Padilla v. LaFrance
| Citation | 875 S.W.2d 730 |
| Decision Date | 07 April 1994 |
| Docket Number | No. B14-93-00134-CV,B14-93-00134-CV |
| Parties | Enrique PADILLA, Appellant, v. Ernest J. LaFRANCE, Individually and as Representative of the Estate of Ruth LaFrance, Madeleine LaFrance, Individually and as Next Friend of Michelle LaFrance, Marlene Luther and Marilyn Koenig, Appellees. (14th Dist.) |
| Court | Court of Appeals of Texas |
Arthur M. Glover, Jr., Ronald P. Schramm, James B. Lewis, Houston, for appellant.
Jeffrey Steidley, D. Craig Olivier, Jeffrey W. Hitt, Richard P. Hogan, Jr., Houston, for appellees.
Before MURPHY, SEARS and DRAUGHN, JJ.
MAJORITY OPINION
This appeal involves the question of whether a settlement agreement, pursuant to pending litigation, is enforceable under contract law when it does not comply with the requirements of TEX.R.CIV.P. 11. Under the facts of this case, we hold that it cannot be enforced as a contract.
Appellees sued appellant and others for personal injuries sustained in an automobile accident. Appellant was driving a pick-up truck while intoxicated and crossed the center line of the road striking the car containing the LaFrance family. Ruth LaFrance was killed, Ernest LaFrance was seriously injured, and Michelle LaFrance, an attorney, sustained a severe head injury and is severely and permanently brain damaged. She is currently in a permanent vegetative state. The LaFrance family sued appellant, and others, and appellant is the only defendant in this appeal. The attorneys for appellant and the appellees entered into settlement negotiations, and they hotly dispute whether a settlement agreement was consummated.
Appellant was insured by State Farm Mutual Automobile Insurance Company, and his claim was handled by their adjuster, Phil Bradshaw. State Farm retained attorney Brian Chandler to defend the original lawsuit. During the pendency of the lawsuit, a series of letters and memoranda were exchanged between Bradshaw and/or Chandler and appellees' attorney, Jeffrey Steidley, regarding possible settlement of appellees' claim for the policy limit of $40,000.00.
On April 10, 1991, Steidley sent an "offer of settlement" to Chandler which stated in pertinent parts as follows:
At this time we make demand the for [sic] policy limits of $40,000.00 for full and final settlement of this case against the insured that you represent. Payment of this sum should be made on or before Tuesday, April 23, 1991 at 5:00 p.m., by delivery of checks in the appropriate amounts to the offices of the undersigned made payable in the following amounts and to the following payees:
One check in the amount of $20,000.00 to Madeleine LaFrance as next friend of Michelle LaFrance and Oliver N. Steidley.
One check in the amount of $20,000.00 made payable to Ernest J. LaFrance, Marlene Luther, Marilyn Koenig, Madeleine LaFrance and Oliver N. Steidley, their attorneys of record.
* * * * * *
Please be advised that although I will be more than happy to discuss this case with you or any of your representatives, no oral discussion that we may have will serve to alter the time limits expressed in the correspondence. I look forward to receipt of the checks on or before date specified, failing which this offer to settle will be withdrawn and my clients will proceed to perfect their rights under Texas law.... (emphasis in original).
As the insurance adjuster, Bradshaw contacted Steidley regarding the settlement offer, and requested documentation from him, including a death certificate of Ruth LaFrance and information regarding her estate. On April 15, 1991, Steidley sent a letter to Bradshaw which allowed an alteration of the payee on one of the checks. Bradshaw contends that he informed one of Steidley's employees that there was a medical lien still outstanding that needed to be resolved before the parties could settle. In the late afternoon of April 23, 1991, which was the deadline set by Steidley, Bradshaw faxed a memorandum to Steidley which read in full:
This will confirm our settlement agreement of 4/18/91, whereby State Farm agreed to meet the policy limit demand set out in your letter of 4/10/91. The only thing holding up resolution of this is the hospital lien re: Michelle. I await word from you regarding the lien so I know to whom to make drafts payable.
Steidley responded the same day with the following:
This letter will confirm that the above referenced matter has been settled for all applicable policy limits, which have been represented to us to be $40,000.00. Please forward settlement checks in the above referenced matter. This office will agreed [sic] to take care of the lien filed by [the hospital] out of the settlement funds forwared [sic] by your office.
