Carlton Energy Group LLC and Thomas C. O'Dell v. Sam G. Pal ( 2012 )

Reversed and Remanded and Memorandum Opinion filed February 16, 2012.
In The
Fourteenth Court of Appeals
NO. 14-11-00113-CV
CARLTON ENERGY GROUP, LLC AND THOMAS O’DELL, Appellants
V.
SAM G. PAL, Appellee
On Appeal from the County Court at Law No. 2
Harris County, Texas
Trial Court Cause No. 942271
MEMORANDUM OPINION
Appellants, Carlton Energy Group, LLC and Thomas O’Dell, appeal a judgment
rendered on a settlement agreement in appellee, Sam G. Pal’s, breach-of-contract suit. In
their sole issue, appellants contend the trial court erred by rendering judgment because
(1) appellants had previously withdrawn their consent to settlement and entry of an
agreed judgment, and (2) Pal did not plead and prove a claim for breach of the settlement
agreement to support a judgment on the agreement despite appellants’ withdrawal of
consent. We reverse and remand.
BACKGROUND
Pal sued appellants for breach of contract based on their alleged failure to repay a
loan made by Pal to Carlton Energy Group, LLC, for which O’Dell, its chairman and
managing director, personally guaranteed repayment. Appellants filed a counterclaim,
alleging the contract was void as usurious.
On April 29, 2010, the parties executed a Rule 11 agreement (―the settlement
agreement‖) resolving the case under the following terms: (1) appellants would consent
to an agreed judgment in favor of Pal for the full principal due, plus interest. attorneys
fees, and costs of court, in a total amount not to exceed $35,000.00; (2) the parties would
file a motion to abate the suit and refrain from filing the agreed judgment for six months;
and (3) the parties would file a joint motion to dismiss if appellants paid the amount due
under the agreed judgment within the six-month period. Subsequently, the Rule 11
agreement was filed in the trial court. According to Pal, appellants did not pay the
amount due under the proposed agreed judgment within the six-month period.
There is no reporter’s record of any trial court proceedings. However, it is
undisputed that the trial court conducted a hearing on October 15, 2010 relative to entry
of judgment and then reset the matter for another hearing on November 12, 2010. As we
will further discuss, appellants assert in their appellate brief and counsel’s affidavit
supporting appellants’ motion for new trial that, during both hearings, appellants
informed the trial court they had withdrawn consent to settlement and entry of an agreed
judgment.
On November 12, 2010, the trial court signed a final judgment. Although the
word ―Agreed‖ is not included in the title of the judgment, the court effectively recited
therein that it was rendering an agreed judgment on the settlement agreement:
On the 12th day of November, 2010 came on to be considered the above-
entitled and numbered cause. Plaintiff, [Pal] appeared by and through his
attorney of record, and Defendants, Thomas C. O’Dell and Carlton Energy
Group, L.L.C., evidenced their consent to the entry of this Judgment by the
signature of their attorney of record appearing below. The parties
2
announced that all facts and things in controversy have been settled
pursuant to the terms of a Rule 11 Agreement duly filed with this Court on
May 3, 2010, and requested the Court enter the following Order.
The court then ordered that Pal recover $25,000 in principal, $2,515.32 in pre-judgment
interest, $7,000 in attorneys’ fees, and post-judgment interest from appellants. The court
also ordered dismissal of appellants’ counterclaim. Contrary to the above-quoted
recitation, the judgment does not contain the signature of appellants’ attorney, and the
space reserved for his signature is left blank.
Appellants timely filed a motion for new trial on the grounds that, before judgment
was rendered, they withdrew their consent to settlement and entry of an agreed judgment
and Pal did not plead and prove validity of the settlement agreement. The trial court
denied the motion by written order.
ANALYSIS
A party may revoke its consent to a settlement agreement at any time before
judgment is rendered on the agreement. S & A Rest. Corp. v. Leal, 892 S.W.2d 855, 857
(Tex. 1995); Quintero v. Jim Walter Homes, Inc., 654 S.W.2d 442, 444 (Tex. 1983). The
party must effectively communicate its withdrawal of consent to the trial court. Baylor
Coll. of Med. v. Camberg, 247 S.W.3d 342, 346 (Tex. App.—Houston [14th Dist.] 2008,
pet. denied) (citing First Heights Bank, FSB v. Marom, 934 S.W.2d 843, 845 (Tex.
