Cortes v. Wendl

ISABEL CORTES AND JOHNNY FERNANDES, Appellants v. SHARON WENDL AS ATTORNEY IN FACT AND A/N/F FOR ADA EDNA HARDY, Appellee

No. 06-17-00121-CV

Court of Appeals Sixth Appellate District of Texas at Texarkana

Date Submitted: May 22, 2018

June 20, 2018

On Appeal from the 4th District Court Rusk County, Texas

Trial Court No. 2016-348

Before Morriss, C.J., Moseley and Burgess, JJ.

Memorandum Opinion by Chief Justice Morriss MEMORANDUM OPINION

At the age of eighty-five, the widowed and ailing Ada Edna Hardy was a resident of Brookdale Assisted Living in Henderson, six years after selling¹ her home place with fifteen acres and retaining the mineral rights² in the property. As a result of what Hardy would later describe as a campaign of duress, coercion, and undue influence on Hardy by Isabel Cortes and Cortes' ex-husband, Johnny Fernandes, Hardy reportedly "gave up" and, without consideration and without "her own free will or volition," accompanied Cortes to a local title company and signed a deed transferring to Cortes seventy-five percent of her mineral rights and all of her previously accrued mineral and royalty interests.³

When Hardy's nurse and friend, Sharon Wendl, learned from Hardy that she thought she had "been swindled," Wendl investigated the matter, obtained a power of attorney from Hardy, and ultimately filed a lawsuit on Hardy's behalf against Cortes and Fernandes. In her lawsuit, Wendl claimed that the mineral deed was executed as a result of Cortes' and Fernandes' exertionof duress, coercion, and undue influence on Hardy; that no consideration was paid for the conveyance; and that it was not executed by Hardy "of her own free will or volition." Wendl further claimed that Cortes took a check made payable to Hardy in the amount of $67,876.89, representing royalties paid and owed to her by Sabine Oil & Gas Corporation relative to these mineral rights. Following a bench trial, the trial court declared the mineral deed void and entered judgment for, among other things, actual damages in the amount of $52,881.89 and for punitive damages in the amount of $50,000.00 against Cortes and $50,000.00 against Fernandes.

On appeal, Cortes and Fernandes claim that the trial court erred in permitting Wendl to prosecute the lawsuit on Hardy's behalf as her next friend, in denying Cortes' motion for leave to designate a responsible third party, and in declaring the mineral deed void and cancelling the deed. We affirm the trial court's judgment, because we find that (1) Wendl was authorized to prosecute the lawsuit pursuant to a durable power of attorney, (2) there was no error in denying leave to designate a responsible third party, and (3) the evidence is legally and factually sufficient to support the trial court's cancellation of the mineral deed.

(1) Wendl Was Authorized to Prosecute the Lawsuit Pursuant to a Durable Power of Attorney

In her original petition, Wendl sued Cortes as "Sharon Wendl as Attorney In Fact for Ada Edna Hardy" and alleged that she was acting by and through her authority derived from a power of attorney, a copy of which was attached to the petition. In her second and third amended petitions, Wendl continued to allege that she was acting on authority of the power of attorney, but further alleged that she was acting on behalf of, and as next friend for, Hardy. Cortes andFernandes challenge Wendl's authority to prosecute the lawsuit on Hardy's behalf. A review of the background facts is necessary in the examination of the issues presented.

Hardy reserved the mineral estate when she sold her home place because her father told her never to sell minerals, and her deceased husband would not have wanted her to sell the minerals.⁴ Nevertheless, Cortes and Fernandes,⁵ who lived together on Hardy's former home place, continually urged Hardy to deed Cortes the mineral rights. According to Hardy, when Cortes and Fernandes delivered the monthly note payment to Hardy at Brookdale, they told her that the land was no good to them without the minerals. This happened each time they delivered the note payment, and it bothered Hardy since she did not wish to sell the minerals. When Hardy persisted in refusing to sell, Fernandes told her, "The IRS is going to be after you." Hardy testified that she was frightened by this prospect.

Hardy testified that she had seizures after her husband passed away and that she felt like she was going to start having seizures again due to the pressure to sell her minerals. According to Hardy, Cortes knew that she did not want to sell the minerals, and she would not have done so if Cortes and Fernandes had not threatened her with the IRS and frightened her. Sometimes Fernandes would come into Hardy's room at Brookdale, and the two of them were there alone. The same thing happened with Cortes. Hardy did not feel safe in her room and locked her doorduring the day because she was afraid Fernandes or Cortes might hurt her. Hardy felt like a "nervous wreck," felt she had no choice but to sell the minerals, and "just couldn't take it any longer." The situation was making her nervous, and she was shaking. Despite the fact that Hardy needed the mineral income to pay her bills at Brookdale, she testified that she "just [gave] up."

