Opinion issued August 5, 2014.
In The
Court of Appeals
For The
First District of Texas
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NO. 01-13-00321-CV
———————————
DARRELL BRUESS AND TRACI BRUESS, Appellants
V.
RESIDENTIAL CREDIT SOLUTIONS, INC., Appellee
On Appeal from the 212th District Court
Galveston County, Texas
Trial Court Case No. 11-CV-0342
MEMORANDUM OPINION
When Darrell and Traci Bruess fell behind on their mortgage payments,
Residential Credit Solutions, Inc. initiated foreclosure proceedings against them.
The Bruesses sued RCS, thereby halting the foreclosure. The parties attended
mediation, which ended with the attorneys for both sides signing a mediated
settlement agreement. Over one year later, the trial court entered a final judgment
in RCS’s favor “pursuant to the Mediated Settlement Agreement” that dismissed
the Bruesses’ claims against RCS with prejudice and set new deadlines related to
the loan modification and foreclosure efforts.
In one issue, the Bruesses argue that the trial court erred in granting
judgment because (1) neither of them signed the settlement agreement, (2) they
withdrew their consent before judgment was entered, preventing judgment on a
motion to enforce, (3) dismissal of their claims with prejudice had no basis in law,
and (4) the settlement agreement mandated that any disputes would be resolved by
returning to mediation, not a judgment.
We reverse and remand.
Background
The Bruesses sued RCS for violations of the Real Estate Settlement
Procedures Act of 1974, 12 USC Section 2605(a), (b)(1–3), and (c)(1–3), and for
improperly posting their home for foreclosure. The trial court granted a temporary
injunction prohibiting foreclosure on August 26, 2011. The parties attended a
court-ordered mediation that resulted in a Mediated Settlement Agreement (MSA)
signed by counsel for both parties. The MSA states that it is a “basic outline or a
short-hand rendition of the terms of the parties’ agreement, and formal orders shall
be prepared consistent with this agreement” and that “any and all disputes
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regarding the drafting of the final documents based on this agreement shall be
resolved by mediation and/or arbitration with the mediator, Mary Nell Crapitto.”
The MSA has three agreed terms:
1. [RCS] to hold off on foreclosure (for short sale) until April 30, 2012.
2. Plaintiff, Darrell Bruess, to submit new application for loan
modification by December 15, 2011 (to include revised income) and
Response from RCS shall be forthcoming before January 15, 2012.
3. Trial is continued pending the “loan application approval process” for
90 days.
The loan approval process was delayed, causing these deadlines to be
missed. The parties filed an agreed motion for continuance, explaining that they
“have been cooperating in exchanging documents for the loan modification, a
process [that] has taken longer than expected.” The continuance postponed the trial
setting until at least May 31, 2012.
On May 31, RCS filed a motion to enforce the MSA, arguing that under the
terms of the MSA the parties “agreed to a timetable during which the [Bruesses]
would submit an application and documentation for a loan modification review.
[RCS] agreed not to post the property for foreclosure prior to April 30, 2012.” RCS
alleged that the Bruesses “failed to provide a complete application and supporting
documentation for the loan modification by the agreed due date.” RCS further
asserted that the agreement “not to post the property for foreclosure prior to April
30, 2012” was, in effect, an agreement “to allow the Property to be posted for
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foreclosure after April 30, 2012.” Thus, RCS sought a judgment permitting it to
foreclose on the property and, secondarily, dismissing the Bruesses’ claims against
it with prejudice. The Bruesses opposed the motion.
Following a hearing, the court signed a final judgment dissolving the
temporary injunction, ordering the Bruesses to submit a new loan modification
application within 23 days, but allowing RCS to post the property for foreclosure
after just 14 days. The final judgment further ordered that the Bruesses’ claims
against RCS “are dismissed with prejudice.”
The Bruesses appeal the judgment, arguing that it goes beyond the terms of
the MSA and that the proper resolution of the dispute should have been to order the
parties to further mediate as specified in their MSA. The Bruesses request that the
trial court’s judgment be reversed and the matter remanded.
Standard of Review
Because it is undisputed that the Bruesses did not consent to an agreed
judgment based on the MSA, we treat the judgment as affirming RSC’s claim that
the Bruesses breached the terms of the MSA. See Mantas v. Fifth Court of Appeals,
925 S.W.2d 656, 658 (Tex. 1996) (orig. proceeding) (holding that, after one party
withdraws consent to settlement, court may enter judgment for breach of
settlement agreement but not an agreed judgment). Procedurally, the judgment was
entered without a trial on the merits, suggesting the court treated RSA’s motion to
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enforce as a summary judgment motion. See TEX. R. CIV. P. 166a(c); Mayhew v.
