TEXAS COURT OF APPEALS, THIRD DISTRICT, AT AUSTIN
NO. 03-24-00559-CV
David Ahr, Leigh Anne Ahr, and Rock Lake Partners, Appellants v.
Sharon Elaine Palasota, Independent Executor of The Estate of Ricky J. Palasota, Deceased, Appellee
FROM THE 20TH DISTRICT COURT OF MILAM COUNTY NO. CV34002, THE HONORABLE JOHN YOUNGBLOOD, JUDGE PRESIDING
MEMORANDUM OPINION
Appellants David Ahr, Leigh Anne Ahr, and Rock Lake Partners (collectively, the Ahrs) obtained a judgment in 2012 against Ricky J. Palasota, Sr. (Senior) and others in the amount of $976,768.10, plus attorneys’ fees and pre-judgment and post-judgment interest at the rate of 6%. After years of collection efforts and bankruptcy proceedings, including the 2017 settlement of a Texas Uniform Fraudulent Transfer Act (TUFTA) suit against Senior’s daughter, the Ahrs in 2024 filed an application for writ of scire facias seeking to revive the 2012 judgment. The trial court issued the writ of scire facias and ordered appellee Sharon Elaine Palasota, the independent executor of Senior’s estate, to appear and show cause why the judgment should not be revived. 1 Palasota filed a motion to dismiss the Ahrs’ application and the Ahrs filed a response. After the hearing, the trial court found the 2012 judgment was released in the 2017
1 Senior died in 2023.
settlement agreement, granted Palasota’s motion to dismiss, and denied the Ahrs’ application to revive the 2012 judgment.
For the reasons explained below, we reverse and render judgment that the 2012 judgment is revived.
BACKGROUND
In the 2012 judgment, the trial court found Senior; Ricky Palasota, Jr., (Junior);
and B.V.S. Construction, Inc. jointly and severally liable in the amount of $976,768.10, plus attorneys’ fees and interest, for breach of contract, fraud, violations of the Theft Liability Act, theft of property, and trespass. A few months later, the Milam County District Clerk issued abstracts of judgment, which the Ahrs filed in the real-property records of Milam County, Brazos County, and Madison County. See Tex. Prop. Code § 52.001 (providing that properly recorded and filed abstract of judgment “constitutes a lien on and attaches to any real property of the defendant, other than real property exempt from seizure or forced sale . . ., that is located in the county in which the abstract is recorded and indexed,” including later-acquired real property). As of July 2024, the Judgment Debtors had paid $47,299.23 towards the 2012 judgment.
The Various Palasotas’ Bankruptcy Proceedings The Ahrs’ efforts to collect their judgment were thwarted by the Palasotas’ efforts to avoid payment. Junior and BVS Construction filed for bankruptcy, and their judgment debt was discharged in bankruptcy. After the Ahrs learned that Senior had fraudulently transferred sixty acres of real property to his daughter, Emily Palasota, the Ahrs filed a new suit in 2014 in Brazos County against Senior and Emily under TUFTA. A few months later, Senior filed for bankruptcy.
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Although the bankruptcy court ultimately denied Senior’s request to have his debts discharged in bankruptcy in 2021, his bankruptcy proceeding complicated the Ahrs’ efforts to enforce the 2012 judgment. After Senior filed for bankruptcy, the Ahrs nonsuited their TUFTA suit against him but left their TUFTA suit against Emily pending in state court.
Subsequently, the Ahrs filed a proof of claim in Senior’s bankruptcy proceeding, demonstrating that the amount of their 2012 judgment against him had increased to $1,140,793. The bankruptcy court authorized a group of creditors, the Class 22 Creditors, including the Ahrs, to pursue an action against Senior for his fraudulent transfers of real property. The Ahrs acted as class representatives, but they were not authorized to individually pursue claims against Senior.
Emily filed for bankruptcy in 2016, and she removed the Ahrs’ state-court TUFTA suit to federal bankruptcy court. In 2017, the Class 22 Creditors (including the Ahrs), Emily, and Senior entered into a Mutual Release and Compromise Settlement Agreement.
