Lee v. Hunt

• Decision Date: 01 December 1980
• Docket Number: No. 80-3211,80-3211
• Citation: 631 F.2d 1171
• Parties: Mrs. Frania Tye LEE, Plaintiff, v. Ray Lee HUNT, Executor of the Estate of H. L. Hunt, Defendant-Appellee, v. Hugh S. Hunt, Defendant-Appellant. Summary Calendar. . Unit A
• Court: U.S. Court of Appeals — Fifth Circuit

Page 1171

631 F.2d 1171

Mrs. Frania Tye LEE, Plaintiff, v. Ray Lee HUNT, Executor of the Estate of H. L. Hunt, Defendant-Appellee, v. Hugh S. Hunt, Defendant-Appellant.

No. 80-3211

Summary Calendar.

United States Court of Appeals, Fifth Circuit.

Unit A

Dec. 1, 1980.

Thomas A. Rayer, New Orleans, La., for defendant-appellant.

Cook, Clark, Egan, Yancey & King, Sidney E. Cook, Shreveport, La., Don L. Case, Dallas, Tex., Lawrence E. Donohoe, Jr., Lafayette, La., for Ray Lee Hunt.

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

Before GEE, RUBIN and RANDALL, Circuit Judges.

RANDALL, Circuit Judge:

This appeal arises from a suit originally filed in 1975 by Mrs. Frania Tye Lee, who is the mother of the Appellant herein, Hugh S. Hunt (a/k/a Hugh Lee Hunt, hereinafter "Hugh Hunt"), against the executor of the Estate of H. L. Hunt, alleging a putative marriage with the late H. L. Hunt and, as such, an entitlement to a community interest in property acquired during the alleged relationship. After lengthy litigation on jurisdiction, venue and related matters, Lee v. Hunt, 410 F.Supp. 329 (M.D.La.1976); Lee v. Hunt, 415 F.Supp. 245 (M.D.La.1976); Lee v. Hunt, 431 F.Supp. 371 (W.D.La.1977), the matter was finally tried before a jury between January 9 and January 16, 1978. On January 16, counsel for the respective parties requested a conference in chambers with the trial judge, at which time they advised the court that they had reached an agreement of settlement of the pending lawsuit. The judge requested that the parties dictate the terms of the agreement to the court reporter in his chambers. During a brief recess the dictated settlement was transcribed, and eleven persons-including Hugh Hunt-thereafter signed it. The district court discharged the jury and, on January 23, 1978, entered a judgment of dismissal with prejudice based upon the January 16 settlement. Pursuant to this agreement, counsel for the Hunt Estate then prepared a "master settlement agreement" which spelled out in greater detail the agreement among the parties. All of the necessary parties (nineteen in all) signed this document, with the exception of Hugh Hunt.

Having failed to persuade Hugh Hunt, counsel for the Hunt Estate filed a petition to enforce the settlement agreement on September 26, 1978. On the same date the district court joined Hugh Hunt as a party defendant to the action, pursuant to Fed.R.Civ.P. 19(a), and ordered him to show cause why the settlement should not be enforced. In response to the petition and these orders, Hugh Hunt filed two motions: (1) to vacate or modify judgment, Fed.R.Civ.P. 60(b); and (2) to dismiss the petition pursuant to Fed.R.Civ.P. 12(b)(1), (2), (5) and (6), that is, for lack of subject matter and personal jurisdiction, for insufficiency of service of process, and for failure to state a claim upon which relief can be granted. On December 7, 1978, the district court held a plenary hearing on the petition. At that time counsel for Hugh Hunt withdrew the Rule 60(b) motion. On December 19, 1979, the district court entered a memorandum ruling, Lee v. Hunt, 483 F.Supp. 826 (W.D.La.1979), in which it rejected all of Hugh Hunt's Rule 12(b) claims and held that the January 16 settlement agreement was binding on Hugh Hunt and that all of the provisions of the master settlement agreement were within the contemplation of the earlier agreement. Accordingly, the court entered final judgment on December 27, 1979, ordering Hugh Hunt to execute the master settlement agreement.

Hugh Hunt now appeals from this order. He does not argue with the district court's rulings under Rule 12(b) and does not seek to reassert his Rule 60(b) motion. Rather, he raises a confused variety of factual and legal challenges to the memorandum ruling and order of the district court. These arguments fall roughly into the following categories: (1) that there was no "meeting of the minds" and therefore no contract in the January 16 meeting; (2) that he may avoid the contract under doctrines of duress, undue influence and failure of consideration; (3) that the master settlement agreement is not a reasonable expression of the terms of the January 16 agreement; and (4) that certain provisions of the agreement are contra bones mores under Louisiana law. We deal with these arguments in turn after determining the applicable state law and reviewing the circumstances of the January 16 agreement.

