Dalton R. McWhinney and Velva McWhinney v. Ameriquest Mortgage Securities, Inc., and Deutsche Bank National Trust Company ( 2014 )

Opinion issued December 4, 2014
In The
Court of Appeals
For The
First District of Texas
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NO. 01-13-00761-CV
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DALTON R. MCWHINNEY AND VELVA MCWHINNEY, Appellants
V.
AMERIQUEST MORTGAGE SECURITIES, INC., AND DEUTSCHE
BANK NATIONAL TRUST COMPANY, Appellees
On Appeal from the 506th District Court
Waller County, Texas
Trial Court Case No. 07-09-19041
MEMORANDUM OPINION
Appellants Dalton and Velva McWhinney appeal the trial court’s dismissal
of their claims against Appellees Ameriquest Mortgage Securities, Inc. and
Deutsche Bank National Trust Company. After Appellees foreclosed on the
McWhinneys’ home, the McWhinneys sued Appellees, asserting breach of contract
and various other claims. The parties entered into a settlement agreement that
contemplated reinstatement of the mortgage following the McWhinneys’ cash
payment of $10,000 to Appellees. When the McWhinneys failed to pay any
amount under the settlement agreement, Appellees moved to enforce the settlement
agreement. The trial court entered an order granting the Appellees’ motion to
enforce and dismissing the McWhinneys’ claims with prejudice. The
McWhinneys contend on appeal that the trial court’s dismissal of their claims was
error. We agree. Accordingly, we reverse and remand.
Background
In November 2005, Appellants Dalton and Velva McWhinney obtained an
adjustable rate mortgage in the amount of $81,000 for a property in Prairie View,
Texas. The McWhinneys defaulted and Appellees foreclosed on the property in
December 2006.
In 2007, Appellees filed a forcible detainer and eviction lawsuit. The Waller
County Justice of the Peace No. 3 rendered an eviction judgment in favor of
Appellees, but the McWhinneys sued Appellees before the Appellees obtained a
writ of possession. After the Waller County Court at Law dismissed that lawsuit,
the McWhinneys sued in district court to stop the eviction and maintain possession
of the property. They asserted claims for breach of contract, tortious breach of
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good faith and fair dealing, negligent misrepresentation, deceptive trade practices,
and unfair debt collection practices.
While the suit was pending in district court, the parties entered into a Rule
11 agreement and a “Settlement Agreement and General Release” (“Settlement
Agreement”). The Settlement Agreement contemplated reinstatement of the
mortgage not later than 30 days after the McWhinneys paid Deutsche Bank
$10,000 and dismissal of the “entire case” thereafter. The Settlement Agreement
provided that performance would occur as follows:
A. “Not later than fifteen (14) days after Deutsche Bank’s execution of
this Agreement as set forth below on the signature hereto, the
McWhinneys shall: (1) pay Deutsche Bank $10,000.00 in certified
funds . . . and (2) execute the Recession and Reinstatement Agreement
....
B. “Not later than thirty (30) days after counsel’s receipt of the
McWhinney’s certified funds and executed Recession and
Reinstatement Agreement, Deutsche Bank shall: (1) file the Recession
and Reinstatement Agreement of record in the Waller County Real
Property Records; and (2) reinstate the Mortgage in its system with a
principal balance of $83,728.00 to commence servicing of it and will
provide written confirmation thereof to the McWhinneys, which will
include notice of the McWhinneys first payment thereunder.”
C. “Thereafter, the parties shall move to dismiss this entire case with
prejudice by executing and filing a Joint Motion for Dismissal with
Prejudice and Order granting same, true and correct copies of which
are attached as Exhibit No. 2 and are incorporated for all purposes.”
D. “Upon satisfaction of the conditions set forth in §II(A)-(C) above, the
McWhinneys . . . hereby unconditionally and irrevocably remises,
releases, forever discharges and covenants not to sue Deutsche Bank,
AHMSI, or Ameriquest Mortgage Securities, Inc. . . . .”
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In October 2012, eight months after the McWhinneys returned the signed
Settlement Agreement and Recession and Reinstatement Agreement, they filed a
motion to compel Deutsche Bank to sign the Settlement Agreement. In their
response, Appellees argued that the Settlement Agreement was not enforceable
because there was no meeting of the minds and, in the alternative, that the
McWhinneys breached the Settlement Agreement by failing to make any
payments.
