In Re Mabray , 355 S.W.3d 16 ( 2010 )


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  • OPINION1

    LAURA CARTER HIGLEY, Justice.

    By a petition for writ of mandamus, relator, Mary Lynn Mabray, challenges the trial court’s October 30, 2009 order denying her motion to disqualify Brenda Keen, counsel from representing her husband, Gary Allen Mabray, and her motion to revoke consent to arbitration. Mary contends that Keen’s representation of her husband, and the arbitration agreement itself, violate Texas public policy. We disagree. Accordingly, we deny mandamus relief.

    Background

    After 35 years of marriage, Mary discovered her husband Gary’s alleged ongoing infidelity and sought a divorce. She retained Harry L. Tindall, and filed an action for divorce in September 2008. Gary re*20tained Brenda Keen and filed an answer in October 2008.

    On February 12, 2009, the parties and their counsel signed a four page document titled “Cooperative Law Dispute Resolution Agreement” (“the Agreement”). The Agreement states that the parties agreed to “effectively and honestly communicate with each other with the goal of efficiently and economically settling the terms of the dissolution of the marriage.”

    The Agreement forbids formal discovery unless agreed upon, relying instead on “good faith” informal discovery. Specifically, the Agreement provides:

    No formal discovery procedure will be used unless specifically agreed to in advance. The parties will be required to sign a sworn inventory and appraisement if requested by the other party.
    We acknowledge that, by using informal discovery, we are giving up certain investigative procedures and methods that would be available to us in the litigation process. We give up these measures with the specific understanding that the parties will make to each other a complete and accurate disclosure of all assets, income, debts, and other information necessary for us to reach a fair settlement. Participation in this process is based on the assumptions that we have acted in good faith and that the parties have provided complete and accurate information to the best of their ability.

    Neither party requested a sworn inventory and appraisement.

    The Agreement also provides that, if the divorce was not settled by April 30, 2009, the cooperative law process would cease and the parties agreed to submit the divorce to arbitration. Specifically, the Agreement provides:

    The parties further agree that if this case has not been settled by negotiation and an Agreed Final Decree of Divorce has not been submitted to and signed by the Court before April 30, 2009 then this matter will be submitted to binding arbitration pursuant to the Joint Motion for Referral to Arbitration and Agreed Order of Referral to Arbitration attached hereto and made a part hereof.
    The parties agree to be bound by this agreement, the Texas alternative Dispute Resolution Procedures Act (chapter 154 of the Texas Civil Practice and Remedies Code), the Texas General Arbitration Law (chapter 171 of the Texas Civil Practice and Remedies Code), Section 6.601, Texas Family code, and the laws of the state of Texas.

    The parties, through their counsel signed a “Joint Motion for Referral to Arbitration” that was filed on March 11, 2009. The motion asked the trial court to submit their case to arbitration on or before July 3, 2009, if the parties had not resolved their case by agreement by April 30, 2009, and also asked that a certain person, agreed to by the parties, be appointed as the arbitrator. The trial court signed the requested order on March 18, 2009.

    An agreed final decree of divorce was not submitted to the court by April 30, 2009. Accordingly, the cooperative law process ceased by its own terms.

    In May, the person appointed as the arbitrator discovered a conflict that prevented him from presiding over the arbitration proceedings. The parties subsequently agreed to a new person to act as arbitrator and submitted an agreed order to the trial court on July 2, 2009, representing “as evidenced by the signatures of their respective attorneys of record” that (1) they wanted a new arbitrator appointed; (2) the case was not resolved by agree*21ment of the parties before April 30, 2009; and (3) they had agreed to amend the Agreement to provide that the case would be submitted to binding arbitration on or before August 31, 2009.2 The trial court signed the order on August 12, 2009, ordering the parties to submit their dispute for arbitration before the newly-designated arbitrator on August 26, 2009 — a date agreed to by the parties.

    After the parties submitted this agreed order to the trial court, but before the trial court signed the order, Mary submitted a motion to substitute counsel. The order granting the motion to substitute counsel was signed by the trial court on August 7, 2009. Accordingly, Mary’s new counsel, Stephen Shoultz, was appointed five days before the agreed order was signed.

    On August 14, 2009, two days after the agreed order had been signed, Mary filed a motion to revoke her consent to arbitration. Specifically, she stated that Tindall had “forced” her to sign the Agreement while she was “emotionally distraught” over the divorce and under the influence of tranquilizers.

    Six days after that, she filed a motion to disqualify Keen, Gary’s counsel. Mary asserted that the Agreement sought to “contract around” Texas’s collaborative law statute, section 6.603 of the Texas Family Code. Because Keen would be unable to continue to represent Gary in litigation under a collaborative law agreement once the collaborative process had failed, Mary contended that Keen must also be disqualified after the cooperative process failed.

    Gary moved to enforce the Agreement and to compel arbitration, noting that the Texas collaborative law statute is inapplicable to cooperative law agreements.

