                           COURT OF APPEALS
                            SECOND DISTRICT OF TEXAS
                                 FORT WORTH

                                NO. 02-15-00279-CV


PRESCRIPTION HEALTH                                             APPELLANTS
NETWORK, LLC, AND WILLIAM M.
BLACKSHEAR JR., M.D.

                                         V.

TOBY R. ADAMS, LISA B. ADAMS,                                    APPELLEES
AND ADAMS MARKETING
CONSULTING, INC.


                                      ----------

           FROM THE 442ND DISTRICT COURT OF DENTON COUNTY
                     TRIAL COURT NO. 2013-50459-367

                                      ----------

                             MEMORANDUM OPINION1

      Appellants Prescription Health Network, LLC (PHN) and William M.

Blackshear Jr., M.D. (collectively, the PHN Defendants) appeal from the trial

court’s judgment confirming an arbitration award in favor of Appellees Toby R.



      1
          See Tex. R. App. P. 47.4.
Adams, Lisa B. Adams, and Adams Marketing Consulting, Inc. (AMC)

(collectively, the Adams Plaintiffs). We affirm.

                   I.      Factual and Procedural Background

      On June 11, 2013, the Adams Plaintiffs filed a lawsuit in the trial court

asserting claims for common law fraud, fraud by nondisclosure, fraudulent

inducement,    negligent     misrepresentation,    breach   of   contract,   tortious

interference, civil conspiracy, and violations of the Texas Deceptive Trade

Practices Act (DTPA), Tex. Bus. & Com. Code Ann. §§ 17.41–17.63 (West

2011 & Supp. 2016), arising from a franchise agreement (the Franchise

Agreement) entered between the parties on June 8, 2012.             The Franchise

Agreement concerned a Prescription Weight Loss Clinic that was being offered

by the PHN Defendants to the Adams Plaintiffs. In addition to the Franchise

Agreement, PHN and AMC entered a “Social Media Marketing Services

Agreement” that set forth certain obligations between the parties related to their

agreement to do business.

      The PHN Defendants moved to compel arbitration based on the arbitration

clause in the Franchise Agreement that provided if a dispute among the parties

was not resolved by mediation, the parties would resolve their dispute through

arbitration governed by the Federal Arbitration Act (FAA), 9 U.S.C.A. §§ 1–

16 (West 2009). On October 30, 2013, the trial court granted the motion and

stayed the litigation pending the outcome of the arbitration.




                                         2
      The parties submitted their dispute to a three-member arbitration panel

(the Arbitration Panel). After a three-day hearing conducted September 17 to 19,

2014 and the submission of prehearing and posthearing briefs, the Arbitration

Panel entered a “reasoned award” on October 30, 2014 (the Award). In the

Award, the Arbitration Panel stated that it would interpret and enforce the

Franchise Agreement under Florida law per its choice-of-law provisions but that it

would apply Texas law to the tort claims asserted by the Adams Plaintiffs in

accordance with the “most significant relationship” test.

      The Arbitration Panel found that AMC did not comply with the Franchise

Agreement and found that $2,100.25 was due to PHN from AMC for PHN’s

unreimbursed costs for product purchases and fees. The Arbitration Panel also

found that AMC did not comply with the Franchise Agreement by not paying PHN

the balance of the initial franchise fees and royalties. However, the panel denied

recovery of these fees and royalties to the PHN Defendants and held that any

sums paid by AMC to PHN for the franchise fees and royalties would be offset by

the damages it awarded to AMC on its claim against the PHN Defendants for

violating the Florida Deceptive and Unfair Trade Practices Act (FDUTPA), Fla.

Stat. §§ 501.201–501.213 (West 2016). The panel then concluded that the PHN

Defendants violated the FDUTPA and breached the Social Media Marketing

Services Agreement.

      The Arbitration Panel awarded $41,045.90 to AMC on its FDUTPA and

breach of the Social Media Marketing Services Agreement claims and reduced


                                         3
the amount by the $2,100.25 that the panel found was owed to PHN for product

purchases and fees under the Franchise Agreement.         As a result, the panel

awarded AMC actual damages in the amount of $38,945.65, recoverable jointly

and severally from the PHN Defendants. In February 2015, the Arbitration Panel

issued a supplemental award concerning attorney’s fees and costs, awarding

AMC $90,150 in attorney’s fees and $45,402 in costs, also recoverable jointly

and severally from the PHN Defendants.

