Is a Mediated Settlement Agreement Still Valid in Texas if a Case is Dismissed?

A while back, a friend and fellow attorney asked me some questions about whether an MSA was still valid if a case was dismissed.

I have heard this question debated before among attorneys and opinions seem to be split. Half think the agreement is no longer valid and half think it is. This is basically what I told my friend. I also mentioned I was aware of cases in Texas where it was found that an MSA was still valid after one of the parties died. That case is discussed in greater detail below.

Recently I have had a chance to revisit this topic because one of my clients asked me the same question. It had been some time since I last looked into the question, so I started looking at whether there was any new case law on the subject.

Texas Family Lawyers Discussion on Facebook

I was looking for any new case law in my search so I posed the question to a Texas family lawyers group that I am a member of on Facebook.

Most of the family law attorneys who responded to the question rehashed much of what I already knew regarding the prevailing wisdom/guesses but no case law that was helpful.

However, when I chimed in and clarified my question, one attorney had actually argued the point in court and had some helpful information. She mentioned that I should take a look at the case “In re Kasschau, 11 S.W.3d 305 (Tex. App. 1999).”

In my research, I had only been looking at cases after 2007 and had not gone that far back. As a result of looking at that case, I was also able to find In re Minix, 543 S.W.3d 446, 448 (Tex. App. 2018).

I hope you enjoy reading what I learned as much as I enjoyed researching the validity of a mediated settlement agreement, should the case be dismissed.

  1. ISSUE

Does a mediated settlement agreement survive if judgment is not entered and the case is either dismissed or nonsuited?

The Mediated Settlement Agreement

Most mediated settlement agreements (MSA) entered into today contain the following provisions:

  1. The undersigned parties to this settlement agreement agree to compromise and settle the claims and controversies between them. The parties wish to avoid potentially protracted and costly litigation.
  1. If any dispute arises with regard to the interpretation or performance of this agreement or any of its provisions, including the necessity and form of closing documents, the parties are to participate in binding arbitration, in person or by and through their attorneys, with the mediator. Any disputes regarding drafting shall be resolved whenever possible by reference to the Texas Family Law Practice Manual (2d ed.).
  1. This agreement is made and performable in Harris County, Texas and must be construed in accordance with Texas law.
  1. Each signatory to this settlement has entered into the settlement freely and without duress after having consulted with professionals of his or her choice. Each party has been advised by the mediator that the mediator is not the attorney for any party and that each party should have this agreement approved by that party's attorney before executing it.
  1. THIS AGREEMENT IS BINDING AND IS NOT SUBJECT TO REVOCATION***
  1. THE PARTIES ACKNOWLEDGE THAT THE PARTIES SHALL BE ENTITLED TO AN AGREED ORDER ON THIS SETTLEMENT AGREEMENT. THE TERMS OF THIS AGREEMENT ARE EFFECTIVE IMMEDIATELY UNLESS OTHERWISE INDICATED HEREIN.
  1. BRIEF ANSWER

In reviewing the current case law, it appears the intentional failure to prove up or take any action to secure a judgment does not render an MSA unenforceable.

A dismissal of the divorce does not render the MSA unenforceable.

*** There is not a perfect case on this issue; however, current case law strongly favors finding a mediated settlement agreement valid. There are also is case law where an MSA has survived the death of a party and where an MSA survived dismissal but was found invalid for other reasons

  1. RELEVANT STATUTES

The following statutes are relevant to this discussion:

Texas Family Code Section 6.602 – Mediation Procedures

  1. On the written agreement of the parties or on the court's own motion, the court may refer a suit for dissolution of a marriage to mediation.
  1. 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.
  1. 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.

