Opinion issued May 19, 2016
In The
Court of Appeals
For The
First District of Texas
————————————
NO. 01-15-00730-CV
———————————
SHEA PALAVAN, Appellant
V.
BRIAN MCCULLEY, TBW DEVELOPMENT, LLC, AND BOULEVARD
REALTY, LLC, Appellees
On Appeal from County Civil Court at Law No. 3
Harris County, Texas
Trial Court Case No. 1047954-002
OPINION
The county court at law dismissed with prejudice the appeal filed by appellant,
Shea Palavan, from an agreed judgment that Palavan had entered into with appellees,
Brian McCulley, TBW Development, LLC, and Boulevard Realty, LLC, in a justice
of the peace court. The county court likewise denied Palavan’s application for writ
of certiorari based on the same agreed judgment. Subsequently, the county court
granted McCulley and TBW Development’s motion for summary judgment on their
breach of contract claims against Palavan. In five issues on appeal, Palavan argues
(1) the county court improperly dismissed his appeal, (2) the county court
improperly dismissed his application for writ of certiorari, (3) fact issues remained
on McCulley and TBW Development’s breach of contract claim, (4) the county court
improperly granted summary judgment on McCulley and TBW Development’s
declaratory judgment action, and (5) dismissal of Palvan’s claims mooted McCulley
and TBW Development’s breach of contract claims.
We affirm.
Background
Palavan rents a home in Houston, Texas. TBW Development began
construction on an adjacent property. On July 9, 2013, Palavan filed suit in a justice
of the peace court against McCulley, TBW Development, and Boulevard Realty,
alleging trespass, nuisance, and trespass to chattels. The defendants answered, and
trial was set for March 20, 2014.
On the date of the trial, the parties entered into an agreed judgment. The
agreed judgment provides,
Came on for trial the above styled case. After considering the
issues of the case with the Judge, the parties announced they reached a
settlement in the case as to all claim of plaintiff[,] as to any parties to
the litigation[,] or otherwise. TBW Development LLC, Boulevard
2
Realty, LLC[,] and Brian McCulley are dismissed with prejudice from
this litigation. Plaintiff accepts the settlement of $1[,]200 as complete
satisfaction of all claims or causes of action, pled or otherwise, which
arise out of or relate to the claims for damages as alleged in this
Litigation. TBW Development LLC’s claims against any contractor for
the sums paid under the settlement shall not be released o[r] affected by
this settlement. The $1[,]200 shall b[e] paid by counsel for Defendants
Brian McCulley and/or TBW Development LLC to Shea Palavan by
April 19, 2014. Based upon the settlement this court ORDERS:
All claims of [plaintiff] Shea Palavan against all Defendants in
this Litigation are hereby dismissed with prejudice.
Twenty days later, Palavan filed a notice of appeal and application for writ of
certiorari in the county court. Palavan also filed a memorandum in support of both
filings. Attached to the memorandum was Palavan’s affidavit. In the affidavit,
Palavan identified a number of alleged actions taken by the justice of the peace and
the defendants that he considered to be unfair or improper, including defendants’
being allowed to serve him with “voluminous amounts of discovery [requests],” his
not being allowed to serve defendants with discovery, defendants’ presenting one
settlement offer and refusing to further negotiate, the court’s denial of his jury
request, the court’s “refus[al] to acknowledge” two of his claims, and the court’s
refusal to allow his girlfriend to testify. Palavan continued,
After ignoring two of Plaintiff’s claims, the Justice Court asked if
Defendants’ unreasonable settlement offer—which they refused to
negotiate on—was still on the table. Having refused to hear any
evidence from Plaintiff, Plaintiff felt his only options were (1) to
dismiss his claims since the Justice Court seemed uninterested in
properly trying the case, or (2) settle with Defendants and appeal the
case to get a proper trial. Thus, rather than giving up his valid, proper
3
claims, Plaintiff decided to agree in court and appeal from the many
injustices he faced in the Justice Court.
