M-I L.L.C. v. Texas International Terminals, Ltd.

Opinion issued April 23, 2026




                                     In The

                              Court of Appeals
                                     For The

                          First District of Texas
                           ————————————
                              NO. 01-24-00608-CV
                           ———————————
                             M-I L.L.C., Appellant

                                        v.

                 Texas International Terminals, Ltd., Appellee


                     On Appeal from 122nd District Court
                          Galveston County, Texas
                           Cause No. 21-CV-0311


                         MEMORANDUM OPINION

      This appeal arises from a settlement agreement dispute between Texas

International Terminals, Ltd. (“TXIT”) and M-I L.L.C. (“M-I”). The trial court

granted summary judgment against M-I and concluded that M-I breached the parties’

settlement agreement. The trial court declared that certain language be included in
the previously executed settlement agreement and ordered that the amended

agreement be executed within seven days of its order.

      In three issues, M-I contends that the trial court erred by (1) requiring M-I to

enter into a new settlement agreement including terms not previously agreed to by

the parties; (2) adding to and deleting terms from the parties’ prior agreements; and

(3) alternatively, miscalculating the amount of the annual payment owed by M-I.

      We reverse and remand.

                                     Background

      M-I entered into a Materials Handling Agreement (“MHA”) with Galveston

Bulk Terminals L.P., and Galveston Bulk Terminals assigned its rights and benefits

under the MHA to TXIT. Under the MHA, TXIT provided stevedoring and

transportation services to M-I, including receiving and unloading M-I’s products

from vessels, transporting, and stockpiling that product. In return, M-I agreed to pay

for and use TXIT’s services for a minimum annual tonnage at a rate that was initially

fixed but could be adjusted by the parties after the initial three years.

      Following years of litigation, the parties entered into a settlement agreement

that included the following provisions:

      1.     Payment of the Lease on a monthly basis in accordance with its
             terms but all possessory rights will be terminated effective
             October 30, 2023. [TXIT] and the Intervenors SULTEX, Ltd.
             (“SULTEX”) and 5700 PIB, LLC (“PIB”) will acknowledge that
             land and improvements will be returned as is, where is;

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      2.     A stipulation that the balance due under the Lease is $1,671,296;

      3.     Payment by [M-I] of the regular, annual payments under the
             MHA for 2024 and 2025, and a ½ payment in 2026, and a single
             payment within 45 days in the amount of $5,000,000 for the
             damages to the bulkhead, fendering expenses, attorney’s fees,
             interest, storage at PIB and all other sums claimed in the above-
             captioned Lawsuit;

      4.     Mutual, global releases of all claims asserted in the Lawsuit or
             not, along with a dismissal with prejudice. The settlement
             documents will be prepared in a form mutually acceptable to
             counsel for the M-I, TXIT, SULTEX, and PIB (the “settling
             parties”).

      TXIT moved for summary judgment seeking a declaration that (1) the

“regular, annual payments under the MHA for 2024 and 2025, and a 1/2 payment

for 2026” under the settlement agreement’s third provision included price

adjustments tied to the consumer price index (“CPI”) based on the parties’ course of

dealing; and (2) M-I remove its equipment from the TXIT’s premises on TXIT’s

request. TXIT presented an affidavit by its president as evidence of the parties’

course of dealing under the MHA and to support its position that M-I must remove

its equipment according to the parties’ sub-lease agreement, despite the settlement

agreement’s “as is” provision. M-I objected to the affidavit and sought to enforce

the settlement agreement, contending (1) the “regular, annual payments under the

MHA” did not include the CPI price adjustment because the MHA did not provide

for it; and (2) the settlement agreement gave M-I the right to return the premises to

TXIT in its then-existing condition, which M-I had done.
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      The trial court granted TXIT’s summary judgment motion and concluded M-I

breached the settlement agreement. The trial court ordered that the following

language be included in the settlement agreement and that M-I execute the

agreement within seven days:

      1.    M-I shall make the required payments of “regular, annual
            payments” under the MHA as follows:

            •     On May 1, 2024, the amount of $2,540,000 or as otherwise
                  CPI adjusted in accordance with the methodology
                  established by the prior course of dealing prior to the
                  Effective Date;
            •     On May 1, 2025, the amount of $2,540,000 or as otherwise
                  CPI adjusted in accordance with the methodology
                  established by the prior course of dealing prior to the
                  Effective Date;
            •     On May 1, 2026, the amount of $1,270,000 or as otherwise
                  CPI adjusted in accordance with the methodology
                  established by the prior course of dealing prior to the
                  Effective Date.

