Cadle Co. v. Castle

913 S.W.2d 627, 1995 Tex. App. LEXIS 2646, 1995 WL 632644

• Court: Court of Appeals of Texas
• Decided: October 24, 1995
• Docket: 05-94-00816-CV
• Status: Published

Opinions

OPINION

OVARD, Justice.

The Cadle Company (Cadle) appeals a judgment rendered on a written settlement agreement reached in an alternative dispute resolution procedure. In four points of error, Cadle contends the trial court erred in rendering judgment because the judgment: (1) is not supported by the pleadings; (2) is not supported by the evidence; (3) constitutes an improper consent judgment; and (4) does not conform to the written settlement agreement. For the following reasons, we reverse the trial court’s judgment and remand the cause to the trial court for further proceedings consistent with this opinion.

FACTUAL AND PROCEDURAL HISTORY

Frank Castle (Castle) executed a note payable to Deposit Insurance Bridge Bank. The promissory note was later transferred to Bank One, Texas, N.A. (Bank One). Castle subsequently defaulted on the note, and Bank One sued. In the fall of 1993, Cadle purchased the note from Bank One and filed a motion to realign the parties, substituting itself as plaintiff. Bank One remained a party to the suit as a result of a counterclaim filed by Cadle.

The trial judge ordered the parties to mediation pursuant to chapter 154 of the Texas Civil Practice and Remedies Code. See generally Tbx.Civ.PRAc. & Rem.Code Ann. §§ 154.001-154.073 (Vernon Supp.1995). On February 5, 1994, the parties attended a mediation conference and entered into a written settlement agreement. Under the terms of the agreement, Cadle would receive $2,500 from Castle and $12,500 from Bank One. However, the agreement was “subject to” approval by Bank One senior management personnel.

Four days later, Castle filed a “Motion to Enforce Settlement Agreement” with the court. Castle attached a copy of the written settlement agreement to the motion. In his motion, Castle contended, that although the agreement had been finalized and signed at the mediation conference, Cadle had subsequently withdrawn its consent to the written settlement agreement. Castle claimed the agreement was enforceable under section 154.071 of the civil practice and remedies code. See Tex.Cxv.PRAC. & Rem.Code Ann. § 154.071 (Vernon Supp.1995).

On February 11, 1994, Cadle filed a “Notice of Withdrawal of Consent to Settlement Agreement” with the court. Cadle also filed a response to Castle’s motion to enforce, contending that enforcement of the written settlement agreement would be improper.

On February 14, 1994, the trial judge conducted a hearing on Castle’s motion to enforce. Without hearing evidence, the trial judge concluded that the terms of the written settlement agreement should be “incorporated” into a final judgment. The judgment provided, in part, that:

the parties, having been referred to mediation by Order of this Court, did appear ... and reach the written agreement disposing of this cause ... the terms of that agreement are enforceable under Tex.Civ.PRAC. & Rem.Code Ann. § 154.071 (Supp.1994) and are hereby incorporated in this Final Decree disposing of this case.

The terms of the judgment provide for monetary payments by Castle and Bank One that are different from the terms of the written settlement agreement. After a motion for new trial was overruled April 29,1994, Cadle filed this appeal.

LACK OF PLEADINGS TO SUPPORT THE JUDGMENT

In its first point of error, Cadle challenges the propriety of the trial court entering a judgment based solely on a “Motion to Enforce Settlement Agreement” when no underlying breach of contract claim had been raised in a petition or counterclaim. Because Castle failed to properly plead breach of the written settlement agreement, Cadle contends any judgment entered under such circumstances is improper. Castle, however, argues that such a procedure is authorized under section 154.071 of the civil practice and remedies code.

Section 154.071 provides:

(a) 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.

(b) The court in its discretion may incorporate the terms of the agreement in the court’s final decree disposing of the case.

(c) A settlement agreement does not affect an outstanding court order unless the terms of the agreement are incorporated into a subsequent decree.

Tex.Civ.PRAC. <& Rem.Code Ann. § 154.071 (Vernon Supp.1995).