    At the hearing, Mary contended that Gary breached the cooperative law agreement by concealing assets, but Gary’s counsel asserted that the arbitrator, not the trial court, should determine whether he breached the Agreement.3 The trial court agreed with Gary’s counsel, noting that the parties had eschewed formal, sworn discovery unless made otherwise by agreement. The trial court granted Gary’s motion, concluding that “[i]f they want to enter into an agreement which, apparently, they both signed, and call it Cooperative Law Agreement ... I don’t think there’s any assumption that they can’t do that.”

    On October 30, 2009, the trial court signed an order compelling arbitration, which provides, in part:

    This case was not resolved by agreement of the parties before April 30, 2009, and the parties are required to arbitrate their divorce action pursuant to the Cooperative Law Dispute Resolution Agreement signed by the parties on February 12, 2009....
    It is ordered that Mary Lynn Mabray’s Motion to Disqualify Brenda Keen is hereby denied.
    It is ordered that Mary Lynn Mabray’s First Amended Motion to Revoke Consent to Arbitration and Request for Jury Trial is hereby denied.

    The trial court filed findings of fact and conclusions of law. Subsequently, the trial court filed additional findings of fact and conclusions of law that state:

    1. Brenda Keen is not required to withdraw as attorney for Gary Allen *22Mabray after the parties failed to reach a settlement under the Cooperative Law Dispute Resolution Agreement.
    2. The Cooperative Law Dispute Resolution Agreement is not governed by Texas Family Code § 6.603.
    3. The Cooperative Law Dispute Resolution Agreement does not violate Texas Public Policy.
    4. Brenda Keen is not disqualified to represent Gary Allen Mabray.

    In two points of error in her petition for writ of mandamus, Mary argues that the trial court abused its discretion in failing to disqualify Keen and in ordering the parties to submit to arbitration. For her first point of error, Mary does not contend that Keen’s representation of Gary violates the Texas Disciplinary Rules of Professional Conduct. See In re Cerberus Capital Mgmt., L.P., 164 S.W.3d 379, 382 (Tex. 2005) (holding disciplinary rules can provide guidelines relevant to a disqualification determination). Moreover, she does not assert that she divulged confidential information to Keen that could be used inappropriately in litigation. Nor does she state that she and Keen engaged in an attorney-client relationship. Instead, she contends generally that Keen must be disqualified because the collaborative law statute controls the agreement and because cooperative law agreements violate public policy in Texas.

    In his response to the petition for writ of mandamus, Gary argues that Mary’s petition is barred by laches.

    Mandamus Review

    Mandamus relief is available only to correct a clear abuse of discretion when there is no adequate remedy by appeal. Walker v. Packer, 827 S.W.2d 833, 839 (Tex.1992). A clear abuse of discretion occurs when a trial court “reaches a decision so arbitrary and unreasonable as to amount to a clear and prejudicial error of law.” Johnson v. Fourth Court of Appeals, 700 S.W.2d 916, 917 (Tex.1985) (orig. proceeding). The reviewing court may not substitute its judgment for that of the trial court when reviewing factual issues. Walker, 827 S.W.2d at 839-40. Even if the reviewing court would have decided the issue differently, it cannot disturb the trial court’s decision unless the decision is shown to be arbitrary and unreasonable. Id. at 840. When a trial court improperly denies a motion to disqualify opposing counsel, there is no adequate remedy by appeal and mandamus relief is appropriate. In re Basco, 221 S.W.3d 637, 639 (Tex.2007). Mandamus review may be appropriate for an order granting a motion to compel arbitration when it is necessary “to preserve important substantive and procedural rights from impairment or loss.” In re Gulf Exploration, LLC, 289 S.W.3d 836, 843 (Tex.2009).

    Laches

    As a threshold issue, Gary contends that Mary’s petition for writ of mandamus is barred by laches. Although mandamus is a legal remedy, it is largely controlled by equitable principles. River-center Assocs. v. Rivera, 858 S.W.2d 366, 367 (Tex.1993). One such equitable principle is that equity aids the diligent and not those who slumber on their rights. Id. A party asserting the defense of laches must show both an unreasonable delay by the mandamus petitioner and harm resulting from the delay. Rogers v. Ricane Enters., 772 S.W.2d 76, 80 (Tex.1989). Delay alone will not constitute laches; injury or prejudice must also be established. Lawrence v. Lawrence, 911 S.W.2d 443, 449 (Tex.App.-Texarkana 1995, writ denied). Lach-es is a question of fact that should be determined by considering all of the cir*23cumstances in each particular case. See Tribble & Stephens Co. v. RGM Constructors, L.P., 154 S.W.3d 639, 669 (TexApp.-Houston [14th Dist.] 2004, pet. denied).

    Here, the trial court signed its order denying Mary’s motions to disqualify Keen and revoke consent to the Agreement on October 30, 2009. The trial court issued its additional findings of fact and conclusions of law on November 25, 2009. Mary petitioned for mandamus on December 22, 2009, and explained that the delay was caused because she was waiting to review the trial court’s additional findings of fact and conclusions of law. Gary does not indicate how he was harmed by the delay. See Rogers, 772 S.W.2d at 80. Because Mary adequately explains her brief delay and Gary fails to show harm, we hold that Mary has not slumbered on her rights.

