Court Opinion

ID: 3072429
Source: CourtListenerOpinion
Date Created: 2015-10-16 00:46:43.029562+00
Date Added: 2024-06-11T11:50:07.574865
License: Public Domain

COURT OF APPEALS
                         SECOND DISTRICT OF TEXAS
                              FORT WORTH

                             NO. 02-13-00356-CV

PUTZ FARMS, A JOINT VENTURE;                                      APPELLANTS
DR. HERBERT R. PUTZ; AND
SIGNE PUTZ

                                       V.

CROP PRODUCTION SERVICES,                                            APPELLEE
INC.

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          FROM THE 362ND DISTRICT COURT OF DENTON COUNTY
                    TRIAL COURT NO. 2009-40347-362

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                        MEMORANDUM OPINION1

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      In three issues, Appellants Putz Farms, a Joint Venture; Dr. Herbert R.

Putz; and Signe Putz (collectively, Putz) appeal from an agreed judgment in favor

of Appellee Crop Production Services, Inc. (CPS). We reverse and remand.

      1
       See Tex. R. App. P. 47.4.
                                   Background

      CPS brought a suit on a sworn account against Putz. After mediating the

case, the parties entered into a “Compromise, Settlement and Release

Agreement” (the Settlement Agreement) to be effective March 6, 2013.           The

Settlement Agreement provided in relevant part as follows:

            1.     Payment, Agreed Judgment, and Dismissal

             (a)    Putz will pay to CPS the total amount of $800,000 plus
      interest (the “Settlement Amount”) as set forth below:

                   (i)     $150,000 to be received within five business days
                           of 6 March 2013;

                   (ii)    $325,000 plus 3% (simple) interest accrued since
                           6 March 2013 to be received on or before 31 July
                           2013; and

                   (iii)   $325,000 plus 3% (simple) interest accrued since
                           6 March 2013 to be received on or before 31
                           January 2014.

            ....

             (b)    Agreed Judgment.       Contemporaneously with the
      execution of this Agreement, the Parties2 will execute an agreed
      judgment (the “Agreed Judgment”) in favor of CPS and against
      Putz, in the amount of $1,300,000 to accrue 18% interest from the
      date the Agreed Judgment is signed, in substantially the form
      attached as Exhibit A. CPS will hold the Agreed Judgment in trust,
      through its counsel Dulan Elder, pending fulfillment by Putz of all
      payment obligations under section 1.(a) above. CPS shall not,
      however, file or record the Agreed Judgment, nor shall CPS have
      the right to enforce the Agreed Judgment, except in accordance with
      paragraph 2, below.

      2
       The Settlement Agreement defines “Parties” as CPS and Putz.

                                         2
            (c)   Termination of rights. If and when all payments have
      been made, CPS shall dismiss the case with prejudice, within 15
      days of receipt of final payment in full satisfaction of the Settlement
      Amount.

             2.     Events of Default and Enforcement

             (a)    Monetary Default. The failure to make any payment in
      accordance with the terms of paragraph 1(a) of this Agreement . . .
      shall constitute an “Event of Monetary Default”.

             (b)    Enforcement of the Agreed Judgment

             (i)    Upon the occurrence of an Event of Monetary Default,
                    CPS shall provide to counsel for Putz written notice
                    (“Default Notice”) of such default. If such default is not
                    cured by receipt of payment by Putz within 15 business
                    days of the Default Notice, CPS shall then immediately
                    have all rights to file, record and enforce the Agreed
                    Judgment (less credit of all amounts paid).

             (ii)   Putz and CPS shall cooperate as appropriate to
                    maintain this case on the Court’s docket pending
                    fulfillment of settlement obligations, and/or filing of the
                    Agreement Judgment.