Section 154.071(a)

Under section 154.071(a), either party to a written settlement agreement may seek to enforce the agreement under general contract law. The law regarding enforcement of contracts is well established in Texas. A cause of action for breach of contract consists of the contract itself, which is the primary right of the plaintiff, and its breach by an act or omission of the defendant. G.P. Enters., Inc. v. Adkins, 543 S.W.2d 913, 915 (Tex.Civ.App.—Texarkana 1976, no writ); 14 Tex.JuR.3d Contracts § 308 (1981). A petition in an action based on a contract must contain a short statement of the cause of action sufficient to give fair notice of the claim involved, including an allegation of a contractual relationship between the parties, and the substance of the contract which supports the pleader’s right to recover. Air & Pump Co. v. Almaquer, 609 S.W.2d 309, 313 (Tex.Civ.App.—Corpus Christi 1980, no writ); 14 Tex.JuR.3d Contracts § 338 (1981). In response, a defendant may file a general denial which puts at issue all matters not required to be denied under oath or affirmatively pleaded. Tex.R.Civ.P. 92; 14 Tex. Jur.3d Contracts § 346 (1981). Many defenses to a breach of contract suit, including lack of capacity, denial of execution, lack of consideration, and usury, must be made by verified denial. TexR.Civ.P. 93. Further, the affirmative defenses of accord and satisfaction, duress, failure of consideration, fraud, illegality, statute of frauds, and other matters in avoidance must be affirmatively pleaded. TexR.Civ.P. 94.

A party to a breach of contract suit is entitled to pretrial discovery. See generally Tex.R.Civ.P. 166b, 167, 168, 169, 200, 208. A party is entitled to summary judgment in a breach of contract suit when no material fact issues exist and the movant establishes its right to judgment as a matter of law. Tex.R.Civ.P. 166a; Roark v. Stallworth Oil & Gas, Inc., 813 S.W.2d 492, 494-96 (Tex.1991). If, however, a trial on the merits is necessary, a party to a breach of contract suit is entitled to a jury trial on disputed issues of fact. Trinity Universal Ins. Co. v. Ponsford Bros., 423 S.W.2d 571, 576 (Tex.1968). To prevail at trial, the plaintiff must prove: (1) a contract existed between the parties; (2) the contract created duties; (3) the defendant breached a material duty under the contract; and (4) the plaintiff sustained damages. Snyder v. Eanes Indep. Sch. Dist., 860 S.W.2d 692, 695 (Tex.App.—Austin 1993, writ denied). Judgment is then entered based on the pleadings, evidence, and findings of the judge or jury. Tex.R.Civ.P. 301.

This is the traditional method of enforcing contracts contemplated by section 154.071(a) and relied upon by this Court in Stevens v. Snyder, 874 S.W.2d 241 (Tex.App. — Dallas 1994, writ denied); see Tex.Civ.PRAC. & Rem. Code Ann. § 154.071(a) (Vernon Supp.1995). This was not the enforcement procedure relied upon by the trial judge in this case.

Section 154.071(b)

The trial judge in this case relied on section 154.071(b) to “incorporate” the terms of the written settlement agreement into a final judgment. Thus, the issue in this case is the meaning and effect of section 154.071(b) of the civil practice and remedies code.

In construing a statute, we look to and follow the intent of the legislature. Citizens Bank v. First State Bank, 580 S.W.2d 344, 347 (Tex.1979); Minton v. Frank, 545 S.W.2d 442, 445 (Tex.1976). We determine legislative intent by looking at the language of the statute. Jones v. Del Andersen & Assocs., 539 S.W.2d 348, 350 (Tex.1976). In determining the meaning of statutory language, we read the statute as a whole and give consideration to the entire act, its nature and object, and the consequences that would follow from a particular construction. Sayre v. Mullins, 681 S.W.2d 25, 27 (Tex.1984).

Section 154.071(b) gives a trial judge the discretion to incorporate specific terms of a written settlement agreement in the trial court’s final judgment. Castle and the dissent argue that section 154.071(b) creates a “summary” procedure giving the trial judge the authority to enter a judgment on the merits of the cause of action, over the objection of one or more parties, without a trial, without an evidentiary hearing, and without any underlying petition or counterclaim asserting a breach of contract claim.

