Court Opinion

ID: 4071303
Source: CourtListenerOpinion
Date Created: 2016-09-30 01:55:00.022269+00
Date Added: 2024-06-11T14:33:13.485287
License: Public Domain

Affirmed and Opinion Filed August 3, 2015

                                          S   In The
                               Court of Appeals
                        Fifth District of Texas at Dallas
                                        No. 05-14-00615-CV

         MARK SCHWARZ, NEWCASTLE CAPITAL MANAGEMENT, L.P.,
       NEWCASTLE CAPITAL GROUP, L.L.C., NEWCASTLE PARTNERS, L.P.,
        AND NEWCASTLE SPECIAL OPPORTUNITY FUND II, L.P., Appellants
                                  V.
                       STEVEN J. PULLY, Appellee

                      On Appeal from the 298th Judicial District Court
                                   Dallas County, Texas
                           Trial Court Cause No. DC-11-00064

                             MEMORANDUM OPINION
                       Before Justices Francis, Lang-Miers, and Whitehill
                                  Opinion by Justice Whitehill

       This is a breach of contract case. Appellee Steven J. Pully sued appellants asserting

employment compensation claims and claims concerning his investments in two hedge funds

related to his employment. After appellants moved to compel arbitration of Pully’s investment

claims, he began an arbitration proceeding regarding those claims. The arbitrator made an award

favoring Pully. The trial court confirmed that award, and appellants appeal from that order.

       Appellants present four issues. The first three issues argue that the trial court erroneously

confirmed that award because:

       (1) Pully’s investment claims arose from an alleged oral employment agreement that did

not include an arbitration agreement;
        (2) the award benefitted persons who were not parties to the arbitration;

        (3) the award is contrary to public policy because Pully, who is a lawyer, violated Texas

Disciplinary Rule of Professional Conduct 1.08(a) by entering an oral business transaction with

his client.

        Appellants’ fourth issue argues that the trial court erroneously severed the claims

resolved by the arbitration award from Pully’s remaining employment claims, thereby producing

the final judgment that is the subject of this appeal, because that severance “split a single breach

of oral contract claim and severed interrelated defenses and counterclaims from the affirmative

claims to which they relate.”

        For the reasons discussed below, we resolve appellants’ issues against them and affirm

the judgment.

                                        I. BACKGROUND

A.      Factual Background

        The appellants are:

                 (i) Two hedge funds, Newcastle Partners, L.P. and Newcastle Special Opportunity
                 Fund II, L.P. (“NSOF”);

                 (ii) Those hedge funds’ general partner, Newcastle Capital Management, L.P.;

                 (iii) Newcastle Capital Management, L.P.’s general partner, Newcastle Capital
                 Group, L.L.C.; and

                 (iv) Newcastle Capital Management, L.P.’s president and CEO, Mark Schwarz.

        Appellee Pully is a Texas lawyer and a CPA. From about December 2001 until October

2007, Pully worked for Newcastle Capital Management as an officer and at times as inside

counsel.      During that employment, he acquired limited partnership interests in both funds.

According to Pully, he also invested in NSOF on behalf of his family members.

        Newcastle Partners and NSOF were governed by separate limited partnership

agreements. Each such agreement contained an identical arbitration clause providing for the
                                                –2–
arbitration of any dispute arising out of or relating to that agreement, associated subscription

agreements, the fund’s affairs, or the partners’ rights or interest:

            Any dispute, controversy or claim arising out of or relating to this Agreement, the
            Subscription Agreements or to the Fund’s affairs or the rights or interests of the
            Partners . . . shall be settled by arbitration in Dallas, Texas . . . .

It is undisputed that Pully executed a subscription agreement for each investment whereby he

agreed to the limited partnership agreements’ terms.

