In re Mary Lynn Mabray--Appeal from 311th District Court of Harris County
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Opinion issued August 31, 2010
In The
Court of Appeals
For The
First District of Texas
NO. 01-09-01099-CV
IN RE MARY LYNN MABRAY, Relator
Original Proceeding on Petition for Writ of Mandamus
DISSENTING OPINION
The central issue in this case of first impression interpreting Texas’s
collaborative law statute, Section 6.603 of the Texas Family Code, is whether a
“cooperative law agreement” that is not provided for by statute and whose
provisions track and conflict with the provisions of the collaborative law statute and
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the arbitration provision within it are valid and enforceable under Texas law or void
as against public policy.
The majority holds that both the “cooperative law
agreement” and its arbitration clause are valid and enforceable. I would hold that
neither is.
By petition for writ of mandamus, relator, Mary Lynn Mabray, challenges the
trial court’s October 30, 2009 order (1) ordering the parties to arbitration under the
terms of the parties’ “Cooperative Law Dispute Resolution Agreement” (“the
Agreement”) and (2) denying her motion to disqualify Brenda Keen, counsel for her
ex-husband, Gary Allen Mabray, for failing to withdraw as counsel following the
failure of settlement efforts under the cooperative law agreement.
Mary argues that the Agreement is “void and/or unenforceable” because (1) it
fails to comply with Texas’s collaborative law statute, including its provision that
collaborative counsel withdraw if no settlement agreement is reached;
(2) enforcement of the Agreement would violate public policy as reflected in the
collaborative law statute because she would be required to participate in further
litigation against counsel disqualified by statute; (3) the trial court clearly abused its
discretion by requiring her to proceed to arbitration under an alternative dispute
resolution agreement that fails to comply with Texas statutory law and is against
public policy; and (4) even if formerly enforceable, the Agreement and the
arbitration clause within it are no longer enforceable because Gary materially
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breached the agreement and, in response, she revoked her consent to the agreement
and terminated it. Gary opposes Mary’s arguments and contends her petition for
writ of mandamus is barred by laches.
I agree with the majority that Mary’s petition is not barred by laches. I would
hold, however, that both the “cooperative law agreement” and the arbitration
provision within it are void and unenforceable as against the public policy of the
State of Texas. Therefore, I would provisionally grant mandamus relief.
Background
After 35 years of marriage, Mary discovered her husband Gary’s ongoing
infidelity and sought a divorce. She retained Harry L. Tindall, who recommended
that the parties engage in a process called “cooperative law” to settle the divorce.
On February 12, 2008, Mary and Gary and their attorneys signed a four page
document titled “Cooperative Law Dispute Resolution Agreement.”
The
Agreement was not filed with the trial court.
The Agreement acknowledged the parties’ “shared belief that it is in the best
interests of the parties to avoid litigation.” Thus, it stated that the parties agree to
“effectively and honestly communicate with each other with the goal of efficiently
and economically settling the terms of the dissolution of the marriage.” The
Agreement provided for the joint retention of experts, if needed, and it forbade
formal discovery unless agreed upon, relying instead on the parties’ agreement to
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deal with each other in “good faith.” It further provided,
No formal discovery procedure will be used unless specifically agreed
to in advance. The parties will be required to sign a sworn inventory
and appraisement if requested by the other party.
We acknowledge that, by using informal discovery, we are giving up
certain investigative procedures and methods that would be available to
us in the litigation process. We give up these measures with the
specific understanding that the parties will make to each other a
complete and accurate disclosure of all assets, income, debts, and other
information necessary for us to reach a fair settlement. Participation
in this process is based on the assumptions that we have acted in good
faith and that the parties have provided complete and accurate
information to the best of their ability.
Also included in the Agreement was an arbitration provision, which stated:
The parties further agree that if this case has not been settled by
negotiation and an Agreed Final Decree of Divorce has not been
submitted to and signed by the Court before April 30, 2009 then this
matter will be submitted to binding arbitration pursuant to the Joint
Motion for Referral to Arbitration and Agreed Order of Referral to
Arbitration attached hereto and made a part hereof.
The parties agree to be bound by this agreement, the Texas Alternative
Dispute Resolution Procedures Act (chapter 154 of the Texas Civil
Practice and Remedies Code), the Texas General Arbitration Law
(chapter 171 of the Texas Civil Practice and Remedies Code), Section
6.601, Texas Family Code, and the laws of the state of Texas.
The cooperative law process failed, and an agreed final decree of divorce was not
submitted to the court by April 30, 2009. Neither party had requested a sworn
inventory and appraisement.
On March 11, 2009, the parties jointly moved for referral to arbitration, and,
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on March 18, 2009, the court entered the first Agreed Order for Referral to
Arbitration, appointing an arbitrator and scheduling the arbitration for June 18,
2009. When the arbitrator realized that he had consulted with Mary regarding the
divorce and thus could not serve as arbitrator, Gary filed an Opposed Motion to
Appoint Substitute Arbitrator and For Entry of Order of Referral to Arbitration.
The parties’ agreed order appointing Donald R. Royall as substitute arbitrator was
signed by the trial court on August 12, 2009, and the arbitration was scheduled for
August 25 and 26, 2009.
In early August, Mary terminated her attorney-client relationship with Tindall
and hired new counsel, Stephen Shoultz. Thereafter, Mary moved to disqualify
Gary’s counsel, Brenda Keen, on grounds that the Agreement was contrary to Texas
public policy and therefore invalid. Specifically, Mary asserted that the Agreement
sought to “contract around” Texas’s collaborative law statute, section 6.603 of the
Family Code. Because Brenda Keen would be unable to continue to represent Gary
in litigation under a collaborative law agreement once the collaborative process had
failed, Mary contended that, so too, Keen must be disqualified after the cooperative
process failed. Mary also moved to revoke her consent to arbitration. She stated
that Tindall had “forced” her to sign the Agreement while she was “emotionally
distraught” over the divorce and under the influence of tranquilizers. She further
contended that Gary “failed to truthfully and voluntarily disclose relevant
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information, including complete and accurate disclosure of all assets.” Gary moved
to enforce the Agreement and to compel arbitration, arguing that the Texas
collaborative law statute is inapplicable to the parties’ cooperative law agreement.
