DANIEL P. ROBINOWITZ, FROM A DISTRICT COURT APPELLANT, v. GIBRALTAR SAVINGS, GIBRALTAR FINANCIAL CORPORATION OF CALIFORNIA, SHAWMUT FIRST MORTGAGE CORP. f/k/a FIRST GIBRALTAR MORTGAGE CORP. and FGMC INVESTMENT CORP. APPELLEES

COURT OF APPEALS
FIFTH DISTRICT OF TEXAS
AT DALLAS
NO. 05-88-00478-CV
DANIEL P. ROBINOWITZ,                        FROM A DISTRICT COURT
 
        APPELLANT,
 
v.
 
GIBRALTAR SAVINGS, GIBRALTAR
FINANCIAL CORPORATION OF
CALIFORNIA, SHAWMUT FIRST
MORTGAGE CORP. f/k/a FIRST
GIBRALTAR MORTGAGE CORP. and
FGMC INVESTMENT CORP.
 
        APPELLEES.                                  OF DALLAS COUNTY, TEXAS
 
 
 
BEFORE JUSTICES THOMAS, BURNETT FN:1 AND WHITTINGTON FN:2
OPINION BY JUSTICE THOMAS
MARCH 28, 1989
        This is an appeal from a summary judgment in favor of appellees, Gibraltar Savings, Gibraltar Financial Corp. of California, Shawmut First Mortgage Corp. f/k/a First Gibraltar Mortgage Corp. and FGMC Investment Corp. (Gibraltar). Appellant, Daniel P. Robinowitz, in a sole point of error urges that the trial court erred in granting summary judgment. We agree and, therefore, reverse the judgment and remand the cause to the trial court for further proceedings.
FACTUAL BACKGROUND
        In 1983, Robinowitz and Gibraltar entered into a partnership to purchase property in New Orleans with the expectation of development. Gibraltar agreed to finance development of the property if height zoning variances could be obtained. In 1985, after the variances were obtained, Robinowitz and Gibraltar formed two new partnerships. One of the partnerships was to own the land and the other was to develop it. The agreements provided for joint and equal management. Robinowitz also had an agreement entitling him to be the developer and manager of the development and another agreement with the contractor to share in construction revenues. The development was to be in several phases and would include office space, retail space, a multi-screen theatre, an athletic club, a parking garage and a hotel. The estimated cost was $500 million and the development was to be called the Galleria. The development began pre-leasing office space and Embassy Suites began negotiations for franchising the hotel. Because of a waning New Orleans economy and increased rental competition there was a severe capital shortage. Gibraltar agreed to supply the extra capital but required Robinowitz to decrease his share in the hotel to 25%.
        Gibraltar withheld final approval of the construction of the hotel and athletic club which caused construction and leasing delays. Robinowitz urged Gibraltar to close the hotel negotiations so that construction could begin. During this period, Robinowitz sent several letters to different Gibraltar employees threatening litigation and/or asking Gibraltar to continue construction, maintain time schedules, pay expenses, etc.
        In September 1986, Robinowitz was scheduled to meet with the board of directors for Gibraltar in order to make a presentation concerning the hotel. Prior to the meeting, Robinowitz and his attorney met with Herb Young, a Gibraltar officer, and Cory Patick, Gibraltar's representative to the Galleria partnership. During this meeting, Young stated that Gibraltar was going to cut off financing for the Galleria, would not fund the hotel and would sell what existed of the Galleria for whatever it would bring. After further conversations between the attorneys for both parties, Robinowitz's legal counsel was convinced of Gibraltar's determination to close the Galleria and sell what was available.
        Shortly thereafter, Robinowitz began negotiations with Gibraltar's attorney in an effort to sell his interest. During the negotiations, construction continued as scheduled. When the settlement talks stopped, Gibraltar instructed the contractor to stop work. Finally, on November 6, 1986, Robinowitz signed a contract by which he sold his interest in the Galleria for $3,500,000 and agreed to release Gibraltar from each, every and all claims and/or causes of action which he may have had prior to the signing of the contract.
        Two days later, Gibraltar met with construction personnel to start work that had previously been shut down. Further, on November 10, Gibraltar held a press conference and publicly stated that it had no intention of selling the project. Thereafter, Robinowitz filed suit against Gibraltar, claiming breach of fiduciary duty, fraud and misrepresentation. Gibraltar moved for summary judgment based upon the execution of the release by Robinowitz. It is from that judgment that Robinowitz now appeals.
STANDARD OF REVIEW
        A defendant who moves for summary judgment has the burden of showing as a matter of law that no material issue of fact exists as to the plaintiff's cause of action. See Arnold v. National County Mutual Fire Ins. Co., 725 S.W.2d 165, 167 (Tex. 1987). This may be accomplished by defendant's summary judgment evidence showing that at least one element of plaintiff's cause of action has been established conclusively against the plaintiff. See Gray v. Bertrand, 723 S.W.2d 957, 958 (Tex. 1987). A summary judgment for the defendant disposing of the entire case is proper only if, as a matter of law, plaintiff could not succeed upon any theories pleaded. Delgado v. Burns, 656 S.W.2d 428, 429 (Tex. 1983).
        The standards for reviewing a motion for summary judgment are:
 
