Houston COA Holds Trial Court Inappropriately Modified Arbitrator’s Decision Regarding Joint and Several Liability

Texas’ 14^th District Court of Appeals in Houston has amended a trial court’s judgment that modified an arbitrator’s decision.  In Broemer v. Houston Lawyer Referral Service, No. 14-12-00337-CV, (Tex. App. – Houston [14^th Dist.], July 25, 2013), Houston Lawyer Referral Service (“HLRS”) referred three lawsuits to an attorney named Roslyn Bazzelle.  When the firm at which Bazelle was employed closed, she took the cases with her to her new position at W. Fulton Broemer & Associates, L.C. (“B&A”).  Bazelle later left B&A, and the named attorney, Broemer, subsequently settled the cases.  After the cases were settled, HLRS sought referral fees from Broemer and B&A through arbitration.

Following a hearing, an arbitrator awarded HLRS more than $15,000 in referral fees from B&A.  The arbitrator also awarded the organization more than $2,000 from Broemer individually in connection with another case.  In his award, the arbitrator specifically stated Broemer should not be held personally liable for the award against B&A.  The trial court later confirmed the arbitrator’s award “jointly and severally” against both Broemer and B&A.

On appeal, Broemer and B&A claimed “the trial court erred in denying their application to vacate [the] arbitration award, in assessing liability against B&A, and in holding Broemer jointly and severally liable for the entire amount of the arbitration award.”  According to the appeals court, the appellants failed to file a motion to vacate the arbitral award within three months as required by Section 12 of the Federal Arbitration Act.  Additionally, the court stated “An application to vacate filed outside the statutory limitations period is untimely and must be denied.”

Next, the Houston court addressed appellants’ argument that that trial court committed error when it entered judgment against an incorrect version of B&A’s name, B&A LLC, which is a non-existent entity.    The court stated,

In its petition seeking confirmation of the arbitration award and entry of judgment, HLRS asserted Broemer & Associates and B&A LLC both are assumed names of W. Fulton Broemer & Associates, L.C. and requested entry of judgment against all three entity names and Broemer. The trial court conducted an evidentiary hearing before confirming the arbitration award and entering judgment in the underlying case. At the hearing, HLRS presented the following evidence that W. Fulton Broemer & Associates, L.C. was doing business as B&A LLC…

Because the court concluded that B&A was doing business under the assumed name of B&A LLC , it dismissed appellants’ second argument.

The Court of Appeals then turned to appellants’ claim that Broemer should not have been held jointly and severally liable for the entirety of the arbitration award.   First, the appeals court stated the grounds on which a trial court may modify an arbitral award are extremely limited.  Finally, the court held,

Here, the arbitrator expressly found in the award, “I do not find a reason to pierce the corporate veil and impose individual liability on Mr. Broemer for the three percentage cases.” The trial court’s modification imposing joint and several liability upon Broemer for the entire amount of the award conflicts with that finding, and HLRS did not demonstrate that any of the statutory grounds allowed the modification.

After reforming the trial court’s judgment to remove the joint and several liability provision, the Houston appeals court affirmed the lower court’s decision.