Court Opinion

ID: 1081592
Source: CourtListenerOpinion
Date Created: 2013-10-09 20:50:42.792178+00
Date Added: 2024-06-11T09:00:05.222042
License: Public Domain

IN THE COURT OF APPEALS OF TENNESSEE, WESTERN SECTION
                                 AT JACKSON
            _______________________________________________________

                                    )
HOWARD A. WOODS,                    )     Shelby County Circuit Court
                                    )     No. 65172 T.D.
   Plaintiff/Appellant.             )
                                    )
VS.                                 )     C. A. NO. 02A01-9510-CV-00218
                                    )
MUTUAL OF OMAHA,                    )

   Defendant/Appellee.
                                    )
                                    )
                                                              FILED
                                    )
And                                 )                         October 9, 1996
                                    )
CNA INSURANCE COMPANY,              )                        Cecil Crowson, Jr.
                                                             Appellate C ourt Clerk
and EASTWOOD HOSPITAL,              )
                                    )
   Defendant.                       )
______________________________________________________________________________

From the Circuit Court of Shelby County at Memphis.
Honorable Robert A. Lanier, Judge

Howard A. Woods, Pro Se
Plaintiff/Appellant.

Philip E. Mischke,
WYATT, TARRANT & COMBS, Memphis, Tennessee
Attorney for Defendant/Appellee, Mutual of Omaha.

OPINION FILED:

AFFIRMED

                                          FARMER, J.

CRAWFORD, P.J., W.S. : (Concurs)
LILLARD, J. : (Concurs)
               This case concerns the validity of a “Compromise Settlement Release” executed by

the appellant, Howard A. Woods (Woods), in favor of the appellee, Mutual of Omaha (Omaha).

Woods challenges its validity on the ground of mental incapacity. The trial court entered summary

judgment in favor of Omaha and Woods has appealed. For reasons hereinafter expressed, we affirm.

               In March 1991, Omaha issued Woods two insurance policies (medical and disability).

During the processing of a claim filed by Woods, Omaha discovered certain misrepresentations on

Woods’ application for insurance which, according to Omaha, invalidated the policies by their own

terms. Omaha informed Woods in November 1991 that the policies were “cancelled from the issue

date.” In January 1992, Woods filed suit against Omaha alleging wrongful termination of his

insurance. On March 27, 1992, Woods executed the release at issue here which, in sum, releases

Omaha from all claims arising out of the aforementioned insurance policies in consideration for

$12,000. A check for that amount was negotiated by Woods on March 30, 1992. The release

expressly provided for the dismissal with prejudice of Woods’ lawsuit.

               In June 1994, Woods filed the present action in general sessions court again claiming

that Omaha had wrongfully terminated his insurance.1 The suit was apparently dismissed and Woods

appealed the decision to circuit court. Thereafter, Omaha filed a motion “to dismiss or in the

alternative for summary judgment,” asserting that the action was barred by the applicable statute of

limitations and the doctrines of res judicata and accord and satisfaction. The affidavit of Janet

Stewart, Omaha’s second vice president and counsel, was submitted on its behalf. The affidavit set

forth the terms of the release as heretofore specified and included a copy of the release. The trial

court granted Omaha’s motion based on the release.

               Woods then filed a “Motion for New Trial,” asserting that he had, since entry of the

summary judgment, “gathered [a]ffidavits from his doctors to clarify his mental and physical

condition on 3/27/92 . . . .” No affidavits were attached to the motion. Woods additionally filed a

“Motion to Set Aside” the ruling. The affidavit of Dr. Dale Foster was attached, which states, as

       1
        Woods filed suit against various defendants; however, the judgment before us enters
summary judgment in favor of Omaha only and was rendered final by the trial court in
accordance with Rule 54.02 T.R.C.P. Thus, Omaha is the only Appellee for purposes of this
appeal.
relevant here:

                        I am a psychologist with the Germantown Psychological
                 Associates, P.C. . . .

                         Mr. Woods is currently under my care and has requested that
                 I inform you concerning the history of his psychological condition as
                 indicated by his treatment while under my care.

                        Mr. Woods first came to me on April 6, 1992 presenting with
                 paranoia, psychotic thinking, numerous somatic complaints, and
                 extreme anxiety.

                        He has received a diagnosis of Schizophrenia, Paranoid type
                 ....

                          It is my opinion that, due to his mental state at that time, he
                 was not capable of entering into a contract with full knowledge and
                 ability to understand the consequences of that contract.

The record next includes a document filed by Woods entitled “Amend[ed] Complaint,” which

includes the affidavits of Dr. George Chu, addressing Woods’ physical condition while hospitalized

in April and May 1991 as the result of an automobile accident, and Dr. John Howser, which also

addresses Woods’ physical condition subsequent to the accident. Woods also filed a “Motion to

Extend Time to File Beyond the Allotted Time After a Ruling,” so as to file additional expert

affidavits regarding his mental capacity “in 1992,” and various other motions. After entertaining the

motions, the trial court entered an order denying Woods’ motion to set aside.