      2.    The M-I equipment that appears in the image below shall be
            removed, if [TXIT] requests the removal, and such equipment
            shall be removed within 180 days of termination of the Sub Lease
            Agreement. [TXIT] may only request the removal of the
            following items and none other:




                                        4
The trial court further ordered that its declaratory ruling was enforceable by

contempt if the agreement was not timely completed and signed.

      M-I moved to modify the judgment and for new trial and requested rulings on

its objections to summary judgment evidence and its motion to enforce the

settlement agreement. The trial court overruled M-I’s objections and denied all M-I’s

motions.

                               Standard of Review

      We review the trial court’s summary judgment under a de novo standard of

review. Provident Life & Accident Ins. Co. v. Knott, 128 S.W.3d 211, 215 (Tex.

2003). In doing so, we take as true all evidence favorable to the nonmovant and make

every reasonable inference and resolve any doubts in the nonmovant’s favor. Id.




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      The construction of an unambiguous contract is a question of law, which we

review de novo. Kachina Pipeline Co., Inc. v. Lillis, 471 S.W.3d 445, 449 (Tex.

2015). Additionally, whether a contract is ambiguous is itself a question of law. Id.

                   Interpretation of the Settlement Agreement

      Because the trial court’s interpretation of the settlement agreement informs its

enforcement of the same, we address M-I’s interpretation issue first. M-I contends

that the trial court rewrote the parties’ settlement agreement instead of interpreting

it and improperly relied on extrinsic evidence. TXIT responds that the trial court

properly relied on TXIT’s extrinsic evidence of the parties’ course of dealing in

interpreting and enforcing the “regular, annual payments under the MHA” of the

settlement agreement. TXIT further responds that M-I’s complaint regarding the trial

court’s order to remove certain equipment was moot, but in any event, the order

complied with the land lease and common practice.

      “Under Texas law, we interpret settlement agreements like other contracts.”

Sandt v. Energy Maint. Servs. Grp. I, LLC, 534 S.W.3d 626, 642 (Tex. App.—

Houston [1st Dist.] 2017, pet. denied). “In construing a contract, we must ascertain

and give effect to the parties’ intentions as expressed in the document.” Frost Nat’l

Bank v. L & F Distribs., Ltd., 165 S.W.3d 310, 312 (Tex. 2005). “When a contract

is worded such that it has a certain and definite legal meaning, it is unambiguous.”

Transcont’l Gas Pipeline Corp. v. Texaco, Inc., 35 S.W.3d 658, 665 (Tex. App.—

                                          6
Houston [1st Dist.] 2000, pet. denied). “Only if a contract is subject to more than

one reasonable interpretation can it be ambiguous.” Id. The parties’ conflicting

interpretations do not make an otherwise straightforward contract ambiguous. Id.

“When the meaning of the contract is plain and unambiguous, a party’s construction

is immaterial.” Id. at 666.

      We interpret unambiguous contracts by their express terms and enforce

unambiguous contracts as written. David J. Sacks, P.C. v. Haden, 266 S.W.3d 447,

450 (Tex. 2008); Lyons v. Ortego, No. 01-17-00092-CV, 2018 WL 4014218, at *2

(Tex. App.—Houston [1st Dist.] Aug. 23, 2018, pet. denied). But we may examine

the contract as a whole and the circumstances surrounding the contract’s

formulation. Texaco, 35 S.W.3d at 665.

      We agree with the parties and the trial court that the express language of the

settlement agreement is unambiguous. When a contract is unambiguous, a court may

not consider extrinsic evidence, including evidence of the parties’ course of dealing.

Haden, 266 S.W.3d at 451; Frost Nat’l Bank, 165 S.W.3d at 313 n.3.

