Teal v. Eagle Fleet, Inc.

• Citation: 933 F.2d 341
• Decision Date: 17 June 1991
• Docket Number: No. 90-4843,90-4843
• Parties: , 19 Fed.R.Serv.3d 1462 Edwin T. TEAL and Hilde Teal, Plaintiffs-Appellants, v. EAGLE FLEET, INC. et al., Defendants-Third Party Plaintiffs, v. PENROD DRILLING CORPORATION, Third Party Defendant-Appellee. Summary Calendar.
• Court: United States Courts of Appeals. United States Court of Appeals (5th Circuit)

Page 341

933 F.2d 341

1993 A.M.C. 1518, 19 Fed.R.Serv.3d 1462

Edwin T. TEAL and Hilde Teal, Plaintiffs-Appellants, v. EAGLE FLEET, INC. et al., Defendants-Third Party Plaintiffs, v. PENROD DRILLING CORPORATION, Third Party Defendant-Appellee.

No. 90-4843

Summary Calendar.

United States Court of Appeals Fifth Circuit.

June 17, 1991.

Rehearing Denied Oct. 3, 1991.

Anthony D. Moroux, Moroux, Domengeaux, & Davis, Lafayette, La., for plaintiffs-appellants.

William B. Schwartz, William Daniel Wellons, Burke & Mayer, New Orleans, La., for Penrod Drilling Corp.

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

Before GOLDBERG, JOLLY, and JONES, Circuit Judges.

PER CURIAM:

Edwin Teal and his wife seek to appeal the district court's denial of motions seeking to set aside a settlement agreement the Teals entered into with Penrod Drilling Corporation ("Penrod"). The district court denied these various motions on procedural grounds. The Teals also contest the district court's decision to grant Penrod's motion to dismiss for failure to state a claim, arguing that the district court erred in dismissing Penrod without first addressing the merits of the settlement agreement. Because we find that the issue of the validity of the settlement agreement was never properly before the district court, we affirm.

I. FACTS AND PROCEEDINGS BELOW

This action arises out of an accident in which Edwin Teal, a roustabout employed by Penrod, was injured when a crane operator on a Penrod jackup rig lowered him from a personnel basket onto the M/V AMERICAN EAGLE, a vessel owned and operated by Eagle Fleet, Inc. ("Eagle"). On August 20, 1986, Teal and his wife entered into a settlement agreement with Penrod. Under the terms of the settlement agreement, the Teals retained their rights to sue Eagle.

Subsequent to entering into their settlement agreement with Penrod, the Teals brought this action against Eagle and the M/V AMERICAN EAGLE. On August 1, 1989, Eagle filed a third party complaint against Penrod, tendering Penrod to the Teals pursuant to Federal Rule of Civil Procedure 14(c). Eagle also filed a motion to set aside the settlement between the Teals and Penrod, arguing that the district court should declare this agreement invalid because Penrod procured it through overreaching and without obtaining the Teals' full understanding of its content and consequences.

Penrod timely filed an answer to Eagle's third party complaint and also filed a motion to dismiss, asserting lack of jurisdiction and, alternatively, failure to state a claim upon which relief could be granted. Subsequently, the district court denied Eagle's motion to set aside the settlement, finding that Eagle lacked standing to attack the settlement agreement because it was not prejudiced by the settlement. On October 27, 1989, Eagle filed a motion for reconsideration, arguing that it had standing to challenge the settlement agreement because it would suffer legal prejudice if the court failed to reduce its liability to the Teals by the amount of Penrod's liability. Eagle's motion for reconsideration was set for hearing on December 12, 1989. Two months after this scheduled hearing date, the Teals filed a memorandum in support of Eagle's motion for reconsideration.

On February 26, 1990, the Teals filed their first motion to set aside the settlement. When the Teals filed this motion, the trial was set for March 19, 1990. The court's standard pretrial order specifically stated that all dispositive motions must be filed sixty days prior to the pre-trial date. On March 13, 1990, the court entered an order denying both Eagle's motion for reconsideration and the Teals' motion to set aside the settlement. The court held that Eagle would not be prejudiced by the settlement with Penrod because the court would apportion damages pro rata in accordance with Leger v. Drilling Well Control, Inc., 592 F.2d 1246 (5th Cir.1979). The district court denied the Teals' motion to set aside the settlement as "obviously" untimely.

In an order dated March 16, 1990, the district court addressed Penrod's motion to dismiss. The court held that it did have subject matter jurisdiction over Penrod because the Teals properly invoked admiralty jurisdiction, and therefore Eagle properly tendered Penrod to the plaintiffs pursuant to Rule 14(c). Nevertheless, the court granted Penrod's motion to dismiss for failure to state a claim, finding that Penrod had already settled with the Teals and Eagle was not prejudiced by that settlement.