 
    1.        The movant for summary judgment has the burden of showing that there is no genuine issue of material fact and that it is entitled to judgment as a matter of law.
 
    2.        In deciding whether there is a disputed material fact issue precluding summary judgment, evidence favorable to the non-movant will be taken as true.
 
    3.        Every reasonable inference must be indulged in favor of the non-movant and any doubts resolved in its favor.
Nixon v. Mr. Property Managment, Co., 690 S.W.2d 546, 548-49 (Tex. 1985); Montgomery v. Kennedy, 669 S.W.2d 309, 310-11 (Tex. 1984); Wilcox v. St. Mary's University of San Antonio, 531 S.W.2d 589, 592-93 (Tex. 1975). See also City of Houston v. Clear Creek Basin Authority, 589 S.W.2d 671 (Tex. 1979).
        The crucial issue raised by this appeal is whether under the facts of this case, the release contained in the contract of sale precludes Robinowitz from affirming the contract and suing for damages on the contract. If so, the granting of summary judgment was proper. We conclude that under the facts presented, the release did not bar Robinowitz's cause of action.
RELEASE AND FRAUD IN THE INDUCEMENT
        A settlement agreement or release which is valid on its face and has not been set aside is a complete bar to a later action on the matters contained within the release. Leluca v. Munzel, 673 S.W.2d 373, 375 (Tex. App.--Houston [1st Dist.] 1984, writ ref'd n.r.e.); Tobbon v. State Farm Mut. Auto. Ins. Co., 616 S.W.2d 243, 245 (Tex. Civ. App.--San Antonio 1981, writ ref'd n.r.e.). See First Texas Sav. Ass'n v. Dicker Center, Inc., 631 S.W.2d 179, 186 (Tex. App.--Tyler 1982, no writ). Robinowitz executed a release which stated that he fully released Gibraltar from
 
