Xavier Cantu, M.D. v. Mercy Health Center--Appeal from 341st Judicial District Court of Webb County

MEMORANDUM OPINION

No. 04-06-00010-CV

Xavier CANTU, M.D.,

Appellant
v.
MERCY HEALTH CENTER,

Appellee
From the 341st Judicial District Court, Webb County, Texas

Trial Court No. 2003-CVF-000668D3

Honorable Elma Teresa Salinas, Judge Presiding

Opinion by: Sandee Bryan Marion, Justice

Sitting: Sandee Bryan Marion , Justice

Phylis J. Speedlin , Justice

Rebecca Simmons , Justice

Delivered and Filed: November 1, 2006

REVERSED AND REMANDED

In the underlying lawsuit, appellee sued appellant on a sworn account and for breach of contract and quantum meruit. On the day of trial, the parties announced they had reached a settlement. This is an appeal from the trial court's entry of a final judgment that purports to effectuate the settlement. We reverse and remand for further proceedings.

JURISDICTION

As a preliminary matter, appellee asserts appellant did not timely file a motion for new trial, therefore, his notice of appeal was also untimely, thereby depriving this court of jurisdiction. Appellant's motion for new trial was due prior to or within thirty days after the judgment was signed. See Tex. R. Civ. P. 329b(a). The trial court signed its judgment on October 4, 2005, and appellee argues this date is considered "day one" for the purpose of calculating thirty days, therefore, appellant's notice of appeal was due on November 2, 2005. We disagree. The Texas Rules of Civil Procedure provide that "the act, event, or default after which the designated period of time begins to run is not to be included." See Tex. R. Civ. P. 4. Accordingly, appellant's motion for new trial was due on November 3, 2005. Appellant filed his motion for new trial on November 3, 2005. Because the motion for new trial was timely filed, appellant's notice of appeal was due to be filed on January 23, 2006. See Tex. R. App. P. 26.1(a)(1). Appellant timely filed his notice of appeal on November 3, 2005. Therefore, this court has jurisdiction to consider the appeal.

THE SETTLEMENT AGREEMENT

On June 15, 2004, the day of trial, the parties announced a settlement, the following terms of which were dictated into the record:

Appellee's attorney: Your honor, we have agreed to accept $5,200 as complete and final payment settlement of all accounts due and owing by Dr. Cantu to Mercy Health Center. We have agreed, Your Honor, to leave the case pending. We have given him six months to pay that amount. As soon as the amount is paid in full, whether it be before then or within six months, we will be filing a nonsuit and dismissal with the Court. We've also agreed that upon complete payment Mercy Health Center will notify any of the credit companies that have been notified of these debts that they have been settled in full.

Appellant's attorney: ... the terms of the settlement agreement will be ... reduced to writing and put in a compromising settlement agreement.

Appellee's attorney: ... [the] agreement will be held by the parties only and will not be filed with the Court unless we get to the point where payment isn't made and six months have passed.

The court did not approve the settlement agreement, but concluded the hearing by stating, "All right." Approximately sixteen months later, the court, on its own motion, scheduled a hearing, at the conclusion of which it signed a judgment which stated that appellant and appellee "agreed to entry of a final Judgment" and that appellant "hereby agrees to this judgment against [him], for all amounts provided for in this Agreed Judgment." The court granted appellee judgment against appellant "in the amount of $5,200.00 ... [and awarded appellee] prejudgment interest at 6% and post judgment interest at 10%." This appeal ensued.

On appeal, appellant asserts the settlement announced at trial was not an enforceable agreement because it did not state the consequences of his failure to pay in accordance with the terms of the agreement. Appellant also asserts that the parties did not agree to entry of a judgment against him, nor did any party waive the right to present defenses or claims in the event the conditions of the agreement were not satisfied or the parties failed to finalize the terms of the agreement. Finally, appellant contends the parties agreed to reduce the agreement to writing, which did not occur. Alternatively, appellant asserts that, even if the terms announced in court were sufficient to create an enforceable settlement agreement, he did not consent to the judgment on the date it was rendered, and the judgment should be reversed because it does not conform with the terms of the agreement.

ENFORCEABILITY OF AGREEMENT

A settlement agreement must comply with Texas Rule of Civil Procedure 11 to be enforceable. See Padilla v. LaFrance, 907 S.W.2d 454, 460 (Tex. 1995). Rule 11 states that "[u]nless otherwise provided in these rules, 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. R. Civ. P. 11. "The law does not require the parties to dictate and agree to all of the provisions to be contained in all of the documents necessary to effectuate the purposes of the agreement; it only requires the parties to reach an agreement as to all material terms of the agreement and prevents the trial court from supplying additional terms to which the parties have not agreed." McLendon v. McLendon, 847 S.W.2d 601, 606 (Tex. App.--Dallas 1992, writ denied). Whether a Rule 11 agreement fails for lack of an essential term is a question of law. DaimlerChrysler Corp. v. Brannon, 67 S.W.3d 294, 298 (Tex. App.--Texarkana 2001, no pet.).