    Collaborative and Cooperative Law

    The case before us concerns the legitimacy of cooperative law. Because cooperative law is untreated in Texas case law, and its more established cousin, collaborative law, only receives minor treatment, a brief exposition of each is warranted.

    Collaborative law is codified in the Texas Family Code, which provides, in part:

    (a) On a written agreement of the parties and their attorneys, a dissolution of marriage proceeding may be conducted under collaborative law procedures.
    (b) Collaborative law is a procedure in which the parties and their counsel agree in writing to use their best efforts and make a good faith attempt to resolve their dissolution of marriage dispute on an agreed basis without resorting to judicial intervention except to have the court approve the settlement agreement, make the legal pronouncements, and sign the orders required by law to effectuate the agreement of the parties as the court determines appropriate. The parties’ counsel may not serve as litigation counsel except to ask the court to approve the settlement agreement.
    (c)A collaborative law agreement must include provisions for:
    (1) full and candid exchange of information between parties and their attorneys as necessary to make a proper evaluation of the case;
    (2) suspending court intervention in the dispute while the parties are using collaborative law procedures;
    (3) hiring experts, as jointly agreed, to be used in the procedure
    (4) withdrawal of all counsel involved in the collaborative law procedure if the collaborative law procedure does not result in settlement of the dispute; and
    (5) other provisions as agreed to by the parties consistent with a good faith effort to collaboratively settle the matter.
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    Tex. Fam.Code Ann. § 6.603 (Vernon 2006) (emphasis added).

    Collaborative law is a variety of alternative dispute resolution, used most commonly in the context of divorce, that “provides for an advance agreement entered into by the parties and the lawyers in their individual capacities, under which the lawyers commit to terminate their representations in the event the settlement process is unsuccessful and the matter proceeds to litigation.” Stephanie Smith and Janet Martinez, An Analytic Framework for Dispute System Design, 14 Harv. Negot. L. Rev. 123, 166 (2009). Developed in Minnesota in 1990, collaborative law attempts to fos*24ter an amiable rather than an adversarial atmosphere by creating a “four-way” agreement between each party and their attorneys “in which all are expected to participate actively.” John Lande and Gregg Herman, Fitting the Forum to the Family Fuss, 42 Fam. Ct. Rev. 280, 283 (2004).

    The presence of a disqualification agreement is widely held to be the minimum qualification for calling a practice collaborative law. Id.; see also Pauline Tesler, Collaborative Law: Achieving Effective Resolution in Divorce Without Litigation 5-6 (American Bar Association 2008) (“There is really only one irreducible minimum condition for calling what you do ‘collaborative law”: you and the counsel for the other party must sign papers disqualifying you from ever appearing in court on behalf of either of these clients against the other.”). Specifically, collaborative law attorneys cannot represent their collaborative clients in litigation if the collaborative process fails, but collaborative law clients retain their right to pursue litigation with new counsel. John Lande, Possibilities for Collaborative Law: Ethics and Practice of Lawyer Disqualification and Process Control in a New Model of Lawyering, 64 Ohio St. L.J. 1315, 1322 n. 20 (2003).

    In some jurisdictions, collaborative law attorneys may continue to represent their clients in arbitration if the parties agree to arbitration in the collaborative law agreement. See, e.g., N.C. Gen.Stat. § 50-78 (2007) (providing, “The parties’ attorneys for the collaborative law proceeding may also serve as counsel for any form of alternate dispute resolution pursued as part of the collaborative law agreement”). Although case law has not addressed the issue, Texas appears to preclude a collaborative-law attorney’s representation of a collaborative-law client in arbitration. See Tex. Fam.Code Ann. § 6.603(c)(4).

    Akin to collaborative law, cooperative law “is a process which incorporates many of the hallmarks of Collaborative Law but does not require the lawyer to enter into a contract with the opposing party providing for the lawyer’s disqualification.” Smith and Martinez, 14 Harv. Negot. L. Rev. at 166. “Cooperative law includes a written agreement to make full, voluntary disclosure of all financial information, avoid formal discovery procedures, utilize joint rather than unilateral appraisals, and use interest-based negotiation.” Lande and Herman, 42 Fam. Ct. Rev. at 284. Put simply, cooperative law agreements mirror collaborative law agreements in spirit and objective, but lack the disqualification clause unique to collaborative law agreements.

    Mary portrays cooperative law as an illegitimate aberration of collaborative law, and asks that the Agreement be interpreted by the statutory standards of a collaborative law agreement. However, it is noteworthy that at least one legal association has determined that cooperative law passes ethical muster while collaborative law does not. The Ethics Committee for the Colorado Bar Association states:

    [T]he practice of Collaborative Law violates Rule 1.7(b) of Colorado Rules of Professional Conduct insofar as a lawyer participating in the process enters into a contractual agreement with the opposing party requiring the lawyer to withdraw in the event that the process is unsuccessful. The Committee further concludes that pursuant to Colo. RPC 1.7(c) the client’s consent to waive this conflict cannot be validly obtained. Because Cooperative Law lacks the disqualification agreement found in Collaborative Law, *25the practice of Cooperative Law is not per se unethical.4

    Colo. Bar Ass’n Ethics Comm., Formal Op. 115 (Feb. 24, 2007).