The trial court heard all motions on September 17, 2009. At the hearing,
Mary contended that Gary had breached the cooperative law agreement by
concealing assets, but Gary’s counsel asserted that the arbitrator, not the trial court,
should determine whether he had breached the Agreement. Gary himself did not
attend the hearing, despite having been subpoenaed to attend and bring financial
documents.
The trial court verified that no notice of collaborative law proceedings had
been filed with the court and no order had been signed by the trial court setting the
dates for status reports, 1 as required by the collaborative law statute, section 6.603 of
1
The following colloquy between the court and Gary’s counsel, Brenda Keen,
occurred:
[The Court]: So, the case is not filed as a Collaborative Law
Agreement under the statute?
[Ms. Keen]: It is not, Your Honor.
[The Court]: And there’s been no order signed by the Court that
approves collaborative law procedures and schedules
and so forth.
[Ms. Keen]: No notice of collaborative law proceedings was filed,
and the case had not been put on the collaborative track
or no notices of updates, nothing. It is not a
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the Family Code. 2 The court reasoned that it could not impose an “attorneys-haveto-withdraw provision” in a non-collaborative law case, stating,
The Code certainly includes, encourages all forms of ADR; and if they
want to enter into an agreement which, apparently, they both signed,
and call it Cooperative Law Agreement and it has some mechanisms to
try to resolve the case through ADR rather than coming to the Court, I
don’t think there’s any assumption that they can’t do that.
Mary’s counsel argued that Mary had revoked her consent to arbitration, and
therefore there was no valid agreement to arbitrate, and she also argued that the trial
court was required to determine whether a valid agreement existed. He further
argued that the cooperative law agreement operated as a collaborative law
agreement but violated Texas law by not providing for the withdrawal of attorneys,
as required by Texas’s collaborative law statute. He stated, “There is no basis in
Texas law to just substitute in the word cooperative for collaborative and then say
the statute does not exist.”
collaborative case.
[The Court]: And after the signing of the agreement that includes the
referral to arbitration, it wasn’t handled as a
collaborative law case subsequent to that time either?
[Ms. Keen]: No. It was always, it was always handled under the
agreement, which is attached to my motion, to try to
resolve it out of court by negotiation, and if we were
unable to settle it by a date certain, we would go to
submit all issues to binding arbitration.
2
TEX. FAM. CODE ANN. § 6.603(f) (Vernon 2006).
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Gary’s counsel argued that breach of contract issues were a matter for the
arbitrator to decide. She also argued that the agreement was not a collaborative law
agreement under the Texas statute, that “[n]o notice of collaborative law proceeding
was filed, and the case had not been put on the collaborative track or no notice of
updates, nothing.”
The trial court agreed with Gary’s counsel and granted Gary’s motion. On
October 30, 2009, the court signed an order compelling arbitration, which provides,
in part:
This case was not resolved by agreement of the parties before April 30,
2009, and the parties are required to arbitrate their divorce action
pursuant to the Cooperative Law Dispute Resolution Agreement signed
by the parties on February 12, 2009. . . .
It is ordered that Mary Lynn Mabray’s Motion to Disqualify Brenda
Keen is hereby denied.
It is ordered that Mary Lynn Mabray’s First Amended Motion to
Revoke Consent to Arbitration and Request for Jury Trial is hereby
denied.
The trial court signed findings of fact and conclusions of law on October 21,
2009.
On November 25, the court signed additional findings of fact and conclusions
of law that state:
1.
Brenda Keen is not required to withdraw as attorney for Gary
Allen Mabray after the parties failed to reach a settlement under
the Cooperative Law Dispute Resolution Agreement.
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2.
The Cooperative Law Dispute Resolution Agreement is not
governed by Texas Family Code § 6.603.
3.
The Cooperative Law Dispute Resolution Agreement does not
violate Texas Public Policy.
4.
Brenda Keen is not disqualified to represent Gary Allen Mabray.
On December 22, 2009, Mary petitioned for writ of mandamus.
Standard of Review
Mandamus relief is available only to correct a “clear abuse of discretion”
when there is no adequate remedy by appeal. Walker v. Packer, 827 S.W.2d 833,
839–40 (Tex. 1992) (orig. proceeding). A clear abuse of discretion occurs when a
trial court “reaches a decision so arbitrary and unreasonable as to amount to a clear
and prejudicial error of law.” Id. at 839. The reviewing court may not substitute
its judgment for that of the trial court when reviewing factual issues. Id. Even if
the reviewing court would have decided the issue differently, it cannot disturb the
trial court’s decision unless the decision is shown to be arbitrary and unreasonable.
Id. at 840. Appellate review of a trial court’s determination of the legal principles
controlling its ruling, however, is much less deferential. Id.; In re Ching, 32
S.W.3d 306, 310 (Tex. App.—Amarillo 2000, orig. proceeding). A trial court has
no “discretion” in determining what the law is or in applying it to the facts. Walker,
827 S.W.2d at 840; Ching, 32 S.W.3d at 310. A clear failure of the trial court to
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analyze or apply the law correctly constitutes an abuse of discretion that may result
in the grant of an extraordinary writ. Walker, 827 S.W.2d at 840; Ching, 32 S.W.3d
at 310.
Collaborative and Cooperative Law
Mary argues that (1) the parties Cooperative Law Dispute Resolution
Agreement is void or unenforceable as against public policy because it fails to
comply with Texas’s collaborative law statute, including its provision that
collaborative counsel withdraw if no settlement agreement is reached; (2)
enforcement of the Agreement would violate public policy by requiring her to
participate in further litigation against counsel disqualified by statute; and (3) the
trial court clearly abused its discretion by requiring her to proceed to arbitration
under an alternative dispute resolution agreement that fails to comply with Texas’s
collaborative law statute and is against public policy. Mary contends that “[u]sing a
slightly different title for the ADR agreement does not avoid the protections of the
statute.” Gary responds to these three issues that the collaborative law statute is
inapplicable to a cooperative law agreement. 3
The central issue in the case is, thus, whether, in the absence of a duly
promulgated cooperative law statute, the public policy of the State of Texas permits
3
Mary also argues that, even if the Agreement was formerly enforceable, she
terminated it after Gary breached it and it is no longer enforceable.