In considering the plain language of section 154.071(b), we do not find support for the argument that the legislature intended to create a “summary” proceeding for enforcement of written settlement agreements.¹ Further, we believe there is another, more reasonable, explanation for the adoption of section 154.071(b). ADR works because parties are able to explore resolutions to conflicts that simply do not fit within the traditional framework of the litigation system. Frequently, these terms are essential parts of a written settlement agreement but have no place in a final judgment. A trial judge should have discretion to tailor a judgment that fits the desires of the parties to an ADR procedure.² These considerations strongly suggest that section 154.071(b) was intended to give a trial judge the discretion to either include, or exclude, terms of the written settlement agreement when entering judgment. See Calvert v. Texas Pipe Line Co., 517 S.W.2d 777, 781 (Tex.1974) (legislative intent must be ascertained from entire act and not from isolated portions).

The dissent relies on the public policy of the State in encouraging the peaceable resolution of disputes and the early settlement of pending litigation through voluntary settlement procedures to conclude that section 154.071(b) creates a “summary” proceeding. While we share the conviction that ADR plays an important role in the Texas justice system and is clearly supported by public policy, we do not believe this public policy is a sound basis for interpreting section 154.071(b) in such a manner. This “summary” procedure is clearly not peaceable, nor is it voluntary. Moreover, a procedure so summary in nature may become a means of impairing, if not entirely extinguishing, significant and well established procedural and substantive rights. Even if this public policy is a legitimate basis for interpreting the statute, we believe such an interpretation is contrary to the public policy of this State because it effectively deprives a party of the right to be confronted by appropriate pleadings, assert defenses, conduct discovery, and submit contested fact issues to a judge or jury. Parties would certainly be hesitant to participate in an ADR procedure knowing that any writing generated during the procedure might be considered by a trial judge as an “agreement” under section 154.071(b) and thus, subject to entry of a judgment in a “summary” fashion.

We do not believe the legislature intended section 154.071(b) to be used to enter a judgment on the merits of a cause of action without a party having the right to be confronted by appropriate pleadings, have an opportunity to conduct discovery and assert defenses, or a chance to have the dispute determined by a judge or jury. In this case, the only document supporting the judgment is a “Motion to Enforce Settlement Agreement” under section 154.071(b). We hold Castle’s motion is an insufficient “pleading” to support entry of a judgment that (1) Cadle breached a contract and (2) appellees are entitled to recover damages.

Accordingly, we sustain Cadle’s first point of error.

LEGAL AND FACTUAL INSUFFICIENCY

In its second point of error, Cadle contends the evidence is legally and factually insufficient to support the trial court’s judgment. Assuming, for the sake of argument only, that the legislature intended to create a “summary” procedure for the enforcement of written settlement agreements when it enacted section 154.071(b), we will address this point of error. All parties on appeal have argued an evidentiary standard of review although the language of the statute is discretionary. We will also, for the sake of argument only, assume that the standard of review for such a “summary” proceeding would be an evidentiary, rather than a discretionary, standard. Under an evidentiary standard, and because of our disposition of Cadle’s first point of error, we do not need to address whether the evidence is factually sufficient to sustain the trial court’s judgment. See Tex.R.App.P. 90(a); Resolution Trust Corp. v. Cook, 840 S.W.2d 42, 47-48 (Tex.App.—Amarillo 1992, writ denied) (holding that, because appeal was being reversed and remanded for new trial on separate point of error, the court of appeals need not address factual sufficiency point). Accordingly, we address only whether the evidence is legally sufficient to support the trial court’s judgment.

A no evidence point is a question of law. Tomlinson v. Jones, 677 S.W.2d 490, 492 (Tex.1984). We sustain a no evidence point when the record discloses: (1) a complete absence of evidence of a vital fact; (2) the rules of law or evidence bar consideration of the only evidence offered to prove a vital fact; (3) the evidence offered to prove a vital fact is no more than a mere scintilla; or (4) the evidence conclusively shows the opposite of the vital fact. Cecil v. Smith, 804 S.W.2d 509, 510 n. 2 (Tex.1991).

