Wallace Boudreaux v. Transocean Deepwater, Inc.

Case: 14-30776 Document: 00513371771 Page: 1 Date Filed: 02/05/2016
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
United States Court of Appeals
No. 14-30776
Fifth Circuit
FILED
February 5, 2016
WALLACE BOUDREAUX, Lyle W. Cayce
Clerk
Plaintiff - Appellant
v.
TRANSOCEAN DEEPWATER, INCORPORATED,
Defendant - Appellee
Appeal from the United States District Court
for the Eastern District of Louisiana
USDC No. 2:08-CV-1686
Before REAVLEY, OWEN, and HIGGINSON, Circuit Judges.
STEPHEN A. HIGGINSON, Circuit Judge:*
Wallace Boudreaux, a seaman, entered into a settlement agreement with
Transocean Deepwater, Inc. (“Transocean”), his former employer. The
agreement provided that Boudreaux would recover one of two amounts from
Transocean, depending on the judicial resolution of the parties’ dispute. The
district court held that the agreement entitled Boudreaux to the lower amount.
We REVERSE.
* 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 R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH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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FACTS AND PROCEEDINGS
Boudreaux claimed he injured his back while working for Transocean.
For nearly five years, Transocean paid Boudreaux maintenance and cure—a
small daily stipend for food, lodging, and basic medical care. Boudreaux v.
Transocean Deepwater, Inc. (Boudreaux I), 721 F.3d 723, 724–25 (5th Cir.
2013). Boudreaux later sued Transocean, claiming a right to additional
maintenance and cure, seeking punitive damages for Transocean’s alleged
mishandling of past benefits, and asserting claims for Jones Act negligence and
unseaworthiness. Id. at 724. Through discovery, Transocean learned that
Boudreaux had failed to disclose serious back problems in Transocean’s pre-
employment medical questionnaire in response to inquiries regarding his
history of back trouble. Id. Transocean filed an unopposed motion for partial
summary judgment on Boudreaux’s claim for further maintenance and cure.
Id. Transocean relied on the McCorpen defense, which provides that “a vessel
owner’s obligation to pay maintenance and cure to an injured seaman
terminates upon proof that the seaman, in procuring his employment,
‘intentionally’ and ‘willfully’ concealed a material medical condition causally
linked to the injury later sustained.” Id. at 725 (quoting McCorpen v. Cent. Gulf
S.S. Corp., 396 F.2d 547, 549 (5th Cir. 1968)). The district court granted
Transocean’s motion and dismissed the claim for further maintenance and
cure. Id. at 725.
Transocean then filed a second motion for summary judgment on
Boudreaux’s claims for negligence under the Jones Act and unseaworthiness
under the general maritime law. The district court denied that motion.
Transocean then filed a counterclaim against Boudreaux, seeking to recover
payments that it had already made for maintenance and cure. Transocean
moved for summary judgment on the counterclaim, arguing that its successful
McCorpen defense established its right to restitution under the general
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maritime law. Transocean’s proposed theory of restitution presented an issue
of first impression in our circuit. See Patterson v. Allseas USA, 145 F. App’x
969, 970–71 (5th Cir. 2005) (per curiam) (acknowledging that the return of
maintenance and cure payments via restitution was res nova but declining to
reach the issue because the employer had not established a McCorpen defense).
Before the district court ruled on Transocean’s motion for summary
judgment on its counterclaim, the parties reached a bracketed settlement
agreement. Boudreaux I, 721 F.3d at 725. Initially, the parties filed a “Joint
Motion for Revised Scheduling Order” (“Joint Motion”), which provided that
the parties “have reached a bracketed settlement agreement which has
resolved all of the issues currently pending before the [district c]ourt, with the
exception of Transocean’s legal/substantive right to maintain a Counterclaim
against Wallace Boudreaux for recovery of its maintenance and cure
payments.” The Joint Motion further provided that after the district “[c]ourt’s
ruling, the prevailing party will consent to their opponent’s application to [the
district court] for a certification of interlocutory appeal to the United States
Fifth Circuit.” The parties also “stipulate[d] that upon receiving a final ruling
from the United States Fifth Circuit, the case will not need to be returned to
the Court’s trial docket, and absent an instruction from the Fifth Circuit for
further findings by the trial court, the parties will promptly submit a Motion
to Dismiss as of Settlement.”
