United States District Court, N.D. Texas, Wichita Falls Division
ORDER ACCEPTING FINDINGS, CONCLUSIONS, AND
RECOMMENDATION OF THE UNITED STATES MAGISTRATE JUDGE
O'CONNOR UNITED STATES DISTRICT JUDGE
September 3, 2019, the United States Magistrate Judge issued
Findings, Conclusions, and a Recommendation (the
“FCR”) in this case. FCR, ECF No. 90. The FCR
recommended that the Court deny Defendant Y&O WF
LLC's (“Y&O”) Motion to Enforce
Settlement Agreement (“Def.'s Mot.”) (ECF No.
83), filed February 14, 2019, and grant Plaintiff Sears
Authorized Hometown Stores, LLC's (“Sears”)
Counter-Motion to Enforce Settlement Agreement
(“Pl.'s Counter-Mot.”) (ECF No. 86), filed
March 7, 2019. Y&O filed Objections (“Def.'s
Obj.”) (ECF No. 92), and Sears filed a Response
(“Pl.'s Resp.”) (ECF No. 95).
Court has conducted a de novo review of those portions of the
FCR to which an objection was made. For the following
reasons, Y&O's objections are
OVERRULED, and the Court
ADOPTS the reasoning in the Magistrate
Judge's FCR. Accordingly, the Court
DENIES Y&O's Motion to Enforce
Settlement Agreement and GRANTS Sears's
Counter-Motion to Enforce Settlement Agreement.
a dispute pertaining to the lease of a retail property
located in Wichita Falls, Texas and owned by Y&O, Y&O
and Sears entered into a settlement agreement (the
“Proposal”), the scope of which they now contest.
See Def.'s Mot. 6-7, ECF No. 83; Pl.'s
Counter-Mot. 8, ECF No. 86. Specifically, the parties
challenge whether the Proposal prevents Sears from bringing
third-party claims against Faith Retail, LLC
(“Faith”) and its owner, Cheryl Warren
(“Warren”). See Id. Faith and Warren are
not parties to the Proposal and are no longer parties to this
action. See Def.'s Mot. 6, ECF No. 83; Pl.'s
Counter-Mot. 4-5, ECF No. 86
case began when Sears sued Y&O for injunctive relief and
damages in connection with Y&O's alleged
“wrongful withholding” of its equipment,
inventory, and intellectual property, all located in the
Sears Hometown Store in a shopping center owned by Y&O.
Compl. 3, ECF No. 1. Faith and Warren operated that store
until May 18, 2018, when they allegedly abandoned it and
Y&O locked the premises. Id. at 2-3. In
response, Y&O filed a Counterclaim against Sears and a
Third-Party Complaint against Faith and Warren. Original
Countercl. & Third-Party Compl., ECF No. 18. Ultimately,
Y&O settled its third-party claims against Faith and
Warren. See Settlement Agreement & Release, ECF
No. 84-2. In their signed agreement, Faith and Warren agreed
“to assign to Y&O any and all claims that the
Warren Defendants may have against [Sears] and any of its
affiliates, ” and Y&O agreed “to defend the
Warren Defendants from any claims asserted by [Sears].”
Id. at 1-2. The Court approved the agreement and
entered a Final Judgment “fully and completely
resolv[ing] all claims by and between these parties”
and dismissing the claims with prejudice. Final J. 1, ECF No.
and Sears, the remaining parties in the litigation, engaged
in mediation before mediator Melvin Wolovits (the
“Mediator”). See Alternative Dispute
Resolution Summ., ECF No. 81. The Mediator's ADR Summary
stated that Y&O and Sears “[s]ettled as a result of
ADR.” Id. The Mediator sent Y&O and Sears
the Mediator's Proposal (“the Proposal”),
which states that it is “made to settle any and all
claims/counter-claims/third party claims, whether by
assignment or otherwise, by and between PLAINTIFF and
DEFENDANTS, which are brought or could have been brought in
Cause 7:18-CV-0083.” Proposal 1, ECF No. 84-3. By
signing the release, Y&O and Sears agreed “to
submit to the Court an Agreed Motion and Order of Dismissal
with prejudice of all claims/counterclaims/third party
claims.” Id. The Magistrate Judge also ordered
Y&O and Sears to file the appropriate dismissal papers.
See Order, ECF No. 82.
thereafter, “[t]he parties reached an impasse.”
