IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

 

No. 98-40709

 

FRANK H LEFEVRE; ET AL

Plaintiffs

JANE ROSS; WENDY CARMICHAEL

Plaintiffs - Appellees

versus

ROBERT M KEATY; THOMAS KEATY;

KEATY & KEATY, doing business as

The Keaty Firm

Defendants - Appellants

___________________________

JANE ROSS; WENDY CARMICHAEL

Plaintiffs - Appellees

versus

KEATY & KEATY, doing business as

The Keaty Firm; ROBERT KEATY;

THOMAS KEATY

Defendants - Appellants

 

Appeal from the United States District Court

for the Southern District of Texas

 

September 30, 1999

Before REYNALDO G. GARZA, HIGGINBOTHAM, and DAVIS, Circuit Judges.

PATRICK E. HIGGINBOTHAM, Circuit Judge:

In this diversity case, we determine whether an enforceable

settlement occurred under Texas Rule of Civil Procedure 11.

Because we find that parties reached no enforceable settlement on
which a judgment could be based, we VACATE AND REMAND the final

judgment of the district court.

I.

Jane Ross and Wendy Carmichael brought this diversity action

for negligence and breach of fiduciary duty against their lawyers,

the Keatys. In February of 1998, the parties informed the district

court that they had reached a settlement after an unreported

settlement conference. The district court entered an order

administratively closing the case pending settlement. Ultimately,

however, the Keatys did not fund the settlement and voiced concerns

about the terms of the release.

The court scheduled another settlement conference for May 8,

1998. At that hearing, the parties discussed the two remaining

issues regarding the releases: language releasing certain third

parties, and a deferred final judgment as a mechanism to address

the releases by the Ross and Carmichael minor children. The court

asked counsel for the Keatys to draft the deferred final judgment.

Counsel for Ross and Carmichael gave releases to counsel for the

Keatys. The district court then ordered the Keatys to tender

complete settlement funds by May 12, 1998. 

The Keatys failed to prepare the final judgment or to fund the

settlement, and on May 13, the district court entered an order

reprimanding the Keatys and ruling that the parties’ settlement

agreement was binding on them as a matter of law. The district
3

court then entered final judgment, including costs and pre-judgment

interest. The Keatys appealed.

II.

The Keatys contend that the judgment was improper because the

parties did not reach an enforceable settlement. In diversity

cases, Texas Rule of Civil Procedure 11 governs the enforcement of

settlements. See Anderegg v. High Standard, Inc., 825 F.2d 77, 80

(5th Cir. 1987). That rule includes two formal components. 

First, there must be documentation of the settlement. Rule 11

requires oral recitation in court or written commemoration of the

settlement. See Anderegg, 825 F.2d at 80. Rule 11 provides:

[N]o 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.R.Civ.P. 11 (1999). If the agreement is oral, it should be

dictated into the record and assented to on the record by the

parties. See Anderegg, 825 F.2d at 81.

Second, the state court must render judgment by officially

announcing its decision in open court or filing a written order

with the clerk. See Anderegg, 825 F.2d at 80. Until the court
1 This does not mean that the other party is left without a

remedy. He may amend his pleadings to bring a breach of contract

action against the non-settling party, and the judge may enforce

the settlement as a written contract upon demonstration of proof.

See Mantas v. Fifth Court of Appeals, 925 S.W.2d 656, 658 (Tex.

1996); Padilla v. LaFrance, 907 S.W.2d 454, 461-62 (Tex. 1995).

4

renders judgment, either party may revoke the settlement.1 See

S & A Restaurant Corp. v. Leal, 892 S.W.2d 855, 857 (Tex. 1995). 

The court’s order must indicate that no further action need be

taken for judgment. In Buffalo Bag Company v. Joachim, for

example, the court held that no final judgment was rendered where

the trial court approved the parties’ settlement and noted on the

docket sheet, “[j]udgment to be entered accordingly.” 704 S.W.2d

482, 483 (Tex. App. 1986). The court held that the language

indicated that a further, future action would effectuate judgment.

Moreover, the court noted that the parties’ announcement that they

would prepare a judgment and submit it to the judge for signature

could not amount to a rendition of judgment. See Buffalo Bag, 704

S.W.2d at 483-84. 

In this case, the required pairing of formalities never

occurred. Regarding the February hearing, there appears to be no

documentation that the parties commemorated a final settlement.

Even if there were such evidence, there was no final judgment by

the court. The administrative closing order noted that the case

was closed “pending settlement,” indicating that further action

needed to occur before judgment would be final. The Keatys’
5

subsequent announcement that they had remaining concerns revoked

their assent to any February settlement.

At the May 8 hearing, the parties appeared to settle the

remaining release issues. They never read the specific terms into

the record, however, or prepared a written memorandum of the

terms. Their general agreement is insufficient to satisfy the

Texas rule. Without a final agreement of the parties, the district

court had no authority to issue a final judgment or grant interest

on May 13.

VACATED AND REMANDED.