The defendants filed motions to dismiss the appeal and deny the application
for the writ of certiorari. In the motions, they argued that the appeal and application
were barred by waiver and estoppel because Palavan had settled the suit, agreed to
dismiss them from the suit, and accepted $1,200 in satisfaction of his claims.
McCulley and TBW Development also filed counterclaims for breach of contract,
alleging that the appeal and application were violations of the settlement agreement.
In his response, Palavan argued that he had properly appealed the judgment
from the justice of the peace and that the agreed judgment was not enforceable. For
his enforceability argument, Palavan argued that the agreed judgment had been
obtained by fraud and that he had not consented to the agreed judgment. The county
court granted the defendants’ motions, dismissed with prejudice Palavan’s claims
against the defendants, and denied Palavan’s application for writ of certiorari.
Palavan filed a notice of appeal in this Court. We later dismissed for lack of
jurisdiction.1 During the pendency of that appeal, McCulley and TBW Development
filed a motion for summary judgment. McCulley and TBW Development argued
that Palavan breached the settlement agreement by appealing the agreed judgment
1
See Palavan v. McCulley, No. 01-14-00604-CV, 2015 WL 1544520, at *1–*2 (Tex.
App.—Houston [1st Dist.] Apr. 2, 2015, no pet.) (mem. op.).
4
and that they were entitled to recover attorneys’ fees incurred in getting the appeal
dismissed and application denied. Palavan argued they could not recover because
the agreed judgment had become void upon his appeal of the judgment; the agreed
judgment was signed under a mutual or unilateral mistake; McCulley and TBW
Development could not recover because they had unclean hands; the agreed
judgment was illegal, ambiguous, contrary to public policy, and fraudulently
induced; McCulley and TBW Development were estopped from enforcing the
agreed judgment; his appealing the agreed judgment did not constitute a breach of
the settlement agreement; and McCulley and TBW Development were not harmed
by any alleged breach.
After we dismissed the earlier appeal, McCulley and TBW Development
amended their counter-petition, adding a claim for declaratory relief. Specifically,
they requested that the county court “construe the Agreed Judgment as a binding
Settlement Agreement of all claims of [Palavan] against [McCulley and TBW
Development] in the underlying dispute.”
The county court granted McCulley and TBW Development’s motion for
summary judgment. The order awarded McCulley and TBW Development
$5,153.62 in damages along with attorneys’ fees for unsuccessful appeals and
appellate motions. The order provided, “This judgment disposes of all parties and
claims and is a final judgment.”
5
Motions to Dismiss
In his first issue, Palavan argues that the county court improperly dismissed
his appeal. In his second issue, Palavan argues that the county court improperly
dismissed his application for writ of certiorari.
The defendants argued in their motions to dismiss that Palavan could not bring
his appeal and application for writ of certiorari because of the agreed judgment.
Specifically, they argued the appeal and application were barred by waiver and
estoppel because Palavan had settled the suit, agreed to dismiss them from the suit,
and accepted $1,200 in satisfaction of his claims. In his response, Palavan argued
that he had properly appealed the judgment from the justice of the peace and that the
agreed judgment was not enforceable. For his enforceability argument, Palavan
argued that the agreed judgment had been obtained by fraud and that he had not
consented to the agreed judgment.
On appeal, Palavan frames the issue as a jurisdictional question. He argues
that the agreed judgment did not deprive the county court of jurisdiction for his
appeal and application. We agree that “an agreed judgment in the justice court does
not deprive the county court of jurisdiction to hear the case in a trial de novo.”
Mullins v. Coussons, 745 S.W.2d 50, 50 (Tex. App.—Houston [14th Dist.] 1987, no
writ). This does not mean, however, that the grounds for dismissal presented in the
defendants’ motions—Palavan’s claims being barred by waiver and estoppel due to
6
the agreed judgment—were wrong. See id. at 51 (holding agreed judgment presents
question of waiver or estoppel rather than question of jurisdiction).