      Putz timely paid the first settlement payment on March 7, 2013, and the

parties executed an Agreed Judgment. On July 16, 2013, before the second

settlement payment was due, CPS’s counsel forwarded the Agreed Judgment to

the trial court. CPS did not enclose a signed copy of the Settlement Agreement

with the Agreed Judgment. The cover letter addressed to the court coordinator

stated in relevant part as follows:

             The parties to this lawsuit have reached a mediated
      settlement agreement which has been memorialized by a written
      settlement agreement. Under the terms of that agreement, the
      parties have agreed to enter into an Agreed Judgment which is to be
      signed by the Judge but held in trust pending performance of the

                                          3
      payout of the agreed amount by [Putz]. The final payment under the
      agreed settlement is due January 31, 2014.

            ....

             We request that the Court sign the judgment but that it not be
      entered into the Court’s minutes or filed among the papers of the
      cause and instead be returned to the undersigned in the enclosed
      self-addressed stamped envelope to be held in trust in accordance
      with the parties’ agreement.

            If [the trial court] has problems with this arrangement, then
      please advise and we will seek to address the Court’s concerns.

      On July 22, 2013, a visiting judge signed the Agreed Judgment, and the

Agreed Judgment was filed with the papers of the case as part of the record.

The clerk sent notice of the judgment to Putz.

      Putz timely filed a motion for new trial, arguing that good cause existed for

granting Putz a new trial because (1) CPS’s representation to the trial court in its

July 16 letter that the Agreed Judgment was to be signed by the trial court was

misleading in that the Settlement Agreement did not contemplate that the Agreed

Judgment would be sent to the trial court for signature prior to the occurrence of

a default under the Settlement Agreement and (2) after it was signed, the Agreed

Judgment was filed in the records of the case even though Putz had not

defaulted. CPS responded that the Agreed Judgment should not be set aside

because (1) the parties contemplated that the trial court would sign the Agreed

Judgment and (2) by that time, Putz had failed to make the July 31, 2013

settlement payment, which permitted CPS to record the Agreed Judgment under

                                         4
the terms of the Settlement Agreement, so that any error was harmless. The trial

court denied the motion for new trial, and Putz appealed.

                                     Analysis

      In three issues, Putz argues that the trial court erred in signing the Agreed

Judgment because (1) the Agreed Judgment was procured by fraud in

misrepresenting that the parties had agreed that it was to be signed by the trial

court before any default; (2) the Settlement Agreement was not enforceable as a

rule 11 agreement because it was not on file with the trial court at the time the

Agreed Judgment was signed; and (3) CPS did not seek to enforce the

Settlement Agreement as a contract through proper pleading, notice, hearing,

and proof.

      In parts of its first and second issues, Putz complains that the Agreed

Judgment was not in strict or literal compliance with the Settlement Agreement.

As pointed out to the trial court in its motion for new trial, Putz argues on appeal,

and we agree, that the Settlement Agreement does not contain a provision

permitting CPS to send the Agreed Judgment to the trial court for signature

before default by Putz and that Putz was not in default when the trial court signed

the Agreed Judgment on July 22, 2013. Thus, the trial court should not have

signed the Agreed Judgment and filed it in the papers of the case.

      An agreed judgment based upon a settlement agreement must be in strict

or literal compliance with the terms of that agreement. Vickrey v. Am. Youth

Camps, Inc., 532 S.W.2d 292, 292 (Tex. 1976). A trial court has no power to

                                         5
supply terms, provisions, or conditions not previously agreed upon by the parties.

Matthews v. Looney, 132 Tex. 313, 317, 123 S.W.2d 871, 872 (Tex. 1939);

Tinney v. Willingham, 897 S.W.2d 543, 544 (Tex. App.—Fort Worth 1995, no

writ); McLendon v. McLendon, 847 S.W.2d 601, 610 (Tex. App.—Dallas 1992,

writ denied). If the terms of an agreed judgment conflict with the terms of the

underlying settlement agreement, the judgment will be unenforceable. Nuno v.