The Release Emily’s motion to approve the 2017 settlement agreement explained the material terms of the agreement: “in consideration of mutual releases and the dismissal of the Lawsuits,” she would transfer the real property back to Senior, who agreed to pay $300,000 to the Class 22 Creditors to resolve the TUFTA claims against him. He also agreed to secure his promise to make monthly settlement payments with a deed of trust. Under the settlement agreement, if Senior defaulted on his agreement to make settlement payments, the Class 22 Creditors would have the right to foreclose on the deeded property.
The 2017 settlement agreement incorporates certain documents by reference, including the “Deed of Trust to Secure a Judgment” signed by Senior. The deed of trust states,
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“[f]or value received, including Payee’s [the Class 22 Creditors’] execution of a partial release of judgment lien against other property, and to secure payment of the Judgment, Grantor [Senior] conveys the property to Trustee in trust.” In 2022, the trustee released the property lien that secured Senior’s payment of the $300,000 settlement amount when it was paid off.
The 2017 settlement agreement contains the following release provision:
[The Parties] hereby agree that the Adversary, and all claims and controversies between the Parties, arising out of or relating to the subject matter of the Adversary, are hereby settled in accordance with the following terms:
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EMILY ANN PALASOTA AND RICKY J. PALASOTA and DAVID AHR, LEIGH ANN AHR AND CLASS 22, including their predecessors, hereby fully, finally, and completely release, discharge, and forever hold each other harmless from any and all claims, cross-claims, counter-claims, demands, actions, causes of action, or suits, known or unknown as of this date, fixed or contingent, liquidated or unliquidated, that have been or could have been asserted by or against any other party in the Adversary, and that arise from or relate to the subject matter of the Adversary, including without limitation any wrongful actions and/or omissions of Plaintiffs, DAVID AHR, LEIGH ANN AHR AND CLASS 22 or of Defendants, EMILY ANN PALASOTA AND RICKY J.
PALASOTA, and including any claims for attorneys’ fees incurred through this date by the parties. This complete settlement includes all claims, credits, offsets, and counterclaims of the parties resulting from the past relationship between any and/or all of the Parties.
(Emphases added.) The 2017 settlement agreement limits the meaning of the “Adversary” to the bankruptcy proceedings in which the Class 22 Creditors, including the Ahrs, sued Emily and Senior for fraudulent transfers of real property.
Subsequent Judgment-Collection Efforts by the Ahrs The Ahrs also sought to enforce their judgment against Senior in various proceedings in Madison County, Texas. In 2020, the Texas Department of Transportation began
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condemnation proceedings as to a portion of Palasota’s homestead property, which was an exempt asset during Senior’s bankruptcy proceedings, and thus was not available to satisfy the 2012 judgment. The Department appealed the commissioner’s award in the condemnation proceedings and initiated a lawsuit in Madison County District Court. In 2024, the Department agreed to no longer contest the commissioner’s award and was subsequently ordered to pay $2,035,488.00 into the registry of the court. After a portion of these proceeds was released by agreement to pay off Palasota’s mortgage lender, a balance of approximately $912,000 remained available to be disbursed. Palasota filed a motion to release the condemnation award to her. The Ahrs opposed the release of funds, claiming superior rights to the proceeds because of the 2012 Judgment.
In Palasota’s motion to release the condemnation proceeds from the court’s registry, Palasota asserted that the Ahrs did not have a valid judgment lien and therefore could not recover any of the condemnation proceeds because they had settled all claims and controversies with Senior in 2017. Additionally, Palasota alleged that the 2012 judgment had become dormant and unenforceable. The Madison County District Court scheduled a hearing on the parties’ competing claims to the remaining condemnation proceeds to occur on August 26, 2024.
Scire Facias Proceeding The Ahrs maintain that Senior’s fraud and bankruptcy proceeding tolled the dormancy of the 2012 judgment, but because Palasota contended the judgment was already dormant and unenforceable, the Ahrs filed an application for a writ of scire facias in the same court that rendered the 2012 judgment. See Tex. Civ. Prac. & Rem. Code §§ 34.001 (“If a writ
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of execution is not issued within 10 years after the rendition of a judgment . . ., the judgment is dormant and execution may not be issued on the judgment unless it is revived.”), 31.006 (“A dormant judgment may be revived by scire facias or by an action of debt brought not later than the second anniversary of the date that the judgment becomes dormant.”).