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marriages to be dissolved pursuant to private “cooperative law” agreements,
unauthorized by statute, whose provisions track and conflict with the provisions of
Texas’s collaborative law statute. I would hold, on the basis of Texas public policy
regarding the dissolution of marriage as set out in Texas’s statutes, the legislative
history of the collaborative law statute, and Texas case law, that the parties’
“cooperative law” agreement is an illegal contract whose enforcement is contrary to
the public policy of the State of Texas. I would, therefore, hold the agreement void.
1.
Collaborative Law and Cooperative Law Defined
I generally agree with and adopt the majority’s statement of the distinction
between collaborative law and cooperative law.
Essentially, collaborative law is a variety of alternative dispute resolution,
most commonly used in the divorce context, that “provides for an advance
agreement entered into by the parties and the lawyers in their individual capacities,
under which the lawyers commit to terminate their representations in the event the
settlement process is unsuccessful and the matter proceeds to litigation.” Janet
Martinez & Stephanie Smith, An Analytic Framework for Dispute Systems Design,
14 HARV. NEGOT. L. REV. 123, 166 (2009).
Texas provides by statute for the dissolution of a marriage in accordance with
the collaborative law procedures set out in section 6.603 of the Family Code, which
provides, in part:
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(a) On a written agreement of the parties and their attorneys, a
dissolution of marriage proceeding may be conducted under
collaborative law procedures.
(b) Collaborative law is a procedure in which the parties and
their counsel agree in writing to use their best efforts and make a
good faith attempt to resolve their dissolution of marriage
dispute on an agreed basis without resorting to judicial
intervention except to have the court approve the settlement
agreement, make the legal pronouncements, and sign the orders
required by law to effectuate the agreement of the parties as the
court determines appropriate. The parties’ counsel may not
serve as litigation counsel except to ask the court to approve the
settlement agreement.
(c)
for:
A collaborative law agreement must include provisions
(1) full and candid exchange of information between
the parties and their attorneys as necessary to make a proper
evaluation of the case;
(2) suspending court intervention in the dispute while
the parties are using collaborative law procedures;
(3) hiring experts, as jointly agreed, to be used in the
procedure;
(4) withdrawal of all counsel involved in the
collaborative law procedure if the collaborative law procedure
does not result in settlement of the dispute; and
(5) other provisions as agreed to by the parties
consistent with a good faith effort to collaboratively settle the
matter.
(d) Notwithstanding Rule 11, Texas Rules of Civil Procedure,
or another rule or law, a party is entitled to judgment on a
collaborative law settlement agreement if the agreement:
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(1) provides, in a prominently displayed statement that
is boldfaced, capitalized, or underlined, that the agreement is not
subject to revocation; and
(2) is signed by each party to the agreement and the
attorney of each party.
(e) Subject to Subsection (g), a court that is notified 30 days
before trial that the parties are using collaborative law
procedures to attempt to settle a dispute may not, until a party
notifies the court that the collaborative law procedures did not
result in a settlement:
(1)
set a hearing or trial in the case;
(2)
impose discovery deadlines;
(3)
require compliance with scheduling orders; or
(4)
dismiss the case.
(f)
The parties shall notify the court if the collaborative law
procedures result in a settlement. If they do not, the parties shall
file:
(1) a status report with the court not later than the 180th
day after the date of the written agreement to use the procedures;
and
(2) a status report on or before the first anniversary of
the date of the written agreement to use the procedures,
accompanied by a motion for continuance that the court shall
grant if the status report indicates the desire of the parties to
continue to use collaborative law procedures.
(g) If the collaborative law procedures do not result in a
settlement on or before the second anniversary of the date that
the suit was filed, the court may:
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(1) set the suit for trial on the regular docket; or
(2) dismiss the suit without prejudice.
....
TEX. FAM. CODE ANN. § 6.603 (Vernon 2006).
By contrast, cooperative law is essentially “a process which incorporates
many of the hallmarks of Collaborative Law but does not require the lawyer to enter
into a contract with the opposing party providing for the lawyer’s disqualification.”
Martinez & Smith, 14 HARV. NEGOT. L. REV. at 166. Texas has no cooperative law
statute.
2.
Texas Public Policy
“It is the policy of [Texas] to encourage the peaceable resolution of disputes
. . . and the early settlement of pending litigation through voluntary settlement
procedures.” TEX. CIV. PRAC. & REM. CODE ANN. § 154.002 (Vernon 2005).
Texas public policy also strongly favors “preserving the freedom of contract.”
Lawrence v. CDB Servs., Inc., 44 S.W.3d 544, 553 (Tex. 2001), superseded by
statute on other grounds, TEX. LAB. CODE ANN. § 406.003(e), as recognized in
Storage & Processors, Inc. v. Reyes, 134 S.W.3d 190 (Tex. 2004). However, “[t]he
courts will not enforce a contract whose provisions are against public policy.”
Sacks v. Dallas Gold & Silver Exch., Inc., 720 S.W.2d 177, 180 (Tex. App.—Dallas
1986, no writ); accord Lawrence, 44 S.W.3d at 555 (Baker, J., dissenting) (noting,
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“On several occasions, we have held otherwise freely-entered contracts void
because they were contrary to public policy” (citing, e.g., Juliette Fowler Homes,
Inc. v. Welch Assocs., Inc., 793 S.W.2d 660, 663 (Tex. 1990))).
Texas expresses its public policy through its statutes. Tex. Commerce Bank,
N.A. v. Grizzle, 96 S.W.3d 240, 250 (Tex. 2002) (quoting Lawrence, 44 S.W.3d at
553).