    Here, we do not weigh the legitimacy of collaborative law; it already has been adopted in Texas.5 Instead, we examine whether the collaborative law statute excludes the use of cooperative agreements and whether Texas public policy permits cooperative law, a matter of first impression in this court. According to experts, cooperative law is a small but legitimate movement akin to collaborative law. See, e.g., Hon. Tommy Bryan, Saying “No” To Court?, 70 Ala. Law. 434, 436 (2009); Lande and Herman, 42 Fam. Ct. Rev. at 284. Like collaborative law, it possesses both benefits and detriments. For example, the absence of a disqualification agreement offers advantages but also poses disadvantages. Lande and Herman, 42 Fam. Ct. Rev. at 284. Specifically, “parties and lawyers may act reasonably only if they face a credible threat of litigation.” Id. Additionally, cooperative law clients are less likely to feel mired in the cooperative process because they need not hire and educate new lawyers should litigation ensue. See Bryan, 70 Ala. Law. at 436. Conversely, collaborative law clients may feel unduly pressured to complete the collaborative process rather than pursue litigation because of the cost and inconvenience of hiring and educating a new attorney. Id. Of course, cooperative law threatens to “taint the negotiation by undermining a problem-solving atmosphere.” Lande, 42 Fam. Ct. Rev. at 284.

    While we have not encountered cooperative law’s codification in any state’s code, neither have we encountered its prohibition.6 In fact, as we have observed, it has been found to be a better system in at least one jurisdiction. See Colo. Bar Ass’n Ethics Comm., Formal Op. 115.

    Against this general backdrop, we must determine whether the collaborative law statute controls this agreement and, if not, whether a cooperative law agreement is void as a matter of public policy within the State of Texas. We will first consider whether the collaborative law statute controls before determining whether cooperative law agreements violate public policy.

    Applicability of the Collaborative Law Statute

    In her first point of error, Mary asserts that Keen must be disqualified because Keen’s continued representation of Gary violates the Texas collaborative law statute. Specifically, Mary contends that “[u]sing a slightly different title for the ADR agreement does not avoid the protee-*26tions of the statute.” Gary responds that the collaborative law statute is inapplicable to a cooperative law agreement.

    The trial court determined that the Agreement is a cooperative law agreement, not a collaborative law agreement, and therefore need not conform to Texas’s collaborative law statute. The Agreement does not suffer from a crisis of identity; it does not reference collaborative law or the collaborative law statute.

    Mary contends that “leaving out a required element does not avoid a statute; it violates it.” In order for this to be true, however, the statute would either have to mandate its application or forbid the use of cooperative law agreements. We hold that it does neither.

    It is clear by its plain language that the collaborative law statute is elective, not mandatory. Subsection (a) of the statute explicitly provides that “a dissolution of marriage proceeding may be conducted under collaborative law procedures.” Tex. Fam.Code Ann. § 6.603(a) (emphasis added). Nothing in the statute mandates its usage. Instead, parties that elect to follow its procedures obtain certain benefits from the trial court. The parties can obtain a judgment on their collaborative law agreement by signing the settlement agreement and including a boldfaced, capitalized, or underlined statement that the agreement is not subject to revocation. Id. § 6.608(d). If the parties provide proper notice to the trial court, the court is precluded from setting a hearing or trial in the case, imposing discovery deadlines, requiring compliance with scheduling orders, or dismissing the case while the parties are using the process. Id. § 6.603(e). Additionally, the statute incorporates the provisions for confidentiality of alternative dispute resolution procedures as provided in Chapter 154 of the Civil Practices and Remedies Code for collaborative law procedures. Id. § 6.603(h).

    In order to obtain these benefits, the parties must enter into an agreement providing for (1) a full and candid exchange of information; (2) suspending court intervention in the dispute while the parties are using collaborative law procedures; (3) hiring any experts jointly; (4) withdrawal of all counsel in the collaborative law procedure if the collaborative law procedure does not result in settlement of the dispute; and (5) other provisions agreed to by the parties that are consistent with a good faith effort to collaboratively settle the suit.7 Id. § 6.603(c). The Agreement signed by Mary and Gary does not require the withdrawal of counsel if settlement is not obtained, the fourth requirement for application of the collaborative law statute. Accordingly, by the plain language of the statute, the collaborative law procedures and resulting benefits do not apply to the Agreement.

    Additionally, nothing in the statute or in its legislative history leads us to the conclusion that the collaborative law statute forbids parties in Texas from entering into cooperative law agreements. It has been the stated policy of Texas from at least 1987 “to encourage the peaceable resolution of disputes ... and the early settle*27ment of pending litigation through voluntary settlement procedures.” Tex. Civ. PraC. & Rem.Code Ann. § 154.002 (Vernon 2005). There is no statute or case law in Texas that explicitly prohibits any specific form of alternative dispute resolution.

