Contract Law governs Rule 11 Settlement Agreements

  
VALIDITY AND ENFORCEABILITY OF AGREEMENTS UNDER TRCP 11 (Tex. R. Civ. P. 11)

The rule the Rule Eleven Agreement takes its name from: Tex. R. Civ. P. 11

General Metal Fabricating Corporation v Stergiou (Tex.App.- Houston [1st Dist.] May 24, 2012)
  

OPINION EXCERPT

 

Contract law governs agreements made in open court pursuant to rule 11. Ronin v. Lerner, 7 S.W.3d 883, 886 (Tex. App.—Houston [1st Dist.] 1999, no pet.). A contract is legally binding only if its terms are sufficiently definite to enable a court to understand the parties’ obligations. See Fort Worth Indep. Sch. Dist. v. City of Fort Worth, 22 S.W.3d 831, 846 (Tex. 2000).“ Each contract should be considered separately to determine its material terms.” T.O. Stanley Boot Co., Inc. v. Bank of El Paso, 847 S.W.2d 218, 221 (Tex. 1992). Although the contract’s material terms must be agreed upon before a court may enforce the contract, a binding settlement contract may exist even if the parties contemplate that a more formal document memorializing their agreement will be executed at a later date. See City of Fort Worth, 22 S.W.3d at 846; Foreca, S.A. v. GRD Dev. Co., 758 S.W.2d 744, 745-46 (Tex. 1988); see also McLendon v. McLendon, 847 S.W.2d 601, 606-07 (Tex. App.—Dallas 1992, writ denied) (“[T]he attempts by the parties to reduce the rule 11 stipulations to writing do not affect the nature and effect of the stipulations dictated at the [hearing in open court.]”).When an agreement leaves material matters open for future adjustment and agreement on the additional matters never occurs, however, the agreement is not binding upon the parties. City of Fort Worth, 22 S.W.3d at846.

Whether the rule11 agreement is an enforceable settlement agreement—or whether it fails forlack of an essential term—is a question of law. See Ronin, 7 S.W.3d at 888; see also Martin v. Martin, 326 S.W.3d 741, 746 (Tex. App.—Texarkana 2010, pet. denied) (“The question of whether an agreement is an unenforceable agreement to agree is a question of law, not a question for the jury.”).The parties’ intent to be bound, however, generally is a question of fact. See Herring v. Herron Lakes Estates Owners Ass’n, Inc., No. 14-09-00772-CV, 2011 WL 2739517, at *3 (Tex. App.—Houston [14th Dist.] Jan. 4, 2011, no pet.) (mem. op.) (citing Foreca, 758 S.W.2d at 746).We may determine the issue as a matter of law only if an unambiguous writing shows that the parties intended to be bound by the agreement. Herring, 2011 WL 2739517 at *3 (citing Padilla v. LaFrance, 907 S.W.2d 454, 461-62 (Tex. 1995)).

SOURCE: HOUSTON COURT OF APPEALS - 01-11-00460-CV – 5/25/12 

CASE STYLE: GeneralMetal Fabricating Corporation, GMF Leasing, Inc., and Arnold Curry vs.  John Stergiou and Main Marine RepairIndustrial Cleaning Company 

We begin by noting that nothing in the rule 11 agreement indicates the parties did not intend to be bound. Like most settlement agreements, the rule 11 agreement included essential terms for the payment of money in exchange for the performance of some act: Stergiou would return his shares of the GMF Companies’ stock, Curry would pay $300,000, and together the parties would dismiss the lawsuit with prejudice. See Padilla, 907 S.W.2d at 460-61 (noting that material terms of rule 11 settlement agreement include payment and release of claims); see also CherCo Props., Inc. v. Law, Snakard & Gambill, P.C., 985 S.W.2d 262, 266 (Tex. App.—Fort Worth 1999, no pet.) (holding settlement agreement that included terms of payment and statement that parties would execute mutual releases contained all material terms).The rule 11 agreement further detailed when the stock would be returned (“upon payment of the $20,000 down payment . . . and the execution of all documents necessary to provide the security described therein”), how and when the money would be paid (in the form of a “promissory note” with “$20,000 of principal . . . paid on or before May 3, 2006” and monthly installments of $4,000 thereafter), the interest that would accrue (“6.5% per annum”), and the nature of the collateral (“all furniture, fixtures, equipment, receivables (from the ordinary course of business), inventory, and real property owned by the GMF Companies known [as] (the White Buildings and the empty lot) (excluding the four lots the ‘Blue Building’ resides upon and the ‘Blue Building’”)).See T.O. Stanley Boot Co., 847 S.W.2d at 221 (noting that material terms of contract to loan money are amount to be loaned, maturity date of loan, interest rate, and repayment terms).

We acknowledge that the rule 11 agreement required the parties to execute a promissory note, a deed of trust, a security agreement, and a financing statement, and that, as an affidavit included in Stergiou’s summary judgment evidence suggests, the “forms” for those documents include certain standard provisions for things like collateral descriptions; defaults; inspection rights; insurance, maintenance, and repair of collateral; and prepayment of the debt. However, to the extent these particular provisions are missing from the rule 11 agreement, the two cases on which Stergiou primarily relies do not persuade us that those provisions were essential to an enforceable settlement of this case.[4]See Martin, 326 S.W.3d at 741; see also DKH Homes, LP v. Kilgo, No. 03-10-00656-CV, 2011 WL 1811435, at *3-4 (Tex. App.—Austin May 11, 2011, no pet.) (mem. op.).

