What is a Mediated Settlement Agreement?
A mediated settlement agreement (“MSA”) in a Texas divorce is binding if it meets certain requirements. It must state that it is not subject to revocation in bold letters, capital letters or underlined text. It must also be signed by each party and the party’s attorney, if present. Tex. Fam. Code Ann. § 6.602. Some Texas courts have held that an MSA may be unenforceable if it is obtained by fraud, duress or coercion.
A husband recently challenged an MSA, partly on the grounds that he allegedly signed it under duress.
The parties had been married since 1981. Some of the property acquired during the marriage was held by a limited partnership in which the parties owned a 95% interest. In August 2017, the husband was arrested after the wife reported he had threatened her with a firearm. The wife filed for divorce the very next day.
Husband Claims He Signed Mediated Settlement Agreement Under Duress
The parties went to mediation and signed an MSA. In the MSA, the husband agreed to transfer property, including some owned by the limited partnership, to the wife. Notably, the MSA stated that the parties “entered into the settlement freely and without duress…”
Thereafter, the wife requested the trial court to enter judgment along the lines of the MSA, but the husband asked the court to refer them to arbitration. The parties arbitrated their disputes and an arbitrator signed the proposed divorce decree. The wife filed the decree and asked the court to enter judgment once again.
Because of his earlier arrest, the husband, who was a physician, lost the ability to work at several hospitals, which he claimed threatened his ability to make a living. At the hearing on the wife’s motion to enter judgment, he argued he had to sign the MSA due to the duress arising out of his criminal charges.
The husband asked the court to set aside the MSA and hold a hearing. He alleged the wife falsely accused him of domestic violence. He also alleged she used the threat of criminal prosecution to gain advantage in the divorce and at mediation. He claimed she was responsible for his loss of hospital privileges. He also alleged she had reported his criminal charges to the Texas Medical Board. He claimed he felt he did not have a choice when he signed the MSA.
Worth noting, the husband conceded that, at the mediation, he did not communicate with anyone other than his own attorneys and the mediator.
The wife testified she had called 911 on husband because she was afraid. She said that, contrary to the husband’s allegations, she had not notified the Texas Medical Board or any hospitals about anything that would affect the husband’s credentials, nor had she asked anyone else to do so.
After hearing the evidence, the trial court found that husband had not been coerced into signing the MSA, granted the wife’s motion, and signed the final divorce decree. The trial court denied the husband’s motion for a new trial, and he appealed.
Court of Appeals Affirms – Finding No Duress
The husband argued the MSA was unenforceable because he signed it under duress. A threat of criminal prosecution to get someone to sign a contract may raise the issue of duress. In this case, the criminal prosecution began nearly a year before the mediation occurred. Furthermore, the record showed that the husband wanted the wife to drop the charges and he raised that issue in the negotiations. He proposed a letter for her to sign, but it was revised during the mediation. He said he would like it to be signed so his “criminal charges will go away.” He did not have any direct contact with the wife or her attorney during the mediation.
Duress is determined based on the actions of the accused party and must be based on an imminent threat. There was no evidence that contradicted the wife’s testimony she had not taken an active role in the investigations beyond calling 911 and making the initial report. She did not make any imminent threat to get the husband to sign the MSA. Furthermore, after she reported the incident, the criminal prosecution was in the control of the District Attorney’s Office, not her.
The appeals court found the trial court have reasonably concluded the husband had required the MSA to address the criminal case. The appeals court found no abuse of discretion in the trial court’s refusal to set aside the MSA when it met the statutory requirements.
The husband also argued the MSA was based on a mutual mistake that he could convey the property owned by the limited partnership. A mutual mistake exists when the document does not reflect the common intent of the parties. The appeals court noted that there was no evidence showing the agreement did not reflect the intent of the parties. Furthermore, there was no evidence that the purported mistake was mutual.
Before mediation, the parties’ attorneys had communicated about whether the husband had the authority to convey the property. The husband had not raised the issue of a lack of authority during the mediation or prior to signing the MSA. The partnership agreement had not been made part of the record. Without evidence of the terms of the partnership agreement, the husband could not show that complying with the MSA would violate the partnership agreement or that the property transfers would be inconsistent with the partnership agreement. The appeals court further suggested the husband may have misrepresented his authority, and noted that he could not benefit from that misrepresentation by calling it a mistake.
Accordingly, the appeals court affirmed the trial court’s judgment.
Make Sure a Strong Attorney Represents You at Mediation
An MSA that meets the statutory requirements is generally going to be binding. Thus, it is best to be represented at the mediation by strong Texas divorce attorneys who can advise and protect you and your rights. Call us at (214) 692-8200 to schedule a consultation with McClure Law Group.