Therefore, “to determine whether a contract violates public policy, we
consider the policies underlying any applicable statutes.” Jankowiak v. Allstate
Property & Cas. Ins. Co., 201 S.W.3d 200, 210 (Tex. App.—Houston [14th Dist.]
2006, no pet.) (quoting Lawrence, 44 S.W.3d at 555 (Baker, J., dissenting)).
Whether a contract violates public policy is a question of law the courts
review de novo. Id. at 209. Generally, if a contract violates public policy it is
void, not merely voidable. Lawrence, 44 S.W.3d at 555 (citing, e.g., Tom L. Scott,
Inc. v. McIlhany, 798 S.W.2d 556, 560 (Tex. 1990)). When a contract is void,
neither party is bound thereby. Ex parte Payne, 598 S.W.2d 312, 317 (Tex. Civ.
App.—Texarkana 1980, no writ), overruled on other grounds, Huff v. Huff, 648
S.W.2d 286 (Tex. 1983). Neither estoppel nor ratification will make a contract that
violates public policy enforceable. Lawrence, 44 S.W.3d at 555–56 (Baker, J.,
dissenting) (citing Richmond Printing v. Port of Houston Auth., 996 S.W.2d 220,
224 (Tex. App.—Houston [14th Dist] 1999, no pet.) and Ex parte Payne, 598
S.W.2d at 317). The appropriate test when considering whether a contract violates
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public policy “is whether the tendency of the agreement is injurious to the public
good, not whether its application in a particular case results in actual injury.”
Hazelwood v. Mandrell Indus. Co., 596 S.W.2d 204, 206 (Tex. Civ. App.—Houston
[1st Dist.] 1980, writ ref’d n.r.e.).
3.
Texas Public Policy Regarding Marriage: Section 1.101 of the
Family Code
Texas has expressly set out its public policy with respect to marriage in the
Family Code, Subchapter B, “Public Policy,” section 1.101, “Every Marriage
Presumed Valid,” which states:
In order to promote the public health and welfare and to provide
the necessary records, this code specifies detailed rules to be followed
in establishing the marriage relationship. However, in order to
provide stability for those entering into the marriage relationship in
good faith and to provide for an orderly determination of parentage and
security for the children of the relationship, it is the policy of this state
to preserve and uphold each marriage against claims of invalidity
unless a strong reason exists for holding the marriage void or voidable.
Therefore, every marriage entered into in this state is presumed to be
valid unless expressly made void by Chapter 6 or unless expressly
made voidable by Chapter 6 and annulled as provided by that chapter.
TEX. FAM. CODE ANN. § 1.101 (Vernon 2006) (emphasis added).
Chapter 6
expressly makes voidable marriages dissolved by collaborative law agreements
made and performed in accordance with the procedures set out in Chapter 6, section
6.603 of the Family Code. Chapter 6 does not expressly make marriages voidable
by “cooperative law” agreements.
Therefore, a private “cooperative law”
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agreement has no power to dissolve a marriage under Texas law. See id.; see also
Capellen v. Capellen, 888 S.W.2d 539, 545–46 (Tex. App.—El Paso 1994, writ
denied) (stating, in context of analyzing “open courts” claim, that suits for divorce
and suits affecting parent-child relationship are not subject to such common law
causes of action because they are statutorily created and regulated proceedings);
Ulloa v. Davila, 860 S.W.2d 202, 203 (Tex. App.—San Antonio 1993, no writ)
(stating that Texas law does not recognize common law divorce, and thus, marriage
can be terminated only by death or court decree) (citing Estate of Claveria v.
Claveria, 615 S.W.2d 164, 167 (Tex. 1981)). Under the plain language of section
1.101 of the Code, a marriage purportedly dissolved in accordance with a private
“cooperative law agreement” remains presumptively valid under Texas law.
4.
Texas Public Policy Regarding Collaborative Law: Section 6.603 of
the Family Code
Unlike cooperative law agreements, collaborative law agreements are
statutorily approved by Chapter 6 of the Texas Family Code as a method for
dissolving a marriage under Texas law. The public policy regarding marriage set
out in section 1.101 of the Family Code is echoed in the stated purpose of Texas’s
collaborative law statute as expressly set out both in the statute itself and in its
legislative history. See TEX. FAM. CODE ANN. § 6.603(a), (b) (providing permission
to conduct dissolution of marriage proceeding on written agreement of parties and
17
their attorneys and describing requirements of statutorily valid collaborative law
proceeding in detail).
Texas’s collaborative law statute originated in Texas’s 77th Legislature as
House Bill 1363, and it was enacted as new section 6.603 of the Texas Family Code,
effective September 1, 2001. See id. § 6.603. The final House Bill Analysis, dated
June 12, 2001, states, under the heading, “Background and Purpose”:
Currently, different types of alternative dispute resolution procedures
are encouraged to bring about a peaceable solution instead of litigation.
Collaborative law, a new dispute resolution method, is being used
primarily in family law cases relating to the dissolution of a marriage
and the parent-child relationship in which the costs of a court battle can
be both personally and financially overwhelming. The collaborative
law process offers parties the option to negotiate in good faith for an
out-of-court settlement. The process is entirely voluntary and
participation may be terminated at any time. The parties agree to a
full exchange of records and to jointly hire experts. If a settlement is
not reached, the attorneys must withdraw and the parties then employ
trial counsel. House Bill 1363 includes the collaborative law process
among other dispute resolution methods encouraged in actions relating
to the dissolution of a marriage or suits affecting the parent-child
relationship.
House Comm. on Civil Practices, Bill Analysis, Tex. H.B. 1363, 77th Leg., R.S.
(2001) (emphasis added).
Under the heading “Analysis,” the bill analysis states:
House Bill 1363 amends the Family Code to provide that a
collaborative law procedure (procedure) is a specified process,
conducted under written agreement of the parties and their counsel, to
reach a settlement agreement with minimal judicial intervention in a
dissolution of marriage dispute or a suit affecting the parent-child
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relationship. The bill sets forth provisions for what the agreement
must include . . . .
