Overview of a Texas Rule 11 Agreement
What is a Texas Rule 11 Agreement?
The legal landscape of the State of Texas has distinct differences from other jurisdictions, especially in relation to the enforcement of oral agreements. A unique provision of the Texas Rules of Civil Procedure allows for the enforcement of Rule 11 agreements, even if they have yet to be reduced to writing. Texas Rule of Civil Procedure 11 states that an agreement made in a civil action between the parties or their attorneys, when in writing and filed with the papers of the cause, or when entered of record in that cause, shall be enforced like other agreements. As mentioned above, an agreement does not have to be written down (or reduced to writing) to be enforceable so long as it has been entered into the record of a case . However, as you may have guessed not all agreements are agreed to in open court in the presence of the judge. In cases where agreements are not entered on the record, they must be in writing at some point to be enforceable. In essence, Rule 11 agreements are enforceable agreements between the parties of a lawsuit. Many times the agreement at issue is settlement related and allows the parties to resolve a matter without the need for a trial. When the parties agree to the resolution of the case in lieu of a jury deciding the issues, they will often ask that the agreement be entered onto the record of the court.
Essentials of a Rule 11 Agreement
A Rule 11 agreement can be thought of as a contract between opposing parties in a lawsuit. In order for such an agreement to be valid and binding in Texas, it must contain the following key elements: For an agreement to be enforceable, Texas courts require that both elements be present. In addition, some courts have required that the writing be signed by the attorneys for all parties, as this satisfies the requirement for a memorandum of the agreement. However, while a Rule 11 agreement typically requires the signature of the attorneys for all parties, a few Texas opinions have enforced a Rule 11 agreement signed only by a party.
When and why a Rule 11 Agreement becomes necessary
Rule 11 agreements, while used in various types of cases, are by no means appropriate or necessary in every case. However, those that do not use them are likely missing out on an opportunity to gain some efficiencies and strengths for their case. A Rule 11 agreement can be used by either side for many reasons and at many stages of a case. While this list is not exhaustive, below are some of the common reasons such an agreement has been used.
A Rule 11 agreement is another tool you have to try to move toward a resolution of the case. The best time to use a Rule 11 agreement is when you are as close to certifying a settlement of the entire case as possible. The closer you get to a global settlement, the more likely you will be able to finalize and complete the agreement. It is an incredibly efficient way to get an agreement entered even more quickly and, therefore, save money that would be better used on your case and your recovery.
A Rule 11 agreement creates certainty and stability with regard to what you have settled. As ruled by the Texas Supreme Court in Gulf Coast Inv. Corp. v. Kanell, a Rule 11 agreement does bar summary judgment based on a final resolution of your case or portion thereof. A signed Rule 11 agreement has been held to compel production of documents deemed confidential and also to satisfy arbitration agreements. Depending on the complexity of your case and the best approach to get the case settled, it may be beneficial to have as many portions completed at the same time so that you can have one Rule 11 agreement to cover all parts of your case. That way, everything you have settled and agreed to is in one place and you do not have to worry about whether an unconstituted portion of the agreement will invalidate any other portion.
Because Rule 11 agreements are often presented after a mediation, there are some disputes resolved thereby, typically regarding reasonable attorneys’ fees, whether and how long a releases should last, and how the release should be governed. While these may not be relevant in every case, Rule 11 agreements give the parties the chance to tie up these loose ends with finality. They are also helpful because there may be some portions of the agreement that the parties are not quite yet able to agree upon, but are very important to them. A Rule 11 agreement allows you to constitute those portions of the mediation or settlement conference that you can agree upon, while leaving the others for jurisdictional/ non-jurisdictional fragments of the case.
Of course, there are some portions of a case that require a court’s involvement. Nevertheless, it is possible to use a Rule 11 agreement notwithstanding that you may need a court in some of the subordinate issues.
How to draft a Rule 11 Agreement
The only Texas requirement about the general content of a Rule 11 Agreement is that it "state the parties intentions." But that is not the end of it.
Your Rule 11 Agreement must also meet two legal requirements. It must be (1) supported by consideration and (2) signed by the party to be charged.
The first thing to note about consideration is that it does not have to be money. It can be as little as a "peppercorn" exchanged between the parties. The most common form of consideration in a Rule 11 Agreement, however, is the party’s agreement not to pursue (or pursue any further) legal action in exchange for another party’s agreement to do (or refrain from doing) some act.
The second thing to note is that your Rule 11 Agreement must be signed by a party or the party’s attorney. A Rule 11 Agreement is not enforceable under Texas law unless it is properly signed by the party whose agreement may be enforced (unless the opposing party admits during a deposition that the party was represented, agreed, or understood that the agreement applied to him or her). When a Rule 11 Agreement is signed by an attorney of record it must also be signed with the attorney’s name followed by the initials "by" or an equivalent such as "for" along with an indication that the attorney is signing on behalf of the client.
A Rule 11 Agreement can be a stand-alone document or it can appear within other filed pleadings such as the order dismissing the case if it is an agreement of the parties for a no-evidence summary judgment dismissal.
