COURT OF APPEALS
SECOND DISTRICT OF TEXAS
FORT WORTH
NO. 2-08-442-CV
VICKI ANN MILNER APPELLANT
V.
JACK EDW ARD MILNER APPELLEE
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FROM THE 322ND DISTRICT COURT OF TARRANT COUNTY
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MEMORANDUM OPINION 1
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Appellant Vicki Ann Milner and Appellee Jack Edward Milner signed a
mediated settlement agreement (MSA), and after Vicki unsuccessfully attempted to
withdraw her consent to the MSA, the trial court granted their divorce and signed the
decree. After the trial court denied her motion for new trial, Vicki timely filed this
appeal. In eight issues, she challenges the MSA and the divorce decree and
contends that the trial court abused its discretion by refusing to allow her to withdraw
1
See Tex. R. App. P. 47.4.
her consent to the MSA and erred by denying her request for additional and
amended findings of fact and conclusions of law as well as her motion for new trial.
Because we hold that there was no meeting of the minds regarding the contemplated
transfer of Jack’s “record title and beneficial interest” in a limited partnership to Vicki,
we also hold that the MSA was not a binding contract and that the trial court abused
its discretion by enforcing the MSA and incorporating it into the divorce decree. W e
therefore reverse the judgment in part and remand this case to the trial court for a
new division of the marital estate.
Background Facts
Jack and Vicki were married in 1994. During their marriage, Thelin Recycling
Company, L.P. (“Thelin Recycling”) and Thelin Management Company, LLC (“Thelin
Management”) were formed. W hen the parties separated, the community estate
owned a 44.055% interest in Thelin Recycling. The three limited partners of Thelin
Recycling were Jack, his brother, Joey Milner, who owned a 20.295% interest, and
Michael Hill, who owned a 34.65% interest. Joey sold his interest to Hill before the
divorce was granted.
Thelin Management owned a 1% interest in Thelin Recycling and acted as its
general partner. At the time of the separation, the community estate owned a 44.5%
interest in Thelin Management, Joey owned a 20.5% interest, and Hill owned a 35%
interest. Joey sold his interest to Hill before the divorce was granted.
2
Under Thelin Recycling’s partnership agreement, generally, a transfer of
record title or beneficial ownership of a partnership interest requires the unanimous
consent of all the partners, also termed “Required Consent” in the partnership
agreement. Section XIII, Paragraph B, Subsection 5 of the partnership agreement
further contains specific provisions regarding the transfer of a partnership interest in
the event of a divorce, allowing the rights of the partner to share in the profits and
losses and to receive distributions, as well as the liabilities for all unsatisfied
obligations of the Partner, to pass to the former spouse “unless otherwise provided
for herein.” The provision also provides:
In no event shall the . . . former spouse . . . become a Partner of the
Partnership, nor be construed as a substituted partner, nor . . . have any
voting rights as a Partner or any rights relative to the operations or
management of the Partnership, except as provided in this Agreement
and the Act.
Section XIII, Paragraph B, Subsection 4 makes clear that no substitute limited
partner may be admitted to the partnership without the unanimous consent of the
partners. The partnership agreement also makes clear that a mere “assignee” “has
only the rights granted under Section 7.02 of the Act” and “does not have the right
to become a partner except as provided” in the Partnership Agreement or in Section
7.04 of the Act.2
2
See Tex. Rev. Civ. Stat. Ann. art. 6132a-1, §§ 7.02, 7.04 (Vernon Supp.
2009) (discussing assignees and limited partners). Since January 1, 2010, limited
partnerships are generally governed by chapter 153 of the Business Organizations
Code. See Tex. Bus. Orgs. Code Ann. §§ 153.003–.553 (Vernon Supp. 2009).
3
On August 14, 2007, Jack and Vicki separated, and Vicki filed for divorce. On
July 3, 2008, they entered into the MSA.