Id. (emphasis added). The analysis also states that, for the parties to be entitled to
judgment on a collaborative law agreement, the agreement must “provide[] in a
specified manner that [it] is not subject to revocation” and must be signed by each
party and each party’s attorney. Id. Finally, the analysis states that the bill
requires notification to the court if the procedures result in a settlement, or the filing
of a status report within a certain time period if they do not, and it states, “If the
procedures do not result in a settlement on or before the second anniversary of the
date that the suit was filed, the bill authorizes the court to set the suit for trial on the
regular docket or dismiss the suit without prejudice.” Id.
Section 6.603 of the Family Code restates the same purpose as the bill
analysis:
Collaborative law is a procedure in which the parties and their counsel
agree in writing to use their best efforts and make a good faith attempt
to resolve their dissolution of marriage dispute on an agreed basis
without resorting to judicial intervention except to have the court
approve the settlement agreement, make the legal pronouncements, and
sign the orders required by law to effectuate the agreement of the
parties as the court determines appropriate. The parties’ counsel may
not serve as litigation counsel except to ask the court to approve the
settlement agreement.
TEX. FAM. CODE ANN. § 6.603(b). It then sets out the mandatory requirements of a
collaborative law agreement:
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(1) full and candid exchange of information between the parties and
their attorneys . . . ; (2) suspending court intervention . . . while the
parties are using collaborative law procedures; (3) hiring experts, as
jointly agreed . . . ; (4) withdrawal of all counsel involved in the
collaborative law procedure if the . . . procedure does not result in
settlement of the dispute; and (5) other provisions as agreed to by the
parties consistent with a good faith effort to collaboratively settle the
matter.
Id. § 6.603(c). Section 6.603 also contains notice requirements to the parties
regarding the binding effect of any settlement reached and to the court regarding any
settlement, the provision of a status report if the case is not settled within a year, and
a provision that the court may set the case for trial on the regular docket or dismiss it
without prejudice if it does not settle within two years. Id. § 6.603(d), (f).
5.
Contravention of Texas’s Collaborative Law Statute, Section 6.603,
by the “Cooperative Law Dispute Resolution Agreement”
The “cooperative law agreement” entered by the parties in this case shows full
cognizance of the statement of purpose and the safeguards expressly enumerated in
Texas’s collaborative law statute—section 6.603 of the Family Code—and in the
Bill Analysis approving collaborative law as an alternative, statutorily approved,
method for the dissolution of a marriage. Indeed, the Agreement’s provisions track
the provisions in the collaborative law statute and expressly contravene its
protections while taking advantage of its benefits.
(a) Lack of notice to the trial court of “cooperative law agreement”
Section 6.603 requires that parties notify the trial court of any settlement
20
under collaborative law procedures, but it exempts collaborative law settlement
agreements from filing with the court, which would otherwise be required for
enforceability by Texas Rule of Civil Procedure 11, if certain conditions are met by
the settlement agreement; and, in the absence of a settlement, the statute requires the
parties to notify the trial court periodically of their progress through status reports.
See TEX. R. CIV. P. 11 (providing that “no agreement between attorneys or parties
touching any suit pending will be enforced unless it be in writing, signed and filed
with the papers as part of the record, or unless it be made in open court and entered
of record”); TEX. FAM. CODE ANN. § 6.603(d) (exempting collaborative settlement
agreements from compliance with Rule 11), 6.603(e) (limiting actions that trial court
may take once notified by parties that they will use collaborative procedures),
6.603(f) (providing method for putting trial court on notice of parties’ agreement to
use collaborative law procedures and requiring parties to submit status reports).
The parties to the “cooperative law agreement” indicated their awareness of
the provisions of section 6.603 and their purpose by tracking the statement of the
background and purpose of section 6.603 as set out in the statute, by including in the
Agreement a provision to negotiate in good faith for an out-of-court settlement, and
by agreeing to fully exchange records and to jointly hire experts.
However, their “cooperative law agreement” was not filed with the court as a
Rule 11 agreement, nor were status reports filed with the trial court. See TEX. R.
21
CIV. P. 11; TEX. FAMILY CODE ANN. § 6.603 (e), (f). Indeed, the parties emphasize
that they intentionally failed to incorporate into the “cooperative law agreement”
those provisions of the collaborative law statute that provided for notice to the trial
court. Thus, the court was never put on notice of the nature of the Agreement or the
progress of the parties’ settlement negotiations until the parties sought binding
arbitration under the Agreement.
I would hold, therefore, that the Agreement is unenforceable by virtue of the
parties’ failure to file their “cooperative law agreement” with the trial court as
required by Rule 11 for the enforceability of all agreements “touching any suit
pending” while they were negotiating a settlement for the dissolution of their
marriage or, alternatively, by virtue of their intentional failure to file status reports,
as required for compliance with the collaborative law statute.
(b) Failure to provide for voluntary withdrawal from the Agreement and
referral to binding arbitration
Also, where the legislatively stated purpose of the collaborative law statute is
that the process is “entirely voluntary and participation may be terminated at any
time,” House Comm. on Civil Practices, Bill Analysis, Tex. H.B. 1363, 77th Leg.,
R.S. (2001), the parties “cooperative law agreement” provides that “if this case has
not been settled by negotiation and an Agreed Final Decree of Divorce has not been
submitted to and signed by the Court before April 30, 2009 then this matter will be
22
submitted to binding arbitration pursuant to the Joint Motion for Referral to
Arbitration and Agreed Order of Referral to Arbitration attached hereto and made a
part hereof.” The collaborative law statute, by contrast, provides for returning the
case to the regular docket setting for trial or dismissal without prejudice if settlement
is not reached in two years. TEX. FAM. CODE ANN. § 6.603(g).
Thus, while the “cooperative law agreement” grounded itself in Texas
statutory authority permitting binding alternative dispute resolution procedures, it
pointedly skirted and violated the safeguards in the collaborative law statute
expressly designed to ensure the voluntariness of parties’ participation in
collaborative law negotiations and further providing for return to the court’s docket
or dismissal should the collaborative law process fail, violating both the letter and
the spirit of section 6.603.