A party may appeal a judgment from a justice of the peace court to a county
court at law. TEX. CIV. PRAC. & REM. CODE ANN. § 51.001(a) (Vernon 2015); TEX.
R. CIV. P. 506.1(a). “An appeal is perfected when a bond, cash deposit, or statement
of inability to pay is filed in accordance with this rule.” TEX. R. CIV. P. 506.1(h).
“[I]t is well-settled that perfection of an appeal to county court from a justice court
for trial de novo vacates and annuls the judgment of the justice court.” Villalon v.
Bank One, 176 S.W.3d 66, 69–70 (Tex. App.—Houston [1st Dist.] 2004, pet.
denied).
It is undisputed that Palavan perfected his appeal to the county court. See
TEX. R. CIV. P. 506.1(h). Accordingly, the judgment of the justice of the peace court
was vacated and annulled. See Villalon, 176 S.W.3d at 69–70. Palavan argues that,
as a result, the agreed judgment did not bar his claims before the county court. We
disagree.
Agreed judgments are based on agreements between the parties and are
construed as contracts. See Gulf Ins. Co. v. Burns Motors, Inc., 22 S.W.3d 417, 422
(Tex. 2000) (holding agreed judgments are construed in same manner as contract);
Hicks v. Hicks, 348 S.W.3d 281, 283 (Tex. App.—Houston [14th Dist.] 2011, no
pet.) (holding agreed judgments are treated as contract between parties). While the
7
judgment itself was vacated, the contract between the parties remained.
Accordingly, the contract can be enforced, subject to the regular defenses available
to contract actions raised by the opposing party. 2 See In re Build by Owner, LLC,
No. 01-11-00513-CV, 2011 WL 4612790, at *7 (Tex. App.—Houston [1st Dist.]
Oct. 6, 2011, no pet.) (mem. op.) (holding settlement agreement can be enforced as
contract even when party prevents settlement from becoming judgment and holding
defending party can assert defenses to contract enforcement).
Palavan raises a number of grounds for why the settlement agreement cannot
be enforced. As an initial ground, Palavan argues that it is not a settlement
agreement. This argument rests on the legal proposition that “a party’s signature
attesting to the form and substance of a judgment standing alone is insufficient to
establish a consent judgment.” Underwater Servs., Inc. v. Offshore Drilling Co.,
No. 01-11-00889-CV, 2013 WL 2096640, at *7 (Tex. App.—Houston [1st Dist.]
2
To enforce a settlement agreement where consent was withdrawn before judgment
was entered, the complaining party must assert a breach of contract claim and obtain
judgment through summary judgment or trial. Staley v. Herblin, 188 S.W.3d 334,
336 (Tex. App.—Dallas 2006, pet. denied). We do not need to resolve whether the
same rule applies in this circumstance, however, because Palavan has not challenged
Realty Boulevard’s failure to assert a breach of contract claim in its pleadings and
has not argued that the motions to dismiss were substantively different than a motion
for summary judgment. See Roark v. Stallworth Oil & Gas, Inc., 813 S.W.2d 492,
495 (Tex. 1991) (holding unpleaded claims or defenses that are tried by express or
implied consent of parties are treated as if they had been raised by pleadings even
in summary judgment proceedings); In re Brookshire Grocery Co., 250 S.W.3d 66,
72 (Tex. 2008) (holding nature of motion is determined by its substance, not its
title); Walling v. Metcalfe, 863 S.W.2d 56, 58 (Tex. 1993) (holding appellate courts
cannot reverse judgment on grounds not raised on appeal).
8
2013, no pet.) (mem. op.) (citing Hicks, 348 S.W.3d at 283). Nevertheless, the body
of a consent judgment indicating the parties’ consent is sufficient. Hicks, 348
S.W.3d at 283.
