in Re Vaishangi, Inc. , 57 Tex. Sup. Ct. J. 690 ( 2014 )

IN THE SUPREME COURT OF TEXAS
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NO. 13-0169
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IN RE VAISHANGI, INC., ET AL., RELATORS
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ON PETITION FOR WRIT OF MANDAMUS
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PER CURIAM
JUSTICE BROWN did not participate in the decision.
In this mandamus proceeding, we must decide whether the trial court had jurisdiction to
enforce a Rule 11 agreement when the defendant filed a motion to enforce almost one year after the
case had been dismissed. We hold that the Rule 11 agreement was not an agreed judgment. Because
the trial court’s plenary power expired thirty days after the dismissal order, the court lacked power
to enforce the agreement. We conditionally grant relief.
The relators, Vaishangi, Inc., Shivangi, Inc., Meena Patel, and Vinayak K. Patel
(collectively, Vaishangi), entered into a commercial real estate lien note and related security
instruments with Southwestern National Bank to finance a hotel. After disagreement regarding the
note, the Bank accelerated the note and began proceedings to foreclose on the hotel property. In
response, Vaishangi filed suit for breach of contract and wrongful foreclosure in Harris County. The
parties reached a settlement, memorialized in a handwritten Rule 11 agreement,1 which the parties
and the trial court signed. The agreement provided that Vaishangi “agree[d] to execute” a
referenced loan-modification agreement. The Bank filed the Rule 11 agreement with the trial court
that same day and attached an unsigned loan-modification agreement. The parties disagree whether
Vaishangi had an opportunity to review and approve the referenced loan-modification agreement
before the Bank filed the Rule 11 agreement with the court.
Four days later, the trial court signed an agreed order dismissing all claims. The order of
dismissal did not incorporate the entire Rule 11 agreement. The parties soon disagreed on the
principal amount remaining on the note and the terms of the settlement, ultimately resulting in the
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The handwritten Rule 11 agreement reads as follows:
Rule 11 Agreement
Re: 2010-40753; Vaishangi Inc., Shivangi Inc., Meena Patel,
Vinayak K. Patel v. Southwestern National Bank
The Parties in the above-referenced matter, in resolution of this lawsuit, agree to the following terms:
1. Plaintiffs agree to dismiss their claims against Southwestern National Bank with prejudice;
2. Southwestern National Bank agrees to dismiss its claims against Plaintiffs without prejudice;
3. All parties agree to pay their own attorney’s fees and costs;
4. Southwestern National Bank agrees to provide Plaintiffs with a copy of the March 2010 appraisal
and related invoice;
5. Plaintiffs agree to execute the modified loan documents attached hereto;
6. All parties agree that Southwestern National Bank is entitled to and may withdraw all funds held
in the Court’s registry;
7. Plaintiffs agree to have the check from Cramer Johnson Wiggins and Assoc. re-issued payable
solely to Southwestern National Bank, and to have said check mailed to Leyh [sic] & Payne LLP,
9545 Katy Freeway, Suite 200, Houston, Texas, 77024;
8. The District Clerk is ordered to prepare a check made payable to Southwestern National Bank in
the amount of all principal plus interest currently held in the Court’s Registry, less any administrative
fees. Southwestern National Bank’s attorneys can pick up the check on its behalf.
9. All parties agree that all defaults other than payment prior to the date of the modification agreement
are settled including the alleged defaults on this loan relating to the La Porte Property;
10. All parties agree that the Settlement Agreement at issue in this lawsuit dated May 27, 2010, is
valid and enforceable.
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Bank’s foreclosure of the hotel property. Vaishangi filed suit in Bexar County for wrongful
foreclosure.
In response, the Bank filed a motion to transfer the case to Harris County, the venue of the
previously dismissed lawsuit. The Bank also filed a “Motion to Enforce Settlement Agreement” in
the Harris County lawsuit, which had been dismissed eleven months prior. Because Vaishangi had
not yet executed the loan-modification agreement, the motion to enforce requested that the court
order Vaishangi to pay damages, costs, and attorney’s fees. Alternatively, the Bank requested that
the court order Vaishangi to execute the loan-modification agreement. Vaishangi argued in response
that the trial court had no jurisdiction to enforce the Rule 11 agreement because the trial court’s
plenary power expired thirty days after signing the dismissal order. Vaishangi also argued that a
genuine issue of material fact existed regarding the balance owed under the modification agreement
that should be resolved by trial.
