Family Law Settlements
Tex. Civ. Prac. & Rem. Code § 154.002
Public policy “encourages the peaceful resolution of disputes” by allowing parties to come to agreements through settlements. Tex. Civ. Prac. & Rem. Code § 154.002 (2011). In family law cases such as divorce or child custody disputes, this policy is furthered by sections of the Texas Family Code, e.g., § 6.602—allowing parties to reach a binding settlement agreement through mediation, and § 7.006—allowing parties to come to a settlement agreement on the division of property and liabilities and on spousal maintenance.
But what happens if a party changes his or her mind before the divorce is finalized? The answer may depend on how the agreement was reached.
Marriage Settlement Agreements
What is community property?
In In re the Marriage of Joyner, the parties signed a mediated settlement agreement (“MSA”) “that delineated and partitioned most of their property” and was in compliance with § 6.602 of the Texas Family Code. 196 S.W.3d 883,886 (Tex. App.—Texarkana 2006, pet. denied). A final hearing was held three months later for the court to resolve personal property issues on which the parties had not been able to come to an agreement. Id.
But one day after the hearing, the ex-husband won over two million dollars in the lottery. Id. The ex-wife, understandably wanting a piece of the winnings, argued that by failing to rule on certain property issues agreed upon in the prior MSA, the court impermissibly severed the divorce from the property matters and that therefore the parties were still married and the lottery winnings were community property. Id. at 888.
Binding Agreements at the Time of Execution
The court disagreed, holding that the MSA entitled them to a judgment based on that agreement, with very few exceptions. Id. By complying with § 6.602, the parties “elect[ed] to make their agreement binding at the time of execution rather than at the time of rendering.” Id. at 889. At the time the MSA was executed, the agreement “became more binding than a basic written contract” and nothing could have altered or voided the agreement. Id.
This is so even if a party attempts to withdraw his consent after execution. Id. at 890. The nature of an agreement under § 6.602 does not even require a determination from the court that the agreement is just and right. Id. at 889. Thus, given public policy and the court’s lack of authority to make a ruling that did not comply with the MSA, the court was not required to give a specific statement rendering judgment on the already stronger than a contract agreement before the parties could be legally divorced. Id. at 891. And the ex-wife was just out of luck when it came to her ex-husband’s newly won two million dollars.
Revision and Repudiation of Agreements
In contrast, the very language of § 7.006 of the Texas Family Code provides for revision and repudiation of agreements made prior to divorce regarding the division of property “unless the agreement is binding under another rule of law.” Though an agreement under this section requires court approval, even a determination that the terms are just and right does not make the agreement irrevocable. In Cook v. Cook, the trial court approved a property settlement under § 7.006, yet did not finalize the divorce. 243 S.W.3d 800, 801 (Tex. App.—Fort Worth 2007, no pet.) (quoting S & A Restaurant Corp. v. Leal, 892 S.W.2d 855, 857 (Tex. 1995) (holding “approval of a settlement does not necessarily constitute a rendition of judgment.”)) The husband argued that he revoked his consent to the agreement prior to judgment. The Fort Worth court agreed and held that “[a] judgment rendered after one party revokes his consent is void.” Cook, 243 S.W.3d at 802 (quoting S & A Restaurant Corp, 892 S.W.2d at 857).
Revising the Agreement
A party’s ability to reconsider a prior agreement depends on the form of the agreement, as stated above, as well as whether or not the agreement was filed with the court and is otherwise in compliance with Rule 11. Rule 11 of the Texas Rules of Civil Procedure governs settlement agreements and their revocability for all types of civil litigation, not just family law. Simply put, “a Rule 11 agreement is nothing more than a contract that satisfies the terms of Rule 11 of the Texas Rules of Civil Procedure.” In re E.S.S., 131 S.W.3d 632, 640 (Tex. App.—Fort Worth 2004, no pet.) The Rule states “no agreement between attorneys or parties touching any suit pending will be enforced unless it be in writing, signed and filed with the papers as part of the record, or unless it be made in open court and entered of record.” Tex. Rules Civ. Pro. 11.
Rule 11 Agreements
Though a Rule 11 agreement “may not serve as the basis for an agreed judgment if a party withdraws its consent before the trial court has rendered judgment,” seeking to revoke one’s consent to a Rule 11 agreement may open oneself up to a breach of contract action. Henry v. City of Fort Worth, No. 02-09-065-CV (Tex. App.—Fort Worth Feb. 18, 2010, pet. denied) (mem. op.) See also Padilla v. LaFrance, 907 S.W.2d 454, 462 (Tex. 1995) (holding “[a]n action to enforce a settlement agreement, where consent is withdrawn, must be based on proper pleading and proof.”) Thus a party may revoke his consent; however, revocation may mean little if the agreement can be enforced through contract law.
The two statutes in the Texas Family Code providing for amicable settlement of property matters allow the parties to make their agreement either revocable or irrevocable and to either require court approval or not. Yet once the agreement is filed in court and in compliance with Rule 11 of the Texas Rules of Civil Procedure, though a party still has the right to revoke a Rule 11 agreement, a previously revocable agreement under § 7.006 of the Texas Family Code binds the parties in the nature of a contract. See Childers v. King Ranch, Inc., No., 13-03-006-CV (Tex. App.—Corpus Christi April 7, 2005, no pet.) (mem. op.), (holding “a party has the right to revoke its consent to a rule 11 agreement at any time before the rendition of judgment…[n]evertheless, a court is not precluded from enforcing a rule 11 agreement.”)