IN THE SUPREME = COURT OF TEXAS

IN THE SUPREME COURT OF TEXAS

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No. 06-0575

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Knapp Medical Center, = Petitioner,

Javier E. De La = Garza and=20 Javier E. De La Garza, M.D., P.A., Respondents

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On Petition for Review from = the

Court of Appeals for the Thirteenth = District of=20 Texas

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PER = CURIAM

=20 In this case, we must decide whether Texas Rule of Civil = Procedure 11=20 bars enforcement of a disputed oral settlement agreement. Rule 11 = requires that=20 agreements between attorneys or parties touching any pending suit be in = writing,=20 signed and filed of record, or be made in open court and entered of = record as a=20 condition to enforcement. The court of appeals found the rule to be no=20 impediment when it affirmed a trial court judgment for damages in = contract and=20 fraud arising out of an oral settlement dispute. ___ S.W.3d ___. Because = the=20 court=92s judgment is contrary to the requirements of Rule 11, we = reverse and=20 render.

=20 Dr. Javier De La Garza, M.D., sued Knapp Medical=20 Center, a hospital in = Weslaco, for = defamation,=20 business disparagement, interference with business relations, and civil=20 conspiracy. The case went to trial in September, 2000. During that = trial, De La=20 Garza=92s attorney offered to settle the case for the hospital=92s = insurance policy=20 limits of $1,000,000. When this settlement demand was made, De La = Garza=92s=20 attorney understood that the hospital would contribute an additional = $200,000 to=20 the settlement. After making the policy limits demand, he learned that = the=20 hospital did not plan to contribute to the settlement, but that the = insurer had=20 agreed to settle for the $1,000,000 policy limits.

=20 During recorded proceedings held just before jury arguments on = September=20 15, 2000, De La Garza=92s attorney, Ramon Garcia, explained to the court = that he=20 had offered to settle for the policy limits based upon his understanding = that=20 the hospital would contribute $200,000, and that he was now in a = quandary as to=20 what should be done because of the hospital=92s disagreement with that=20 understanding. The hospital=92s attorney, Rex Leach, acknowledged that = the insurer=20 had agreed to settle the case for policy limits. He further acknowledged = that an=20 additional contribution from the hospital had been discussed, but that = no=20 agreement had been reached and that the hospital would, in fact, not = contribute=20 anything further to the settlement. Despite the disagreement about what = had been=20 promised, De La Garza agreed on the record to settle the underlying = claims for=20 $1,000,000, while purporting to reserve his right to collect an = additional=20 $200,000 from the hospital in another lawsuit. The court accepted the = agreement=20 and discharged the jury. De La Garza thereafter signed a Release, = acknowledging=20 the settlement funds as complete satisfaction of the claims asserted in = the=20 underlying litigation.

=20 De La Garza then sued the hospital for the disputed $200,000, = alleging=20 fraud and breach of an oral agreement that pre-dated the September 15 = hearing at=20 which the settlement terms were dictated into the record and accepted by = the=20 court. A bench trial ensued with the trial court rendering judgment for = De La=20 Garza=92s damages and attorney=92s fees. The hospital appealed this = judgment,=20 contending that Rule 11 barred De La Garza=92s claims because they were = based on=20 an alleged oral settlement agreement. Instead of addressing this Rule 11 = argument, the court of appeals concluded that the parol testimony of one of the attorneys was = sufficient to=20 support the existence and breach of the settlement agreement, and = affirmed the=20 trial court=92s judgment. ___ S.W.3d at ___. We, however, agree with the = hospital=92s unaddressed argument below that the failure to comply with = Rule 11=20 bars the present claims.

=20 As we said in Kennedy v. Hyde, 682 S.W.2d 525, 528 (Tex. = 1984):=20 =93Rule 11 is a minimum requirement for enforcement of all agreements = concerning=20 pending suits.=94 The rule provides, with certain exceptions not = relevant here,=20 that =93no agreement between attorneys or parties touching any suit = pending will=20 be enforced unless it be in writing, signed and filed with the papers as = part of=20 the record, or unless it be make in open court and entered of record.=94 = Tex. R. Civ. P. 11. The rule = has long=20 been a part of Texas jurisprudence. See Kennedy, 682 = S.W.2d at=20 526-28 (discussing rule=92s origins). One hundred and fifty years ago, = we=20 recognized the wisdom of eschewing the verbal agreements of counsel in = favor of=20 written ones, noting that the vicissitudes of memory would otherwise = =93beget=20 misunderstandings and controversies.=94 Birdwell v. Cox, 18 Tex. = 535, 537=20 (1857). The rule continues to be an effective tool for finalizing = settlements by=20 objective manifestation so that the agreements =93do not themselves = become sources=20 of controversy.=94 Kennedy, 682 S.W.2d at 530. In short, = settlement=20 agreements =93must comply with Rule 11 to be enforceable.=94 Padilla = v. LaFrance, 907 S.W.2d 454, 460 (Tex. 1995). =

=20 The trial court=92s findings of fact included a finding that the = parties=92=20 oral settlement agreement was read into the record of the court on = September 15,=20 2000. The record conclusively shows, however, that there was no = agreement=20 between the parties to settle the lawsuit for any amount other than the=20 $1,000,000 policy limits. Because the hospital=92s alleged agreement to = contribute=20 an additional $200,000 to settle the underlying suit was neither in = writing nor=20 made in open court and entered of record, it is not enforceable. The = court of=20 appeals=92 judgment to the contrary conflicts both with Rule 11 and our = decision=20 in Kennedy v. Hyde. Accordingly, pursuant to Texas Rule of = Appellate=20 Procedure 59.1, we grant the petition for review, and, without hearing = oral=20 argument, we reverse the court of appeals=92 judgment and render = judgment that De=20 La Garza take nothing.

Opinion=20 delivered: November 2, = 2007