B.          Procedural History

            In January 2008, Pully sued Schwarz, Newcastle Capital Management, and Newcastle

Capital Group in the 298th District Court of Dallas County. He later joined Newcastle Partners

and NSOF as defendants. In March 2009, Pully filed a second amended petition asserting

several claims.1              His claims focused on two different matters.                                One, he alleged that his

compensation included 10% of Newcastle Capital Management’s profits, which he was not paid

for 2007. Two, he alleged that appellants breached an agreement to waive performance fees

associated with Newcastle Partners. Pully also sought declaratory judgment that appellants

could not charge him any performance fees on his NSOF investment.

            Appellants later moved to compel arbitration of “all claims relating to the Subscription

Agreement and Fund Partnership Agreements,” arguing that the agreements’ arbitration clauses

covered Pully’s ninth and tenth causes of action, which were directed at recovering the

performance fee Newcastle Capital Management charged Pully in 2007.

            Shortly after appellants filed their motion, Pully filed with the American Arbitration

Association an arbitration demand against appellants. That demand alleged that “Respondents

charged Claimant performance fees in violation of the parties’ agreement.”

     1
         Pully also joined another defendant, Geoworks Corporation, in the second amended petition. Geoworks is not a party to this appeal.

                                                                      –3–
       An arbitrator later heard Pully’s claim and issued an award. That award ruled that

Newcastle Capital Management agreed to waive the performance fee, that Pully was entitled to

that waiver for the first nine months of 2007, and that Pully was entitled to recover that fee

(about $60,000), plus attorneys’ fees and expenses. The arbitrator further ruled that Newcastle

Capital Management and NSOF “are not to charge Pully and/or his family any performance

allocation fee for their investments in NSOF for 2006 and the first nine months of 2007.”

       Appellants objected to the arbitrator’s rulings on Pully’s “employment-related claims”

and in favor of Pully’s family as being “outside the scope of the arbitration agreements and

matters that [appellants] agreed to arbitrate.” The arbitrator refused to modify the award.

       Pully subsequently filed a new petition and motion to confirm the arbitration award. The

case was assigned to the 160th District Court of Dallas County. Appellants answered and moved

to partially vacate the award.

       A few months later, this new case was transferred to the 298th District Court and

consolidated with Pully’s original suit. The trial court held a hearing, granted Pully’s motion to

confirm, and denied appellants’ motion to partially vacate the arbitration award. This order was

interlocutory because Pully’s claims based on the failure to pay him 10% of Newcastle Capital

Management’s 2007 profits remained pending.

       The litigation regarding that claim proceeded for two more years until Pully filed a

motion to sever the claims resolved by arbitration award from the remaining claims. The trial

court granted Pully’s severance motion over appellants’ objection and signed a final judgment

awarding Pully the relief awarded by the arbitrator. Appellants timely appealed.

                                     II. APPLICABLE LAW

       Appellants assert that this case is governed by the Texas Arbitration Act (TAA), Texas

Civil Practice and Remedies Code Chapter 171. They assert alternatively that the result would

                                               –4–
be the same if the Federal Arbitration Act (FAA) applies. Pully takes no position on the

question.

       The FAA applies to arbitration clauses in contracts that affect interstate commerce.

Fredericksburg Care Co., L.P. v. Perez, No. 13-0573, 2015 WL 1035343, at *2 (Tex. Mar. 6,

2015). A party seeking to apply the FAA has the burden to show that the contract affects

interstate commerce if the arbitration agreement does not specify which act applies. Brand FX,

LLC v. Rhine, 458 S.W.3d 195, 202 (Tex. App.—Fort Worth 2015, no pet.); cf. Southwind Grp.,

Inc. v. Landwehr, 188 S.W.3d 730, 734–35 (Tex. App.—Eastland 2006, no pet.) (applying TAA

because record did not show the contract involved or affected interstate commerce). Here, the

arbitration clauses do not expressly select either act, neither party affirmatively seeks application

of the FAA, and neither party argues that the contracts affect interstate commerce. Accordingly,

we apply the Texas Arbitration Act.