      The PHN Defendants filed a motion to modify or vacate the Award in the

trial court. They argued that the Award should be vacated or modified because

the Arbitration Panel acted with “manifest disregard of the law,” “exceeded their

powers,” or awarded damages on a matter not presented to them. Specifically,

the PHN Defendants contended that the Arbitration Panel stated in the Award

that the Adams Plaintiffs’ tort claims would be governed by Texas law, yet when

reviewing the Adams Plaintiffs’ deceptive trade practices claims, the panel

applied Florida law under the FDUTPA rather than Texas law under the DTPA.

      The Adams Plaintiffs filed a response and motion to confirm the arbitration

award.    After a hearing on the competing motions, the trial court signed a

judgment denying the PHN Defendants’ motion and granting the Adams

Plaintiffs’ motion to confirm the award in the amount of $175,497.65.2


      2
       The parties do not address the $1,000 difference in the amount of the
award ($174,497.65) and the amount confirmed in the trial court’s judgment
($175,497.65).


                                        4
                                  II.     Issues

      In four issues, the PHN Defendants argue: (1) the Award should be

vacated because the Arbitration Panel “exceeded their powers”, (2) the Award

should be vacated because the Arbitration Panel acted with “manifest disregard”,

(3) alternatively, the award should be modified because the Arbitration Panel

acted on a matter not submitted to them, and (4) the award of attorney’s fees and

costs to AMC should be vacated and damages, attorney’s fees, and costs should

instead be awarded to the PHN Defendants.          In their reply brief, the PHN

Defendants argue for the first time that the Award should be vacated because the

Arbitration Panel failed to issue a “reasoned award.”

                                   III.   Discussion

A.    The Standard of Review for Vacating or Modifying Arbitration Awards
      Is Extraordinarily Narrow.

      The parties agree that the FAA governs this case. See 9 U.S.C.A. §§ 1–

16. Further, there is no dispute that Texas courts have jurisdiction to consider

confirmation of an arbitration award under the FAA.      See Banc of Am. Inv.

Servs., Inc. v. Lancaster, No. 2-06-314-CV, 2007 WL 2460277, at *3 (Tex.

App.—Fort Worth Aug. 31, 2007, no pet.) (mem. op.); see also Credigy

Receivables, Inc. v. Mahinay, 288 S.W.3d 565, 568 (Tex. App.—Houston [14th

Dist.] 2009, no pet.).   We review de novo a trial court’s order confirming,

modifying, or vacating an arbitration award under the FAA. Banc of Am. Inv.

Servs., 2007 WL 2460277, at *3 (citing McIlroy v. PaineWebber, Inc., 989 F.2d



                                          5
817, 819–20 (5th Cir. 1993)). This de novo standard is intended to give this court

full power to give strong deference to the award. See id. An arbitration award

has the same effect as a judgment of a court of last resort; accordingly, all

reasonable presumptions are indulged in favor of the award and none against it.

CVN Grp., Inc. v. Delgado, 95 S.W.3d 234, 238 (Tex. 2002). “A party seeking to

vacate an arbitration award bears the burden of presenting a complete record

that establishes grounds for vacatur.” Amoco D.T. Co. v. Occidental Petroleum

Corp., 343 S.W.3d 837, 841 (Tex. App. —Houston [14th Dist.] 2011, pet. denied).

      An arbitration award governed by the FAA must be confirmed unless it is

vacated, modified, or corrected under certain limited grounds. Id.; see Hughes

Training, Inc. v. Cook, 148 F. Supp. 2d 737, 742 (N.D. Tex.) (“[R]eview of an

arbitration award is extraordinarily narrow under the FAA”), aff’d, 254 F.3d

588 (5th Cir. 2001), cert. denied, 534 U.S. 1172 (2002). In fact, this court’s

review is so limited that “we may not vacate an award even if it is based upon a

mistake in law or fact.” Ancor Holdings, LLC v. Peterson, Goldman & Villani, Inc.,

294 S.W.3d 818, 826 (Tex. App.—Dallas 2009, no pet.). Due to our deference to

arbitration awards, judicial scrutiny focuses on the integrity of the process, not

the propriety of the result.    Id. (citing Tuco, Inc. v. Burlington N. R.R. Co.,

