Opinion
Civil Action No: 00-1484; c/w 00-2102; 00-2346; 00-2067, Section: "R"(4)
December 12, 2002
ORDER AND REASONS
Before the Court is the motion of defendant, Stone Energy Corporation, for summary judgment to enforce a settlement agreement with plaintiff Ricky Ardoin. For the following reasons, the Court GRANTS defendant's motion.
I. BACKGROUND
This case arises out of the capsize on April 21, 2000 of the M/V JOHNETTE, a jack-up rig owned by Falcon Operators and operated by Stone Energy. Various individuals, including Ricky Ardoin, brought claims for personal injuries sustained as result of the capsize. Plaintiff claims that he suffered serious physical and mental injuries and permanent disability, including a right shoulder torn rotator cuff which required surgery, a disc herniation deemed not operable, left shoulder pain, and chronic back and leg pain. His claimed mental injuries include post-traumatic stress disorder, depression, and a severe pain disorder. He also claims a substantial loss in past and future earnings and ongoing medical expenses.
On June 19, 2002, Stone filed a motion to enforce a settlement agreement with plaintiff. Plaintiff's former attorney, Leonard Radlauer, and Stone began settlement negotiations in April or May of 2001. The parties dispute whether these negotiations were contingent upon larger settlement negotiations with Falcon and with Baker, Ardoin's employer, which fell through due to Falcon's bankruptcy. Through his new attorney, Jere Jay Bice, plaintiff claims that Radlauer assured him a collective settlement amount of $230,000 and that Radlauer never informed him of any individual settlement amounts. Stone asserts that its negotiations with plaintiff resulted in an agreement that plaintiff would settle his claim against Stone for $5,000 and that it never knew of any contingency upon or negotiations relating to a larger settlement with other defendants. Stone also asserts that it had settled with other plaintiffs in a similar position as Ardoin for $5,000.
In response to Stone's motion, Radlauer filed unsworn memoranda but offered no evidence suggesting that the settlement was contingent upon settlements with the principal defendants. Plaintiff initially submitted no affidavit of his own. The Court nevertheless held an evidentiary hearing on December 4, 2002 to permit the parties to submit proof of their respective positions. Tellingly, Radlauer neither appeared at the hearing nor submitted any evidence to support plaintiff's contentions that Radlauer did not have settlement authority or that the settlement was contingent. Plaintiff submitted his own affidavit to the effect that he never knew of any settlement sum or agreement other than the $230,000 amount Radlauer quoted him, that Radlauer had advised him of Falcon's imminent bankruptcy, and that he never signed any check or settlement documents from Stone. Stone's attorney testified under oath that the parties agreed to the $5,000 settlement and that it was not contingent on the settlement by other parties for some global sum. Further, Stone introduced documents indicating that Radlauer signed a settlement letter confirming the settlement and provided his tax identification number on the settlement letter as requested by Stone. Further, the settlement letter, quoted below, mentioned no contigency:
This is to confirm that you have agreed to settle your claim of Mr. Ardoin against Stone for the amount of $5,000. You reserve all rights to proceed against any named and unnamed parties. I would ask that you please sign on the signature line and fax the signed letter back to me confirming our settlement. . . . I have contacted the court and told them that our motion is moot and that we have settled Ardoin's claim against Stone.
(Def.'s Ex. 1.) Stone also instructed Radlauer not to deposit the funds before signing and returning the receipt and release. It is undisputed that the check bears a signature in plaintiff's name and that Radlauer deposited the check into his account. Ardoin and Radlauer did not sign a receipt and release or a motion to dismiss.
On June 5, 2001, soon after these events took place, the Court stayed all matters relating to claims against Reliance Insurance Company, Falcon's insurer, which entered rehabilitation and, subsequently, liquidation. The case was not reopened until May 2002. On October 25, 2001, Ardoin terminated Radlauer's services. During that year, Radlauer never confronted Stone with any dispute as to the validity of the settlement agreement or as to the adequacy or contingency of the $5,000 amount.
Radlauer did not file a motion to withdraw as Ardoin's counsel until July 17, 2002.
