Kathleen Moreland Rich v. Paul M. Rich

Opinion issued May 8, 2003 In The Court of Appeals For The First District of Texas NO. 01-03-00078-CV KATHLEEN MORELAND RICH, Appellant V. PAUL B. RICH, Appellee On Appeal from the 308th District Court Harris County, Texas Trial Court Cause No. 2000-32292 MEMORANDUM OPINION This is an interlocutory appeal of the trial court’s denial of appellant’s motion to compel arbitration. Appellant, Kathleen Moreland Rich, sought to compel arbitration pursuant to a divorce decree. Paul B. Rich, appellee, resisted arbitration and contends that the clause is neither valid nor enforceable. We reverse. BACKGROUND Paul and Kathleen divorced in October 2001. Pursuant to the parties’ settlement agreement, the trial court issued a divorce decree. In that decree, Paul and Kathleen were each awarded a 50 percent interest in their former homestead. In November 2002, Paul sued to enforce the decree. In his live pleadings, Paul contended that the continued joint ownership and management of the property was not functional. He also alleged that Kathleen had not paid certain debts for which she was responsible. Paul sought to recover all sums allegedly due plus attorney’s fees; he asked the trial court to appoint a receiver to take possession of the property, sell it, and split the proceeds. Kathleen filed her own motion to enforce the divorce decree, contending that Paul was not complying with the terms of the decree, was concealing rental proceeds from their property and forging her name to convert these rental proceeds, and was attempting to take control of certain funds. Kathleen also sought to arbitrate the dispute. Although he signed a statement recognizing the value of alternative dispute resolution, Paul opposed the arbitration. DISCUSSION In her sole point of error, Kathleen contends that the dispute between the parties is governed by an arbitration clause in the divorce decree. The applicable portion of the divorce decree provides: The parties agree that any claim or controversy arising out of this Final Decree of Divorce that cannot be settled by direct negotiation or mediation will be submitted to binding arbitration as provided in Chapter 171 of the Texas Civil Practice and Remedies Code. The arbitrator will be Mary Sean O’Reilly, but if said arbitrator is not able to conduct arbitration, the parties will secure the name of an arbitrator from the court that rendered the Final Decree of Divorce in this case. The cost of the arbitrator will be paid fifty percent (50%) by Kathleen M. Rich and fifty percent (50%) by Paul B. Rich. (Emphasis added.) Standard of Review We review a trial court’s determination concerning the existence of an arbitration agreement under an abuse of discretion standard. Southwest Tex. Pathology Assocs., L.L.P. v. Roosth, 27 S.W.3d 204, 207 (Tex. App.—San Antonio 2000, pet. dism’d w.o.j.). Under this standard, we must uphold the trial court’s decision unless we conclude that the trial court could reasonably have reached only one decision. Id. Right to Arbitration A party seeking to compel arbitration must establish the existence of an arbitration agreement and show that the dispute falls within the scope of the agreement. See In re Oakwood Mobile Homes, 987 S.W.2d 571, 573 (Tex. 1999). Paul challenges both the validity and the scope of the agreement to arbitrate. Paul contends that because neither he nor Kathleen signed the divorce decree, there is no contract to enforce. Paul does not argue that the divorce decree does not fairly and fully represent the parties’ agreement. He simply relies on this technical fault. Although the decree is not signed by either party, we cannot agree that there is no contract. Rule 11 provides, “Unless otherwise provided in these rules, 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.” Tex. R. Civ. P. 11 (emphasis added). Thus, the absence of the parties’ signatures does not vitiate the divorce decree. Rule 11 equates a written divorce agreement with the “open court and entered of record” portion of the rule. McLendon v. McLendon, 847 S.W.2d 601, 608 (Tex. App.—Dallas 1993, writ denied). When the court reporter transcribed the decree, this act memorialized the agreement and gave it the same legal effect as a written agreement signed by the parties. See id. The language in the divorce decree makes it clear that it represents the agreement of the parties. As such, it complies with the spirit and intent of Rule 11. The decree provides in pertinent part: The Court finds that the parties have entered into a written agreement as contained in this decree by virtue of having approved this decree as to both form and substance. To the extent permitted by law, the parties stipulate the agreement is enforceable as a contract. The Court approves the agreement of the parties as contained in this Final Decree of Divorce. . . . . This Final Decree of Divorce is stipulated to represent a merger of a mediation agreement between the parties. To the extent there exist any differences between the mediation agreement and the Final Decree of Divorce, this Final Decree of divorce shall control in all instances. Because it incorporated the terms of the agreement, the divorce decree here is a consent judgment; thus it is enforceable both as a contract and as a judgment. McGuire v. McGuire, 4 S.W.3d 382, 386 (Tex. App.—Houston 1999, no pet.). We hold that the divorce decree represents a valid contract between Paul and Kathleen. Moreover, Paul’s acceptance of benefits under the decree forecloses his argument at this juncture. In effect, he ratified the agreement by his conduct. See Dehnert v. Dehnert, 705 S.W.2d 849, 851 (Tex. App.—Beaumont 1986, no writ) (holding that because husband took advantage of settlement agreement in divorce proceeding by receiving property, should not be able to renounce); see also K.B. v. N.B., 811 S.W.2d 634, 638 (Tex. App.—San Antonio 1991, writ denied) (noting that party’s conduct estopped him from rejecting terms of divorce decree). Relying on In re Valle Redondo, 47 S.W.3d 655, 662 (Tex.—Corpus Christi 2001, orig. proceeding), Paul further asserts that if a claim can be maintained without reference to the contract, it is not subject to arbitration. We note, however, that if the facts alleged touch matters, have a significant relationship to, or are factually intertwined with the contract subject to arbitration, the claim is arbitrable. Id. Paul contends that the claim he is making can be maintained without reference to the divorce decree—that to partition the property, all that is necessary is for the trial court to appoint a receiver. However, the parties’ equal ownership of their former homestead is a term of the decree that must be referenced, because the homestead could have been awarded in its entirety to one of the parties. We further note that Paul petitioned for more than merely the appointment of a receiver—he also sought payment of various financial obligations allegedly due under the terms of the divorce decree—and Kathleen’s response to the petition invokes different issues arising from the decree that also need to be dealt with. Accordingly, we conclude that the facts alleged here are factually intertwined with the divorce decree and fall within the scope of the agreement to arbitrate. CONCLUSION We hold that there is a valid, enforceable agreement to arbitrate any disputes arising from the divorce decree, that this claim is subject to arbitration, and that the trial court abused its discretion when it denied the motion to compel arbitration. We sustain Kathleen’s point of error. We reverse the trial court’s judgment and remand the cause for arbitration pursuant to the agreement. Evelyn V. Keyes Justice Panel consists of Justices Taft, Keyes, and Higley.