      Although surrounding circumstances may objectively inform a contract’s text,

a party cannot use extrinsic evidence to give the contract a meaning different from

the one its language clearly supports; add to, contradict, or alter the contract’s terms;

make the language say what it clearly does not say; or show that the parties probably




                                           7
meant, or could have meant, something other than what their contract stated. URI,

Inc. v. Kleberg Cnty., 543 S.W.3d 755, 769 (Tex. 2018).

      In the settlement agreement, the parties agreed that M-I would pay the

“regular, annual payments under the MHA for 2024 and 2025, and a 1/2 payment in

2026 . . . .” The only reasonable interpretation of “regular, annual payments under

the MHA” is that the M-I’s regular, annual payments comply with the terms of the

MHA. Because the MHA unambiguously explains that the rate can be adjusted

annually upon mutual written agreement, the parties must have a mutual written

agreement to modify the rate. The MHA also states that if the parties fail to agree,

the prevailing rate from the previous year carries forward to the next year until an

agreement is reached.

      TXIT claims that “regular, annual payments under the MHA” also

incorporates the parties’ course of dealing. TXIT relies on its president’s affidavit

explaining that the parties had a regular course of dealing in which they used the CPI

as the adjustment factor to annually calculate the rate for the MHA payment and

proof of such a CPI adjustment in the 2023 MHA payment. Although M-I expressly

refused CPI’s proposed language, the trial court used CPI’s proposed language and

ordered M-I to pay for 2024 and 2025: $2,540,000 each year or as otherwise CPI

adjusted according to the parties’ prior course of dealing, and for 2026: $1,270,000

or as otherwise CPI adjusted according to the parties’ prior course of dealing.

                                          8
      The trial court impermissibly relied on TXIT’s extrinsic, course of dealing

evidence to construe the unambiguous language in the parties’ settlement agreement

and add terms that contradicted its plain language. See Maxey v. Maxey, 617 S.W.3d

207, 225 (Tex. App.—Houston [1st Dist.] 2020, no pet.). Courts do not have the

authority to rewrite contracts to insert provisions that the parties could have included

but did not, and that are not essential to the construction of the contract’s language.

Id.

      Because the settlement agreement’s express terms are clear and support M-I’s

interpretation, we do not consider TXIT’s course of dealing evidence. See URI, Inc.,

543 S.W.3d at 769; Frost Nat’l Bank, 165 S.W.3d at 313 n.3. If there is no mutual

written agreement, as M-I asserts, then the 2024 MHA payment would include the

prevailing rate from the previous year, and so on. Absent a written agreement to

modify the rate, the payments due under the MHA for 2024 and 2025 are each

$2,314,000, and the payment for 2026 is $1,157,000.

      The parties also agreed in the settlement agreement that “land and

improvements will be returned as is, where is.” The only reasonable interpretation

of “as is, where is” is that M-I, as tenant, may leave the property in its current

condition without removing anything. It effectively shifts the risk concerning the

condition of the property at its existing site and any resulting loss. See Prudential

Ins. Co. of Am. v. Jefferson Assocs., Ltd., 896 S.W.2d 156, 161 (Tex. 1995).

                                           9
      TXIT contends that M-I’s equipment subject to removal according to the trial

court’s order is neither “land” nor “improvements” and describes M-I’s equipment

as both “fixtures” and “personal property.” Although TXIT relies on the sub-lease,

its express terms confirm M-I was never responsible for removing its fixtures or

personal property. Under the sub-lease, only alterations and improvements must be

removed if requested by TXIT, but M-I “can remove any personal property, fixtures

or temporary alterations to the land.” Accordingly, whether M-I’s pieces of

equipment are improvements, fixtures, or personal property, the parties’ written

contracts allow M-I to leave them on the property. Thus, by requiring M-I to remove

32 pieces of equipment from the property on TXIT’s request, the trial court

disregarded “the fundamental principle that courts cannot rewrite the parties’

contract or add to or subtract from its language.” Fischer v. CTMI, L.L.C., 479

S.W.3d 231, 242 (Tex. 2016).

