No CV IN THE COURT OF APPEALS FOR THE FIFTH DISTRICT OF TEXAS AT DALLAS, TEXAS H. GLENN GUNTER, Appellant, vs.

Transcription

1 No CV ACCEPTED 225EFJ FIFTH COURT OF APPEALS DALLAS, TEXAS 12 April 9 P5:48 Lisa Matz CLERK IN THE COURT OF APPEALS FOR THE FIFTH DISTRICT OF TEXAS AT DALLAS, TEXAS H. GLENN GUNTER, Appellant, vs. EMPIRE PIPELINE CORPORATION, EMPIRE EXPLORATION L.P., and EMPIRE EXPLORATION CORPORATION, Appellees. APPEALED FROM THE ND 192 JUDICIAL DISTRICT COURT OF DALLAS COUNTY, TEXAS APPELLANT S BRIEF M. Kevin Queenan, Esq. State Bar No Carson Hebert, Esq. State Bar No QUEENAN LAW FIRM, P.C. 731 Station Drive Arlington, Texas (817) (817) (FAX) ATTORNEYS FOR APPELLANT APPELLANT RESPECTFULLY REQUESTS ORAL ARGUMENT

2 No CV H. GLENN GUNTER, Appellant, vs. EMPIRE PIPELINE CORPORATION, EMPIRE EXPLORATION L.P., and EMPIRE EXPLORATION CORPORATION, Appellees. IDENTITY OF PARTIES Pursuant to TEX. R. APP. P. 38.1(a), a complete list of the names of all interested parties is provided below so the members of this Honorable Court may at once determine whether they are disqualified to serve or should recuse themselves from participating in the decision of the case. Appellant: H. Glenn Gunter Trial and Appellate Counsel for Appellant: Appellees: Kevin Queenan, SB # Carson Hebert, SB # Queenan Law Firm, P.C. 731 Station Drive Arlington, Texas Empire Pipeline Corporation, Empire Exploration L.P., and Empire Exploration Corporation Trial and Appellate Counsel for Appellees: ii

3 Robert L. Harris, SB # Shannon, Gracey, Ratliff & Miller, LLP Bank of America Plaza 901 Main Street, Suite 4600 Dallas, Texas Prior Trial Counsel for Appellant: Emil Lippe, Jr., SB # Law Offices of Lippe & Associates Plaza of the Americas, South Tower 600 N. Pearl Street, Suite S2460 Dallas, Texas Jennifer L. Keefe, SB # D. Patrick Long, SB # Patton Boggs, LLP 2001 Ross Avenue, Suite 3000 Dallas, Texas iii

4 Title TABLE OF CONTENTS Page IDENTIFY OF PARTIES ii INDEX OF AUTHORITIES vi Cases vi, vii Statutes vii Rules vii STATEMENT OF CASE STATEMENT OF ORAL ARGUMENT ISSUES PRESENT FOR REVIEW STANDARD OF REVIEW STATEMENT OF FACTS SUMMARY OF ARGUMENT ARGUMENT I. The discovery of mediation records and communications at issue related to the deposition of Jennifer Keefe, Esq. is the necessary result of treating settlement agreements as all other contracts and is required to protect the important procedural and substantive rights of Gunter II. III. IV. The Texas ADR Act's cloak of confidentiality over mediation proceedings should be pierced to allow disclosure and discovery when defenses, such as a defense based on fraud, is asserted against breach of contract claims and/or specific performance claims because the confidentiality statute is not absolute and cannot be utilized by a party as a shield and a sword The Texas ADR Act's confidential mediation provision does not preclude courts from excepting circumstances such as those presented here An inquiry into the confidential mediation communications here is necessary to further facilitate the duty of full and fair disclosure of an attorney to his client whom he represents at such mediation proceeding CONCLUSION iv

5 PRAYER CERTIFICATE OF SERVICE APPENDIX A-1 v

6 INDEX OF AUTHORITIES Cases Page Able Supply Co. v. Moye, 898 S.W.2d 766 (Tex. 1995) (orig. proceeding)) Alan Reuber Chevrolet, Inc. v. Grady Chevrolet, Ltd., 287 S.W.3d 877, 883 (Tex. App. Dallas 2009, no pet.) Albertson's, Inc. v. Sinclair, 984 S.W.2d 958 (Tex. 1999) Alford v. Bryant, 137 S.W.3d 916 (Tex. App. Dallas 2004, pet. denied) Avary v. Bank of Am., N.A., 72 S.W.3d 779 (Tex. App. Dallas 2002, pet. denied) , 10, 11, 12, 17, 23, 27 Bloyed v. Gen. Motors Corp., 881 S.W.2d 422 (Tex. App. Texarkana 1994) , 27 Boyter v. MCR Const. Co., 673 S.W.2d 938 (Tex. App. Dallas 1984, writ ref'd n.r.e.) Boyd v. Boyd, 67 S.W.3d 398 (Tex. App. Fort Worth 2002, no pet.) , 16, 21 Cadle Co. v. Castle, 913 S.W.2d 627 (Tex. App. Dallas 1995, writ denied) (en banc)... 3, 15, 22 F.D.I.C. v. White, 76 F. Supp. 2d 736 (N.D. Tex. 1999) Flood v. Katz, 294 S.W.3d 756 (Tex. App. Dallas 2009, pet. denied)... 9, 10, 12, 17, 20, 22, 24 Ford Motor Co. v. Castillo, 279 S.W.3d 656 (Tex. 2009) , 9, 11, 14, 21 Gaskin v. Gaskin, No CV, 2006 WL (Tex. App. Fort Worth Aug. 31, 2006, pet. denied) Ginsberg v. Fifth Court of Appeals, 686 S.W.2d 105 (Tex. 1985) Gunter v. Empire Pipeline Corp., 310 S.W.3d 19 (Tex. App. Dallas 2009, pet. denied) , 4, 6, 7, 10, 15, 22 Haas v. George, 71 S.W.3d 904 (Tex. App. Texarkana 2002, no pet.) In re Alcatel USA, Inc., 11 S.W.3d 173, 175 (Tex. 2000) vi

7 Knapp v. Wilson N. Jones Mem'l Hosp., 281 S.W.3d 163 (Tex. App. Dallas 2009, no pet.) , 10, 16, 17, 23 Mantas v. Fifth Court of Appeals, 925 S.W.2d 656 (Tex. 1996) , 22 Pena v. Smith, 321 S.W.3d 755 (Tex. App. Fort Worth 2010, no pet.) Prudential Insurance Co. of America v. Jefferson Associates, Ltd., 896 S.W.2d 156 (Tex. 1995) Querner v. Rindfuss, 966 S.W.2d 661 (Tex. App. San Antonio 1998, pet. denied) Quintero v. Jim Walter Homes, Inc., 654 S.W.2d 442 (Tex. 1983)) Randle v. Mid Gulf, Inc., No CV, 1996 WL (Tex. App. Houston [14th Dist.] Aug. 8, 1996, writ denied) , 13, 18 Samlowski v. Wooten, 332 S.W.3d 404 (Tex. 2011), reh'g denied (Apr. 1, 2011) Security Bank of Whitesboro v. Hudgins, No. 4:95 CV 341, 1998 WL (E.D. Tex. July 1, 1998) , 10, 12 Staley v. Herblin, 188 S.W.3d 334 (Tex. App. Dallas 2006, pet. denied) Willis v. Maverick, 760 S.W.2d 642 (Tex. 1988) Zidell v. Zidell, CV, 1997 WL (Tex. App. Dallas July 30, 1997, no writ) RULES RULE 38, TEX.R.APP.PROC TEXAS RULES OF APPELLATE PROCEDURE STATUTES TEX. CIV. PRAC. & REM.CODE (a) , 11 TEX. CIV. PRAC. & REM. CODE , 6, 9, 24, 25, 26, 27, 28 vii

8 No CV H. GLENN GUNTER, Appellant, vs. EMPIRE PIPELINE CORPORATION, EMPIRE EXPLORATION L.P., and EMPIRE EXPLORATION CORPORATION, Appellees. APPEALED FROM THE ND 192 JUDICIAL DISTRICT COURT OF DALLAS COUNTY, TEXAS APPELLANT S BRIEF TO THE HONORABLE JUSTICES OF THE COURT OF APPEALS: H. GLENN GUNTER, Appellant ( Gunter ), hereby files, pursuant to Rule 38, TEX. nd R. APP. PROC., his Appellant s brief, requesting relief concerning the order by the 192 Judicial District Court of Dallas County, Texas granting the Appellees, Empire Pipeline Corporation, Empire Exploration, L.P., and Empire Exploration Corporation (hereafter collectively Empire ), motion and supplemental motion to quash notice of deposition duces tecum and subpoena to Jennifer L. Keefe, Esq., which was requested by Appellant, and motion for protection (collectively Motion to Quash ) and states: 1

9 STATEMENT OF THE CASE Nature of the case. This is an agreed interlocutory appeal under TEXAS RULES OF APPELLATE PROCEDURE 28.2 from the trial court s order granting the motion and supplemental motion to quash notice of deposition duces tecum and subpoena to Jennifer Keefe, Esq. and motion for protection requested by Empire (the Motion to Quash ). [App. Tab A; C.R ] The underlying proceeding is the consolidated action of Gunter v. Empire Pipeline Corp., et al., No K ( the Original Action ), and Gunter v. Empire Pipeline Corp., et al., No K ( the Declaratory Judgment Action ), now pending before the 192nd Judicial District Court of Dallas County, as No K. [C.R ] Gunter is the plaintiff in the Original Action, seeking recovery for breach of contract and other wrongful acts, and in the Declaratory Judgment Action, seeking a declaration that even if the alleged mediated settlement agreement between the parties is determined valid, Empire has breached the same and lacks the ability to perform under the alleged agreement. [C.R. 7-20, 40-61, ] Empire filed a response in the Original Action and a counterclaim in the Declaratory Judgment Action seeking to enforce the alleged mediated settlement agreement. [C.R ; Supp. C.R. 4-19] Gunter is asserting various defenses to the enforcement of the alleged mediated settlement agreement, inter alia, fraudulent inducement, failure to disclose material facts and the failure to agree on all material terms, resulting in no meeting of the minds. [C.R , ] This case, involving oil and gas interests and related issues, originated from a dispute arising out of Gunter s employment contract with Empire. [C.R. 7-61] In an attempt to resolve this dispute, Empire agreed in a mediated settlement agreement to convey a 2% net overriding royalty interest to Gunter related to certain properties. [C.R. 129] Gunter subsequently sought 2

10 to vacate this mediated settlement agreement and prevent its enforcement on the basis that it was procured under duress, fraud, coercion, and/or was not a final recitation of the parties agreement. [C.R , ] In the alternative, Gunter s live pleading asserts that, in the event that the mediated settlement agreement is deemed a final and enforceable contract, Empire failed to perform in accordance with the agreement s terms by attempting to tender an interest that was not a 2% net overriding royalty interest. [C.R ] Course of proceedings. The trial court entered an order on March 25, 2008, summarily enforcing the alleged mediated settlement agreement between the parties. [C.R ] Gunter appealed, and this Court reversed that decision, holding that the summary procedure employed by the trial court deprived Gunter of the right to be confronted by appropriate pleadings, assert defenses, conduct discovery, and submit factual disputes to a fact finder, contrary to the procedural rights that a party had pursuant to the principles set forth in Cadle Co. v. Castle, 913 S.W.2d 627, 632 (Tex. App. Dallas 1995, writ denied) (en banc). (Emphasis added) Gunter v. Empire Pipeline Corp., 310 S.W.3d 19, 22 (Tex. App. Dallas 2009, pet. denied). [App. Tab B] Following remand, Gunter sought to take the deposition of Jennifer Keefe, the former attorney for Gunter who had appeared on his behalf at mediation and had negotiated the very alleged mediated settlement agreement that Empire is seeking to enforce. [C.R ] Empire filed the Motion to Quash alleging that the deposition was an improper attempt to discover information deemed confidential by Chapter 154 of the Texas Civil Practice & Remedies Code. [C.R , ; see TEX. CIV. PRAC. & REM. CODE [App. Tab D]] Trial court disposition. The trial court granted Empire s Motion to Quash on February 13, [App. Tab A; C.R ] The trial court also granted the application for interlocutory 3

