Newby et al v. Treyled Life Settlements LLC

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF TEXAS
HOUSTON DIVISION
KENNETH NEWBY AS TRUSTEE OF THE §
ANTONIO AND JULIET GRACE CAMPOS §
2021 INSURANCE TRUST, ET AL., §
Petitioners/Cross-Respondents, §
§
v. § CIVIL ACTION NO. 4:25-CV-0866
§
TREYLED LIFE SETTLEMENTS, LLC, §
Respondent/Cross-Petitioner. §
MEMORANDUM AND RECOMMENDATION
This action is before the Court on Petitioners’ Amended Motion to Vacate
Arbitration Award (ECF 61-1) and Respondent’s Amended Petition to Confirm
Arbitration Award (ECF 70).1 Having considered the parties’ submissions and the
law, the Court RECOMMENDS that Respondent’s Petition to Confirm be
GRANTED and Petitioners’ Motion to Vacate be DENIED.
I. Background
The following facts are undisputed unless otherwise noted. Petitioners/Cross-
Respondents are Kenneth Newby, Steven Campos, Jeannine Campos-Grech, and
Joseph Campos, as Trustees of the Antonio and Juliet Grace Campos 2012 Insurance
Trust (Trust). Respondent/Cross-Petitioner is Treyled Life Settlements, LLC
1 The District Judge referred the case to the Magistrate Judge pursuant to 28 U.S.C. § 636(b)(1)(A)
and (B), the Cost and Delay Reduction Plan under the Civil Justice Reform Act, and Federal Rule
of Civil Procedure 72. ECF 53.
United States District Court
Southern District of Texas
ENTERED
November 19, 2025
Nathan Ochsner, Clerk
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(Treyled). The Trust held an insurance policy (Policy) with a death benefit of $50
million payable to the adult children of Antonio and Grace Campos upon the
survivor’s death (Policy). Treyled provided services to the Trust under a Life
Settlement Broker Services Agreement entered on January 3, 2022 (Agreement).
ECF 61-2 at 27-31; ECF 70-3. The Agreement contains a provision granting Treyled
exclusive rights to market and negotiate the sale of the Policy. ECF 61-2 at 28, ¶3.
On October 24, 2022, Treyled commenced an arbitration proceeding pursuant
to paragraph 6.2 of the Agreement asserting it found a suitable buyer for the Policy,
but the Trust breached the Agreement by selling the Policy to another buyer and
refusing to pay Treyled its commission. See ECF 61-2 at 6; ECF 70-2 at 2. The
Arbitrator, Justice William Boyce, presided over an evidentiary hearing in Houston,
Texas from April 2, 2024 to April 9, 2024 during which both sides presented
testimony from fact and expert witnesses. Id. On July 31, 2024, the Arbitrator issued
a Final Award in favor of Treyled. ECF 61-2 at 6-27; ECF 70-2. The Arbitrator
determined:
• The Trust breached the Agreement’s exclusivity provision.
• The Trust’s defenses as to an asserted lack of required licenses
and the asserted illegality of the exclusivity provision fail.
• Treyled is entitled to a commission of $1,997,718.12 from the
Trust based on the Trust’s breach of the exclusivity provision.
• The Trust’s defenses and counterclaims based on breach of
fiduciary duty, fraudulent inducement, and breach of contract,
and all other asserted defenses, fail.
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• Treyled is entitled to recover attorney’s fees and costs as the
prevailing party.
Id.
As the Trust recognizes, denial of the Motion to Vacate is the equivalent of
granting the Motion to Confirm. ECF 76 at 2-3. Therefore, the Court will address
the motions simultaneously in the manner framed by the Trust’s Amended Motion
to Vacate.
II. Standard for district court review of an arbitration award
A federal district court’s review of an arbitration award is very deferential.
PoolRe Ins. Corp. v. Organizational Strategies, Inc., 783 F.3d 256, 262 (5th Cir.
2015). “The burden of proof is on the party seeking to vacate the award, and any
doubts or uncertainties must be resolved in favor of upholding it.” Cooper v.
WestEnd Cap. Mgmt., L.L.C., 832 F.3d 534, 544 (5th Cir. 2016). In the Fifth Circuit,
the Final Award of an arbitrator decision will be vacated “only in very unusual
circumstances.” United States Trinity Energy Servs., L.L.C. v. Se. Directional
Drilling, L.L.C., 135 F.4th 303, 307 (5th Cir. 2025) (citations omitted).
The Federal Arbitration Act (FAA) requires a court to confirm an award
unless the award is (1) vacated pursuant to Section 10, or (2) modified by Section
11. Cooper, 832 F.3d at 544 (citing Hall St. Assocs., L.L.C v. Mattel, Inc., 552 U.S.
576, 582 (2008). Section 10(a) of the FAA provides the exclusive statutory grounds
for vacating an arbitration award. United States Trinity Energy Servs., 135 F.4th at
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308; see also Citigroup Global Markets, Inc., v. Bacon, 562 F.3d 349, 352 (5th Cir.
