Lefevre v. Keaty , 191 F.3d 596 ( 1999 )

IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
No. 98-40709
FRANK H LEFEVRE; ET AL
Plaintiffs
JANE ROSS; WENDY CARMICHAEL
Plaintiffs - Appellees
versus
ROBERT M KEATY; THOMAS KEATY;
KEATY & KEATY, doing business as
The Keaty Firm
Defendants - Appellants
___________________________
JANE ROSS; WENDY CARMICHAEL
Plaintiffs - Appellees
versus
KEATY & KEATY, doing business as
The Keaty Firm; ROBERT KEATY;
THOMAS KEATY
Defendants - Appellants
Appeal from the United States District Court
for the Southern District of Texas
September 30, 1999
Before REYNALDO G. GARZA, HIGGINBOTHAM, and DAVIS, Circuit Judges.
PATRICK E. HIGGINBOTHAM, Circuit Judge:
In this diversity case, we determine whether an enforceable
settlement occurred under Texas Rule of Civil Procedure 11.
Because we find that parties reached no enforceable settlement on
which a judgment could be based, we VACATE AND REMAND the final
judgment of the district court.
I.
Jane Ross and Wendy Carmichael brought this diversity action
for negligence and breach of fiduciary duty against their lawyers,
the Keatys. In February of 1998, the parties informed the district
court that they had reached a settlement after an unreported
settlement conference. The district court entered an order
administratively closing the case pending settlement. Ultimately,
however, the Keatys did not fund the settlement and voiced concerns
about the terms of the release.
The court scheduled another settlement conference for May 8,
1998. At that hearing, the parties discussed the two remaining
issues regarding the releases: language releasing certain third
parties, and a deferred final judgment as a mechanism to address
the releases by the Ross and Carmichael minor children. The court
asked counsel for the Keatys to draft the deferred final judgment.
Counsel for Ross and Carmichael gave releases to counsel for the
Keatys. The district court then ordered the Keatys to tender
complete settlement funds by May 12, 1998.
The Keatys failed to prepare the final judgment or to fund the
settlement, and on May 13, the district court entered an order
reprimanding the Keatys and ruling that the parties’ settlement
agreement was binding on them as a matter of law. The district
court then entered final judgment, including costs and pre-judgment
interest. The Keatys appealed.
II.
The Keatys contend that the judgment was improper because the
parties did not reach an enforceable settlement. In diversity
cases, Texas Rule of Civil Procedure 11 governs the enforcement of
settlements. See Anderegg v. High Standard, Inc., 825 F.2d 77, 80
(5th Cir. 1987). That rule includes two formal components.
First, there must be documentation of the settlement. Rule 11
requires oral recitation in court or written commemoration of the
settlement. See Anderegg, 825 F.2d at 80. Rule 11 provides:
[N]o 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 (1999). If the agreement is oral, it should be
dictated into the record and assented to on the record by the
parties. See Anderegg, 825 F.2d at 81.
Second, the state court must render judgment by officially
announcing its decision in open court or filing a written order
with the clerk. See Anderegg, 825 F.2d at 80. Until the court
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renders judgment, either party may revoke the settlement.1 See
S & A Restaurant Corp. v. Leal, 892 S.W.2d 855, 857 (Tex. 1995).
The court’s order must indicate that no further action need be
taken for judgment. In Buffalo Bag Company v. Joachim, for
example, the court held that no final judgment was rendered where
the trial court approved the parties’ settlement and noted on the
docket sheet, “[j]udgment to be entered accordingly.” 704 S.W.2d
482, 483 (Tex. App. 1986). The court held that the language
indicated that a further, future action would effectuate judgment.
Moreover, the court noted that the parties’ announcement that they
would prepare a judgment and submit it to the judge for signature
could not amount to a rendition of judgment. See Buffalo Bag, 704
S.W.2d at 483-84.
In this case, the required pairing of formalities never
occurred. Regarding the February hearing, there appears to be no
documentation that the parties commemorated a final settlement.
Even if there were such evidence, there was no final judgment by
the court. The administrative closing order noted that the case
was closed “pending settlement,” indicating that further action
needed to occur before judgment would be final. The Keatys’
1
This does not mean that the other party is left without a
remedy. He may amend his pleadings to bring a breach of contract
action against the non-settling party, and the judge may enforce
the settlement as a written contract upon demonstration of proof.
See Mantas v. Fifth Court of Appeals, 925 S.W.2d 656, 658 (Tex.
1996); Padilla v. LaFrance, 907 S.W.2d 454, 461-62 (Tex. 1995).
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subsequent announcement that they had remaining concerns revoked
their assent to any February settlement.
At the May 8 hearing, the parties appeared to settle the
remaining release issues. They never read the specific terms into
the record, however, or prepared a written memorandum of the
terms. Their general agreement is insufficient to satisfy the
Texas rule. Without a final agreement of the parties, the district
court had no authority to issue a final judgment or grant interest
on May 13.
VACATED AND REMANDED.
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