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Barker v. Roelke3/20/2003
n County appointed a guardian for Jackie Jay in May of 1998 based upon the court's finding of her incapacity by clear and convincing evidence. As noted in Mobil Oil Corporation v. Floyd, 810 S.W.2d 321, 324 (Tex.App. B Beaumont 1991, orig. proceeding), the appointment of a guardian creates a presumption of incompetency in other proceedings. Dr. James T. Russell, M.D., advised the probate court in the guardianship proceeding that Jackie Jay suffered a brain injury as a result of the accident which resulted in severe incapacity as to reasoning abilities, short-term memory, judgment, and resistance to undue influences. These matters demonstrate that appellant had "reason to know" of the parties' alleged mistake regarding Jackie Jay's competency in 1998. Appellant, however, did not attempt to set aside the releases until March of 2000. He remained in possession of the funds which he had received by virtue of the settlements and continued seeking to enforce the settlements during this period. The record therefore conclusively establishes that appellant ratified the releases by manifesting an intent to affirm them long after he had reason to know of the parties' possible mistake.
Appellant also seeks to rescind the releases based on an allegation of fraud. He contends that Jackie Jay and James Michael Thompson (Ronald Jay's attorney) fraudulently induced him to enter into the settlement reflected by the releases by making false statements regarding Jackie Jay's competency and consent to the settlement. The elements of common-law fraud are: (1) a material representation was made; (2) the representation was false; (3) when the representation was made, the speaker knew it was false or made it recklessly without any knowledge of the truth and as a positive assertion; (4) the representation was made with the intention that it be acted upon by the other party; (5) the party acted in reliance upon the representation; and (6) the party suffered injury . See Johnson & Higgins of Texas, Inc. v. Kenneco Energy, Inc., 962 S.W.2d 507, 524 (Tex.1998). As was the case with his mutual mistake contentions, appellant asserts that he could not have ratified the releases without a judicial determination of his fraud allegations against Jackie Jay and Ronald Jay's attorney. Unlike the "knows or has reason to know" standard applicable to allegations of mutual mistake, the Restatement provides that a party's power to avoid a contract based on a fraudulent misrepresentation is not lost until the party "knows of the misrepresentation." Section 380(2). We therefore review the summary judgment evidence to determine if appellant manifested an intent to affirm the releases after knowing of Jackie Jay's and Thompson's purported fraudulent misrepresentations.
Jackie Jay was deposed on two occasions in December 1997 and January 1998. She was questioned extensively during the depositions about her and Thompson's alleged fraud. She stated that Thompson advised her as follows with respect to the settlement proposed at the April 3, 1997, hearing:
I just remember [Thompson] telling me that it was best for me to go along if the insurance...if the insurance asked if I was going to sue, and he told me to say no and that, later on down the line, he would try to get me some type of a B I don't know what the word is called B compensation from [the accident].
She also answered in the affirmative to the following question:
You'll agree with me that if you got up there [at the April 3, 1997, hearing] and you told us you understood, that you were doing all these things, and, in fact, you knew that you didn't understand but you were just giving us the answers that you thought we wanted to hear, that you wer
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