                                         III. ANALYSIS

A.     Standard of Review and Standards for Vacating and Confirming Awards Under the
       TAA.

       We review a trial court’s decision to confirm or vacate an arbitration award de novo

based upon a review of the entire record. Centex/Vestal v. Friendship W. Baptist Church, 314
S.W.3d 677, 683 (Tex. App.—Dallas 2010, pet. denied).

       Under the TAA, a court must confirm an arbitrator’s award unless an opposing party

establishes a statutory ground for vacating, modifying, or correcting the award. TEX. CIV. PRAC.

& REM. CODE ANN. § 171.087 (West 2011); Centex/Vestal, 314 S.W.3d at 683. As relevant here,

the TAA authorizes vacatur if (i) an arbitrator exceeds his powers or (ii) if there was no

agreement to arbitrate and the opposing party did not participate in the arbitration hearing

without raising the objection. See CIV. PRAC. § 171.088(a)(3)(A); id. § 171.088(a)(4).

                                                –5–
       An arbitrator’s power arises from the arbitration agreement, and that power is limited to

deciding the matters either expressly or by necessary implication within the agreement’s scope.

Centex/Vestal, 314 S.W.3d at 684. To determine whether claims are within an arbitration

agreement’s scope, we examine the agreement’s terms and the claim’s factual allegations.

Skidmore Energy, Inc. v. Maxus (U.S.) Exploration Co., 345 S.W.3d 672, 687 (Tex. App.—

Dallas 2011, pet. denied). Any doubts concerning the scope of what is arbitrable under the

agreement should be resolved in favor of arbitration. Id. That is, an arbitrator has the authority

to decide a claim unless it can be said with positive assurance that the arbitration agreement is

not susceptible of an interpretation that covers the dispute. Id.

B.     Appellants’ First Issue: Were Pully’s performance fee claims outside the
       arbitration agreements’ scope?

       Appellants argue that Pully’s performance fee claims were outside the arbitration

agreements’ scope because the claims arose from Pully’s oral employment agreement.

Appellants emphasize that Pully argued in a post-arbitration brief that the partnership

agreements’ obligation to pay those fees did not bar his performance fee claims because his

claims were based on a “wholly separate agreement” between Pully and Schwarz. But given the

partnership agreements’ broad arbitration agreements, we agree with the trial court that Pully’s

performance fee claims were arbitrable because those claims relate to the partnership

agreements.

       In so concluding, we first examine the arbitration agreements. Those agreements cover

any dispute relating to the limited partnership agreements:

       Any dispute, controversy or claim arising out of or relating to this [limited
       partnership] Agreement, the Subscription Agreements or to the Fund’s affairs or
       the rights or interests of the Partners . . . shall be settled by arbitration in Dallas,
       Texas . . . .

                                                –6–
       The phrase “relates to” is a very broad term. In re Wilmer Cutler Pickering Hale & Dorr

LLP, No. 05-08-01395-CV, 2008 WL 5413097, at *4 (Tex. App.—Dallas Dec. 31, 2008, orig.

proceeding [mand. denied]) (mem. op.). A claim “relates to” a contract if it has a significant

relationship with or touches matters covered by the contract. Kirby Highland Lakes Surgery

Ctr., L.L.P. v. Kirby, 183 S.W.3d 891, 898 (Tex. App.—Austin 2006, no pet.).

       Next, we review the facts underlying Pully’s claims. Pully pled in court that appellants

agreed to waive performance fees because he was a Newcastle Capital Management employee.

He further alleged that appellants breached this agreement by charging him performance fees

when he redeemed his Newcastle Partners investments during 2007. Pully’s arbitration demand

similarly alleged that “Respondents charged Claimant performance fees in violation of the

parties’ agreement.”     Indeed, according to appellants, Pully’s alleged duty to pay the

performance fees arose from the Newcastle Partners and NSOF limited partnership agreements.

Specifically, as appellants asserted in their motion to compel arbitration:

       The [limited partnership] agreements drafted by Pully contain specific provisions
       which provide for the performance fees and prohibit any attempt to waive them in
       the manner urged by Pully. The agreements also contain broad arbitration clauses
       which require arbitration relating to any issue regarding the limited partnership
       interests. . . .