The MSA contains the following section:
Business Interests:
Jack agrees to transfer to Vicki all of his beneficial interest and record
title in and to the 44.055% community property interest in Thelin
Recycling Company, LP, and the 44.5% community property interest in
Thelin Management Company, LLC, subject to all liabilities thereon,
(except a portion of the mineral interests, as set out herein) and all
provisions of the existing Partnership Agreement. The parties
acknowledge that Thelin Recycling LP and/or Thelin Management, LLC,
have outstanding debt relative to the operation of the business. Vicki
agrees to substitute her name, for Jack’s name, for all outstanding
liabilities on both companies. The parties acknowledge that this
agreement is contingent upon the existing lender, or any successor
lender, accepting Vicki as a guarantor in place of Jack on all existing
liabilities of the Thelin businesses. Jack and Vicki agree to execute the
Required Consents to Transfer of Record Title and Beneficial
Ownership Interests, copies of which are attached hereto as Exhibit “A”,
and Exhibit “B”, and incorporated herein fully by reference, at the same
time this Agreement is executed.
Exhibit A to the MSA provides,
THELIN RECYCLING COMPANY, LP
REQUIRED CONSENT TO TRANSFER OF
RECORD TITLE AND BENEFICIAL OWNERSHIP INTERESTS
W hereas, Jack Milner and Vicki Milner have entered into an
agreement for Jack Milner to transfer the record title and beneficial
ownership interest in his 44.055% interest in Thelin Recycling
Company, LP, to Vicki Milner as a part of the division of the community
estate of the parties; and[]
W hereas, THELIN MANAGEMENT COMPANY, LLC, MICHAEL
HILL, JACK MILNER, and JOEY MILNER, being all of the partners of
THELIN RECYCLING COMPANY, LP, hereby agree to transfer one-
4
half of the mineral interest associated with Jack Milner’s 44.055%
interest in Thelin Recycling Company, LP, to Jack Milner, individually,
and all such partners further agree to execute all documents necessary
to award such interest to Jack Milner;
Now, therefore, THELIN MANAGEMENT COMPANY, LLC,
MICHAEL HILL, JACK MILNER, and JOEY MILNER, being all of the
partners of THELIN RECYCLING COMPANY, LP, and constituting the
Required Consent, hereby give their consent to such transfers of
interest, effective this 3rd day of July, 2008.
At the bottom of the page are lines for Jack to sign as both President and limited
partner, lines for Hill and Joey to sign as limited partners, and a line for Vicki to sign
as spouse indicating her “awareness of the agreement as it affects [her] community
property rights in Jack Milner’s interest in Thelin Recycling Company, LP, and [her]
consent to such action.” Jack and Vicki both signed where indicated; no one else
signed the exhibit that day. Joey signed it on July 7, 2008, eight days before he sold
his interest to Hill.
Exhibit B to the MSA provides,
THELIN MANAGEMENT COMPANY, LLC
REQUIRED CONSENT TO TRANSFER OF
RECORD TITLE AND BENEFICIAL OWNERSHIP INTERESTS
W hereas, Jack Milner and Vicki Milner have entered into an
agreement for Jack Milner to transfer the record title and beneficial
ownership interest in his 44.5% interest in Thelin Management
Company, LLC, to Vicki Milner as a part of the division of the
community estate of the parties;
Now, therefore, MICHAEL HILL, JACK MILNER, and JOEY
MILNER, being all of the members of THELIN MANAGEMENT
COMPANY, LLC, and constituting the Required Consent, hereby give
5
their consent to such transfers of interest, effective this 3rd day of July,
2008.
At the bottom of the page are lines for Jack, Hill, and Joey to sign as members and
a line for Vicki to sign as spouse indicating her “awareness of the agreement as it
affects [her] community property rights in Jack Milner’s interest in Thelin
Management Company, LLC, and [her] consent to such action.” Jack and Vicki both
signed where indicated; no one else signed the exhibit that day. Joey signed it on
July 7, 2008, eight days before he sold his interest to Hill.
On July 17, 2008, the trial court held a hearing regarding the MSA. Vicki
objected that the proposed final decree did not accurately reflect the MSA.
Specifically, she objected that Exhibit B to the decree differed from the MSA exhibits.
Exhibit B to the decree provides,
Assignment of Interests
In accordance with the terms of the Agreed Final Decree of
Divorce . . . , I, JACK EDW ARD MILNER, TRANSFER, CONVEY, and
ASSIGN to VICKI ANN MILNER, the following closely held business
interests:
a. All of my beneficial interest and record title in and to my
44.055% Limited Partnership Interest in Thelin Recycling
Company, LP, subject to all provisions of the Limited
Partnership Agreement of Thelin Recycling Company, LP,
save and except for the mineral interest to be awarded to
me . . . .
b. All of my beneficial interest and record title in and to my
44.5% membership interest in Thelin Management
6
Company, LLC, subject to all provisions of the Regulations
of Thelin Management Company, LLC, save and except
for the mineral interest to be awarded to me . . . .