Texas Family Code Section 153.0071 - Alternative Dispute Resolution Procedures

  1. On written agreement of the parties, the court may refer a suit affecting the parent-child relationship to arbitration. The agreement must state whether the arbitration is binding or non-binding.
  1. If the parties agree to binding arbitration, the court shall render an order reflecting the arbitrator's award unless the court determines at a non-jury hearing that the award is not in the best interest of the child. The burden of proof at a hearing under this subsection is on the party seeking to avoid rendition of an order based on the arbitrator's award.
  1. On the written agreement of the parties or on the court's own motion, the court may refer a suit affecting the parent-child relationship to mediation.
  1. A mediated settlement agreement is binding on the parties if the agreement:
  1. If a mediated settlement agreement meets the requirements of Subsection (d), a party is entitled to judgment on the mediated settlement agreement notwithstanding Rule 11, Texas Rules of Civil Procedure, or another rule of law.
  1. (e-1) Notwithstanding Subsections (d) and (e), a court may decline to enter a judgment on a mediated settlement agreement if the court finds that:
  1. a party to the agreement was a victim of family violence, and that circumstance impaired the party's ability to make decisions; or
  1. the agreement would permit a person who is subject to registration under Chapter 62, Code of Criminal Procedure, on the basis of an offense committed by the person when the person was 17 years of age or older or who otherwise has a history or pattern of past or present physical or sexual abuse directed against any person to:
  1. reside in the same household as the child; or
  1. otherwise have unsupervised access to the child; and
  2. the agreement is not in the child's best interest.

PRE-LITIGATION MEDIATION AUTHORIZED BY STATUTE

Texas Family Code Section 153.133 - Parenting Plan for Joint Managing Conservatorship

(b) The agreed parenting plan may contain an alternative dispute resolution procedure that the parties agree to use before requesting enforcement or modification of the terms and conditions of the joint conservatorship through litigation, except in an emergency.

Texas Family Code Section 153.134 - Court-Ordered Joint Conservatorship

(b) In rendering an order appointing joint managing conservators, the court shall:

(5) if feasible, recommend that the parties use an alternative dispute resolution method before requesting enforcement or modification of the terms and conditions of the joint conservatorship through litigation, except in an emergency.

V. RELEVANT CASE LAW

The following cases are relevant to this discussion:

In re Kasschau, 11 S.W.3d 305 (Tex. App. 1999)

A Court Does Not Have to Enter a Judgement for an MSA with Illegal Provisions

In this case, the wife brought divorce action against the husband, requesting:

  1. Divorce
  2. Conservatorship of two children
  3. Division of community estate

Before judgment was entered on the court-approved mediated settlement agreement, the wife nonsuited the divorce petition.

Unaware of the nonsuit, the husband filed a counter-petition for divorce, seeking enforcement of the settlement, denying paternity of the second child, and asserting various tort claims.

The wife filed a new petition for divorce.

The trial court granted the motion to consolidate the two divorce actions based on its conclusion that the nonsuit did not defeat the mediated settlement agreement.

The court expressly stated that the nonsuit did not defeat the agreement. Instead of immediately entering judgment on the mediated settlement agreement, however, the trial court reviewed the agreement and concluded it was void.

The Court of Appeals held that:

  1. By failing to explain why trial court's refusal to reinstate his counter-petition for divorce, which was originally filed after wife nonsuited her divorce petition, could not be remedied by an appeal, petitioner failed to establish justification for mandamus relief;
  1. The trial court that approved mediated settlement agreement at divorce, but never rendered judgment on the agreement, had no ministerial duty to enter judgment, and thus did not violate a duty imposed by law, such that mandamus relief was available; and
  1. The trial court's setting aside of the entire mediated settlement agreement at divorce on grounds of illegality, rather than just severing illegal portion, was not an abuse of discretion.

Spiegel. v. KLRU Endowment Fund, 228 S.W.3d 237 (Tex. App.–Austin 2007) review denied (Sept. 28, 2007) rehearing of petition for review denied (Feb. 15, 2008).

A Party’s Death Does Not Render Unenforceable an MSA

In Spiegel v. KLRU Endowment Fund, the husband filed for a divorce in 2000. Thereafter, in 2002, the parties successfully mediated all issues and appropriately memorialized and executed an MSA.

The mediated settlement agreement included the required statutory language. For more than two years after the mediated settlement agreement was signed, husband unsuccessfully used various legal maneuvers attempting to rescind the agreement. Wife died in 2004 before a decree had been entered by the court.

The trial court held that the mediated settlement agreement was enforceable, and Husband appealed. The Court of Appeals affirmed, holding in part an MSA is enforceable under the Family Code, even in the absence of a divorce decree incorporating it.

While husband argued that although he and Wife intended to make an MSA pursuant to section 6.602 0f the Family Code, the agreement is unenforceable because wife’s death precluded any possibility that the agreement can be incorporated into a final decree of divorce as intended by the parties.