               . . . Pully is required to arbitrate his tenuous claims regarding the
       performance fees (and any other claims relating to the limited partnership
       interests) due to the existence of enforceable arbitration clauses that bear directly
       on them.

Thus, Pully’s claims were claims that appellants breached legal duties not to charge him

performance fees even though the limited partnership agreements arguably entitled appellants to

charge those fees.

       Finally, we ask whether Pully’s claims had a substantial relationship with or touched a

matter covered by the agreements. The agreements here appeared to require Pully to pay

performance fees, but Pully denied that he was required to pay those fees. His claims thus

                                                –7–
directly involved the enforceability of one of his obligations under the agreements. Accordingly,

his claims related to—that is, had a substantial relationship with and touched a matter covered

by—the partnership agreements. Because his claims related to the agreements, the claims were

arbitrable, and the arbitrator did not exceed his powers by deciding those claims.

       Nonetheless, appellants argue that Pully’s performance fee claims were not arbitrable

because they were “employment claims” arising from an oral employment agreement that was

“wholly separate” from the limited partnership agreements. Appellants further emphasize that

the alleged oral employment agreement contained no arbitration clause. But, as we discussed

above, the crux of the matter is whether the claims fit within the partnership agreements’

arbitration clauses. On this point, appellants assert that those clauses “clearly [do] not apply to

oral employment agreements.” (Emphasis in original.) Appellants’ argument misses the point.

The arbitration agreements apply to any dispute, controversy, or claim arising out of or relating

to the limited partnership agreements. As this case illustrates, a claim can relate to more than

one agreement.     In his claims, Pully argued that a different agreement changed his and

appellants’ rights and obligations under the limited partnership agreements, and that appellants

breached their legal duties when they charged him fees under the partnership agreements. So his

claims related to the partnership agreements, and the arbitrator had the power to determine them.

       We thus overrule appellants’ first issue.

C.     Appellants’ Second Issue: Did the arbitrator exceed his powers by awarding relief
       to persons who were not parties to the arbitration proceeding?

       Appellants next argue that the arbitrator exceeded his powers by awarding relief to

nonparties (namely, Pully’s family members), or alternatively that the trial court erred by

confirming the award in favor of persons not before the court. They base their argument on this

sentence in the arbitration award:

                                               –8–
           I further find that NCM and NSOF are not to charge Pully and/or his family any
           performance allocation fee for their investments in NSOF for 2006 and the first
           nine months of 2007.

           Pully responds that appellants’ second issue is moot because NSOF made its distributions

to Pully and his family after the arbitrator made his award, and appellants charged them no

performance fees since the NSOF funds did not appreciate enough to trigger such fees.2

           We conclude that appellants’ second issue is moot for these reasons:

            First, we accept as true Pully’s unchallenged factual assertion that he and his family have

received their investment distributions from NSOF and were not charged any performance fees

because the investments did not appreciate sufficiently to warrant the fees. Although appellants’

reply brief addressed Pully’s mootness argument, they did not dispute the accuracy of his factual

assertion. So we may accept Pully’s assertion as true. See TEX. R. APP. P. 38.1(g) (“In a civil

case, the court will accept as true the facts stated [in appellant’s brief] unless another party

contradicts them.”); Redman v. Bennett, 401 S.W.2d 891, 896 (Tex. Civ. App.—Tyler 1966, no

writ) (accepting uncontradicted assertion in appellee’s brief as true).

           Second, an issue is moot if a party seeks a judgment (i) on a controversy that does not

really exist, or (ii) that when rendered cannot have any practical legal effect on a then-existing

controversy. Seals v. City of Dallas, 249 S.W.3d 750, 754 (Tex. App.—Dallas 2008, no pet.).

