Putz Farms, a Joint Venture Dr. Herbert R. Putz And Signe Putz v. Crop Production Services, Inc.

COURT OF APPEALS
SECOND DISTRICT OF TEXAS
FORT WORTH
NO. 02-13-00356-CV
PUTZ FARMS, A JOINT VENTURE; APPELLANTS
DR. HERBERT R. PUTZ; AND
SIGNE PUTZ
V.
CROP PRODUCTION SERVICES, APPELLEE
INC.
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FROM THE 362ND DISTRICT COURT OF DENTON COUNTY
TRIAL COURT NO. 2009-40347-362
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MEMORANDUM OPINION1
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In three issues, Appellants Putz Farms, a Joint Venture; Dr. Herbert R.
Putz; and Signe Putz (collectively, Putz) appeal from an agreed judgment in favor
of Appellee Crop Production Services, Inc. (CPS). We reverse and remand.
1
See Tex. R. App. P. 47.4.
Background
CPS brought a suit on a sworn account against Putz. After mediating the
case, the parties entered into a “Compromise, Settlement and Release
Agreement” (the Settlement Agreement) to be effective March 6, 2013. The
Settlement Agreement provided in relevant part as follows:
1. Payment, Agreed Judgment, and Dismissal
(a) Putz will pay to CPS the total amount of $800,000 plus
interest (the “Settlement Amount”) as set forth below:
(i) $150,000 to be received within five business days
of 6 March 2013;
(ii) $325,000 plus 3% (simple) interest accrued since
6 March 2013 to be received on or before 31 July
2013; and
(iii) $325,000 plus 3% (simple) interest accrued since
6 March 2013 to be received on or before 31
January 2014.
....
(b) Agreed Judgment. Contemporaneously with the
execution of this Agreement, the Parties2 will execute an agreed
judgment (the “Agreed Judgment”) in favor of CPS and against
Putz, in the amount of $1,300,000 to accrue 18% interest from the
date the Agreed Judgment is signed, in substantially the form
attached as Exhibit A. CPS will hold the Agreed Judgment in trust,
through its counsel Dulan Elder, pending fulfillment by Putz of all
payment obligations under section 1.(a) above. CPS shall not,
however, file or record the Agreed Judgment, nor shall CPS have
the right to enforce the Agreed Judgment, except in accordance with
paragraph 2, below.
2
The Settlement Agreement defines “Parties” as CPS and Putz.
2
(c) Termination of rights. If and when all payments have
been made, CPS shall dismiss the case with prejudice, within 15
days of receipt of final payment in full satisfaction of the Settlement
Amount.
2. Events of Default and Enforcement
(a) Monetary Default. The failure to make any payment in
accordance with the terms of paragraph 1(a) of this Agreement . . .
shall constitute an “Event of Monetary Default”.
(b) Enforcement of the Agreed Judgment
(i) Upon the occurrence of an Event of Monetary Default,
CPS shall provide to counsel for Putz written notice
(“Default Notice”) of such default. If such default is not
cured by receipt of payment by Putz within 15 business
days of the Default Notice, CPS shall then immediately
have all rights to file, record and enforce the Agreed
Judgment (less credit of all amounts paid).
(ii) Putz and CPS shall cooperate as appropriate to
maintain this case on the Court’s docket pending
fulfillment of settlement obligations, and/or filing of the
Agreement Judgment.
Putz timely paid the first settlement payment on March 7, 2013, and the
parties executed an Agreed Judgment. On July 16, 2013, before the second
settlement payment was due, CPS’s counsel forwarded the Agreed Judgment to
the trial court. CPS did not enclose a signed copy of the Settlement Agreement
with the Agreed Judgment. The cover letter addressed to the court coordinator
stated in relevant part as follows:
The parties to this lawsuit have reached a mediated
settlement agreement which has been memorialized by a written
settlement agreement. Under the terms of that agreement, the
parties have agreed to enter into an Agreed Judgment which is to be
signed by the Judge but held in trust pending performance of the
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payout of the agreed amount by [Putz]. The final payment under the
agreed settlement is due January 31, 2014.
....
We request that the Court sign the judgment but that it not be
entered into the Court’s minutes or filed among the papers of the
cause and instead be returned to the undersigned in the enclosed
self-addressed stamped envelope to be held in trust in accordance
with the parties’ agreement.
If [the trial court] has problems with this arrangement, then
please advise and we will seek to address the Court’s concerns.
On July 22, 2013, a visiting judge signed the Agreed Judgment, and the
Agreed Judgment was filed with the papers of the case as part of the record.
The clerk sent notice of the judgment to Putz.
