Enforcing Mediated Settlement Agreements
Updated: Jan 31
In family law, the Texas Legislature has made mediated settlement agreements (“MSAs”) binding on the parties if the MSA provides, in a prominently displayed statement that is in boldfaced type or capital letters or underlined, that the agreement is not subject to revocation and is signed by each of the parties and their respective attorneys, if any. Tex. Fam. Code §§ 6.602(b), 153.0071(d). (Note that the statute only requires bold, capital, OR underlined text; although, it is common practice to use all three effects.) If an MSA complies with the Texas Family Code’s requirements, a party is entitled to judgment on that MSA. Tex. Fam. Code §§ 6.602(c); 153.0071(e). In a suit affecting the parent-child relationship, the Code permits a trial court to refuse to set aside an MSA only under limited circumstances. See Tex. Fam. Code § 153.0071(e-1). Additionally, parties cannot informally agree to set aside an MSA and can seek judgment on an MSA even if a significant period of time has passed since entering into one. See In re Minix, 543 S.W.3d 446, 454 (Tex. App.—Houston [14th Dist.] 2018, orig. proceeding [mand. denied)).
An MSA is a contract, and its construction is governed by legal principles generally applicable to contracts. Garza v. Villarreal, 345 S.W.3d 473, 479 (Tex. App.—San Antonio 2011, pet denied). Whether a contract is ambiguous is a question of law. Milner v. Milner, 361 S.W.3d 615, 619 (Tex. 2012) (citing Coker v. Coker, 650 S.W.2d 391, 394 (Tex. 1983)). When the MSA’s language can be given a certain and definite meaning, the MSA is not ambiguous, and its construction is a matter for the court. Milner, 361 S.W.3d at 619 (citing Chrysler Ins. Co. v. Greenspoint Dodge of Houston, Inc., 297 S.W.3d 248, 252 (Tex. 2009) (per curiam)). However, if the MSA is susceptible to more than one reasonable interpretation, the agreement is MSA, creating a fact issue on the parties’ intent. Milner, 361 S.W.3d at 619 (citing J.M. Davidson, Inc. v. Webster, 128 S.W.3d 223, 229 (Tex. 2003)).
In construing an MSA, the primary concern of the court is to ascertain the true intentions of the parties as expressed in the MSA itself. Webster, 128 S.W.3d at 229. To achieve this objective, the court must examine and consider the entire writing in an effort to harmonize and give effect to all the provisions of the MSA so that none will be rendered meaningless. Webster, 128 S.W.3d at 229. No single provision taken alone will be given controlling effect; instead, all the provisions must be considered with reference to the whole instrument. Id.
An MSA is not ambiguous merely because the parties disagree about its meaning and may be ambiguous even though the parties agree it is not. URI, Inc. v. Kleberg Cty., 543 S.W.3d 755, 763 (Tex. 2018). Both the presence of ambiguity and interpretation of an unambiguous contract are questions of law the court reviews de novo using well-settled contract construction principles. Id.
If an MSA is limited in scope, then all of the MSA’s provisions—including those for attorney’s fees—may be limited as well. In re Marriage of Jobe, No. 12-20-00105-CV, 2021 WL 4616387, at *5 (Tex. App.—Tyler 2021, no pet.) (mem. op.). In Jobe, the parties signed two MSAs in their divorce with children and tried an unresolved issue to the court. Id. at *1–*2. In one of the MSAs, the parties agreed to each be responsible for his or her own attorney’s fees. Id. at *1. At trial, each party moved for attorney’s fees, and the trial court awarded some fees to the wife. Id. at *2. The appellate court held that the trial court did not err in finding an ambiguity existed as to the MSA’s provision regarding fees, and it did not err in resolving that ambiguity to find that the provision only applied to attorney’s fees incurred in obtaining that particular MSA. Id. at *5. Thus, the trial court did not alter the parties’ MSA when it awarded attorney’s fees incurred for preparation and participating in the final trial. Id. at *5.
If an MSA contains an error, but the parties’ intent can be deduced from the plain language of the MSA, the trial court must abide by the parties’ intent when rendering judgment. Pryor v. Pryor, No. 07-20-00329-CV, 2021 WL 5085225, at *4 (Tex. App.—Amarillo Nov. 2, 2021, no pet. h.) (mem. op.). In Pryor, the MSA provided that the father would pay a specific amount in monthly child support and stated that the amount was based on a formula and attached exhibits. Id. at *1. When applying the correct values contained in the exhibits to the agreed-upon formula, the specified amount of child support was clearly erroneous. Id. at *4. Thus, the trial court did not err in rending judgment on the sum obtained by using the correct values in the exhibits attached to the MSA. Id.
Common-law contract claims, such as fraudulent inducement, may provide a basis to set aside an otherwise compliant MSA. In re Marriage of Penafiel, __ S.W.3d __, No. 14-19-00240-CV, 2021 WL 3161420, at *9 (Tex. App.—Houston [14th Dist.] 2021, no pet.). In Penafiel, the parties signed an MSA; however, before obtaining a judgment on the MSA, the husband kept delaying the performance to which he had agreed. 2021 WL 3161420 at *3. The trial court signed a judgment on the MSA notwithstanding a finding that the husband had fraudulently induced the wife to sign it. Id.
The MSA required the husband to provide the wife an annuity but did not state a specific date of performance. Id. at *6. Thus, the husband’s performance was due within a “reasonable time.” Id. The husband failed to perform for 16 months and did not argue that he did not have a reasonable time for performance. Id. Additionally, although the husband’s attorney sent numerous emails stating that they were working on performance, the attorney never stated any specific action that had been taking to complete performance. Id. at *7. Moreover, the husband had a history of hiding assets and lying about records, indicating that he was capable of fraudulently inducing the wife into signing the agreement. Id. Thus, the trial court could reasonably determine that the husband fraudulently induced the wife into signing the MSA. Id. at *8. Further, in making that finding, the trial court erred in signing a judgment on the MSA. Id.
However, as in any divorce, the parties do not owe each other the fiduciary duty that is owed to a spouse during a happy marriage. See Cantillo v. Cantillo, 627 S.W.3d 367, 371 (Tex. App.—El Paso 2020, no pet.). In Cantillo, the parties’ MSA specifically awarded to the husband a phone and laptop that he believed were in the parties’ marital residence. Id. at 368–69. However, after signing the MSA, the husband discovered that the FBI had confiscated the phone and laptop. Id. at 369. The trial court refused to grant the husband’s motion to set aside the MSA based on fraud. Id. The appellate court held that the wife had no duty to voluntarily disclose the devices’ location and that the burden, instead, was on the husband to ask about the location during mediation. Id. at 373.