Knapp Medical Center v. De La Garza

Because Knapp Medical Center's alleged agreement to contribute an additional $200,000 to settle Dr. Javier De La Garza's suit was not in writing or made in open court and entered into the record, the court found that it was not enforceable.

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Click here for the full text of this decision FACTS:Dr. Javier De La Garza sued Knapp Medical Center, a hospital in Weslaco, for defamation, business disparagement, interference with business relations and civil conspiracy. The case went to trial in September 2000. During that trial, De La Garza’s attorney offered to settle the case for the hospital’s insurance policy limit of $1 million. When De La Garza’s attorney made this settlement demand, the attorney understood that the hospital would contribute an additional $200,000 to the settlement. After making the policy limit demand, he learned that the hospital did not plan to contribute to the settlement but that the insurer had agreed to settle for $1 million. During recorded proceedings held just before jury arguments on Sept. 15, 2000, De La Garza’s attorney, Ramon Garcia, explained to the court that he had offered to settle for the policy limit based upon his understanding that the hospital would contribute $200,000 and that he was now in a quandary as to what should be done because of the hospital’s disagreement with that understanding. Rex Leach, the hospital’s attorney, acknowledged that the insurer had agreed to settle the case for the policy limit. He further acknowledged that an additional contribution from the hospital had been discussed but that no agreement had been reached and that the hospital eventually decided not to contribute to the settlement. Despite the disagreement about what had been promised, De La Garza agreed on the record to settle the underlying claims for $1 million, while purporting to reserve his right to collect an additional $200,000 from the hospital in another suit. The court accepted the agreement and discharged the jury. De La Garza thereafter signed a release, acknowledging the settlement funds as complete satisfaction of the claims asserted in the underlying litigation. De La Garza then sued the hospital for the disputed $200,000, alleging fraud and breach of an oral agreement that predated the Sept. 15, 2000, hearing. A bench trial ensued with the trial court rendering judgment for De La Garza’s damages and attorneys’ fees. The hospital appealed the judgment, contending that Texas Rule of Civil Procedure 11 barred De La Garza’s claims, because they were based on an alleged oral settlement agreement. Instead of addressing this Rule 11 argument, the 13th Court of Appeals concluded that the parol testimony of one of the attorneys was sufficient to support the existence and breach of the settlement agreement and affirmed the trial court’s judgment. HOLDING:Reversed and rendered. The court agreed with the hospital’s argument that the failure to comply with Rule 11 bars the present claims. Rule 11, the court stated, is a minimum requirement for enforcement of all agreements concerning pending suits. The rule provides that “no agreement between attorneys or parties touching any suit pending will be enforced unless it be in writing, signed and filed with the papers as part of the record, or unless it be made in open court and entered of record.” The trial court’s findings of fact, the court stated, included a finding that the parties’ oral settlement agreement was read into the record of the court on Sept. 15, 2000. The record conclusively showed, however, that there was no agreement between the parties to settle the suit for any amount other than the $1 million policy limits. Because the hospital’s alleged agreement to contribute an additional $200,000 to settle the underlying suit was neither in writing nor made in open court and entered into the record, the court found that it was not enforceable. OPINION:Per curiam.

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