11 appeal submitted by Gunter and Empire under Section (d) of the Texas Civil Practice and Remedies Code, of the order granting Empire s Motion to Quash on February 13, [C.R ] Gunter filed his notice of appeal on February 23, [C.R ] STATEMENT OF ORAL ARGUMENT The Court should grant oral argument for the following reasons: A. The issue presented has not been considered or decided. The issue presented, regarding a Plaintiff s ability to take the deposition of his prior counsel in connection with her actions and statements arising out of mediation, involves a controlling question of law as to which there is difference of opinions on the issue. See Gunter v. Empire Pipeline Corp., 310 S.W.3d 19 (Tex. App. Dallas 2009, pet. denied); In re Empire Pipeline, 323 S.W.3d 308 (Tex. App. Dallas 2010, no pet.). [App. Tab B, C] B. Oral argument would allow the Court to better analyze the important issues presented in this appeal and significantly aid the Court in deciding this case. This appeal involves the combination of several fundamental issues regarding a party s procedural rights to be confronted by appropriate pleadings and proof, assert defenses, conduct discovery and submit disputes to a fact finder, in addition to the confidentiality of mediation proceedings afforded by the Texas Civil Practices and Remedies Code. C. Oral argument would allow the Court a more complete understanding of the facts presented in this appeal. This appeal and the case overall involve facts that span over several years and involve prior successful and unsuccessful appeals that have contributed to the development of the issues which are now presented in this appeal. 4

12 ISSUE PRESENTED FOR REVIEW In light of the fact that Appellant alleges, as defenses to Appellee s breach of contract and specific performance claims based on an alleged mediated settlement agreement, that the contract was induced by fraud, duress, coercion, mistake and that there was no meeting of the minds on all essential terms of a contract in connection with such negotiations, that Appellee breached its ongoing duties of full and complete disclosure, and that Appellee lacked the power to grant the type of mineral interest which it represented it would convey, was it error for the trial court to grant the Motion to Quash thereby precluding Appellant from conducting the oral deposition of his former attorney and prohibit any inquiry and discovery whatsoever into communications and representations made at the mediation proceeding in which the settlement agreement was procured. [C.R ] STANDARD OF REVIEW This is an agreed interlocutory appeal from a discovery order granting the Motion to Quash. [App. Tab A; C.R ] The trial court granted permission to appeal on the grounds that the order involves a controlling question of law as to which the court and all the parties feel there is a substantial ground for difference of opinion. [C.R ] Generally, a trial court s discovery order, in particular an order regarding a motion to quash a deposition and protective order, is reviewed for abuse of discretion. See In re Alcatel USA, Inc., 11 S.W.3d 173, 175 (Tex. 2000); Avary v. Bank of Am., N.A., 72 S.W.3d 779, 787 (Tex. App. Dallas 2002, pet. denied). The purpose of discovery is to allow the parties to obtain the fullest knowledge of facts and issues prior to trial. Avary, 72 S.W.3d at 787. Orders prohibiting discovery may constitute an abuse of discretion. Id. It is an abuse of discretion if a trial court denies discovery if that denial 5

13 severely compromises a party s ability to present a viable defense. Ford Motor Co., v. Castillo, 279 S.W.3d 656, 663 (Tex. 2009). However, a de novo standard is applied to a trial court s conclusions of law. Alan Reuber Chevrolet, Inc. v. Grady Chevrolet, Ltd., 287 S.W.3d 877, 883 (Tex. App. Dallas 2009, no pet.). A trial court s conclusions of law are reviewed de novo as legal questions, and the reviewing court affords no deference to the lower court s decision. Id. Under de novo review, the reviewing court exercises its own judgment and redetermines each legal issue. Id. In the instant case and given that the basis for appeal was granted on the uncertainty as to whether a plaintiff may take the deposition of his prior counsel in connection with actions and statements, events, representations made, and understandings reached, at the mediation, based upon the conflict between the confidentiality provision in the Texas Civil Practices and Remedies Code and the decision of the Fifth Court of Appeals in Gunter v. Empire Pipeline Corp., 310 S.W.3d 19 (Tex. App. Dallas 2009, pet. denied), with the decision in In re Empire Pipeline, 323 S.W.3d 308 (Tex. App. Dallas 2010), the trial court s conclusions of law here should be reviewed de novo. [See C.R ] STATEMENT OF FACTS The background facts are set forth in the prior opinions of this Court issued in this case, specifically the opinion on the prior appeal, Gunter v. Empire Pipeline Corp., 310 S.W.3d 19 (Tex. App. Dallas 2009, pet. denied), and the opinion on the mandamus request, In re Empire Pipeline, 323 S.W.3d 308 (Tex. App. Dallas 2010, no pet.). [App. Tab B, C] In the original proceeding Gunter asserted claims for breach of contract and other wrongful acts. [C.R. 7-61] After being ordered to mediate with Empire, Gunter filed a motion 6

14 to vacate the settlement agreement allegedly resulting from the court-ordered mediation on the basis that it was signed under duress and coercion, procured by fraud, and/or was not a final recitation of the parties agreement. [C.R , ] Empire subsequently filed a response to Gunter s motion to vacate and the district court ordered the enforcement of the settlement agreement and dismissed the original proceeding with prejudice. [C.R , ] After a successful appeal, this Court in Gunter v. Empire Pipeline Corp., 310 S.W.3d 19 (Tex. App. Dallas 2009, pet. denied), reversed the trial court and remanded the case. [App. Tab B] In the Declaratory Judgment Action filed thereafter, Gunter sought a declaratory judgment that if the alleged mediated settlement agreement was binding, Empire has failed to comply by its terms. [C.R ] Empire then counterclaimed for specific performance and breach of contract. [C.R ] Gunter filed an answer to Empire s counterclaim asserting affirmative defenses based on fraud by fraudulent inducement and failure to disclose, and the failure to agree on all material terms, resulting in no meeting of the minds, among other defenses.[c.r ] Thereafter, Gunter proceeded to conduct the deposition of Robert Harris, the attorney who represented Empire in the mediation proceeding in which the alleged settlement agreement was procured. [Supp. C.R ; C.R ] The dispute over whether the deposition of Mr. Harris could be held resulted in the opinion issued in this court in In re Empire Pipeline, 323 S.W.3d 308 (Tex. App. Dallas 2010, no pet.). [App. Tab C] Plaintiff did not take Mr. Harris deposition. In the summer of 2010, the trial court consolidated the Original Action and the Declaratory Judgment Action. [C.R ] Gunter subsequently sought to take discovery in the consolidated action by serving a deposition notice for the deposition of Jennifer Keefe, prior 7

15 counsel for Gunter, who was present at the mediation in December of [C.R ] Seeking to avoid discovery of material evidence, Empire filed the Motion to Quash asserting that the mediation confidentiality statute of the Texas Alternative Dispute Resolution ( ADR ) Act located in Chapter 154 of the Texas Civil Practice & Remedies Code prevented the deposition requested and any disclosures of mediation communications and records. [C.R , ] The trial court granted the Motion to Quash on February 13, [App. Tab A; C.R ] As a result, Gunter sought and was granted this agreed interlocutory appeal to resolve the issue regarding whether the trial court erred in granting the Motion to Quash thereby effectively preventing Gunter s ability to discover material evidence regarding the circumstances surrounding the procurement of the alleged settlement agreement. [App. Tab A; C.R ] SUMMARY OF ARGUMENT If the procedural and substantive protections repeatedly stated by the Supreme Court of Texas and this Court are to be implemented and honored, then under the circumstances present here, discovery, and in particular the deposition of Gunter s prior attorney (who represented him 1 in the mediation proceeding at issue), should be permitted. By permitting Gunter to delve into the negotiations and representations made at the mediation proceeding which resulted in the alleged agreement attempted to be enforced here, Gunter would be given the opportunity to exercise his rights of being confronted with proper pleadings and proof, conduct discovery, and have his claims be determined with a full and fair understanding of the circumstances. This requested outcome is consistent with the overarching policy in Texas of treating settlement 1 It is noteworthy that only Empire objected to the deposition. There has been no objection by attorney Keefe to such a deposition. 8

16 agreements as all other contracts and affording the important rights which provide a party to be confronted with proper pleadings, proceedings and proof. Without the discovery requested here, the validity of the settlement agreement at issue may be determined with an incomplete factual background because full resolution of the surrounding facts and circumstances cannot be made. Further, denial of discovery of mediation records and communications may compromise Gunter s ability to present one or more viable defenses and deny Gunter s rights and ability to have his case decided on the merits with proper proof. ARGUMENT I. The discovery of mediation records and communications at issue related to the deposition of Jennifer Keefe, Esq. is the necessary result of treating settlement agreements as all other contracts and is required to protect the important procedural and substantive rights of Gunter. The well-established important procedural and substantive rights requiring that proceedings to enforce settlement agreements must be treated as all other contract disputes, with proper pleadings and proof, are equally as important as the policy supporting mediation and the peaceable resolution of disputes. Ford Motor Co. v. Castillo, 279 S.W.3d 656, 663 (Tex. 2009); Knapp v. Wilson N. Jones Mem'l Hosp., 281 S.W.3d 163, 173 (Tex. App. Dallas 2009, no pet.). Despite the privileges arising from settlement communications under Rule 408 of the Texas Rules of Evidence and/or communications in the course of a mediation proceeding under , and (c), of the Texas Civil Practices & Remedies Code, such protections are not absolute and often times do give way to discovery concerning the inducement of the alleged mediated settlement agreement. See, e.g., Security Bank of Whitesboro v. Hudgins, No. 4:95 CV 341, 1998 WL , at *11-13 (E.D. Tex. July 1, 1998) (mem. op.); Flood v. Katz, 294 S.W.3d 9

17 756, (Tex. App. Dallas 2009, pet. denied); Knapp, 281 S.W.3d at 177; Avary v. Bank of Am., N.A., 72 S.W.3d 779, 799 (Tex. App. Dallas 2002, pet. denied); Randle v. Mid Gulf, Inc., No CV, 1996 WL , at *1-2 (Tex. App. Houston [14th Dist.] Aug. 8, 1996, writ denied) (not designated for publication). As evident by the cases cited in the preceding sentence, this cloak of confidentiality, which the mediation confidentiality provisions are often referred to as creating, is not absolute, resulting in the discovery of certain records and communications that might otherwise be deemed confidential under the mediation confidentiality provisions. See, e.g., Security Bank of Whitesboro, 1998 WL , at *11-13; Flood, 294 S.W.3d at 62-63; Knapp, 281 S.W.3d at 177; Avary, 72 S.W.3d at ; Randle v. Mid Gulf, Inc., 1996 WL , at *1-2. After consent has been withdrawn, a court may enforce a settlement agreement only as a written contract. Mantas v. Fifth Court of Appeals, 925 S.W.2d 656, 658 (Tex. 1996) (per curiam); see also Tex. Civ. Prac. & Rem.Code (a) (providing that a settlement agreement is enforceable in the same manner as any other contract ). In enforcing a settlement agreement as a written contract, the party seeking enforcement must pursue a separate breach of contract claim, which is subject to the normal rules of pleading and proof. Mantas, 925 S.W.2d at 658. In short, if consent is withdrawn, the only method available for enforcing a settlement agreement is through summary judgment or trial. Gunter v. Empire Pipeline Corp., 310 S.W.3d 19, 22 (Tex. App. Dallas 2009, pet. denied) (citing Staley v. Herblin, 188 S.W.3d 334, (Tex. App. Dallas 2006, pet. denied); see also Pena v. Smith, 321 S.W.3d 755, 758 (Tex. App. Fort Worth 2010, no pet.). 10