Without hearing evidence, the Harris County court issued an order granting the Bank’s
motion to enforce the Rule 11 agreement, awarding the Bank damages and attorney’s fees and
ordering Vaishangi to execute the modification agreement. Vaishangi filed a petition for writ of
mandamus with the Fourteenth Court of Appeals, seeking to set aside the trial court’s enforcement
order by contending that the trial court lacked jurisdiction. The court of appeals denied relief. ___
S.W.3d ___, ___.
If the Rule 11 agreement is a final judgment, as the Bank argues, the trial court maintains
continuing jurisdiction to enforce that judgment. See TEX. R. CIV. P. 308 (providing for court
enforcement of its judgments and decrees). If, however, the agreement is simply an interlocutory
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order, and the dismissal order signed four days later is the court’s final judgment, as Vaishangi
argues, the trial court was without jurisdiction to enforce the Rule 11 agreement because its plenary
power had expired. See TEX. R. CIV. P. 329b(d) (providing that a trial court’s plenary power runs
for thirty days after judgment is signed).
Texas Rule of Civil Procedure 11 provides that “no 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.
We have generally treated Rule 11 agreements as separate and distinct from agreed judgments
entered thereon. See, e.g., Mantas v. Fifth Court of Appeals, 925 S.W.2d 656, 658 (Tex. 1996) (per
curiam) (discussing when a court can “render an agreed judgment on the settlement agreement”);
Padilla v. LaFrance, 907 S.W.2d 454, 462 (Tex. 1995) (“[T]he announcement of the agreement in
open court and its notation on the docket cannot give it the force of a judgment.” (quoting Burnaman
v. Heaton, 240 S.W.2d 288, 292 (Tex. 1951))); Kennedy v. Hyde, 682 S.W.2d 525, 528 (Tex. 1984)
(“[N]otwithstanding a valid Rule 11 agreement, consent must exist at the time an agreed judgment
is rendered.”). But nothing in the rules of procedure prohibits a Rule 11 agreement from being,
itself, an agreed judgment, so long as the agreement meets the requirements for a final judgment.
A judgment is final “if and only if either it actually disposes of all claims and parties then before the
court, regardless of its language, or it states with unmistakable clarity that it is a final judgment as
to all claims and all parties.” Bison Bldg. Materials, Ltd. v. Aldridge, 422 S.W.3d 582, 585 (Tex.
2012) (quoting Lehmann v. Har-Con Corp., 39 S.W.3d 191, 192–93 (Tex. 2001)); Able Cabling
Servs., Inc. v. Aaron-Carter Elec., Inc., 16 S.W.3d 98, 100–01 (Tex. App.—Houston [1st Dist.]
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2000, pet. denied). However, a trial court’s “approval of a settlement does not necessarily constitute
rendition of judgment,” because rendition of judgment requires a “present act” to “decide the
issues.” S & A Rest. Corp. v. Leal, 892 S.W.2d 855, 857–58 (Tex. 1995) (per curiam) (citing Reese
v. Piperi, 534 S.W.2d 329, 330 (Tex. 1976)). When parties dictate a settlement agreement on the
record (creating an enforceable agreement under Rule 11) and the trial court approves it on the
record, such a settlement agreement does not constitute an agreed judgment unless “[t]he words used
by the trial court . . . clearly indicate the intent to render judgment at the time the words are
expressed.” Id. at 858.
The Bank argues that fact issues regarding whether the Rule 11 agreement disposed of all
claims and all parties preclude us from determining this issue in a mandamus proceeding. See, e.g.,
West v. Solito, 563 S.W.2d 240, 245 (Tex. 1978) (“[A]n appellate court may not deal with disputed
areas of fact in a mandamus proceeding.”). Although fact issues about the scope and terms of the
Rule 11 agreement may remain, those issues do not prevent the Court from determining as a matter
of law whether the Rule 11 agreement constitutes an agreed judgment. See Walker v. Packer, 827
S.W.2d 833, 840 (Tex. 1992) (noting that this Court has the power to determine legal questions in
a mandamus proceeding). Additionally, we are not precluded from deciding if the trial court
exceeded its jurisdiction, as we need not resolve any fact issues to reach that determination. See In
re Sw. Bell Tel. Co., 35 S.W.3d 602, 605 (Tex. 2000) (per curiam) (“Mandamus is proper if a trial
court issues an order beyond its jurisdiction.”); In re Ford Motor Co., 988 S.W.2d 714, 722 (Tex.
