Durley v. Offshore Drilling Co.

IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT United States Court of Appeals
Fifth Circuit
FILED
August 6, 2008
No. 07-30734 Charles R. Fulbruge III
Clerk
TRACY DURLEY
Plaintiff-Appellee
v.
THE OFFSHORE DRILLING COMPANY
Defendant-Appellant
Appeal from the United States District Court
for the Eastern District of Louisiana
USDC No. 2:06-CV-5681
Before HIGGINBOTHAM, DAVIS, and BARKSDALE, Circuit Judges.
PER CURIAM:*
This is an interlocutory appeal of a district court’s order invalidating a
seaman’s release.1 Tracy Durley (“Durley”) was employed by the Offshore
*
Pursuant to 5TH CIR. R. 47.5, the Court has determined that this opinion should
not be published and is not precedent except under the limited circumstances set forth
in 5TH CIR. R. 47.5.4.
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Durley also asserts that this Court lacks jurisdiction because Appellate Rule
4 required TODCO to file notice of its appeal within thirty (30) days of the entry of the
district court’s appealable judgment or order, the Findings of Fact and Conclusions of
Law entered on February 23, 2007 (the “Findings”). This argument is without merit
because TODCO did indeed timely file its Notice of Interlocutory Appeal (“Notice”).
TODCO filed its Notice on August 8, 2007. The district court issued the Findings in
accordance with Federal Rule of Civil Procedure 52(a), but did not enter judgment in
No. 07-30734
Drilling Company (“TODCO”) as a seaman on an inland drilling barge owned
and operated by TODCO. On July 2, 2006, Durley was injured in an accident on
his rig, and he suffered various injuries. On or about July 12, 2006,
representatives of the company offered Durley $3,000 to release any and all
claims arising out of the July 2 accident.
Durley was diagnosed by multiple doctors prior to August 10, 2006, none
of which diagnosed him with torn ligaments in his left knee or with a herniated
disc in his cervical spine. This was partly due to the fact that Durley withheld
that he was experiencing pain in those areas because he desired to return to
work. Thus, the extent of the medical diagnosis was of severe bruising. On
August 10, 2006, Durley executed release documents (the “Release”) purporting
to settle all claims arising from the accident. After signing the Release, Durley
was diagnosed with the aforementioned injuries.
Counsel for TODCO, in the presence of a court reporter, explained in detail
the terms of the Release before Durley signed. The Release stated, in relevant
part, that Durley agreed to release TODCO “of and from any and all past,
present and/or future claims, demands, causes of action and rights of action
whatsoever, which he may or might have and/or which may hereafter accrue to
him, whether known or unknown, foreseen or unforeseen.” The Release also
stated that Durley relinquished “any and all claims, demands, causes of action
accordance with Rule 58. Rule 58 requires that a judgment be set out in a separate
document. FED. R. CIV. P. 58(a). Thus, under Rule 58, judgement is entered, if a
separate document is required, at the earlier of either (a) “it is set out in a separate
document” or (b) “150 days have run from entry in the civil docket.” FED. R. CIV. P.
58(c)(2). Because the district court did not set out the judgment from the Findings on
a separate document, the Findings were deemed entered for purposes of appeal on July
23, 2007. TODCO’s Notice was therefore timely.
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No. 07-30734
and rights of action which [Durley] may or might have under . . . any . . . laws
whatsoever for past, present and/or future bodily and personal injuries . . . and
all consequences thereof, whether known or unknown, proximate or remote.”
Additionally, the Release stated that Durley “warrants that he is fully aware
that his condition may grow worse than it is, or seems to be . . . [and] is
completely giving up and discharging any and all rights he may have against
[TODCO].” These provisions were explained to Durley and he acknowledged
that he understood them.
Durley filed an action against TODCO pursuant to the Jones Act, 46
U.S.C. App. § 688(a), and general maritime law for personal injuries he allegedly
received from the accident of July 2, 2006. TODCO pled the Release as a defense
to the suit and also filed a compulsory counterclaim for indemnity against
Durley. The district court held a bench trial on the validity of the Release and
found that because none of the doctors had diagnosed the torn ligaments in
Durley’s left knee and the herniated disc in his cervical spine, neither Durley nor
TODCO were aware of the nature of his injuries. Thus, the district court found
that when he signed the Release, both parties thought that severe bruising was
the extent of Durley’s injuries. The district court held that because both parties
shared the mutual mistake of diagnosis of Durley’s injuries, the Release should
be set aside and TODCO’s counterclaim dismissed. The district court did not
reach the remaining grounds Durley urged in support of his argument that the
Release was invalid. For the following reasons, we vacate and remand.
I.
“On appeal, a district court’s conclusion regarding the validity of a
seaman’s release will be reversed only if the conclusion is clearly erroneous.”
Castillo v. Spiliada Mar. Corp., 937 F.2d 240, 245 (5th Cir. 1991); see also
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Transocean Offshore USA Inc. v. Catrette, 256 Fed. Appx. 672, 673 (5th Cir.
2007) (per curiam). Questions of law, of course, we review de novo. See, e.g.,
Jauch v. Nautical Servs., Inc., 470 F.3d 207, 212 (5th Cir. 2006) (citation
omitted).
II.
The validity of a seaman’s release is governed by general maritime law.