18 As the Supreme Court of Texas has held, disputes over settlement agreements, like any other breach of contract claim, are subject to the established procedures of pleading and proof, the parties involved in such dispute are entitled to full and fair discovery and the parties are entitled to the ability to have their cases decided on the merits. Ford Motor Co. v. Castillo, 279 S.W.3d 656, 663 (Tex. 2009). As a result, it is improper and amounts to an abuse of discretion if a court denies discovery when that denial severely compromises a party s ability to present a viable defense. Id. (citing Able Supply Co. v. Moye, 898 S.W.2d 766, 772 (Tex. 1995) (orig. proceeding)). The abundant amount of case law and the current provision of the Texas ADR Act located at Tex. Civ. Prac. & Rem.Code (a) that makes ADR agreements enforceable in the same manner as any other written contract arguably contemplates the introduction of evidence necessary in enforcing the ADR agreement. Therefore, for example, just like when parol evidence is allowed to determine the meaning of an ambiguous provision in a contract, the same should be allowed to resolve an ambiguity in a mediated settlement agreement, given that the resolution of ambiguities is basic to a contract s enforceability. If a court is denied the opportunity to hear evidence concerning what a particular clause in a settlement agreement means, the settlement agreement cannot be enforced in the same manner as any other written contract. In applying this principle that mediated settlement agreements are enforceable in the same manner as all other written contracts, this Court has noted that where there are issues regarding enforceability of a mediated settlement agreement, confidentiality must give way. Avary v. Bank of Am., N.A., 72 S.W.3d 779, (Tex. App. Dallas 2002, pet. denied). This 11

19 Court recognized that proof of a mediated settlement agreement and any defenses would necessarily involve disclosure of mediation communications. Id. at 800. As a result of this imperative inquiry into mediation communications, this Court and others, specifically have allowed the disclosure of confidential mediation communications when a party s claims related to a mediated settlement agreement and its enforcement require it. For example, in Flood v. Katz, 294 S.W.3d 756 (Tex. App. Dallas 2009, pet. denied) where creditors of Irwin Katz entered into a mediated settlement agreement and were seeking a claim for fraud based on the settlement agreement, this Court held that the creditors were not precluded by the confidentiality provisions of the Texas ADR Act. Flood v. Katz, 294 S.W.3d at 762. Even though Katz asserted that his mediation communications remain confidential under the applicable rules of evidence and the Texas ADR Act, this Court, nonetheless, allowed the disclosure of this otherwise confidential communication because, as this Court stated, wrongful acts are not shielded because they took place during compromise negotiations. Id. at , n.2 (citing Avary, 72 S.W.3d at 799 n.4). In addition, this Court held that a party cannot be prevented from proving a claim for fraud simply because some of the acts, which constituted the fraud, took place during the mediation. Id. As with other written contracts, when enforcing a mediated settlement agreement and resolving any ambiguities that exist in the settlement agreement that resulted from the mediation proceeding, parol evidence is needed, therefore requiring the disclosure of confidential mediation communications. (Security Bank of Whitesboro v. Hudgins, No. 4:95 CV 341, 1998 WL , at *11-13 (E.D. Tex. July 1, 1998). In applying the Texas ADR Act and its provisions addressing the confidentiality of mediation communications, the U. S. District Court held that 12

20 because mediated settlement agreements are enforceable in the same manner as other contracts, parol evidence of the circumstances surrounding the making of the settlement agreement was necessary and permissible to explain and resolve the ambiguities that were at issue. Id. The court went on to emphasize that the communications regarding the ambiguous provision of the settlement agreement did not relate to the subject matter of the underlying dispute but were inquires needed to resolve the ambiguities in the settlement agreement, taking it out of the scope of the confidentiality provisions. Id. Further, the inquiry into mediation communications and disclosure of the same is unavoidable when a party, against whom a mediated settlement agreement is being enforced against, asserts a defense such as fraud, duress, coercion, and mutual mistake, much like a party is allowed to do in all other contract disputes. This was emphasized by the Fourteenth District Court of Appeals in Houston when it allowed the disclosure of certain confidential mediation communications because the party seeking to void the settlement agreement resulting from mediation asserted the common law contract defense of duress. Randle v. Mid Gulf, Inc., No CV, 1996 WL , at *1-2 (Tex. App. Houston [14th Dist.] Aug. 8, 1996, writ denied) (not designated for publication). In Randle, the parties signed a mediation agreement related to an oil and gas dispute. Id. Afterwards, however, one party refused to execute the settlement and repudiated the mediated agreement contending that because he, on the day of mediation, was experiencing tiredness and chest pains and had requested to leave to take his prescribed medication, but was denied the ability to leave. Id. This party, therefore, claimed he had signed the agreement under duress because he was essentially forced to settle the day of mediation. Id. at *1-2. Without the ability to seek disclosure of mediation provisions in cases 13

21 such as Randle, a party would effectively be barred from raising any well-established common law defenses such as fraud, duress, coercion and mutual mistake. In such situations, a defendant would be placed in a great disadvantage in trying to prove, for example, the plaintiff's misrepresentations when the defendant asserts a defense of fraud, if he is not allowed to testify himself or allowed to inquire into mediation communications where the misrepresentations took place. The Supreme Court of Texas emphasized in Ford Motor Co. that [t]he validity of a settlement agreement cannot be determined without full resolution of the surrounding facts and circumstances. Ford Motor Co. v. Castillo, 279 S.W.3d 656, 663 (Tex. 2009) (citing Quintero v. Jim Walter Homes, Inc., 654 S.W.2d 442, 444 (Tex. 1983)). Since the alleged settlement agreement at issue here was negotiated and finalized at mediation, and the material representations or omissions Gunter alleges were made during this same mediation, an inquiry into the mediation process is unavoidable if the validity of the settlement agreement is to be determined upon full resolution of the surrounding facts and circumstances. [C.R , , ] In treating the settlement agreement at issue like all other contracts and determining its validity and meaning upon full resolution of the surrounding facts and circumstances, an inquiry into the mediation communications in which this settlement agreement was drafted certainly should be allowed. Furthermore, an inquiry into the mediation process is to a greater extent unavoidable if the denial of such severely compromises a party s ability to present a viable defense. The inability to take the deposition of Gunter s former counsel, who represented him in the mediation proceeding, could severely compromise his ability to present a viable defense to the enforcement of the alleged settlement agreement based on his assertions that fraud, failure to disclose, duress, 14

22 coercion, mutual mistakes and/or unilateral mistakes occurred. [C.R , , ] This, as it is stated by the Court in Ford Motor Co., would be an improper denial of discovery. Further, without the ability to inquire further into the meaning of the ambiguities that exist within the agreement, such as what was actually conveyed in the agreement and the meaning of a net overriding royalty interest, which appears in the settlement agreement but is vaguely defined, and the ability to discover and use otherwise admissible parol evidence, Gunter s ability to resolve this ambiguity could be substantially compromised. 2 Without allowing the party resisting enforcement of an alleged mediated settlement agreement to assert contract defenses and try the factual issues relating to such defenses would render meaningless the holding in this very case, in Gunter v. Empire Pipeline Corp., 310 S.W.3d 19, 22 (Tex. App. Dallas 2009, pet. denied). If the applicable mediation confidentiality standard does not provide an exception for enforcement proceedings and is strictly construed, the very information necessary for the contract law analysis may be unavailable. If not for inquiries into otherwise confidential mediation communications and records, which allowed for a full resolution of the surrounding facts and circumstances, cases such as Cadle Co. v. Castle, 913 S.W.2d 627 (Tex. App. Dallas 1995, writ denied) (en banc) and Boyd v. Boyd, 67 S.W.3d 398 (Tex. App. Fort Worth 2002, no pet.) would have had an opposite result. Cadle required the development of evidence related to actions occurring during the mediation process and the representations made therein in a dispute over a settlement agreement. Cadle, 913 S.W.2d at The differing opinions on what this term and other agreement terms mean, for example, appear in Gunter s petition for declaratory judgment and response to Empire s counterclaim [C.R , 170], and in Empire s counterclaim and motion to quash the deposition of Robert Harris [Supp. C.R.13, 36]. 15

23 32. Boyd involved a mediated settlement agreement which was deemed unenforceable because one party s intentional failure to disclose certain facts and assets in the mediation proceeding lead to mistaken facts which were relied upon by the other party in agreeing to the settlement terms. Boyd, 67 S.W.3d at 402. The principles that parties are entitled to full and fair discovery, that parties are entitled to have their cases decided on the merits and that all settlement agreements must be treated like all other written contracts, necessarily require that in certain circumstances, such as the one presented here, consideration of mediation proceedings and the discussions occurring therein is unavoidable and necessary. Gunter should be allowed to depose his former attorney to perform full and fair discovery and have the capability to present viable defenses against the enforcement of what is just another alleged contract, the alleged settlement agreement. Without the ability to do so, the claims and defenses surrounding that purported agreement cannot be properly and fairly evaluated. II. Texas ADR Act's cloak of confidentiality over mediation proceedings should be pierced to allow disclosure and discovery when defenses, such as a defense based on fraud, is asserted against breach of contract claims and/or specific performance claims because the confidentiality statute is not absolute and cannot be utilized by a party as a shield and a sword. The mediation confidentiality provisions do not create a blanket of confidentiality nor are they so broad as to bar all evidence regarding everything that occurs at mediation from being presented in the trial court. Knapp v. Wilson N. Jones Mem'l Hosp., 281 S.W.3d 163, 172 (Tex. App. Dallas 2009, no pet.). This Court has stated that despite public policy supporting arbitration and the peaceable resolution of disputes, there is an equally important public policy to preserve significant and well-established procedural and substantive rights. Id. at 173. The 16

24 ability to defend against claims and submit contested fact issues to the jury implicate these significant substantive and procedural rights. Id. at 175. It has even been recognized that in protecting a party s substantive and procedural rights, evidence relating to intent, ambiguities in settlement agreements and affirmative defenses to a claim for breach of the agreement could, in some circumstances, involve evidence of otherwise confidential mediation communications. Avary v. Bank of Am., N.A., 72 S.W.3d 779, 800 (Tex. App. Dallas 2002, pet. denied). As a result of the above reasoning, the shield provided by the mediation confidentiality statutes does not shield wrongful acts, such as fraud or failure to disclose, simply because they took place during compromise negotiations. See Flood v. Katz, 294 S.W.3d 756, (Tex. App. Dallas 2009, pet. denied); Avary, 72 S.W.3d at 799 n. 4. It is clear that courts do not treat the mediation confidentiality provisions as being absolute. For example, the court in Knapp, pierced the confidentiality of mediation proceedings in a suit by a former employee against his former employer for denial of severance pay, in order to allow discovery as to prior arbitration between employer and its auditor regarding reasons for denial of severance pay. Knapp, 281 S.W.3d at 175. In addition, the court in Flood also pierced the confidentiality of mediation proceedings in a suit between creditors who entered into a mediated settlement agreement with the debtor because the mediation confidentiality provisions could not prevent the wrongful acts, such as fraud or misrepresentations, to be shielded simply because they occurred during compromised negotiations. Flood, 294 S.W.3d at The piercing of the mediation confidentiality provisions is appropriate because one cannot invoke the jurisdiction of the courts in search of affirmative relief, such as a breach of contract claim or specific performance, and yet, on the same basis of the mediation 17