Appellant argues that because an essential term - what happens if he fails to pay within the time prescribed - is missing, the agreement is unenforceable. We disagree. The settlement agreement contained all the material terms of the agreement: appellant agreed to pay $5,200 to appellee within six months; appellee agreed to accept $5,200 as complete and final settlement of all accounts due and owing by appellant; the suit would remain pending, to be dismissed upon full payment; and, upon full payment, appellee agreed to notify the appropriate credit companies that the debt had been settled in full. We conclude the record reflects the essential terms with sufficient detail to determine the obligations of the parties. See Padilla, 907 S.W.2d at 460-61 (finding complete agreement where terms included agreement to pay in exchange for settlement); CherCo Prop., Inc. v. Law, Snakard & Gambill, P.C., 985 S.W.2d 262, 266 (Tex. App.--Fort Worth 1999, no pet.) (holding agreement specifying terms of payment in exchange for releases contained all material terms). Appellant also argues that the settlement agreement was contingent upon the parties reducing the oral pronouncement to writing. Again, we disagree. There is no indication in the record that the parties contemplated that their agreement would not be binding until it was reduced to writing. Attempts by the parties to reduce the Rule 11 agreement to writing do not affect the nature and effect of the stipulations read into the record at the June 2004 hearing. See McLendon, 847 S.W.2d at 606-07 (holding same). Accordingly, the parties entered into a valid Rule 11 agreement.

CONSENT TO JUDGMENT

Having determined the parties entered into a valid settlement agreement, we must next determine whether the trial court erred in signing the judgment. Appellant argues that even if "there is an enforceable settlement agreement among the parties, there was no consent to the judgment at the time the judgment was rendered." Appellee asserts that because "the agreement of the parties satisfies Rule 11...., it can be enforced by the trial court after proper notice and hearing."

"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 complying with Rule 11 even though one side no longer consents to the settlement. The judgment in the latter case is not an agreed judgment, but rather is a judgment enforcing a binding contract." Padilla, 907 S.W.2d at 461. Here, appellee did not move to enforce the settlement agreement. See Mantas v. Fifth Court of Appeals, 925 S.W.2d 656, 658 (Tex. 1996) (orig. proceeding) (holding that proper way to enforce settlement agreement is through breach-of-contract suit, subject to normal rules of pleading and proof). Instead, the court on its own motion set a hearing for entry of judgment, and, following the hearing, signed the judgment. Accordingly, we must determine if consent existed at the time of the October 4, 2005 hearing.

"[N]otwithstanding a valid Rule 11 agreement, consent must exist at the time an agreed judgment is rendered." Kennedy v. Hyde, 682 S.W.2d 525, 528 (Tex. 1984); Leal v. Cortez, 569 S.W.2d 536, 541 (Tex. Civ. App.--Corpus Christi 1978, no writ). A trial court should not enter an agreed judgment if it possesses information that would reasonably prompt further inquiry, and such inquiry, if pursued, would disclose a lack of consent. Burnaman v. Heaton, 150 Tex. 333, 339, 240 S.W.2d 288, 291 (Tex. 1951); Gregory v. White, 604 S.W.2d 402, 403 (Tex. Civ. App.--San Antonio 1980, writ ref'd n.r.e). Where the trial court makes a Rule 11 agreement the judgment of the court, but consent is lacking in the case, the judgment of the trial court must be reversed and the cause remanded for a new trial. Leal, 569 S.W.2d at 541.

At the October 4 hearing on entry of judgment, appellant's counsel stated he had only $3,000 to pay appellee because an IRS tax levy had frozen appellant's accounts. Counsel stated,

He's not able to pay anything. I can do that you know. She [appellee's attorney] can get her judgment or whatever and I can get a - a - a- when I say get a judgment, I can give them the $3,000 today, Your Honor. Otherwise, you know, I'm going to ask the Court, given the change and [sic] circumstances, to give me a new trial. Let me go ahead and put on - let my guy tell his side of the story because essentially, Your Honor, the fact of the matter is we - we reached this accord during the pendency of the plaintiff's case in chief. And defendant hasn't had the opportunity to put on his side of the story and prove up his affirmative defenses.

The court asked, "But there was a settlement agreement?" and appellant's counsel responded, "That is correct, Your Honor." The court then stated it would sign the judgment and the parties would "have every opportunity to negotiate about how to ... set it aside or settle and have it released."

We recognize the trial court may have received a mixed message from appellant's counsel, who, on one hand, said there was a settlement agreement, but on the other hand, said his client wanted a new trial "to tell his side of the story...." Nevertheless, we conclude, from this record, that the trial court possessed information that appellant no longer consented to entry of the judgment against him. Also, at neither the June 14, 2004 hearing nor at the entry of judgment hearing, did either party discuss or consent to an award of interest in the judgment. Therefore, appellant did not consent to entry of the judgment at the time it was rendered, and the trial court erred in rendering an agreed judgment.

CONCLUSION

For the reasons stated above, we reverse the trial court's judgment and remand for further proceedings. (1)

Sandee Bryan Marion, Justice

1. Because our disposition of appellant's complaint that he did not consent to entry of the judgment is dispositive, we do not address the merits of appellant's complaint that the judgment should be reversed because it does not conform with the terms of the agreement. See Tex. R. App. P. 47.1.