    The collaborative law statute is one of four alternative dispute resolution processes that the Texas legislature specifically encourages parties in divorce proceedings to utilize. The four processes are arbitration, mediation, collaborative law, and informal settlement conferences. Tex. Fam. Code Ann. §§ 6.601-.604 (Vernon 2006). Nothing in these statutes states that they are the exclusive forms of alternative dispute resolution available to parties to a divorce.

    Even if these were the exclusive forms of alternative dispute resolution available to parties to a divorce, the Agreement specifically cites to sections 6.601 and 6.604 of the Family Code. Those are the arbitration and informal settlement conference provisions, respectively. Tex. Fam.Code Ann. §§ 6.601, .604.

    In an informal settlement conference, “[t]he parties to a suit for dissolution of a marriage may agree to one or more informal settlement conferences and may agree that the settlement conferences may be conducted with or without the presence of the parties’ attorneys, if any.” Tex. Fam. Code Ann. § 6.604(a). The legislature did not in any other way limit or constrict the parties’ abilities to determine how informal settlement conferences would be conducted. Because this statute is deliberately silent as to the procedures that can be used in informal settlement conferences, we must conclude that the legislature meant to cast a wide net and give the parties wide latitude in deciding how to structure them, including structuring them through a cooperative law agreement.

    The dissent argues that the legislature’s enacting of the collaborative law statute is proof that they meant to exclude cooperative law agreements. We cannot agree. The legislature knows how to conscribe permissible actions when other related actions would be in violation of public policy. See, e.g., Tex. Bus. & Com.Code Ann. § 15.05 (Vernon 2002) (mandating every contract in restraint of trade is unlawful), § 15.50 (Vernon Supp. 2009) (providing strict requirements for covenants not to compete to avoid violation of public policy). The legislature has taken no such action here. Instead, it has determined that alternative dispute resolution is beneficial and encourages it. Tex. Civ. Prac. & Rem.Code Ann. § 154.002. Given the legislature’s broad approval of alternative dispute resolution, we find no reason to determine that it meant to prohibit parties from entering into cooperative law agreements.

    We overrule Mary’s first point of error.

    Applicability of the Arbitration Provision

    In her second point of error, Mary contends that the trial court abused its discretion by denying her motion to revoke her consent to arbitrate because (1) the Agreement is unenforceable because it violates the public policy of Texas; (2) Gary’s dishonest conduct within the cooperative process served to breach and thereby invalidate the Agreement; (3) she lacked mental capacity and the Agreement was obtained fraudulently; and (4) she revoked her consent to the Agreement.8 Mary also as*28serts that the trial court abused its discretion by determining that the second and third issues must be determined by the arbitrator.

    A. Standard of Review

    A party moving to compel arbitration must establish (1) the existence of a valid, enforceable arbitration agreement and (2) that the claims asserted fall within the scope of that agreement. In re Oalcwood Mobile Homes, Inc., 987 S.W.2d 571, 573 (Tex.1999). If the movant establishes that an arbitration agreement governs the dispute, the burden then shifts to the party opposing arbitration to establish a defense to the arbitration agreement. In re Provine, 312 S.W.3d 824, 829 (Tex. App.-Houston [1st Dist.] 2009, orig. proceeding). A party may revoke the agreement only on a ground that exists at law or in equity for the revocation of a contract. Tex. Civ. Prao. & Rem.Code Ann. § 171.001(b) (Vernon 2005). “Once the trial court concludes that the arbitration agreement encompasses the claims, and that the party opposing arbitration has failed to prove its defenses, the trial court has no discretion but to compel arbitration and stay its own proceedings.” In re FirstMerit Bank, N.A., 52 S.W.3d 749, 753-54 (Tex.2001).

    Whether an agreement imposes a duty to arbitrate is a question of law which the appellate court reviews de novo. In re Provine, 312 S.W.3d at 829. We apply ordinary state-law principles governing contracts to determine whether an agreement to arbitrate was formed. J.M. Davidson, Inc. v. Webster, 128 S.W.3d 223, 227-28 (Tex.2003). “[A]bsent unmistakable evidence that the parties intended to the contrary, it is the courts rather than the arbitrators that must decide ‘gateway matters.’ ” In re Weekley Homes, L.P., 180 S.W.3d 127, 130 (Tex.2005). An appellate court may not deal with disputed areas of fact in an original mandamus proceeding. West v. Solito, 563 S.W.2d 240, 245 (1978).

    B. Enforceability of the Arbitration Provision

    Mary argues that the arbitration provision cannot be enforced because the Agreement, generally, is not enforceable because it violates public policy.

    Even if the collaborative law section of the Agreement were in violation of public policy, this does not automatically mean that the arbitration section of the Agreement is unenforceable.