In their application for writ of scire facias and to revive the 2012 judgment, the Ahrs informed the trial court of the relevant facts: the court had issued the final judgment on August 30, 2012; the judgment remained unsatisfied; and a writ of execution had not issued in the ten-year period after August 30, 2012. The Ahrs requested that the court, after issuing a writ of scire facias to Palasota, enter an order reviving the final judgment in all respects.
The trial court issued the writ of scire facias to Palasota and set a hearing for August 16, 2024. Palasota filed a motion to dismiss the Ahrs’ application, asserting that the Ahrs released the 2012 judgment in the 2017 settlement agreement. After a hearing, the trial court granted Palasota’s motion to dismiss. This appeal followed.
ANALYSIS
In a single issue, the Ahrs contend that the trial court erred by finding that the Ahrs released the 2012 judgment when they entered into the 2017 settlement agreement.
Standard of Review When, as here, neither party has alleged that the release was induced by fraud, and when the language of the release is unambiguous, the interpretation of the release is “to be decided by the court as a question of law.” Memorial Med. Ctr. of E. Tex. v. Keszler, 943 S.W.2d 433, 434 (Tex. 1997) (per curiam). “In general, a release surrenders legal rights or obligations between the parties to an agreement.” Dresser Indus., Inc. v. Page Petrol., Inc.,
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853 S.W.2d 505, 508 (Tex. 1993). A release “operates to extinguish the claim or cause of action as effectively as would a prior judgment between the parties and is an absolute bar to any right of action on the released matter.” Id. (emphasis added). “For these reasons, a release is expressly designated as an affirmative defense.” 2 Id. (citing Tex. R. Civ. P. 94); see also Barras v. Barras, 396 S.W.3d 154, 170 n.5 (Tex. App.—Houston [14th Dist.] 2013, pet. denied) (“[T]he defendant bears the burden to plead and prove the existence of an effective and valid release.” (citing Williams v. Glash, 789 S.W.2d 261, 264 (Tex. 1990))).
Contract-Construction Principles Like any other agreement, a release is subject to the rules of construction governing contracts. Baty v. ProTech Ins. Agency, 63 S.W.3d 841, 848 (Tex. App.—Houston [14th Dist.] 2001, pet. denied). “When a contract’s meaning is disputed, our primary objective is to ascertain and give effect to the parties’ intent as expressed in the instrument.” Privilege Underwriters Reciprocal Exch. v. Mankoff, 733 S.W.3d 1, 4 (Tex. 2026) (quoting URI, Inc. v. Kleberg County, 543 S.W.3d 755, 763 (Tex. 2018)). Whether a contract is ambiguous is a question of law. Id.
2 Palasota asserts that we should review the trial court’s order granting her motion to dismiss the Ahrs’ petition to revive the judgment for abuse of discretion. However, Palasota’s motion to dismiss raised her affirmative defense of release, and she attached evidence, including the settlement agreement and related documents. See Robles v. Mount Franklin Food, L.L.C., 591 S.W.3d 158, 163 (Tex. App.—El Paso 2019, pet. denied) (“Affirmative defenses should be raised through a motion for summary judgment or proven at trial.”) Thus, in substance, Palasota’s motion to dismiss was a motion for summary judgment, and we construe it as one. See id. (“[W]e have an obligation to look to the substance of a motion and may construe a motion to dismiss as a summary judgment.”). Accordingly, we review the trial court’s order de novo, and we take all evidence favorable to the nonmovant Ahrs as true and indulge every reasonable inference and resolve any doubts in their favor. Valence Operating Co. v. Dorsett, 164 S.W.3d 656, 661 (Tex. 2005).
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“In contract law, the terms ‘ambiguous’ and ‘ambiguity’ have a more specific meaning than merely denoting a lack of clarity in language.” RSUI Indem. Co. v. Lynd Co., 466 S.W.3d 113, 119 (Tex. 2015). “Mere disagreement over the interpretation of an agreement does not necessarily render the contract ambiguous.” Plains Expl. & Prod. Co. v. Torch Energy Advisors Inc., 473 S.W.3d 296, 305 (Tex. 2015). “If a written contract is so worded that it can be given a definite or certain legal meaning, then it is not ambiguous.” National Union Fire Ins. Co. of Pittsburgh, PA v. CBI Indus., Inc., 907 S.W.2d 517, 520 (Tex. 1995) (citing Coker v. Coker, 650 S.W.2d 391, 393 (Tex. 1983)). But if the language “is subject to two or more reasonable interpretations, it is ambiguous.” Id.