Under this test, appellants’ second issue is moot. Appellants contend that the arbitrator and the

trial court should not have ordered them not to charge performance fees to Pully’s family. But

now appellants have cashed out Pully’s family’s investments without charging performance fees,

and appellants do not dispute that they could not have charged Pully’s family any performance

fees even under appellants’ theory of the case. Thus, whether appellants are entitled to charge

     2
       Pully also argues that the arbitrator had jurisdiction over both his and his family’s claims, and that any error was harmless. We need not
address these arguments.

                                                                     –9–
Pully’s family the performance fee is no longer a live controversy, and our resolution of that

issue would have no practical legal effect. See Univ. Interscholastic League v. Jones, 715
S.W.2d 759, 760–61 (Tex. App.—Dallas 1986, writ ref’d n.r.e.) (appeal from injunction

allowing student to play high school football was moot because season was over and student had

graduated).

       Finally, appellants’ reply brief argues that we must vacate the trial court’s judgment and

dismiss the case if Pully’s mootness argument is correct. This is the general rule when an entire

case becomes moot. See, e.g., City of Dallas v. Woodfield, 305 S.W.3d 412, 416 (Tex. App.—

Dallas 2010, no pet.) (“If a case is moot, the appellate court is required to vacate any judgment or

order in the trial court and dismiss the case.”). But here the entire case is not moot; only

appellants’ second issue is moot. When a single issue becomes moot, we dismiss only that issue.

See Seals, 249 S.W.3d at 755 (dismissing as moot one of appellants’ nine issues). Accordingly,

we dismiss appellants’ second issue as moot.

D.     Appellants’ Third Issue: Is the arbitrator’s award void because it enforces an
       agreement that violates Texas public policy?

       1.      Applicable Standards

       Appellants next argue that the arbitrator’s award is void because it enforces an oral

agreement (to waive performance fees) that violated Texas Disciplinary Rule of Professional

Conduct 1.08(a) and therefore violated Texas public policy. The TAA, however, does not list

public policy as a ground for vacating an arbitration award. See CIV. PRAC. § 171.088.

       But, at common law, an arbitration award based on a claim arising from an illegal

transaction was void and unenforceable. CVN Grp., Inc. v. Delgado, 95 S.W.3d 234, 237 (Tex.

2002) (relying on Smith v. Gladney, 98 S.W.2d 351 (Tex. 1936)). In CVN Group, the supreme

court assumed without deciding that the TAA does not preempt this common law ground for

vacatur. Id. at 238. If there is a public policy ground for vacatur, the supreme court concluded,

                                               –10–
an arbitration award can be set aside only “in an extraordinary case in which the award clearly

violates carefully articulated, fundamental policy.” Id. at 239. To that end, the policy advanced

must reference “‘laws and precedents’ rather than ‘general considerations of proposed public

interests.’” Myer v. Americo Life, Inc., 232 S.W.3d 401, 413 (Tex. App.—Dallas 2007, no pet.)

(quoting W.R. Grace & Co. v. Rubber Workers, 461 U.S. 757, 766 (1983)). Furthermore, courts

may not re-examine an arbitrator’s decision whether a particular obligation is of the sort that is

legally unenforceable. See id. at 238.

       For example, in CVN Group, the Delgados argued that an arbitrator violated public policy

by wholly disregarding Texas’s constitutional and statutory requirements to perfect a mechanic’s

lien on a homestead. Id. at 239. The supreme court agreed that such total disregard would

violate public policy, but it rejected the Delgados’ argument that such disregard had occurred.

Id. Rather, the question of compliance with the requirements was arbitrated, and the arbitrator

decided that question against the Delgados.       Id.   Nothing in the record indicated that the

arbitrator had completely disregarded the requirements for lien perfection, so the court held that

the arbitrator’s ruling could not be disturbed on public policy grounds. Id. at 239, 243.

       As occurred in CVN Group, Pully does not challenge whether the statutory grounds for

challenging an arbitration award, which do not expressly include the common law public policy

exception, see CIV. PRAC. § 171.088, preempt this common law exception. Thus, for purposes of

this appeal, we assume without deciding that the public policy exception applies. See CVN Grp.,
95 S.W.3d at 239.