25 confidentiality statutes, deny a party the benefit of evidence that would materially weaken or defeat the claims against them. See Alford v. Bryant, 137 S.W.3d 916, 921 (Tex. App. Dallas 2004, pet. denied) (citing Ginsberg v. Fifth Court of Appeals, 686 S.W.2d 105, 107 (Tex. 1985); Randle v. Mid Gulf, Inc., No CV, 1996 WL , at *1-2 (Tex. App. Houston [14th Dist.] Aug. 8, 1996, writ denied) (not designated for publication). Such offensive, rather than defensive, use of a privilege lies outside the intended scope of the privilege. Alford, 137 S.W.3d at 921. Although the mediation confidentiality statutes have not been accorded the status of privileges by case law, this Court analyzed certain situations where privileges have been held not to be absolute in its application of the confidentiality statutes in Alford. Id. As a result, this Court held in Alford that when a party uses mediation confidentiality as a sword, rather than as a shield, the party waives this protection. Id. at Although Alford did not involve defense of an action to enforce a settlement reached in the mediation proceeding as to which discovery was sought, as it is here, its reasoning can be found in disputes similar to one presented here. Id. at 922; See Randle, 1996 WL The case of Randle v. Mid Gulf, Inc. provides a vital analogy to the circumstances presented in this case. See Randle, 1996 WL In Randle, a party claimed a mediated settlement agreement was void on the grounds that he had signed it under duress, the evidence of which the opposing party argued was inadmissible because it was based on statements made during mediation and therefore subject to the confidentiality provision of the Texas ADR Act. Id. at *1-2. The Fourteenth Court of Appeals in Houston, nonetheless, allowed the disclosure of the mediation communications holding that a party cannot both sue for specific performance and at the same time claim confidentiality as to a contract defense based on the mediation confidentiality statute. 18

26 Id. Essentially, the court in Randle prevented the use of the mediation confidentiality as a sword, rather than a shield, in accord with the reasoning and holding that would later be given in Alford. See id. In Zidell v. Zidell, CV, 1997 WL (Tex. App. Dallas July 30, 1997, no writ) this Court further agreed that courts should not allow the use of the mediation confidentiality statute in an offensive manner, such that the privilege intended as a shield becomes a sword that the party may use in an effort to prevent the true facts from being presented to the court. Zidell v. Zidell, 1997 WL at *9. Although disclosure of mediation proceedings was not allowed in Zidell, this Court stated that Feldman, the opposing party who was being accused of using the confidentiality statute as a sword, was not using it as such in preventing the presentation of the alleged agreement because she and Zidell did not enter into an enforceable agreement. Instead, this Court stated that the confidentiality provision worked as it was designed and protected communications made during the party's mediation that do not result in a binding and final settlement of all or part of a lawsuit. Id. Unlike in Zidell, supra, however, here the issue of whether a final settlement agreement existed between Gunter and Empire and, in the alternative, whether it is an enforceable agreement, is in dispute. [C.R , , ] Here, the use of the mediation confidentiality provision by Empire is in an effort to prevent the ability to discover whether in fact there was a final agreement. Further under Empire s theory, this cloak of confidentiality prevents discovery of material facts regarding whether there were acts constituting fraud, duress, coercion or mistake. Essentially the mediation confidentiality statute here is being used by Empire as an effort to prevent the true facts from being presented to the court. By refusing to 19

27 allow Gunter to discover the communications in the mediation proceeding at issue, the court is essentially denying him the benefit of evidence that would materially weaken or defeat the claims against him. Like in Randle, the Court should hold here that Empire cannot both sue for specific performance and breach of contract and at the same time claim confidentiality as to the contract defenses of Gunter based on the mediation confidentiality statute. It has been stated that [f]raud vitiates all privileges. Querner v. Rindfuss, 966 S.W.2d 661, (Tex. App. San Antonio 1998, pet. denied) (vitiating the litigation privilege held by an attorney to allow a claim based on fraud against him). In the creation of a contract, fraud by one party such as fraudulent inducement, failing to disclose, or concealment of information, allows the other party to rescind or not be bound by the contract. Prudential Insurance Co. of America v. Jefferson Associates, Ltd., 896 S.W.2d 156, 162 (Tex. 1995); Boyter v. MCR Const. Co., 673 S.W.2d 938, 941 (Tex. App. Dallas 1984, writ ref d n.r.e.). Fraud alleged by one party to a mediated settlement agreement based on the failure to disclose by the other party has constituted a sufficient basis for the disclosure of confidential mediation information before. In Flood v. Katz, disclosure of mediation communications was permitted because the creditors of Mr. Katz alleged that Mr. Katz committed fraud by remaining silent where he had a duty to speak and disclose, and failing to disclose the whole truth rather than partial disclosure. Flood v. Katz, 294 S.W.3d 756, (Tex. App. Dallas 2009, pet. denied). Without the use of mediation communications, a case like Boyd v. Boyd, where a mediated settlement agreement was deemed unenforceable because of one party's intentional failure to disclose certain facts, which constituted fraud, lead to mistaken facts which were relied on by the other party in agreeing to the settlement terms, would not have been resolved in the 20

28 matter in which it did. Boyd v. Boyd, 67 S.W.3d 398, 402 (Tex. App. Fort Worth 2002, no pet.). Given that fraud can be used against ordinary non-mediation contracts, mediation contracts are subject to the same defense, since, as argued above, they are to be treated like all 3 other contracts. If the mediation confidentiality provision were to prevent the ability to inquire into the settlement agreement and disclose the circumstances in which it was procured, then the privilege would effectively bar a party from raising any of the well-established common law defenses such as fraud, duress, coercion, and mutual mistake. See, e.g., F.D.I.C. v. White, 76 F. Supp. 2d 736, 738 (N.D. Tex. 1999) (allowing disclosure of mediation communications in a federal action because if the federal law, deeming mediation proceedings to remain confidential, applied under all circumstances the privilege would serve as a bar against defenses stated above). Gunter herein alleges as a defense to Empire's specific performance and breach of contract claim, that Empire committed fraud, fraudulently induced Gunter, and failed to disclose material facts in the procurement of the settlement agreement.[c.r ] Accordingly, the mediation confidentiality statute should be vitiated to allow for proper discovery into his claim despite Empire's claims that such allegations are not viable. See Ford Motor Co. v. Castillo, 279 S.W.3d 656, 664 (Tex. 2009) ( a party is not required to demonstrate the viability of defenses before it is entitled to conduct discovery ). It would be an error to permit Gunter to present defenses such as fraud based on the mediated settlement agreement itself, while simultaneously depriving him of the opportunity to introduce or discover probative evidence from the mediation process that could refute the claim. 3 See supra Part I. 21

29 Further, it is unjustified to prevent Gunter from discovery of mediation communications to prevent the enforcement of a mediated settlement agreement but allow the disclosure if he was asserting a separate fraud claim based off the same facts which he alleges here, such as it was done in Flood v. Katz. In Flood, after a mediated settlement agreement had been signed and treated by both parties as final and binding, this Court allowed discovery of mediation communications when a party agreeing to the settlement agreement pursued a fraud claim based on the opposing party's misrepresentations in the mediation proceeding which resulted in the settlement agreement. Flood, 294 S.W.3d at As done before, Gunter here simply seeks that this Court allow that the wrongful acts committed in mediation proceedings to be rectified by allowing the shield provided by the mediation confidentiality provisions to be pierced. Gunter seeks to prevent Empire from invoking the district court s jurisdiction in search of affirmative relief while also denying Gunter the benefit of evidence that would materially weaken or defeat the claims against him, on the basis that the mediation confidentiality statute requires it. The pursuit of a breach of contract claim based on a mediated settlement agreement, subjects the case to the normal rules of pleading and proof when consent to the agreement is lacking. See Mantas v. Fifth Court of Appeals, 925 S.W.2d 656, 658 (Tex. 1996); Gunter v. Empire Pipeline Corp., 310 S.W.3d 19, 22 (Tex. App. Dallas 2009, pet. denied). Further, a party has a right to assert defenses and conduct discovery. Cadle Co. v. Castle, 913 S.W.2d 627, 632 (Tex. App. Dallas 1995, writ denied). Although Gunter was previously denied the ability to inquire into the confidential mediation proceedings at issue here, when he sought to depose Empire's attorney in the mediation proceeding, the circumstances and the arguments presented here 22

30 differ. See In re Empire Pipeline, 323 S.W.3d 308 (Tex. App. Dallas 2010, no pet.). Gunter now seeks to depose his own attorney who represented him in the mediation proceedings at issue. [C.R ] In doing so, Gunter seeks to discover evidence which supports his defenses to Empire's claim of breach of contract and specific performance, which include, but are not limited to, acts of fraudulent inducement and failure to disclose committed by Empire, duress, coercion, and the lack of a meeting of the minds between Empire and himself. [C.R ] By choosing to seek discovery from his former attorney, Gunter is exercising his right to assert his defense and conduct discovery so that the issue in front of the trial court, regarding the validity of the settlement agreement, is determined with a full and fair understanding of the circumstances in which it was procured. Like in Avary, Gunter is not seeking this discovery to impose additional liability on Empire in the original action nor proposing disclosure of mediation records and communications to obtain additional funds from Empire. See Avary v. Bank of Am., N.A., 72 S.W.3d 779, (Tex. App. Dallas 2002, pet. denied). Further, the concerns that existed in Avary and other cases regarding disturbing the settlement agreement by allowing disclosure of mediation proceedings, is not one implicated here as the fact of whether the contract here, the alleged mediated settlement agreement, even existed and was a final and full recitation of the parties agreements is in dispute. [C.R , , ]; see Avary, 72 S.W.3d at 800; Knapp v. Wilson N. Jones Mem'l Hosp., 281 S.W.3d 163, 175 (Tex. App. Dallas 2009, no pet.). Focusing on the fact that Gunter was not asserting a new and independent tort separate from the settlement agreement or the underlying action, this Court distinguished Gunter's previous attempt to pierce the cloak of confidentiality from other cases where 23

