Court Reversed Jury Trial And Determined That Settlement Agreement Dividing Real Property Owned By Trusts Was Not Ambiguous

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In Maxey v. Maxey, in a dispute that arose from the probate of an estate, two sisters mediated and reached a settlement agreement concerning the division of certain real property. No. 01-19-00078-CV, 2020 Tex. App. LEXIS 10281 (Tex. App.—Houston [1st Dist.] December 29, 2020, no pet. history). The two sisters disagreed on how they would divide property among certain trusts, and they sued one another. After mediation, they entered into a settlement agreement that purported to divide the real property. Then the parties disagreed on what the settlement agreement meant, and once again sued each other regarding breach of the agreement. The trial court found the settlement agreement was ambiguous and submitted the meaning of the agreement to a jury. After the jury trial, the court entered judgment on the verdict, and the losing sister appealed.

The court of appeals reversed and held that the settlement agreement was not ambiguous:

We disagree with the trial court that the Settlement Agreement is ambiguous. The Settlement Agreement identifies the Marble Falls Property, provides that it is to be divided in such a way that Mary’s trust receives a tract worth one-half of the value of the entire property and Carolyn’s trust receives a tract worth one-half of the value of the entire property, and further provides that Mary’s trust is to receive the “West 50%” and Carolyn’s trust the “East 50%.” As Mary argues, this language is clear and can be given definite meaning: the sisters agreed that the Marble Falls Property was to be divided into two tracts, equivalent in value, and that Mary would receive the western tract and Carolyn the eastern tract. This language is not reasonably susceptible to more than one meaning. To the extent the trial court ruled that the Settlement Agreement was ambiguous because it was silent on precisely how the Marble Falls Property was to be divided and did not set out metes and bounds for the two specific tracts, we note that our sister courts have repeatedly held that ambiguity in contract language is not to be confused with silence. An ambiguity results when the intention of the parties is expressed in language that is susceptible to more than one meaning. In contrast, when a contract is silent, the question “is not one of interpreting the language but, rather, one of determining its effect.” Courts may not and will not rewrite contracts to insert provisions that the parties could have included, but did not, and that are not essential to the construction of the language of the contract.

The fact that the Settlement Agreement did not specify, through metes and bounds or some other method, how Carolyn was to divide the Marble Falls Property does not make the language in the Settlement Agreement ambiguous. The agreement provided that the property was to be divided into two tracts of equivalent value, with Mary receiving the western tract and Carolyn receiving the eastern tract. As we have held, this language can be given certain and definite legal meaning, and it is not susceptible to more than one reasonable interpretation. We therefore conclude that the Settlement Agreement is not ambiguous.

We conclude that, because the language of the Settlement Agreement is unambiguous, the trial court—and not the jury—should have determined the parties’ intent as a matter of law, “and it could not do so by relying on extrinsic evidence to create an intent that the contract itself does not express.” We therefore hold that the trial court reversibly erred by ruling that the Settlement Agreement was ambiguous, admitting and instructing the jury to consider parol evidence concerning whether the parties intended to divide the Marble Falls Property according to the Brookes Baker Survey, and submitting Question Number One to the jury.

Id. The court therefore remanded the case back to the trial court to construe the settlement agreement and properly divide the real property. The court also reversed and remanded the prevailing party’s request for specific performance.

Interesting Note: Parties in trust and estate cases often have to mediate and settle disputes that involve real property interests. When the parties agree to undivided interests, this is often not a problem. For example, parties often agree to split undivided interests in mineral estates so that they can each have the same chance of having a productive well. However, undivided interests in surface estates rarely settles disputes and only generates future confrontations. So, parties typically want to have divided interests in surface estates. Without having a surveyor on the property as the mediation is being conducted, the parties are often challenged in creating metes and bounds descriptions of tracks of real property. The parties and their attorneys worry about whether the settlement agreement will be enforceable where they do not have definite descriptions of the tracks. This case is very good in that is shows that parties can enter into enforceable and unambiguous settlement agreements that divide real property where they provide as much description as possible (short of metes and bounds) on how to divide the property.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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