BILL ANALYSIS Civil Practices Committee S.B. 1240 By: Brown (Goodman) 05-10-95 Committee Report (Unamended) BACKGROUND Several conflicting appellate opinions have recently been decided regarding mediated settlement agreements. Two court opinions held that a party who has reached a settlement agreement disposing of a dispute through alternative dispute resolution procedures (and the party has signed a written agreement) may not unilaterally repudiate the agreement. Another opinion held that a Rule 11 agreement entered into as a result of court-ordered mediation cannot be the basis of a consent judgement if one party withdraws consent after the signing of the agreement, but before the trial court renders judgment. Two opinions are directly in conflict with the recently decided one opinion from Houston. Mediation is often ordered before parties can proceed with temporary orders regarding child custody in a number of counties across the state. There are other courts in the state that will not set a case for trial unless mediation has been attempted first. A number of cases settle through mediation and other alternative dispute resolution methods. The Houston opinion will have a chilling effect on the future of mediated settlements because there would be no binding effect given to these settlements between the signing of the agreement and the rendition of judgment. If a party believed that he or she could revoke an agreement at any time prior to judgment, the mediation process would become just another step in the litigation process instead of a way to finally resolve conflicts. PURPOSE H.B. 2665 would eliminate the conflict in the law that currently exists regarding the enforceability of mediated settlement agreements prior to the agreement being approved by the trial court. H.B. 2665 would provide that mediated settlements have binding effect on the parties if the settlement agreement specifically states that the agreement is not subject to revocation and is signed by an attorney for the party. RULEMAKING AUTHORITY It is the committee's opinion that this bill does not grant any additional rulemaking authority to a state officer, institution or agency. SECTION BY SECTION ANALYSIS SECTION 1. Amends Section 154.071, Civil Practice and Remedies Code by adding new Subsections (d) and (e) as follows: (d) Mediated settlement agreements are subject to revocation by a party before rendition of judgement or decree, unless: (1) the settlement agreement contains a separate paragraph, an underlined statement that the settlement agreement is not subject to revocation, and (2) the settlement agreement is signed by each party to the settlement; and (3) if the party is represented by an attorney in the mediated matter, the attorney shall approve the settlement agreement, if the agreement is presented to the attorney when the agreement is executed. (e) If a mediated settlement agreement meets the above requirements, a party is entitled to judgment on the mediated settlement agreement. SECTION 2. Emergency clause- effective immediately. SUMMARY OF COMMITTEE ACTION Senate Bill 1240 was considered by the Committee on Civil Practices in a public hearing on May 10, 1995. The bill was reported favorably without amendment, with the recommendation that it do pass and be printed, by a record vote of five ayes, zero nays, zero pnv and four absent.