       2.      Application to this Case

       Appellants base their public policy argument on Texas Disciplinary Rule of Professional

Conduct 1.08(a), which provides that lawyers may not enter into business deals with their clients

unless certain client safeguards exist:

                                               –11–
       (a) A lawyer shall not enter into a business transaction with a client unless:

           (1) the transaction and terms on which the lawyer acquires the interest are fair
           and reasonable to the client and are fully disclosed in a manner which can be
           reasonably understood by the client;

           (2) the client is given a reasonable opportunity to seek the advice of
           independent counsel in the transaction; and

           (3) the client consents in writing thereto.

TEX. DISCIPLINARY RULES PROF’L CONDUCT R. 1.08(a), reprinted in TEX. GOV’T CODE ANN., tit.

2, subtit. G, app. A (West 2013). According to appellants, they adduced uncontroverted expert

testimony at the arbitration hearing that the alleged oral agreement for the waiver of performance

fees was an attorney–client transaction that violated all three prongs of Rule 1.08(a). This, they

contend, satisfies the purported public policy ground for vacatur. Pully disagrees.

       We are not persuaded by appellants’ third issue for several reasons:

       Initially, assuming without deciding that Rule 1.08(a) establishes a carefully articulated

and fundamental Texas public policy, based on law and precedent rather than general

consideration of proposed public interests, we agree with Pully that appellants’ expert did not

establish that the alleged oral waiver of performance fees presents an extraordinary case in which

the award clearly violated Rule 1.08(a). A comment to the rule provides that the rule does not

apply to transactions that the client routinely engages in with other persons:

       [Rule 1.08(a)] does not, however, apply to standard commercial transactions
       between the lawyer and the client for products or services that the client generally
       markets to others such as banking or brokerage services, medical services,
       products manufactured or distributed by the client, and utilities services. In such
       transactions, the lawyer has no advantage in dealing with the client, and the
       restrictions in paragraph (a) are unnecessary and impracticable.

TEX. DISCIPLINARY RULES PROF’L CONDUCT R. 1.08 cmt. 2. These non-exclusive examples are

similar to the professional employment agreement in this case.

       Furthermore, at the arbitration hearing, Pully adduced evidence, including his own

testimony and third-party affidavits, that hedge funds commonly waive fees for their employees
                                               –12–
who invest in their funds, that this waiver is a standard fringe benefit for employees, and that it

would be unusual for a hedge fund to charge employees a performance fee or a performance

allocation. Given this evidence, we conclude that appellants did not establish that the oral

waivers involved in this case clearly violated Rule 1.08(a).

       Additionally, appellants’ expert testified on cross-examination that Rule 1.08(a) applies

only if Pully was acting as a lawyer when he negotiated the performance fee waiver with

Schwarz. The expert added her conclusion that Pully was so acting. But, as the following

examples show, the evidence on this point did not present a case in which the award clearly

violates Rule 1.08:

       (1)     Pully testified that he talked to Schwarz, and Schwarz agreed to waive the
               performance fees, in 2003, after Pully had become Newcastle Capital
               Management’s president. This evidence suggests Pully may not have been acting
               as a lawyer when he and Schwarz agreed to the waiver.

       (2)     Pully also testified that he had a conversation with Schwarz about waiving the
               performance fees in 2006, before Pully invested funds in NSOF.

       (3)     Although Pully’s deposition testimony read at the arbitration hearing stated that
               “there were probably some very limited situations” in which he provided legal
               services as part of his employment with the general partner (Newcastle Capital
               Management), and Pully was Newcastle Capital Management’s senior legal
               executive from 2003 through February 2006, Pully’s Newcastle business cards
               never listed him as legal counsel.

       (4)     Pully also testified that another person was hired as “Vice-President Legal” in
               April or May 2006, and Pully was “trying to really move away from any legal
               work.”

In sum, the record does not clearly show that Pully was acting in his capacity as attorney for

Schwarz when they reached the alleged oral agreements about waiving performance fees. Thus,

the evidence does not establish that the alleged oral agreements clearly violated Rule 1.08(a).