1998) (refusing to grant mandamus where the resolution of fact disputes was essential to
determining if mandamus relief was proper). The Bank’s concerns go to the question of whether
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the parties agreed to dispose of all claims; the issue before the Court is whether the trial court
intended to dispose of all claims and all parties through the entry of this agreement, thereby
rendering final judgment, at that moment.
The Rule 11 agreement here provides that Vaishangi and the Bank agree to dismiss all
claims. Additionally, the agreement states that “[a]ll parties agree that the Settlement Agreement
at issue in this lawsuit dated May 27, 2010, is valid and enforceable.” Although the trial court
signed the agreement, nowhere did the trial court indicate the “intent to render judgment at the time
the words [were] expressed.” S & A Rest. Corp., 892 S.W.2d at 858. In fact, we note that the Rule
11 agreement contains no decretal language typically seen in a judgment (i.e., “ordered, adjudged,
and decreed”), while the dismissal order repeatedly recites the decretal language of “ordered,
adjudged, and decreed.” The signed agreement may be a binding and enforceable settlement as
between the parties, but we cannot conclude that it is a judgment.
Additionally, if the Rule 11 agreement were a final judgment, the dismissal order would have
been useless and unnecessary because a trial court can render only one judgment in a case, TEX. R.
CIV. P. 301. Thus, the trial court here likely would not have entered the dismissal order had it
intended the Rule 11 agreement to be a final judgment. Further, a later judgment supersedes a prior
one, see Old Republic Ins. Co. v. Scott, 846 S.W.2d 832, 833 & n.2 (Tex. 1993), so the dismissal
order would have nullified any effect of the Rule 11 agreement as a judgment. The only reasonable
conclusion is that the dismissal order is the trial court’s final judgment and the Rule 11 agreement
is not. See Stewart v. USA Custom Paint & Body Shop, Inc., 870 S.W.2d 18, 20 (Tex. 1994) (“A
properly executed order of dismissal is a judgment.”).
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While a party can certainly pursue a claim for breach of a settlement agreement even when
that settlement agreement is not an agreed judgment, the “[t]he party seeking enforcement of the
settlement agreement must pursue a separate claim for breach of contract.” Ford Motor Co. v.
Castillo, 279 S.W.3d 656, 663 (Tex. 2009). When, as here, the trial court’s plenary power had
expired, a party could not “reinvest the trial court that dismissed the case with jurisdiction to enforce
the settlement agreement” by filing a post-judgment motion to enforce the agreement. Univ. Gen.
Hosp., LP v. Siemens Med. Solutions USA, Inc., ___ S.W.3d ___, ___ (Tex. App.—Houston [1st
Dist.] Feb. 28, 2013, no pet.) (mem. op.). When the trial court nevertheless heard the motion and
issued an order enforcing the settlement agreement, the trial court exceeded its jurisdictional
authority. See In re John G. & Marie Stella Kenedy Mem’l Found., 315 S.W.3d 519, 522 (Tex.
2010). In these instances, mandamus is proper even without a showing that the relator lacks an
adequate remedy on appeal. See Sw. Bell Tel. Co., 35 S.W.3d at 605 (“Mandamus is proper if a trial
court issues an order beyond its jurisdiction . . . . Further, because the order was void, the relator
need not show it did not have an adequate appellate remedy, and mandamus relief is appropriate.”
(citing In re Dickason, 987 S.W.2d 570, 571 (Tex. 1998))). Therefore, we conditionally grant the
petition for writ of mandamus without hearing oral argument, see TEX. R. APP. P. 52.8(c), and direct
the trial court to vacate its order granting Southwestern National Bank’s motion to enforce the
settlement agreement. As we are confident that the trial court will comply, the writ will issue only
if the trial court fails to do so.
OPINION DELIVERED: June 6, 2014
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