Borne v. A & P Boat Rentals No. 4, Inc.

• Decision Date: 22 January 1986
• Docket Number: No. 85-3328,85-3328
• Citation: 780 F.2d 1254
• Parties: Claude BORNE, Plaintiff-Appellant, v. A & P BOAT RENTALS NO. 4, INC., Defendant-Appellee. Summary Calendar.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 1254

780 F.2d 1254

1986 A.M.C. 1782

Claude BORNE, Plaintiff-Appellant, v. A & P BOAT RENTALS NO. 4, INC., Defendant-Appellee.

No. 85-3328

Summary Calendar.

United States Court of Appeals Fifth Circuit.

Jan. 22, 1986.

Paul J. Galuszka, New Orleans, La., for plaintiff-appellant.

Arden J. Lea and David J. L'Hoste, New Orleans, La., for defendant-appellee.

Appeal from the United States District Court for the Eastern District of Louisiana.

Before GEE, RANDALL and DAVIS, Circuit Judges.

PER CURIAM:

Seaman Claude Borne, a ward of the admiralty, appeals a district court order enforcing a settlement agreement that he now claims is invalid and unenforceable. We affirm.

I.

Borne, a seaman, filed suit under the Jones Act and general maritime law against A & P Boat Rentals No. 4, Inc. the owner of his vessel, seeking recovery for injuries to his back in two alleged slip-and-fall incidents aboard the vessel. Eleven months after filing this action, Borne dismissed his attorney and received permission to substitute counsel. Borne's former counsel intervened, claiming his contractual right to share in any recovery to the extent of his costs and reasonable attorney's fees.

Towards the close of the first day of a jury trial, the judge called counsel for the parties to his chambers and urged them to reach a settlement. A & P offered $9000. Counsel for Borne presented the offer to Borne who agreed to accept it. The intervenor was not present during these negotiations, and his claim was not mentioned.

On being advised of the settlement, the court dismissed the jury and, on December 16, 1983, dismissed the action subject to reopening if settlement were not consummated. A & P tendered its check and release forms by letter dated December 21, 1983. In correspondence of the same date, Borne's counsel informed the court that he would not accept the settlement because the terms "were not reasonable under the circumstances." He returned the unopened settlement documents and requested that the action be reinstated on the trial docket.

On February 29, 1984, the district court heard oral argument on A & P's motion to enforce the settlement. Several days later, the intervenor moved for adjudication of his claim on the settlement funds. On March 12, 1984, the court entered judgment in favor of Borne in the amount of the settlement and directed that the funds be deposited with the court. Borne filed notice of appeal on March 28. The next day, the district court referred intervenor's claim to a magistrate for adjudication. These proceedings were stayed pending the appeal to this Court.

On March 22, 1985, 755 F.2d 1131, this Court dismissed the appeal for lack of jurisdiction since the district court judgment adjudicated the claims of fewer than all the parties and was unaccompanied by a Fed.R.Civ.P. 54(b) certificate. A & P then filed a motion for an order directing entry of final judgment as to fewer than all parties. This motion was granted on May 8, 1985. Borne filed notice of appeal on June 3. A motion to continue the magistrate's hearing on the intervention was granted on June 6.

II.

The issues before us today concern the validity and enforceability of the settlement agreement between Borne and A & P Borne argues that the district court erred in ordering enforcement of the settlement agreement. According to Borne, the agreement is not valid because it does not comply with Louisiana law. Borne further argues that the district court erred in ordering the settlement enforced without placing the burden on A & P to prove that Borne entered the agreement freely and with a full understanding of his rights. Borne maintains that this burden could not be satisfied for various reasons. First, Borne asserts that the district court threatened to declare a directed verdict or a mistrial or grant an A & P motion for judgment notwithstanding a verdict favorable to Borne, thereby coercing Borne into accepting the offer. Second, this coercion was aggravated by Borne's vulnerability: He has only a first-grade education, he cannot read or write or tell time. The district court's questioning of him during the trial and its alleged threats upset Borne to such an extent that he was not able to appreciate fully the consequences of agreeing to the settlement.

