The Texas Supreme Court has granted a temporary stay pending consideration of a petition for writ of mandamus in a divorce case in which a trial court granted a party’s motion for new trial after the parties had reached a pair of Rule 11 settlement agreements.
The facts of In Re David Michael Lance Cooke (24-0798; granted September 26, 2024) are as follows. David Cooke and his wife Damyanna Cooke filed for divorce. They agreed on two separate Rule 11 settlements. Subsequently, Damyanna learned of David’s new monetary distributions by his employer. She testified that she already knew that new distributions to David were possible post-divorce, but she still filed a motion for a new trial alleging nondisclosure fraud. Although Damyanna abandoned the nondisclosure fraud theory during the hearing, the trial court nevertheless granted her motion for a new trial without giving any legal basis therefor, especially because Damyanna “never identified any misrepresentation [or fraud] by David.” Because David didn’t know why her motion had been granted and their previous settlement ignored by the trial court, he filed a motion for reconsideration, arguing that the new trial order did not state specific reasons for granting it. The trial court denied his motion without explanation. David sought mandamus relief from the Houston [1st] Court of Appeals, which denied it without explanation. He then filed an emergency motion to stay all further proceedings pending resolution of his petition for writ of mandamus, which SCOTX granted.
Relator argues that the trial court abused its discretion under In re Columbia Medical Ctr. of Las Colinas, Subsidiary, L.P., 290 S.W.3d 204 (Tex. 2009) and its progeny because it failed to state specific reasons for overturning a final judgment (see also In re United Scaffolding, Inc., 377 S.W.3d 685 (Tex. 2012)). When undoing settled expectations, the trial court cannot “simply parrot a pro forma template,” but must give a reason that is legally sound and specific to the case. Without any explanation, parties can only speculate about why the court overturned a settlement agreement, which involves the constitutional right to contract, a right that heavily favored by Texas courts.
Relator further contends that In re Toyota Motor Sales, U.S.A, Inc., 407 S.W.3d 746 (Tex. 2013) does not apply in this case and SCOTX should clarify whether courts should follow Justice Lehrmann’s concurrence in that case. In Toyota, Justice Lehrmann wrote that Columbia‘s specificity rule should not apply to bench trials or default judgments. Other intermediate appellate courts have followed Justice Lehrmann’s exception to Columbia, for the most part in the default judgment context. However, Relator points out that Justice Lehrmann’s concurrence was not the Toyota majority opinion and that no SCOTX decision has adopted it. According to Relator, “building a legal rule upon a concurrence, rather than a majority holding, is building a house upon the sand,” so they urge SCOTX to provide guidance on this issue. In any event, Relator argues, the proposed Columbia exception does not apply to this case because it didn’t involve either a bench trial or default judgment, but a final judgment reached by settlement.
Finally, Relator asserts that while Columbia‘s purpose is to secure Texans’ constitutional right to a jury trial, setting aside a final judgment reached by a settlement agreement contradicts the right to contract. Mandamus relief is the best way to secure the right to contract “because waiting for a final appeal until after the contractual right is violated deprives the parties of the benefit of a contract.”
This case raises an important issue. Should a party who has become disenchanted with a final judgment based on a Rule 11 settlement agreement get a second bite at the apple by way of a motion for new trial? Does the other party have a settled expectation that the final judgment can be enforced according to its terms? We shall see.
TCJL Intern Dilara Muslu provided the research for and substantially drafted this article.