On June 7, 2002, defendant sent Radlauer a copy of the negotiated $5,000 check, requesting that he execute the receipt and release and the motion for partial dismissal within five days. When it did not receive these documents from Radlauer as requested, Stone filed this motion for summary judgment to enforce the settlement. On November 14, 2002, Jere Jay Bice enrolled as plaintiff's counsel. Through Bice, plaintiff asserts that the settlement agreement is unenforceable on the grounds that plaintiff never consented to the settlement amount. Plaintiff further claims that there is an appearance of fraud and inadequacy of counsel and that the settlement is grossly inadequate. Lastly, plaintiff asserts that the settlement is invalid because its terms have not been fulfilled, namely, no release has been signed.
For the following reasons, the Court GRANTS Stone's motion for summary judgment.
II. DISCUSSION
A. Legal Standard
Summary judgment is appropriate when there are no genuine issues as to any material facts, and the moving party is entitled to judgment as a matter of law. See FED. R. Civ. P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 322-323, 106 S.Ct. 2548, 2552 (1986). A court must be satisfied that no reasonable trier of fact could find for the nonmoving party or, in other words, "that the evidence favoring the nonmoving party is insufficient to enable a reasonable jury to return a verdict in her favor." Lavespere v. Niagara Mach. Tool Works, Inc., 910 F.2d 167, 178 (5th Cir. 1990) (citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249, 106 S.Ct. 2505, 2511 (1986)). The moving party bears the burden of establishing that there are no genuine issues of material fact.
If the dispositive issue is one on which the nonmoving party will bear the burden of proof at trial, the moving party may satisfy its burden by merely pointing out that the evidence in the record contains insufficient proof concerning an essential element of the nonmoving party's claim. See Celotex, 477 U.S. at 325, 106 S.Ct. at 2554; see also Lavespere, 910 F.2d at 178. The burden then shifts to the nonmoving party, who must, by submitting or referring to evidence, set out specific facts showing that a genuine issue exists. See Celotex, 477 U.S. at 324, 106 S.Ct. at 2553. The nonmovant may not rest upon the pleadings, but must identify specific facts that establish a genuine issue exists for trial. See id. at 325, 106 S.Ct. at 2553-54; Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir. 1996).
B. Enforcement of the Settlement Agreement
A district court has the power to enforce summarily a settlement agreement in a case pending before it. Strange v. Gulf South American Steamship Co., 495 F.2d 1235, 1237 (5th Cir. 1974). When the substantive claims in a case are based on federal maritime law, the court must apply federal law to determine the validity or enforceability of the settlement agreement. See Mid-South Towing Co. v. HAR-WIN, Inc., 733 F.2d 386, 389 (5th Cir. 1984) (citing Strange, 495 F.2d 1235; Cia Anon Venezolana De Navegacion v. Harris, 374 F.2d 33 (5th Cir. 1967)); Chilsan Merchant Marine Co., Ltd. v. M/V K Fortune, 110 F. Supp.2d 492, 496 (E.D. La. 2000). Under federal law, when opposition to enforcement of a settlement agreement is based on a challenge to the validity or scope of the agreement itself, rather than the merits of the claim, the court cannot summarily enforce the settlement on the motions but must allow the parties an evidentiary hearing. See Mid-South Towing Co., 733 F.2d at 390-91 (citing Mull v. Marathon, 658 F.2d 386 (5th Cir. 1981); Cia Anon Venezolana, 374 F.2d at 36; Harmon v. United States, 59 F.2d 372, 373 (5th Cir. 1932)); Itochu Int'l, Inc. v. M/V Sunderland et al., 2002 WL 318327, *2 (E.D. La. 2002); Demilia v. United Student Aid Funds et al., 2001 WL 1543491, *4 (E.D. La. 2001). This holds true even when the settlement agreement appears legitimate. See Noble Drilling, Inc. v. Davis et al., 64 F.3d 191, 195 (5th Cir. 1995). Underlying this principle is the notion that seamen are "wards of admiralty whose rights federal courts are duty-bound to jealously protect." Id. (citing Bass v. Phoenix Seadrill/78, Ltd., 749 F.2d 1154, 1160-61 (5th Cir. 1985)).