The court decides whether a contract is ambiguous “by looking at the contract as a whole in light of the circumstances present when the contract was entered.” Id. We apply well-settled construction principles that “include giving the language its plain, ordinary, generally accepted meaning[;] considering the context in which words are used[;] avoiding constructions that render provisions meaningless[;] and construing contract provisions together so as to give effect to the whole.” Rosetta Res. Operating, LP v. Martin, 645 S.W.3d 212, 219 (Tex. 2022) (citations omitted). “Only where a contract is first determined to be ambiguous may the courts consider the parties’ interpretation and admit extraneous evidence to determine the true meaning of the instrument.” National Union Fire Ins., 907 S.W.2d at 520 (citation omitted). Here, the Ahrs and Palasota disagree about what the 2017 release provision means, but both contend that the provision is unambiguous; we must determine whether we agree. See Rosetta, 645 S.W.3d at 219 (“Even if parties agree that a contract is unambiguous and argue that the unambiguous language merely creates different results, we may independently conclude that the contract is ambiguous as a matter of law.”). “When a contract contains an ambiguity, the
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granting of a motion for summary judgment is improper because the interpretation of the instrument becomes a fact issue.” Id. (quoting Coker, 650 S.W.2d at 394).
Release-Construction Principles To effectively release a claim, the releasing instrument must “mention” the claim to be released. Victoria Bank & Tr. Co. v. Brady, 811 S.W.2d 931, 938 (Tex. 1991). Any claims not “clearly within the subject matter” of the release are not discharged, even if those claims exist when the release is executed. Id. “Furthermore, general categorical release clauses are narrowly construed.” Id.
It is not necessary, however, for the parties to specifically enumerate all released claims, and the Texas Supreme Court has expressly recognized the validity of “broad-form releases.” See Keck, Mahin & Cate v. National Union Fire Ins. Co. of Pittsburgh, Pa., 20 S.W.3d 692, 698 (Tex. 2000). The parties need not identify every potential cause of action relating to the subject matter of the release for that claim to be within the scope of the release. Id.
The Scope of the Release Does Not Include the 2012 Judgment With these principles in mind, we consider the 2017 release. The Ahrs maintain that the 2017 settlement agreement unambiguously limits the scope of its release to the Ahrs’ (and other Class 22 creditors’) TUFTA claims. Palasota asserted below, and continues to assert on appeal, that we must construe the release language broadly, as an “all-encompassing mutual release between all parties.” Palasota contends that because “[t]he Settlement Agreement does not provide a carve-out for the survival of the [Ahrs’] Judgment or any claims of other Class 22 Unsecured Creditors,” and because of its expansive language, the parties intended to release
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Senior from his obligation to satisfy the 2012 judgment and that the 2012 judgment therefore was satisfied by the 2017 settlement.
The parties’ dispute centers on whether a release that releases all “claims” and purports to include “all claims, credits, offsets, and counterclaims of the parties from the past relationship between any and/or all of the Parties” operates as a release and satisfaction of a judgment. Release of a judgment must be express and unconditional. “A release of judgment is an express relinquishment by the judgment creditor of his rights in the judgment; it operates as a bar because the one who might otherwise have asserted the right has expressly surrendered it.” Rapp v. Mandell & Wright, P.C., 123 S.W.3d 431, 434 (Tex. App.—Houston [14th Dist.] 2003, pet. denied) (emphasis added). Such “an unconditional release of judgment operates as a total relinquishment of all rights of the judgment creditor in the judgment. It is a complete discharge of the debt created by the judgment and a complete surrender of the judgment creditor’s rights in the judgment.” Id. at 435.
Nothing in the 2017 settlement agreement constitutes an unconditional and unambiguous acknowledgment that the 2012 judgment has been satisfied and released. The 2012 judgment is not mentioned or identified at all in the settlement agreement. Palasota argues that the 2012 judgment was the basis for the Ahrs’ TUFTA claims, and thus, it necessarily is encompassed by the release language. We disagree. While the 2012 judgment gave the Ahrs standing to initially pursue the TUFTA claims against Senior and Emily, alleging that Senior fraudulently transferred real property to Emily, and that standing carried over to the Adversary Proceeding in Emily’s bankruptcy, the TUFTA suit is an independent suit pursued by the Ahrs and the other creditors.
