Jose Cisnado and Juanita J. Cisnado v. Shady Oak Estates Homeowner's Association, Inc.

Affirmed and Memorandum Opinion filed January 15, 2012.
In The
Fourteenth Court of Appeals
NO. 14-12-00028-CV
JOSE CISNADO AND JUANITA J. CISNADO, Appellants
V.
SHADY OAK ESTATES HOMEOWNER’S ASSOCIATION, INC., Appellee
On Appeal from the 240th District Court
Fort Bend County, Texas
Trial Court Cause No. 08-DCV-164309
MEMORANDUM OPINION
Appellants Jose and Juanita J. Cisnado challenge the trial court’s order
enforcing the parties’ mediated settlement agreement, dismissing the underlying
lawsuit with prejudice, and awarding attorney’s fees to appellee Shady Oak Estates
Homeowner’s Association, Inc. (“Shady Oaks”). In five issues, the Cisnados
assert that they were entitled to rescind the settlement agreement, that the trial
court abused its discretion by failing to require the parties to mediate their dispute
regarding the settlement agreement, that the trial court abused its discretion by
awarding Shady Oaks attorney’s fees, and that there is no contractual or statutory
basis for the award of attorney’s fees to Shady Oaks. We affirm.
BACKGROUND
This dispute arose out of Shady Oaks’ attempted enforcement of deed
restrictions against the Cisnados. Shady Oaks filed suit against the Cisnados,
seeking enforcement of certain deed restrictions and a temporary injunction. The
Cisnados answered and filed counterclaims against Shady Oaks. On October 14,
2010, the parties attended mediation, which resulted in a mediated settlement
agreement resolving the underlying lawsuit between the parties. The parties were
to take several actions pursuant to the settlement agreement. As is relevant here,
the settlement agreement provided:
Shady Oaks would pay the Cisnados $2,500.00 on or before November 1,
2010.
The lawsuit would be resolved by an agreed order of dismissal with
prejudice, with costs taxed to the party incurring them.
All parties agreed to release and discharge one another from any and all
claims, demands, suits, et cetera arising from or related to the events and
transactions the subject matter of the lawsuit, with no exceptions.
Counsel for Shady Oaks would deliver any settlement documents to the
Cisnados by October 24, 2010. The parties agreed to cooperate with each
other in drafting and executing any additional documents “as are reasonably
requested or required to implement the terms and spirit of this agreement.
Plaintiff shall return the executed documents within ten (10) days after
receipt of same.”
If disputes arose with regard to the interpretation or performance of the
agreement, the parties agreed to attempt to resolve them by telephone
conference with the mediator who facilitated the settlement agreement. If
the phone conference failed to resolve the dispute, the parties agreed to
return for one-half day of additional mediation. Any party refusing to
mediate “may not recover attorney[’]s fees or costs in any litigation brought
to construe or enforce this agreement.”
2
“This agreement is made in accordance with Rule 11 of the Texas Rules of
Civil Procedure; and, as such, may be filed of record in Court before seeking
enforcement.”
The agreement was not subjection to revocation.
On October 19, 2010, counsel for Shady Oaks sent, via email, a joint notice
of non-suit with prejudice to the Cisnados’ counsel. The Cisnados did not return
the executed documents within ten days as specified by the settlement agreement.
Counsel for Shady Oaks emailed the Cisnados’ counsel on numerous occasions
regarding finalizing the joint notice of non-suit and dismissing the case: the record
contains emails dated January 6, 2011, February 22, 2011, March 15, 2011, March
28, 2011, April 27, 2011, and May 24, 2011 inquiring about the status of the non-
suit. The non-suit was never signed by the Cisnados, and their attorneys did not
respond to Shady Oaks’ inquiries. Shady Oaks did not send the $2,500.00 check to
the Cisnados by November 1, 2010 as specified by the agreement.
On June 6, 2011, the Cisnados’ counsel notified Shady Oaks in writing that
the Cisnados were “rescinding” the settlement agreement. In this letter, the
Cisnados’ counsel stated that Shady Oaks had breached the settlement agreement
by failing to pay the Cisnados as specified by the agreement on or before
November 1, 2010. This letter concluded, “The Cisnados, being the non-breaching
parties, have therefore elected the remedy of cancellation and rescission and do
hereby declare such agreement rescinded.”
Shady Oaks responded to this letter by sending a check to the Cisnados’
counsel on June 8, 2011. This check was dated October 22, 2010, a few days after
Shady Oaks had originally emailed the Cisnados’ counsel the non-suit documents.
