Can Parties Agree to Set Aside an MSA?: Opinions, Feb. 27, 2018

The Fourteenth Court of Appeals released two interesting, published opinions on Tuesday (it’s been busy ’round these parts), one on whether parties can agree to set aside an MSA (Spoiler alert: No, not without a best interest finding) and the other on the effect of an undisclosed bankruptcy on a property division (It voids it).

The question addressed in In re Minix, No. 14-17-00417-CV, is whether the parties’ agreement to set aside an MSA is legally binding.  In response, the COA produced both a majority opinion, a concurrence, and a dissent. I am going to summarize the procedural history below, but you can skip it  (picking up with the paragraph starting with “In its analysis,…”) because the basic question is whether or not the parties can agree to set aside a binding, valid MSA.

Father filed for divorce from mother. The parties signed an MSA which was filed with the trial court on December 1, 2015. The MSA named the parents as JMCs, father got a SPO and paid $1,300 per month in child support. At this time, the parties did not ask the court to enter judgment on the MSA. The trial court was not asked to enter temporary orders.

In January 2016, father filed several motions to enforce the MSA, alleging mother was denying him visitation. On March 28, 2016, he filed a motion to enter TO consistent with the MSA. On May 24, 2016, mother filed a motion for TRO and emergency motion to modify, requesting the trial court 1) appoint her SMC and 2) deny father possession of and access to the child. She alleged he hit the child with a belt. On May 27, 2016, the trial court signed TO prohibiting father from having possession of or access to the child and setting a date for a TO hearing.

On June 7, 2016, father moved to set aside the MSA and requested TO. That same day, the parties’ attorneys appeared in front of the trial court and represented to the judge that the parties had agreed to set aside the MSA, though there apparently was no document signed by the parties to set aside the MSA. The next day, at a hearing on TO in front of the AJ, mother’s attorney advised the AJ that the parties had stipulated to set aside the MSA and father’s attorney agreed on the record. The AJ entered “band-aid” TO. On June 29 (three weeks later) mother filed a motion to modify the band-aid TO based on newly discovered evidence, again requesting she be appointed SMC and father be denied access to the child.

On August 19, 2016, the trial court signed an agreed order for the parties to undergo psychological examinations. On November 22, 2016, he signed agreed TO appointing the parents temporary JMCs, with mother as primary. The terms of the TO were similar to the MSA provisions, but the child support was higher ($1,422.05 per month).

Mother switched lawyers on March 7, 2017. Her new lawyer moved for entry of judgment on the MSA and requested that all subsequent temporary orders, rule 11 agreements, and other court orders be vacated. A hearing was held on March 21, 2017, on the motion for entry of judgment. At the hearing, father’s lawyer asserted that the MSA had been valid and binding but that the parties had agreed to set it aside. Mother testified that she did not agree to set aside the MSA.

The trial court took the motion for entry of judgment on the MSA under advisement and, on April 27, 2017, signed an order denying the motion. Mother filed a petition for writ of mandamus, asking the COA to set aside the judge’s order denying the motion and direct the trial court to render judgment consistent with the MSA.

In its analysis, the COA first found that the MSA was valid, binding, and irrevocable under TFC §153.0071. Then the COA turned to construing the statute. At the time the trial court decided the question, the trial court could deny entry of judgment on the MSA only if 1) a party to the MSA was a victim of family violence such that it impaired the parties’ ability to make decisions, and 2) the MSA is not in the child’s best interest. “The Legislature has provided no other circumstances under which the trial court may refuse to enter judgment on the MSA,” the COA held. To allow parties to agree to set aside an irrevocable MSA would “render meaningless subsection (e),” which provides that a party is entitled to judgment on the MSA notwithstanding Rule 11, the TRCP, or another rule of law.

The father argued there was at least a fact issue as to whether the parties agreed to set aside the MSA, since mother’s testimony differed from what her then-attorney represented to the court. The COA found it was irrelevant because the trial court could not set aside the MSA.

The father also argued that the Texas Supreme Court in In re Lee left open the possibility that a trial court may properly refuse to enter judgment on an MSA that complies with section 153.0071. In In re Lee, the Court noted that several courts of appeals had addressed the issue of whether section 153.0071 mandates entry of a statutorily-compliant MSA in any and all circumstances, including where it was procured by fraud, duress, or coercion. The Supreme Court did not reach the issue, the COA found, and thus there was no door open to refuse to enter judgment on a statutorily-compliant MSA.

As such, the COA found the trial court abused its discretion in denying the motion to enter judgment on the MSA and directed the trial court to vacate its order and enter judgment in accordance with the MSA.

In his concurrence, Justice Busby wrote to address the dissent’s argument, so we’ll get to it in a minute. The dissent (by 14th COA Chief Justice Kem Frost) found that the doctrines of quasi-estoppel and invited error demand that the COA deny the mandamus. The dissent argues that the COA does not need to reach the issue of whether the parties can agree to set aside the MSA because she accepted the benefits of the trial court’s TO which she had requested for nine months.