Putz timely filed a motion for new trial, arguing that good cause existed for
granting Putz a new trial because (1) CPS’s representation to the trial court in its
July 16 letter that the Agreed Judgment was to be signed by the trial court was
misleading in that the Settlement Agreement did not contemplate that the Agreed
Judgment would be sent to the trial court for signature prior to the occurrence of
a default under the Settlement Agreement and (2) after it was signed, the Agreed
Judgment was filed in the records of the case even though Putz had not
defaulted. CPS responded that the Agreed Judgment should not be set aside
because (1) the parties contemplated that the trial court would sign the Agreed
Judgment and (2) by that time, Putz had failed to make the July 31, 2013
settlement payment, which permitted CPS to record the Agreed Judgment under
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the terms of the Settlement Agreement, so that any error was harmless. The trial
court denied the motion for new trial, and Putz appealed.
Analysis
In three issues, Putz argues that the trial court erred in signing the Agreed
Judgment because (1) the Agreed Judgment was procured by fraud in
misrepresenting that the parties had agreed that it was to be signed by the trial
court before any default; (2) the Settlement Agreement was not enforceable as a
rule 11 agreement because it was not on file with the trial court at the time the
Agreed Judgment was signed; and (3) CPS did not seek to enforce the
Settlement Agreement as a contract through proper pleading, notice, hearing,
and proof.
In parts of its first and second issues, Putz complains that the Agreed
Judgment was not in strict or literal compliance with the Settlement Agreement.
As pointed out to the trial court in its motion for new trial, Putz argues on appeal,
and we agree, that the Settlement Agreement does not contain a provision
permitting CPS to send the Agreed Judgment to the trial court for signature
before default by Putz and that Putz was not in default when the trial court signed
the Agreed Judgment on July 22, 2013. Thus, the trial court should not have
signed the Agreed Judgment and filed it in the papers of the case.
An agreed judgment based upon a settlement agreement must be in strict
or literal compliance with the terms of that agreement. Vickrey v. Am. Youth
Camps, Inc., 532 S.W.2d 292, 292 (Tex. 1976). A trial court has no power to
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supply terms, provisions, or conditions not previously agreed upon by the parties.
Matthews v. Looney, 132 Tex. 313, 317, 123 S.W.2d 871, 872 (Tex. 1939);
Tinney v. Willingham, 897 S.W.2d 543, 544 (Tex. App.—Fort Worth 1995, no
writ); McLendon v. McLendon, 847 S.W.2d 601, 610 (Tex. App.—Dallas 1992,
writ denied). If the terms of an agreed judgment conflict with the terms of the
underlying settlement agreement, the judgment will be unenforceable. Nuno v.
Pulido, 946 S.W.2d 448, 451 (Tex. App.—Corpus Christi 1997, no writ); Tinney,
897 S.W.2d at 544. If the discrepancy in the terms results from a clerical error,
the appellate court may modify the conflicting term to conform to the settlement
agreement. McLendon, 847 S.W.2d at 610. However, a judgment based upon
judicial error must be reversed and remanded to the trial court for entry of a
judgment that conforms to the terms of the parties’ settlement agreement.
Donzis v. McLaughlin, 981 S.W.2d 58, 63 (Tex. App.—San Antonio 1998, no
pet.); Clanin v. Clanin, 918 S.W.2d 673, 678 (Tex. App.—Fort Worth 1996, no
writ); McLendon, 847 S.W.2d at 610.
Whether an error is clerical or judicial is a question of law. Finlay v. Jones,
435 S.W.2d 136, 138 (Tex. 1968). A clerical error is a mistake or omission that
prevents the judgment as entered from accurately reflecting the judgment that
was actually rendered. Universal Underwriters Ins. Co. v. Ferguson, 471 S.W.2d
28, 29–30 (Tex. 1971). A judicial error arises from a mistake of law or fact that
requires correction through judicial reasoning or determination. W. Tex. State
Bank v. Gen. Res. Mgmt. Corp., 723 S.W.2d 304, 306 (Tex. App.—Austin 1987,
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writ ref’d n.r.e.). In other words, a judicial error occurs in the rendering, as
opposed to the entering of a judgment. Escobar v. Escobar, 711 S.W.2d 230,
231 (Tex. 1986).
Here, paragraph 1(b) of the Settlement Agreement provided that the
parties would execute an Agreed Judgment contemporaneously with the
execution of the Settlement Agreement and that CPS would hold the Agreed
Judgment in trust and not file or record it unless there was an Event of Monetary
Default under paragraph 2. Paragraph 2 provided that the failure to make any
payment in accordance with the payment terms in paragraph 1(a) constituted a
Monetary Default, and upon the occurrence of a Monetary Default, CPS was
required to give Putz written notice of the default and fifteen business days to
cure the default before filing, recording, or enforcing the Agreed Judgment. Putz
was not in Monetary Default under paragraph 2 when the Agreed Judgment was
signed and filed among the papers of the case on July 22, 2013, because the
second payment was not due until July 31, 2013. Thus, the Agreed Judgment
was not in strict or literal compliance with the terms of the Settlement Agreement.
This is not a clerical error; it is a judicial error that cannot be corrected by this
court’s modification and rendition of an appropriate judgment.3 See Donzis, 981
S.W.2d at 64–65; Clanin, 918 S.W.2d at 678.