The trial court held a hearing on the McWhinneys’ motion to compel in
November 2012; it concluded that the Settlement Agreement was enforceable and
ordered performance. While it did not enter a written order at that time, it orally
ordered:
• Appellees to sign the agreement and notify the McWhinneys of their signing
by December 15, 2012.
• Appellees to calculate the interest accrued between February 2011 and
January 2013 and notify the McWhinneys of the amount of interest by
November 30, 2012.
• The McWhinneys to pay $10,000 plus “accrued interest since February 11th
of 2011 at the rate of the original loan document; not the matured rate, but at
the loan rate.”
• The McWhinneys to pay all taxes accrued on the property.
• The McWhinneys make their first monthly payment in February 2013.
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The trial court stated: “If the McWhinneys fail to pay the $10,000 plus the
accrued interest plus the taxes no later than January 31, 2013, the mortgage
company title will be affirmed.” The trial court also stated that if the McWhinneys
“don’t pay all of that accrued interest through January 31st, you don’t have a deal.”
On December 21, 2012, Appellees informed the McWhinneys that the
accrued interest totaled $18,440.12. On January 31, 2013, the date by which the
trial court ordered the McWhinneys to pay the $10,000 plus accrued interest of
$18,440.12, the McWhinneys filed an “Objection to Calculations Submitted by
Respondent, and in the Alternative Objection to Order of the Court.” The
McWhinneys complained about the proposed interest calculations and requested
that the trial court reconsider its order and set the case for trial.
In April 2013, Appellees filed a “Motion to Enforce the Court’s Order.”
Appellees argued that because the McWhinneys failed to comply with the trial
court’s oral ruling requiring them to pay $10,000 and accrued interest by January
31, 2013, the Appellees were “entitled to an order affirming its title to the subject
property and dismissing this case with prejudice.”
The trial court heard argument on Appellees’ motion to enforce and the
McWhinneys’s motions in July 2013. The McWhinneys reiterated their objections
to the trial court’s ruling at the November 2012 hearing. The McWhinneys also
argued that they should not have to pay the $18,440.12 in interest dating back to
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February 2011 in a lump sum as the trial court ordered, because the Settlement
Agreement did not require it.
The trial court disagreed and stated that the November 2012 ruling
“effected” the Settlement Agreement:
[T]aking into reasonable consideration those times that needed to be
adjusted because of some delays. So from that standpoint, I don’t see
how your clients are entitled to any additional trials. They settled the
case. It is then at that point it becomes necessary to perform under the
settlement agreements tempered by the rulings from November.
The McWhinneys continued to object that the interest calculation was erroneous,
and that they did not waive their right to a jury trial.
On August 1, 2013, the trial court entered an order memorializing its oral
rulings from the November 2012 hearing, along with an Order of Dismissal. In the
Order of Dismissal, the trial court overruled the McWhinneys’ Objection to Court
Rendition, granted Appellees’ Motion to Enforce, and dismissed the case with
prejudice “for Plaintiffs’ failure to comply with the Court’s Order on Plaintiffs’
Motion to Compel settlement.” The McWhinneys appealed.
The trial court erred in dismissing the McWhinneys’ claims
In two issues, the McWhinneys contend that the trial court abused its
discretion in dismissing the case with prejudice for failing to comply with the
Settlement Agreement and in denying the McWhinneys’ request for a jury trial.
Because the Settlement Agreement required the McWhinneys to dismiss their
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claims only after they paid Deutsche Bank $10,000 and Deutsche Bank reinstated
their mortgage—and neither of these predicate conditions came to pass—the trial
court erred in dismissing the McWhinneys’ claims with prejudice.
A. Standard of Review and Applicable Law
We construe settlement agreements under normal rules of contract
construction. McCoy v. Rogers, 240 S.W.3d 267, 276 (Tex. App.—Houston [1st
Dist.] 2007, pet. denied). “In construing a written contract, the primary concern of
the court is to ascertain the true intentions of the parties as expressed in the
instrument.” J.M. Davidson, Inc. v. Webster, 128 S.W.3d 223, 229 (Tex. 2003).