The Cisnados did not respond to this correspondence. Shady Oaks filed a motion
to enforce the settlement agreement on June 9, 2011, in which it stated that, more
than seven months after the parties had reached a mediated settlement agreement,
3
the Cisnados had purportedly rescinded the agreement. Shady Oaks contended that
the Cisnados could not rescind the agreement because they had failed to (a)
cooperate in executing the settlement agreement; (b) execute the non-suit within
ten days of its receipt on October 19, 2010; or (c) contact the mediator when a
dispute arose regarding the interpretation or performance of the agreement. Shady
Oaks requested that the trial court enforce the settlement agreement because the
Cisnados had breached the agreement first and had waived any claim for equitable
rescission by their inaction in the face of Shady Oaks’ repeated attempts to settle
the dispute.
The Cisnados responded on September 1, 2011, asserting that Shady Oaks
had failed to (1) keep the settlement agreement and their counsels’ tax
identification number confidential; (2) tender the $2,500.00 payment to the
Cisnados on or before November 1, 2010 as required by the agreement, which they
asserted was a condition precedent to execution of the non-suit; and (3) contact the
mediator regarding any concerns Shady Oaks had about tendering payment to the
Cisnados before the Cisnados executed the settlement documents. The Cisnados
also asserted that Shady Oaks stated in its motion to enforce that it had mailed
them only a “copy of the check” and that the “document” provided was “stale-
dated” and could not have been negotiated.
The trial court heard Shady Oaks’ motion to enforce on September 1, 2011.
Counsel for both Shady Oaks and the Cisnados appeared. Counsel for the
Cisnados stipulated that the above described emails from Shady Oaks’ counsel, as
well as the non-suit documents, had been received. The Cisnados’ counsel stated
that the Cisnados had not executed the non-suit because they were awaiting receipt
of the $2,500.00. Counsel for the Cisnados agreed that the Cisnados had not
responded to any of Shady Oaks’ inquiries regarding the non-suit documents.
4
At the conclusion of the hearing, the court orally found and ordered as
follows:
Based on the stipulations and after argument of Counsel, the
court finds that the settlement agreement dated October 14, 2010,
remains an enforceable document. Further that the [HOA is] ordered
to stop payment on the outstanding $2,500 check, which is dated
October the 22, 2010, immediately and to reissue same on or before
Wednesday, September 7, 2011 . . . .
[Counsel for the Cisnados] is ordered to immediately execute
the outstanding joint notice of non[-]suit on or before Thursday,
September the 8, 2011, and immediately transmit the original [to] the
Fort Bend County District clerk . . . via fax and simultaneously mail
the original document with the original signature on it . . . certified,
return receipt requested.
The $2,500 check is not to be deposited or negotiated until
[counsel for the Cisnados] complies with the order to execute the
non[-]suit and transmit same as ordered above.
Upon receipt of the executed joint notice of non[-]suit, executed
by all required parties, the Court will order non[-]suit putting a stake
through the heart of this particular litigation.
Have I - - and I’m not awarding any additional costs or fees.
The next day, Shady Oaks mailed the Cisnados, via their counsel, a check for
$2,500.00, pursuant to the trial court’s order. Shady Oaks also enclosed another
copy of the joint notice of non-suit signed by its counsel. The Cisnados’ counsel
failed to execute the non-suit.
On September 30, 2011, Shady Oaks filed a motion to enforce the settlement
and for sanctions. In this motion, Shady Oaks asserted that the Cisnados had failed
to comply with the court’s orders. Shady Oaks further stated that the Cisnados’
counsel had advised it that the Cisnados “ha[d] no intention of complying with the
Court’s Rulings and Order.” Shady Oaks sought full enforcement of the trial
court’s September 1 rulings, including an order dismissing the underlying case
5
with prejudice. Shady Oaks further sought attorney’s fees from the Cisnados for
“having to come back to this court for enforcement of the settlement agreement
and the preparation and presentation of this Motion. . . . Reasonable attorney’s
fees through the hearing on this matter total at least $2,880.00.”
The Cisnados responded on October 6, 2011, acknowledging that the court
had ordered their counsel to execute the non-suit documents. They further stated
in the motion that they had instructed their counsel “NOT to execute any
documents.” The Cisnados stated in their motion that they were “being denied
their day in court.” They argued that they promptly performed under the
settlement agreement, but Shady Oaks did not timely tender the $2,500.00 as
required by the agreement. They further asserted that Shady Oaks allowed other
property owners to commit the same violations of the deed restrictions for which
Shady Oaks had sued the Cisnados. They asked that the trial court deny Shady
Oaks’ motion.