       Finally, this case is distinguishable from Lee v. Daniels & Daniels, 264 S.W.3d 273 (Tex.

App.—San Antonio 2008, pet. denied), on which appellants rely. In Lee, a law firm arbitrated,

and prevailed on, a fee claim against a former client and his guarantor. Id. at 276–77. The court

                                               –13–
of appeals held that the trial court erred in part by confirming the award, concluding as a matter

of law that part of the fees sought by the law firm were unconscionable and therefore against

Texas public policy. Id. at 279–81. Specifically, the evidence established that the arbitrator

awarded the law firm all the fees that the firm had incurred in its efforts to withdraw from the

representation, even though the firm was adversarial to the client for part of that time. Id. at 281.

Here, however, the arbitration record did not clearly establish that the arbitrator enforced an

agreement that violated a disciplinary rule. Thus, Lee is not persuasive.3

          For the above reasons, we overrule appellants’ third appellate issue.

E.        Appellants’ Fourth Issue: Did the trial court abuse its discretion by severing the
          case?

          Appellants’ fourth issue posits that the trial court abused its discretion by severing the

arbitration award claims from Pully’s unpaid compensation claims. But appellants condition

their fourth issue on our reversing the judgment confirming the arbitration award. Specifically,

at the beginning of their argument, appellants state, “In the event the arbitration award is

reversed and vacated and the severed cause is remanded to the trial court, the severance order

should also be vacated to avoid separate trials on interwoven claims, counterclaims, and defenses

involving the same facts and legal issues.” Appellants do not argue that we should reverse the

severance if we affirm the judgment confirming the arbitration award. Accordingly, because we

affirm the judgment confirming the arbitration award, we do not address appellants’ fourth issue.

     3
        Appellants also urge that Cruse v. O’Quinn, 273 S.W.3d 766 (Tex. App.—Houston [14th Dist.] 2008, pet. denied), supports vacatur of the
arbitration award on public policy grounds, but Cruse did not involve an arbitration award or Rule 1.08(a).

                                                                   –14–
                                     IV. CONCLUSION

      For the foregoing reasons, we affirm the trial court’s judgment.

140615F.P05                                       /Bill Whitehill/
                                                  BILL WHITEHILL
                                                  JUSTICE

                                             –15–
                                         S
                                Court of Appeals
                         Fifth District of Texas at Dallas
                                        JUDGMENT

MARK SCHWARZ, NEWCASTLE                              On Appeal from the 298th Judicial District
CAPITAL MANAGEMENT, L.P.,                            Court, Dallas County, Texas
NEWCASTLE CAPITAL GROUP, L.L.C.,                     Trial Court Cause No. DC-11-00064.
NEWCASTLE PARTNERS, L.P., AND                        Opinion delivered by Justice Whitehill.
NEWCASTLE SPECIAL OPPORTUNITY                        Justices Francis and Lang-Miers
FUND II, L.P., Appellants                            participating.

No. 05-14-00615-CV          V.

STEVEN J. PULLY, Appellee

     In accordance with this Court’s opinion of this date, the judgment of the trial court is
AFFIRMED.

         It is ORDERED that appellee Steven J. Pully recover his costs of this appeal and the full
amount of the trial court’s judgment from appellants Mark Schwarz, Newcastle Capital
Management, L.P., Newcastle Capital Group, L.L.C., Newcastle Partners, L.P., and Newcastle
Special Opportunity Fund II, L.P. and from the cash deposit in lieu of bond. After all costs and
the full amount of the judgment have been paid, the clerk of the district court is directed to
release the balance, if any, of the cash deposit in lieu of bond to appellants Mark Schwarz,
Newcastle Capital Management, L.P., Newcastle Capital Group, L.L.C., Newcastle Partners,
L.P., and Newcastle Special Opportunity Fund II, L.P.

Judgment entered August 3, 2015.

                                              –16–