“Words in a contract must carry their ordinary, generally accepted meanings unless
the contract itself shows that the terms have been used in a technical or different
sense.” Doe v. Tex. Ass’n of Sch. Bds., Inc., 283 S.W.3d 451, 458 (Tex. App.—
Fort Worth 2009, pet. denied) (citing Ramsay v. Md. Am. Gen. Ins. Co., 533
S.W.2d 344, 346 (Tex. 1976)). “In construing a contract, we may not rewrite it nor
add to its language.” Id. Thus, courts cannot grant remedies for breach of an
agreement not contemplated by the parties. See Island Entm’t Inc. v. Castaneda,
882 S.W.2d 2, 5 (Tex. App.—Houston [1st Dist.] 1994, writ denied) (holding that
trial court could enforce settlement agreement but could not punish breach with
sanctions). Courts likewise cannot read into an agreement terms that were not
included by the parties. Am. Mfrs. Mut. Ins. Co. v. Schaefer, 124 S.W.3d 154, 162
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(Tex. 2003) (“[W]e may neither rewrite the parties’ contract nor add to its
language.”).
The interpretation of an unambiguous contract is a matter of law to be
determined by the trial court. Gulf Ins. Co. v. Burns Motors, Inc., 22 S.W.3d 417,
423 (Tex. 2000). We review the trial court’s interpretation of and enforcement of
the Settlement Agreement de novo. See Spiegel v. KLRU Endowment Fund, 228
S.W.3d 237, 240–41 (Tex. App.—Austin 2007, pet. denied) (because enforcement
of mediated settlement agreement raised purely legal issues, court used de novo
standard of review).
B. Analysis
In their motion to enforce, Appellees argued that the trial court should
dismiss the McWhinneys’ claims because the McWhinneys breached the
Settlement Agreement by failing to pay $10,000 and accrued interest by January
31, 2013, as required by the trial court’s order. The trial court’s judgment
dismissed the McWhinneys’ claims against Appellees with prejudice for breaching
the Settlement Agreement by failing “to comply with the Court’s Order on
Plaintiffs’ Motion to Compel settlement.”
But the Settlement Agreement does not reflect that the parties agreed that
dismissal of the claims would be the remedy for a breach by the McWhinneys.
Rather, the Settlement Agreement contemplates that dismissal of the McWhinneys’
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claims would occur only if and after the parties both performed their other
respective obligations.
Specifically, the Settlement Agreement indicates that the McWhinneys
conditioned their agreement to dismiss their claims upon Deutsche Bank’s filing of
the Recession and Reinstatement Agreement and Deutsche Bank’s reinstating the
mortgage. Deutsche Bank’s obligation to reinstate the mortgage was, in turn,
conditioned upon the McWhinneys’ payment of $10,000 and execution of the
Recession and Reinstatement Agreement. Neither of these conditions was
fulfilled; thus the McWhinneys’ obligation to dismiss the case pursuant to the
terms of the Settlement Agreement did not arise. Therefore, the trial court erred in
concluding that dismissal of the McWhinneys’ claims was the appropriate remedy
for their failure to perform under the Settlement Agreement. See Bruess v.
Residential Credit Solutions, Inc., No. 01-13-00321-CV, 2014 WL 3843517, at *4
(Tex. App.—Houston [1st Dist.] Aug. 5, 2014, no pet.) (mem. op.) (trial court
erred in dismissing plaintiffs’ claims because terms of agreement did not provide
for “final resolution of the parties’ claims against each other”).
We sustain the McWhinneys’ first issue. Having concluded that the trial
court erred in dismissing the McWhinneys’ claims with prejudice for failure to
comply with the Settlement Agreement, we decline to specifically address the
McWhinneys’ second issue regarding their demand for a jury trial as its resolution
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would not result in greater relief to the McWhinneys. See TEX. R. APP. P. 47.1
(court of appeals need only address issues raised and necessary to disposition of
appeal); State v. Ninety Thousand Two Hundred Thirty–Five Dollars and No Cents
in U.S. Currency ($90,235), 390 S.W.3d 289, 294 (Tex. 2013) (same).
Conclusion
We reverse the trial court’s judgment and remand for further proceedings
consistent with this opinion.
Rebeca Huddle
Justice
Panel consists of Chief Justice Radack and Justices Bland and Huddle.
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