Yesterday, the Dallas Court of Appeals affirmed the dismissal of fraud claims brought by parties on one side of an arbitration proceeding against the opposing party, opposing counsel, the arbitrator, and JAMS. The court found that the claims were preempted by the Texas Arbitration Act. The case is Patten et al. v. Johnson et al., No. 05-12-01695-CV.
The claims arose from the arbitrator's failure to disclose a prior relationship with the opposing party's counsel. In a prior decision, the Dallas Court of Appeals found that the arbitrator should have disclosed the prior relationship, reversed the arbitration award, and remanded for a new hearing. See Karlseng v. Cooke, 346 S.W.3d 85 (Tex. App.—Dallas 2011, no pet.). The prevailing parties in that appeal then filed the fraud claims against the opposing party, his counsel, the arbitrator, and JAMS, seeking to recover the costs incurred in obtaining vacatur of the arbitration award. Those parties asserted that the fraud suit was really a collateral attack on an arbitration award that had already been reversed.
The district court dismissed the claims for lack of jurisdiction. The court of appeals held that the Texas Arbitration Act preempted the plaintiffs' claims because vacatur is the sole remedy for the conduct alleged. Read the entire opinion here.
- Rich Phillips, Thompson & Knight