Potential mistakes with Rule 11 Agreements
The pitfalls and mistakes associated with Texas Rule 11 agreements are as varied as the ways parties can actually create a Rule 11 agreement. Parties utilizing Rule 11 agreements should be aware of the following potential issues:
- (1) Is the Rule 11 agreement between parties, or parties and their attorneys?
- (2) Does the agreement address all issues in the underlying lawsuit?
- (3) Does the agreement address the settlement of claims between named parties, or also unnamed parties (whether those parties pursue claims individually or as representatives of interests in the case)?
- (4) Is the agreement a settlement on the record (i.e., as pronounced by counsel and signed by the court reporter in the court reporter’s shorthand notebook) and/or is it later reduced to writing, signed by the parties, incorporated into a mediation communication , etc. (for a later enforcement exercise)?
- (5) Is the language precise enough to satisfy any agency requirements? In Texas, most courts require that any agency be clearly spelled out. In effect, this means that a client (say, an insurance company) cannot simply tell counsel "please settle the case for X." The client must explicitly say "X" is the maximum the client will pay and that requests for more are not authorized.
- (6) Does the Rule 11 agreement have all required signatures, and if it is the former (cathedral law of delivery), has it been delivered to the court or judge assigned to the case?
- (7) If the settlement agreement is the type that simply places the parties in a position to finalize settlement terms later (say, to provide time to obtain approvals, to discuss additional issues, etc.), does the agreement place a finite time within which the other terms are left to be decided?
Sample Rule 11 Agreement in the state of Texas
It is hereby agreed and stipulated by and between the attorneys for the Plaintiff, , and the attorneys for the Defendant, , that all of the causes of action and all of the cross-actions between the parties are fully settled and compromise by this Rule 11 Agreement. The settlement resolves all issues and QEIA’s concerning the items set forth below. Additionally, the parties stipulate and agree that the Court shall enter an entry of take nothing judgment as to the parties to this Rule 11 Agreement. Defendant shall pay a total of $__________. Payment shall be made according to the following schedule: Each installment is due on or before the first (1st) day of each month beginning the first (1st) day of ______, 20__. A late charge of $__________. shall be assessed for each installment not paid by the fifth (5th) _____ day of the month. Additionally, interest shall accrue on each unpaid installment at the rate of __% per annum as provided in the contract. If an installment is not paid when due [the attorney for _______], the attorney for Defendant, may file a Motion to Enforce the Rule 11 Agreement and request recovery of attorney’s fees to enforce the Rule 11 Agreement in the amount of $___________. In consideration of the payments set forth above, Plaintiff[s] agree[s] to take nothing from Defendant[s]. Defendant[s] releases, acquits, and discharges Plaintiff[s] from any and all claims, demands, actions and causes of action (including claims of negligence or other fault) which Defendant[s] now have or may hereafter acquire on account of, arising out of or in connection with ______________. Defendant[s] further agree[s] to execute a full and final release of Plaintiff[s] and non-suit Plaintiff’s pleadings in this cause. Plaintiff[s] releases, acquits, and discharges Defendant[s] from any and all claims, demands, actions and causes of action (including claims of negligence or other fault) which Plaintiff[s] now have or may hereafter acquire on account of, arising out of or in connection with ______________. This Rule 11 Agreement is signed in open court and shall be filed; a copy shall not be filed until the agreement is approved by the judge.
Texas Courts and litigation over a Rule 11 Agreement
As long as the terms of a Rule 11 agreement are sufficiently certain, it can be enforced in both Texas federal and state courts, alike. Where an agreement concerns only state law, a state court will apply state contract law principles to determine whether an enforceable agreement exists and whether a specific remedy should be awarded. The same rules apply in Texas federal courts unless the underlying substantive legal claims involved are based on federal law, in which case the court will apply federal contract law principles. Ordinarily, Federal Rule of Civil Procedure 65 does not provide an enforceable remedy because the agreement is not itself a judicial order. Alternatives include contempt or criminal prosecution. If a party violates a rule 11 agreement, there are several options for recourse against them. For example, a Texas state court may award a judgment of monetary damages or order other relief to enforce the agreement. Where a party has breached an agreement that affects a federal right, such as an agreement to settle a federal claim, a federal court has authority to hold the violator in contempt.
Advice on drafting and reviewing Rule 11 Agreements
This is why it is important to seek legal advice before entering into an agreement in a Rule 11 contract. A Rule 11 Agreement has the same power and legal effect as a final judgment even if the matter is never tried. This causes problems for persons who may not fully understand the costs and ramifications involved. Parties may also be shocked and disappointed when their attorney later becomes unavailable (whether the attorney is terminated or dies) , and they are left to find new representation in the middle of the case. A Rule 11 Agreement may also not protect your right to recovery of attorneys’ fees in the event you prevail on a motion or in trial and the opposing party does not comply with the final judgment. In this instance, you will also be left to litigate again unless you obtain a Rule 11 Agreement that protects your right to recovery of attorneys’ fees.