Town of Sunnyvale, 774 S.W.2d 284, 286–87 (Tex. App.—Dallas 1989, writ
denied). Substantively, the final judgment states that the court “reviewed the
pleadings, arguments of counsel, if any, and the Mediated Settlement Agreement,”
which is consistent with a ruling on a summary judgment motion. We conclude,
therefore, that the standard of review for the grant of a traditional summary
judgment motion applies. See Martin v. Black, 909 S.W.2d 192, 195 (Tex. App.—
Houston [14th Dist.] 1995, writ denied) (because trial court ruled as matter of law
that settlement was enforceable, appellate court applied standard of review for
summary judgments); Spiegel v. KLRU Endowment Fund, 228 S.W.3d 237, 240–
41 (Tex. App.—Austin 2007, pet. denied) (because enforcement of mediated
settlement agreement raised purely legal issues, court used de novo standard of
review). We review the judgment de novo. Provident Life & Accid. Ins. Co. v.
Knott, 128 S.W.3d 211, 215–16 (Tex. 2003) (applying de novo standard to
summary judgment).
Challenge Based on Lack of Party Signature
The Bruesses argue that the absence of their signatures on the MSA
indicates that they never consented to the agreement and, as a result, cannot be
bound by its terms. But the Bruesses’ attorney did sign the agreement, and that
signature binds the Bruesses even without their signatures on the document. See
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Kelly v. Murphy, 630 S.W.2d 759, 761 (Tex. App.—Houston [1st Dist.] 1982, writ
ref’d n.r.e.); Robinson v. Cason, No. 01–11–00916–CV, 2013 WL 3354651, at *9
(Tex. App.—Houston [1st Dist.] July 2, 2013, no pet.) (mem. op.). Thus, the
Bruesses cannot avoid the settlement agreement based on their failure to sign the
agreement. The Bruesses can be bound by the MSA’s terms, based on their
attorney’s signature, provided that the other elements of RCS’s claim are proven.
Challenge to Form of Motion
The Bruesses also contend that RCS’s motion to enforce was not a valid
mechanism to obtain judgment against them because they had withdrawn consent
to enforcement of the settlement agreement. According to the Bruesses, once a
settling party withdraws consent to a settlement agreement, judgment is available
only through a motion for summary judgment that asserts a breach-of-contract
claim or a trial on the merits. Thus, they contend, the trial court erred by granting
final judgment on only a motion to enforce.
While other courts have indicated that a party moving for judgment on a
settlement agreement to which the other party has withdrawn consent must do so
by means of a motion for summary judgment, this Court repeatedly has held that a
motion to enforce an agreement may be treated as a motion for summary judgment
so long as the motion “gives the nonmovant notice of the claim asserted and an
opportunity to defend itself.” Robinson, 2013 WL 3354651, at *4; see Bayway
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Servs., Inc. v. Ameri-Build Constr., L.C., 106 S.W.3d 156, 160 (Tex. App.—
Houston [1st Dist.] 2003, no pet.); see also Neasbitt v. Warren, 105 S.W.3d 113,
117 (Tex. App.—Fort Worth 2003, no pet.).
RCS’s motion asserted that a settlement agreement existed between the
parties, attached and incorporated the settlement agreement, and alleged that the
terms of the agreement permitted RCS to foreclose on the property after the
specified date. The motion gave the Bruesses notice of the claim being asserted.
See Bayway Servs., 106 S.W.3d at 160. And the hearing on the motion occurred
more than 21 days after notice was given. See TEX. R. CIV. P. 166a(c) (requiring 21
days’ notice of summary judgment motion). Therefore, under Bayway Services, the
trial court could treat the motion to enforce as a summary judgment motion. See id.
Judgment was in Error
The Bruesses next argue that the trial court erred in dismissing their claims
with prejudice because that remedy was inconsistent with the parties’ settlement
agreement. They argue that, under the terms of their agreement, the parties should
be required to return to mediation to resolve their ongoing dispute instead.