2009) (holding that “Sections 10 and 11 of the FAA enumerate the exclusive
circumstances under which an arbitration award may be vacated, modified, or
corrected.”). Section 10(a) of the Act allows a district court to vacate an arbitral
award in the following circumstances:
(1) where the award was procured by corruption, fraud, or undue means;
(2) where there was evident partiality or corruption in the arbitrators, or
either of them;
(3) where the arbitrators were guilty of misconduct in refusing to
postpone the hearing, upon sufficient cause shown, or in refusing to
hear evidence pertinent and material to the controversy; or of any
other misbehavior by which the rights of any party have been
prejudiced; or
(4) where the arbitrators exceeded their powers, or so imperfectly
executed them that a mutual, final, and definite award upon the
subject matter submitted was not made.
9 U.S.C.A. § 10(a). Parties who seek to vacate arbitration awards based on erroneous
contract interpretation often move under section 10(a)(4), which provides a more
generalized basis for relief than sections 10(a)(1-3). However, “convincing a court
of an arbitrator’s error—even his grave error—is not enough [to vacate an award
under section 10(a)(4)].” United States Trinity Energy Servs., 135 F.4th at 308
(quoting Oxford Health Plans LLC v. Sutter, 569 U.S. 564, 572 (2013)). When
determining whether an arbitrator so exceeded his powers to justify relief under
section 10(a)(4), the question for the district court is not whether the arbitrator
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construed the parties’ contract correctly, but whether the arbitrator construed the
parties’ contract at all. Id.; Timegate Studios, Inc. v. Southpeak Interactive, L.L.C.,
713 F.3d 797, 802 (5th Cir. 2013) (holding that an arbitration award will be
confirmed if it “draws its essence from the contract,” or, in other words, “if it is
rationally inferable from the letter or the purpose of the underlying agreement”).
III. Analysis
The Trust seeks to vacate the Final Award because:
(a) the Arbitrator failed to issue a mutual, final, and definite award upon
the subject matter submitted, (b) enforcement of the Award violates
explicit, well-defined and dominant public policy established by the
collateral source rule, (c) the Award does not draw its essence from the
contract; and (d) enforcement of the Award violates explicit, well-
defined and dominant public policy in Texas and California regarding
activity of unlicensed life settlement brokers.
ECF 61-1 at 4. Treyled contends that the Trust’s arguments are wholly without merit
and seeks to confirm the Final Award in full. ECF 71. The Trust’s four grounds for
vacatur fall into two categories. First, the Trust seeks relief under § 10(a)(4) of the
FAA because the arbitrator failed to issue a mutual, final and definite award upon
the subject matter submitted, and because the Award does not draw its essence from
the contract. Second, the Trust seeks relief on public policy grounds because
enforcement of the Award would violate public policy established by the collateral
source rule, and Texas’ and California’s public policy preventing activity of
unlicensed life settlement brokers.
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A. The Trust has not met its heavy burden for vacatur under § 10(a)(4).
The Trust has not met its “heavy burden” under § 10(a)(4) to show either: (1)
the Arbitrator failed to issue a mutual, final, and definite award upon the subject
matter submitted, or (2) the Final Award does not draw its essence from the contract.
See United States Trinity Energy Servs., 135 F.4th at 308 (“[A] party seeking relief
under [§ 10(a)(4)] bears a heavy burden.”) (quoting Oxford Health Plans LLC v.
Sutter, 569 U.S. 564, 569 (2013)).
1. The Arbitrator decided all issues presented to him.
In addition to Treyled’s affirmative claims against the Trust for breach of
contract and attorney’s fees, the parties submitted to the Arbitrator the Trust’s
defenses to the breach of contract claim that: (1) Treyled does not have a federal
securities license and is not registered as a broker-dealer (Id. at 15-17); (2) Treyled
does not have required California licenses (Id. at 17-18); and (3) the exclusive
dealing provisions in the contract violate § 3.1741(b)(2) of the Texas Administrative
Code (Id. at 18-19). The parties also submitted to the Arbitrator the Trust’s
counterclaims or affirmative defenses for breach of fiduciary duty, breach of contract
and fraudulent inducement (Id. at 20-22). The Trust contends that the Arbitrator
failed to resolve the Trust’s “fundamental affirmative defenses based on Treyled’s
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fraudulent inducement, breach of fiduciary duty, and breach of contract.”2 ECF 61-
1 at 34.
The Trust’s argument is contrary to the express holdings of the Final Award.
The Arbitrator ruled that, because the buyer of the Policy, Coventry, was covering
all expenses and indemnifying any potential loses, “the Trust cannot establish
causation, harm, or damages in connection with any asserted breach of fiduciary
duty, fraudulent inducement, or breach of contract arising out of the Agreement
between Treyled and the Trust.” ECF 61-2 at 22. The Trust vehemently disagrees
with the Arbitrator’s conclusions and rejection of its affirmative defenses. However,
it is clear from the Final Award that the Arbitrator, whether he ruled correctly on
not, ruled on all of the issues submitted to him for decision.