App.—Houston [14th Dist.] 1996, no writ)). ―The proper inquiry is whether the
information in the trial court’s possession is clearly sufficient and of such a nature as to
put the court on notice that a party’s consent is lacking. . . .‖ Id. (citing Sohocki v.
Sohocki, 897 S.W.2d 422, 424 (Tex. App.—Corpus Christi 1995, no writ)). A trial court
may not render an agreed judgment on a settlement agreement that lacks a party’s consent
at the time judgment is rendered. Padilla v. LaFrance, 907 S.W.2d 454, 461 (Tex. 1995);
Quintero, 654 S.W.2d at 444.
A written settlement agreement may be enforced although one party withdraws
consent before judgment is rendered on the agreement; however, the party seeking
3
enforcement must pursue a separate breach-of-contract claim, which is subject to the
usual rules of pleading and proof. Mantas v. Fifth Court of Appeals, 925 S.W.2d 656,
658 (Tex. 1996); Padilla, 907 S.W.2d at 461–62; see Quintero, 654 S.W.2d at 444. After
proper pleading and proof, a party may obtain a judgment enforcing the contract through
summary-judgment proceedings, if no fact issue exists, or by non-jury or jury trial, if a
fact issue exists. Davis v. Wickham, 917 S.W.2d 414, 416 (Tex. App.—Houston [14th
Dist.] 1996, no writ). If one party withdraws his consent to a settlement agreement, the
trial court may render judgment on the agreement only through one of the above-outlined
procedural vehicles. Id. at 416–17.
In their sole issue, appellants contend the trial court erred by rendering an
―agreed‖ judgment on the settlement agreement because appellants had previously
informed the trial court that they withdrew consent to settlement and entry of an agreed
judgment. We agree.
As we have mentioned, there is no reporter’s record of any trial court proceedings.
Further, the appellate record includes no written withdrawal of consent filed in the trial
court before it rendered judgment. However, in the ―Statement of The Facts‖ section of
appellants’ brief, they initially assert,
On October 15, 2010 and November 12, 2010, [Pal] and appellants
appeared thru [sic] their attorneys of record in the trial court for entry of a
proposed judgment filed by [Pal] and based solely on [the] Rule 11
settlement agreement (―the Agreement‖). . . . On October 15, 2010 and
November 12, 2010, Appellants expressly withdrew their consent to the
Agreement and entry of any judgment based upon the Agreement prior to
entry of judgment.
In the same section, appellants later recite more details regarding their withdrawal of
consent:
At the October 15, 2010 hearing on entry of judgment, Appellants’ counsel
informed the trial court and [Pal’s] counsel that Appellants had withdrawn
their consent to settlement and withdrawn their consent to any agreed
judgment pursuant to the Agreement, including the Judgment. Appellants’
counsel also informed the trial court and [Pal’s] counsel that Appellants’
4
counsel no longer had authority from Appellants to agree to the Judgment.
The trial court reset entry of judgment for November 12, 2010 in part
because of Appellants’ counsel having informed the trial court of
Appellants’ withdrawal of their consent to the Agreement and any
judgment pursuant to the Agreement. At the November 12, 2010 hearing on
entry of the Judgment, Appellants’ counsel again informed the trial court
and [Pal’s] counsel that Appellants had withdrawn their consent to the
Agreement and withdrawn their consent to any agreed judgment pursuant to
the Agreement. At the November 12, 2010 hearing on entry of the
Judgment, Appellants’ counsel also informed the trial court and [Pal’s]
counsel that Appellants’ counsel no longer had authority from Appellants to
agree to any judgment pursuant to the Agreement. Despite Appellants’
withdrawal of their consent to the Agreement and any agreed judgment
pursuant to the Agreement, the trial court entered the Judgment on
November 12, 2010 based solely on the Agreement.
(internal record references omitted).
To support the factual assertions in their brief, appellants reference affidavits
attached to their motion for new trial. In his affidavit, appellants’ counsel averred,
. . . Prior to October 15, 2010, I was instructed by Thomas C. O’Dell that he
had withdrawn consent to the April 28, 2010 Rule 11 settlement agreement
in the above cited cause for himself and Carlton Energy Group, LLC. Prior
to October 15, 2010, Thomas C. O’Dell instructed me that he had
withdrawn consent for himself and Carlton Energy Group, LLC to any
judgment in the above cited cause. Prior to October 15, 2010 and at all
times thereafter, I did not have authority to sign any agreed judgment in the
above cited cause on behalf of Thomas C. O’Dell and Carlton Energy
Group, LLC.