In Martin, two brothers had a dispute over the management of their closely-held corporation.326 S.W.3d at 743.In an effort to settle their dispute over “corporate control,” the brothers reached a “settlement agreement” that, among other things, required them to negotiate a shareholder agreement. Id. at 743-44.They never agreed as to the terms of the shareholder agreement. The court of appeals concluded that their settlement was not an enforceable agreement because the to-be-negotiated shareholder agreement “would be the foundational document of [the company] and would define the [brothers’] rights vis-à-vis each other and [the company].”Id. at 754.Here, the additional documents do not have the same “foundational” importance to the underlying dispute. The essence of Stergiou and Curry’s rule 11 agreement is the promise to pay $300,000in exchange for the return of the GMF Companies’ stock and the dismissal of the lawsuit. Although the rule 11 agreement requires Curry to make installment payments for a number of years, it does not require Stergiou and Curry to have a relationship akin to the parties in Martin, who continued to be involved in the operation of the same closely-held corporation.

In Kilgo, a homebuilder alleged that the Kilgos failed to comply with a contractual obligation to build a new home.2011 WL 1811435, at *1.The court of appeals determined that the parties’ agreement did not include terms essential to a contract for the construction of a new home. Id. at *3.The agreement did not include any information defining the undertaking, such as the size of the house contemplated, the price of the house on a per-square-foot or other basis, or the time for completing construction. Id. Here, unlike in Kilgo, the terms that Stergiou asserts are essential—i.e., those terms describing the parties’ obligations to insure, maintain, and repair the collateral, the notice and cure periods for default, and the right of prepayment—do not define the undertaking in the rule 11 agreement to pay for the return of Stergiou’s stock in the GMF Companies.
  
Instead, this case is more analogous to Montanaro v. Montanaro, 946 S.W.2d 428 (Tex. App.—Corpus Christi 1997, no writ). Montanaro was a suit for an accounting, dissolution of a family-owned partnership, fraud, and breach of fiduciary duties. The parties agreed on the general terms of their settlement, including payment obligations and the release of claims. Id. at 429.The payment obligations were to be secured by a to-be-drafted promissory note, but despite having exchanged drafts, the parties could not agree on the promissory note’s terms. Id. at 431.The court of appeals concluded that the record nevertheless established the essential terms of a settlement agreement because, like Stergiou and the GMF Companies, the parties agreed as to the exact amount of the payments and the period over which they were to be made. Id. “Additional terms regarding overdue, or post-maturity, interest and acceleration upon default were not necessary to enable the parties to comply with the terms of the note, or the underlying settlement agreement.”Id. Likewise here, we conclude that the particular terms of the additional documents were not material and therefore did not destroy the rule 11 agreement’s effectiveness, and we hold that the rule 11 agreement is not an unenforceable “agreement to agree.”

  

To hold otherwise would undermine well-established policy favoring the peaceable resolution of disputes by agreement and would encourage continued litigation of disputes that have already been decided by agreement. See Kennedy v. Hyde, 682 S.W.2d 525, 529 (Tex. 1984) (noting that “[i]n a day of burgeoning litigation and crowded dockets, the amicable settlement of lawsuits is greatly to be desired”). Moreover, the parties behaved as though their settlement was binding. The transcript of the trial court’s proceedings reflects that the parties were entering into a settlement agreement. Stergiou’s counsel dictated the terms of the agreement into the record. Each party, on the record, appeared in open court and expressed under oath that they had reached an agreement, had reviewed and understood its terms, had authority to enter into that agreement, and wished the trial court to approve it. The trial court did so. At no time did either Stergiou or Curry state on the record that the rule 11 agreement was only a preliminary agreement. See Ronin, 7 S.W.3d at 888 (considering lack of statement on record that rule 11 agreement was only preliminary a factor in enforcing the agreement).

  
The timing and circumstances under which the rule 11 agreement was executed also indicate the parties’ intent to be bound. The specific terms of the settlement were contingent on the jury’s verdict. If the rule 11 agreement was only preliminary, and not intended to be final until the details of the additional documents were agreed upon, the party that prevailed before the jury would prefer the “win” over the compromised settlement and would have little incentive to agree to those details. Stergiou did not present any summary judgment evidence establishing that his intent was otherwise. And, after the trial court approved the rule 11 agreement, the parties exchanged drafts of the additional documents contemplated by the rule 11 agreement, and they twice extended the agreed deadline for dismissing the lawsuit in order to continue negotiating the terms of the additional documents.

 
On this record, we overrule Stergiou’s first sub-issue.

  

B.      Definiteness of Terms
   

Stergiou’s next complaint—that the rule 11 agreement cannot be enforced as written—is closely related to the issue already decided. Stergiou contends that the rule 11 agreement cannot be enforced until the additional documents are actually executed, which is not possible because there has not been any agreement as to the terms of those additional documents and a reviewing court cannot supply the terms not agreed upon. That is, a court cannot force Stergiou or Curry to accept one or the other’s version of the additional documents.