On March 29, 1990, the Teals filed a motion for reconsideration of the court's order refusing to set aside the settlement agreement, arguing once again that the Teals did not understand the nature of the settlement agreement, and also arguing that Penrod had breached the agreement. The Teals attached to this motion for reconsideration certain exhibits and an affidavit from Teal which had not previously been submitted to the court. The district court denied the Teals' motion for reconsideration, noting that they could have presented the additional evidence in their first motion and, therefore, relief was not available under a motion to reconsider.

Prior to the district court's denial of their motion for reconsideration, the Teals settled their claim with Eagle for an undisclosed sum and, upon the district court's denial of the Teals' motion for reconsideration, the matter was dismissed. The Teals subsequently filed this appeal, arguing that the district court erred when it dismissed the Teals' claims against Penrod without addressing the validity of the settlement agreement.

II. DISCUSSION

A. Jurisdiction

Penrod argued in the district court, and argues now on appeal, that the district court never properly acquired jurisdiction over it. According to Penrod, the Teals' failure to specifically plead their cause as one arising under Rule 9(h), Fed.R.Civ.P., precluded Eagle from filing a Rule 14(c) ¹ demand against Penrod. Rule 9(h) provides in pertinent part:

A pleading or count setting forth a claim for relief within the admiralty and maritime jurisdiction that is also within the jurisdiction of the district court on some other ground may contain a statement identifying the claim as an admiralty or maritime claim for the purposes of Rule 14(c)....

Fed.R.Civ.P. 9(h). The Teals titled their complaint as follows: "COMPLAINT WITHIN THE ADMIRALTY AND MARITIME JURISDICTION PURSUANT TO THE GENERAL MARITIME LAW OF THE UNITED STATES OF AMERICA...." Their complaint goes on to state that: "This case is cognizable under the admiralty and maritime jurisdiction pursuant to the General Maritime Law of the United States of America, 28 U.S.C. [Sec.] 1333 and diversity of citizenship...." In addition, the Teals pled an in rem action against the M/V AMERICAN EAGLE.

Although the Teals' complaint did not specifically invoke Rule 9(h), this court has held that a case cognizable under both admiralty and diversity jurisdiction will be treated as an admiralty action if the plaintiff asserts "a simple statement asserting admiralty or maritime claims." T.N.T. Marine Serv., Inc. v. Weaver Shipyards & Dry Docks, Inc., 702 F.2d 585, 588 (5th Cir.), cert. denied, 464 U.S. 847, 104 S.Ct. 151, 78 L.Ed.2d 141 (1983); cf. 5 Wright & Miller, Federal Practice and Procedure: Civil 2d Sec. 1313 at 719 (1990) (preferred technique is to expressly invoke Rule 9(h)). Therefore, under our jurisprudence, a party need not make a specific reference to Rule 9(h) in order to fall under our admiralty jurisdiction. See Durden v. Exxon Corp., 803 F.2d 845, 848-50 (5th Cir.1986); T.N.T. Marine, 702 F.2d at 586-88.

In T.N.T. Marine and Durden, the plaintiffs asserted both admiralty and diversity jurisdiction. In addition, in both cases in rem actions were pled against the vessel involved. Although neither plaintiff's complaint specifically mentioned Rule 9(h), both complaints contained simple statements asserting admiralty or maritime claims or jurisdiction. Consequently, in both cases this court held that the plaintiff had properly invoked admiralty jurisdiction. See T.N.T. Marine, 702 F.2d at 587; Durden, 803 F.2d at 850; cf. Bodden v. Osgood, 879 F.2d 184, 186 (5th Cir.1989) (where complaint alleged suit brought under admiralty and general maritime laws, but where suit was filed in state court which lacked jurisdiction and plaintiff failed to object to defendant's removal to federal court solely on diversity grounds, no admiralty jurisdiction). Because this court finds that the Teals properly invoked admiralty rules and procedures in their original complaint, we hold that Eagle properly tendered Penrod to the plaintiffs pursuant to Rule 14(c).

B. The Settlement Agreement

In the district court, the Teals moved to set aside their settlement with Penrod, arguing that the court should declare this agreement invalid because it was procured through overreaching and without the Teals' full understanding of its content and consequences. We hold that the district court correctly denied this motion because the Teals did not timely contest the settlement agreement. It is well established that seamen, like Teal, 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); see also Garrett v. Moore-McCormack Co., 317 U.S. 239, 63 S.Ct. 246, 87 L.Ed. 239 (1942). In addition, this court has long recognized that courts must be particularly vigilant to guard against overreaching when a seaman purports to release his right to compensation for personal injuries. See, e.g., Wink v. Rowan Drilling Co., 611 F.2d 98, 100 (5th Cir.) ("releases or settlements involving seaman's rights are subject to careful scrutiny"), cert. denied, 449 U.S. 823, 101 S.Ct. 84, 66 L.Ed.2d 26 (1980).

It does not follow, however, that a district court must independently reject a settlement agreement which has not been...