Brozo v. Shearson Lehman Hutton, Inc.

• Decision Date: 15 September 1993
• Docket Number: No. 13-92-407-CV,13-92-407-CV
• Parties: James BROZO, Appellant, v. SHEARSON LEHMAN HUTTON, INC., Appellee.
• Court: Texas Court of Appeals

Page 509

865 S.W.2d 509

James BROZO, Appellant, v. SHEARSON LEHMAN HUTTON, INC., Appellee.

No. 13-92-407-CV.

Court of Appeals of Texas,

Corpus Christi.

Sept. 15, 1993.

F. Edward Barker, Barker & King, Corpus Christi, for appellant.

Bradley Whalen, Ellen Morris, Houston, Todd Hunter, Corpus Christi, for appellee.

Before SEERDEN, C.J., and KENNEDY and GILBERTO HINOJOSA, JJ.

OPINION

KENNEDY, Justice.

James Brozo appeals the grant of summary judgment to Shearson Lehman Hutton, Inc. confirming an arbitration award to Shearson. We affirm.

Brozo began working for Shearson ¹ on September 21, 1987, pursuant to a letter agreement. As part of the agreement, Shearson loaned Brozo $21,000, agreeing to forgive one-third of the principal annually if Brozo remained employed by Shearson. Brozo agreed in his application for securities industry registration or transfer to arbitrate disagreements with Shearson; he consented in the letter agreement to arbitrate such disputes pursuant to the New York Stock Exchange constitution. Brozo resigned in January 1988. Shearson demanded repayment of the loan by letter to Brozo in February 1988. In June 1988, Shearson applied the money remaining in his account to the loan, then again wrote him demanding payment of the balance. Shearson threatened arbitration of the unpaid amount before the NYSE.

In August 1988, after Brozo still did not pay, Shearson filed a claim before the NYSE. On September 21, 1988, attorney Anthony Pletcher notified the NYSE by letter that he represented Brozo in the matter. Pletcher requested in that letter that the NYSE "direct all future correspondence regarding this matter to me." In a letter to Shearson on the same date, Pletcher stated that Brozo disputed the debt, did not agree to arbitration, but was willing to settle and work out a payout agreement. Shearson replied noncommittally to Pletcher in December 1988, expressing interest in settlement but insisting on payment of most of the debt. When Pletcher told Brozo of the response, Brozo told Pletcher that his available funds had diminished so that he could not pay much on the debt and that he chose to wait for the civil lawsuit that Pletcher predicted would follow the arbitration. Pletcher told Brozo that he would not be able to help him. Pletcher felt that Brozo understood that Brozo would have to handle the matter himself or through another attorney.

Pletcher heard nothing more on the case until August 31, 1989, when he received notice from the NYSE of the arbitration hearing on September 12, 1989. He responded by letter dated August 31, 1989, to the NYSE (copy to Shearson) that he no longer represented Brozo. Neither Pletcher, Shearson, nor the NYSE thereafter attempted to inform Brozo personally of the setting.

The NYSE held the arbitration hearing as scheduled and found that Brozo owed Shearson $15,987.08 plus interest and attorneys' fees. The NYSE then sent notice of the decision to Pletcher.

Shearson applied to the trial court to confirm the arbitration award, and later filed a motion for summary judgment. Once Shearson had shown the rendition of an award, Brozo had the burden to establish facts that would relieve him from the award's effect. Ridgill Bros. v. Dupree, 85 S.W. 1166, 1167 (Tex.Civ.App.1905, no writ). Brozo complained that the arbitration award was void because he had received no notice of the date, time, or place of the hearing. The court granted the motion for summary judgment. He complained that the affidavit of Thomas Fulkerson, submitted in support of the motion, contained inadmissible hearsay and legal conclusions.

Brozo appeals, raising points of error similar to his arguments below. Two points concern the efficacy of the notice; the third challenges the sufficiency of the evidentiary support for the judgment by attacking Fulkerson's affidavit.

Our review of the confirmation of an arbitration award is limited. The common law allows a court to set aside an arbitration award only if the decision is "tainted with fraud, misconduct, or gross mistake as would imply bad faith and failure to exercise honest judgment." House Grain Co. v. Obst, 659 S.W.2d 903, 905 (Tex.App.--Corpus Christi 1983, writ ref'd n.r.e.); see also Riha v. Smulcer, 843 S.W.2d 289, 292 (Tex.App.--Houston [14th Dist.] 1992, writ denied). ² Because arbitration is favored as a means of dispute resolution, courts indulge every reasonable presumption in favor of upholding the award. House Grain, 659 S.W.2d at 905; see also Riha, 843 S.W.2d at 292, 294.

Our review is filtered through the summary judgment standard. Movants for summary judgment have the burden to show that there is no genuine issue of material fact and that they are entitled to judgment as a matter of law. TEX.R.CIV.P. 166a(c). We take as true evidence favorable to nonmovants, and indulge every reasonable inference and resolve all doubt in their favor. Nixon v. Mr. Property Management Co., 690 S.W.2d 546, 548-49 (Tex.1985).

Our task, then, is to construe all evidence, reasonable inferences, and doubt against the judgment of the trial court, which had construed every reasonable presumption in favor of the arbitration award.

By point one, Brozo contends that the court erred in granting the judgment because the arbitration award was void. He contends that it was void because the notice of the hearing violated NYSE Arbitration Rule 613 as well as constitutional procedural and substantive due process. Rule 613, in part, provides as follows:

Unless the law directs otherwise, the time and place for the initial hearing shall be determined by the Director of Arbitration and each hearing thereafter by the arbitrators. Notice of the time and place for the initial hearing shall be given at least eight (8) business days prior to the date fixed for the hearing by personal service, registered or certified mail to each of the parties....

Pletcher acknowledged in answers to interrogatories that the NYSE sent notice to Pletcher of the date, time, and place of the arbitration. Though the record does not show that the NYSE sent this notice by registered or certified mail, the arbitrators, interpreters of the NYSE rules, ³ apparently found the notice provided satisfied Rule 613 because they conducted the hearing and ruled for Shearson. The court, under its standard of review, was justified in presuming that the arbitrators determined that the notice complied with NYSE rules regarding form of service. We review the record to determine whether the notice was adequate under constitutional standards.

The dispute in this case is whether notice of the hearing sent to Pletcher satisfied the due process requirements with respect to Brozo. Due process requires that notice must be reasonably calculated to apprise the party of the suit. Mullane v. Central Hanover Bank & Trust Co., 339 U.S. 306, 316, 70 S.Ct. 652, 658, 94 L.Ed. 865 (1950); International Shoe Co. v. State of Washington, 326 U.S. 310, 320, 66 S.Ct. 154, 160, 90 L.Ed. 95 (1945). It is not clear to what extent this requirement applies to notice of an arbitration hearing rather than commencement of arbitration. See Ex parte Hodge, 611 S.W.2d 468, 469-70 (Tex.Civ.App.--Dallas 1980, no writ). We need not decide the extent of its application because the court properly concluded that the notice satisfied due process.

The court was justified in concluding that the arbitrators found that service on Pletcher supplied necessary notice to Brozo. Rule 614 allows representation by an attorney at any stage of the proceeding, but none of the remainder of the excerpted NYSE rules details the implications of that representation. For instance, the rules do not state whether sending notice to a party's attorney is tantamount to sending notice to the party, nor do they set out how an attorney must go...