  

In support of his contention, Stergiou argues this case is analogous to Nash v. Conatser, 410 S.W.2d 512 (Tex. App.—Dallas 1966, no writ).There, the court observed that specific performance of a contract cannot be ordered when the contract is unenforceable for lack of material terms. Id. at 519-21.We have already disapproved of Stergiou’s assertion that the rule 11 agreement lacked material terms by overruling Stergiou’s first issue, so Nash is not controlling here.

 

Because the rule 11 agreement set out the amounts to be paid for the return of the GMF Companies’ stock and the dismissal of the lawsuit, how those amounts were to be paid and when, and the interest rate, the parties’ obligations are sufficiently defined.We hold that the terms of the rule 11 agreement are not so indefinite so as to preclude its enforcement, and we overrule Stergiou’s second sub-issue.

  

C.      Statute of Frauds

  

Part of the dispute on appeal concerns the description of the security for Curry’s promise to pay Stergiou $300,000 for the return of his stock. The rule 11 agreement provides that the promissory note “will be secured by a first lien Deed of Trust and Security Agreement covering all furniture, fixtures, equipment, receivables (from the ordinary course of business), inventory, and real property owned by the GMF Companies known [as] (the White Buildings and the empty lot) (excluding the four lots the ‘Blue Building’ resides upon and the ‘Blue Building’) of General Metal Fabrication, Inc. and GMF Leasing, Inc.”

Stergiou argues that we should reverse the trial court’s summary judgment and render judgment that the rule 11 agreement is not enforceable because it does not sufficiently describe the real property offered as security. This argument rests on the premise that the rule 11 agreement is a contract for the sale of real estate and thus subject to the statute of frauds. See Tex. Bus. & Comm. Code Ann. § 26.01(b)(4) (West 2009) (statute of frauds).Without deciding whether that premise is sound, we conclude that the rule 11 agreement, together with the writings referenced by it, describes the property in a manner sufficient to satisfy the statute of frauds.

  

The statute of frauds does not require that a complete description of the land to be conveyed appear in a single document. See Padilla, 907 S.W.2d at 460 (holding that series of letters between parties satisfied statute of frauds).A property description is sufficient if the writing furnishes within itself, or by reference to some other existing writing, the means or data by which the particular land to be conveyed may be identified with reasonable certainty. See AIC Mgmt. v. Crews, 246 S.W.3d 640, 645 (Tex. 2008).The description of the land may be obtained from documents that are prepared in the course of the transaction, even if those documents are prepared after the parties’ contract for sale. See Porter v. Reaves, 728 S.W.2d 948, 949 (Tex. App.—Fort Worth 1987, no writ) (description of land as “1/2 of 20-acre tract” satisfied statute of frauds because location of tract was not disputed, the parties referenced a drawing of the tract in their contract, and seller was required to furnish “current survey” of land after contract was executed); see also Adams v. Abbott, 254 S.W.2d 78, 80 (Tex. 1952) (description furnished by exchange of correspondence between the parties)
  

The GMF Companies’ summary judgment evidence included Curry’s affidavit testimony that they owned three tracts of land, which were commonly referred to as the “Blue Building,” the “White Buildings,” and the “empty lot.”Stergiou’s attorney drafted the rule 11 agreement using those same terms. Although the rule 11 agreement describes the property to be secured by the deed of trust only as the “White Buildings” and “empty lot,” but not “the four lots the ‘Blue Building’ resides upon and the ‘Blue Building,’” the various deeds of trust and the security agreements circulated as drafts between the parties contain sufficient legal descriptions of those properties. The “White Buildings” are described as:

  
Lots Five (5), Six (6), Fifteen (15) and Sixteen (16), in Block Fifty-Four (54), of KING’S COURT, an addition in Harris County, Texas, according to the map of the plat thereof recorded in Volume 7, Page 65 of the Map Records of Harris County, Texas.
 
The “empty lot” is described as:
 

Lots 7, 8, 9 and 10, in Block 54 of KING’S COURT, an addition in Harris County, Texas, according to the map or plat thereof recorded in Volume 7, Page 65 of the Map of Records of Harris County, Texas.

    
These same legal descriptions appear in the drafts prepared by Stergiou and in the drafts prepared by the GMF Companies. Thus, there was no dispute between the parties regarding the identification of the real estate.

For this reason, we hold that the statute of frauds does not bar enforcement of the rule 11 agreement, and we overrule Stergiou’s third sub-issue.
   
Interpretation of the Rule 11 Agreement  
   
Having determined that the rule 11 agreement is enforceable, we now consider whether, as argued by the GMF Companies in their appeal, the agreement authorized Curry to pay the entire amount owed under the agreement at one time In four issues, the GMF Companies contend (1) the rule 11 agreement included a right of prepayment, (2) Curry’s tender of the full $300,000 constituted substantial performance of the rule 11 agreement, (3) by refusing that tender, Stergiou waived his right to interest under the rule 11 agreement, and (4) Stergiou’s failure to mitigate his damages by accepting the tender relieves Curry of any continuing burden to make interest payments. For reasons discussed below, only the GMF Companies’ first issue is properly within the scope of this agreed interlocutory appeal.
   