31 disclosure was allowed. In re Empire Pipeline, 323 S.W.3d 308, (Tex. App. Dallas 2010, no pet.). However, as stated above, requiring that Gunter assert a new cause of action for fraud at a later time, like it was done in Flood v. Katz, but presently prevent him from using these same assertions to prevent the enforcement of the alleged settlement agreement in the first place, will be an unjustifiable requirement. Had the creditors in Flood known about the assets Mr. Katz failed to disclose in their mediation at the time of their mediation proceeding or soon after, it is likely that they too would have sought the same course Gunter now seeks, to rectify the wrong committed. See Flood v. Katz, 294 S.W.3d 756, (Tex. App. Dallas 2009, pet. denied). Furthermore, Gunter, in noticing the deposition of his former attorney, does not limit the scope of the deposition solely to the communications and records in mediation, rather the deposition s scope includes all the facts and claims which involve the subject of this litigation. [C.R. 188] Section (c) of the Texas ADR Act specifically allows the discovery of communication or written material used in or made a part of an alternative dispute resolution procedure... if it is admissible or discoverable independent of the procedure. This essentially provides that communications and records that are discoverable or admissible at trial cannot be made non-discoverable or inadmissible by introducing them at a mediation. Gaskin v. Gaskin, No CV, 2006 WL , at *3 (Tex. App. Fort Worth Aug. 31, 2006, pet. denied) (mem. op.). Accordingly, Gunter should be able to depose his former attorney on communications and materials that were already discoverable and admissible at trial in the original action. Notwithstanding that by now seeking discovery from his former attorney, Gunter 24

32 4 implicates an explicit exception to the mediation confidentiality statute, and is allowed to discover mediation communications and materials that were already discoverable and admissible at trial in the original action, from a legal and policy standpoint, all considerations presented to the Court now support disclosure of all mediation communications and records. The Texas ADR Act's cloak of confidentiality over mediation proceedings is not absolute. In fact, under the circumstances presented here, the cloak of confidentiality over mediation proceedings should be pierced to allow disclosure and discovery because, here, Gunter's defenses, such as fraud and duress, against Empire's breach of contract and specific performance claims, warrant disclosure to prevent it from shielding Empire's wrongful acts. III. The Texas ADR Act's confidential mediation provision does not preclude courts from exceptional circumstances such as those presented here. The Court should not hesitate to allow the disclosure of mediation communications here simply because one is not explicitly included in the Texas ADR Act. See Tex. Civ. Prac. & Rem. Code (listing three explicit exceptions to the confidentiality provision). Allowing Gunter to inquire into confidential mediation communications would not go against the statutory construction of the mediation confidentiality provision at Tex. Civ. Prac. & Rem. Code The statute states: [T]he subject matter of any civil or criminal dispute made by a participant in an alternative dispute resolution procedure, whether before or after the institution of formal judicial proceedings, is confidential, is not subject to disclosure, and m ay not be used as evidence against the participant in any judicial or administrative proceeding (a) (emphasis added). Generally, the term may is given a permissive construction. 4 See infra Part IV. 25

33 Samlowski v. Wooten, 332 S.W.3d 404, 422 (Tex. 2011), reh'g denied (Apr. 1, 2011). Where a statute is permissive, the court has discretion in application of its provisions. See id. Had the legislature intended an obligatory compliance, the word shall would have been more appropriate, given that shall is interpreted as making the statute mandatory. See Albertson's, Inc. v. Sinclair, 984 S.W.2d 958, 961 (Tex. 1999). Thus, following this reasoning, under the Texas ADR statute, the courts are not absolutely precluded from allowing disclosure of mediation information, as they have evidently done before in the cases cited previously. IV. An inquiry into the confidential mediation communications here is necessary to further facilitate the duty of full and fair disclosure of an attorney to his client whom he represents at such mediation proceeding. The third exception to the statutory provision for confidentiality of mediation proceedings, other legal requirements for disclosure, is also implicated in this case. See (e). The exception, in short, states that if the mediation confidentiality provision conflicts with other legal requirements for disclosure the issue of confidentiality may be presented to the court to determine whether the materials sought to be disclosed are subject to disclosure. Id. Here, a fiduciary relationship existed between Ms. Jennifer Keefe and Mr. Gunter because Ms. Keefe had an attorney-client relationship with Mr. Gunter and was serving as his attorney in the mediation proceedings that are at issue in this case. As a result, the deposition of Ms. Jennifer Keefe is simply in furtherance of requiring Ms. Keefe to further fulfill her duties imposed on her to Gunter. In an attorney-client relationship a duty exists on the attorney to make a full and fair disclosure of every facet of the mediation proceedings in which the settlement agreement was procured given that they stand in a fiduciary relationship to their client. Bloyed v. Gen. Motors 26

34 Corp., 881 S.W.2d 422, 436 (Tex. App. Texarkana 1994) aff'd, 916 S.W.2d 949 (Tex. 1996). Attorneys, as fiduciaries, are obligated to render a full and fair disclosure of facts material to the client's representation. Haas v. George, 71 S.W.3d 904, 913 (Tex. App. Texarkana 2002, no pet.) (citing Willis v. Maverick, 760 S.W.2d 642, 645 (Tex. 1988)). Any breach of this duty to disclose is tantamount to concealment. Id. Avary provides an adequate example for the application of this exception. Avary v. Bank of Am., N.A., 72 S.W.3d 779, (Tex. App. Dallas 2002, pet. denied). In Avary an analysis pursuant to (e) was required to determine whether, in light of the facts, circumstances, and context, disclosure of the confidential communications was warranted. Id. Avary involved a settlement agreement reached during the course of court-ordered mediation. Id. at Avary, the guardian of the estates of the decedent's children, sued Bank of America, which served as the executor of the decedent's estate, for amongst other things, breach of fiduciary duty and fraud. Id. Avary, in her appeal, objected to the trial judge's prohibition of discovery relating to the mediation proceeding. Id. This Court reversed the trial court's judgment and remanded the case for further proceedings, in part, because this Court concluded the bank's fiduciary obligations constituted a legal requirement for disclosure pursuant to (e) and that requirement conflicted with the confidentiality provisions of Id. at 796. This Court went on to state that the fiduciary duty of disclosure is a high duty of full disclosure of all material facts that might affect the rights of the party to whom the duty is owed. Id. at 797. Just as in Avary, the fiduciary duty owed here to Gunter by his former counsel, Jennifer Keefe, is one that requires full disclosure of all material facts. Although this case differs from 27

35 Avary, in that Gunter is not asserting a claim against Ms. Keefe, there still exists a legal requirement for disclosure here pursuant to (e) because Ms. Keefe, as former attorney of Gunter, owed him the duty to make a full and fair disclosure of every facet of the mediation proceedings in which the alleged settlement agreement was procured. Even though this legal requirement conflicts with the confidentiality provision of the Texas ADR Act, disclosure is warranted to apprise Gunter of all the material facts which were and were not disclosed in the mediation proceeding at issue. CONCLUSION In order to honor and continue to protect the procedural and substantive rights recognized by the Supreme Court of Texas, the discovery sought here, the deposition of Gunter s former attorney issue, should be permitted. This outcome is the necessary result of Texas courts repeatedly treating settlement agreements as all other contracts and affording a party to be confronted with proper pleadings, proceedings and proof. Without the discovery sought here, the full resolution of the surrounding facts and circumstances cannot be made to properly determine the validity of the alleged settlement agreement at issue. Denial of discovery of mediation records and communications could severely compromise Gunter s ability to present a viable defense, and deny Gunter s rights and ability to have his case decided on the merits with proper proof. Furthermore, Empire should not be allowed to shield its wrongful acts standing behind the purported confidentiality of mediation communications and records, while at the same time depend on that same mediation to assert breach of contract and specific performance claims. This unjustified result can only be avoided if Mr. Gunter is allowed to conduct the discovery deposition of Jennifer Keefe, Esq. 28

36 PRAYER Based upon the foregoing facts and analysis, Appellant respectfully requests that this Court: 1. REVERSE the trial court ORDER GRANTING EMPIRE PIPELINE CORPORATION, L.P. AND EMPIRE EXPLORATION CORPORATION'S MOTION AND SUPPLEMENTAL MOTION TO QUASH NOTICE OF DEPOSITION DUCES TECUM AND SUBPOENA TO JENNIFER KEEFE, ESQ. AND MOTION FOR PROTECTION; and 2. provide Appellant such other and further relief, at law or in equity, to which Appellant may be justly entitled. Respectfully submitted, By:/s/ M. Kevin Queenan M. Kevin Queenan, SB# Carson R. Hebert, SB# QUEENAN LAW FIRM, P.C. 731 Station Drive Arlington, Texas (817) (817) (FAX) ATTORNEYS FOR APPELLANT 29

37 CERTIFICATE OF SERVICE This is to certify that a true and correct copy of the above and foregoing document has th been served on the following party via certified mail, return receipt requested on this 9 day of April, 2012: Robert Harris, Esq. Shannon, Gracey, Ratliff & Miller, L.L.P. 901 Main Street, Suite 4600 Dallas, Texas I:\379\1\APPEAL PLEADINGS\APPELLANTS BRIEF.wpd /s/ M. Kevin Queenan M. Kevin Queenan 30

38 Appendix

39 No CV IN THE COURT OF APPEALS FOR THE FIFTH DISTRICT OF TEXAS AT DALLAS, TEXAS H. GLENN GUNTER, Appellant, vs. EMPIRE PIPELINE CORPORATION, EMPIRE EXPLORATION L.P., and EMPIRE EXPLORATION CORPORATION, Appellees. APPEALED FROM THE 192N JUDICIAL DISTRICT COURT OF DALLAS COUNTY, TEXAS APPENDIX TO APPELLANT'S BRIEF A ORDER PERMITTING AGREED INTERLOCUTORY APPEAL B Gunter v. Empire Pipeline Corp., 310 S.W.3d 19 (Tex. App.-Dallas 2009, pet. denied). c In re Empire Pipeline, 323 S.W.3d 308 (Tex. App.-Dallas 2010, no pet.). D TEXAS CIVIL PRACTICES AND REMEDIES CODE r,\379\ 1 \APPEhL PLEADTNGS\APPEND!X.wpd

40

41 CAUSE NO K H. GLENN GUNTER IN THE DISTRICT COURT Plaintiff, v. l92dd JUDICIAL DISTRICT EMPIRE PIPELINE CORPORATION, EMPIRE EXPLORATION L.P., and EMPIRE EXPLORATION CORPORATION, Defendants. DALLAS COUNTY, TEXAS ORIGINAL ORDER PERMITTING AGREED INTERLOCUTORY APPEAL On August 29, 20 II, the court considered the agreed application of Plaintiff and Defendants for interlocutory appeal under Section (d) of the TEXAS CIVIL PRACTICE AND REMEDIES CODE of the order of the 192nd Judicial District Court as follows: ORDER GRANTING EMPIRE PIPELINE CORPORATION, EMPIRE EXPLORATION, L.P. AND EMPIRE EXPLORATION CORPORATION'S MOTION AND SUPPLEMENTAL MOTION TO QUASH NOTICE OF DEPOSITION DUCES TECUM AND SUBPOENA TO JENNIFER KEEFE, ESQ. AND MOTION FOR PROTECTION. The Court finds that the foregoing order js not appealable under Section (a) of the TEXAS CIVIL PRACTICE AND REMEDIES CODE. The Court is of the opinion that the interlocutory order involves a controlling question of law as to which there is a substantial ground for difference of opinion, in that there is uncertainty whether Plaintiff may take the deposition of his prior counsel in connection with actions and statements of that previous counsel arising out of mediation, and elicit testimony concerning the statements, events, representations made, and understandings reached, at the mediation, based upon the conflict between the decision of the Fifth ORDER PERfllll TING AGREED INTERLOCIJTORY APPEAL Pagr I 216