(c) Failure to provide for withdrawal of counsel on failure of the
settlement negotiations
The parties likewise ignored the provisions of the collaborative law statute
that state, “The parties’ counsel may not serve as litigation counsel except to ask the
court to approve the settlement agreement,” and that mandate “withdrawal of all
counsel involved in the collaborative law procedure if the . . . procedure does not
result in settlement of the dispute.”
Id. § 6.603(b),(c)(4).
Gary then took
advantage of the Agreement’s silence and proceeded to binding arbitration with the
23
same counsel he had used in the “cooperative law” negotiations, in plain
contravention of sections 6.603(b) and (c),.
Thus, for this reason as well, I would hold that the parties’ Agreement violates
Texas’s collaborative law statute and its public policy and is void.
6.
Violation of Texas Public Policy Regarding the Dissolution of
Marriage: Section 1.101 of the Texas Family Code
The collaborative law procedures set out in detail in section 6.603 of the
Family Code carry forward the express public policy of the State of Texas regarding
the dissolution of marriages stated in section 1.101 of the Family Code—that policy
being that,
in order to provide stability for those entering into the marriage
relationship in good faith and to provide for an orderly determination of
parentage and security for the children of the relationship, it is the
policy of this state to preserve and uphold each marriage against claims
of invalidity unless a strong reason exists for holding the marriage void
or voidable
Id. § 1.101. Therefore, every marriage is presumed to be valid “unless expressly
made voidable by Chapter 6 and annulled as provided by that chapter.” Id. The
parties’ “cooperative law agreement” directly contravenes the policy set out in
section 1.101 and the plain language of the statute by providing a private alternative
to statutorily recognized means for dissolving marriages under Texas law.
The comparison between the “cooperative law agreement” in this case and
Texas’s collaborative law statute shows exactly why the statutory safeguards of
24
section 6.603 were meticulously put in place by the Texas Legislature for parties
wishing to engage in collaborative settlement negotiations pertaining to the
dissolution of a marriage. Assuming that Gary did not make the “full and candid
exchange of information” that Mary Lynn contends he did not make, Mary Lynn
now finds herself bound to an agreement to settle through binding arbitration,
whereas under Texas’s collaborative law statute she could withdraw from the
collaborative law agreement at any time. She is bound to this without having
received the notice of a “prominently displayed statement that is boldfaced,
capitalized, or underlined, that the agreement is not subject to revocation” required
for binding a party to a settlement agreement reached pursuant to section
6.603(d)(1). Id. § 6.603(d)(1). She is denied the protection of having the trial
court put on notice of the “cooperative” negotiations with their full disclosure and
joint naming of experts. And she is denied the protections of the provisions in the
collaborative law statute that the parties notify the court in which the dissolution of
marriage is pending if the collaborative law procedures result in settlement or file a
status report if they do not. Id. § 6.603(f). She is also denied the right to have the
suit set for trial by the trial court or dismissed without prejudice should the
collaborative law procedures not result in a settlement on or before the second
anniversary of the date the suit was filed. Id. § 6.603(g).
Finally, Mary is required to face Gary’s counsel in the binding arbitration
25
provided for by the cooperative law agreement to which she is consigned, whereas,
under the collaborative law statute and its statement of purpose, collaborative law
counsel are expressly required to withdraw if the collaborative law procedure does
not result in settlement of the dispute. Id. § 6.603(c)(4). Not only does the
“cooperative law agreement” violate the collaborative law statute in each of the
ways set out above, but also the overall picking and choosing among the provisions
of the collaborative law statute shows the clear intent of the drafters of the
Agreement to avoid the protections of law prescribed by section 6.603.
To count the parties’ cooperative law agreement as valid and enforceable is
thus to deny all meaning to section 1.101 of the Family Code, setting out the express
public policy of Texas with regard to marriage. Indeed, to enforce such a private
agreement is to permit a party who has not negotiated in good faith and who has
failed to perform his obligations under the agreement, while benefitting from good
faith participation in informal discovery and negotiation by the opposing party, to
hold the party performing in good faith to binding arbitration while the violator
continues to use the same counsel but exposes to the other party only that
information he or she is required by arbitration procedures to share, flouting the
provisions of the collaborative law statute, depriving the opposing party of its
protections and of access to the courts, and potentially calling into question the
compliance of the attorney who continues representation of a party in arbitration
26
after the failure of the “cooperative law” proceedings with the provisions of Rules
1.06 and 1.07 of the Texas Disciplinary Rules of Professional Conduct, governing
conflicts of interest.
See TEX. DISCIPLINARY R. PROF’L CONDUCT 1.06, 1.07,
reprinted in TEX. GOV’T. CODE ANN., tit. 2, subtit. G app. A (Vernon 2005).
Because Texas expresses its public policy through its statutes, and the Texas
Legislature has expressly stated its policy regarding the dissolution of marriage in
section 1.101 of the Family Code; because it has expressly permitted the dissolution
of a marriage using collaborative law procedures in section 6.603 of the Code,
setting out mandatory provisions for the protection of parties to such agreements;
because the dissolution of marriage through “cooperative law agreements,” such as
the Agreement between the parties in this case, is not expressly provided for in
Chapter 6; and because that Agreement systematically strips the protections of
Chapter 6 from the parties to it, I would hold that the Cooperative Law Dispute
Agreement in this case is injurious to the public good and that it is, therefore, void
and unenforceable as against public policy.
Disqualification of Cooperative Law Counsel as Arbitration Counsel
Mary next argues that Keen, Gary’s collaborative law attorney, must be
disqualified from further participation in the dissolution of marriage proceedings
because Keen’s continued representation of Gary violates the Texas collaborative
law statute and Texas public policy. I agree.
27
Courts are required to adhere to an exacting standard when considering
motions to disqualify counsel in order to discourage the use of such motions as a
dilatory trial tactic. Spears v. Fourth Court of Appeals, 797 S.W.2d 654, 656 (Tex.