Courts must be "particularly vigilant to guard against overreaching when a seaman purports to release his rights to compensation for personal injuries." Borne v. AP Boat Rentals No. 4, Inc., 780 F.2d 1254, 1256 (5th Cir. 1986) (quoting Bass, 749 F.2d at 1160-61 (5th Cir. 1985)). "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." Id. (citing cases). The burden of demonstrating the seaman's understanding rests with the party claiming enforcement of the settlement. See id. (citing cases). In evaluating whether that burden is satisfied, courts consider whether the parties negotiated at arms-length and in apparent good faith, whether adequacy and competency of legal advice is questioned, and whether there is any appearance of fraud or deception. See id. at 1257 (citing Strange, 495 F.2d at 1236). Whether a seaman was fully apprised of rights and consequences is a finding of fact. See id. Regarding an attorney's settlement authority,
[A]n attorney of record is presumed to have authority to compromise and settle litigation of his client, and a judgment entered upon an agreement by the attorney of record will be set aside only upon affirmative proof of the party seeking to vacate the judgment that the attorney had no right to consent to its entry.Mid-South Towing Co., 733 F.2d at 390 (citing St. Amand v. Marriott Hotel, Inc., 430 F. Supp. 488, 490 (E.D. La. 1977)). See also Cia Anon Venezolana, 374 F.2d at 35-36 (affirming district court's enforcement of a settlement agreement despite fact that counsel for defendant later informed plaintiff that defendant client asserted a lack of settlement authority). "When a seaman is acting upon independent advice and that advice is disinterested and based on a reasonable investigation, there being no question of competence, a settlement agreement will not be set aside." Borne, 780 F.2d at 1258 (citing cases).
In this case, plaintiff testifies that he agreed only to a $230,000 settlement, that he had no knowledge of any specified amount from Stone, and that he never signed the check. (Ardoin Aff. ¶¶ 2, 4.) The evidence shows, however, that plaintiff was adequately represented by an experienced attorney. The transaction was at arms-length. There is no appearance of fraud. Moreover, the evidence submitted by Stone — the sworn testimony of its attorney, Radlauer's signature and tax identification number affixed to Stone's settlement letter, and Radlauer's act of depositing the check into his account — indicates that the $5,000 amount was agreed to by the parties. ( See Def.'s Mot. Summ. J., Exs. 1-3.) Further, the evidence does not reveal any contingency relating to the $5,000 amount. While the evidence does suggest that plaintiff intended to confect a settlement that would resolve all of his claims at the same time, it does not suggest that Stone's settlement was contingent on the actions of any other parties. Ardoin even testifies that he knew that Falcon was threatening bankruptcy around the time of settlement negotiations with Stone, yet he offers no contemporaneous evidence that he or Radlauer posed any objection to Stone's settlement letter or check to note that the settlement was contingent on payments by others. ( See Ardoin Aff. ¶ 2.) To the contrary, Stone's settlement letter, which Radlauer signed, contains a clause reserving Ardoin's rights against other parties. ( See Stone Letter, attached to Def.'s Mot. Summ J., Ex. 1.)
Further, there is no evidence suggesting that $5,000 was inadequate. Stone had settled with multiple plaintiffs in Ardoin's position for $5,000, which indicates that Stone was on the outer margin of potentially liable defendants. (Test. of Darling.) This accords with the Court's perception of the degree of the parties' relative exposure. Given Stone's marginal position in the litigation, a settlement of $5,000 does not appear to be inadequate or the product of overreaching. Moreover, the low settlement value of the claim makes it unlikely that Stone's $5,000 settlement was to be contingent on plaintiff's obtaining $225,000 from the other parties.
Plaintiff was badly injured in the accident and the value of this case has been greatly diminished by Falcon's bankruptcy, all of which is unfortunate. Plaintiff's testimony that he did not agree to a settlement with Stone, however, is not believable. Plaintiff has a powerful incentive to see past events in a different light, given that the principal defendants are no longer available as sources of recovery. This is not a case in which a plaintiff asserts he knew nothing about a proposed settlement and the lawsuit was settled out from under him. To the contrary, plaintiff knew that his former attorney was in the process of settling the case on his behalf. Moreover, plaintiff's former attorney was experienced and engaged in armslength, good faith negotiations with Stone. Finally, when the time came for plaintiff's former attorney to give evidence under oath to support plaintiff's position, he did not do so.
The Court therefore concludes that Stone has satisfied its burden and finds the settlement agreement valid and enforceable.
IV. CONCLUSION
Defendant's motion to enforce the settlement agreement is GRANTED.