Later, the parties memorialized their agreement in a “Receipt, Release,
Indemnity and Hold Harmless Agreement” (“Release”). The Release states that
“Boudreaux has agreed to dismiss all his claims against Transocean, including
those for Jones Act negligence, unseaworthiness, and for payment of additional
maintenance and cure, while allowing Transocean to maintain its counterclaim
under the terms and conditions of the ‘high-low’ settlement agreement
described herein.” Further, the Release provides:
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Transocean and Boudreaux agree to compromise and settle all
disputes between them, with the precise amount of the settlement
to be determined by the Court’s ruling on whether a Jones Act
employer is allowed to recover maintenance and cure payments
made to a seaman who was never entitled to such payments under
McCorpen. If a Jones Act employer is not allowed to recover
maintenance and cure payments made to a seaman who is not
entitled to such payments under McCorpen, Boudreaux will
recover $90,000.00 (the “high” amount or the “maximum”). If a
Jones Act employer is allowed to recover such maintenance and
cure payments, Boudreaux will recover only $50,000.00 (the “low”
or “minimum” amount).
Finally, the Release states that it “contains the entire agreement between the
parties hereto.”
The district court granted Transocean’s motion for summary judgment
on its counterclaim, concluding that employers such as Transocean are entitled
to restitution of maintenance and cure payments. On interlocutory appeal, this
court reversed the district court. Our court rejected Transocean’s argument
that a Jones Act employer who successfully establishes a defense to liability
for further maintenance and cure under McCorpen is thereby automatically
entitled to restitution for benefits already paid. Boudreaux I, 721 F.3d at 724,
726. However, the court noted, “[a]lready, even without fraud, an employer
may offset any Jones Act damages recovered by the seaman to the extent they
duplicate maintenance and cure previously paid.” Id. at 727. Our court
concluded that past payments for maintenance and cure “can be recovered only
by offset against the seaman’s damages award—not by an independent suit
seeking affirmative recovery. The case for exercising our extraordinary power
to create a new right of action has not been made.” Id. at 728.
Transocean filed a petition for a writ of certiorari. See Transocean
Deepwater, Inc. v. Boudreaux, 134 S. Ct. 1001 (2014) (denying certiorari).
Meanwhile, Boudreaux moved in the district court to enforce the settlement,
seeking the high value. Transocean opposed this motion, arguing that it was
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premature before the Supreme Court ruled on its petition. Before the district
court addressed these arguments, the Supreme Court denied certiorari.
Transocean then filed a supplemental opposition to Boudreaux’s motion to
enforce the settlement, contending for the first time that the limited right to
“recovery” recognized in Boudreaux I triggered the low settlement value under
the terms of the Release. The district court agreed with Transocean and denied
Boudreaux’s motion. Boudreaux timely appealed. After oral argument,
Transocean filed an opposed motion to incorporate the record from Boudreaux
I.
DISCUSSION
As a threshold matter, we consider Transocean’s motion to incorporate
the record from the prior appeal. While we find it unnecessary to incorporate
the record from Boudreaux I, we will take judicial notice of that record. See ITT
Rayonier Inc. v. United States, 651 F.2d 343, 345 n.2 (5th Cir. Unit B 1981) (“A
court may . . . take judicial notice of its own records or of those of inferior
courts.”) 1
The parties’ dispute largely hinges on the proper interpretation of the
Release. We must first decide which law governs that issue. Boudreaux argues
that the district court erred in interpreting the Release under state law, and
not federal admiralty law. However, Boudreaux waived that argument by
arguing for Mississippi law in the district court. “[P]arties generally are bound
by the theory of law they argue in the district court, absent some manifest
injustice.” Am. Int’l Trading Corp. v. Petroleos Mexicanos, 835 F.2d 536, 540
(5th Cir. 1987) (internal quotation marks and citation omitted); see also
Empl’rs Ins. of Wausau v. Occidental Petroleum Corp., 978 F.2d 1422, 1430 n.8
(5th Cir. 1992). Manifest injustice requires “extreme circumstances;” that a
1 Transocean’s motion to incorporate the record from the prior appeal is DENIED.
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different jurisdiction’s law dictates a different result does not constitute
manifest injustice. Petroleos Mexicanos, 835 F.2d at 540. Boudreaux has
argued only that federal law must apply, not that a manifest injustice will
result by applying state law. We will therefore apply state law to interpret the
parties’ agreement. While Boudreaux relied on Mississippi law in the district
court, Transocean cited Louisiana law. Because the relevant laws of
Mississippi and Louisiana do not conflict, we need not engage in a choice-of-
law analysis. See Mumblow v. Monroe Broad., Inc., 401 F.3d 616, 620 (5th Cir.