. . . At the October 15, 2010 and November 12, 2010 hearings on entry of
judgment in the above cited cause, I informed this Honorable Court and
[Pal’s] counsel that 1) prior to the October 15, 2010 hearing, Thomas C.
O’Dell and Carlton Energy Group, LLC had withdrawn their consent to
settlement and withdrawn their consent to any agreed judgment in the
present case and 2) I did not have authority to sign any agreed judgment in
the present cause.1
1
Appellants also reference O’Dell’s affidavit, averring he informed appellants’ counsel before
the October 15, 2010 hearing that appellants no longer consented to the settlement or entry of an agreed
judgment and counsel was not authorized to sign an agreed judgment on appellants’ behalf. These
averments mirror the testimony in counsel’s affidavit regarding the information relayed to him by
appellants. Counsel’s affidavit is the one pertinent to this appeal because the relevant point is that counsel
5
In a civil case, we accept as true facts asserted in the ―Statement of Facts‖ section
of an appellant’s brief unless controverted by another party. Tex. R. App. P. 38.1(g). In
his appellate brief, Pal essentially does not dispute that appellants’ counsel told the trial
court and Pal’s counsel in open court that appellants had withdrawn consent to the
settlement agreement and entry of an agreed judgment, as set forth in the above-quoted
factual assertions in appellants’ brief. Instead, in his own ―Statement of Facts‖ section,
Pal states the following relative to the alleged withdrawal of consent:
At no time before either hearing or the November 12, 2010 judgment
did Appellants file a motion for continuance or any sort of notice of
withdrawal of their consent to the Rule 11 Agreement. Additionally, prior
to the rendition of the judgment the record does not show Appellants
advised the court that they had withdrawn their consent to the Rule 11
Agreement and reflects no objection to the rendition of the judgment based
upon Appellants’ withdrawal of their consent to the agreed judgment. . . .
On December 10, 2010 Appellants filed a motion for new trial and
for the first time filed any formal notice or statement that they asserted the
judgment should not have been rendered based on the Rule 11 Agreement
because they had withdrawn their consent to the agreement.
(emphasis added). Then, in the body of his argument, Pal states,
. . . the record reflects no such withdrawal of consent was effectively
communicated to the trial court prior to the judgment of November 12,
2010. There is also no evidence of Appellants’ objection to the judgment
based on withdrawal of consent before it was rendered. Appellants did not
file any sort of notice of withdrawal of consent before the judgment. And
the appellate record reveals no docket entry, record or other indication
from the trial court itself that it was aware of any withdrawal of consent
before it rendered the judgment.
(emphasis added).
Pal’s statement that appellants failed to ―file‖ any written notice regarding
withdrawal of consent before the trial court rendered judgment, albeit correct, does not
then informed the trial court regarding appellants’ withdrawal of consent. In his affidavit, O’Dell also
sets forth the reasons that appellants withdrew consent to the settlement; however, the reasons are not
relevant to the present inquiry, which concerns merely whether appellants informed the trial court
regarding the withdrawal.
6
contradict appellants’ assertion they provided oral notification during both hearings.
Moreover, Pal does not cite, and we have not found, any portion of the record
affirmatively negating appellants’ assertion that they provided such oral notification.
Thus, we construe Pal’s above-quoted statements as suggesting there is no record—
reporter’s or otherwise—demonstrating appellants provided such oral notification.
However, Pal’s suggestion that there is no record of any such notification does not
controvert appellants’ assertion that it was provided. Further, Pal’s statement that there is
no notation by the trial court in the record indicating it was aware of the withdrawal of
consent does not controvert appellants’ assertion that they provided oral notification.
Absent in Pal’s appellate brief is any statement actually disputing appellants’
assertion that, during both hearings, appellants’ counsel orally informed the trial court of
appellants’ withdrawal of consent prior to rendition of judgment. Therefore, we accept
appellants’ assertion as true pursuant to Rule 38.1(g). See id.; Verm v. Harris Cnty.