    An illegal or unconscionable provision of a contract may generally be severed so long as it does not constitute the essential purpose of the agreement. Whether or not the invalidity of a particular provision affects the rest of the contract depends upon whether the remaining provisions are independent or mutually dependent promises, which courts determine by looking to the language of the contract itself. The relevant inquiry is whether or not parties would have entered into the agreement absent the unenforceable provisions.

    In re Poly-America, L.P., 262 S.W.3d 337, 360 (Tex.2008).

    The Agreement in this case consists of four sections: (1) the preamble, stating the purpose of the Agreement; (2) the *29provisions for their collaborative law agreement; (3) the provisions for their arbitration agreement; and (4) miscellaneous provisions. In the first section, the parties “acknowledge[d] the shared belief that it is in the best interests of the parties to avoid litigation.” Both the cooperative law agreement section and the arbitration agreement section accomplish this stated purpose. Significantly, the Agreement only allowed the parties about two- and-a-half months to resolve their dispute through the cooperative law process. After that, the arbitration provision controls. The arbitration section is the longest section and contains the most detailed procedures. The title of the Agreement notwithstanding, it is reasonable to determine that the arbitration section is an independent agreement that the parties would have agreed to even without the presence of the cooperative law section. Accordingly, even if the collaborative law agreement were void, the arbitration provision would be severable.

    Nevertheless, we conclude that the cooperative law portion of the Agreement does not violate public policy. Whether a contract violates public policy is a question of law we review de novo. Lawrence v. CDB Serve., Inc., 44 S.W.3d 544, 555 (Tex.2001) (superceded by statute on other grounds). Public policy is a vague and uncertain term that is up to the power of the lawmaking body to define. Tex. Commerce Bank, N.A. v. Grizzle, 96 S.W.3d 240, 250 (Tex.2002) (quoting Lawrence, 44 S.W.3d at 553). “[C]ourts are apt to encroach upon the domain of that branch of the government if they characterize a transaction as invalid because it is contrary to public policy, unless the transaction contravenes some positive statute or some well-established rule of law.” Id. (quoting Lawrence, 44 S.W.3d at 553).

    Texas expresses its public policy through its statutes. Id. Therefore, “to determine whether a contract violates public policy, we consider the policies underlying any applicable statutes.” Lawrence, 44 S.W.3d at 555. The appropriate test when considering whether a contract violates public policy “is whether the tendency of the agreement is injurious to the public good, not whether its application in a particular case results in actual injury.” Hazelwood v. Mandrell Indus. Co., Ltd., 596 S.W.2d 204, 206 (Tex.Civ.App.-Hous-ton [1st Dist.] 1980, writ ref d n.r.e.).

    With respect to domestic disputes, as well as in other areas of the law, Texas public policy permits and encourages parties to enter into agreements to submit disputes to various forms of alternative dispute resolution. See, e.g., Tex. FaM.Code Ann. §§ 6.601-.604; Tex. Civ. Prac. & Rem.Code Ann., Title 7. Texas public policy also strongly favors “preserving the freedom to contract.” Lawrence, 44 S.W.3d at 553. “The courts will not enforce a contract whose provisions are against public policy.” Sacks v. Dallas Gold & Silver Exch., Inc., 720 S.W.2d 177, 180 (Tex.App.-Dallas 1986, no writ).

    We can see no reason why we should hold that cooperative law agreements violate public policy in Texas. Neither the collaborative law statute nor common law prohibit the practice of cooperative law in Texas, and Mary has offered no persuasive evidence as to why cooperative law agreements cannot be negotiated by parties within Texas’s generous ADR ambit. See Tex. Civ. Prao. & Rem.Code Ann. § 154.002. As we have noted, experts generally neither laud nor condemn it, but note its benefits and detriments as a legitimate ADR procedure akin to collaborative law.

    *30In fact, due to their strong similarities, we could find that cooperative law agreements violate public policy only if we were to determine that allowing the parties to retain their original attorneys if they fail to reach an agreement violates public policy. We see no justification for this result.

    Although Mary does not contend that she disclosed confidential information to Keen that could be utilized against her in litigation, the possibility of a client’s disclosure of privileged information to opposing counsel at a “four-way” meeting is not insignificant. See Lande, 64 Ohio St. L.J. at 1341^42 (generally critical of collaborative law). “Four-way” meetings are common to both collaborative and cooperative law, but, as has been repeatedly underscored, only cooperative law permits retention of the same counsel in litigation. See Smith and Martinez, 14 Harv. Negot. L. Rev. at 166. We must determine, then, whether this retention of counsel in litigation, in light of possible disclosure of privileged information, is injurious to the public good. See Hazelwood, 596 S.W.2d at 206.

    It is noteworthy that collaborative law, a process blessed by the Texas legislature, poses nearly the same risk of disclosure of privileged information. Specifically, a collaborative client in a four-way meeting may, in the collaborative spirit of the moment, divulge confidential information to both the opposing party and the opposing party’s attorney. See Lande, 64 Ohio St. L.J. at 1341-42. The opposing attorney will be disqualified from ensuing litigation, but the opposing party, having also heard the confidential information, will not. See Tex. Fam.Code Ann. § 6.603(c)(4).

