Howard v. Chris-Craft Corp.

• Decision Date: 24 September 1982
• Docket Number: No. TY-80-407.,TY-80-407.
• Parties: Holley Evans HOWARD and Sarah Donaldson, v. CHRIS-CRAFT CORPORATION, et al.
• Court: U.S. District Court — Eastern District of Texas

562 F. Supp. 932

Holley Evans HOWARD and Sarah Donaldson, v. CHRIS-CRAFT CORPORATION, et al.

No. TY-80-407.

United States District Court, E.D. Texas, Tyler Division.

September 24, 1982.

Leonard E. Davis, John H. Minton, Douglas R. McSwane, Jr., Potter, Guinn, Minton, Roberts & Ireland, Tyler, Tex., for plaintiffs.

David W. Ledyard, Strong, Pipkin, Nelson, Parker & Bissell, Beaumont, Tex., for defendants.

Robert Keith Drummond, Strasburger & Price, Dallas, Tex., for Outboard Marine Corp.

Tom Stollenwerck, Dallas, Tex., for Ins. Co.

Memorandum Opinion

JUSTICE, Chief Judge.

Plaintiffs filed this products liability suit on November 7, 1980, for personal injuries sustained in a boating accident. Before the court is plaintiffs' motion to enforce a settlement agreement that the parties agree was entered into on August 19, 1982. For the reasons set forth below, the motion will be granted.

I. History of the Case

The plaintiffs are two young women who took a ride on Lake Tyler on July 5, 1980, in a boat manufactured by defendants. Their allegations are summarized, as follows: The defective design of the boat would cause it to tilt upward at a steep angle, greatly impairing forward visibility, at least until the boat achieved a very high rate of speed — about 30 m.p.h. — at which time it would "plane out." Because it was impossible to see adequately at a pre-planing speed while sitting in the seats provided, plaintiffs had to sit instead on the top of the backs of those seats. When that boat was hit by the wake of another boat, both plaintiffs were thrown into the water. The boat was defective, in that it was not equipped with a relatively simple safety device, called a "kill switch", which would have automatically cut the engine when the driver was thrown out of the boat. Instead, the boat continued running and pulled into a tight circle, repeatedly running over both women with its propeller, permanently disfiguring both and almost killing them. Plaintiff Holley Howard, who was to have begun work in a few weeks as a dance instructor and part-owner of a dance studio, lost her leg.

Defendants prepared to defend the case by alleging, inter alia, misuse of equipment, assumption of the risk, and contributory negligence. In addition, they filed a counterclaim against the driver of the boat, plaintiff Holley Howard, for indemnification or contribution for any damages they might be found to owe plaintiff Sarah Donaldson. They had expert witnesses available and ready to testify that the accident could not have happened as the women had described it. They intended to argue, among other things, that the women were under the influence of alcohol (both had admitted to drinking about two and a half alcoholic drinks over the four hours preceding the accident), that they were seated precariously (also admitted by plaintiffs), and that they were operating the boat at an unsafe speed. (See Pre-Trial Order, Contentions of Chris-Craft.)

After some eighteen months of extensive discovery, including the taking of over thirty depositions, the case was set for trial on the August 1982 docket in the Tyler Division, with jury selection to take place August 20, 1982. On August 18, 1982, David Ledyard, Esquire, lead counsel for defendants Chris-Craft Corporation and Chris-Craft Industries, Inc. ("Chris-Craft"), offered to plaintiffs a settlement of $1,040,000. It is undisputed that Ledyard had full authority to make that offer on behalf of his clients. On August 19, 1982, counsel for plaintiffs, Leonard Davis, Esquire, accepted that offer on behalf of the plaintiffs, having obtained their permission to do so. The settlement was the culmination of over a month of negotiations, with the plaintiffs having originally asked for $2.5 million (July 10, 1982), and the defendants having originally offered $450,000 (August 13, 1982). Ledyard and Davis agreed that Davis would notify the court of the settlement, which he did that same day. It was further agreed that Davis would set down the agreement in writing in a letter to Ledyard, which would include, as terms: (1) that Chris-Craft would pay the plaintiffs $1,040,000 within ten days; (2) that Chris-Craft would pay all court costs; (3) that Chris-Craft would execute releases of plaintiffs for any contribution claims; and (4) that Chris-Craft would provide necessary indemnity agreements, to preclude the necessity of any of the settlement money having to be held in trust under an indemnity agreement previously entered into between plaintiffs and a former additional defendant in this case (Outboard Marine Corporation). Davis wrote and sent the letter the same day. Ledyard testified that he had no doubt at that time that the case had been settled.