1990); In re Seven-O Corp., 289 S.W.3d 384, 388 (Tex. App.—Waco 2009, orig.
proceeding). The burden is on the movant to establish with specificity a violation,
in most cases a violation of one or more disciplinary rules. See Spears, 797 S.W.2d
at 656.
However, the disciplinary rules are only guidelines, not controlling
standards for attorney disqualification. In re Seven-O Corp., 289 S.W. 3d at 388.
Here, Keen was Gary’s “cooperative law” counsel and, in that capacity,
received all of the information from Mary that she would have received had the
parties proceeded properly under the applicable collaborative law statute, section
6.603 of the Family Code. The Legislature’s analysis of the purpose of the statute
expressly contemplates that, in a collaborative law setting, “The parties agree to a
full exchange of records and to jointly hire experts. If a settlement is not reached,
the attorneys must withdraw and the parties then employ trial counsel.” House
Comm. on Civil Practices, Bill Analysis, Tex. H.B. 1363, 77th Leg., R.S. (2001).
The bill’s analysis further states that the “collaborative law procedure (procedure) is
a specified process, conducted under written agreement of the parties and their
counsel, to reach a settlement agreement with minimal judicial intervention in a
dissolution of marriage dispute or a suit affecting the parent-child relationship” and
28
that “[t]he bill sets forth provisions for what the agreement must include.” Id. The
express language of section 6.603 mandates, inter alia, “full and candid exchange of
information between the parties and their attorneys [and] withdrawal of all counsel
involved in the collaborative law procedure if the . . . procedure does not result in
settlement of the dispute . . . .” TEX. FAM. CODE ANN. § 6.603(c) (emphasis added).
By continuing as Gary’s counsel in binding arbitration proceedings, rather
than withdrawing, Gary’s counsel clearly contravenes the stated policy of the State
of Texas regarding attorneys who participate in informal marriage dissolution
negotiations.
See id. § 6.603(b) (expressly prohibiting counsel who has
participated in collaborative law procedure from “serv[ing] as litigation counsel
except to ask the court to approve the settlement agreement”), 6.603(c) (requiring
collaborative law agreements to include provision for “withdrawal of all counsel
involved in the collaborative law procedure if the collaborative law procedure does
not result in settlement of the dispute”).
The reasons for this policy seem clear. The collaborative law statute and the
parties’ “cooperative law agreement” both expressly contemplate “the full and
candid exchange of information between the parties and their attorneys.” If parties
abide by these statutory and contractual provisions, it is at least arguable that they
will produce information to the opposing party that ordinarily would be protected by
the attorney client privilege. If that same counsel continues to represent the same
29
client in arbitration proceedings, he will then have waived a privilege his client
might otherwise be able to assert. If he has not made full and fair disclosure, he
may well have violated the provisions of the “cooperative law” agreement. The
different roles of the attorney representing parties in settlement negotiations based
on “full and candid” disclosure of information and of the attorney representing his
client in court set up the potential for a conflict of interest or waiver of the client’s
privilege. See TEX. DISCIPLINARY R. PROF’L CONDUCT 1.06, 1.07. 4
I recognize that it is not inevitable that representation of a client in
“cooperative law” or collaborative law proceedings followed by representation of
that same client in litigation, or, as here, in subsequent binding arbitration, would
lead to the conflicts of interest contemplated by Rules 1.06 and 1.07 of the Rules of
Disciplinary Conduct. However, it is reasonable to infer that it is precisely to avoid
the potential for such conflicts of interest arising upon the failure of settlement
negotiations between opposing parties in the informal full disclosure setting of
collaborative law proceedings that Texas’s collaborative law statute expressly
4
Rule 1.06 is the general rule on attorney conflicts of interest. It provides
that, within limitations, a lawyer shall not represent “opposing parties to the same
litigation” or any person if representation of that person “involves a substantially
related matter in which that person’s interests are materially and directly adverse to
the interest of another client” or “reasonably appears to be or become adversely
limited by the lawyer’s . . . responsibilities to another client or to a third person. . . .”
TEX. DISCIPLINARY R. PROF’L CONDUCT 1.06(a), (b), reprinted in TEX. GOV’T.
CODE ANN., tit. 2, subtit. G app. A (Vernon 2005).
Rule 1.07 addresses conflicts of interest when an attorney acts as an
intermediary. TEX. DISCIPLINARY R. PROF’L CONDUCT 1.07(a).
30
mandates that counsel in the collaborative law negotiations withdraw upon the
failure of those negotiations.
I would hold that Keen is disqualified from representing Gary in on-going
dissolution of marriage proceedings under the express public policy of the State of
Texas.
Submission of Dispute to Arbitration under the Cooperative Law Agreement
Mary also argues that the trial court clearly abused its discretion by requiring
her to proceed to arbitration under an alternative dispute resolution agreement that
fails to comply with Texas statutory law and is against public policy.
A party attempting to compel arbitration must first establish that the dispute in
question falls within the scope of a valid arbitration agreement. J.M. Davidson, Inc.
v. Webster, 128 S.W.3d 223, 227 (Tex. 2003). If the other party resists arbitration,
the court must determine whether a valid arbitration agreement exists. Id. If the
court finds that the claim falls within the scope of a valid arbitration agreement, the
court has no discretion but to compel arbitration. Forest Oil Corp., 268 S.W.3d 51,
56 (Tex. 2008).
While defenses attacking the validity of a contract as a whole and not
specifically aimed at the agreement to arbitrate are for the arbitrator rather than the
court, the presumption favoring arbitration arises only after the party seeking to
compel arbitration proves that a valid arbitration agreement exists. In re Morgan
31
Stanley & Co., 293 S.W.3d 182, 185 (Tex. 2009) (orig. proceeding). “[W]here the
‘very existence of a contract’ containing the relevant arbitration agreement is called
into question, the . . . courts have authority and responsibility to decide the matter.”
In re Morgan Stanley, 293 S.W.3d at 187 (quoting Banc One Acceptance Corp. v.
Hill, 367 F.3d 426, 429 (5th Cir. 2004)). Any claim that necessarily calls the
existence of an agreement to arbitrate into question is a question for the court. Id. at
190.