    Specifically, in collaborative law, nothing prevents the opposing party privy to the confidential disclosure from imparting the information to his new litigation counsel. This risk did not prevent the Texas legislature from adopting collaborative law. Nor should cooperative law’s similar risk lead to a prohibition of cooperative law.

    Moreover, the only harm that Mary can identify that she has suffered is a loss of the right to force her husband to obtain a new attorney. She does not articulate why this right is so fundamental that the lack of it should be held to violate public policy.

    The dissent argues that the cooperative law agreement violates public policy because the collaborative law statute “provides for returning the case to the regular docket setting for trial or dismissal without prejudice if settlement is not reached in two years,” while the Agreement terminated by its own terms after only two-and-one-half months but then required the parties to proceed to binding arbitration. To the degree that the dissent suggests that a time less than two years violates public policy, we disagree. The statute precludes a trial court from taking certain actions while the parties are engaged in the collaborative law process. Tex. Fam.Code Ann. § 6.603(e). If, however, the collaborative law process extends for more than two years, the trial court may set the suit for trial on the regular docket or dismiss the suit without prejudice. Id. § 6.603(g). This is not mandatory. Even if it were, it only sets a maximum amount of time the process can continue. It does not set a minimum. Nor could it, considering that the stated purpose of the statute is for the process to be “entirely voluntary and participation may be terminated at any time.” House Comm, on Civil Practices, Bill Analysis, Tex. H.B. 1363, 77th Leg., R.S. (2001). If it can be terminated at any time, certainly the parties can agree to a specific termination date at the time of entering into the agreement.

    To the degree that the dissent suggests that the arbitration provision in the Agreement renders it against public policy, this *31conclusion cannot stand. First and foremost, the subsection that the dissent cites to for support for its argument that a collaborative law agreement cannot proceed to arbitration merely provides that if the parties have not resolved their divorce through the collaborative law process within two years, the court may set the suit for trial. Id. § 6.603(g). A provision allowing a judge to set a case for trial after waiting for two years is distinctly different from a provision that prohibits parties from agreeing to give up their right to a trial.

    Second, arbitration is one of the specifically condoned forms of alternative dispute resolution in the Family Code. Tex. Fam. Code ANN. § 6.601. It cannot be said that a specifically condoned form of alternative dispute resolution violates public policy when it is included in an agreement for another specifically condoned form of alternative dispute resolution — such as collaborative law — or even when it is included in an agreement that has not received statutory recognition — such as cooperative law. Even if cooperative law agreements did violate public policy in Texas, an inclusion of a statutorily condoned action cannot heighten its violation.

    Third, the collaborative law statute specifically states that collaborative law agreements can contain “other provisions as agreed to by the parties consistent with a good faith effort to collaboratively settle the matter.” Tex. Fam.Code ANN. § 6.603(c)(5). Arbitration is specifically condoned in resolution of divorces. Tex. Fam.Code Ann. § 6.601. Accordingly, its inclusion in a collaborative law agreement cannot be inconsistent with a good faith effort to collaboratively settle the matter. By extension, its inclusion in a cooperative law agreement cannot be used to create a contrast that would somehow render it in violation of public policy.

    C. Breach of the Agreement

    Gary proved (1) the existence of a valid, enforceable arbitration agreement and (2) that the claims asserted fall within the scope of that agreement. See In re Oakwood, 987 S.W.2d at 573. Specifically, Gary offered the signed Agreement. As we have already determined, the fact that the Agreement is framed in cooperative law does not render it invalid. Moreover, it is undisputed that Gary’s claims fall within the scope of the Agreement. Id. When an agreed final decree of divorce, signed by the court, was not submitted to the court by April 30, 2009, the Agreement’s arbitration clause was triggered.

    At the hearing, the trial court determined that the arbitrator should determine whether Gary breached the Agreement. The trial court explained that, based upon the lack of formal, sworn discovery, it was incapable of making an informed determination of whether Gary had honestly complied with the cooperative law process. Additionally, the parties had not produced a sworn inventory. Breach of the Agreement by not conforming to its parameters is not a “gateway matter” properly addressed by a trial court. In re Weekley Homes, L.P., 180 S.W.3d 127, 130. Accordingly, the trial court did not abuse its discretion by determining that the arbitrator should decide whether Gary breached the Agreement.

    D. Capacity and Fraud

    Unlike breach of the Agreement, Mary’s defenses of lack of mental capacity and fraud are gateway matters best addressed by a trial court. Id. The record, however, does not support that the trial court ordered the arbitrator to address Mary’s defenses of lack of mental capacity and fraud. Implicitly, the trial court considered them and found them unmeritorious. In its October 30, 2009 order, the *32trial court denied Mary’s motion to revoke consent to arbitration. At the hearing, the trial court explicitly determined that Mary’s breach of contract defense must be determined by the arbitrator, but did not explicitly address her lack of mental capacity and fraud defenses. Accordingly, we conclude that Mary’s contention that the trial court delegated determination of Mary’s defenses of lack of mental capacity and fraud to the arbitrator is not supported by the record. Furthermore, we may not determine whether the trial court abused its discretion in determining that Mary’s defenses of lack of mental capacity and fraud failed to invalidate the Agreement because such determinations involve disputed areas of fact. West, 563 S.W.2d at 245.