I. CHOICE OF LAW

A threshold question in this case is the choice of law by which the settlement agreement should be judged. Although federal courts possess the inherent power to enforce agreements entered into in settlement of litigation, ¹ the construction and enforcement of settlement agreements is governed by principles of state law applicable to contracts generally. E. g., Florida Education Association, Inc. v. Atkinson, 481 F.2d 662 (5th Cir. 1973). In accordance with Klaxon Co. v. Stentor Electric Manufacturing Co., Inc., 313 U.S. 487, 61 S.Ct. 1020, 85 L.Ed. 1477 (1941), and its progeny, federal courts must, in such cases, apply the choice of law rules of the forum state, in this case Louisiana. Thus, the district court correctly referred to La.Civ.Code Art. 10, which provides, in pertinent part:

The form and effect of public and private instruments are governed by the laws and usages of the places where they are passed or executed.

It is not immediately clear how the district court went from this provision to the conclusion that Texas law applies in this case; the contract of settlement was executed in Louisiana. ² Nevertheless, a close analysis of the applicable choice of law principles convinces us that Texas law does govern the interpretation of the settlement agreement.

Louisiana choice of law rules (and their interpretation by federal courts) have been in a state of confusion for some time. During the 1960's a line of cases evolved in both the intermediate Louisiana appellant courts ³ and in federal courts in this circuit ⁴ which applied a more modern approach to choice of law rules-looking to the "center of gravity," or to the state with the "most significant contacts"-rather than applying the literal wording of the Louisiana Code. See generally Restatement (Second) of Conflict of Laws §§ 6, 188 (1971). But this approach was rejected by the Louisiana Supreme Court in Johnson v. St. Paul Mercury Insurance Co., 236 So.2d 216 (La.1970). We subsequently recognized Louisiana's adherence to the strict wording of Article 10 in Lester v. Aetna Life Insurance Co., 433 F.2d 884 (5th Cir.), cert. denied, 402 U.S. 909, 91 S.Ct. 1382, 28 L.Ed.2d 650 (1971), but upheld the district court's application of the modern approach by carving out an exception to the rule of Klaxon. We held that we were not bound by the choice of law rule of the forum state where only a "false conflict" exists, that is, where only one state has any legitimate interest in the case. Our holding was not an attempt to overrule the Louisiana Supreme Court's strict interpretation of Article 10, or to eviscerate Klaxon ; rather, we sought to except the general Klaxon rule only in those extreme cases where " 'one of two states related to a case has a legitimate interest in the application of its law and the other has none.' " 433 F.2d at 890. Our exception was, however, rejected by the Supreme Court in Day and Zimmerman, Inc. v. Challoner, 423 U.S. 3, 96 S.Ct. 167, 46 L.Ed.2d 3, overruling Challoner v. Day and Zimmerman, Inc., 512 F.2d 77 (5th Cir. 1975), in a short per curiam opinion which concluded:

By parity of reasoning, the conflict-of-laws rules to be applied by a federal court in Texas must conform to those prevailing in the Texas state courts. A federal court in a diversity case is not free to engraft onto those state rules exceptions or modifications which may commend themselves to the federal court, but have not commended themselves to the State in which the federal court sits.

423 U.S. at 4, 96 S.Ct. at 168. See generally C. Wright, Law of Federal Courts § 57, at 264-65 (3rd ed. 1976).

Following Challoner, we are bound by the interpretation of Article 10 adopted by the Louisiana courts. Subsequent to Challoner, however, the Louisiana Supreme Court overruled Johnson in favor of a more modern approach to conflicts of law. Jagers v. Royal Indemnity Co., 276 So.2d 309 (La.1973). Unfortunately, Jagers is far from clear. Jagers apparently created an exception to the strict Louisiana choice of law rules by holding that only a "false conflict" existed in the case; that is, the Louisiana Supreme Court adopted the reasoning of this court in Lester and Challoner and held that conflicts of law principles did not apply in cases of "false" conflicts. ⁵ But Jagers can be read to go even farther than this. After holding that the state choice of law rule did not apply in cases of false conflict, the court cryptically stated:

That some modern methods for determining whether to apply the law of the forum are faulty in some respects should not deter a court in the application of the law of the forum to its citizens, when not otherwise prohibited.

A footnote to this statement is as follows:

For choice-of-law principles, see Restatement, Second, Conflict of Laws, § 6 (1969):

"(1) A court, subject to constitutional restrictions, will follow a statutory directive of its own state on choice of law,

"(2) When there is no such directive, the factors relevant to the choice of the applicable rule of law include

"(a) the needs of the interstate and international systems,

"(b) the relevant policies of the forum,

"(c) the relevant policies of other interested states and the relative interests of those states in the determination of the particular issue,

"(d) the protection of justified expectations,

"(e) the basic policies underlying the particular field of law,

"(f) certainty, predictability and uniformity of result, and

"(g) ease in the determination and...