Here, the judgment was entitled “Agreed Judgment,” asserted that the parties
had reached a settlement of the claims, identified the terms of the settlement, and
was signed by Palavan, agreeing “as to form and substance.” We hold this is
sufficient evidence of a settlement agreement between the parties.
Next, Palavan argues that his agreement to settle was subject to his right to
appeal the judgment to the county court. His evidence for this is based on the
affidavit he attached to his notice of appeal to the county court. In his affidavit,
Palavan identified a number of alleged actions taken by the justice of the peace and
the defendants that he considered to be unfair or improper, including defendants’
being allowed to serve him with “voluminous amounts of discovery [requests],” his
not being allowed to serve defendants with discovery, defendants’ presenting one
settlement offer and refusing to further negotiate, the court’s denial of his jury
request, the court’s “refus[al] to acknowledge” two of his claims, and the court’s
refusal to allow his girlfriend to testify. Palavan continued,
After ignoring two of Plaintiff’s claims, the Justice Court asked if
Defendants’ unreasonable settlement offer—which they refused to
negotiate on—was still on the table. Having refused to hear any
evidence from Plaintiff, Plaintiff felt his only options were (1) to
dismiss his claims since the Justice Court seemed uninterested in
properly trying the case, or (2) settle with Defendants and appeal the
9
case to get a proper trial. Thus, rather than giving up his valid, proper
claims, Plaintiff decided to agree in court and appeal from the many
injustices he faced in the Justice Court.
Palavan also relies on this evidence as support for his other grounds for avoiding the
contract, including ambiguity, mutual mistake, unilateral mistake, fraud, illegality,
unclean hands, unconscionability, and equitable estoppel.
Palavan’s argument for each of these grounds, which he contends is supported
by his affidavit, is that “prior to, during, and after signing [the agreed judgment],
[Palavan] made clear his disagreement and non-consent to the Agreed Judgment.”
Throughout his brief, Palavan argues his affidavit presents some evidence that he
made the parties and the justice of the peace aware of his objections to the
proceedings and the agreed judgment and that everyone knew he was signing the
agreed judgment subject to those objections.
Palavan’s affidavit does not support this assertion, however. Palavan averred
in his affidavit that he “felt” he could only dismiss the suit or settle with the
defendants and that he “decided” to settle the claims. Nowhere in his affidavit or
any other evidence in the record is there any proof that Palavan voiced these feelings
and decisions to anyone other than himself.
“For an agreement to be enforceable, there must be a meeting of the minds
with respect to the subject matter of the agreement and as to all of its essential terms.”
Ludlow v. DeBerry, 959 S.W.2d 265, 272 (Tex. App.—Houston [14th Dist.] 1997,
10
no writ). In order to determine whether there was a meeting of the minds, we
consider only the parties’ objective manifestations of assent, not their subjective
states of mind. Adams v. Petrade Int’l., Inc., 754 S.W.2d 696, 717 (Tex. App.—
Houston [1st Dist.] 1988, writ denied). “[A] party manifests its assent by signing an
agreement.” Rachal v. Reitz, 403 S.W.3d 840, 845 (Tex. 2013). Without any proof
that any of the other parties or the justice of the peace were even aware of Palavan’s
internal thoughts and decisions, they cannot form the basis of avoiding the plain
terms of the settlement agreement. See Adams, 754 S.W.2d at 717.
We hold there is sufficient evidence in the record to support the defendants’
argument that Palavan’s claims in the county court were barred by the settlement
agreement. We further hold there is no evidence in the record to establish that the
contract cannot be enforced against Palavan. Accordingly, there was no error in the
county court’s dismissal of Palavan’s claims against the defendants and denial of his
application for writ of certiorari. We overrule Palavan’s first two issues.
Summary Judgment
In his third issue, Palavan argues fact issues remained on McCulley’s and
TBW Development’s breach of contract claims. In his fifth issue, Palavan argues
dismissal of his claims mooted McCulley’s and TBW Development’s breach of
contract claims.