The trial court heard the second motion to enforce on October 6, 2011. At
this hearing, the Cisnados and a Shady Oaks’ representative, as well as counsel for
both parties, were present. The Cisnados’ counsel stipulated that Shady Oaks had
complied with the trial court’s September 1, 2011 orders. Counsel for the
Cisnados informed the trial court that he had explained to the Cisnados that they
could be held in contempt for failing to comply with the trial court’s orders.
Additionally, the following exhibits were entered into evidence: the record
from the hearing on September 1, 2011; the mediated settlement agreement;
several letters from Shady Oaks’ counsel following the September 1st hearing
regarding the Cisnados’ lack of compliance with the court’s orders; and several
affidavits regarding Shady Oaks’ attorney’s fees. Shady Oaks presented
6
testimonial and affidavit evidence of the attorney’s fees it had incurred since the
trial court’s September 1st orders, which totaled $3,435.00.
Counsel for the Cisnados called Juanita Cisnado to testify at this hearing to
explain her lack of compliance with the court’s prior orders. She stated that, after
her counsel had advised her of the possible ramifications of refusing to allow
execution of the notice of non-suit, she instructed her counsel not to sign the
document. She explained that she believed she and her family were being “spied
on” and “picked on” by Shady Oaks because they are Hispanic. She testified that
she had complied with the terms of the settlement agreement by abiding by the
deed restrictions, even though many others in the neighborhood did not. She
explained that she had not permitted her counsel to sign the document that would
have resulted in dismissal of the suit because Shady Oaks did not send her family
the $2,500.00 check as the settlement agreement required.
The trial court informed Mrs. Cisnado that Shady Oaks had, since the last
hearing, provided her counsel with a check for $2,500.00. Mrs. Cisnado
acknowledged awareness of the court’s orders that would have resulted in her
family’s getting their money and the lawsuit’s being dismissed. The trial court
explained that her actions could result in further fees and costs being assessed
against her:
THE COURT: All right. Let me just -- Mrs. Cisnado, do you
understand that the hearing we had -- the hearing that -- you weren’t
here at the hearing on September 1st in this courtroom?
THE WITNESS: No, sir.
THE COURT: All right. The lawyers were here and they spent
some time arguing back and forth to give me their position on the
facts. And I’ve -- I wrote down two or three pages of notes of what
they said so that I could enter an order that tried to resolve this case.
7
Since your lawyers did not do what I told them to do based on
that September the 1st hearing and, you know, they didn’t appeal that
September the 1st hearing, that I know of, they just haven’t done it
because you told them not to sign the non[-]suit, do you understand
that that keeps this whole litigation still going?
THE WITNESS: Yes, sir.
THE COURT: And it may -- it may result in the[re] being
additional attorney’s fees charged to you and your husband more than
what was initially a part of the lawsuit back in 2010, that the longer
the case goes on the more expensive it gets. I mean, you understand
that?
THE WITNESS: I understand that. I just want my -- I just want
to go to -- to -- back to mediation and if I could have my day in court,
too, I mean, that’s fine, too. It’s just not fair.
THE COURT: I see. Okay. Thank you very much. I appreciate
you coming in here.
After the close of evidence, counsel for Shady Oaks summarized Shady
Oaks’ position as follows:
The issue before this Court is quite simply whether the September 1st,
2011 order was complied with. It was not. They can explain why
they have not or they can attempt to explain to the Court the dilemma
that they find themselves in, but the fact remains there is a breach of
the agreement. They have violated the Court’s order. There has been
over $3,435 in attorney’s fees incurred by virtue of that breach, and
Shady Oaks . . . is entitled to this case being dismissed. An award of
$3,435 at least in attorney’s fees today and such other relief as the
Court deems appropriate.
The Cisnados’ counsel closed by asserting that (1) the court could compel them to
sign the non-suit or dismiss the case, (2) the trial court’s September 1 orders, while
enforceable, were not appealable by a writ of mandamus because they were not in
writing,1 (3) the attorney’s fees sought were excessive, and (3) Shady Oaks was not
1
We note that this contention is incorrect. Texas Rule of Appellate Procedure 52.3
provides that the appendix to a petition for a writ of mandamus must conain “a certified or sworn
8
alleging a breach of the agreement but a violation of the court’s orders. Finally, he
requested that Shady Oaks’ attorney’s fees be denied and that the case be sent back
to mediation per the settlement agreement.