The Court of Appeals based their holding on:

  1. the plain language of the statute
  2. the public policy underlying it
  3. the intent of the parties as expressed in the language of the agreement.

The Court of Appeals noted that there are multiple ways to approach the division of community property in anticipation of divorce, but that if an MSA meets section 6.602’s requirements, it must be enforced in the absence of allegations that the agreement calls for an illegal act or that it was procured by fraud, duress, coercion, or other dishonest means.

In this case, the 2002 MSA became binding the moment it was signed and is enforceable, even in the absence of a judgment incorporating it. The court noted that section 6.602 allows spouses to enter into settlement agreements that are immediately binding and do not require the approval of the court.

Furthermore, by providing that when an agreement meets the requirements of section 6.602, the agreement is binding, and a party is entitled to judgment on it, the court recognized that the statute shows the legislature’s intention that the agreement be binding even in the absence of a judgment incorporating it. The court also relied on the plain language of the agreement Which indicated that the parties intended that the agreement be immediately effective.

In re Stephanie Lee, 411 S.W.3d 445, 448 (Tex. 2013)

Texas Supreme Court Made It Hard to Overturn MSA’s

In this case, a mother and father were involved in a post-divorce child custody case and had agreed to a binding mediated settlement agreement. Within that agreement was a visitation schedule where both mom and dad had pre-scheduled visitation with the child.

This is the norm for Texas custody cases. What was abnormal was the father letting the judge know at a hearing with the court after the agreement was reached that he was no longer in agreement with his ex-wife on visitation due to her recent marriage to a registered sex offender.

The two judges assigned to the case both refused to sign off on the agreement made between the parties due to the facts presented subsequently by the father. Their rationale for doing so was that it was not in the best interests of the child to be in the presence of a registered sex offender.

The mother (Stephanie Lee) appealed the decision of the trial court to a higher court and lost there as well. The mediated settlement agreement was still not enforced.

Ms. Lee then sought the opinion of the highest authority on legal matters our State has to offer, the Texas Supreme Court.

The Court ended up ruling that a trial court judge (the type of judges who oversee divorce and child custody cases in Texas) cannot reject a mediated settlement agreement even if they believe that the agreement is not in the best interests of the children involved.

This Court held that:

“…a trial court may not deny a motion to enter judgment on a properly executed MSA under section 153.0071 based on a broad best interest inquiry.” In re Lee, 411 S.W.3d 445, 458 (Tex. 2013)

In re Minix, 543 S.W.3d 446, 448 (Tex. App. 2018)

In this case, Father, Mother, and their attorneys signed an MSA. The MSA was later filed with the trial court.

The parties did not request the trial court to enter judgment on the MSA at that time. The court was not asked to enter temporary orders.

At a hearing on temporary orders before an associate judge, mother and father’s attorney let the judge know that the parties had stipulated to set aside the MSA.

Mother later hired a new attorney and moved for entry of judgment based on a mediated settlement agreement (MSA).

The trial court denied the motion. Mother sought a writ of mandamus.

The court of appeals considered whether Section 153.0071 of the Texas Family Code permits the parties to a mediated settlement agreement in a suit affecting the parent-child relationship (“MSA”) to agree to set aside the MSA.

Here, there is evidence that the parties agreed to set aside the MSA.

The Court of Appeals held that:

We conclude that the plain language of section 153.0071 does not permit the parties to the MSA to consent to revoke it, and we conditionally grant the petition for writ of mandamus.

THE TEXAS FAMILY LAW PRACTICE MANUAL

The Texas Family Law Practice Manual authorizes pre-litigation mediation. The forms used in Texas for all filings and orders offers the ability for parties to force mediation prior to the filing of any modification suit. Such provisions are as follows:

“It is agreed that before setting any hearing or initiating discovery in a suit for modification of the terms and conditions of conservatorship, possession, or support of the child, except in an emergency, the parties shall mediate the controversy in good faith. This requirement does not apply to actions brought to enforce this Order or to enforce any subsequent modifications of this Order. It is agreed that the party wishing to modify the terms and conditions of conservatorship, possession, or support of the child shall give written notice to the other party of a desire to mediate the controversy. If, within ten days after receipt of the written notice, the parties cannot agree on a mediator or the other party does not agree to attend mediation or fails to attend a scheduled mediation of the controversy, the party desiring modification shall be released from the obligation to mediate and shall be free to file suit for modification.”