2005) (“[I]f the laws of the states do not conflict, then no choice-of-law analysis
is necessary.” (internal quotation marks and citation omitted)).
The Release is a settlement agreement, which is a contract under both
Louisiana and Mississippi law. Celtic Marine Corp. v. James C. Justice Cos.,
760 F.3d 477, 481–82 (5th Cir. 2014) (applying Louisiana law); Howard v.
TotalFina E & P USA, Inc., 899 So. 2d 882, 888–89 (Miss. 2005). Under general
principles of contract interpretation, we must first seek to determine the
parties’ intent by examining the language of the Release. See HeartSouth,
PLLC v. Boyd, 865 So. 2d 1095, 1105 (Miss. 2003) (“First, the court will attempt
to ascertain intent by examining the language contained within the ‘four
corners’ of the instrument in dispute.” (internal citation and quotation marks
omitted)); Campbell v. Melton, 817 So. 2d 69, 74 (La. 2002) (“The interpretation
of a contract is the determination of the common intent of the parties with
courts giving the contractual words their generally prevailing meaning unless
the words have acquired a technical meaning.”). We will consider the entire
document, interpreting each provision in light of the others. See La. Civ. Code
Ann. art. 2050 (“Each provision in a contract must be interpreted in light of the
other provisions so that each is given the meaning suggested by the contract
as a whole.”); Royer Homes of Miss., Inc. v. Chandeleur Homes, Inc., 857 So. 2d
748, 752 (Miss. 2003) (“When construing a contract, we will read
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the contract as a whole, so as to give effect to all of its clauses.”). Extrinsic
evidence may be consulted only if the contract’s terms are ambiguous.
Gebreyesus v. F.C. Schaffer & Assocs., 204 F.3d 639, 643 (5th Cir. 2000)
(applying Louisiana law); Facilities, Inc. v. Rogers-Usry Chevrolet, Inc., 908 So.
2d 107, 111 (Miss. 2005). “When the terms of a contract are unambiguous and
lead to no absurd consequences, we interpret them as a matter of law.” Liberty
Mut. Ins. Co. v. Pine Bluff Sand & Gravel Co., 89 F.3d 243, 246 (5th Cir. 1996);
see also Griffin v. Tall Timbers Dev., Inc., 681 So. 2d 546, 551 (Miss. 1996).
The district court determined that the Release is not ambiguous. The
court held, “[t]he parties unambiguously agreed that the operative question for
determining whether the upper or lower settlement amount controlled was
‘whether a Jones Act employer is allowed to recover maintenance and cure
payments made to a seaman who was never entitled to such payments under
McCorpen.’” Because our court held that employers may “recover” such
payments through an offset, the district court determined that Boudreaux was
entitled only to the lower amount. On appeal, Transocean defends the district
court’s interpretation, while Boudreaux argues that the word “recover” in the
Release, when read in context, “meant only a right to affirmative recovery by
a restitution counterclaim.”
We review de novo both the district court’s determination that a contract
is unambiguous and its interpretation of an unambiguous contract. Henley v.
Edlemon, 297 F.3d 427, 430 (5th Cir. 2002); Tarrant Distribs. Inc. v. Heublein
Inc., 127 F.3d 375, 377 (5th Cir. 1997). The Release provides that “the precise
amount of the settlement [is] to be determined by the Court’s ruling on whether
a Jones Act employer is allowed to recover maintenance and cure payments
made to a seaman who was never entitled to such payments under McCorpen.”
The Release further provides that Boudreaux would receive the high
settlement amount “[i]f a Jones Act employer is not allowed to recover” such
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payments, and that Boudreaux would receive the low settlement amount “[i]f
a Jones Act employer is allowed to recover” such payments. The key question
is the parties’ intended meaning of “recover.”
