In re Vaishangi, Inc.

• Decision Date: 06 June 2014
• Docket Number: No. 13–0169.,13–0169.
• Parties: In re VAISHANGI, INC., et al., Relators.
• Court: Texas Supreme Court

442 S.W.3d 256

In re VAISHANGI, INC., et al., Relators.

No. 13–0169.

Supreme Court of Texas.

June 6, 2014.

Brandon Seth Payne, Leyh & Payne LLP, Robert J. Adam, Adam & Bing, PC, Sean Michael Reagan, Steven A. Leyh, Leyh Payne & Mallia PLLC, Houston, TX, for Real Party in Interest.

John Risley, Attorney at Law, Houston, Khavischal Anand Tiwari, Paul Foley, III, Tiwari+ Bell, PLLC, Helotes, Kurt Howard Kuhn, Lisa Bowlin Hobbs, Kuhn Hobbs PLLC, Austin, Robert Hindman, Attorney-at-Law, Tyler, TX, for Relator.

Justice BROWN did not participate in the decision.

Opinion

PER CURIAM.

In this mandamus proceeding, we must decide whether the trial court had jurisdiction to enforce a Rule 11 agreement when the defendant filed a motion to enforce almost one year after the case had been dismissed. We hold that the Rule 11 agreement was not an agreed judgment. Because the trial court's plenary power expired thirty days after the dismissal order, the court lacked power to enforce the agreement. We conditionally grant relief.

The relators, Vaishangi, Inc., Shivangi, Inc., Meena Patel, and Vinayak K. Patel (collectively, Vaishangi), entered into a commercial real estate lien note and related security instruments with Southwestern National Bank to finance a hotel. After disagreement regarding the note, the Bank accelerated the note and began proceedings to foreclose on the hotel property. In response, Vaishangi filed suit for breach of contract and wrongful foreclosure in Harris County. The parties reached a settlement, memorialized in a handwritten Rule 11 agreement,¹ which the parties and the trial court signed. The agreement provided that Vaishangi “agree[d] to execute” a referenced loan-modification agreement. The Bank filed the Rule 11 agreement with the trial court that same day and attached an unsigned loan-modification agreement. The parties disagree whether Vaishangi had an opportunity to review and approve the referenced loan-modification agreement before the Bank filed the Rule 11 agreement with the court.

Four days later, the trial court signed an agreed order dismissing all claims. The order of dismissal did not incorporate the entire Rule 11 agreement. The parties soon disagreed on the principal amount remaining on the note and the terms of the settlement, ultimately resulting in the Bank's foreclosure of the hotel property. Vaishangi filed suit in Bexar County for wrongful foreclosure.

In response, the Bank filed a motion to transfer the case to Harris County, the venue of the previously dismissed lawsuit. The Bank also filed a “Motion to Enforce Settlement Agreement” in the Harris County lawsuit, which had been dismissed eleven months prior. Because Vaishangi had not yet executed the loan-modification agreement, the motion to enforce requested that the court order Vaishangi to pay damages, costs, and attorney's fees. Alternatively, the Bank requested that the court order Vaishangi to execute the loan-modification agreement. Vaishangi argued in response that the trial court had no jurisdiction to enforce the Rule 11 agreement because the trial court's plenary power expired thirty days after signing the dismissal order. Vaishangi also argued that a genuine issue of material fact existed regarding the balance owed under the modification agreement that should be resolved by trial.

Without hearing evidence, the Harris County court issued an order granting the Bank's motion to enforce the Rule 11 agreement, awarding the Bank damages and attorney's fees and ordering Vaishangi to execute the modification agreement. Vaishangi filed a petition for writ of mandamus with the Fourteenth Court of Appeals, seeking to set aside the trial court's enforcement order by contending that the trial court lacked jurisdiction. The court of appeals denied relief. 442 S.W.3d 430, 431, 2012 WL 7688167.

If the Rule 11 agreement is a final judgment, as the Bank argues, the trial court maintains continuing jurisdiction to enforce that judgment. See S 308 (providing for court enforcement of its judgments and decrees). If, however, the agreement is simply an interlocutory order, and the dismissal order signed four days later is the court's final judgment, as Vaishangi argues, the trial court was without jurisdiction to enforce the Rule 11 agreement because its plenary power had expired. See Tex.R. Civ. P. 329b(d) (providing that a trial court's plenary power runs for thirty days after judgment is signed).