  1. DISCUSSION AND ANALYSIS

A written mediated settlement agreement in a suit affecting the parent-child relationship is enforceable notwithstanding Rule 11. See TEX FAM. CODE § 153.0071 (d), (e).

Under these provisions, a mediated settlement agreement is binding in a suit if it: (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. Id. §§ 6.602(b); 153.0071 (d).

If a mediated settlement agreement meets these requirements, a party is entitled to judgment on the mediated agreement notwithstanding Rule 11, Texas Rules 0f Civil Procedure, or another rule of law. Id. §§ 6.602(c); 153.0071 (e).

At the outset, it is important to reiterate that, under sections 6.602 and 153.0071, the statutory language clearly set out that, if the terms of either section 6.602(b) or 153.0071(d) are complied with, a party is entitled to judgment on the mediated settlement agreement. Clearly, this means that there is no requirement for a separate suit to enforce the agreement and that it cannot be repudiated to prevent judgment on the matter. See Beyers v. Roberts, 199 S. W.3d 354, 358 (Tex. App.-Houston [1st Dist.] 2006, pet. denied).

Application of the Law to the Current Proceeding

The parties agreed in a mediated settlement agreement to resolve all issues of their divorce. The mediated settlement agreement states that it is “effective immediately” that “either party is entitled to judgment on it” that it is “not revocable.”

The MSA is further signed by the parties and their attorney’s. This is a clear indication that the MSA is enforceable pursuant to Texas Family Code sections 6.602 and 153.0071 and Movant is entitled to judgment thereon.

Case law also supports the fact that even through a nonsuit — an effect similar to the death of a party during litigation — the MSA remains enforceable. In its 2007 opinion in Spiegel, the Court of Appeals mandates the enforceability of MSA’S through:

  1. the plain language of the statute,
  2. the public policy underlying it, as well as
  3. the intent of the parties as expressed in the language of the agreement.

Spiegel v. KLRU Endowment Fund – Not Quite on Point

In this case, there was an active pending case and there was no nonsuit or dismissal. While the party became deceased, the estate could stand in the shoes of the deceased party. There was no nonsuit or dismissal of that case, so the case remained alive, although one of the parties was deceased.

In re Kasschau, 11 S.W.3d 305 (Tex. App. 1999)

In this case, the main focus is that a trial court does not enter an MSA when there are illegal provisions. However, it is interesting to note that the trial court did believe the MSA survived a nonsuit.

In re Minix, 543 S.W.3d 446, 448 (Tex. App. 2018)

This case did not involve a dismissal or nonsuit. However, it did seem to reinforce In Re Stephanie Lee making it harder for parties to back out of mediated settlement agreements even by agreement.

Answering the Question Today

The MSA conforms to the plain language of the statute and the parties intended for the MSA to be effective immediately and be enforceable. If this MSA is decided to be unenforceable due to the effect of the dismissal, Texas Family Code sections 153.133 and 153.134 will not be followed.

Final judgments in Texas properly call for the settlement of unfiled modifications through the mediation process. Securing an MSA prior to the filing of litigation does not automatically render such an MSA unenforceable — especially in matters involving the parent-child relationship.

Any pre-litigation MSA involving the parent-child relationship would 1ook nearly identical to the MSA in this case: identifying an agreement to file future litigation and entering orders pursuant to that future litigation. Indeed, the Texas Family Code and the Texas Family Law Practice Manual ensure the enforceability of Movant’s MSA.

Wife’s intentional failure to not prove up or take any action to secure a judgment does render this MSA unenforceable.

A dismissal of the divorce does not render the MSA unenforceable. The only means in which an MSA is rendered unenforceable, as described by the 2007 Court of Appeals in Spiegel, is a showing that this MSA was procured by fraud, duress, coercion, or other dishonest means.

In sum, the Texas Family Code, case law, and the Texas Family Law Practice Manual all support the position that this MSA is enforceable.

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  1. Termination of Parental Rights and an MSA in Texas
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  6. Can family violence render a Mediated Settlement Agreement void?
  7. Can you challenge a Mediated Settlement Agreement in Texas?
  8. Will a Texas Court enforce a Mediated Settlement Agreement when one party is a registered sex offender?
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