Appraisal Dist., No. 14-06-01046-CV, 2008 WL 2580041, at *2 (Tex. App.—Houston
[14th Dist.] July 1, 2008, no pet.) (mem. op.) (accepting as true, despite lack of reporter’s
record, appellant property owner’s uncontroverted factual assertion in appellate brief that,
during hearing, it requested certain appraised value and appellee taxing authority
―concurred,‖ when concluding owner and taxing authority had reached enforceable
agreement on value).
Additionally, contrary to Pal’s suggestion, there is evidence in the record,
particularly counsel’s affidavit, supporting appellants’ assertion that, during both
hearings, they informed the trial court regarding their withdrawal of consent. Therefore,
appellants do not rely solely on factual assertions in their brief to prove they provided
such notification, although the affidavit is not quite as detailed as the factual assertions in
their brief.2 On appeal, Pal argues that the averments in the affidavit were ―insufficient,
2
We recognize that the motion for new trial and supporting affidavit were insufficient alone to
constitute notification to the trial court regarding withdrawal of consent because they were filed after it
rendered judgment. However, the affidavit at least support appellants’ assertion that their counsel
provided oral notification regarding withdrawal of consent to the trial court before it rendered judgment.
7
uncorroborated,‖ but he cites no authority demonstrating testimony in an affidavit must
be corroborated. Importantly, the record does not include any response to appellants’
motion for new trial or controverting evidence filed by Pal in response to the affidavit.
We acknowledge the trial court recited in the judgment that, during the November
12, 2010 hearing, the parties advised the court the case had been settled and requested the
court to enter judgment. A recital in a judgment is presumed to be true; however, the
presumption is rebutted when a conflict exists between the recital in the judgment and the
record. Bennett v. Lacy, No. 14-03-00530-CV, 2003 WL 22945637, at *2 (Tex. App.—
Houston [14th Dist.] Dec. 16, 2003, no pet.) (mem. op.) (citing Alcantar v. Okla. Nat’l
Bank, 47 S.W.3d 815, 823 (Tex. App.—Fort Worth 2001, no pet.); Aldine Indep. Sch.
Dist. v. Baty, 946 S.W.2d 851, 852–53 (Tex. App.—Houston [14th Dist.] 1997, no writ);
MJR Fin., Inc. v. Marshall, 840 S.W.2d 5, 9 (Tex. App.—Dallas 1992, no writ)). In this
case, appellants have rebutted the above-cited recital in the judgment.
Moreover, as we have mentioned, contrary to another recital in the judgment,
appellants did not ―evidence[] their consent to the entry of this Judgment‖ by their
counsel’s signature on the judgment. We recognize appellants do not base their
contention regarding withdrawal of consent on the absence of counsel’s signature.
Instead, they emphasize their notification regarding withdrawal of consent expressed at
the hearings. However, the absence of counsel’s signature is significant to the extent
there is no consent of appellants reflected on the judgment to controvert their contention
that they had previously informed the trial court regarding their withdrawal of consent.
Finally, Pal argues that appellants waived their complaint by failing to request
findings of fact and conclusions of law relative to ―any pre-judgment notice of
withdrawal of consent.‖ However, we do not construe the question of whether appellants
provided such notification as a factual dispute requiring a fact finder’s resolution of
evidence or a legal issue. Rather, their notification regarding withdrawal of consent is
more akin to an objection; thus, the only inquiry is whether the withdrawal was
articulated to the trial court. See Camberg, 247 S.W.3d at 346. Consequently, we need
8
not consider any purported effects of appellants’ failure to request findings of fact and
conclusions of law.
In sum, the trial court erred by rendering an ―agreed‖ judgment based on the
settlement agreement. As appellants further contend and Pal effectively acknowledges,
he did not plead and prove a claim for breach of the settlement agreement; he pleaded
only a claim for breach of the underlying loan contract. Consequently, we may not
uphold the judgment on the alternative ground that appellants breached the settlement
agreement, although Pal is not foreclosed from attempting to plead and prove such a
claim. See Quintero, 654 S.W.2d at 444 (holding that reversal of ―agreed‖ judgment on
ground one party had withdrawn consent before rendition of judgment did not prejudice
other party’s right to enforce agreement as contract and therefore remanding for further
proceedings).
Accordingly, we sustain appellants’ sole issue, reverse the trial court’s judgment,
and remand for further proceedings consistent with this opinion.
/s/ Charles W. Seymore
Justice
Panel consists of Justices Frost, Seymore, and Jamison.
9