After hearing the evidence and argument of counsel, the trial court granted
Shady Oaks’ motion. The court ordered the lawsuit dismissed with prejudice and
awarded attorney’s fees of $2,880.00 to Shady Oaks, to be assessed against the
Cisnados only, not their counsel. On the same day, the trial court signed an order
to that effect. The order stated that it was “a final judgment.” The order did not
address the $2,500.00 owed to the Cisnados under the terms of the settlement
agreement.
On November 7, 2011, the Cisnados filed a combined motion to modify the
judgment and motion for new trial. In this motion, the Cisnados requested that the
trial court (1) modify the judgment to specify the basis for the award of attorney’s
fees, (2) set aside the order and grant a new trial because the trial court erroneously
awarded attorney’s fees to Shady Oaks, or (3) grant a new trial because the
settlement agreement required mediation of the dispute. This motion was
overruled by operation of law, and this appeal of the trial court’s October 6, 2011
judgment timely ensued.
ANALYSIS
A. The Settlement Agreement
In their first three issues, the Cisnados challenge the trial court’s September
1, 2011 orders enforcing the mediated settlement agreement. First, they assert that
copy of any order complained of, or any other document showing the matter complained of.”
Tex. R. App. P. 52.3(j)(1)(A) (emphasis added); see also In re Bledsoe, 41 S.W.3d 807, 811
(Tex. App.—Fort Worth 2001, orig. proceeding) (stating that mandamus relief may be based on
oral ruling if the ruling is a “clear, specific, and enforceable order that is adequately shown by
the record”).
9
they were entitled to rescind the agreement, which they did prior to the trial court
entering “judgment” on the settlement agreement. Second, they contend that,
because they rescinded the agreement, the trial court was not permitted to enter
“judgment” on the agreement without a trial on the merits. Finally, the Cisnados
argue that the trial court abused its discretion by entering “judgment” on the
agreement without first referring parties back to mediation as required by the
settlement agreement.
The Cisnados misconstrue the basis for the trial court’s judgment. The trial
court’s October 6, 2011 judgment was entered on Shady Oaks’ motion to enforce
the court’s September 1st orders and motion for sanctions,2 not on the mediated
settlement agreement. The trial court dismissed the underlying lawsuit with
prejudice to effectuate its September 1, 2011 orders enforcing the settlement
agreement, with which the Cisnados had failed to comply. The trial court
additionally ordered the Cisnados to pay Shady Oaks attorney’s fees as sanctions
for their failure to comply with its prior orders. Further, the judgment does not
address either the $2,500.00 settlement payment to the Cisnados or the release of
2
Shady Oaks’ motion to enforce is entitled “Motion to Enforce Settlement and Motion
for Sanctions.” The motion focuses on the Cisnados’ failure to comply with the trial court’s
September 1, 2011 orders:
The Cisnados and their counsel have chosen to disregard the Court’s findings,
rulings and Order—all of which are unambiguous. Shady Oaks thus seeks full
enforcement of the Court’s findings and rulings made at the September 1, 2011
hearing. SHADY OAKS seeks an order:
Dismissing the underlying case with prejudice
Ordering the Cisnados and/or their counsel to pay attorneys’ fees to SHADY
OAKS
Such other and further Relief the Court deems appropriate[.]
Further, at the start of the October 6, 2011 hearing, the trial court stated that the parties
were present on Shady Oaks’ “motion to enforce the ruling” that was made on September 1,
2011. As discussed above, the focus of the hearing was on the Cisnados’ failure to comply with
the trial court’s orders.
10
claims discussed above, which also indicates that it is not a judgment on the
settlement agreement.3
The Cisnados did not challenge the trial court’s September 1, 2011 orders.
These orders could have been challenged through a writ of mandamus proceeding.
Cf. In re Lane-Valente Inds. (Nat’l), Inc., No. 01-12-00685-CV, 2012 WL
5192700, at *1 (Tex. App.—Houston [1st Dist.] Oct. 18, 2012, orig. proceeding)
(mem. op., per curiam) (denying mandamus relief to relator challenging trial
court’s order denying its motion to rescind and replace parties’ settlement
agreement); In re Clayton, No. 14-10-00139-CV, 2010 WL 3294322, at *1 (Tex.