      TXIT argues that M-I’s appeal of the trial court’s removal obligation is moot

because M-I agreed to transfer $400,000 to TXIT to be fully discharged and released

from its removal obligations under the trial court’s order. However, M-I represented

to TXIT that such settlement and payment of $400,000 “will not constitute a waiver

of any [p]arty’s rights to move to modify, correct, or challenge the [trial court’s]

order, move for new trial, or appeal any other provision in the [order].” “The Texas

rule is not, and never has been, simply that any payment toward satisfying a

                                        10
judgment, including a voluntary one, moots the controversy and waives the right to

appeal that judgment.” Miga v. Jensen, 96 S.W.3d 207, 211 (Tex. 2002). Parties who

clearly communicate that they reserve the right to appeal preserve their appellate

rights. Id. at 211–12. Because M-I expressly reserved its right to appeal, its payment

of $400,000 to TXIT did not render M-I’s appeal of the equipment removal

obligation moot.

       The trial court ignored the settlement agreement’s pertinent language when

altering the terms of the settlement agreement to include CPI adjustments in the

payments and to require M-I to move 32 pieces of equipment upon TXIT’s request.

We decline to impose CPI adjustments in the MHA payments and equipment

removal requirements when the terms of the settlement agreement did not provide

for them. See Barrow-Shaver Res. Co. v. Carrizo Oil & Gas, Inc., 590 S.W.3d 471,

482 (Tex. 2019) (declining to read qualifier into consent-to-assign provision when

agreement’s terms clearly give party unrestricted right to withhold consent).

       We sustain M-I’s second issue.

                   Enforcement of the Settlement Agreement

       In its first issue, M-I contends that the trial court erred by ordering M-I to

enter a settlement agreement in which the trial court dictated the precise terms to be

included. TXIT responds that the trial court properly enforced the agreement of the

parties.

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      A written settlement agreement between the parties disposing of their dispute

is enforceable in the same manner as any other written contract, and the court has

the discretion to incorporate the terms of the agreement in its final decree disposing

of the case. TEX. CIV. PRAC. & REM. CODE § 154.071. But a final judgment based on

the parties’ settlement agreement must be in strict or literal compliance with that

agreement. Chisholm v. Chisholm, 209 S.W.3d 96, 98 (Tex. 2006); Vickrey v. Am.

Youth Camps, Inc., 532 S.W.2d 292, 292 (Tex.1976) (per curiam). “A final judgment

does not strictly comply with a settlement agreement when the trial court’s judgment

adds terms, significantly alters the original terms, or undermines the intent of the

parties.” Cobb v. Morace, No. 01-07-01036-CV, 2009 WL 2231909, at *4 (Tex.

App.—Houston [1st Dist.] July 23, 2009, no pet.) (mem. op.). A trial court may

modify terms of a settlement agreement in its judgment only if the modification does

not add terms, significantly alter the original terms, or undermine the parties’ intent.

Id.

      Here, the trial court ordered specific terms to be included in the settlement

agreement and for M-I to timely agree to such terms or otherwise be held in

contempt. Assuming without deciding specific performance was a proper remedy

for breach of the settlement agreement,1 the trial court overstepped its authority by



1
      The party seeking specific performance must show that it has complied with its
      obligations under the contract, but, here, the record does not show that TXIT has
                                          12
adding and significantly altering terms to the parties’ settlement agreement. These

terms imposed new obligations on M-I to which it had not agreed, including a

provision requiring M-I to pay a rate that included CPI adjustments and a provision

requiring M-I to remove various equipment at TXIT’s request. The trial court erred

by ordering M-I to enter into the settlement agreement with new terms.

      We sustain M-I’s first issue.2

                                       Conclusion

      We conclude that the trial court erred by failing to interpret and enforce the

parties’ settlement agreement as written. We reverse the trial court’s judgment and

remand this cause for further proceedings consistent with this opinion.




                                                Clint Morgan
                                                Justice

Panel consists of Justices Gunn, Morgan, and Dokupil.




      complied with its obligations under the settlement agreement. See Maxey, 617
      S.W.3d at 226.
2
      Because of our disposition of M-I’s first two issues, we need not reach M-I’s third
      issue. See TEX. R. APP. P. 47.1.
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