The exhibit was to be signed by Jack and notarized. Unlike the exhibits to the
MSA, it contains no blanks or references to the other partners of Thelin Recycling
or the other members of Thelin Management. The exhibit to the divorce decree also
contains no reference to “Required Consent.”
Vicki testified that it was her understanding that the MSA was contingent upon
all of the partners signing consents to the transaction. Jack testified that he believed
that he had performed the required action of transferring his “beneficial interest and
record title” in Thelin Recycling and Thelin Management by signing his consent to
the transfers.
On August 8, 2008, Vicki filed a notice to withdraw her consent to the MSA.
On August 25, Jack filed his Motion to Enter Agreed Final Decree of Divorce.
On August 27, 2008, the trial court signed the final decree of divorce. The final
divorce decree transferred Jack’s “beneficial interest and record title” in Thelin
Recycling and Thelin Management to Vicki. The decree was not contingent on the
other partners consenting to a transferred partnership or management interest.
Arguing that the final divorce decree did not properly reflect the MSA, Vicki filed a
motion for new trial. Vicki alleged that since the signing of the divorce decree, she
had learned that before mediation, Hill had purchased Joey’s portion of Thelin
Management and Thelin Recycling, giving Hill the majority interest in both
7
companies. However, according to Vicki, Jack never indicated during mediation that
Joey’s status as a partner in Thelin Recycling and as a member in Thelin
Management had changed. Jack’s evidence indicated that Vicki’s lawyer was aware
of the pending purchase before the mediation and that the transaction did not occur
until after the mediation. After a hearing, the trial court denied Vicki’s motion for new
trial on October 10, 2008.
Analysis
Section 6.602 of the family code provides in relevant part,
(b) A mediated settlement agreement is binding on the parties if the
agreement:
(1) provides, in a prominently displayed statement that is in
boldfaced type or capital letters or underlined, that the
agreement is not subject to revocation;
(2) is signed by each party to the agreement; and
(3) is signed by the party’s attorney, if any, who is present at the
time the agreement is signed.
(c) If a mediated settlement agreement meets the requirements of this
section, a party is entitled to judgment on the mediated settlement
agreement notwithstanding Rule 11, Texas Rules of Civil Procedure, or
another rule of law.3
3
Tex. Fam. Code Ann. § 6.602(b), (c) (Vernon 2006).
8
As Vicki concedes, the MSA meets the requirements of this section. 4 But
settlement agreements are governed by contract law. 5 This court has held that a trial
court may properly refuse to enforce an MSA that otherwise complies with the
statute if a party procures the agreement by intentionally failing to disclose material
information, 6 and other courts have held that a trial court need not enforce an MSA
that is illegal or that was obtained through fraud, duress, coercion or other dishonest
methods.7 Additionally, the Dallas Court of Appeals has appeared to recognize that
the absence of a meeting of the minds would justify a trial court’s rejection of an
MSA,8 which is logical, given that a meeting of the minds is a required element of a
valid contract. 9
4
See id.
5
Schlumberger Tech. Corp. v. Swanson, 959 S.W .2d 171, 178 (Tex. 1997);
Williams v. Glash, 789 S.W .2d 261, 264 (Tex. 1990); Schriver v. Tex. Dep’t of
Transp., 293 S.W .3d 846, 851 (Tex. App.—Fort W orth 2009, no pet.).
6
Boyd v. Boyd, 67 S.W .3d 398, 403, 405 (Tex. App.—Fort W orth 2002, no
pet.).
7
See In re Joyner, 196 S.W .3d 883, 890 (Tex. App.—Texarkana 2006, pet.
denied); In re Kasschau, 11 S.W .3d 305, 312 (Tex. App.—Houston [14th Dist.] 1999,
orig. proceeding) (op. on reh’g).
8
See Mullins v. Mullins, 202 S.W .3d 869, 877 (Tex. App.—Dallas 2006, pet.
denied).
9
See Schriver, 293 S.W .3d at 851; Hubbard v. Shankle, 138 S.W .3d 474,
481 (Tex. App.—Fort W orth 2004, pet. denied).
9
In her second issue, Vicki contends that the trial court abused its discretion by
not setting aside the MSA and rendering judgment based upon contingencies that
were not performable. She specifically contends within this issue that there was no
meeting of the minds. W e agree.