912 S.W.2d 311, 315 (Tex. App.—Amarillo 1995), modified on other grounds,

960 S.W.2d 629 (Tex. 1997)).        “Ultimately, our review is a determination of

whether the ‘[a]ward [is] so deficient that it warrant[s] sending the parties back to

square one.’” Howerton v. Wood, No. 02-15-00327-CV, 2017 WL 710631, at


                                         6
*3 (Tex. App.—Fort Worth Feb. 23, 2017, no pet. h.) (mem. op.) (quoting Cat

Charter, LLC v. Schurtenberger, 646 F.3d 836, 842 (11th Cir. 2011)). “A party

seeking to vacate an arbitration award bears the burden of presenting a complete

record that establishes grounds for vacatur.” Amoco, 343 S.W.3d at 841.

B.    The Statutory Grounds for Vacating an Arbitration Award Under the
      FAA are Limited and Explicit.

      Section 10(a) of the FAA provides that a trial court may vacate an

arbitration award upon the application of any party to the arbitration:

      (1) where the award was procured by corruption, fraud, or undue
          means;

      (2) where there was evident partiality or corruption in the arbitrators,
          or either of them;

      (3) where the arbitrators were guilty of misconduct in refusing to
          postpone the hearing, upon sufficient cause shown, or in
          refusing to hear evidence pertinent and material to the
          controversy; or of any other misbehavior by which the rights of
          any party have been prejudiced; or

      (4) where the arbitrators exceeded their powers, or so imperfectly
          executed them that a mutual, final, and definite award upon the
          subject matter submitted was not made.

9 U.S.C.A. § 10(a)(1)–(4); cf. Gilbert v. Rain & Hail Ins., No. 02-16-00277-CV,

2017 WL 710702, at *2 (Tex. App.—Fort Worth, Feb. 23, 2017, no. pet. h.)

(mem. op.) (“An arbitration award governed by the FAA must be confirmed

unless it is vacated, modified, or corrected under certain limited grounds.”).




                                         7
C.    Vacatur of the Award is not Warranted Under Section 10(a)(4) of the
      FAA Because the Arbitration Panel Did Not “Exceed its Powers.”

      In their first issue, the PHN Defendants argue that the Arbitration Panel’s

finding of liability for the Adams Plaintiffs under the FDUTPA should be vacated

under section 10(a)(4) because the panel “exceeded its powers.” We disagree.

      Arbitrators only exceed their power when they decide a matter not properly

before them. Banc of Am. Inv. Servs., 2007 WL 2460277, at *6 (citing Barsness

v. Scott, 126 S.W.3d 232, 241 (Tex. App.—San Antonio 2003, pet. denied));

accord Ancor Holdings, LLC, 294 S.W.3d at 829.             Arbitrators derive their

authority from the arbitration agreement; therefore, an arbitrator’s power and

authority depend on the provisions under which the arbitrator was appointed.

See IQ Holdings, Inc. v. Villa D’Este Condo. Owner’s Assoc., Inc., 509 S.W.3d

367, 373 (Tex. App.—Houston [1st Dist.] 2014, no pet.); see also Glover v. IBP,

Inc., 334 F.3d 471, 474 (5th Cir. 2003) (“To determine whether an arbitrator

exceeded his powers, we must examine the language in the arbitration

agreement.”). Because the parties “bargained for the arbitrator’s construction of

their agreement, an arbitral decision even arguably construing or applying the

contract must stand, regardless of a court’s view of its demerits.” Oxford Health

Plans LLC v. Sutter, 133 S. Ct. 2064, 2068 (2013) (citations and internal

quotation marks omitted). Moreover, an arbitration award may not be vacated

under section 10(a)(4) of the FAA based on the arbitrator’s errors in interpretation

or application of the law or facts. IQ Holdings, Inc., 509 S.W.3d at 373 (citing



                                         8
Stolt-Nielsen S.A. v. AnimalFeeds Int’l Corp., 559 U.S. 662, 671, 130 S. Ct. 1758,

1767 (2010) (“It is not enough for petitioners to show that the [arbitration] panel

committed an error—or even a serious error.”)). “It is only when [an] arbitrator

strays from interpretation and application of the agreement and effectively

dispense[s] his own brand of industrial justice that his decision may be

unenforceable.” Stolt-Nielsen, 559 U.S. at 671, 130 S. Ct. at 1767 (citation and

quotation marks omitted).