                 Woods thereafter filed additional motions, with the court subsequently entering an

“Order on Motions and Final Judgment as to Mutual of Omaha.” The judgment, from which this

appeal lies, grants Woods’ requests to file a copy of his medical records from Southeast Mental

Health Center and to reconsider the summary judgment entered in favor of Omaha. The judgment

further reflects the trial court’s denial of Woods’ motion to set aside the summary judgment after its

consideration of the medical records and “all other documents submitted by [Woods], . . .”

                 The issue before us is whether the trial court was correct in entering summary

judgment for Mutual of Omaha. In ruling on motions for summary judgment, we are to consider the

matter in the same manner as a motion for a directed verdict made at the close of the plaintiff’s

proof, i.e., all evidence must be viewed in a light most favorable to the motion’s opponent and all
legitimate conclusions of fact must be drawn in that party’s favor. It is only when there is no

disputed issue of material fact that summary judgment should be granted by the trial court and

sustained by the court of appeals. E.g., Fly v. Cannon, 813 S.W.2d 458, 460 (Tenn. App. 1991).

The party seeking summary judgment carries the burden of persuading the court that no genuine and

material factual issues exist and that he is, therefore, entitled to judgment as a matter of law. Once

this is shown by the moving party, then the nonmovant must demonstrate, by affidavits or discovery

materials, that there is a genuine, material fact dispute warranting a trial. Byrd v. Hall, 847 S.W.2d
208, 211 (Tenn. 1993).

               As heretofore noted, the trial court granted Omaha’s motion for summary judgment

based on the release executed by Woods, who now challenges its validity upon the ground that he

was mentally incompetent to execute it. The mental incapacity required to invalidate a contract was

discussed by the middle section of this Court in Roberts v. Roberts, 827 S.W.2d 788 (Tenn. App.

1991), when stating:

                       No published Tennessee authority is found which defines
               [the] degree of mental incapacity required to invalidate a contract. .
               ..

                       In 17 C.J.S. Contracts § 133(1)(e), pp. 860, 861, 862, is found
               the following text:

                                The test of mental capacity to contract is
                       whether the person in question possesses sufficient
                       mind to understand, in a reasonable manner, the
                       nature, extent, character, and effect of the act or
                       transaction in which he is engaged; the law does not
                       gauge contractual capacity by the standard of mental
                       capacity possessed by reasonably prudent men. It is
                       not necessary to show that a person was incompetent
                       to transact any kind of business, but to invalidate his
                       contract it is sufficient to show that he was mentally
                       incompetent to deal with the particular contract in
                       issue, . . .

                               On the other hand, to avoid a contract it is
                       insufficient to show merely that the person was of
                       unsound mind or insane when it was made, but it must
                       also be shown that this unsoundness or insanity was of
                       such a character that he had no reasonable perception
                       or understanding of the nature or terms of the
                       contract. The extent or degree of intellect generally is
                       not in issue, but merely the mental capacity to know
                       the nature and terms of the contract.

                               . . . there must, to invalidate the contract, be
                       at the time thereof such impairment of reasoning
                       powers as to make the person incapable of acting
                       rationally in the transaction involved, or such mental
                       unsoundness as occasions an inability to comprehend
                       the subject of the contract and its nature and probable
                       consequences, or as renders the individual incapable
                       of understanding and acting with discretion in the
                       business at hand; and it has been held that to
                       invalidate his contract there must be an entire loss of
                       a person’s understanding as respects such transaction.

                              In the final analysis, contractual capacity is a
                       question to be resolved in the light of the facts of each
                       case and the surrounding circumstances.

Roberts, 827 S.W.2d at 791-92.

               In view of Roberts, we hold that in order for Woods to defeat Omaha’s motion for

summary judgment, the record before us must establish his mental incompetency with respect to the

particular contract in issue. We find nothing in this record, however, specifically addressing this

concern. The records of Southeast Mental Health Center include an “intake summary,” dated March

6, 1992, which references Woods’ overall mental status at that time, as does another psychological

evaluation of Woods dated January 4, 1994. We find both of these assessments of little import in

determining whether Woods had the capacity to execute the release in question. The record also

includes the Department of Health and Human Service’s decision that Woods is disabled for

purposes of the Social Security Act. The decision states that Woods “has been disabled since April

29, 1991, . . . He has a psychotic disorder not otherwise specified, possible paranoid schizophrenia,

borderline intellectual functioning, carpel tunnel syndrome, and cervical facet syndrome, which are

considered to be ‘severe’ under the Social Security Regulations.” As is apparent, the Department’s

decision does not concern Woods’ capacity to understand and appreciate the contract in question.

The only evidence in the record addressing Woods’ capacity to enter into a contract is the affidavit

of Dr. Foster, which we find inadequate on the issue. Dr. Foster’s affidavit establishes that he did

not begin treating Woods until April 6, 1992, which was after the agreement’s execution. Moreover,

the affidavit refers only to Woods’ general inability to enter into a contract and does not make

specific reference to the contract at issue.

                We conclude that when the evidence is viewed in a light most favorable to Woods,
no genuine issue of material fact is created regarding his mental capacity to execute the release on

March 27, 1992. The judgment of the trial court is, accordingly, affirmed. Costs are assessed

against Howard A. Woods, for which execution may issue if necessary.

                                                     ______________________________
                                                     FARMER, J.

______________________________
CRAWFORD, P.J., W.S. (Concurs)

______________________________
LILLARD, J. (Concurs)