11
A. Standard of Review
The summary-judgment movant must conclusively establish its right to
judgment as a matter of law. See MMP, Ltd. v. Jones, 710 S.W.2d 59, 60 (Tex.
1986). Because summary judgment is a question of law, we review a trial court’s
summary judgment decision de novo. See Mann Frankfort Stein & Lipp Advisors,
Inc. v. Fielding, 289 S.W.3d 844, 848 (Tex. 2009).
To prevail on a “traditional” summary-judgment motion asserted under Rule
166a(c), a movant must prove that there is no genuine issue regarding any material
fact and that it is entitled to judgment as a matter of law. See TEX. R. CIV. P. 166a(c);
Little v. Tex. Dep’t of Criminal Justice, 148 S.W.3d 374, 381 (Tex. 2004). A matter
is conclusively established if reasonable people could not differ as to the conclusion
to be drawn from the evidence. See City of Keller v. Wilson, 168 S.W.3d 802, 816
(Tex. 2005).
When it moves for summary judgment on a claim for which it bears the burden
of proof, a party must show that it is entitled to prevail on each element of its cause
of action. See Parker v. Dodge, 98 S.W.3d 297, 299 (Tex. App.—Houston [1st Dist.]
2003, no pet.). The party meets this burden if it produces evidence that would be
sufficient to support an instructed verdict at trial. Id.
To determine whether there is a fact issue in a motion for summary judgment,
we review the evidence in the light most favorable to the non-movant, crediting
12
favorable evidence if reasonable jurors could do so, and disregarding contrary
evidence unless reasonable jurors could not. See Fielding, 289 S.W.3d at 848 (citing
City of Keller, 168 S.W.3d at 827). We indulge every reasonable inference and
resolve any doubts in the non-movant’s favor. Sw. Elec. Power Co. v. Grant, 73
S.W.3d 211, 215 (Tex. 2002).
B. Analysis
Palavan argues that there is no proof that he breached the settlement
agreement because the agreement “contains no promise whatsoever by [him].
Without a promise by [him] to do, or not to do, something, there simply can be no
breach by him.”
“In construing a contract, a court must ascertain the true intentions of the
parties as expressed in the writing itself.” Italian Cowboy Partners, Ltd. v.
Prudential Ins. Co. of Am., 341 S.W.3d 323, 333 (Tex. 2011) (citing J.M. Davidson,
Inc. v. Webster, 128 S.W.3d 223, 229 (Tex. 2003)). “We begin this analysis with the
contract’s express language.” Id. (citing Progressive Cnty. Mut. Ins. Co. v. Kelley,
284 S.W.3d 805, 807 (Tex. 2009)). “We give contract terms their plain and ordinary
meaning unless the instrument indicates the parties intended a different meaning.”
Dynegy Midstream Servs., Ltd. P’ship v. Apache Corp., 294 S.W.3d 164, 168 (Tex.
2009).
13
We find no support for Palavan’s claim that the agreement places no
breachable obligations on him. The settlement agreement, as reflected in the agreed
judgment, provided that the defendants would be dismissed from the suit and that
Palavan would accept $1,200 “as complete satisfaction of all claims or causes of
action, pled or otherwise, which arise out of or relate to the claims for damages as
alleged in this Litigation.” By appealing the agreed judgment, Palavan breached his
obligation to have the defendants dismissed from the suit and to accept the payment
of $1,200 as satisfaction all of his claims.
Palavan argues that the plain language of the agreed judgment reflects that he
did not agree to dismiss his claims. “[T]o the contrary, the plain language indicates
that the JP court itself dismissed the claims.” Of course, the justice of the peace
court dismissed Palavan’s claims pursuant to an agreement to which Palavan was a
party and agreed. Accordingly, Palavan agreed to have his claims dismissed by the
justice of the peace.