      Relying heavily on the Supreme Court’s decision in Stolt-Nielsen, the PHN

Defendants argue that the Arbitration Panel “exceeded its powers” by not

following any choice of law theory or ignoring the choice of law theory it had

determined governed in this case. Specifically, the PHN Defendants assert that

the Arbitration Panel exceeded its powers by making a determination and

analysis under both the DTPA and the FDUTPA, even though it had already

determined that Texas law should apply to the Adams Plaintiffs’ tort claims. In

Stolt-Nielsen, the Supreme Court concluded that the arbitrator exceeded its

powers and vacated an arbitration award because the arbitrator’s award did not

identify and apply a rule derived from the FAA or other applicable body of law;

instead, it imposed its own policy choice and thus, exceeded its powers under

the parties’ arbitration agreement. Id. at 676–77, 130 S. Ct. at 1770.

      However, Stolt-Nielsen is of no assistance to the PHN Defendants here.

Under the terms of the Franchise Agreement, it appears the deceptive trade

practices claims under both the Texas and Florida statutes could be submitted to


                                         9
the Arbitration Panel, and the claims were actually submitted. The arbitration

clause in the Franchise Agreement provides that if the parties have a dispute or

claim “arising under or in connection with” the agreement, or the making, validity,

performance, interpretation, breach, or termination of the agreement, including

claims of fraud or fraud in the inducement, the parties would first attempt to

negotiate in good faith to resolve the dispute. If negotiations did not settle the

dispute, the parties agreed to go to mediation. If mediation did not solve the

dispute, it would be submitted to binding arbitration.     Accordingly, under the

arbitration clause, the Arbitration Panel had the authority to settle the deceptive

trade claims under both the Texas and Florida statutes because these claims

“arose under or in connection with” the Franchise Agreement.

      Further, in their Statement of Claims provided to the Arbitration Panel in

their presubmission brief, the Adams Plaintiffs asserted that the PHN

Defendants’ actions violated both the DTPA and the FDUTPA.                 In their

posthearing brief, the Adams Plaintiffs asserted that the DTPA applied under the

choice of law analysis, but they also asserted that the PHN Defendants’ acts

were per se violations of the FDUTPA. The Adams Plaintiffs therefore submitted

their FDUTPA claim to the arbitrators, and the panel did not decide a matter not

before them in ruling on the deceptive trade claim by applying the Florida version

of the law. In the end, the appropriate inquiry is not whether the Arbitration Panel

decided an issue correctly, but instead whether it had the authority to decide the

issue at all. D.R. Horton-Tex., Ltd. v. Bernhard, 423 S.W.3d 532, 534 (Tex.


                                        10
App.—Houston [14th Dist.] 2014, pet. denied); see Ancor Holdings, LLC.,

294 S.W.3d at 830 (“Thus, improvident, even silly interpretations by arbitrators

usually survive judicial challenges.”) (citations and internal quotation marks

omitted). The Arbitration Panel did not exceed its powers.

       We overrule the PHN Defendants’ first issue.

D.     “Manifest Disregard” of the Law Is Not a Ground for Vacatur of the
       Award Under the FAA.

       The PHN Defendants argue in their second issue that they were entitled to

have the Arbitration Panel’s decision vacated, either independently or as a

“judicial gloss” to the statutory grounds for vacatur under the FAA, because the

Arbitration Panel “manifestly disregarded” the law. We disagree.

       The use of the doctrine of “manifest disregard” as a basis for vacating or

modifying arbitration awards had its genesis in Wilko v. Swan, a 1953 Supreme

Court decision where the Court found that “the interpretations of the law by the

arbitrators in contrast to manifest disregard are not subject, in the federal courts,

to judicial review for error in interpretation.” 346 U.S. 427, 436–37, 440, 74 S. Ct.

182, 187–88, 190 (1953), overruled on other grounds by Rodriguez de Quijas v.

Shearson/Am. Exp., Inc., 490 U.S. 477, 109 S. Ct. 1917 (1989); see Burchell v.