3
While we conclude that the rendering of the Agreed Judgment was a
judicial error, we note that a copy of the signed Settlement Agreement was not
filed with the letter from CPS’s attorney asking the trial court to sign the Agreed
Judgment. Moreover, the record does not reflect whether the visiting judge
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CPS asserts that written correspondence between the parties’ attorneys
demonstrates that the parties contemplated the Agreed Judgment would be
immediately submitted to the trial court for signature and would be filed or
recorded only upon Putz’s default. The Settlement Agreement, however, could
be “modified only in writing by a document signed by the Parties affected by the
modification.” The correspondence does not evidence an intent to modify the
terms of the Settlement Agreement, and it is not signed by the parties. Thus, the
correspondence did not modify the terms of the Settlement Agreement, which
only provided that the parties—not the trial court—would sign the Agreed
Judgment before default. Nor can the correspondence be considered as
extrinsic evidence of the intent of the parties absent any ambiguity, and we find
none. See Chapman v. Hootman, 999 S.W.2d 118, 123 (Tex. App.—Houston
[14th Dist.] 1999, no pet.) (“Absent a finding of ambiguity, a court must interpret
the meaning and intent of a contract from the four corners of the document
without the aid of extrinsic evidence.”). Lack of clarity or disagreement over
interpretation of contract language does not render the language ambiguous.
Universal Health Servs., Inc. v. Renaissance Women’s Group, P.A., 121 S.W.3d
742, 746 (Tex. 2003). A contract is ambiguous when its meaning is uncertain
and doubtful or it is reasonably susceptible to more than one meaning. Coker v.
Coker, 650 S.W.2d 391, 393 (Tex. 1983).
reviewed the letter—which was addressed to the court coordinator—prior to
signing the Agreed Judgment.
8
The contract language here is not reasonably susceptible to more than one
meaning. CPS’s interpretation, which is set forth in its July 16, 2013 letter to the
court coordinator, conflicts with the rules of civil and appellate procedure. Once
the trial court signs a judgment, it should be entered by the clerk in the minutes of
the court and filed with the other documents in the case. See Dunn v. Dunn, 439
S.W.2d 830, 832 (Tex. 1969); Oak Creek Homes, Inc. v. Jones, 758 S.W.2d 288,
290 (Tex. App.—Waco 1988, no writ). But a signed judgment is valid whether or
not it is filed or entered in the record. See In re Barber, 982 S.W.2d 364, 367
(Tex. 1998) (orig. proceeding). The signing is significant because, among other
reasons, the deadlines for postjudgment motions and for perfecting an appeal
start to run on the date the judge signs the judgment. Tex. R. App. P. 26.1; Tex.
R. Civ. P. 306a(1), 329b(a), (b), (g). Likewise, the period of the trial court’s
plenary power is calculated from the date of signing. Tex. R. Civ. P. 306a(1),
329b(d). Giving a signed judgment back to a party’s counsel to hold “in trust” is
not contemplated by the rules. The timetables would still run from the date of
signing. CPS’s proposed interpretation of the Settlement Agreement is
incompatible with the rules of civil and appellate procedure and would lead to an
absurd result. When possible, we will avoid a construction that is unreasonable,
inequitable, or oppressive, or would lead to an absurd result. Pavecon, Inc. v. R-
Com, Inc., 159 S.W.3d 219, 222 (Tex. App.—Fort Worth 2005, no pet.) (citing
Reilly v. Rangers Mgmt., Inc., 727 S.W.2d 527, 530 (Tex. 1987); Lane v.
Travelers Indem. Co., 391 S.W.2d 399, 402 (Tex. 1965)).
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CPS also argues that because subsequent to the date the Agreed
Judgment was signed, Putz defaulted on the Settlement Agreement by not
paying the July 31, 2013 settlement payment, Putz was not harmed by the
premature entry of the Agreed Judgment. We fail to see how the premature
entry of a judgment in the amount of $1,300,000 plus postjudgment interest
accruing at the rate of eighteen percent from the date the judgment was signed is
not harmful. Moreover, even assuming that Putz defaulted on the July 31, 2013
payment, a question we need not reach, CPS had the right to file, record, and
enforce the Agreed Judgment only after CPS provided written notice of default
and Putz failed to cure the default within fifteen business days of the notice. And
even if we were to adopt CPS’s logic, there are no pleadings or evidence to
establish that CPS provided the required notice after Putz’s alleged default to
entitle it to file, record, and enforce the Agreed Judgment.
Accordingly, we sustain Putz’s first and second issues in part. Because
these issues are dispositive of the appeal, we need not address the remainder of
Putz’s first and second issues or its third issue. See Tex. R. App. P. 47.1.
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Conclusion
Having sustained Putz’s first and second issues in part, we reverse the trial
court’s judgment and remand the case to the trial court for further proceedings.
See Tex. R. App. P. 43.2(d).
/s/ Anne Gardner
ANNE GARDNER
JUSTICE
PANEL: DAUPHINOT, GARDNER, and GABRIEL, JJ.
DELIVERED: March 12, 2015
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