WHAT HAPPENS WHEN A PARTY REVOKES CONSENT TO A SETTLEMENT AGREEMENT?

When one party revokes his consent to a settlement, “[t]he settlement agreement alone is insufficient to provide a basis for judgment because it deprives a party of the right to be confronted by appropriate pleadings, assert defenses, conduct discovery, and submit contested fact issues to a judge or jury.” In re Est. of Denison, No. 11-04-00058-CV, 2005 WL 2404046, at *1 (Tex. App.—Eastland Sept. 29, 2005, pet. denied) (mem. op.).

A disputed settlement agreement may not be enforced “simply on motion and hearing[.]” Gamboa, 383 S.W.3d at 269–70. “When a trial court has knowledge that one of the parties to a suit does not consent to a judgment, the trial court should refuse to sanction the agreement by making it the judgment of the court.” Quintero v. Jim Walter Homes, Inc., 654 S.W.2d 442, 444 (Tex. 1983).

“The law does not recognize the existence of any special summary proceeding for the enforcement of a written settlement agreement, even one negotiated and executed in the context of a mediation.” Pena v. Smith, 321 S.W.3d 755, 758 (Tex. App.—Fort Worth 2010, no pet.).

SETTLEMENT AGREEMENTS ARE CONTRACTS THAT CAN BE ENFORCED UNDER CONTRACT RULES 

“If the parties reach a settlement and execute a written agreement disposing of the dispute, the agreement is enforceable in the same manner as any other written contract.” TEX. CIV. PRAC. & REM. CODE § 154.071(a). However, “the parties must consent to the agreement at the time the trial court renders judgment.” Gamboa v. Gamboa, 383 S.W.3d 263, 269 (Tex. App.—San Antonio

2012, no pet.). “Although a court cannot render a valid agreed judgment absent consent at the time it is rendered, this does not preclude the court, after proper notice and hearing, from enforcing a settlement agreement” through a breach of contract action. Padilla v. LaFrance, 907 S.W.2d 454, 461 (Tex. 1995). Such an action “is subject to normal rules of pleading and proof.” Gamboa, 383 S.W.3d at 269.

“A motion to enforce a settlement agreement is a sufficient pleading by which to raise a cause of action for breach of contract.” Barragan v. Nederland Indep. Sch. Dist., CV, 2015 WL 474282, at *3 (Tex. App.—Beaumont Feb. 5, 2015, pet. denied) (mem. op.). 

Like any contested issue, a breach of contract action involving a settlement agreement may be resolved by “trial on the merits, either to a jury or the bench, motions for summary judgment, or agreements by the parties to compromise some or all of a party’s claims.” In re Park Mem’l Condo. Ass’n, 322 S.W.3d 447, 451 (Tex. App.—Houston [14th Dist.] 2010, orig. proceeding). “Except by these methods, however, a trial court cannot resolve a disputed issue.” Id.

TIMING OF REVOCATION  MATTERS

When one party revokes its consent to a settlement, the crucial question is whether it did so before or after the trial court rendered judgment on the agreement. See S & A Rest. Corp. v. Leal, 892 S.W.2d 855, 857 (Tex. 1995) (per curiam); Gamboa, 383 S.W.3d at 270.  “The rendition of the trial court’s decision, whether in open court or by official document of the court, is the critical moment when the judgment becomes effective.” Henry v. Cullum Cos., Inc., 891 S.W.2d 789, 792 (Tex. App.—Amarillo 1995, writ denied).

A rendition of judgment may be either oral or written, but “‘[t]he judge’s intention to render judgment in the future cannot be a present rendition of judgment. The rendition of judgment is a present act[.]’

. . . The words used by the trial court must clearly indicate the intent to render judgment at the time the words are expressed.” Leal, 892 S.W.2d at 858 (quoting Reese v. Piperi, 534 S.W.2d 329, 330 (Tex. 1976) (orig. proceeding)); Gamboa, 383 S.W.3d at 270.

WHAT THE COURT CAN DO

The Texas Supreme Court has held that a trial court may render judgment on a settlement agreement “by ordering [the parties] to sign and follow the agreement.” See Samples Exterminators v. Samples, 640 S.W.2d 873, 875 (Tex. 1982) (per curiam).

“A trial court’s decision whether a settlement agreement should be enforced as an agreed judgment or must be the subject of a contract action requiring additional pleadings and proof is subject to the abuse of discretion standard of review.” Lewoczko v. Crews, No. 09-18-00432-CV, 2020 WL 6494207, at *3 (Tex. App.—Beaumont Nov. 5, 2020, no pet.) (mem. op.); Staley v. Herblin, 188 S.W.3d 334, 336 (Tex. App.—Dallas 2006, pet. denied). A trial court abuses its discretion if its decision is arbitrary, unreasonable, or made without reference to guiding rules and principles. See Lewoczko, 2020 WL 6494207, at *3.