Although the date of its delivery is not in the record, a check dated January 29, 2016, in the amount of $67,876.89 made out to Edna Hardy from Sabine Oil & Gas Corporation was delivered to Hardy's former home, where Cortes and Fernandes resided. During this same time period, on February 5, 2016, Hardy deeded her mineral rights to Cortes because Hardy claimed to have been frightened and worried. Cortes drove Hardy to the U.S. Title Company in Longview to execute the deed. Hardy testified that she did not read the mineral deed and that no one read it to her. She did not have a friend or someone she trusted look over the document before she signed it. According to Hardy, Cortes did not pay for the minerals. Cortes disputes this and testified that the minerals were deeded to her in exchange for topsoil that had previously been removed from the property.⁶

After execution of the mineral deed, Cortes drove Hardy to the Woodforest Bank located within the Walmart in Henderson on February 27, 2016, where she opened a joint checking account with Hardy with an initial deposit of twenty-five dollars provided by Cortes. Both Cortes and Hardy received a debit card for the account. According to Hardy, Cortes told her, "[S]ign this check," which resulted in her endorsement of the Sabine Oil & Gas Corporation royalty check.On February 29, the royalty check was deposited into the joint account at the bank's Longview branch. On March 10, Fernandes withdrew $500.00 from the account at an automatic teller machine in Henderson. Also on March 10, a cashier's check was issued from the account to Cortes at the Longview branch in the amount of $36,508.69. On that same date, a second cashier's check was issued to Cortes at the Longview branch in the amount of $13,000.00. The second cashier's check was held until March 24, when Cortes cashed it at the Henderson branch. Ten thousand dollars was disbursed to Cortes in cash, and a new cashier's check in the amount of $3,000.00 was issued to Randy Hardy, Hardy's son. A final cashier's check in the amount of $2,500.00 was issued to Randy Hardy on March 10, a transaction authorized by Cortes. On March 11, there were two debit transactions—one to Walmart in the amount of $148.84 and one to Fadal Pediatrics in the amount of $194.00. On March 12, there was a single debit transaction in the amount of $56.36 to IHOP in Longview. The remaining balance in the account on March 12 was $14,995.00.

This course of events was uncovered by Wendl, a home health nurse who has cared for Hardy at Brookdale since 2014. The two eventually became friends. On March 24, while visiting Hardy, Wendl noticed that Hardy seemed very upset and was trembling. When Wendl asked Hardy what was wrong, Hardy replied, "I think I've been swindled." Hardy told Wendl that she signed a form at the bank and was bothered when Cortes was given a debit card. When asked why she would open an account with Cortes, Hardy could not provide an explanation, but expressed the opinion that "something had happened" when she saw that "the bank lady" handed Cortes a card. Wendl was already aware that Cortes and Fernandes had been pressuring Hardy to sign over her mineral rights. Hardy told Wendl that she signed a document having to do with her minerals,because Cortes and Fernandes told her that the IRS was after her, and she needed to sign over her mineral rights so she would not be in trouble. Hardy began to experience tremors, and that worried Wendl. She began to believe that something was wrong, and at Hardy's request, Wendl took the debit card to the bank to check Hardy's account balance. Because she did not have the correct pin number, Wendl was unable to check the balance.

Wendl then spoke with a teller at the Woodforest Bank in the Henderson Walmart, where she learned that a large amount of money had been deposited into the account and that only a small amount remained. After that, Wendl was able to get Hardy on a speaker phone with the teller, who gave the teller permission to discuss the account with Wendl. That is when Wendl discovered the $67,000.00 deposit and the significant withdrawals. Hardy was unaware of the fact that she had had a $67,000.00 royalty check, and she told Wendl that she did not give Cortes permission to take any of those funds.

After Wendl reported the matter to the Henderson Police Department,⁷ Hardy executed the durable power of attorney in favor of Wendl, appointing Wendl as her agent in a number of areas,⁸ and specifically giving Wendl the authority to sue on her behalf.

Cortes and Fernandes complain that, because the record has no specific allegations confirming that Hardy is or was under any legal disability, Wendl had no authority to initiate litigation as next friend...