Pl.'s Resp. 3, ECF No. 95. They disagreed on the scope of
the Proposal and were unable to draft a mutually satisfying
settlement agreement. See Id. Y&O filed a Motion
to Enforce Settlement Agreement, stating that Sears refused
to sign its draft settlement agreement and asking the Court
to uphold Y&O's interpretation of the Proposal.
See Def.'s Mot. 5-7, ECF No. 83. “The
draft agreement prepared by Y&O contain[ed] mutual
releases that include[d] the claims assigned by Warren to
Y&O as well as any claims [Sears] may have against Warren
or Faith Retail. . . .” Id. at 6. Y&O
asserts that this agreement was consistent with the Proposal,
which it took to reflect the parties' intent to
“negotiate a comprehensive, ‘walk away'
resolution that foreclosed any possibility of further
litigation involving [Sears] or Y&O related to the
Wichita Falls store location.” Id. at 4. It
argues that the Proposal was intended to foreclose Sears'
potential claims against Faith and Warren, given that Y&O
had previously agreed to defend Faith and Warren from such
claims. See Id. at 3-4. Though Y&O recognizes
the parties' disagreement regarding the “intended
scope of the release, ” it highlights that the Proposal
“was signed by both parties and their counsel, included
consideration[, ] provided that [it] became enforceable upon
execution by both parties . . . [and] encompassed all
material terms.” Id. at 8. It maintains that
there was “no doubt” that the Proposal
“reflected the parties' intent to enter into a
binding agreement as well as an intent to fully settle the
entire lawsuit.” Id.
response, Sears filed a Counter-Motion to Enforce the
Settlement Agreement, in which it provides is own
interpretation of the Proposal. Pl.'s Counter-Mot., ECF
No. 86. Therein, Sears argues that the Proposal applies only
to claims “by and between” Y&O and Sears and
does not prevent Sears from bringing future claims against
Faith and Warren, which were “never sued by [Sears],
were not parties to the lawsuit at the time of the mediation,
did not participate in the mediation, are nowhere mentioned
in the release provisions of the Mediator's Proposal, and
are not parties to the Proposal.” Id. at 1-2.
Sears argues that Y&O is asking the Court to read alleged
intent that goes beyond the Proposal's agreed-upon text.
See Id. at 3.
Magistrate Judge considered both Y&O's Motion and
Sears's Counter-Motion, and he issued Findings,
Conclusions, and a Recommendation in this case on September
3, 2019. FCR, ECF No. 90. Y&O filed Objections.
Def.'s Obj., ECF No. 92. Sears responded. Pl.'s
Resp., ECF No. 95. The FCR, Objections, and Response are now
ripe for review.
[d]istrict [c]ourt has the power to enforce . . . a
settlement agreement reached in a case pending before
it.” Mid-South Towing Co. v. Har-Win, Inc.,
733 F.2d 386, 389 (5th Cir. 1984). In a diversity case, a
federal court reviewing a settlement agreement applies the
law of the state in which the agreement was negotiated and is
to be performed. Lockette v. Greyhound Lines, Inc.,
817 F.2d 1182, 1185 (5th Cir. 1987). “More
specifically, the enforceability of a settlement agreement in
a diversity case tried in a federal district court in Texas
is governed by provisions of Rule 11[ of the] Texas Rules of
Civil Procedure (‘Texas Rule 11').”
Borden v. Banacom Mfg. & Mktg., Inc., 698
F.Supp. 121, 123 (N.D. Tex. 1988) (citing Anderegg v.
High Standard, Inc., 825 F.2d 77, 80-81 (5th Cir.
1987)). Under Texas Rule 11, “a settlement agreement is
enforceable only if it is (1) ‘in writing, signed[, ]
and filed with the papers as part of the record' or (2)
‘made in open court and entered of record.'”
Williamson v. Bank of N.Y. Mellon, 947 F.Supp.2d
704, 707 (N.D. Tex. 2013) (citing Tex.R.Civ.P. 11; Estate
of Martineau v. ARCO Chem. Co., 203 F.3d 904, 910 (5th
ANALYSIS OF OBJECTIONS
makes several objections to the Magistrate Judge's FCR.
First, Y&O argues that the FCR fails to give meaning to
essential terms in the Mediator's Proposal. Def.'s
Obj. 5-7, ECF No. 92. Second, Y&O argues that the FCR
fails to consider relevant facts bearing on the parties'
intent. Id. at 7-8. And third, Y&O argues that
the “by and between” language in the
mediator's proposal does not exclude ...