SOURCE: HOUSTON COURT OF APPEALS - 01-11-00460-CV – 5/25/12   

CASE STYLE: General Metal Fabricating Corporation, GMF Leasing, Inc., and Arnold Curry vs.  John Stergiou and Main Marine Repair Industrial Cleaning Company   

MSA given effect by court even though signatory tried to change its terms

ENFORCING SETTLEMENT AGREEMENTS

Abdulwahab v. Sam's Real Estate Business Trust
(Tex.App.- Fort Worth, Jul. 21, 2011)

Fort Worth Court of Appeals explains that agreed judgment cannot be entered when party withdraws consent to settlement agreement (or refuses to sign final court document effecting the terms of the settlement). Remedy in such cases is a claim for breach of settlement agreement by the non-breaching party. Motion to dismiss held sufficient in this case in lieu of breach-of-contract pleadings to give opposing party notice and provide a basis for dismissal in accordance with the terms of the settlement, which included release language. Breaching party -- who objected to the scope of the release -- did not respond to motion to dismiss and therefore couldn't complain later about denial of the right to assert defenses to breach-of-settlement agreement claim.


POINTS OF LAW ON WITHDRAWAL -- OR REVOCATION -- OF CONSENT TO SETTLEMENT AGREEMENT PRIOR TO ENTRY OF JUDGMENT

Written settlement agreements and rule 11 agreements may be enforced as contracts even if one party withdraws consent before judgment is entered on the agreement. Ford Motor Co. v. Castillo, 279 S.W.3d 656, 663 (Tex. 2009); Padilla v. LaFrance, 907 S.W.2d 454, 461 (Tex. 1995); see Tex. Civ. Prac. & Rem. Code Ann. § 154.071(a) (West 2011) ("If the parties reach a settlement and execute a written agreement disposing of the dispute, the agreement is enforceable in the same manner as any other written contract."); Tex. R. Civ. P. 11; City of Roanoke v. Town of Westlake, 111 S.W.3d 617, 626 (Tex. App.-Fort Worth 2003, pet. denied). When consent is withdrawn, an agreed judgment based on the settlement agreement is inappropriate; instead, the party seeking enforcement of the settlement agreement must pursue a claim for breach of contract. Ford Motor Co., 279 S.W.3d at 663; Padilla, 907 S.W.2d at 461 ("Although a court cannot render a valid agreed judgment absent consent at the time it is rendered, this does not preclude the court, after proper notice and hearing, from enforcing a settlement agreement . . . even though one side no longer consents to the settlement."); Alcantar v. Okla. Nat'l Bank, 47 S.W.3d 815, 819 (Tex. App.-Fort Worth 2001, no pet.).

A settlement agreement can be enforced as a contract by the trial court only after proper pleading, notice, hearing, and proof. Ford, 279 S.W.3d at 663; Padilla, 907 S.W.2d at 462; Neasbitt v. Warren, 105 S.W.3d 113, 117 (Tex. App.-Fort Worth 2003, no pet.); see also Mantas v. Fifth Court of Appeals, 925 S.W.2d 656, 658 (Tex. 1996) (orig. proceeding) ("Where the settlement dispute arises while the trial court has jurisdiction over the underlying action, a claim to enforce the settlement agreement should, if possible, be asserted in that court under the original cause number.").

Although an amended pleading is one method of raising a claim that a settlement agreement should be enforced as a contract, we have held that a motion seeking enforcement of the settlement agreement is a sufficient pleading to allow a trial court to render judgment enforcing the settlement because such a motion gives the alleged breaching party an opportunity to defend itself. Neasbitt, 105 S.W.3d at 117; see Twist v. McAllen Nat'l Bank, 248 S.W.3d 351, 361 (Tex. App.-Corpus Christi 2007, orig. proceeding [mand. denied]) (holding that an oral motion to enforce a settlement agreement was sufficient because "[a]s long as the motion recites the terms of the agreement, states that the other party has revoked its previously stated consent to the agreement, and requests the trial court to grant relief, the motion is sufficient"); Bayway Servs., Inc. v. Ameri-Build Constr., L.C., 106 S.W.3d 156, 160 (Tex. App.-Houston [1st Dist.] 2003, no pet.). If the motion satisfies the general purposes of pleadings, which is to give the other party fair notice of the claim and the relief sought, it is sufficient to allow the trial court to render judgment enforcing the settlement. Twist, 248 S.W.3d at 361; Neasbitt, 105 S.W.3d at 117.[7]

FULL CASE STYLE: HUSSAIN ABDULWAHAB, INDIVIDUALLY AND D/B/A FURNITURE GALAXY AND BAZAAR v. SAM'S REAL ESTATE BUSINESS TRUST, A DELAWARE STATUTORY TRUST, (Tex.App.- Dallas, July 21, 2011)

FULL TEXT OF OPINION BY TERRIE LIVINGSTON 

MEMORANDUM OPINION [1]

This appeal arises from a judgment that the trial court rendered after the parties entered into a Mediation Settlement Agreement (MSA). The trial court granted appellee Sam's Real Estate Business Trust, a Delaware Statutory Trust's motion to dismiss, which sought enforcement of the MSA. We affirm the trial court's judgment.