42 Court of Appeals in Gunter v. Empire Pipeline Corp., 310 S. W.3d 19 (Tex.App.-Dallas 2009, pet. denied), with the decision in In re Empire Pipeline, 323 S.W.3d 308 (Tex.App.-Dallas 2010). In the first opinion rendered by the Fifth Court of Appeals, it would appear that discovery into issues surrounding the statements made at mediation would be proper for consideration; however, in the second opinion, the Fifth Court of Appeals stated that discovery into statements made in mediation would not be allowed. This Court is of the opinion that an immediate appeal from the order would materially advance the ultimate termination of the litigation in this case, because this Court will be required to rule on admissibility of testimony at trial concerning alleged statements and representations made, and understandings allegedly reached, during the course of the mediation, in order to provide the evidence for consideration by the fact finder of the defenses urged by Gunter to the enforceability of the alleged mediated settlement agreement. The testimony of Jennifer Keefe may be material to the question of the enforceability of the mediation settlement agreement. This Court cannot determine, due to the conflict between the two opinions ofthe Fifth Court of Appeals cited above, whether to admit or not admit such testimony at trial. As the parties have agreed to an order authorizing an interlocutory appeal, the court therefore orders an interlocutory appeal under Section (d) ofthe TEXAS CIVIL PRACTICE AND REMEDIES CODE as follows: WHETHER THE TRIAL COURT ERRED IN GRANTING THE MOTION TO QUASH AND MOTION FOR PROTECTION THEREBY PRECLUDING PLAINTIFF FROM CONDUCTING THE ORAL DEPOSITION OF JENNIFER KEEFE, ESQ. ORDER Pl:ll)IITII>';G AGREED ll'iterlocljtory APPEAL 217

43 Under Section (e) ofthe TEXAS CIVIL PRACTICE AND REMEDIES CODE, proceedings in the trial court are stayed pending resolution of the interlocutory appeal. SIGNED this t > day of_~...~...,;;;.;~_..,, ~~~l JUDGE PRESIDING M. Kevin Queenan, SB# Carson Hebert, SB# QUEENAN LAW FIRM, P.C. 731 Station Drive Arlington, Texas (817) (817) (FAX) ATTORNEYS FOR PLAINTIFF arris, SBN Shannon, Gracey, Ratliff & Miller, LLP Bank of America Plaza 901 Main Street, Suite 4600 Dallas, Texas (214) (214) (FAX) ATTORNEYS FOR DEFENDANTS ORDER PERMilTING AGREED INTERLOCUTORY APPEAL PngrJ 218

44 i "j J! It 1

45 Gunter v. Empire Pipeline Corp., 310 S.W.3d 19 (2009) Synopsis 310 S.W.3d 19 Court of Appeals oftexas, Dallas. H. Glenn GUNTER, Appellant, v. EMPIRE PIPEUNE CORPORATION, Empire Exploration, L.P., and Empire Exploration Corporation, Appellees. No. os-o8-oo824-cv. I July 24, Background: Plaintiff sued defendants for breach of contract. Following execution of mediated settlement agreement, plaintiff filed motion to invalidate settlement. The 192nd Judicial District Court, Dallas County, Greg Smith, J., signed order enforcing settlement, and plaintiff appealed. Holdings: The Court of Appeals, FitzGerald, J., held that: [1] once plaintiff withdrew consent to mediated settlement agreement, trial court was precluded from summarily granting defendant's motion to enforce agreement; [2] execution of mediated settlement agreement on plaintiffs breach of contract claims against defendant did not vitiate trial court's subject matter jurisdiction over plaintiffs claim after plaintiff withdrew consent to settlement; and [3] vacatur of order enforcing mediated settlement agreement in breach of contract claim despite plaintiffs withdrawal of consent to agreement did not, in essence, rescind settlement agreement. Reversed and remanded. [2] (3] [4) [5] Judgment ~ Requisites and sufficiency The trial court cannot render an agreed judgment after a party has withdrawn its consent to a settlement agreement. Compromise and Settlement ~.., Enforcement After consent to a settlement agreement has been withdrawn, a court may enforce agreement only as a written contract. Compromise and Settlement \? Enforcement The law does not recognize the existence of any special summary proceeding for the enforcement of a written settlement agreement, even one negotiated and executed in the context of a mediation, and thus, an action to enforce a settlement agreement, where consent is withdrawn, must be based on proper pleading and proof. 2 Cases that cite this headnote Compromise and Settlement ~ Enforcement If consent to a settlement agreement is withdrawn, the only method available for enforcing a settlement agreement is through summary judgment or trial. West Headnotes (8) [1] Compromise and Settlement ~ Enforcement Once plaintiff withdrew consent to mediated settlement agreement, trial court was precluded from summarily granting defendants' motion to enforce agreement; rather, appropriate remedy was for defendant to file complaint for breach of agreement. [6] Compromise and Settlement 4P Enforcement [7) Execution of mediated settlement agreement on plaintiffs breach of contract claim against defendants did not vitiate trial court's subject matter jurisdiction in action to enforce agreement after plaintiff withdrew consent to settlement. Compromise and Settlement ;,..,. Enforcement ' '. N=:~r 2012 Thomson Reuters. No claim to original U.S. Government Works.

46 Gunter v. Empire Pipeline Corp., 310 S.W.3d 19 (2009) (8] Vacatur of order enforcing mediated settlement agreement in breach of contract claim despite plaintiffs withdrawal of consent to agreement did not, in essence, rescind settlement agreement; rather, enforceability of settlement agreement had yet to be litigated, as neither party had amended pleadings to address enforceability of settlement agreement. Appeal and Error Cl'~ Exclusion of evidence Plaintiff did not waive any error in summary enforcement of mediated settlement agreement that was ordered despite plaintiffs withdrawal of consent to agreement based on plaintiffs alleged failure to make offer of proof of evidence he would have introduced, where plaintiff complained of entire procedure utilized by trial court and made such arguments clear at hearing on motion to vacate order enforcing settlement. Rules ofevid., Rule 103(a)(2); Rules App.Proc., Rule Attorneys and Law Firms *21 Emil Lippe, Jr., Law Offices of Lippe & Associates, Dallas, TX, for Appellant. Robert L. Harris, 1. Stephen Gibson, Shannon, Gracey, Ratliff & Miller, L.L.P., Dallas, TX, for Appellee. Before Justices FITZGERALD, LANG, and SMITH. 1 Opinion OPINION Opinion By Justice FITZGERALD. Appellant H. Glenn Gunter sued appellees Empire Pipeline Corporation, Empire Exploration, L.P., and Empire Exploration Corporation (collectively "Empire"). The parties signed a mediated settlement agreement, but Gunter later filed a motion to invalidate the settlement. Instead, the trial court signed an order enforcing the settlement and dismissing the lawsuit. We conclude that the trial court erred'by enforcing the settlement in the absence of proper pleadings, proceedings, and proof. We accordingly reverse and remand for further proceedings. I. BACKGROUND AND ISSUES ON APPEAL Gunter sued Empire, alleging breach of contract and other theories of recovery. The parties went to mediation after the case had been pending for almost two years, and they signed a document entitled "settlement agreement." About two months later, Gunter filed a motion to "vacate" the settlement agreement, contending that the agreement was invalid and unenforceable on grounds such as duress and fraud. A few days before the hearing, Gunter filed an amended motion to vacate the settlement agreement. Empire filed a response to the motion to vacate. Although Empire did not style this response as a cross-motion, it included in its prayer a request that the court "enter judgment enforcing the Settlement Agreement and Dismissal with Prejudice of all Plaintiffs Claims." The trial court held a nonevidentiary hearing at which the parties presented argument as to the proper procedure to be followed when a party seeks to avoid a settlement agreement. Gunter argued that Empire could not obtain judicial enforcement of the settlement agreement without pleading and proving its right to enforcement through the usual channels-trial or summary judgment. Empire argued that the court could enforce the agreement in a summary fashion if it concluded that the agreement was not ambiguous on its face. The court took the matter under advisement and later signed an order that both enforced the settlement agreement (by ordering Empire Pipeline Corporation to pay the consideration recited in the agreement) and dismissed Gunter's claims with prejudice. Gunter filed a motion for new trial, which the trial court heard and denied. Gunter presents five issues on appeal. In his first issue, he argues that the trial court erred by enforcing the settlement agreement without proper pleadings by Empire and without proper proof adduced through a trial or motion for summary judgment. In his other issues, he argues the merits of his position that the settlement agreement is unenforceable for various reasons. *22 II. ANALYSIS [1] [2] (3] [4] [5] The law in this area is well-settled. The trial court cannot render an agreed judgment after a party. '" ' ['Ji::\t 2012 Thomson Reuters. No claim to original U.S. Government Works. 2 CJ

47 Gunter v. Empire Pipeline Corp., 310 S.W.3d 19 (2009) has withdrawn its consent to a settlement agreement. Padilla v. LaFrance, 907 S.W.2d 454, (Tex.1995); Quintero v. Jim Walter Homes, Inc., 654 S.W.2d 442, 444 (Tex.l983); Crump v. Crump, No CV, 2005 WL , at * 1 (Tex.App.-Dallas Oct. 31, 2005, no pet.) (mem. op.). After consent has been withdrawn, a court may enforce a settlement agreement "only as a written contract." Mantas v. Fifth Court of Appeals, 925 S.W.2d 656, 658 (Tex.l996) (per curiam). The law does not recognize the existence of any special summary proceeding for the enforcement of a written settlement agreement, even one negotiated and executed in the context of a mediation. Cadle Co. v. Castle, 913 S.W.2d 627, 631 (Tex.App.-Dallas 1995, writ denied) (en bane). Thus, "(a ]n action to enforce a settlement agreement, where consent is withdrawn, must be based on proper pleading and proof." Padilla, 907 S.W.2d at 462. Proper notice and hearing are also required. See id. at 461. In short, if consent is withdrawn, "the only method available for enforcing a settlement agreement is through summary judgment or trial." Staley v. Herb/in, 188 S.W.3d 334, 336 (Tex.App.-Dallas 2006, pet. denied). Empire had no pleadings to support rendition of judgment on the settlement agreement. It included a prayer for enforcement of the agreement in its response to Gunter's motion to vacate, but that is not a sufficient pleading for these purposes. See Crump, 2005 WL , at * 1 ("Application for Approval of Agreement to Settle Estates" not a sufficient pleading); Cadle Co., 913 S.W.2d at ("Motion to Enforce Settlement Agreement" not a sufficient pleading); see also Rupert v. McCurdy, 141 S.W.3d 334, 339 (Tex.App.-Dallas 2004, no pet.) ("Pleadings are composed of petitions and answers."). Moreover, the summary procedure employed by the trial court deprived Gunter of the right to be confronted by appropriate pleadings, assert defenses, conduct discovery, and submit factual disputes to a fact finder. Staley, 188 S.W.3d at 337; Crump, 2005 WL , at *1. Cj In re B.L.A., No CV, 2008 WL , at *1 (Tex.App.-Dallas June 6, 2008, no pet.) (mem. op.) ("If parties do not adhere to summary judgment practice in cases such as this, the likely result will be uncertainty for the parties and trial courts and disparity in trial courts' consideration and treatment of individual cases."). We agree with Gunter that the trial court erred by rendering a judgment that essentially ordered specific performance of the settlement agreement without proper pleadings, proceedings, and proof. Empire argues that Cadle, Crump, and other cases cited by Gunter are distinguishable. According to Empire, the settlements in those cases were subject to unfulfilled conditions precedent, so the parties could withdraw their consent before the agreements were consummated. Empire further argues that Gunter could not withdraw his consent to the settlement agreement because he "consummated (that agreement] unconditionally." We disagree with Empire's interpretation of the cases, and we conclude that Cadle and Crump are controlling. In both cases, one party contended that a settlement was an enforceable agreement, the other party notified the court that it no longer consented to the settlement, and we held that the trial court could not summarily enforce the agreement without proper pleadings, proceedings, and proof. Crump, 2005 WL , at *1; Cadle, 913 S.W.2d at That is precisely the situation presented *23 m this case. Just as in Cadle and Crump, we must reverse. [6] Empire contends that the execution of the settlement agreement destroyed the trial court's subject-matter jurisdiction by eliminating the "case or controversy" between it and Gunter. We disagree. Empire cites no authority to support the proposition that a contested settlement agreement can moot a lawsuit and destroy subject-matter jurisdiction under circumstances like those presented in this case. We conclude that the record in this case discloses no defect in the trial court's subject-matter jurisdiction. [7] Empire argues that a ruling in Gunter's favor would effectively grant him rescission of the agreement even though he did not plead sufficient grounds for such relief. We express no opinion as to the legal merit of any of Gunter's grounds for invalidating the settlement agreement, and we are not rendering judgment of rescission in his favor. The validity of the settlement agreement has yet to be properly tested, because neither side amended its pleadings to reckon with the settlement agreement and no trial or equivalent proceeding has been held. Gunter's filing of the motion to vacate meant only that a consent judgment could not be rendered and that the validity of the agreement had to be litigated according to the usual procedures. See Staley, 188 S.W.3d at 336 ("Where fact issues are raised or consent has been withdrawn, the only method available for enforcing a settlement agreement is through summary judgment or trial."). As further discussed below, the merits of Gunter's grounds for invalidating the settlement agreement are not properly before us. [8] Finally, Empire argues that Gunter waived error by failing to make an offer of proof of the evidence he would have introduced if the trial court had conducted an evidentiary hearing. See TEX.R. EVID. 103(a)(2). We disagree. The error asserted by Gunter is not merely the erroneous exclusion of evidence. Gunter complains of the N::>:t 2012 Thomson Reuters. No claim to original U.S. Government Works. 3 10