An appellant bears the burden to present a sufficient record to show error that requires reversal. Tex.R.App.P. 50(d). We presume the evidence supports the trial court’s judgment when the record on appeal contains no statement of facts and the trial court rendered judgment after hearing evidence. Otis Elevator Co. v. Parmelee, 850 S.W.2d 179, 181 (Tex.1993). Nevertheless, when there is no indication that evidence was admitted or considered by the trial court prior to rendering judgment and the record on appeal contains no statement of facts, we indulge no presumptions in favor of the judgment. Otis Elevator, 850 S.W.2d at 181; Thompson v. Haberman, 739 S.W.2d 71, 72 (Tex.App.—San Antonio 1987, no writ).

The record on appeal does not contain a statement of facts. In its brief, Cadle contends that no statement of facts from the hearing exists because Castle did not offer, and the trial court did not hear, any evidence in support of Castle’s motion. Neither Castle nor Bank One challenges these assertions.

We may accept as correct any statement an appellant makes in his original brief regarding the facts or the record unless the opposing party challenges that statement. Tex.R.App.P. 74(f); Jones v. American Economy Ins. Co., 672 S.W.2d 879, 881 (Tex. App.—Dallas 1984, no writ). Neither Castle nor Bank One challenges Cadle’s assertion that the trial court failed to hear evidence at the hearing. The record does not indicate that the trial court heard any evidence at the hearing. Therefore, we accept Cadle’s assertion as true. See Biscamp v. Zeno Carpet Co., 473 S.W.2d 218, 219 (Tex.Civ.App.— Beaumont 1971, no writ) (accepting as true appellant’s claim that no evidence was introduced in the trial court since appellee did not directly challenge claim and appellate record did not contain statement of facts). Consequently, we indulge no presumptions in favor of the judgment due to Cadle’s failure to file a statement of facts in this Court. See Otis Elevator, 850 S.W.2d at 181; Thompson, 739 S.W.2d at 72.

Regardless of the fact that no evidence was presented at the hearing, Castle asserts Cadle’s notice of withdrawal of consent is a judicial admission that Cadle had entered into and was breaching the written settlement agreement. Castle contends this judicial admission constitutes sufficient proof to support the judgment. We disagree.

A judicial admission constitutes a formal waiver of proof. Mendoza v. Fidelity & Guar. Ins. Underwriters, Inc., 606 S.W.2d 692, 694 (Tex.1980); Gevinson v. Manhattan Constr. Co., 449 S.W.2d 458, 466 (Tex.1969). Generally, judicial admissions appear in pleadings or in the stipulations of the parties. Mendoza, 606 S.W.2d at 694; Gevinson, 449 S.W.2d at 466. The party who made the admission cannot dispute the admitted fact, and the opposing party is relieved of the burden to prove it. Mendoza, 606 S.W.2d at 694; Gevinson, 449 S.W.2d at 466. To constitute a judicial admission, a statement must be deliberate, clear, and unequivocal. Flintkote Supply Co. v. Thompson, 607 S.W.2d 41, 43 (Tex.Civ.App.—Beaumont 1980, no writ); see Blieden v. Greenspan, 751 S.W.2d 858, 859 (Tex.1988).

Cadle’s notice of withdrawal of consent was not authenticated and admitted into evidence. The trial judge did not take judicial notice of Cadle’s notice of withdrawal. Ca-dle’s notice of withdrawal of consent is not a pleading. See Tex.R.Civ.P. 45(a) (pleadings shall be by petition and answer). Cadle’s notice is not a stipulation of the parties. Therefore, a statement within Cadle’s notice of withdrawal of consent cannot constitute a judicial admission in this case. See Mendoza, 606 S.W.2d at 694; Gevinson, 449 S.W.2d at 466.

Even if the statement could serve as a judicial admission, it would not support the judgment in this case. Castle contends Ca-dle made the admission through the following statement:

The Cadle Company hereby gives notice that it has withdrawn its consent to be bound by the terms of the mediation settlement memorandum.

This statement is not a deliberate, clear, and unequivocal assertion that includes the terms of the judgment entered in this ease. The written settlement agreement was not admitted into evidence. The statement relied upon by Castle does not identify the specific terms of the agreement or provide any information relating to damages. Thus, the statement does not constitute a judicial admission that would support the judgment. See Blieden, 751 S.W.2d at 859; Flintkote Supply, 607 S.W.2d at 43.