App.—Houston [14th Dist.] Aug. 11, 2010, orig. proceeding) (mem. op., per
curiam) (denying mandamus relief to relator requesting that order granting motion
to enforce mediated settlement agreement be set aside and that parties be ordered
to return to mediation). Instead, the Cisnados simply chose not to comply with
these orders. And the Cisnados have failed to perfect an appeal from the trial
court’s September 1, 2011 orders. See Tex. R. App. P. 25.1; 26.1 (providing that
to perfect an appeal, a notice of appeal must contain the date of the judgment or
order appealed from and must be filed within thirty days if no appropriate post-
judgment motion has been filed and ninety days if an appropriate post-judgment
motion has been filed).4 Accordingly, we overrule the Cisnados’ first three issues.
3
There were also several other handwritten terms on the mediated settlement agreement
with which the Cisnados were to comply. Their failure to comply with these terms would result
in certain violations and monetary penalties payable to Shady Oaks. None of these terms were
included in the trial court’s final judgment.
4
An amended notice of appeal may be filed in certain circumstances. See Tex. R. App.
P. 25.1(f). However, in this case, the Cisnados’ notice of appeal was filed on January 4, 2012,
well past the deadline for perfecting an appeal from the September 1, 2011 order.
11
B. Attorney’s Fees
In issue four, the Cisnados assert that the trial court abused its discretion by
awarding Shady Oaks attorney’s fees because the settlement agreement explicitly
provides that any party who refuses to mediate may not recover attorney’s fees in
an action to enforce the agreement. In their fifth issue, they argue that attorney’s
fees may not be awarded (a) on a Rule 11 enforcement motion to a party that has
not complied with contractual conditions precedent to recovery of those fees and
(b) when neither the settlement agreement nor any statute expressly provides for
their award.
The trial court did not award attorney’s fees based on the settlement
agreement. Rather, Shady Oaks requested attorney’s fees in its motion to enforce
the trial court’s September 1st orders and combined motion for sanctions. It
sought its fees only for preparation and presentation of this motion, and the trial
court’s award of fees was limited to these fees. Thus, the trial court awarded
attorney’s fees to Shady Oaks as a sanction against the Cisnados for their failure to
comply with the trial court’s September 1, 2011 order. We therefore combine
these issues and construe them as a challenge to the trial court’s decision to award
Shady Oaks its attorney’s fees as sanctions.
Trial courts possess inherent power to impose sanctions for bad faith abuse
of the judicial process even when the specific conduct is not covered by a rule or
statute. Ezeoke v. Tracy, 349 S.W.3d 679, 685 (Tex. App.—Houston [14th Dist.]
2011, no pet.). We review a trial court’s decision to impose sanctions under its
inherent authority for an abuse of discretion. See id. The trial court’s inherent
power includes the authority to appropriately sanction for failure to comply with a
valid court order incident to one of its core functions, such as hearing evidence,
deciding issues of fact, deciding questions of law, entering judgments, and
12
enforcing judgments. See id. The trial court entered its September 1st orders
enforcing the mediated settlement agreement after deciding both issues of fact and
questions of law. Thus, the trial court issued these orders incident to exercise of its
core functions.
Based on the record before us, we conclude that the trial court did not abuse
its discretion in awarding Shady Oaks its attorney’s fees as sanctions under its
inherent authority.5 Accordingly, we overrule the Cisnados’ fourth and fifth issues.
CONCLUSION
For the foregoing reasons, we have overruled the Cisnados’ five issues. We
affirm the trial court’s judgment.
/s/ Adele Hedges
Chief Justice
Panel consists of Chief Justice Hedges and Justices Brown and Busby.
5
The Cisnados do not challenge the trial court’s failure to find bad faith on their part
before imposing these sanctions. See Ezeoke, 349 S.W.3d at 686 (determining that sanctions
order could not be upheld under trial court’s inherent authority because it did not include
findings that sanctioned party’s conduct significantly interfered with court’s legitimate exercise
of core functions). In fact, their only mention of the attorney’s fees as sanctions in their brief is
as follows:
If the attorney’s fees were awarded as a sanction, then they were an abuse of
discretion for a court may not impose sanctions under rule providing for sanctions
against party or attorney who signed pleading or motion that is groundless and
brought in bad faith or groundless and brought for purpose of harassment except
for good cause, the particulars of which must be stated in the sanction order. No
good cause is stated in the Final Judgment.
The attorney’s fees at issue here were not awarded as sanctions under Texas Rule of Civil
Procedure 13, providing that sanctions may be imposed for signing groundless pleadings or
motions brought in bad faith or for purposes of harassment. Tex. R. Civ. P. 13.
13