CQuentia Series Holding, LLC v. Luminex Corporation

Opinion

COURT OF APPEALS EIGHTH DISTRICT OF TEXAS EL PASO, TEXAS

CQUENTIA SERIES HOLDINGS, LLC, § No. 08-20-00033-CV

Appellant, § Appeal from the

v. § 126th District Court

LUMINEX CORPORATION, § of Travis County, Texas

Appellee. § (TC# D-1-GN-19-003896)

OPINION

What’s in a settlement agreement? It depends on who you ask. This is an appeal of an

Agreed Final Judgment entered by the trial court in a lawsuit where Appellee Luminex Corporation

sued Appellant CQuentia Series Holdings, LLC for breach of a settlement agreement. Part of the

settlement agreement, according to Appellee, was securing Appellant’s signature on an agreed

judgment so it could pursue perfection of said judgment in the event Appellant breached its

payment obligations. When Appellant did not make the required payments, Appellee filed suit

against it and sought entry of the Agreed Judgment, which it obtained. Appellant claims it

withdrew consent to entry of the Agreed Judgment prior to its entry, and is, thus, void. Appellee

claims, among other things, Appellant waived its right to appeal when it signed a supplement to

the settlement agreement. We agree with Appellee. The Agreed Final Judgment of the trial court is affirmed.

BACKGROUND

There seem to be few, if any, disputed facts in this case. Appellee sued non-party Total

Diagnostix Labs, LLC (hereafter, TDL) for a little less than $4.3 million pursuant to various

contractual obligations between the two entities. TDL sought relief under Chapter 11 of the

Bankruptcy Code, and Appellee filed a proof of claim in the bankruptcy proceeding for its alleged

damages.

The Settlement and Release Agreement

Appellant is an affiliate of TDL and participated at mediation in the bankruptcy proceeding

with Appellee, TDL, and others. Appellant and Appellee entered into a Settlement and Release

Agreement, which the TDL bankruptcy court approved. Pursuant to the terms of the Settlement

and Release Agreement, Appellee agreed to withdraw its proof of claim against TDL upon receipt

of $1.3 million from Appellant drawn on funds outside of the bankruptcy estate. The Settlement

and Release Agreement included a section requiring any dispute regarding interpretation or

enforcement of the agreement to first be mediated and, if necessary, subsequently filed in the

bankruptcy court, if applicable, or federal or state courts in Tarrant County, Texas.

The Supplement, the Amendment, and the Agreed Judgment

Shortly before Appellant’s payment was due under the Settlement and Release Agreement,

Appellant notified Appellee of its inability to make the payment. Appellee agreed to new payment

terms in a supplement to the Settlement and Release Agreement (hereafter, the Supplement). In

exchange for Appellee accepting a modified payment plan, Appellant agreed to sign an Agreed

Final Judgment (hereafter, Agreed Judgment) for the amount owed, and pay interest on the unpaid

balance.

2 The Supplement also provided for suspension of certain portions of the Settlement and

Release Agreement during pendency of the Supplement. The parties dispute which terms were

suspended. Pertinent to the issues on appeal, Appellant alleges the Settlement and Release

Agreement’s obligations regarding mediation and venue remained in effect, while Appellee alleges

the terms of the Supplement suspended them.

Per the Supplement’s payment terms, Appellant made the initial payment, but notified

Appellee of its inability to make the second of three required payments. The parties executed an

Amendment to the Supplement (hereafter, the Amendment) which modified the payment terms a

second time and required payment of $5,000 in attorney’s fees. The Amendment also required a

personal guarantee by Appellant’s manager.

The Lawsuit

Appellee never received payment from Appellant or its manager under the terms of the

Amendment. Appellee filed suit against Appellant and its manager in Travis County to enter the

Agreed Final Judgment signed by the parties which was styled for Travis County. The case was

removed to the bankruptcy court and ultimately remanded back to state court in Travis County.

At approximately the same time that the bankruptcy court remanded the case back to the

Travis County district court, the parties entered into a Rule 11 Agreement. The Rule 11 Agreement

stated: “This letter will confirm our agreement that Defendants’ deadline to file a motion to transfer

venue and/or answer in the above-referenced lawsuit shall be 7 days after the Bankruptcy Court

signs the Agreed Order on Motion to Remand.” Appellant filed the Rule 11 Agreement on

October 2, 2019, the same day the bankruptcy court signed the order remanding the case to the

trial court.

3 After remand, Appellee amended its petition dropping the claims against the manager. The

same day, October 3, 2019, it obtained entry of the Agreed Final Judgment by the trial court.

On October 9, 2019, Appellant filed its motion to transfer venue. Thereafter, on

November 1, it filed a motion for new trial. In its motion for new trial, Appellant claimed it was

entitled to a new trial because it did not consent to entry of the Agreed Judgment, and because the

terms of the Settlement and Release Agreement required mediation of any dispute regarding its

enforcement. Although the trial court heard both motions, it did not rule on either motion before

its plenary power expired. Accordingly, both motions were overruled by law. See TEX.R.CIV.P.

329b(c). Appellant timely filed notice of its appeal.