2. The Arbitrator’s Final Award draws its essence from the
parties’ Agreement.
Further, the Trust argues that Arbitrator’s decision, specifically his decision
that Treyled did not act as a “broker,” is contrary to the essence of the parties’
2 The Arbitrator expressly rejected the Trust’s licensure and Texas Administrative Code arguments
in connection with his ruling on Treyled’s breach of contract claim. Id. at 14-20. In short, the
Arbitrator found, after considering competing expert testimony, that “Treyled was not required to
be licensed or registered as a broker-dealer under federal securities laws.” Id. at 17. As to state
licensure, the Arbitrator rejected the Trust’s argument, finding “the ‘Broker’ as defined in the
Agreement had every license needed to close the sale of the Policy.” Id. at 18. The Arbitrator
further found that § 3.1741(b)(2) of the Texas Administrator Code banning exclusive dealing
provisions in a “life settlement contract” was inapplicable because the parties’ agreement does not
meet the statutory definition of a “life settlement contract.” Id. at 19. The Trust challenges these
rulings as in violation of public policy but does not argue that the Arbitrator failed to rule on them.
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contract. ECF 61-1 at 38-41. In order to determine whether certain federal and state
laws applied to Treyled’s services under the parties’ Agreement, the Arbitrator
analyzed whether Treyled acted as a “broker” or as a “finder.” See ECF 61-2 at 15-
18. Despite the fact that the parties’ Agreement uses the term “broker” when
referring to Treyled, the Arbitrator found that Treyled acted as a “finder” under
federal law and “was not required to be licensed or registered as a broker-dealer
under federal securities law.” Id. at17. The Arbitrator’s decision that the Agreement
was enforceable and Treyled was entitled to commissions, whether correct or not, is
“rationally inferable” from, the purpose of the Agreement. See Timegate Studios,
Inc., 713 F.3d at 802 (5th Cir. 2013) (holding that an arbitration award will be
confirmed if it “draws its essence from the contract,” or, in other words, “if it is
rationally inferable from the letter or the purpose of the underlying agreement”).
In sum, the Trust has not met its burden to show it is entitled to relief under §
10(a)(4) of the FAA.
B. The Fifth Circuit does not recognize the violation of public policy as a
ground for vacating an arbitration award.
The Trust argues the Arbitrator’s reliance on the indemnification agreement
with Coventry as a basis to disregard the Trust’s defenses violates the Texas
collateral source rule. ECF 61-1 at 11. The Trust also argues that enforcement of
the Final Award would violate Texas’s and California’s public policy against
payment to unlicensed brokers. Id. at 13.
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Only six months ago, the Fifth Circuit reiterated that § 10 is the exclusive
basis for vacating an arbitration award. United States Trinity Energy Servs., 135
F.4th at 308. In support of its public policy argument, the Trust cites a 2016 case,
McKool Smith, P.C. v. Curtis Int'l, Ltd., 650 F. App'x 208, 214 (5th Cir. 2016). ECF
61-1 at 11. In McKool, the court assumed without deciding that a violation of public
policy could be a statutory basis for vacatur and then denied the petition to vacate
anyway. McKool offers no support at all for the Trust’s position here.
Prior to the Supreme Court’s decision in Hall Street Associates, L.L.C. v.
Mattel, Inc., 552 U.S. 576 (2008), the Fifth Circuit recognized common law grounds,
such as public policy, for vacating an arbitration award. Saipem Am. v. Wellington
Underwriting Agencies Ltd., 335 F. App'x 377, 380 and n.3 (5th Cir. 2009). Post-
Hall, the Fifth Circuit has held that no non-statutory grounds for vacatur, including
violation of public policy and manifest disregard of the law, remain viable. Id.;
(citing Citigroup Global Markets, Inc., 562 F.3d at 358); see also NAFTA Holdings,
LLC v. First Nat'l Bank Grp. Inc., No. CV B: 13-221, 2014 WL 12588518, at *12
(S.D. Tex. Mar. 20, 2014) (holding that “‘public policy’” is not a valid ground for
vacatur under the FAA” (citations omitted)). Thus, the Trust’s public policy
arguments do not support vacatur.
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IV. Conclusion and Recommendation
For the reasons discussed above, the Court recommends that Treyled’s
Amended Motion to Confirm (ECF 70) be GRANTED and the Trust’s Amended
Petition to Vacate (ECF 61-1) be DENIED and a Final Judgment be entered
confirming the Final Award in full.
The Clerk of the Court shall send copies of the memorandum and
recommendation to the respective parties, who will then have fourteen days to file
written objections, pursuant to 28 U.S.C. § 636(b)(1)(C). Failure to file written
objections within the time period provided will bar an aggrieved party from attacking
the factual findings and legal conclusions on appeal. Douglass v. United Servs. Auto.
Ass’n, 79 F.3d 1415, 1428-29 (5th Cir. 1996) (en banc), superseded by statute on
other grounds.
Christina A. Bryan
United States Magistrate Judge
Signed on November 19, 2025, at Houston, Texas.
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