Background Facts

In February 2007, appellee sued appellant for breach of a commercial sublease that was related to a building in Grand Prairie.[2] Appellee claimed that appellant had breached the agreement by not paying rent and other costs. Appellant admitted to entering into the sublease but asserted that although appellee had represented that it would repair various aspects of the building, it had not done so. Thus, appellant counterclaimed for breach of warranty of suitability, breach of covenant of quiet enjoyment, and deceptive trade practices.[3] Appellee answered the counterclaims, and appellee filed a motion to strike them based on appellant's alleged failure to properly answer discovery, a hybrid motion for summary judgment on the counterclaims, and a no-evidence motion for summary judgment on appellant's affirmative defenses. The trial court granted appellee's hybrid motion for summary judgment, ruling that appellee was entitled to judgment as a matter of law on appellant's counterclaims.

The parties then mediated appellee's breach of contract claim. On October 23, 2009, the parties reached an agreement to settle the case. The terms of the MSA, in its entirety, are as follows:

On this the 23th [sic] day of October 2009, the parties identified below resolved the referenced matter on the dependent terms outlined below:

1. Without stipulation as to liability, all parties agree to completely release and discharge any and all claims of any kind, asserted or unasserted, known or unknown, that were or that could have been joined in the referenced litigation between these parties.

. . . .[4]

3. Counsel for Plaintiff will prepare formal settlement and dismissal documents.

By signing below we acknowledge our understanding of and agreement to the terms outlined above.

The agreement displays appellant's signature as well as the signatures of counsel for both parties.

The MSA was filed three days later. In May 2010, seven months after the MSA had been executed, appellee filed a motion to dismiss all claims, alleging that appellant had refused to sign a formal settlement document because he was considering filing a lawsuit against the real estate broker who helped market the property that appellant subleased from appellee.[5] The motion to dismiss stated that appellant had failed to appear for two dismissal hearings scheduled by the trial court and that the court had "directed" that the motion be filed. The motion recited that the formal settlement document that appellant had refused to sign contained "customary release language" that precluded claims against agents of either party.[6] Finally, the motion informed the trial court that appellant disagreed that claims against the parties' agents should be dismissed.

On May 28, 2010, appellee gave appellant written notice that the motion to dismiss would be submitted for the trial court's consideration on June 7, 2010, without an oral hearing. Appellant did not file a response by June 7, and on that date the trial court signed an order granting the motion and stating that

any and all claims of any kind, asserted or unasserted, known or unknown, that were or that could have been joined in this lawsuit, which includes claims against potential agents of either [appellee] or [appellant] (including real estate brokers), are released by both [appellee] and [appellant] and discharged with prejudice.

Two weeks later, appellant requested findings of fact and conclusions of law. Appellee objected, arguing that the trial court's findings and conclusions would not be proper under the rules of civil procedure because the court did not hear conflicting evidence on the dismissal motion. The trial court agreed with appellee and denied appellant's request.

Appellant filed a motion to modify, reform, or correct the judgment, stating that the MSA settled claims among only the named parties. In the motion, appellant represented that he had not withdrawn his consent to the settlement agreement, but he stated that he never gave consent to "any settlement extending beyond the named parties." The trial court denied appellant's motion to reform the judgment, and appellant brought this appeal.

The Propriety of the Trial Court's Judgment

In three issues, appellant contends that the trial court erred by granting appellee's motion to dismiss with prejudice, denying appellant's request for findings of fact and conclusions of law, and denying appellant's motion to modify, reform, or correct the judgment.

The judgment complied with the MSA

In his first issue, appellant contends that the trial court erred by signing its June 7, 2010 "Order Granting Motion to Dismiss All Claims, Asserted and Unasserted, Including Potential Agents, with Prejudice" because the order does not strictly and literally comply with the MSA and because the trial court was on notice that he did not consent to a release of claims against potential agents, including real estate brokers, at the time of the judgment. Appellant argues that the trial court altered the express release language in the MSA and therefore rendered an improper consent judgment, an improper ruling that appellant had breached the settlement agreement when no pleading for breach of contract had been filed, or an improper judgment enforcing a settlement agreement when no motion for enforcement had been filed.

Texas has a public policy of encouraging the peaceful resolution of disputes and the early settlement of pending litigation through voluntary settlement procedures. Tex. Civ. Prac. & Rem. Code Ann. § 154.002 (West 2011); Brooks v. Brooks, 257 S.W.3d 418, 421 (Tex. App.-Fort Worth 2008, pet. denied). Trial and appellate courts are charged with the responsibility of carrying out this public policy. Tex. Civ. Prac. & Rem. Code Ann. § 154.003 (West 2011); Brooks, 257 S.W.3d at 421.

