law-breach-of-settlement-agreement | Rule 11 Agreement | Mediated Settlement Agreements | Release |
accord and satisfaction as affirmative defense |

A settlement agreement is simply a contract between the parties; a breach of settlement
agreement cause of action is identical to a breach of contract cause of action. See Padilla
v. LaFrance, 907 S.W.2d 454, 461 (Tex. 1995).
To establish a breach of contract, Erwin was required
to prove the existence of a valid contract, his performance or tendered performance under the contract,
breach of the contract by Ferris, and damages sustained as a result of the breach. Winchek, 232 S.W.3d at
202. As set forth previously, the elements necessary to form a binding contract are (1) an offer, (2)
acceptance of the offer, (3) a meeting of the minds, (4) the parties' consent to the terms, (5) execution and
delivery with the intent that it be mutual and binding, and (6) consideration. See Advantage Physical
Therapy, Inc., 165 S.W.3d at 24.

When a
claim is released for a promised consideration that is not given, the claimant may either pursue
rights under the release, or treat the release as rescinded and recover on the underlying claim. Murray v.
Crest Constr., 900 S.W.2d 342, 344 (Tex. 1995); see also Hernandez v. LaBella, No. 14-08-00327-CV, 2010
WL 431253 (Tex. App.—Houston [14th Dist.] Feb. 9, 2010, no pet.) (mem. op.) (repudiation or anticipatory
breach of settlement agreement permits nonbreaching party to elect not to proceed with settlement
agreement); BACM 2001-1 San Felipe Rd. Ltd. P’ship v. Traflagar Holdings I, Ltd., 218 S.W.3d 137, 146
(Tex. App.—Houston [14th Dist.] 2007, pet. denied) (on failure of debtor to perform under executory accord,
creditor may treat accord as repudiated and may choose to claim rights under the original cause of action or
the accord); Shaw v. Kennedy, Ltd., 879 S.W.2d 240, 247 (Tex. App.—Amarillo 1994, no pet.) (if settlement
agreement breached, nonbreaching party may treat agreement as repudiated and claim rights either under
the agreement or the underlying cause of action).
Whether a party has breached a contract is a question of fact to be determined by the trier of fact. Allied
Capital Partners, L.P. v. PTRI, 313 S.W.3d 460 (Tex. App.—Dallas 2010, no pet.).

Breach of Settlement Agreement

Written settlement agreements may be enforced as contracts even if one party withdraws consent
before judgment is entered on the agreement. Padilla v. LaFrance, 907 S.W.2d 454, 461 (Tex.
1995). When consent is withdrawn, however, the agreed judgment that was part of the settlement
may not be entered. Id. at 462. The party seeking enforcement of the settlement agreement must
pursue a separate claim for breach of contract. Id.

Castillo urges that his motion to enforce the settlement agreement was sufficient as a pleading to
support a judgment for breach of contract. See
Tex. R. Civ. P. 301 (“The judgment of the court shall
conform to the pleadings, the nature of the case proved and the verdict, if any . . . .”). Ford does not
contend otherwise. Rather, Ford asserts that it was entitled to conduct discovery and develop its
defenses regarding Castillo’s breach of contract claim just as it would have been allowed to do for
any breach of contract claim. We agree.
Ford Motor Co. v. Castillo, No. 06-0875 (Tex. 2009)(Johnson)
(defendant entitled to opportunity to conduct discovery on affirmative defenses to
breach of settlement claim
based on improper juror conduct)(Ford given chance to show it was justified in backing out of settlement
agreement because of allegedly misleading message from jury)  
FORD MOTOR COMPANY v. EZEQUIEL CASTILLO, ET AL.; from Cameron County; 13th district (13-04-
00638-CV, 200 SW3d 217, 06-08-06)  
The Court reverses the court of appeals' judgment and remands the case to the trial court.
Justice Johnson delivered the opinion of the Court.   
Wainwright delivered a concurring opinion, in which Justice Medina joined.    

Like any other breach of contract claim, a claim for
breach of settlement agreement is subject to
the established procedures of pleading and proof. Mantas v. Fifth Court of Appeals, 925 S.W.2d
656, 658 (Tex. 1996) (orig. proceeding) (per curiam). Parties are “entitled to full, fair discovery” and
to have their cases decided on the merits. Able Supply Co. v. Moye, 898 S.W.2d 766, 773 (Tex.
1995) (orig. proceeding); see State v. Lowry, 802 S.W.2d 669, 671 (Tex. 1991) (“Only in certain
narrow circumstances is it appropriate to obstruct the search for truth by denying discovery.”). A trial
court abuses its discretion when it denies discovery going to the heart of a party’s case or when
that denial severely compromises a party’s ability to present a viable defense. Able, 898 S.W.2d at
validity of a settlement agreement cannot be determined without “full resolution of the
surrounding facts and circumstances.” Quintero v. Jim Walter Homes, Inc., 654 S.W.2d 442, 444
(Tex. 1983). Because the trial court denied discovery, Ford was unable to develop facts relevant to
the presentation of its defense. Therefore, the trial court abused its discretion by denying Ford the
right to conduct
discovery on the breach of settlement agreement claim.


GURUMURTHY KALYANARAM; from Dallas County; 5th district (05-05-01493-CV, 230 SW3d 921, 08-07-07,
pet. denied Jan 2008) (
public employment, assertion of immunity, dismissal of claim for breach of settlement
agreement reversed)  

Also see:
Texas Causes of Action and Defenses  |  2011 Texas Supreme Court Opinions | 2011 Tex Sup Ct Per Curiams  | Texas
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