In support of his claim that he did not breach the settlement agreement,
Palavan relies on National Property Holdings, L.P. v. Westergren, 453 S.W.3d 419
(Tex. 2015). In Westergren, National Property Holdings had participated in
settlement of a suit to which it was not a party. Id. at 422. Pursuant to the settlement
agreement, certain property in dispute among the litigants would be sold to National
Property Holdings. Id. In the process, National Property Holdings orally promised
14
Westergren to make certain payments to him. Id. Later, National Property Holdings
made a partial payment to Westergren, and Westergren signed a release of of all
claims against National Property Holdings. Id. Westergren did not realize until later
that he had signed a release and brought suit against National Property Holdings. Id.
National Property Holdings asserted a breach of contract claim based on
Westergren’s filing suit after signing the release. Id.
The Supreme Court of Texas held that the language of the release created an
affirmative defense to Westergren’s suit, but the release did not include a covenant
not to sue. Id. at 428. To the contrary, the release contemplated suit by providing
that the release would act “as an absolute bar to the suit—in other words, it provides
the parties with an affirmative defense.” Id.
Here, however, Palavan agreed to dismiss the defendants from the suit. By
filing his notice of appeal, Palavan kept the defendants in the suit and continued to
pursue his claims against them. This is a breach of the settlement agreement.
Next, Palavan argues that, even if he did breach the settlement agreement,
there is no proof that McCulley and TBW Development suffered any damages. He
argues that McCulley and TBW Development’s damages were the attorneys’ fees
incurred in defending the suit and that “[c]ourts have long distinguished attorneys’
fees from damages.” See, e.g., In re Nalle Plastics Family Ltd. P’ship, 406 S.W.3d
168, 172 (Tex. 2013).
15
One of the grounds upon which McCulley and TBW Development sought
attorneys’ fees was under section 38.001 of the Texas Civil Practice and Remedies
Code. See TEX. CIV. PRAC. & REM. CODE ANN. § 38.001 (Vernon 2015). In order
to recover attorneys’ fees under this section, the party seeking fees must be the
prevailing party. See Green Int’l, Inc. v. Solis, 951 S.W.2d 384, 390 (Tex. 1997).
Typically, for breach of contract claims, this requires obtaining actual damages. See
id. Obtaining specific performance of a contract can also make the party a prevailing
party. Boyaki v. John M. O’Quinn & Assocs., PLLC, No. 01-12-00984-CV, 2014
WL 4855021, at *13–*14 (Tex. App.—Houston [1st Dist.] Sept. 30, 2014, pet.
denied) (mem. op.). Thus, a party is a prevailing party by “obtain[ing] an award of
specific enforcement of [a] settlement agreement and an end to the ongoing litigation
in the case.” Id. at *14.
Here, McCulley and TBW Development obtained specific performance of
their settlement agreement with Palavan by having Palavan’s claims against them
dismissed. McCulley and TBW Development were prevailing parties and were
entitled to an award of attorneys’ fees.
For the same reason, Palavan’s arugment that the dismissal of his claims
mooted McCulley’s and TBW Development’s breach of contract claims must fail.
Dismissal of Palavan’s claims established that McCulley and TBW Development
prevailed, not that their claims were mooted. See id. at *13–*14.
16
We overrule Palavan’s third and fifth issues.
Declaratory Judgment Action
In his fourth issue, Palavan argues the county court improperly granted
summary judgment on McCulley and TBW Development’s declaratory judgment
action. Even if we agreed with Palavan, however, he has failed to establish how he
has been injured by a dismissal of McCulley and TBW Development’s declaratory
judgment action. See CBS Outdoor, Inc. v. Potter, No. 01-11-00650-CV, 2013 WL
269091, at *17 (Tex. App.—Houston [1st Dist.] Jan. 24, 2013, pet. denied) (mem.
op.) (“In order to obtain reversal on appeal, the appellant must show that it suffered
harm as a result of an alleged error.”).
We overrule Palavan’s fourth issue.
Conclusion
We affirm the judgment of the trial court.
Laura Carter Higley
Justice
Panel consists of Chief Justice Radack and Justices Keyes and Higley.
17