Marsh, 58 U.S. (17 How.) 344, 349 (1854) (applying common law arbitration

principles and stating that “[i]f an award is within the submission, and contains

the honest decision of the arbitrators, after a full and fair hearing of the parties, a

court of equity will not set it aside for error, either in law or fact”).



                                            11
      In 2008, the Supreme Court recognized that its language in Wilko was

vague: “Maybe the term ‘manifest disregard’ was meant to name a new ground

for review, but maybe it merely referred to the § 10 grounds collectively, rather

than adding to them.” Hall Street Assocs., L.L.C. v. Mattel, Inc., 552 U.S. 576,

585, 128 S. Ct. 1396, 1404 (2008). The Court then held that under the FAA, an

arbitrator’s decision may be vacated only under one of the four statutory grounds

set out in 9 U.S.C.A. § 10. Id. at 591, 128 S. Ct. at 1407. After Hall, but prior to

Stolt-Nielsen, the Fifth Circuit said that in light of Hall, “[t]o the extent that our

previous precedent holds that nonstatutory grounds may support the vacatur of

an arbitration award, it is hereby overruled.” Citigroup Glob. Mkts., Inc. v. Bacon,

562 F.3d 349, 358 (5th Cir. 2009).

      The PHN Defendants urge the court to disregard Hall and Citigroup and

argue that Stolt-Nielsen “made it clear that the doctrine of ‘manifest disregard’ [is]

not dead.” In support of this proposition, the PHN Defendants cite to a footnote

in Stolt-Nielsen where the Supreme Court stated in dicta that it was not deciding

whether “manifest disregard” survives its decision in Hall as an independent

ground for review or a ground for vacatur set forth in the FAA. See Stolt-Nielsen,

559 U.S. at 671, n.3, 130 S. Ct. at 1768, n.3. In Shaw Constructors, Inc. v. HPD,

LLC, a federal district court examined this footnote and found that the “Fifth

Circuit has not responded to Stolt-Nielsen and therefore [Citigroup’s] refusal to

recognize ‘manifest disregard’ as a separate ground for vacatur remains the rule

in [the Fifth] Circuit.” 749 F. Supp. 2d 474, 479 (E.D. La. 2010). We agree and


                                         12
conclude that the holding in Citigroup is persuasive and that the Supreme Court

in Hall made it clear that sections 10 and 11 contain the exclusive and explicit

grounds for vacating or modifying an arbitration award under the FAA.

      Likewise, the Fifth Circuit has at least twice recognized that Citigroup

removes manifest disregard as a potential independent nonstatutory ground for

vacatur under the FAA. See OMG, L.P. v. Heritage Auctions, Inc., 612 Fed.

Appx. 207, 209–10 (5th Cir.) (finding that the FAA “constrains federal courts to a

narrow review of arbitration awards” and recognizing that Citigroup precludes

treating “manifest disregard of law” as an independent ground for vacatur), cert.

denied, 136 S. Ct. 503 (2015); McVay v. Halliburton Energy Servs., Inc.,

608 Fed. Appx. 222, 225 (5th Cir. 2015) (same); see also McKool Smith, P.C. v.

Curtis Int’l Ltd., No. 3-15-CV-01685-M, 2015 WL 5999654, at *5 (N.D. Tex. Oct.

14, 2015) (citing CitiGroup and stating that “the Fifth Circuit has explicitly held

that manifest disregard of the law is no longer a valid ground for vacatur”), aff’d,

650 Fed. Appx. 208, 211, 212 (5th Cir. 2016) (citing CitiGroup for the proposition

that “the . . . statutory grounds are the exclusive means for vacatur under the

FAA” and “[a]ssuming—without deciding—that manifest disregard of the law . . .

fall[s] within 9 U.S.C. § 10(a)(4)”).3


      3
       Citing ConocoPhillips, Inc. v. Local 13-0555 United Steelworkers Int’l
Union, 741 F.3d 627, 630 (5th Cir. 2014), the PHN Defendants make the bold
assertion that “the Fifth Circuit now recognizes manifest disregard.” A close
review of ConocoPhillips shows that the PHN Defendants are stretching dicta
and severely misstating the court’s holding.