Appellee argues that the trial court's dismissal order was not an agreed order and that it is therefore irrelevant whether appellant withdrew his consent to the MSA before the entry of the order. Written settlement agreements and rule 11 agreements may be enforced as contracts even if one party withdraws consent before judgment is entered on the agreement. Ford Motor Co. v. Castillo, 279 S.W.3d 656, 663 (Tex. 2009); Padilla v. LaFrance, 907 S.W.2d 454, 461 (Tex. 1995); see Tex. Civ. Prac. & Rem. Code Ann. § 154.071(a) (West 2011) ("If the parties reach a settlement and execute a written agreement disposing of the dispute, the agreement is enforceable in the same manner as any other written contract."); Tex. R. Civ. P. 11; City of Roanoke v. Town of Westlake, 111 S.W.3d 617, 626 (Tex. App.-Fort Worth 2003, pet. denied). When consent is withdrawn, an agreed judgment based on the settlement agreement is inappropriate; instead, the party seeking enforcement of the settlement agreement must pursue a claim for breach of contract. Ford Motor Co., 279 S.W.3d at 663; Padilla, 907 S.W.2d at 461 ("Although a court cannot render a valid agreed judgment absent consent at the time it is rendered, this does not preclude the court, after proper notice and hearing, from enforcing a settlement agreement . . . even though one side no longer consents to the settlement."); Alcantar v. Okla. Nat'l Bank, 47 S.W.3d 815, 819 (Tex. App.-Fort Worth 2001, no pet.). A settlement agreement can be enforced as a contract by the trial court only after proper pleading, notice, hearing, and proof. Ford, 279 S.W.3d at 663; Padilla, 907 S.W.2d at 462; Neasbitt v. Warren, 105 S.W.3d 113, 117 (Tex. App.-Fort Worth 2003, no pet.); see also Mantas v. Fifth Court of Appeals, 925 S.W.2d 656, 658 (Tex. 1996) (orig. proceeding) ("Where the settlement dispute arises while the trial court has jurisdiction over the underlying action, a claim to enforce the settlement agreement should, if possible, be asserted in that court under the original cause number.").

Although an amended pleading is one method of raising a claim that a settlement agreement should be enforced as a contract, we have held that a motion seeking enforcement of the settlement agreement is a sufficient pleading to allow a trial court to render judgment enforcing the settlement because such a motion gives the alleged breaching party an opportunity to defend itself. Neasbitt, 105 S.W.3d at 117; see Twist v. McAllen Nat'l Bank, 248 S.W.3d 351, 361 (Tex. App.-Corpus Christi 2007, orig. proceeding [mand. denied]) (holding that an oral motion to enforce a settlement agreement was sufficient because "[a]s long as the motion recites the terms of the agreement, states that the other party has revoked its previously stated consent to the agreement, and requests the trial court to grant relief, the motion is sufficient"); Bayway Servs., Inc. v. Ameri-Build Constr., L.C., 106 S.W.3d 156, 160 (Tex. App.-Houston [1st Dist.] 2003, no pet.). If the motion satisfies the general purposes of pleadings, which is to give the other party fair notice of the claim and the relief sought, it is sufficient to allow the trial court to render judgment enforcing the settlement. Twist, 248 S.W.3d at 361; Neasbitt, 105 S.W.3d at 117.[7]

Appellant argues that the trial court erred by rendering judgment releasing claims against potential agents when the only pleading pending was a motion to dismiss.[8] Although appellee's motion was labeled as a motion to dismiss, it was essentially a motion to enforce the MSA because appellee alleged that appellant "refuse[d] to sign a formal settlement document `releas[ing] . . . any and all claims of any kind . . . that could have been joined in [this] litigation' as he agreed to do in [the MSA]." The motion specifically recited and attached the terms of the MSA and stated that appellee's counsel had prepared the formal settlement and dismissal documents required by the agreement. The motion further alleged that the formal settlement documents were forwarded to and approved by appellant's counsel but that appellant refused to sign them. Appellee requested that the motion to dismiss be set for a hearing with notice to appellant and asked the trial court to enforce the settlement agreement.[9] Thus, the motion contained all of the necessary elements to request enforcement of the MSA. See Twist, 248 S.W.3d at 361-62; Neasbitt, 105 S.W.3d at 117.

Furthermore, the trial court correctly enforced the settlement agreement to preclude claims against third parties that could have been brought in the litigation between appellee and appellant. The MSA is a contract and is therefore governed by the same rules of construction applicable to all contracts. See Doe v. Tex. Ass'n of Sch. Bds., Inc., 283 S.W.3d 451, 458 (Tex. App.-Fort Worth 2009, pet. denied). Thus, in construing the MSA, our primary concern is ascertaining the true intent of the parties as expressed in the agreement. Id. (citing NP Anderson Cotton Exch., L.P. v. Potter, 230 S.W.3d 457, 463 (Tex. App.-Fort Worth 2007, no pet.)); see Republic Nat'l Bank of Dallas v. Nat'l Bankers Life Ins. Co., 427 S.W.2d 76, 79-80 (Tex. Civ. App.-Dallas 1968, writ ref'd n.r.e.) (noting that courts should not consider the "intention which the parties may have had, but failed to express in the instrument"). "Words in a contract must carry their ordinary, generally accepted meanings unless the contract itself shows that the terms have been used in a technical or different sense. In construing a contract, we may not rewrite it nor add to its language." Doe, 283 S.W.3d at 458 (citation omitted). The interpretation of an unambiguous contract is a matter of law to be determined by the trial court. Gulf Ins. Co. v. Burns Motors, Inc., 22 S.W.3d 417, 423 (Tex. 2000).