Jury selection did not take place on August 20, because of the settlement.

Davis's letter arrived in Ledyard's office on August 20, and was read by Ledyard on August 24. Ledyard testified that the letter accurately reflected his understanding of the settlement. At that time, Ledyard advised his client of the settlement and ordered the checks "cut" and he advised plaintiffs' counsel that he had done so.

On August 25, Ledyard became aware that a new witness, who had read of the settlement in a Tyler, Texas, newspaper, had volunteered his services to the defendants, because he believed he possessed information about the accident that, in his opinion, would make the settlement unjust. Ledyard contacted the witness, Mr. Bob Jernigan, found his information credible, and notified Chris-Craft. On August 27, 1982, Ledyard notified Davis that Chris-Craft was not going to tender the checks, on the basis of the new witness's information about the accident.

Plaintiffs moved this court to enforce settlement on August 30, 1982, after the expiration of the ten day period during which, according to the settlement, Chris-Craft was to have tendered the checks. Depositions were taken, and on September 8 and 9, 1982, a plenary hearing was held on the question of whether or not the settlement should be enforced or set aside.

II. The Evidence Presented at the Plenary Hearing

The new witness, Jernigan, testified that he was in a boat with six other adults and two children on Lake Tyler on July 5, 1980. He said that he saw two girls in a boat drive past his boat at a high rate of speed, perhaps twenty to thirty miles per hour, and that it was "planing," that is, the hull was down fairly level in the water. The girls were sitting on the tops of the backs of their seats, which seemed dangerous to him, especially since the boat had no safety rails. He said the driver had something in her right hand (a cup or glass), and the girls were conversing. One of the women in his own party commented that the girl in the other boat was driving with her feet, at which time Jernigan looked and saw that she was. The girls' boat came within about thirty yards of Jernigan's boat. After the boat passed, Jernigan turned his attention back to his own boat, which was about to pull up a skier. About a minute later, he noticed that a very serious accident had taken place, apparently involving the same boat that had passed them. The boat was circling, and rescuers were already on their way. Jernigan could not identify the plaintiffs as the girls he saw. Jernigan said that the girls he saw were wearing two-piece bathing suits, although both plaintiffs testified that they were wearing one-piece suits. Jernigan did not see the accident and, consequently, he did not observe the speed of the boat or the manner in which it was being operated at the moment of the accident.

Jernigan, who was a licensed minister at the time, gave a sermon the next morning into which he incorporated his story about the accident. At the plenary hearing, excerpts of the tape were played in which Jernigan described the same events, including his observation that the girl was driving with her feet. He also described on the tape his theory of how the accident occurred, although neither he nor any member of his party saw it.

Jernigan's wife, Mrs. Jody Jernigan testified that she had been the one in the Jernigan party who had commented that the girl was driving with her feet. She said she had seen the driver's foot, probably the right foot, on the bottom half of the steering wheel. She did not see the accident.

Deposition testimony of Jernigan's sister, Judy, was also entered into the record. She said she had heard someone comment that the girl was driving with her feet, but that she "did not look at the steering wheel area at all," and so she didn't know whether the girl was driving with her feet or not. She did not see how the accident occurred, but she said she turned in time to see one girl go overboard and the boat circling about 200 yards away.

Deposition testimony of Mr. David Hensarling, another member of the party, was also entered into the record. He heard that the girl was driving with her feet, and then looked and saw the girl driving with her foot or feet.

Plaintiffs, in rebuttal, both testified as to their own recollections of the accident, which were consistent with the allegations set forth in the complaint. Both reiterated, in a highly credible manner, that Holley was not driving with her feet and never had so driven the boat. Both admitted to having had two and a half tequila "sunrises" that afternoon, although they said the drinks were sitting on the dashboard at the time of the accident. Both reiterated that the boat was not going fast enough to plane, and that, therefore, the visibility problem forced them to sit on top of the backs of their seats.

Credible character witnesses testified on behalf of plaintiff Holley Howard's truthfulness. Furthermore, her father testified that, during the three months she spent in the hospital following the accident, she told him everything she knew about the accident, including those elements of the accident that might have made her feel guilty — the drinks, their...