Pulido, 946 S.W.2d 448, 451 (Tex. App.—Corpus Christi 1997, no writ); Tinney,
897 S.W.2d at 544. If the discrepancy in the terms results from a clerical error,

the appellate court may modify the conflicting term to conform to the settlement

agreement. McLendon, 847 S.W.2d at 610. However, a judgment based upon

judicial error must be reversed and remanded to the trial court for entry of a

judgment that conforms to the terms of the parties’ settlement agreement.

Donzis v. McLaughlin, 981 S.W.2d 58, 63 (Tex. App.—San Antonio 1998, no

pet.); Clanin v. Clanin, 918 S.W.2d 673, 678 (Tex. App.—Fort Worth 1996, no

writ); McLendon, 847 S.W.2d at 610.

      Whether an error is clerical or judicial is a question of law. Finlay v. Jones,

435 S.W.2d 136, 138 (Tex. 1968). A clerical error is a mistake or omission that

prevents the judgment as entered from accurately reflecting the judgment that

was actually rendered. Universal Underwriters Ins. Co. v. Ferguson, 471 S.W.2d
28, 29–30 (Tex. 1971). A judicial error arises from a mistake of law or fact that

requires correction through judicial reasoning or determination. W. Tex. State

Bank v. Gen. Res. Mgmt. Corp., 723 S.W.2d 304, 306 (Tex. App.—Austin 1987,

                                         6
writ ref’d n.r.e.).   In other words, a judicial error occurs in the rendering, as

opposed to the entering of a judgment. Escobar v. Escobar, 711 S.W.2d 230,

231 (Tex. 1986).

       Here, paragraph 1(b) of the Settlement Agreement provided that the

parties would execute an Agreed Judgment contemporaneously with the

execution of the Settlement Agreement and that CPS would hold the Agreed

Judgment in trust and not file or record it unless there was an Event of Monetary

Default under paragraph 2. Paragraph 2 provided that the failure to make any

payment in accordance with the payment terms in paragraph 1(a) constituted a

Monetary Default, and upon the occurrence of a Monetary Default, CPS was

required to give Putz written notice of the default and fifteen business days to

cure the default before filing, recording, or enforcing the Agreed Judgment. Putz

was not in Monetary Default under paragraph 2 when the Agreed Judgment was

signed and filed among the papers of the case on July 22, 2013, because the

second payment was not due until July 31, 2013. Thus, the Agreed Judgment

was not in strict or literal compliance with the terms of the Settlement Agreement.

This is not a clerical error; it is a judicial error that cannot be corrected by this

court’s modification and rendition of an appropriate judgment.3 See Donzis, 981
S.W.2d at 64–65; Clanin, 918 S.W.2d at 678.

       3
        While we conclude that the rendering of the Agreed Judgment was a
judicial error, we note that a copy of the signed Settlement Agreement was not
filed with the letter from CPS’s attorney asking the trial court to sign the Agreed
Judgment. Moreover, the record does not reflect whether the visiting judge
                                          7
      CPS asserts that written correspondence between the parties’ attorneys

demonstrates that the parties contemplated the Agreed Judgment would be

immediately submitted to the trial court for signature and would be filed or

recorded only upon Putz’s default. The Settlement Agreement, however, could

be “modified only in writing by a document signed by the Parties affected by the

modification.” The correspondence does not evidence an intent to modify the

terms of the Settlement Agreement, and it is not signed by the parties. Thus, the

correspondence did not modify the terms of the Settlement Agreement, which

only provided that the parties—not the trial court—would sign the Agreed

Judgment before default.      Nor can the correspondence be considered as

extrinsic evidence of the intent of the parties absent any ambiguity, and we find

none. See Chapman v. Hootman, 999 S.W.2d 118, 123 (Tex. App.—Houston

[14th Dist.] 1999, no pet.) (“Absent a finding of ambiguity, a court must interpret

the meaning and intent of a contract from the four corners of the document

without the aid of extrinsic evidence.”).   Lack of clarity or disagreement over

interpretation of contract language does not render the language ambiguous.