In response to Borne's arguments, A & P argues that federal, not Louisiana, law controls here. A & P denies that Borne was overreached. The settlement agreement was negotiated by Borne's counsel after the benefit of pre-trial discovery and investigation and after testimony from several of Borne's witnesses at trial. Once the settlement was reached, the district court informed the jury that the attorneys "had very sensibly and correctly" reached a settlement on behalf of their respective clients. Absent a claim of fraud, A & P argues that a settlement such as this one should not be set aside.

III.

A threshold issue in this case is which law, state or federal, governs the validity and enforceability of agreements settling the rights of a seaman. The answer is clear. "Questions regarding the enforceability or validity of ... [settlement] agreements are determined by federal law--at least where the substantive rights and liabilities of the parties derive from federal law." Mid-South Towing Co. v. Har-Win, Inc., 733 F.2d 386, 389 (5th Cir.1984) (citing Fulgence v. J. Ray McDermott & Co., 662 F.2d 1207 (5th Cir.1981); Strange v. Gulf & South American Steamship Co., Inc., 495 F.2d 1235 (5th Cir.1974); Cia Anon Venezolana de Navegacion v. Harris, 374 F.2d 33 (5th Cir.1967); Harmon v. United States, 59 F.2d 372, 373 (5th Cir.1932)). Because Borne alleged causes of action under general maritime law and the Jones Act, federal law governs his challenge of the validity or enforceability of his settlement agreement with A & P.

A considerable body of case law guides our review on this appeal. Seamen such as Borne "are wards of admiralty whose rights federal courts are duty-bound to jealously protect." Bass v. Phoenix Seadrill/78, Ltd., 749 F.2d 1154, 1160-61 (5th Cir.1985). We accordingly must "be particularly vigilant to guard against overreaching when a seaman purports to release his rights to compensation for personal injuries." Id. at 1161. Our ultimate concern in these cases is whether, at the time the seaman relinquished those rights, he did so with "an informed understanding of his rights and a full appreciation of the consequences" of executing the release, Cates v. United States, 451 F.2d 411, 414 (5th Cir.1971), quoted with approval in Bass v. Phoenix Seadrill/78, Ltd., 749 F.2d at 1161; Charpentier v. Fluor Ocean Services, Inc., 613 F.2d 81, 84 (5th Cir.1980), where the burden of demonstrating such understanding rests with the party claiming that the matter has been settled, Garrett v. Moore-McCormack Co., Inc., 317 U.S. 239, 248, 63 S.Ct. 246, 252, 87 L.Ed. 239 (1942); Gueho v. Diamond M. Drilling Co., 524 F.2d 986, 987 (5th Cir.1975), cert. denied, 425 U.S. 976, 96 S.Ct. 2177, 48 L.Ed.2d 800 (1976). In applying this standard, we have therefore been sensitive to whether the parties have negotiated at arms-length and in apparent good faith, whether the competency of counsel or the adequacy of medical or legal advice is questioned, and whether there is any appearance of "taint or fraud, deception, coercion or overreaching ... in the negotiations eventuating in the settlement." Strange v. Gulf & South American Steamship Co., Inc., 495 F.2d 1235, 1236 (5th Cir.1974). Adequacy of the settlement consideration has been relevant in our review only insofar as it indicates "whether the seaman had a full understanding of his rights and of the consequences of the settlement agreement." Bass v. Phoenix Seadrill/78, Ltd., 749 F.2d at 1161. A determination whether a seaman was fully apprised of rights and consequences is a finding of fact. Absent an express district court determination on this, we must review the record for ourselves or remand the case for such a determination. Id. at 1162-63 & n. 16.

The tension in the case law is readily apparent in this appeal. On the one hand we must be duly sensitive to the fact that, as a ward of the admiralty,...