                                         13
      Similarly, this court has recently impliedly recognized that manifest

disregard does not exist as a ground for vacatur under the FAA. See Gilbert,

2017 WL 710702, at *2 (stating “[a]n FAA award can be vacated only” for one of

the four statutory enumerated bases set forth in Section 10(a) of the FAA)

(emphasis added). Moreover, several of our sister courts of appeal have held

either that “manifest disregard” does not exist as a ground for vacating an FAA

arbitration award or that the four grounds explicitly listed in Section 10(a) are the

only grounds for vacating an FAA arbitration award. See, e.g., Casa Del Mar

Ass’n, Inc. v. Williams & Thomas, L.P., 476 S.W.3d 96, 100–01 (Tex. App.—

Houston [14th Dist.] 2015, no pet.) (holding trial court did not err by denying

motion to vacate under the FAA based on the “manifest disregard” doctrine);

Venture Cotton Coop. v. Neudorf, No. 14-13-00808-CV, 2014 WL 4557765, at

*3 (Tex. App.—Houston [14th Dist.] Sept. 16, 2014, no pet.) (mem. op.) (“The

bases for vacatur in section 10 [of the FAA] are exclusive.”); IQ Holdings, Inc.,

509 S.W.3d at 376 (holding that Hall “forecloses” claim that an arbitration award

can be vacated under the common-law doctrine of manifest disregard of the

       Although ConocoPhillips did cite First Options of Chicago, Inc. v. Kaplan,
514 U.S. 938, 942, 115 S. Ct. 1920, 1923 (1995), for the general proposition that
a court will vacate an arbitration award only in unusual circumstances, “such as
fraud, manifest disregard of the law, corruption, undue means, and the arbitrator
overstepping its powers,” Kaplan predated Hall, Stoltz-Nielson, and Citigroup.
ConocoPhillips, 741 F.3d at 630. Moreover, ConocoPhillips did not examine
whether “manifest disregard” continues to exist as a ground for vacatur under the
FAA, nor did the court base its ultimate decision on that doctrine. See id. at 630–
34 (stating that the “primary issue on appeal is . . . ‘who has the power to decide
whether an issue is arbitrable’”).


                                         14
law); Good Times Stores, Inc. v. Macias, 355 S.W.3d 240, 244 (Tex. App.—El

Paso 2011, pet. denied) (“The bases for vacatur in Section 10 of the FAA are

exclusive.”), cert. denied, 132 S. Ct. 2398 (2012); Ancor Holdings, LLC,

294 S.W.3d at 828–29 (concluding that under Citigroup and Hall Street, “manifest

disregard” does not exist as a ground for vacating FAA award); accord Hoskins v.

Hoskins, 497 S.W.3d 490, 497 (Tex. 2016) (holding under the Texas Arbitration

Act (TAA), statutory grounds are the only grounds for vacating an arbitrator’s

decision).4

      We overrule the PHN Defendants’ second issue.

E.   Modification of the Award is Not Warranted Under Section 11(b) of the
     FAA.

      In their third issue, the PHN Defendants alternatively contend that the

Award should be modified under 9 U.S.C.A. § 11(b) because the application of

the FDUTPA was not “submitted” to the panel at the time of the hearing and was

not, therefore, a matter in dispute.   Section 11(b) of the FAA states that an

arbitration award may be modified “[w]here the arbitrators have awarded upon a

matter not submitted to them, unless it is a matter not affecting the merits of the

decision upon the matter submitted.” 9 U.S.C.A. § 11; see IQ Holdings, Inc.,

509 S.W.3d at 373 (“[F]or modification or correction to be appropriate under

      4
        In his concurrence in Hoskins, Justice Willett made clear that under the
TAA there are: “[n]o glosses on those statutory bases, no smuggling common
law in through the back door—and no judicial intermeddling with the Legislature’s
carefully circumscribed bases for judicial review of an arbitration award.
Exclusive means exclusive.” 497 S.W.3d at 500.


                                        15
either the FAA or TAA, the arbitrator must have awarded on a matter that the

parties did not agree to submit to her.”). Here, the Adams Plaintiffs raised the

FDUTPA as an alternative to the DTPA in both their pre- and post-submission

briefs. Thus, the subject matter was submitted to the Arbitration Panel, and there

is no basis for modification of the Award under section 11(b).       Cf. Rosati v.