Bradshaw claims he did not see the response letter until he returned to his office the following day, April 24, 1991. On April 30, 1991, Chandler apparently requested an extension of time from Steidley and Steidley refused to extend the offer. On that same day, Chandler tendered two checks to the appellant along with another settlement agreement. Steidley refused to accept the checks or to sign the agreement. Chandler subsequently sent a copy of Steidley's April 23rd letter to the district clerk's office, requesting that the letter be filed with the papers of the cause.
Appellant subsequently filed a cross-action in the original lawsuit, contending that the parties had entered into a contract and he sued for enforcement of the contract. Appellant filed a motion for summary judgment wherein he contends the settlement agreement was a contract, complete with offer, acceptance, and consideration. Appellees responded by answering the cross-action and moving for a severance of that action. Appellees also filed a motion for summary judgment based on the cross-action, contending it failed to comply with the requirements of Rule 11, and, that no contract existed as a matter of law.
The trial court granted appellees' motion for summary judgment on the grounds that there was a lack of consideration to support a contract, and, that there was no legally enforceable Rule 11 agreement as a matter of law. The trial court also denied appellant's motion for summary judgment on the grounds that there was a fact issue concerning performance of the contract, there was insufficient consideration for the contract, and, that as a matter of law the contract was not legally sufficient under Rule 11.
In six points of error, appellant contends that the trial court erred in granting appellees' motion for summary judgment and in denying his motion. He contends there is a fact issue as to whether the settlement agreement is enforceable based on contract principles. Appellees bring six cross-points of error in which they challenge this court's jurisdiction, contending that the transcript was not timely filed. This court previously found that appellant's motion for reconsideration in the trial court was the equivalent of a motion for new trial, that the appellant time table was extended, and that the transcript was timely filed. All of appellees' cross-points are overruled.
Because all of appellant's points of error deal with his belief that the settlement agreement is enforceable as a contract, we will deal with all the points of error at one time.
The basic statement of law upon which appellant relies is: "The law of contracts governs settlement agreements." In support of this broad statement of the law, appellant cites several cases. Cothron Aviation, Inc. v. Avco Corp., 843 S.W.2d 260, 263 (Tex.App.--Ft. Worth 1993, writ denied); Ortega-Carter v. American International Adjustment Company, 834 S.W.2d 439, 442 (Tex.App.--Dallas 1992, writ denied); Stewart v. Mathes, 528 S.W.2d 116, 118 (Tex.Civ.App.--Beaumont 1975, no writ); Massey v. Galvan, 822 S.W.2d 309, 318 (Tex.App.--Houston [14th Dist.] 1992, writ denied). A discussion of these cases is important to show that appellant's reliance is misplaced.
In Cothron, the court held: "Because there is a genuine issue of material fact as to the formation of a contract, we do not determine whether the procedural requirements of Rule 11 were met or whether equity demands enforcement even if the procedural requirements of Rule 11 were not met." Cothron, 843 S.W.2d at 265. The court reversed the trial court's granting of a summary judgment based solely on the existence of "a genuine issue of material fact as to whether the parties entered into a settlement agreement." Id. Even though the court was not dealing with this issue, it stated in dicta: "This is because settlement agreements are governed by contract law." Id. at 263. This is the statement of law which is relied on by the appellant. However, the authority for that statement was Adams v. Petrade International, 754 S.W.2d 696, 715 (Tex.App.--Houston [1st Dist.] 1988, writ denied).
A reading of Adams reveals that the settlement agreement involved in the Adams case was entered into prior to litigation. Further, in discussing Rule 11, that court held: "... and an oral settlement agreement made prior to the initiation of litigation is not subject to its provisions." (emphasis added). Adams, 754 S.W.2d at 715. Clearly the settlement agreement in Adams was controlled by contract law because it was entered into prior to litigation, and Rule 11 does not apply to pre-litigation agreements. The Cothron Aviation opinion also relied on Hernandez v. Telles, 663 S.W.2d 91, 93 (Tex.App.--El Paso 1983, no writ). Like the Adams case, the Hernandez case involved an agreement entered into prior to litigation. The parties had a contract of sale which they later renegotiated into a second contract and the first contract was effectively cancelled. Subsequently, when suit was brought on the first contract, the existence of the second "agreement" was established by contract law. Again, Rule 11 did not apply.
The second opinion relied upon by the appellants is the Ortega-Carter case. In that case, a summary judgment based...
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