Texas Rule of Civil Procedure 11 provides 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.R. Civ. P. 11. We have generally treated Rule 11 agreements as separate and distinct from agreed judgments entered thereon. See, e.g., Mantas v. Fifth Court of Appeals, 925 S.W.2d 656, 658 (Tex.1996) (per curiam) (discussing when a court can “render an agreed judgment on the settlement agreement”); Padilla v. LaFrance, 907 S.W.2d 454, 462 (Tex.1995) (“[T]he announcement of the agreement in open court and its notation on the docket cannot give it the force of a judgment.” (quoting Burnaman v. Heaton, 150 Tex. 333, 240 S.W.2d 288, 292 (1951) )); Kennedy v. Hyde, 682 S.W.2d 525, 528 (Tex.1984) (“[N]otwithstanding a valid Rule 11 agreement, consent must exist at the time an agreed judgment is rendered.”). But nothing in the rules of procedure prohibits a Rule 11 agreement from being, itself, an agreed judgment, so long as the agreement meets the requirements for a final judgment. A judgment is final “if and only if either it actually disposes of all claims and parties then before the court, regardless of its language, or it states with unmistakable clarity that it is a final judgment as to all claims and all parties.” Bison Bldg. Materials, Ltd. v. Aldridge, 422 S.W.3d 582, 585 (Tex.2012) (quoting Lehmann v. Har–Con Corp., 39 S.W.3d 191, 192–93 (Tex.2001) ); Able Cabling Servs., Inc. v. Aaron–Carter Elec., Inc., 16 S.W.3d 98, 100–01 (Tex.App.-Houston [1st Dist.] 2000, pet. denied). However, a trial court's “approval of a settlement does not necessarily constitute rendition of judgment,” because rendition of judgment requires a “present act” to “decide the issues.” S & A Rest. Corp. v. Leal, 892 S.W.2d 855, 857–58 (Tex.1995) (per curiam) (citing Reese v. Piperi, 534 S.W.2d 329, 330 (Tex.1976) ). When parties dictate a settlement agreement on the record (creating an enforceable agreement under Rule 11 ) and the trial court approves it on the record, such a settlement agreement does not constitute an agreed judgment unless “[t]he words used by the trial court ... clearly indicate the intent to render judgment at the time the words are expressed.” Id. at 858.

The Bank argues that fact issues regarding whether the Rule 11 agreement disposed of all claims and all parties preclude us from determining this issue in a mandamus proceeding. See, e.g., West v. Solito, 563 S.W.2d 240, 245 (Tex.1978) (“[A]n appellate court may not deal with disputed areas of fact in a mandamus proceeding.”). Although fact issues about the scope and terms of the Rule 11 agreement may remain, those issues do not prevent the Court from determining as a matter of law whether the Rule 11 agreement constitutes an agreed judgment. See Walker v. Packer, 827 S.W.2d 833, 840 (Tex.1992) (noting that this Court has the power to determine legal questions in a mandamus proceeding). Additionally, we are not precluded from deciding if the trial court exceeded its jurisdiction, as we need not resolve any fact issues to reach that determination. See In re Sw. Bell Tel. Co., 35 S.W.3d 602, 605 (Tex.2000) (per curiam) (“Mandamus is proper if a trial court issues an order beyond its jurisdiction.”); In re Ford Motor Co., 988 S.W.2d 714, 722 (Tex.1998) (refusing to grant mandamus where the resolution of fact disputes was essential to determining if mandamus relief was proper). The Bank's concerns go to the question of whether the parties agreed to dispose of all claims; the issue before the Court is whether the trial court intended to dispose of all claims and all parties through the entry of this agreement, thereby rendering final judgment, at that moment.

The Rule 11 agreement here provides that Vaishangi and the Bank agree to dismiss all claims. Additionally, the agreement states that “[a]ll parties agree that the Settlement Agreement at issue in this lawsuit dated May 27, 2010, is valid and enforceable.” Although the trial court signed the agreement, nowhere did the trial court indicate the “intent to render judgment at the time the words [were] expressed.” S & A Rest. Corp., 892 S.W.2d at 858. In fact, we note that the Rule 11 agreement contains no decretal language typically seen in a judgment (i.e., “ordered, adjudged, and decreed”), while the dismissal order repeatedly recites the decretal language of “ordered, adjudged, and decreed.” The signed agreement may be a binding and enforceable settlement as between the parties, but we cannot conclude that it is a judgment.

Additionally, if the Rule 11 agreement were a final judgment, the dismissal order would have been useless and unnecessary because a trial court can render only one judgment in a case, Tex.R. Civ. P. 301. Thus, the trial court here likely would...