The trial court literally and strictly complied with the MSA by ordering that it precluded all claims "that were or that could have been joined in this lawsuit, which includes claims against potential agents."[10] This is precisely what the MSA required when the parties agreed to "completely release and discharge any and all claims of any kind, asserted or unasserted, known or unknown, that were or that could have been joined in the referenced litigation between these parties." Appellant's interpretation of the MSA, that it releases only claims that could have been brought between appellant and appellee, is unreasonable because it would have required the trial court to rewrite the agreement to state, in effect, that the parties agreed to "completely release and discharge any and all claims of any kind between these parties, asserted or unasserted, known or unknown, that were or that could have been joined in the referenced litigation."

Because we hold that the trial court did not err by granting appellee's motion to dismiss (of which appellant had notice and an opportunity to respond) and by strictly enforcing the terms of the MSA, we overrule appellant's first issue. See Neasbitt, 105 S.W.3d at 117-19.

The request for findings of fact and conclusions of law was inappropriate

In his second issue, appellant argues that the trial court erred by refusing to file findings of fact and conclusions of law. "In any case tried in the district or county court without a jury, any party may request the court to state in writing its findings of fact and conclusions of law." Tex. R. Civ. P. 296. "Findings and conclusions are appropriate if there is an evidentiary hearing and the trial court is called upon to determine questions of fact based on conflicting evidence." Int'l Union, United Auto., Aerospace & Agric. Implement Workers of Am.-UAW v. Gen. Motors Corp., 104 S.W.3d 126, 129 (Tex. App.-Fort Worth 2003, no pet.) (citing Port Arthur ISD v. Port Arthur Teachers Ass'n, 990 S.W.2d 955, 958 (Tex. App.-Beaumont 1999, pet. denied)). When the trial court rules without determining questions of fact, a request for findings of fact and conclusions of law is inappropriate. Id.; see O'Donnell v. McDaniel, 914 S.W.2d 209, 210 (Tex. App.-Fort Worth 1995, writ denied) (stating that a dismissal of a case without an evidentiary hearing does not constitute a case that has been "tried" within the meaning of rule 296); see also Puri v. Mansukhani, 973 S.W.2d 701, 708 (Tex. App.-Houston [14th Dist.] 1998, no pet.) ("The purpose of Rule 296 is to give a party a right to findings of fact and conclusions of law finally adjudicated after a conventional trial. . . . In other cases, findings and conclusions may be proper, but a party is not entitled to them.").

The trial court did not hold an evidentiary hearing, and its decision to grant appellee's motion to dismiss and enforce the MSA was not based on the determination of any fact issue about which there was conflicting evidence. Instead, at most, it was based on the parties' competing interpretations of the principal evidence presented, the MSA, and on appellant's undisputed refusal to sign a document that complied with the MSA's language.

Appellant contends that the trial court decided a disputed fact issue of the parties' intent in signing the MSA. But intent in entering a contract is only a fact issue where the contract is ambiguous, and based on our reasoning above, we hold that the MSA was not ambiguous. See Columbia Gas Transmission Corp. v. New Ulm Gas, Ltd., 940 S.W.2d 587, 589 (Tex. 1996); Doe, 283 S.W.3d at 459.

For these reasons, we hold that the trial court did not err by declining to file findings of fact and conclusions of law. See Tex. R. Civ. P. 296. We overrule appellant's second issue.

The trial court correctly denied appellant's motion to modify, reform, or correct the judgment

In his third issue, appellant argues that the trial court erred by denying his motion to modify, reform, or correct the judgment. That motion and the argument contained in the body of appellant's third issue recast the contentions that appellant made in his first issue. Therefore, for the same reasons that we overruled appellant's first issue, we overrule his third issue. See Neasbitt, 105 S.W.3d at 118-19.

Conclusion

Having overruled each of appellant's issues, we affirm the trial court's judgment.

For footnotes click on link below:

Agreed Judgment cannot be rendered after consent is withdrawn

Agreed Judgment cannot be rendered when a party changes his or her mind and revokes consent to the agreement.

Dallas Court of Appeals reverses on finding that trial court erred by rendering judgment on the parties' Rule 11 settlement agreement in SAPCR modification proceeding after appellant had withdrawn his consent.

Mims v. Mims
Wesley James Mims v. Mary Ann Mims (Tex.App.- Dallas, Aug. 2, 2011)

  
MEMORANDUM OPINION

Before Justices Moseley, Richter, and Lang-Miers
Opinion By Justice Lang-Miers

Appellant Wesley James Mims appeals the trial court's judgment in this suit to modify an order affecting the parent-child relationship. For the following reasons, we reverse the trial court's judgment and remand for further proceedings.

Background

Appellee filed this suit to modify an order affecting the parent-child relationship. The matter was set for a bench trial in July 2009. Sometime after the trial began, the parties reached a rule 11 settlement agreement on all issues. The attorneys read the agreement into the record and also worked out some of the details of the agreement as it was being read. The court made extensive notes about the agreement's details on the docket sheet. At the conclusion of the proceeding, both parties stated that they agreed to the settlement agreement and asked the trial court to approve it. Appellee prepared an agreed order and, about a month later, filed it along with a motion to sign the order. Appellant had not signed the agreed order. Two days after appellee filed the motion to sign the agreed order, appellant filed objections to the motion stating that he withdrew his consent to the settlement agreement. The record reflects that a hearing on the matter was scheduled for August 19, 2009. However, on August 18, 2009, the court made a docket entry stating, “Resp. to get cases to Court by 4:00 P.M. Review cases and transcript. Both sides announced they had no objections.” The record does not contain any other notation regarding a hearing, and on August 27, 2009, the trial court signed the agreed order. In one issue, appellant argues that the trial court erred by rendering judgment after he withdrew his consent to the agreement.

