Texas Supreme Court Affirms Legal Setback for Lance Armstrong in Fraud Case

Texas Supreme Court Affirms Legal Setback for Lance Armstrong in Fraud Case
 
The Supreme Court of Texas has denied a request by attorneys representing famed cyclist Lance Armstrong, who were seeking to stay an arbitration hearing on whether their client must pay back a company that paid him close $12 million for winning the Tour de France. Armstrong was later stripped of his Tour de France titles after it was determined that he took performance enhancing drugs.
 
The high court’s decision came just weeks after the Fifth Court of Appeals’ ruling that “it lacked jurisdiction to stay arbitration proceedings or, alternatively, to vacate the order signed by the arbitration panel.”
 
The appellee in the case is SCA Promotions Inc., a business that underwrites prizes and contests. In exchange for the payment of a fee, SCA accepts the risk of paying monetary prizes or awards based on a competitor’s performance in an athletic event.
 
Joining Armstrong as an appellant in the case is Tailwind Sports Corp., a sports management company that served as Armstrong’s management company during certain periods relevant to this dispute. In 2002, SCA and Tailwind’s predecessor in interest entered into a contract under which SCA indemnified Tailwind’s predecessor in interest for certain incentive compensation offered to Armstrong in the event he was named the official winner of the Tour de France in 2002, 2003, or 2004. A dispute arose concerning SCA’s obligation under the contract, culminating in an arbitration proceeding among Armstrong, Tailwind, and SCA, which concluded with a settlement agreement and arbitration award that became effective in February 2006.
 
On February 7, 2013, SCA Promotions sued in state court, alleging that Tailwind and Armstrong procured the settlement agreement and resulting final arbitration award by fraud. SCA sought, among other things, to vacate the arbitration award and settlement agreement, to require Armstrong and Tailwind to disgorge and return the prize money, and to obtain an award of damages and sanctions against Armstrong and Tailwind. Armstrong and Tailwind filed a variety of dispositive motions in the trial court. SCA subsequently moved to reconvene the original arbitration proceeding and requested sanctions and forfeiture against Armstrong and Tailwind. Armstrong and Tailwind objected to reconvening the arbitration, arguing the arbitration panel lacked jurisdiction to reconvene the proceedings. But the arbitration panel concluded by majority vote that it had jurisdiction to proceed.
 
Armstrong and Tailwind also filed separate motions in the trial court seeking to stay the reconvened proceedings and to vacate the arbitration panel’s partial final award on jurisdiction. The trial court conducted oral argument and denied the motions filed by Armstrong and Tailwind. Although the trial court’s order does not state grounds for its actions, Armstrong and Tailwind argue that the trial court’s order operates not only as a denial of their motions to stay, but also implicitly confirms the arbitrators’ partial final award on jurisdiction. Neither the arbitration panel nor the trial court has taken further action in this case and there is neither a final award on the merits by the arbitration panel nor a final judgment in the trial court.
 
The panel began its analysis by noting that “generally,” the court “has jurisdiction only over appeals from final judgments. See Lehmann v. Har-Con Corp., 39 S.W.3d 191, 195 (Tex. 2001). Texas appellate courts have jurisdiction over interlocutory orders or judgments only when a statute permits an interlocutory appeal. Ogletree v. Matthews, 262 S.W.3d 316, 319 n.1 (Tex. 2007); Bally Total Fitness Corp. v. Jackson, 53 S.W.3d 352, 352 (Tex. 2001); Saxa Inc. v. DFD Architecture Inc., 312 S.W.3d 224, 227 (Tex. App.—Dallas 2010, pet. denied). The Court never presumes appellate jurisdiction, Brashear v. Victoria Gardens of McKinney, L.L.C., 302 S.W.3d 542, 546 (Tex. App.—Dallas 2009, no pet.), and has a duty to inquire as to its own jurisdiction even if the parties do not raise the issue. Bank of New York Mellon v. Guzman, 390 S.W.3d 593, 596 (Tex. App.—Dallas 2012, no pet.).”
 
Further, the court noted that while “orders denying arbitration may be immediately appealed” under Texas law, “there is no statutory authority for an interlocutory appeal of an order compelling arbitration.” See In re Gulf Exploration, LLC, 289 S.W.3d 836, 839-40. (Tex. 2009) (orig. proceeding).
 
“Tailwind and Armstrong nonetheless argue that this appeal is permissible under the Texas Arbitration Act because the appeal from the trial court’s failure to vacate the partial final award on jurisdiction is an appeal from an order ‘confirming or denying confirmation of an award.’ Tex. Civ. Prac. & Rem. Code Ann. § 171.098(a)(3) (West 2011). We need not determine whether the trial court’s failure to grant the motion to vacate operated as an order confirming the partial final award on jurisdiction. As a general matter, an arbitration must be complete before appellate review is appropriate. Bison Bldg. Materials, Ltd. v. Aldridge, 422 S.W.3d 582, 586-87 (Tex. 2012) (dictum extensively discussing Texas Arbitration Act in a case involving Federal Arbitration Act); Yaseen Educ. Soc’y v. Islamic Ass’n of Arabi, Ltd., 406 S.W.3d 385, 389 (Tex. App.—Dallas 2013, no pet.) The circumstances of this case do not warrant departure from the general rule.
 
“An appellate court does not have jurisdiction to review an incomplete arbitration award. Yaseen, 406 S.W.3d at 392. On its face, the partial final award on jurisdiction signed by the arbitration panel addresses only the question whether the arbitration panel has jurisdiction to resolve the dispute between the parties. It does not finally resolve any of the ultimate disputes between Armstrong, Tailwind, and SCA. It clearly relates only to the preliminary question of arbitrability.
 
“SCA is just happy that this legal proceeding can move forward toward a conclusion,” Dallas-based attorney Jeff Tillotson, who represents SCA< told the Dallas Morning News. “SCA feels it’s entitled to any money it paid Mr. Armstrong and any money it spent fighting to recover it. That’s the goal, and the quicker we get to the goal the happier the client will be. It’s unfortunate he’s settled many of his legal battles but not this one, since this was the most egregious. That’s disappointing and frustrating to the client.”   Lance Armstrong and Tailwind Sports Corp. v. SCA Promotions, Inc.; Ct.App.Tex., 5th Dist.; No. 05-14-00300-CV, 2014 Tex. App. LEXIS 4530; 4/24/14   Attorneys of Record: (For Appellants) D. Todd Smith, Smith Law Group, P.C., Austin, TX; Timothy J. Herman, Sean Edward Breen, Shonn Brown, Austin, TX; Brandy Wingate Voss, McAllen, TX; Michael K. Hurst, Dallas, TX. (For Appellees) Jeffrey M. Tillotson, Lynn Tillotson Pinker & Cox, LLP, Dallas, TX.