DISCUSSION

Appellant raises two issues on appeal:

1. Whether the trial court abused its discretion by denying Appellant’s Motion for New Trial when:

(a) entry of the Agreed Final Judgment violated the court’s duty to enforce the parties’ Rule 11 Agreement, which granted Appellant additional time to file a motion to transfer venue and/or answer;

(b) Appellant did not consent to entry of the Agreed Final Judgment at the time it was entered; and,

(c) Appellee did not complete all prerequisites to entry of the Agreed Final Judgment; and

2. Whether the trial court erred by denying Appellant’s Motion to Transfer Venue.

Appellant alleges entry of the Agreed Judgment violated the trial court’s ministerial duty

to enforce the Rule 11 Agreement regarding Appellant’s deadline to answer and file a motion to

transfer venue following remand. It claims the Rule 11 Agreement put the trial court and Appellee

on notice that it revoked consent to entry of the Agreed Judgment. It further claims the Agreed

4 Judgment is void because its consent did not exist at the time the judgment was entered. Finally,

it argues the trial court abused its discretion by denying Appellant’s motion to transfer venue.

In response, Appellee states the Agreed Judgment was timely and properly entered because

Appellant twice failed to make the required payments under the Settlement Agreement,

Supplement, and Amendment. Appellee asserts that Appellant consented no less than three times

to entry of the Agreed Judgment, and never provided any notice it withdrew that consent prior to

the Agreed Judgment’s entry. It further argues Appellant waived its right to appeal by signing the

Supplement. Appellee also argues the Rule 11 Agreement cannot be a basis for reversal because

Appellant never sought its enforcement by the trial court.

Waiver of Right to Appeal

First, we address Appellee’s contention that Appellant waived its right to appeal when it

signed the Settlement Agreement and subsequent amendments thereto. Appellee alleges that

Appellant’s consent to the Agreed Judgment waives its right to complain on appeal regarding the

Agreed Judgment’s entry. In support, Appellee cites three instances where Appellant allegedly

consented to waiving its right to appeal entry of the Agreed Judgment:

(1) Appellant’s counsel’s signature on the Agreed Judgment indicating Appellant ‘agreed to [the judgment] in form and substance and entry requested.’ [Original emphasis removed]; (2) Appellant’s agreement to the language in the agreed judgment, stating ‘Defendant CQuentia Series Holdings, LLC (“CQuentia”) has received written notice of pursuant to the parties’ agreement and has waived its right to receive any additional notice, right to appear and right to be heard[;]’ and (3) Appellant’s signature on the Supplement, where it agreed to ‘waive[] and release[] all errors in the entry of [the Agreed Judgment], all rights of appeal, all notice and opportunity for hearing prior to the entry of judgment.’

The first two instances involve language in, or Appellant’s signature on, the Agreed

Judgment, which requires this Court to analyze whether Appellant consented to entry of the Agreed

5 Judgment. Appellant disputes the existence of its consent at the time judgment was entered against

it. However, the third instance involves the parties’ agreement in the Supplement, which Appellant

admits it signed and does not dispute its agreement thereto. Accordingly, we consider first whether

Appellant contractually waived its right to appeal entry of the Agreed Judgment when it signed

the Supplement. See Emerson v. Emerson, 559 S.W.3d 727, 733 (Tex.App.—Houston [14th Dist.]

2018, no pet.)(where appellee alleges appellant waived right to appeal, the reviewing court’s

“threshold task is to determine if the parties have an enforceable . . . agreement to waive the right

to appeal.”).

A litigant’s right to appeal a judgment may be waived by agreement. Estate of Crawford,

No. 14-17-00703-CV, 2017 WL 5196309, at *2 (Tex.App.—Houston [14th Dist.] Nov. 9, 2017,

pet. denied)(mem. op.)(citing Rodriguez v. Villarreal, 314 S.W.3d 636, 645 (Tex.App.—Houston

[14th Dist.] 2010, no pet.)); see also Matter of Marriage of Long, 946 S.W.2d 97, 99 (Tex.App.—

Texarkana 1997, no pet.)(citing Johnson v. Halley, 27 S.W. 750, 751 (1894, writ ref’d)). Even

when consent to an agreement is disputed, a written agreement in compliance with the Rule 11

binds the parties to its terms even without being filed among the court’s papers, absent a written

document seeking to withdraw the agreement. Matter of Marriage of Long, 946 S.W.2d at 99.

Here, Appellant does not dispute that it signed the Supplement, nor that it agreed to the

terms of the Supplement. Likewise, Appellant did not file any document with the trial court

indicating it withdrew its consent to the Supplement.

The pertinent language in the Supplement states,

CQuentia hereby agrees to the entry of the Agreed Final Judgment in the form attached hereto . . . and shall provide the executed Agreed Final Judgment to Luminex on the Effective Date for safekeeping. Luminex agrees not to file any document to perfect such Agreed Final Judgment until the earlier to occur of (i) CQuentia fails to timely make the Initial Payment or (ii) Luminex makes an election pursuant to paragraph 2c above. If Luminex decides to enforce the

6 Agreed Final Judgment against CQuentia, rather than pursue its claims against the Debtor, Luminex agrees to provide written notice to Debtor’s counsel prior to filing such Agreed Final Judgment with a court.