48 Gunter v. Empire Pipeline Corp., 310 S.W.3d 19 (2009) entire procedure employed by the trial court-the rendition of judgment enforcing the settlement agreement without supporting pleadings, evidence, or an appropriate proceeding such as a trial or summary judgment. Gunter made this complaint clear at the hearing on his motion to vacate. The trial court implicitly rejected Gunter's argument by rendering the judgment enforcing the settlement agreement. Gunter adequately preserved error. See generally TEX.R.APP. P We sustain Gunter's first issue on appeal. In his remaining issues, Gunter contends that the trial court erred by enforcing the settlement agreement for a variety of substantive reasons. Moreover, Gunter prays for us to reverse the judgment and to render judgment vacating the settlement agreement, arguing in essence that he conclusively established his defenses to the enforceability of the agreement. We need not address Gunter's other issues. Gunter did not amend his pleadings in the trial court to attack the validity of the settlement agreement, nor were his defenses to the agreement's enforceability properly adjudicated by summary judgment or trial. His merits arguments and his request for rendition of judgment are therefore premature. See Pollard v. Merkel, No CV, 1999 WL 72209, at *3 n. 5 (Tex.App.-Dallas Feb. 12, 1999, no pet.) (not designated for publication) (refusing to address legal-sufficiency points on similar facts because no "trial" had been held). III. DISPOSITION For the foregoing reasons, we reverse the trial court's judgment and remand this *24 case for further proceedings consistent with this opinion. Footnotes 1 The Honorable Bea Ann Smith, Justice, Court of Appeals, Third District of Texas at Austin, Retired, sitting by assignment. End of Document 2012 Thomson Reuters. No claim to original U.S. Government Works. ;:j,, Ne;.;t 2012 Thomson Reuters. No claim to original U.S. Government Works. 4 \\

49 \'2..,

50 In re Empire Pipeline Corp., 323 S.W.3d 308 (2010) Editor's Note: Additions are indicated by Text and deletions by =fex-t. Synopsis Court of Appeals oftexas, Dallas. In re EMPIRE PIPELINE CORPORATION; Empire Exploration, L.P.; & Empire Exploration Corporation, Relators. No CV. I Sept. 15, I Rehearing Overruled Oct Background: Claimant filed suit against oil and gas exploration companies, asserting breach of contract relating to oil and gas exploration and other theories of recovery. Following mediation, parties signed settlement agreement. Thereafter, claimant sought to vacate the agreement, alleging it was invalid and unenforceable. Companies requested entry of judgment enforcing settlement agreement and dismissal with prejudice of all claims against them, which was granted. Court of Appeals reversed trial court's judgment, and remanded for further proceedings. On remand, claimant sought discovery relating to parties' mediation, to which companies objected. Claimant filed motion to compel discovery. The 192nd District Court, Dallas County, Craig Smith, J., granted, in part, motion to compel. Companies filed petition for writ of mandamus. Holdings: The Court of Appeals, Lang, J., held that: [1] discovery sought by plaintiff was barred by alternative dispute resolution (ADR) privilege, and [2] companies had no adequate remedy by appeal. Petition conditionally granted. West Headnotes (4) [1] Mandamus ~ Remedy by Appeal or Writ of Error Mandamus ~~ Nature of acts to be commanded [2) (3) Mandamus will issue if the relator establishes a clear abuse of discretion for which there is no adequate remedy by appeal. Privileged Communications and Confidentiality ""' Settlement negotiation privilege; mediation and arbitration Discovery by plaintiff of depositions of defendants' representatives who were present at mediation held by parties in underlying breach of contract case in which parties entered into settlement agreement and production by defendants of notes or drafts of documents given to mediator or plaintiff in connection with mediation was barred by alternative dispute resolution (ADR) privilege, in action by defendants to enforce settlement agreement, in which plaintiff asserted affirmative defenses and matters in avoidance of agreement. V.T.C.A., Civil Practice & Remedies Code (a-b). Mandamus.- Modification or vacation of judgment or order Mandamus... Proceedings in civil actions in general Defendants who had entered into settlement agreement with plaintiff in underlying breach of contract action following mediation were entitled to mandamus relief with respect to trial court's abuse of discretion in issuing order compelling depositions of defendants' representatives who were present at mediation and production by defendants of notes or drafts of documents given to mediator or plaintiff in connection with mediation, all of which discovery was barred by alternative dispute resolution (ADR) privilege, as defendants' rights would be materially affected by disclosure of confidential information at issue, such that defendants had no adequate remedy by appeal. V.T.C.A., Civil Practice & Remedies Code (a-b). [4) Equity, N~;~ t 2012 Thomson Reuters. No claim to original U.S. Government Works. 13

51 In re Empire Pipeline Corp., 323 S.W.3d 308 (2010) y--- Nature of unconscionable conduct Alleged instances of defendants' disregard of Court of Appeals decision on appeal of underlying breach of contract case in which parties reached settlement agreement following mediation did not constitute unclean hands, such as would warrant denial of mandamus relief to defendants for trial court's abuse of discretion in issuing order compelling depositions of defendants' representatives who were present at mediation and production by defendants of notes or drafts of documents given to mediator or plaintiff in connection with mediation. Attorneys and Law Firms *309 Rob"<rt L. Harris, Roger E. Beecham and Kevin Haynes C., Shannon, Gracey, Ratliff, & Miller, LLP, Dallas, TX, for Relators. Emil Lippe, Jr., Lippe & Associates, Dallas, TX, for Real Party in Interest. Before Justices MOSELEY, LANG, and MYERS. Opinion Opinion By Justice LANG. OPINION In this mandamus proceeding, relators Empire Pipeline Corporation; Empire Exploration, L.P.; and Empire Exploration Corporation (collectively, "Relators") seek relief from the trial court's order granting, in part, a motion by real party in interest H. Glenn Gunter to compel discovery relating to a mediation. Because we conclude the trial court abused its discretion and relators have no adequate remedy by appeal, we conditionally grant the writ of mandamus. I. FACTUAL AND PROCEDURAL BACKGROUND Gunter sued Relators in February 2006, alleging breach of a contract relating to oil and gas exploration and other theories of recovery (the "original underlying action"). At a December 2007 mediation, the parties signed a document entitled "settlement agreement" (the "agreement"). Among those present at the mediation was Relators' "attorney-incharge," Robert L. Harris. Approximately two months later, Gunter moved to "vacate" the agreement, alleging it was invalid and unenforceable on several grounds, including duress and fraud. Relators filed a "response" to Gunter's motion to vacate in which they included a prayer requesting that the trial court "enter judgment enforcing the Settlement Agreement and Dismissal with Prejudice of all Plaintiff's Claims." Following a nonevidentiary hearing, the trial judge signed a March 25, 2008 order that both enforced the agreement and dismissed Gunter's claims with prejudice. Gunter appealed in this Court. While that appeal was pending, Gunter filed a separate suit in the trial court in which he asserted a declaratory judgment action against Relators (the "declaratory action"). In that declaratory action, Gunter sought, in part, "a declaration of and from [the trial court] that the alleged performance tendered by [Relators]... has failed to comply with the terms of either the alleged Settlement Agreement or the underlying Judgment dated March 25, 2008." On July 24, 2009, this Court reversed the trial court's judgment in the original underlying action and remanded that case to the trial court for further proceedings. *310 Specifically, this Court concluded "the trial court erred by rendering a judgment that essentially ordered specific performance of the settlement agreement without proper pleadings, proceedings, and proof." On March 5, 2010, Gunter served upon Relators' counsel a "Notice of Deposition Duces Tecum of Robert L. Harris" (the "notice of deposition") in both the original underlying action and the declaratory action. That notice stated Harris's deposition would be taken "for use as evidence in this cause" and requested Harris to produce (1) all documents in the nature of notes and drafts from the mediation in this case held on or about December 12-13, 2007; (2) any form overriding royalty agreements or assignments to which he has access or which he utilizes or has utilized; and (3) all drafts or final versions of overriding royalty agreements or assignments relating to Relators. On March 10, 2010, Relators filed an amended motion to quash the notice of deposition and for a protective order. Relators asserted, inter alia, "mediation privilege," attorney-client privilege, and attorney work-product privilege. Additionally, Relators argued generally that Gunter's deposition and document requests in the notice of deposition fell outside the scope of proper discovery Nt:; <t 2012 Thomson Reuters. No claim to original U.S. Government Works. 2

