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Applying Texas state law, a federal court in Texas held that amending an underlying complaint to allege breach of contract is the appropriate procedure for seeking specific performance of a mediated settlement agreement.
In Export Worldwide, Ltd. v. Knight, No. SA-05-CA-647-XR, 2007 WL 628746 (W.D. Tex. Feb. 27, 2007), Export and Knight participated in mediation to resolve disputes regarding Knight's default on payments of a loan from Export. The mediation resulted in a settlement agreement whereby Export would waive all underlying claims in exchange for payment from Knight.
Knight failed to comply with the terms of the settlement agreement, and Export filed a motion to amend its underlying complaint. In the amended complaint, Export claimed breach of the mediated settlement agreement and sought specific performance of the agreement.
The Court held that Export properly sought enforcement of the settlement agreement by filing an amended complaint alleging breach of contract. Export did not breach the settlement agreement by pursuing the claim in court because Export's waiver of its claims against Knight was a promise conditioned on Knight performing his obligations under the settlement agreement.
Additionally, the mediated settlement agreement satisfied all of the requirements of Rule 11 of the Texas Rules of Civil Procedure because the agreement was in writing and signed by authorized representatives of both parties.
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