Yesterday, the Supreme Court of Texas declined to review a fraud case stemming from an arbitration proceeding. In Patten et al. v. Johnson et al., No. 14-0433, a JAMS arbitrator issued an award in favor of Johnson over a business dispute with Patten. Later, that award was vacated due to an undisclosed relationship between the arbitrator and Johnson and a new arbitration was conducted. After Patten prevailed at the new arbitral hearing, he filed a complaint for fraud against Johnson, the law firm of Fish & Richardson, the arbitrator in the vacated case, and JAMS. A trial court dismissed Patten’s lawsuit for lack of subject matter jurisdiction and he appealed the decision to Texas’ Fifth Appeals Court in Dallas.
In April, the Dallas Court of Appeals held that Patten’s fraud claims were preempted by the Texas Arbitration Act. According to the appellate court, the trial court properly dismissed Patten’s lawsuit because there is no statutory jurisdiction on which to review additional complaints about arbitral proceedings after an arbitration award is vacated. Patten then sought review by the Supreme Court of Texas. On August 1st, the Texas high court denied Patten’s petition for review without comment.
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