52 In re Empire Pipeline Corp., 323 S.W.3d 308 (2010) Gunter filed an April 20, 2010 motion to compel discovery (the "motion to compel") 1 in which he sought to compel Harris's deposition and production of the documents identified in the notice of deposition. The specific scope of discovery sought by Gunter is described by him in the motion to compel as follows: Here, the scope of the documents sought indicates the subject matter on which Robert Harris is to be deposed: discussions and negotiations with opposing parties, including the mediator and Plaintiff and his counsel, in connection with the alleged settlement agreement sought to be enforced by Defendants. Plaintiff is not seeking the work product of counsel, nor his trial strategy, but rather information going to the very heart of the issue: was an agreement actually reached at the mediation, and, if so, what were its terms? Relators filed a response to that motion in which they asserted, inter alia, essentially the same arguments asserted in their motion to quash and for protective order. In response to Relators' counterclaim seeking specific performance of the agreement, Gunter filed an answer that was served upon counsel of record on July 2, In that answer, Gunter asserted "affirmative defenses and matters in avoidance" respecting the agreement that included, inter alia, (1) withdrawal of consent, (2) duress and coercion, (3) mistake, (4) no meeting of the minds, (5) no agreement on essential terms, (6) material breach, (7) fraudulent inducement, and (8) breach of fiduciary duty. Following a hearing on Gunter's motion to compel, the trial court signed a July 9, 2010 order that granted, in part, and denied, in part, the motion to compel. That order stated, in relevant part: IT IS THEREFORE ORDERED, ADJUDGED, AND DECREED that Plaintiffs Motion to Compel Discovery be and it hereby is GRANTED in part and DENIED in part. Plaintiff shall be allowed to take the depositions of Robert L. Harris, and any other representatives of Defendants who were present at the mediation in this case held in December 12-13, 2007, provided, however, that no inquiry may be made concerning: (1) communications between counsel *311 and client representatives of Defendants, or (2) trial preparation materials, work product, opinions of counsel, trial strategy, or the mental processes of counsel for Defendants, unless such matters were communicated to the mediator or to Plaintiff or his representatives. Defendants are also ORDERED to produce any notes or drafts of documents given or eomrnunieated to the mediator or Plaintiff or his representatives, in connection with the mediation or the preparation of documents relating to the alleged mediated settlement agreement. In all other respects, the Motion to Compel is DENIED. 2 (emphasis original). On that same date, the declaratory judgment action was consolidated with the original underlying action. This mandamus proceeding followed. II. RELATORS' REQUEST FOR RELIEF Relators contend that because the trial court abused its discretion in ordering Harris to submit to a deposition and produce documents and no adequate remedy by appeal exists, this Court should grant Relators' petition for writ of mandamus and vacate the trial court's July 9, 2010 order. Relators assert the testimony and documents the trial court order produced "are protected under (1) the ADR privilege, (2) the work product privilege, (3) the attorneyclient privilege, and are (4) generally beyond the permissible scope of discovery." Gunter argues confidentiality of mediation proceedings "is not absolute" and does not apply here. Further, according to Gunter, "[t]here is no good faith issue concerning the work product or attorney-client privilege presented by this mandamus proceeding" because his counsel has "expressly stated that no such discovery is sought" and the trial court has "emphatically stated that such will not be allowed." Additionally, Gunter asserts (1) "[t]he narrow inquiry permitted by the trial court's order is the necessary result of Cadle v. Castle "; (2) "prejudgment of the material issues, as sought by [Relators], is improper"; and (3) "[m]andamus should be denied because Relators have unclean hands." A. Applicable Law [11 Mandamus will issue if the relator establishes a clear abuse of discretion for which there is no adequate remedy ;. ' ' NE-d 2012 Thomson Reuters. No claim to original U.S. Government Works. 3 \6

53 In re Empire Pipeline Corp., 323 S.W.3d 308 (2010) by appeal. In re Odyssey Healthcare, Inc., 310 S.W.3d 419, 422 (Tex.2010) (orig. proceeding); In re Deere & Co., 299 S.W.3d 819, 820 (Tex.2009) (orig. proceeding). A trial court abuses its discretion if it reaches a decision so arbitrary and unreasonable as to amount to a clear and prejudicial error of law or if it clearly fails to correctly analyze or apply the law. In re Cerberus Capital Mgmt., L.P., 164 S.W.3d 379, 382 (Tex.2005) (orig. proceeding); In re Tex. Am. Express, Inc., 190 S.W.3d 720, 723 (Tex.App.-Dallas 2005, orig. proceeding). A trial court has no discretion in determining what the law is or applying the law to the facts. Walker v. Packer, 827 S.W.2d 833, 840 (Tex.1992) (orig. proceeding). Thus a clear failure by the trial court to analyze or apply the law correctly will constitute an abuse of discretion, and may result in appellate reversal by extraordinary writ.!d.; see also In re Tex. Am. Express, 190 S.W.3d at 724. "[T]he adequacy of an appeal depends on the facts involved in each case." *312 In re McAllen Med. Ctr., Inc., 275 S.W.3d 458, 468 (Tex.2008) (original proceeding); see also In re Prudential Ins. Co. of Am., 148 S.W.3d 124, 136 (Tex.2004) ( orig. proceeding). Where disclosure of privileged information would materially affect the aggrieved party's rights, an appeal has been held to be inadequate. See In re McAllen Med. Ctr., Inc., 275 S.W.3d at 468. B. Analysis 1. Confidentiality of Mediation Proceedings We begin with Relator's contention that the testimony and documents sought by Gunter are protected by "the ADR privilege." Chapter 154 of the Texas Civil Practice and Remedies Code addresses "Alternative Dispute Resolution Procedures." See TEX. CIV. PRAC. & REM.CODE ANN (West2005 & Supp. 2010). Section of that chapter provides, in relevant part, as follows: Confidentiality of Certain Records and Communications (a) Except as provided by [other subsections], a communication relating to the subject matter of any civil or criminal dispute made by a participant in an alternative dispute resolution procedure, whether before or after the institution of formal judicial proceedings, is confidential, is not subject to disclosure, and may not be used as evidence against the participant in any judicial or administrative proceeding. (b) Any record made at an alternative dispute resolution procedure is confidential, and the participants or the third party facilitating the procedure may not be required to testify in any proceedings relating to or arising out of the matter in dispute or be subject to process requiring disclosure of confidential information or data relating to or arising out of the matter in dispute. (c) An oral communication or written material used in or made a part of an alternative dispute resolution procedure is admissible or discoverable if it is admissible or discoverable independent of the procedure. (e) If this section conflicts with other legal requirements for disclosure of communications, records, or materials, the issue of confidentiality may be presented to the court having jurisdiction of the proceedings to determine, in camera, whether the facts, circumstances, and context of the communications or materials sought to be disclosed warrant a protective order of the court or whether the communications or materials are subject to disclosure.!d Further, "[u]nless the parties agree otherwise, all matters, including the conduct and demeanor of the parties and their counsel during the settlement process, are confidential and may never be disclosed to anyone, including the appointing court."!d (c); see also Allison v. Fire Ins. Exch., 98 S.W.3d 227, 259 (Tex.App.-Austin 2002, pet. granted, judgm't vacated w.r.m.) ("a 'cloak of confidentiality' surrounds mediation, and the cloak should be breached only sparingly"). Gunter contends "[t]he confidentiality of mediation proceedings is not absolute, as numerous decisions of this Court have established." In support of that contention, Gunter cites Avary v. Bank of America, 72 S.W.3d 779 (Tex.App. Dallas 2002, pet. denied), and two additional cases Gunter asserts "underscore the continuing validity of A vary," Knapp v. Wilson N Jones Memorial Hospital, 281 S.W.3d 163 (Tex.App.-Dallas 2009, no pet.), and Alford v. Bryant, 137 S.W.3d 916 (Tex.App.-Dallas 2004, pet. denied). Avary involved a settlement agreement reached during the course of court-ordered *313 mediation of a wrongful death claim. Avary, 72 S.W.3d at After conclusion of the wrongful death lawsuit, Rhonda Avary, the guardian of the estates of the decedent's minor children, sued Bank of America, N.A., executor of the decedent's estate, for breach : '. Next 2012 Thomson Reuters. No claim to original U.S. Government Works. 4 \lp

54 In re Empire Pipeline Corp., 323 S.W.3d 308 (2010) of fiduciary duty, negligence, fraud, and conspiracy based on the bank's alleged rejection of a $450,000 settlement offer and acceptance of a smaller allocation. Id. The bank moved for summary judgment on the ground that A vary had no evidence to support her claims because all communications made at the mediation were confidential under section I d. at 784. After permitting limited discovery, the trial judge granted the bank's motion for summary judgment. I d. On appeal, A vary complained in part that the trial judge abused his discretion by prohibiting certain discovery relating to the mediation session. Id. This Court reversed the trial court's judgment and remanded the case for further proceedings. Id. First, this Court concluded the bank's fiduciary obligations constituted a "legal requirement for disclosure" pursuant to section (e) and that requirement conflicted with the confidentiality provisions of section Id. at 796. Thus, this Court reasoned, an analysis pursuant to section (e) was required to determine whether, in light of the "facts, circumstances, and context," disclosure of the confidential communications was warranted. Id. Next, this Court observed that the parties to the original litigation had resolved their dispute "as the ADR statute contemplates," and Avary was not proposing "to use mediation communications to establish any liability on [defendants'] part" after they had resolved their dispute. Id. at 798. Rather, this Court stated, A vary was seeking to prove a "new and independent tort" that allegedly occurred during the course of the mediation proceeding and involved "breach of a duty to disclose" by her fiduciary, the bank. Id. at 800. As this Court observed, the evidence sought by A vary was to be offered "in a separate case against a separate party to prove a claim that is factually and legally unrelated to the wrongful death and survival claims" that were the subject of the mediation. Id. at 798. This Court stated "[s]ignificant substantive and procedural rights of A vary's are implicated, including the opportunity to develop evidence of her claim and to submit contested fact issue to a judge or jury." Id. at 800. Further, this Court stated, in pursuing that claim, A vary would not disturb the settlement with the defendants. Id. In a holding this Court specified was "limited to the facts before us," this Court stated, "We conclude only that where a claim is based upon a new and independent tort committed in the course of the mediation proceedings, and that tort encompasses a duty to disclose, section does not bar discovery of the claim where the trial judge finds in light of the "facts, circumstances, and context," disclosure is warranted." Id. at 803. We disagree with Gunter that "[t]his Court's discussion and holding in Avary... provides a roadmap for resolution of the issue presented by the mandamus application here." Avary involved a claim based on a "new and independent tort," the pursuit of which would not disturb the settlement reached at the mediation proceeding as to which discovery was sought. Id. at 800. The evidence sought was to be offered "in a separate case against a separate party to prove a claim that is factually and legally unrelated to the wrongful death and survival claims" that were the subject of the mediation. Id. at 798. Here, Gunter has asserted "affirmative defenses and matters in avoidance" in an action by Relators to enforce the agreement. Gunter cites no authority, and we *314 have found none, for his assertion that the narrow holding of Avary applies when defending an action, like this one, to enforce a settlement reached in the mediation proceeding as to which discovery is sought. Accordingly, we conclude A vary is inapplicable here. See id. at (conclusion of Avary limited to facts before this Court). Likewise, neither Knapp nor Alford involved defense of an action to enforce a settlement reached in the mediation proceeding as to which discovery was sought. See Knapp, 281 S.W.3d at 175 (piercing confidentiality of mediation proceeding in suit by former employee against his former employer for denial of severance pay to allow discovery as to prior arbitration between employer and its auditor regarding reasons for denial of severance pay); Alford, 137 S.W.3d at 922 (piercing confidentiality of mediation proceeding in suit between party to mediation and that party's attorney at mediation, where party alleged attorney committed malpractice during mediation by failing to disclose risks and/ or benefits of settlement). Therefore, we conclude those cases are inapposite. Additionally, Gunter contends the granting of the relief requested by Relators would "emasculate the holding of Cadle Co. v. Castle," 913 S.W.2d 627 (Tex.App.-Dallas 1995, writ denied). According to Gunter, in Cadle, "this Court held that proceedings for enforcement of a settlement agreement require proper pleading and proof and that the matter would be treated as any contract dispute." Cadle involved the interpretation of section (b) ofthe Texas Civil Practice and Remedies Code, which gives a trial judge the discretion to incorporate specific terms of a written settlement agreement in the trial court's final judgment. Id. at 631. This Court stated in Cadle, "We do not believe the legislature intended section (b) to be used to enter a judgment on the merits of a cause of action without a party f'je:.;t 2012 Thomson Reuters. No claim to original U.S. Government Works. 5 \1