 
        . . . each, every and all claims and/or causes of action which [he] may have in connection with any dealings, transactions, agreements or understanding with Gibraltar which have occurred prior to the date of this mutual release . . . . It is mutually agreed that no party to this release shall file suit against any released party in connection with agreements or occurrences taking place prior to the date of this mutual release. . . .
        The record reflects that during the negotiations between Robinowitz and Gibraltar as well as at the time of the execution of the release Robinowitz was represented by legal counsel. Robinowitz's attorney informed Robinowitz that if he signed the release and covenant not to sue that he would be precluded from litigating any claims arising out of his dealings with Gibraltar prior to executing the release. Robinowitz's deposition testimony reflects that he understood this.
        Robinowitz claims, however, that he may sue because he had two sets of claims: 1) the prior released causes of action and 2) those arising from the sale of his Galleria interests. Robinowitz asserts that when a party is fraudulently induced to enter into a contract he may retain what was received and, waiving the fraud, sue on the contract for damages. "Fraud in the inducement is fatal to a contract. One induced by fraud may stand to the bargain and recover damages for fraud or he may rescind." Polar Bear Ice Cream Company, Inc. v. Arnold, 620 S.W.2d 191, 193 (Tex. Civ. App.--Waco 1981, writ dism'd w.o.j.). Robinowitz asserts that he can sue for the difference between the contract price and the itemized value of his contracts because he was fraudulently induced into signing the release and covenant not to sue.
        Robinowitz alleges that the fraud is due to the representations made by Gibraltar and its attorneys that it was going to withdraw from the Galleria project, when in fact it had no intention of doing so. According to Robinowitz's allegations, further fraud was committed by the orchestrated attempts of Gibraltar to cease construction, cut off credit, and renege on promises, agreements and commitments, which were aimed at exerting economic pressure intense enough to drive Robinowitz from the partnership. It is uncontroverted that Gibraltar represented it wanted to close the Galleria project and sell what it could; however, Patick, Gibraltar's representative, stated that
            there was never an intent to sell. There was an intent to complete the entire building and in the lease-up phase. There was no need to sell, no desire to sell, and furthermore, there was no attempt on the part of Gibraltar basically to sell it at that time.
        Partners are obligated to deal honestly and fairly with each other in the operation and conduct of their business. Mutual good faith is required of all parties enjoying partnership status. The actions of a partner must be judged not by the morals of the market place, but by the punctilio of an honor the most sensitive. This, then, is the standard of behavior required of a partner. As to this there has developed a tradition that is unbending and inveterate. Smith v. Bowlin, 153 Tex. 486, 271 S.W.2d 93, 96 (1954). Accordingly, Texas law requires that each partner make full disclosure to other partners of all material facts which are known to him. Johnson v. Buck, 540 S.W.2d 393, 399 (Tex. Civ. App.--Corpus Christi 1976, writ ref'd n.r.e.). The summary judgment proof leaves unresolved issues of fact as to whether Gibraltar made material misrepresentations which were fraudulent and in violation of its fiduciary duty. Thus, on the grounds of fraud and breach of fiduciary duty, Gibraltar failed to meet its burden of establishing its entitlement to summary judgment as a matter of law.
RATIFICATION
        Gibraltar also raised the affirmative defense of ratification. A defendant may prevail on his motion for summary judgment if he expressly presents and conclusively proves all essential elements of that defense as a matter of law. Montgomery v. Kennedy, 669 S.W.2d 309, 310-11 (Tex. 1984). "In order to establish waiver or ratification, the proof must show that the defrauded party had knowledge of the material facts concerning the fraud at the time of making a new contract. . . ." Bodovsky v. Texoma Nat'l. Bank of Sherman, 584 S.W.2d 868, 873 (Tex. Civ. App.--Dallas 1979, writ ref'd n.r.e.). The crucial element in determining ratification is the ratifying party's full knowledge of the fraud at the time of ratification.
        We hold that there was a fact issue as to whether Robinowitz knew that Gibraltar had no intention of stopping the Galleria project and selling it. The summary judgment evidence strongly demonstrates that Robinowitz was aware of Gibraltar's dealings prior to the September meeting in Los Angeles. However, the summary judgment evidence reflects that Gibraltar represented to Robinowitz, his partners and his attorney that it was closing down the Galleria project and selling it for what it could obtain. In his deposition testimony Robinowitz states that because he was told there would not be a food court, hotel, athletic club, movie theater, etc., he felt the project would be ruined if the Galleria were not completed. Consequently, he wanted out of the deal in order to salvage what he could. There is a fact issue as to whether Robinowitz was operating under a fraud he knew nothing about at the time of the execution of the release. Robinowitz could not release a cause of action he knew nothing about. We hold, therefore, that a fact issue was raised which made summary judgment improper. Accordingly, we reverse and remand.
 
 
 
                                                          
                                                          LINDA THOMAS
                                                          JUSTICE
 
 
DO NOT PUBLISH
TEX. R. APP. P. 90.
 
88-00478.2F
 
 
FN:1 . The Honorable Joe Burnett, Justice, succeeded the Honorable Bill J. Stephens, a member of the original panel, at the expiration of his term on December 31, 1988. Justice Burnett has reviewed the briefs and the record before the court.
FN:2 . The Honorable John Whittington, Justice, succeeded the Honorable Nathan Hecht, a member of the original panel, at the expiration of his term on December 31, 1988. Justice Whittington has reviewed the briefs and the record before the court.
File Date[01-02-89]
File Name[880478]