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In the absence of express language unconditionally releasing the judgment in exchange for less than the full amount owed, we conclude that the 2017 settlement agreement did not constitute acceptance of money by the Ahrs in complete satisfaction and release of the judgment. See Hibernia Energy III, LLC v. Ferae Naturae, LLC, 668 S.W.3d 745, 762 (Tex. App.—El Paso 2022, no pet.) (“[I]f there is sufficient evidence to establish that a judgment creditor accepted money in complete satisfaction and release of his judgment, that judgment will have no further force or authority.”); cf. Reames v. Logue, 712 S.W.2d 802, 804-05 (Tex. App.— Dallas 1986, writ ref’d n.r.e.) (concluding that appellant’s acceptance of “a compromise settlement of judgment in ‘full and complete satisfaction and release’” barred her recovery of any deficiency). A release for less than the full amount of a judgment debt lacks consideration and is invalid as an accord and satisfaction. Jeanes v. Hamby, 685 S.W.2d 695, 697 (Tex. App.— Dallas 1984, writ ref’d n.r.e.) (“It is well settled that the payment of less than the full amount of a judgment debt alone cannot be consideration for an accord and satisfaction.” (citing Blaylock v. Akin, 619 S.W.2d 207 (Tex. App.—Texarkana 1981, writ ref’d n.r.e.); Reeves v. Hall, 437 S.W.2d 424 (Tex. App.—Austin 1969, no writ)).
Construing the 2017 settlement agreement as a whole with the deed of trust incorporated by reference into the agreement provides further textual support for our conclusion that the agreement does not constitute a release of the 2012 judgment. The deed of trust, signed by Senior to secure the payment of the settlement amount, states that Senior is conveying the property to the trustee for value received, including the Ahrs and other creditors’ “execution of a partial release of judgment lien against other property.” We note that a release of judgment lien does not equate to a release of the underlying judgment, and the use of the word “partial” further indicates that the Ahrs did not unconditionally and unambiguously release the 2012 judgment in
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the 2017 settlement agreement. See Lyda Swinerton Builders, Inc. v. Cathay Bank, 409 S.W.3d 221, 231 (Tex. App.—Houston [14th Dist.] 2013, pet. denied) (“[T]he release [of the lien] itself does not forgive the unpaid portion of the developer’s underlying debt.”).
In addition, the plain language of the 2017 settlement agreement does not support a conclusion that the Ahrs agreed to release the 2012 judgment. The 2017 settlement agreement states that it “is a compromise of disputed claims.” A judgment is the end result of disputed claims—not itself a disputed claim. See Patel v. Nations Renovations, LLC, 661 S.W.3d 151, 154 (Tex. 2023) (defining “final judgment”); Judgment, BLACK’S LAW DICTIONARY (12th ed. 2024) (defining judgment as “final determination”). The 2012 judgment does not fit within the parameters of any matters settled in the 2017 agreement. It is not a demand, action, or suit that was asserted or could have been asserted in the Adversary Proceeding or arising from or relating to the subject matter of the Adversary Proceeding. Nor is it a claim, credit, offset, and counterclaim of the parties from their past relationship. Other language in the 2017 settlement agreement similarly limits the scope of the release to “the Adversary, and all claims and controversies between the Parties, arising out of or relating to the subject matter of the Adversary[.]” The 2012 judgment, which resolved the Ahrs’ claims against Senior and the other defendants for breach of contract, fraud, violations of the Theft Liability Act, theft of property, and trespass, neither arises out of nor is it related to the “subject matter” of the Adversary Proceeding, which is Senior and Emily’s fraudulent transfer of real property.
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CONCLUSION
We conclude that the 2017 settlement agreement unambiguously limits the scope of its release to the Ahrs’ (and other Class 22 creditors’) TUFTA claims and does not release the 2012 judgment. Because Palasota failed to prove her affirmative defense of release as a matter of law, we conclude that the trial court erred by dismissing the Ahrs’ application to revive the 2012 judgment. We render judgment that the 2012 judgment is revived.
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Gisela D. Triana, Justice
Before Justices Triana, Theofanis, and Crump Reversed and Rendered Filed: August 28, 2026