in the Guardianship of Ruby Peterson, 01-15-00567-CV

Background

Siblings Mack, Don, and Lonny Peterson sued regarding care, guardianship, and trust matters involving their mother, Ruby Peterson, who was at Silverado Senior Living and later died on January 11, 2014. Plaintiffs contend Ruby was incapacitated and subjected to mistreatment and that David Peterson engaged in self-dealing with trust funds.
The parties mediated on October 29, 2014 and executed a Rule 11 / mediated settlement agreement (MSA) that was explicitly labeled a "binding nonrevocable agreement" under Texas Estates Code §1055.151. The court authorized the ad litem/attorney ad litem to execute the agreement on Ruby’s behalf and later entered a Final Judgment approving the MSA as valid, binding, non-revocable, and in the ward’s best interest.
Plaintiffs thereafter filed an amended motion seeking to set aside the Rule 11 agreement on multiple grounds: illegality (challenge to the continued validity or revival of a 1993 medical power of attorney), lack of consideration/illusory promises, fraudulent inducement (promises to move Ruby never intended to be performed), and emotional/financial duress (threats of guardianship, sanctions, and fees by opposing counsel).
Ad litems (guardian ad litem and attorney ad litem) moved for entry of judgment on the binding nonrevocable settlement under Texas Estates Code §1055.151(c). The probate court approved the MSA and entered a Final Judgment adopting its terms, finding the 1993 POA valid and revocations void.
Defendant Silverado moved to correct/modify an overbroad jurisdictional order after plaintiffs filed further amended petitions that attempted to reassert previously dismissed claims; Silverado asked the court to narrow its earlier order to reflect which plaintiffs lacked standing to bring claims on behalf of Ruby.

Issues

Issue	Plaintiff's Argument	Defendant/Movant Argument	Held
Validity/legality of using or ratifying 1993 medical Power of Attorney (POA) and whether a revoked POA could be revived by settlement	Plaintiffs: the 1993 medical POA was revoked Nov. 15, 2013 under Health & Safety Code §166.155 and cannot be revived by settlement; the agreement ratifying it is illegal and void	Ad litems/Defendants: court approval authorized ad litems to sign and the probate court found the 1993 POA valid and revocations void; MSA was approved as in ward’s best interest	Court approved MSA and found 1993 POA valid; revocations void — MSA upheld as covering POA issues
Whether the mediated settlement constituted enforceable consideration or was illusory (lack of mutuality)	Plaintiffs: promises (e.g., to move Ruby, not to object to fees) were illusory, lacked enforceable deadlines or obligating language, and thus provided no consideration to support the release	Defendants/Ad litems: MSA terms were bargained at mediation and were binding under Estates Code §1055.151 when the statutory nonrevocation formalities were satisfied	Probate court adopted and entered Final Judgment approving the settlement as valid and nonrevocable under the Estates Code
Fraudulent inducement / nondisclosure (did defendants/ad litems promise performance with no intent to perform?)	Plaintiffs: Defendants represented they would move Ruby and not contest fees but did not act in good faith—circumstantial evidence of fraud and nondisclosure supports voiding the agreement	Defendants/Ad litems: disputed; the MSA memorialized agreed terms and the court’s approval establishes its enforceability	Court approved MSA; plaintiffs’ fraud-based attack was presented but court entered judgment on the agreement (MSA remains effective)
Duress (emotional and financial) — were threats by opposing counsel to seek guardianship, fees, or sanctions coercive enough to void the settlement?	Plaintiffs: threats destroyed free agency, were imminent and left no protection; heavy attorney fees and fear for mother’s life compelled them to sign	Defendants/Ad litems: settlement was reached at mediation with counsel present; statutory nonrevocation language and court approval cure infirmities asserted by plaintiffs	Despite plaintiffs’ assertions, the probate court ratified the MSA and entered Final Judgment approving it; plaintiffs’ duress claim did not prevent court approval

Key Cases Cited

Ronin v. Lerner, 7 S.W.3d 883 (Tex. App.—Houston [1st Dist.] 1999) (rules about applying contract law to Rule 11 agreements)
Fort Worth Indep. Sch. Dist. v. City of Fort Worth, 22 S.W.3d 831 (Tex. 2000) (contracts require sufficiently definite terms to be enforceable)
T.O. Stanley Boot Co. v. Bank of El Paso, 847 S.W.2d 218 (Tex. 1992) (each contract must be considered separately to determine material terms)
Roark v. Stallworth Oil & Gas, 813 S.W.2d 492 (Tex. 1991) (consideration is a bargained-for exchange; mutuality required)
Light v. Centel Cellular Co. of Tex., 883 S.W.2d 642 (Tex. 1994) (illusory promises are not consideration and may render a contract unenforceable unless actual value is given)
Formosa Plastics Corp. USA v. Presidio Eng'rs & Contractors, 960 S.W.2d 41 (Tex. 1998) (promise of future performance can be actionable misrepresentation if made with no intent to perform)
Reservoir Syst., Inc. v. TGS-NOPEC Geophysical Co., L.P., 335 S.W.3d 297 (Tex. App.—Houston [14th Dist.] 2010) (elements of fraud by nondisclosure)