. . .

CQUENT1A HEREBY FOREVER WAIVES AND RELEASES ALL ERRORS IN THE ENTRY OF SAID JUDGMENT, ALL RIGHTS OF APPEAL, ALL NOTICE AND OPPORTUNIIY FOR HEARING PRIOR TO THE ENTRY OF JUDGMENT AND ALL RELIEF FROM ANY AND ALL APPRAISEMENT, STAY OR EXEMPTION LAWS OF ANY STATE NOW IN FORCE OR HEREAFTER ENACTED. [Emphasis added].

In its reply brief, Appellant argues it agreed only to waive its rights to appeal if “all

contractual predicates to entry of the Agreed Final Judgment had occurred—namely, breach,

venue, and mediation.” However, the waiver provision does not contain any conditions precedent

to its application in the case. It states only that Appellant “HEREBY FOREVER WAIVES AND

RELEASES ALL ERRORS IN THE ENTRY OF [the Agreed Final] JUDGMENT, ALL RIGHTS

OF APPEAL, [and] ALL NOTICE AND OPPORTUNITY FOR HEARING PRIOR TO THE

ENTRY OF JUDGMENT[.]”

Appellant claims construing the waiver of appeal against it under the facts of this case

would produce an “absurd result” because it would allow Appellee to obtain entry of the Agreed

Judgment even if Appellant complied in full with its payment obligations under the Settlement

Agreement, and offer Appellant no recourse through the courts of appeals.

We disagree with Appellant’s interpretation. First, the Supplement expressly states

Appellee’s obligation to refrain from perfecting the Agreed Judgment until Appellant either (a)

fails to make the initial payment, or (b) Appellee elects one of two courses of action available to

it after Appellant fails to timely pay the full amount owed under the agreement. In other words,

Appellant would already be in breach of the Settlement Agreement before Appellee would be

entitled to perfect its judgment against Appellant. If Appellee attempted to perfect judgment when

7 no breach occurred and Appellant paid in accordance with the Settlement Agreement, Appellant

would have recourse available against Appellee through a number of contract, tort, and/or

equitable causes of action. 1 On the other hand, Appellant, by its own admission, twice previously

failed to pay Appellee per the terms of their settlement agreement. We reasonably infer the

agreement to enter judgment in favor of Appellee was deemed by Appellee to be a necessary

additional security measure in case Appellant failed to make the agreed-to payments for a third

time, which it did.

Secondly, no breach is required under the terms of the Settlement Agreement before

Appellee is entitled to seek entry of the judgment against Appellant. By placing its signature on

the Supplement, Appellant agreed to immediate entry of judgment against it, regardless of whether

it ultimately paid the amount agreed. In that sense, Appellant is correct in stating that Appellee

could seek entry of the Agreed Judgment even if Appellant complied with its payment obligations. 2

There exists a notable distinction between entering judgment in favor of Appellee, and perfecting

judgment against Appellee. A judgment entered in the trial court but not abstracted in the county

property records is worth little more than the paper it is printed on. A perfected judgment, however,

can serve as a lien on the judgment-debtor’s property, in addition to notifying other potential

creditors of the judgment-debtor’s existing obligation to the judgment creditor. See

TEX.PROP.CODE ANN. § 52.001 (an abstract of judgment serves as a lien on and attaches to

qualifying real property of the judgment defendant when recorded in the real property records of

the county).

1 The record before us does not indicate whether Appellee has made attempts to perfect judgment against Appellant, only that Appellee sought entry of the Agreed Judgment. 2 Appellant also complains the Settlement Agreement mandated adherence to certain conditions precedent prior to entry of the Agreed Judgment, such as the mediation and venue provisions. However, the Supplement does not list any conditions which any party must satisfy prior to entry of the Agreed Judgment.

8 We express no opinion regarding whether Appellant consented to entry of the Agreed

Judgment at the time it was actually entered because it does not change the unambiguous terms of

the Supplement indicating Appellant’s consent to waive any right to receive notice or to be heard

prior to entry of the Agreed Judgment, or to appeal the entry after it occurred. For that reason, we

must hold Appellant to its agreement. See Matter of Marriage of Long, 946 S.W.2d at 99 (a signed

settlement binds the parties to its terms even if not filed in the papers of the court)(citing Padilla

v. LaFrance, 907 S.W.2d 454, 461 (Tex. 1995)).

We find Appellant waived its right to appeal entry of the Agreed Judgment by agreement.

Accordingly, Appellant’s first issue is overruled.

Regarding Appellant’s second issue, we hold the motion to transfer venue is not properly

before this Court because it was not filed prior to entry of the Agreed Final Judgment and thus not

considered nor ruled upon by the trial court. TEX.R.APP.P. 33.1. Appellant’s second issue was not

preserved, and is overruled. Id.

CONCLUSION

Having overruled both of Appellant’s issues, we affirm the judgment of the trial court.

April 16, 2021 YVONNE T. RODRIGUEZ, Chief Justice

Before Rodriguez, C.J., Palafox, and Alley, JJ.