Bekhor, 167 F. Supp. 2d 1340, 1345 (M.D. Fla. 2001) (The trial court refused to

modify an arbitration award and held that “the general issue submitted to the

arbitration panel was securities fraud[, and, w]hile the specific law mentioned in

the [a]ward was not submitted to the arbitrators, the issue of securities fraud was

submitted.”).

      We overrule the PHN Defendants’ third issue.

F.    Vacatur or Modification of the Award to Exclude the Award of
      Attorney’s Fees and Costs to the Adams Plaintiffs is Not Warranted.

      The PHN Defendants argue under their fourth issue that because the

award of damages to the Adams Plaintiffs must be vacated or modified, the

award for attorney’s fees must also be vacated, and damages, fees, and costs

should instead be awarded to the PHN Defendants.               Further, the PHN

Defendants argue that the Arbitration Panel mistakenly found that AMC was the

prevailing party because even though AMC ultimately won on only two of its ten

claims in arbitration, the PHN Defendants prevailed on eight of their ten claims.

These assertions are without merit.




                                        16
      While all the parties emerged from arbitration winning less than they had

hoped, the Arbitration Panel concluded that AMC was the “prevailing party.” We

determine that there was no error in the trial court’s confirmation of the Award

and its implicit agreement with the Arbitration Panel’s finding that the PHN

Defendants were not the “prevailing parties” and thus not entitled to attorney’s

fees and costs.

      We overrule the PHN Defendants’ fourth issue.

G.    The PHN Defendants Waived Their Argument that the Arbitration
      Award Should be Vacated Because it was Not a “Reasoned Award.”

      In their reply brief, the PHN Defendants argue for the first time on appeal

that the Award must be vacated because the Arbitration Panel did not issue a

“reasoned award.” They contend that they may raise this argument for the first

time for two reasons.    First, they contend that the argument was raised in

response to the Adams Plaintiffs’ assertion that they did not meet their burden to

show that the Arbitration Panel manifestly disregarded the law; the PHN

Defendants say this assertion opens the door for them to argue that the panel

failed to issue a reasoned award.       Second, they contend that their reply

argument regarding the absence of a “reasoned award” relates to the issue

presented in their original brief where they contended that the Arbitration Panel

“exceeded its authority.” But see TiVo, Inc. v. Goldwasser, 560 Fed. App. 15,

21 (2d Cir. 2014) (holding argument that arbitration panel exceeded authority




                                       17
because panel’s reasoning “did not wholly track the parties’ arguments” was

meritless). We disagree.

      The argument that we should set aside the Award because it was not

“reasoned” was not an issue or submission fairly raised in the PHN Defendants’

opening brief and cannot be characterized as merely a response to the Adams

Plaintiffs’ brief. It is a wholly separate and new ground for setting aside the

Award, which may not be raised for the first time in a reply brief. See Miller v. El

Campo Holdings, LLC, No. 02-15-00388-CV, 2017 WL 370936, at *4 (Tex.

App.—Fort Worth Jan. 26, 2017, no pet.) (mem. op.); see also Stovall & Assocs.

v. Hibbs Fin. Ctr., Ltd., 409 S.W.3d 790, 803 (Tex. App.—Dallas 2013, no pet.)

(“That Stovall could have but did not make such an argument in its opening brief

does not allow it to do so for the first time in its reply brief.”); Miner Dederick

Constr., LLP v. Gulf Chem. & Metallurgical Corp., 403 S.W.3d 451, 463 n.3 (Tex.

App.—Houston [1st Dist.] 2013) (op. on reh’g) (“[T]he rules of appellate

procedure do not allow an appellant to include in a reply brief a new issue in

response to some matter pointed out in the appellee’s brief but not raised in the

appellant’s opening brief.”), pet. denied, 455 S.W.3d 164 (Tex. 2015).

      We hold that this argument was waived.

                                IV.    Conclusion

      Having overruled or held that the PHN Defendants waived their

complaints, we affirm the trial court’s judgment.




                                         18
                                           /s/ Mark T. Pittman
                                           MARK T. PITTMAN
                                           JUSTICE

PANEL: WALKER, GABRIEL, and PITTMAN, JJ.

DELIVERED: April 20, 2017




                               19