Courts cannot read into an agreement terms that were not included by the
parties. Am. Mfrs. Mut. Ins. Co. v. Schaefer, 124 S.W.3d 154, 162 (Tex. 2003)
(“[W]e may neither rewrite the parties’ contract nor add to its language.”); Vickrey
v. Am. Youth Camps, Inc., 532 S.W.2d 292, 292 (Tex. 1976) (“A final judgment
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which is founded upon a settlement agreement reached by the parties must be in
strict or literal compliance with that agreement.”) Neither can courts grant
remedies for breach of an agreement not contemplated by the parties. See Island
Entm’t, Inc. v. Castaneda, 882 S.W.2d 2, 5 (Tex. App.—Houston [1st Dist.] 1994,
writ denied) (holding that trial court could enforce settlement agreement but could
not punish breach with sanctions). Thus, the remedy available to RCS through a
motion to enforce was limited by the terms of the parties’ agreement.
The trial court’s judgment granted to RCS the right to foreclose on the
Bruesses’ property and dismissed the Bruesses’ claims against RCS with prejudice.
But the MSA does not address a final resolution of the parties’ claims against each
other. RCS’s motion to enforce alleges that the parties “agreed to allow the
[subject property] to be posted for foreclosure after April 30, 2012.” Yet RCS did
not provide any evidence of such an agreement. The MSA does not contain that
term: it provides that RCS will not foreclose before April 30, which is not
equivalent to granting to RCS an unfettered right to foreclose after that date has
passed without consideration of the Bruesses’ claims that remain unresolved.
The parties did not reach an agreement on the merits of their competing
claims. Instead, the MSA was an agreement to continue the case, leaving in place
the status quo while the parties attempted to reach agreement on a new loan
application. The agreement specifically stated that “[t]rial is continued pending the
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‘loan application approval process’ . . . .” This term is inconsistent with the trial
court’s judgment dismissing the Bruesses’ claims against RCS with prejudice.
“In construing a written contract, the primary concern of the court is to
ascertain the true intentions of the parties as expressed in the instrument.” J.M.
Davidson, Inc. v. Webster, 128 S.W.3d 223, 229 (Tex. 2003). A fair reading of
these parties’ agreement is that they entered into a standstill agreement through
April 30, and after that date, if a new loan had not been closed, they could pursue
their legal rights and remedies. The parties did not agree to foreclosure.
That is not to say that the court could not enforce the settlement agreement
upon proper proof. It could not, however, grant RCS’s requested relief—dismissal
with prejudice of the Bruesses’ defense against foreclosure—because the parties
did not agree to settle the Bruesses’ underlying claim against RCS. Instead, they
only agreed to continue trial on that claim and postpone foreclosure to allow
additional time for a loan modification. See El Paso Field Servs., L.P. v. MasTec
N. Am., Inc., 389 S.W.3d 802, 806 (Tex. 2012) (unambiguous contract construed as
matter of law).
Because the trial court granted RCS judgment on the Bruesses’ underlying
claim based on an agreement that neither resolved that issue nor settled all aspects
of the parties’ dispute, it was in error. Cf. Abdulwahab v. Sam’s Real Estate Bus.
Trust, No. 02-10-00282-CV, 2011 WL 2989969, at *4–5 (Tex. App.—Fort Worth
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July 21, 2011, pet. denied) (mem. op.) (holding that trial court did not err in
dismissing settling party’s claims with prejudice as part of enforcement of
settlement agreement because agreement specifically included release as term of
agreement). We sustain the Bruesses’ first issue and reverse the trial court’s
judgment.
The Bruesses have requested “remand of their claims” to the trial court for
“a trial on the merits.” Because we have sustained the Bruesses’ first issue and
reversed the trial court’s judgment, we remand the cause for trial. 1
Conclusion
Having found that the trial court’s judgment exceeded the terms of the
parties’ agreement and was in error, we reverse the judgment and remand the cause
for trial on the merits of the parties’ causes of action and defenses.
Harvey Brown
Justice
Panel consists of Justices Keyes, Bland, and Brown.
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The Bruesses also have argued that the trial court erred by not requiring further
mediation before entering judgment against them. In support of this claim, they
point to language in the MSA, providing that “any and all disputes regarding the
drafting of the final documents based on this agreement shall be resolved by
mediation.” This Court ordered the parties to mediation, and the parties returned to
the same mediator they used in executing the MSA. The Court later was informed
that “the parties made a good-faith effort to settle the issues [but] were unable to
reach an agreement and an impasse was declared.”
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