    E. Revocation of consent

    Finally, Mary argues that she revoked her consent to the Agreement. She correctly asserts that a party may withdraw consent to a Rule 11 settlement agreement prior to judgment. See Kennedy v. Hyde, 682 S.W.2d 525, 528 (Tex. 1984). Mary argues, “The present case is analogous because it provides for a settlement process which would inevitably lead to a judgment.” Regardless of whether the process would lead to a judgment, the simple fact is that there currently is not a judgment. This rule only allows parties to revoke their consent to the entry of an agreed judgment, not the process that could lead to such a judgment. The parties cannot revoke their consent to the process that would lead to a judgment simply because that is the ultimate goal. Accordingly, this rule does not apply.

    Moreover, this rule only applies to agreed judgments. The arbitration process, more than likely, will lead to a judgment that at least one of the parties does not agree to, just as the judgment following a trial would. This does not mean that a party can revoke her “consent” to it. Accordingly, we hold that the trial court did not abuse its discretion by denying Mary’s motion to revoke consent.

    Finally, we note that Mary and Gary twice asked the court to enforce their arbitration provision. The trial court complied both times. It was not until after both of these orders had been signed that Mary attempted to revoke her consent to arbitration. “[A] party cannot complain on appeal that the trial court took a specific action that the complaining party requested.” Tittizer v. Union Gas Corp., 171 S.W.3d 857, 862 (Tex.2005).

    We overrule Mary’s second point of error.

    Conclusion

    The trial court did not abuse its discretion by denying Mary’s motions to disqualify Keen and revoke consent to the Agreement. We therefore deny the petition for writ of mandamus.

    Justice KEYES dissenting.

    . The underlying case is In the Matter of the Marriage of Mary Lynn Mabray and Gary Allen Mabray, No. 2008-53714, in the 311th Judicial District Court of Harris County, Texas, the Hon. Doug Warne, presiding.

    . The agreed order expressly states that it was signed by permission on behalf of Mary. Nothing in the record challenges the accuracy of the statement.

    . Gary did not attend the hearing.

    . Colorado’s Rules of Professional Conduct, at the time the ethics opinion was issued, provided: "A lawyer shall not represent a client if the representation of that client may be materially limited by the lawyer’s responsibilities to ... a third person ... unless: (1) the lawyer reasonably believes the representation will not be adversely affected; and (2) the client consents after consultation." Colo. Bar Ass'n Ethics Comm., Formal Op. 115 (Feb. 24, 2007)

    . Indeed, Texas was the first state to codify collaborative law. Larry R. Spain, Collaborative Law: A Critical Reflection on Whether a Collaborative Orientation Can Be Ethically Incorporated into the Practice of Law, 56 Baylor L. Rev. 141, 151 (2004).

    .Collaborative law is codified in only a handful of states. See Pauline Tesler, Collaborative Law: Achieving Effective Resolution in Divorce Without Litigation 132 (American Bar Association 2008). However, its general lack of codification has not hindered its proliferation. Collaborative law has spread throughout the United States, Canada, Australia, and Western Europe. Hon. Tommy Bryan, Saying "No” To Court?, 70 Ala. Law. 434, 434 (2009).

    . Mary argues that a collaborative law agreement must also provide, in a prominently displayed statement that is boldfaced, capitalized, or underlined, that the agreement is not subject to revocation and must be signed by each party and the party’s attorneys. This is incorrect. Under the statute, any settlement agreement reached by the parties as a result of the collaborative law process must contain that verbiage and must be signed by the parties and their attorneys. Tex. Fam.Code Ann. § 6.603(d). Because the parties never reached a settlement agreement, this section is not applicable, even if the remainder of the statute were otherwise applicable.

    . Before us, Mary also contends that she signed the agreement as a result of mistake. However, she did not assert this defense before the trial court. Consequently, we may not consider in this proceeding. See In re Am. Optical Corp., 988 S.W.2d 711, 714 (Tex. 1998).

    *28Mary also asserts that the trial court abused its discretion because Gary, although subpoenaed to testify, did not attend the hearing on Mary’s motions to disqualify Keen and revoke consent to the Agreement. However, Mary fails to show how Gary’s lack of attendance was the result of an abuse of discretion by the trial court. See Walker v. Packer, 827 S.W.2d 833, 839 (Tex. 1992).

Document Info

Docket Number: 01-09-01099-CV

Citation Numbers: 355 S.W.3d 16, 2010 WL 3448198

Judges: Laura Carter Higley

Filed Date: 10/14/2010

Precedential Status: Precedential

Modified Date: 11/14/2024