Applicable Law

A party may revoke his consent to settle a case any time before judgment is rendered on the agreement. S&A Rest. Corp. v. Leal, 892 S.W.2d 855, 857 (Tex. 1995). An agreed judgment rendered after one of the parties revokes his consent is void. Padilla v. LaFrance, 907 S.W.2d 454, 461-62 (Tex. 1995) (“court cannot render a valid agreed judgment absent consent at the time it is rendered”); Quintero v. Jim Walter Homes, Inc., 654 S.W.2d 442, 444 (Tex. 1983) (when trial court has knowledge party does not consent to judgment, trial court should refuse to sanction agreement by making it judgment of the court).

Although the parties agree with this statement of the law, they disagree about when the judgment in this case was rendered. A judgment is rendered when “the court settles and declares the decision of the law upon the matters at issue.” Formby's KOA v. BHP Water Supply Corp., 730 S.W.2d 428, 429 (Tex. App.-Dallas 1987, no writ) (quoting Coleman v. Zapp, 151 S.W.1040, 1041 (Tex. 1912)). Rendition of judgment is a present act; an expression of future intent is not a rendition. See S&A Rest., 892 S.W.2d at 858; Formby's KOA, 730 S.W.2d at 430. The words used by the trial court must clearly indicate the court's intent to render judgment at the time the words are expressed. S&A Rest., 892 S.W.2d at 858.

Discussion

At the conclusion of the trial proceeding, both parties asked the court to approve the agreement, and the court stated:

THE COURT: All right. Then I understand that [appellee's lawyer] is going to prepare the order. And I know this is going to be kind of a convoluted and very complicated order, but I still would want to have it before - can we get it before - could we get it by July the 30th or 31st?

[APPELLEE'S LAWYER]: Yes.

THE COURT: That way we'll have something in our hands.

Appellant argues that the court “utter[ly] failed to clearly and affirmatively state it was rendering judgment” during the July proceeding during which the settlement agreement was read into the record. He also argues that the agreement did not resolve all pending matters. He contends that the trial court did not render judgment until it signed the agreed order on August 27, 2009. Appellee, on the other hand, contends that no magic words are required and that the court's on-the-record statements at the July proceeding, combined with the court's notations on the docket sheet, “clearly constitute a rendition . . . .” We agree with appellant.

Although the trial court did not expressly state it approved the settlement agreement, the record shows that the court appeared to have approved it. But mere approval of a settlement agreement does not constitute rendition of judgment. S&A Rest., 892 S.W.2d at 858. And although the court appeared to have approved the agreement, the court did not order the parties to sign and follow the agreement. See Samples Exterminators v. Samples, 640 S.W.2d 873, 875 (Tex. 1982) (trial court rendered judgment by ordering parties to sign and follow the agreement); Formby's KOA, 730 S.W.2d at 430. Appellant also argues that the record shows that some matters were left unresolved when the agreement was read into the record. For example, he cites the record where appellee's attorney advised the court that the attorneys and parties would have to work out the logistics of visitation if appellee moved out of the state with the child: “And the logistics of that we'll work out in final orders pursuant to the Texas Family Law Practice Manual, but there's going to have to be some notice provisions and buying tickets.”

Additionally, the record shows that motions were pending and would not be resolved except by the court's signed order. Appellee's counsel asked appellee whether she was “asking the Court to make these terms and conditions into an order that will dispose of two pending motions?” She said yes. The record does not indicate that the trial court ruled on those pending motions at the July proceeding. Appellee responds that the trial court ruled on those matters by the notation on the docket sheet that “all other pending requests denied and non-suited.” But we do not construe that notation as a rendition of judgment. See Formby's KOA, 730 S.W.2d at 430-31 (stating that as a general rule, “a mere docket entry is not sufficient to constitute a judgment or decree of the court” without more evidence of the court's intent). Instead, it appears to be a contemporaneous note relating to appellant's counsel's statement of the parties' agreement that “all other pending requests in this cause of action, the parties have agreed will be waived by the parties and denied by the Court.”

Based on this record, we conclude that judgment was not rendered in this case at the time the parties announced their agreement on the record. We conclude that judgment was rendered on the date the trial court signed the agreed order, which was well after appellant had withdrawn his consent to the agreement. Consequently, the trial court erred by rendering judgment on the parties' agreement after appellant had withdrawn his consent. See Footnote 1

We sustain appellant's sole issue on appeal, reverse the trial court's judgment, and remand the cause for further proceedings.

ELIZABETH LANG-MIERS
JUSTICE

Richter, J., concurring without opinion.

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Footnote 1


We express no opinion regarding the enforceability of the settlement agreement. See Padilla, 907 S.W.2d at 461 (distinguishing between requirements of an agreed judgment and an enforceable settlement agreement); Browning v. Holloway, 620 S.W.2d 611, 614-15 (Tex. Civ. App.-Dallas 1981, writ ref'd n.r.e.) (same).