In determining whether a valid agreement to arbitrate exists, courts generally
apply ordinary state-law principles that govern the formation of contracts. In re D.
Wilson Const. Co, 196 S.W.3d 774, 781 (Tex. 2006); J.M. Davidson, 128 S.W.3d at
227–28; see also First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 944, 115 S.
Ct. 1920, 1924 (1995). Under Texas law, as with any contract, agreements to
arbitrate are valid unless grounds exist at law or in equity for revocation of the
agreement. In re Poly-America, L.P., 262 S.W.3d 337, 348 (Tex. 2008). “The
burden of proving such a ground—such as fraud, unconscionability or voidness
under public policy—falls on the party opposing the contract.” Id. A trial court’s
determination regarding the validity of an arbitration agreement is a legal question
subject to de novo review. Forest Oil Corp., 268 S.W.3d at 55 & n.9; J.M.
Davidson, 128 S.W.3d at 227.
Here, Chapter 6 of the Family Code provides that a court shall “refer a suit for
32
dissolution of marriage to arbitration” upon the “written agreement of the parties.”
TEX. FAM. CODE ANN. § 6.601 (Vernon 2006). The provision presumes, however,
that the parties’ agreement is a valid agreement to arbitrate under Texas law. The
arbitration provision in the Agreement is clearly expressed to be the end result of the
“cooperative law” process in the event the parties do not reach a settlement, rather
than a separate agreement to arbitrate as provided for in Family Code section 6.601.
See id. § 6.601.
By providing for binding arbitration in advance of collaborative settlement
negotiations should those negotiations fail and by failing to permit voluntary
withdrawal from the “cooperative law agreement,” the Agreement directly
contravenes intent of the Legislature that such proceedings shall be voluntary and
withdrawal shall be permitted at any time.
The final House Bill Analysis’s
statement of purpose expressly states, “The collaborative law process offers parties
the option to negotiate in good faith for an out-of-court settlement. The process is
entirely voluntary and participation may be terminated at any time.” House Comm.
on Civil Practices, Bill Analysis, Tex. H.B. 1363, 77th Leg., R.S. (2001).
The arbitration clause also contravenes subsection 6.603(f) of the
collaborative law statute, which requires that in the event collaborative law
procedures do not result in a settlement, “the parties shall file . . . a status report with
the court not later than the 180th day after the date of the written agreement to use
33
the procedures . . . .” TEX. FAM. CODE ANN. § 6.603(f)(1). The clause also
contravenes subsection 6.603(g), which requires that if the collaborative law
procedures do not result in settlement by the second anniversary of the date suit was
filed, the court may set the suit for trial on the regular docket or dismiss it. Id.
§ 6.603(g).
Finally, the collaborative law statute provides that the parties’ counsel may
not participate in litigation except to seek court approval of any settlement
agreement and must withdraw if the proceedings fail.
Id. § 6.603(b), (c)(4).
Necessarily, counsel who have participated in informal collaborative settlement
negotiations may not appear in court and request an order sending the parties to
binding arbitration, much less binding arbitration in which the same counsel will
continue to represent the parties following failure of the settlement negotiations.
The parties’ “cooperative law agreement” intentionally avoids the provisions
for court supervision of settlement negotiations and denies recourse to the courts to a
party to the Agreement if the other party fails to participate in the negotiations in
good faith, sending them to binding arbitration instead. In addition, the arbitration
provision is intended to apply even if, as here, one of the parties continues to be
represented by the same counsel who represented that party in the settlement
negotiations, contravening the letter and intent of the public policy of Texas as stated
in sections 1.101 and 6.603 of the Family Code.
34
Thus, even if I had not concluded that the entire Agreement was void, I would
hold that the inclusion of an arbitration provision in the parties “cooperative law
agreement” violates the letter and the spirit of sections 1.101 and 6.603 of the Family
Code and that the provision is void an unenforceable as against the public policy of
the State of Texas. 5 See In re Poly-America, 262 S.W.3d at 348 (holding that
agreements to arbitrate are valid unless grounds exist at law or in equity for
revocation, including “voidness under public policy”).
Conclusion
For all the foregoing reasons, I cannot agree with the majority’s conclusion
that a private marriage dissolution contract not authorized by Chapter 6 of the
Family Code is valid and enforceable, the necessary implication being that parties
who do not wish to follow Texas’s statutory provisions for dissolving a marriage do
not have to do so, a holding that contradicts both the plain language and the intent of
section 1.101 of the Family Code regarding the public policy of the State of Texas
with respect to marriage.
Nor do I agree with the notion that parties may
inextricably intertwine valid procedures for voiding a marriage, such as arbitration
clauses, into illegal marriage dissolution contracts, validating the illegal provisions
5
Because I would hold that the arbitration agreement is void, I would also hold that
Mary=s fourth issue, contending that even if formerly enforceable, the arbitration
agreement is no longer enforceable, is moot.
35
or avoiding their taint.
I would hold that the public policy of the State of Texas as expressed in
sections 1.101, 6.601, and 6.603 of the Family Code clearly prohibits Texas state
courts from recognizing as a valid method for dissolving a marriage a private
agreement that Chapter 6 of the Family Code does not recognize as a means of
making a marriage void, and that it prohibits intertwining statutorily valid and
invalid procedures regarding the dissolution of marriage to avoid the protections of
law.
I would hold that both the parties’ Cooperative Law Dispute Resolution
Agreement and the arbitration provisions integral to it are contrary to the public
policy of the State and void. I would further hold that the trial court abused its
discretion by enforcing the parties’ Cooperative Dispute Resolution Agreement, by
denying Mary’s motions to disqualify Keen as counsel in the divorce proceedings,
and by ordering Mary to arbitrate her claims as provided in the Agreement.
36
I would provisionally grant the petition for writ of mandamus. I would,
therefore, remand the case to the trial court for further proceedings consistent with
this opinion and with sections 1.101 and 6.603 of the Family Code.
Evelyn V. Keyes
Justice
Panel consists of Justices Keyes, Hanks, and Higley.
Justice Keyes, dissenting.
37
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