Universal Health Servs., Inc. v. Renaissance Women’s Group, P.A., 121 S.W.3d
742, 746 (Tex. 2003). A contract is ambiguous when its meaning is uncertain

and doubtful or it is reasonably susceptible to more than one meaning. Coker v.

Coker, 650 S.W.2d 391, 393 (Tex. 1983).

reviewed the letter—which was addressed to the court coordinator—prior to
signing the Agreed Judgment.

                                        8
      The contract language here is not reasonably susceptible to more than one

meaning. CPS’s interpretation, which is set forth in its July 16, 2013 letter to the

court coordinator, conflicts with the rules of civil and appellate procedure. Once

the trial court signs a judgment, it should be entered by the clerk in the minutes of

the court and filed with the other documents in the case. See Dunn v. Dunn, 439
S.W.2d 830, 832 (Tex. 1969); Oak Creek Homes, Inc. v. Jones, 758 S.W.2d 288,

290 (Tex. App.—Waco 1988, no writ). But a signed judgment is valid whether or

not it is filed or entered in the record. See In re Barber, 982 S.W.2d 364, 367

(Tex. 1998) (orig. proceeding). The signing is significant because, among other

reasons, the deadlines for postjudgment motions and for perfecting an appeal

start to run on the date the judge signs the judgment. Tex. R. App. P. 26.1; Tex.

R. Civ. P. 306a(1), 329b(a), (b), (g). Likewise, the period of the trial court’s

plenary power is calculated from the date of signing. Tex. R. Civ. P. 306a(1),

329b(d). Giving a signed judgment back to a party’s counsel to hold “in trust” is

not contemplated by the rules. The timetables would still run from the date of

signing.   CPS’s proposed interpretation of the Settlement Agreement is

incompatible with the rules of civil and appellate procedure and would lead to an

absurd result. When possible, we will avoid a construction that is unreasonable,

inequitable, or oppressive, or would lead to an absurd result. Pavecon, Inc. v. R-

Com, Inc., 159 S.W.3d 219, 222 (Tex. App.—Fort Worth 2005, no pet.) (citing

Reilly v. Rangers Mgmt., Inc., 727 S.W.2d 527, 530 (Tex. 1987); Lane v.

Travelers Indem. Co., 391 S.W.2d 399, 402 (Tex. 1965)).

                                         9
      CPS also argues that because subsequent to the date the Agreed

Judgment was signed, Putz defaulted on the Settlement Agreement by not

paying the July 31, 2013 settlement payment, Putz was not harmed by the

premature entry of the Agreed Judgment. We fail to see how the premature

entry of a judgment in the amount of $1,300,000 plus postjudgment interest

accruing at the rate of eighteen percent from the date the judgment was signed is

not harmful. Moreover, even assuming that Putz defaulted on the July 31, 2013

payment, a question we need not reach, CPS had the right to file, record, and

enforce the Agreed Judgment only after CPS provided written notice of default

and Putz failed to cure the default within fifteen business days of the notice. And

even if we were to adopt CPS’s logic, there are no pleadings or evidence to

establish that CPS provided the required notice after Putz’s alleged default to

entitle it to file, record, and enforce the Agreed Judgment.

      Accordingly, we sustain Putz’s first and second issues in part. Because

these issues are dispositive of the appeal, we need not address the remainder of

Putz’s first and second issues or its third issue. See Tex. R. App. P. 47.1.

                                         10
                                  Conclusion

      Having sustained Putz’s first and second issues in part, we reverse the trial

court’s judgment and remand the case to the trial court for further proceedings.

See Tex. R. App. P. 43.2(d).

                                                  /s/ Anne Gardner
                                                  ANNE GARDNER
                                                  JUSTICE

PANEL: DAUPHINOT, GARDNER, and GABRIEL, JJ.

DELIVERED: March 12, 2015

                                        11