The dissent also argued that there was a fact issue as to whether the MSA was set aside in open court on June 7, 2016, because the trial court took actions that were inconsistent with the MSA still being in effect by referring the TO to the AJ the next day, June 8, 2017. At that hearing, the parties both stated they should be appointed SMCs. Clearly, the parties did not have an agreement on conservatorship (as represented by the MSA). “If the [MSA] resolved the conservatorship and possession issues and was in effect, why did the parties, the lawyers, and the trial judge spend ten months litigating those issues?” (Because the trial court did not realize it had erred by setting aside the MSA?)

The dissent chides mother for then, after months litigating issues settled by the MSA, suddenly asking the trial court to enter judgment on the MSA.  In other words, the dissent says, she asked the trial court to undo its previous ruling (of setting aside the MSA) to enter judgment on the MSA, “a request that clashed with her pleadings, her arguments, her claims, and her actions up to that point.” (Personally, I find it common for litigation strategy to change when the client’s lawyer changes, which appears to have been the case here)

The dissent urges the majority’s opinion is overly-formalist by relying solely on the statutory text and refusing to consider equitable principles. Specifically, it argues quasi-estoppel (which bars a party from asserting, to another’s disadvantage, a right inconsistent with a position earlier taken) barred mother from doing an about-face on whether or not she wanted the MSA set aside.  It also argues that the invited-error doctrine (which bars a party from asking a court to take a specific action and then complaining of that ruling or action on appeal) barred mother from challenging the trial court’s decision to deny her motion for entry of judgment on the MSA when she herself asked the trial court to set aside the MSA months before.

In the majority opinion, the majority found that quasi-estoppel did not apply because 1) it was not briefed by the parties and 2) father had not shown that enforcing the MSA would have been to his disadvantage because the terms of the MSA were similar to those of the November 22, 2016 TO and father’s child support obligations were less in the MSA. The majority also found the invited error doctrine did not apply because mother did not complain about the setting aside of the MSA or granting the TO in 2016. Rather, mother complained about the trial court’s denial of the motion for entry of judgment on the MSA.

Getting back to the concurrence, Justice Busby wrote separately to explain why the dissent’s emphasis on equity “is incompatible with the statute, principles of equity, the facts of the case, and our adversary system of justice.” (!) In essence, the concurrence argues that the statute is mandatory and that the rule proposed by the dissent would grant trial courts extraordinary license to use equity to upend mandatory statutes.

I couldn’t help wondering what the outcome would have been had the parties agreed on the record on either June 7 or June 8 that setting aside the MSA was in the best interest of the children. If the trial court had granted the parties’ request to aside the MSA on best interest grounds, it seems the trial court would have complied with 153.0071.

In Adeleye v. Driscal, No. 14-14-00822-CV (consolidated with In re Adeleye, No. 14-16-00922-CV), a husband filed both a petition for writ of mandamus and an appeal challenging the trial court’s final judgment in his divorce.

Wife filed for divorce in November 2013. Bench trial was held in September 2014. In October, prior to rendition of judgment, husband informed the judge that he had filed for Chapter 13 bankruptcy in 2013. The trial court rendered judgment dissolving the marriage and dividing the marital estate. Husband appealed and the COA affirmed in March 2016 (which I previously blogged about here). Three weeks later, husband informed the COA about his bankruptcy, prior to any proceedings in this case. The COA thus withdrew its judgment, abated the appeal, and remanded to the trial court with some helpful bankruptcy pointers, including information about how the automatic stay applies even if the parties to whom it applies do not have notice of the bankruptcy filing. On November 14, 2016, husband filed a petition for writ of mandamus, complaining the trial court refused to hold a hearing on the issue of the bankruptcy stay. Two days later, the trial court signed an order which said, in relevant part:

The Court finds that there was no notice of filing for Bankruptcy
presented to the Court. The Court finds that if there was proper notice
given of the filing of bankruptcy that an automatic stay would have
been issued and the Court would have requested the attorneys to have
the stay lifted prior to any further proceedings.

The Court of Appeals then issued a clarifying order which I assume informed the trial court (again) about how the automatic stay works and requested specific findings from the trial court about when the bankruptcy was filed, etc. After an evidentiary hearing, the trial court entered an amended order and the COA thus reinstated the appeal.  It appears from the trial court’s findings that the bankruptcy stay was in effect for the entirety of the trial court proceedings and the trial court thus had no power to render a judgment dividing the marital estate and the division of the estate was void because it occurred in violation of the automatic stay.

Husband also asserted jurisdictional issues, alleging that wife lacked standing and capacity because her real name was different than the name as it appeared in the litigation. The COA found this was not supported by the record. He also challenged the trial court’s personal jurisdiction over him, but because he did not enter a special appearance challenging the trial court’s personal jurisdiction over him, he waived the argument.

The COA then turned to husband’s evidentiary challenges, which appear to be substantively the same as in the prior opinion, so I won’t go through them again here. Having overruled the challenge to the trial court’s finding that a valid marriage existed between the parties, the decree was affirmed to the extent it recognizes and dissolves that marriage. But because the marital estate was void due to the bankruptcy, the decree was otherwise reversed and remanded for division of the marital estate.

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