and Hoda are trivial and immaterial, we conclude that Weiss was not

required to disclose them, and the trial court abused its discretion by continuing the

case and permitting a deposition of Hoda. See Forest Oil Corp., 518 S.W.3d at 431;

TUCO, Inc., 960 S.W.2d at 637; Sebastian, 2019 WL 470087, at *2-4. Moreover,

because we have concluded that the information was trivial and Weiss was not

required to disclose it, we need not address relators’ complaints regarding the alleged

conclusiveness of the ARC’s ruling, as it would not result in greater relief. See Tex.

R. App. P. 47.1.

       We conditionally grant the petition for writ of mandamus and direct the trial

court to vacate its orders of April 20, 2020, and June 4, 2020, granting a continuance

and ordering the deposition of Hoda, and we will issue the writ only if the trial court

does not vacate its orders.

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      PETITION CONDITIONALLY GRANTED.

                                                  PER CURIAM

Submitted on June 22, 2020
Opinion Delivered December 10, 2020

Before McKeithen, C.J., Horton and Johnson, JJ.

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