In the MSA, Jack and Vicki agreed to “execute the Required Consents to
Transfer of Record Title and Beneficial Ownership Interests, copies of which are
attached hereto as Exhibit ‘A’, and Exhibit ‘B’, and incorporated herein fully by
reference.” Each exhibit contains “Required Consent” in its title and contains blanks
for not only Jack and Vicki but also for Joey and Hill. “[O]ur duty is to give effect to
all contract provisions, and render none meaningless.” 10 In contrast to the MSA and
its associated exhibits, the divorce decree and Exhibit B thereto omit any discussion
of “Required Consent,” Joey, and Hill.
Under the partnership agreement, the consents of Joey and Hill were not
required for Jack to merely assign his interest to Vicki, but unanimous consent,
termed “Required Consent” in the partnership agreement, was required for her to be
a limited partner.
Because the MSA contemplated unanimous consent and therefore a limited
partnership interest for Vicki, but the divorce decree contemplated only an
assignment, and because the rights of a limited partner are greater than those of an
10
King v. Dallas Fire Ins. Co., 85 S.W .3d 185, 193 (Tex. 2002).
10
assignee under the partnership agreement, we hold that there was no meeting of the
minds regarding the transfer of the partnership interest. Consequently, we hold that
the trial court abused its discretion by not setting aside the MSA. W e sustain Vicki’s
second issue, and because of this disposition, we do not reach her remaining
issues.11
Having sustained Vicki’s second issue, we affirm that portion of the trial court’s
judgment granting the divorce but reverse the trial court’s judgment as to the
property division. W e remand this case to the trial court for a new division of the
marital estate.
LEE ANN DAUPHINOT
JUSTICE
PANEL: DAUPHINOT, GARDNER, and W ALKER, JJ.
GARDNER, J. filed a concurring opinion.
W ALKER, J. concurs without opinion.
DELIVERED: June 3, 2010
11
See Tex. R. App. P. 47.1.
11
COURT OF APPEALS
SECOND DISTRICT OF TEXAS
FORT WORTH
NO. 2-08-442-CV
VICKI ANN MILNER APPELLANT
V.
JACK EDW ARD MILNER APPELLEE
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FROM THE 322ND DISTRICT COURT OF TARRANT COUNTY
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CONCURRING MEMORANDUM OPINION 1
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I join in the result but on additional grounds expressly raised by Vicki’s issues
in her brief. I would sustain Vicki’s first issue, complaining that the divorce decree
does not conform to the mediated settlement agreement (MSA), because the Exhibit
B attached to and incorporated into the decree, as well as the language of the
decree, substantially differs from the Exhibits A and B attached to and made a part
of the MSA. See In re Joyner, 196 S.W .3d 883, 890–91 (Tex. App.—Texarkana
1
See Tex. R. App. P. 47.4.
2006, pet. denied) (noting that section 6.602 does not authorize the trial court to
substitute its judgment for a mediated settlement agreement).
I would also sustain Vicki’s second issue contending that the MSA contained
contingencies that were impossible to perform. W hen it is impossible to enforce the
terms of a mediated settlement agreement, a trial court may not add terms,
significantly alter terms, or undermine the intent of the parties in an effort to remedy
the problem. See, e.g., Beyers v. Roberts, 199 S.W .3d 354, 362 (Tex.
App.—Houston [1st Dist.] 2006, pet. denied); In re Nolder, 48 S.W .3d 432, 434–35
(Tex. App.—Texarkana 2001, no pet.); In re Ames, 860 S.W .2d 590, 592–93 (Tex.
App.—Amarillo 1993, no writ) (reversing decree that added significant and different
terms to MSA).
Here, the record reflects the impossibility of ever obtaining the required
consents as stated by the MSA and the Exhibits A and B attached thereto, and I
would hold that the trial court abused its discretion by attempting to modify the
agreement because there was no final, binding agreement between the parties. See
Pickell v. Guar. Nat’l Life Ins. Co., 917 S.W .2d 439, 441–42 (Tex. App.—Houston
[14th Dist.] 1996, no writ) (holding where record reflected that contingency contained
in MSA was not met, there was no final, binding agreement on which judgment could
be based).
2
ANNE GARDNER
JUSTICE
DELIVERED: June 3, 2010
3