Robertson v. Douglas S.S. Co., 510 F.2d 829, 834–35 (5th Cir. 1975) (citations
omitted). Such a release is dependent on whether, at the time of relinquishing
his rights, the seaman had “an informed understanding of his rights and a full
appreciation of the consequences.” Borne v. A&P Boat Rentals No. 4, Inc., 780
F.2d 1254, 1256 (5th Cir. 1986) (citations and internal quotation marks omitted).
In applying this standard, we are “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.’” Id. at 1256–57 (quoting
Strange v. Gulf & S. Am. Steamship Co., 495 F.2d 1235, 1236 (5th Cir. 1974)).
Additionally, we have been willing to consider the adequacy of the settlement
consideration inasmuch as it is relevant to indicate whether the seaman had a
full understanding of his rights and of the consequences. Id. at 1257 (internal
quotation omitted). “The ultimate concern . . . is not whether the seaman has
received what the court believes to be adequate consideration, but rather
whether the seaman relinquished his rights with an informed understanding of
his rights and a full appreciation of the consequences when he executed a
release.” Simpson v. Lykes Bros. Inc., 22 F.3d 601, 602 (5th Cir. 1994) (quoting
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No. 07-30734
Stipelcovich v. Sand Dollar Marine, Inc., 805 F.2d 599, 606 (5th Cir. 1986))
(internal quotation marks omitted).
A seaman’s release should be set aside for mutual mistake if neither party
understood the nature of the injury, as opposed to its extent. Rogers v. Trico
Marine Operators, Inc., No. 98-30094, 1998 WL 870688, at *3 (5th Cir. Dec. 2,
1998) (citing Robertson, 510 F.2d at 836). “A longshoreman who signs a release
may have to take his chances that [with] a properly diagnosed condition . . . his
injuries may be more serious and extensive than originally thought.” Id.(quoting Rogers, 510 F.2d at 836). “[T]he law does not require him to take his
chances when the diagnosis is itself erroneous and he is suffering from a disease
entirely different in nature than that diagnosed.” Id. (emphasis in original).
Where both parties completely misunderstood the nature of the injury, then, we
have set aside a release for mutual mistake. Id. (“Robertson signed the release
with the understanding that the nature of his injury consisted of superficial
injuries . . . . injury that was later discovered demonstrated a mistake of fact
that went not merely to the extent and outcome of his injury, but indicated that
the was the victim of an injury entirely different in nature from that
diagnosed.”).
This case has a release similar in many ways to the release in Simpson.
In that case, the release clearly stated that Simpson released his employer from
liability for all injuries sustained, including “future and unknown damages, as
well as such damages as are now known to have occurred.” 22 F.3d at 602.
Indeed, the injuries that Simpson sustained were even more remote,
unknowable, and unpredictable than in the instant case, because he argued that
the release was limited to his back injury and did not include his subsequently
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No. 07-30734
discovered hearing loss. Id. This Court held that the “district court correctly
rejected Simpson’s argument that the release does not cover his hearing loss
because he was unaware of this injury when he signed the release” because
“[t]he release expressly covers unknown events and exposures as well as future
damages both known and unknown.” Id.In the instant case, Durley signed a release similar to that in Simpson that
expressly covers any worsening of his condition subsequent to signing the
Release, both known and unknown at the time. Both the express language of the
Release and his exchange with TODCO’s counsel make it clear that Durley
understood he was relinquishing his rights for all injuries even if they were
unknown. Per Simpson, then, the doctrine of mutual mistake is unavailable to
him to avoid the agreement.
Durley argues that this Court’s decision in Rogers should control. Because
neither Durley nor TODCO knew of the nature of Durley’s knee and neck
injuries, and no doctor had at the time of the Release properly diagnosed these
injuries, Durley argues that the parties acted pursuant to a mistake in
underlying fact. In Rogers, however, the longshoreman “settled his claims fully
aware that he was suffering from a spine injury” and this Court found that “any
mistake made . . . was only to the extent and eventual outcome of Rogers’s
injuries.” Rogers, 165 F.3d 24, at *3. In the instant case, it is true that no doctor
had diagnosed Durley’s knee and neck injuries, but this is partly due to Durley’s
decision not to disclose the injuries to his doctors because he wanted to return
to work. Durley admitted in his testimony that he knew, at the time of signing
the Release, that he had injuries to his knee and neck; his argument that an
error in diagnosis causes a mutual mistake of fact is therefore unavailing
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No. 07-30734
because the mistake was not truly mutual.
It should be noted that there are specific facts distinguishing this case
from Simpson, namely that Simpson was represented by counsel, that Simpson
conceded that he did not sign the document under duress, and that the amount
of consideration did not support a finding that he was uninformed of his rights
or that he did not recognize the consequences. In this case Durley had no
representation, there was evidence that he was under economic duress and that
TODCO knew of this condition, and TODCO provided substantially less
consideration. Due to these distinguishing facts, facts specifically relevant to a
determination regarding the ultimate conclusion of whether a release should be
deemed valid, we must remand to the district court to give it an opportunity to
consider whether any of Durley’s alternate grounds for upsetting the Release
should be accepted.
III.
For the foregoing reasons, the district court’s order upsetting Durley’s
Release on grounds of mutual mistake is vacated and the case is remanded for
further proceedings not inconsistent with this opinion.
VACATED and REMANDED.
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