The party seeking enforcement of a written settlement agreement as a contract must support it by proof. Stevens, 874 S.W.2d at 244; see Padilla v. LaFrance, 907 S.W.2d 454, 461 (Tex.1995). The trial court heai’d no evidence on Castle’s motion. Castle did not authenticate and have admitted into evidence the written settlement agreement or Cadle’s notice of withdrawal of consent. The trial judge did not take judicial notice of the contents of the court’s file. Although the written settlement agreement provided for approval by senior management personnel of Bank One, Castle did not introduce evidence that such approval had been obtained. There is no evidence showing why the terms of the judgment are different from the terms of the agreement. Moreover, Castle failed to offer any evidence of contract damages relating to a breach. Because Castle failed to offer any evidence in support of his motion, we conclude the evidence is legally insufficient to support the trial court’s judgment. We sustain Cadle’s second point of error.

Having prevailed on a no evidence point, Cache would ordinarily be entitled to the rendition of judgment in its favor. National Life & Accident Ins. Co. v. Blagg, 438 S.W.2d 905, 909 (Tex.1969). However, the supreme court has held that appellate courts have broad discretion to remand in the interest of justice. Scott v. Liebman, 404 S.W.2d 288, 294 (Tex.1966). As long as there is a probability that a case has for any reason not been fully developed, an appellate court has the discretion to remand rather than render a decision. Zion Missionary Baptist Church v. Pearson, 695 S.W.2d 609, 613 (Tex. App.—Dallas 1985, writ refd n.r.e.). Because of our conclusion on Cadle’s first point of error and in the interest of justice, we will remand this ease for further proceedings rather than render a decision on this no evidence point.

CONSENT JUDGMENT

In its third point of error, Cache contends the trial court erred in entering judgment based on the written settlement agreement because the agreement violated rule 11 of the rules of civil procedure. See Tex.R.Civ.P. 11.

Castle based his motion to enforce the written settlement agreement on section 154.071 of the Texas Civil Practice and Remedies Code. See Tex.Civ.PRAC. & Rem.Code Ann. § 154.071 (Vernon Supp.1995). The trial court’s judgment states the settlement agreement was made during mediation and is enforceable under section 154.071. Neither Castle’s motion nor the trial court’s judgment addresses rule 11 of the Texas Rules of Civil Procedure. Accordingly, we conclude the trial court’s judgment was not rendered pursuant to rule 11. We overrule Cadle’s third point of error.

VARIANCE IN THE JUDGMENT

In its fourth point of error, Cache contends the trial court erred in entering a judgment which fails to conform to the terms of the written settlement agreement. Because of our disposition of Cadle’s first three points, we need not address its remaining point of error. See Tex.R.App.P. 90(a).

We reverse the trial court’s judgment and remand this cause to the trial court for further proceedings consistent with this opinion.

THOMAS, C.J., LAGARDE, KINKEADE, MALONEY, CHAPMAN, BARBER, MORRIS, WHITTINGTON, and DEVANY, JJ., join in the majority opinion. JAMES, J., dissents with opinion. WRIGHT, J., joins in the dissenting opinion.

JUDGMENT

In accordance with this Court’s opinion of this date, the judgment of the trial court is REVERSED and this cause is REMANDED to the trial court for further proceedings. It is ORDERED that appellant The Cadle Company recover its costs of this appeal from appellees Frank E. Castle and Bank One, Texas, N.A. The obligations of Western Surety Company as surety on appellant’s cost bond are DISCHARGED.

Judgment entered October 24,1995.

1 . We note that neither the parties nor this Court has been able to find any legislative history or other discussion that sheds additional light on section 154.071(b)’s intended purpose.

2 . The fact that section 154.071(b) is discretionary is a strong indication that it was not intended to create a “summary” procedure for the entry of judgment on the merits of a cause of action. Judgments are entered upon the pleadings, evidence, and findings of the judge or jury. Tex. R.Civ.P. 301; Harvey v. Crockett Drilling Co., 242 S.W.2d 952, 953-54 (Tex.Civ.App. — Waco 1951, no writ). Likewise, a party is entitled to a judgment as a matter of law if legally supported by pleadings, evidence, and findings. There is no authority in Texas for entry of a judgment based on the discretion of the trial judge.