The Release makes clear that the issue presented to the district court
and to our court previously was whether a Jones Act employer is entitled to
restitution of maintenance and cure whenever McCorpen applies, even in the
absence of any damages award to offset. The Release states that Boudreaux
“agreed to dismiss all his claims against Transocean, including those for Jones
Act negligence, unseaworthiness, and for payment of additional maintenance
and cure, while allowing Transocean to maintain its counterclaim under the
terms and conditions of the ‘high-low’ settlement agreement described herein.”
Because Boudreaux dismissed all his claims against Transocean, there was no
possibility that he could receive damages that could be offset. The parties
therefore anticipated that the court’s “ruling” would determine whether an
employer is entitled to restitution in the absence of damages to offset. Hence,
the right to “recover,” whose existence the parties anticipated would be made
clear by the “ruling,” refers to an affirmative right of recovery not through an
offset, and our court declined to recognize such a right. This conclusion finds
further support in the statement that Transocean would “maintain its
counterclaim under the terms and conditions of the ‘high-low’ settlement
agreement.” Because our court’s holding in Boudreaux I did not establish the
viability of Transocean’s counterclaim, Boudreaux is entitled to the higher
settlement amount.
Our construction of the Release is reinforced by the parties’ description
of the question on which Boudreaux’s recovery hinges: “whether a Jones Act
employer is allowed to recover maintenance and cure payments made to a
seaman who was never entitled to such payments under McCorpen.” That
explicit language and framing indicate that the parties intended that the right
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to “recover” would turn on a successful McCorpen defense. In addition, the
Release stated that “Transocean believe[d]” this issue to be “unsettled.”
However, in Boudreaux I, the court framed the right to an offset not as a new
right based on the McCorpen defense, but rather as a preexisting right based
on the well-established principle against double recovery. Boudreaux I, 721
F.3d at 727. Citing caselaw, our court observed that Jones Act damages for
past medical expenses, food, and lodging may duplicate maintenance and cure
payments, and that a seaman may not recover twice for these items. Id. at 727
n.19; Brister v. A.W.I., Inc., 946 F.2d 350, 361 (5th Cir. 1991) (“[A] seaman
clearly can receive only one recovery for his medical expenses. Since the
element of past medical expenses is inherent in each of the two types of
recoveries [Jones Act damages and maintenance and cure], there must not be
a duplication in the final award.”); Averett v. Diamond Offshore Drilling Servs.,
Inc., 980 F. Supp. 855, 859 (E.D. La. 1997) (“[The seaman] has already received
wages plus fringe benefits which included the food and lodging as part of his
general damage award under the Jones Act and General Maritime Law. . . .
Recovery of this item of damage under the vessel owner’s maintenance and
cure obligation would be double recovery and thus is not allowed.” (citing
Colburn v. Bunge Towing, Inc., 883 F.2d 372 (5th Cir. 1989))). Citing these
cases and others, the court in Boudreaux I observed that the right to an offset
representing duplicative damages was available “[a]lready, even without fraud
. . . . This, if the employer ‘show[s] that the damages assessed against it have
in fact and in actuality been previously covered.’” Boudreaux I, 721 F.3d at 727
(alteration in original) (quoting Wood v. Diamond M Drilling Co., 691 F.2d
1165, 1171 (5th Cir. 1982)). Importantly, we emphasized that we were not
creating “a new right of action.” Id. at 728 (“The case for exercising our
extraordinary power to create a new right of action has not been made.”). While
the court recognized a preexisting right unrelated to McCorpen, the settlement
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amount, as provided in the Release, hinges on the creation of a new right of
recovery based on McCorpen. This distinction reinforces our conclusion that
the term “recover” in the Release was not intended to include the right to
recover via offset recognized in Boudreaux I.
Because we conclude that Boudreaux is entitled to the higher settlement
amount under the plain language of the Release, we need not decide
Boudreaux’s arguments that he is entitled to the higher amount based on the
Joint Motion, Transocean’s “judicial admissions,” the mandate rule, the party
presentation principle, or estoppel doctrines.
Boudreaux additionally argues that Transocean breached the Joint
Motion and the Release by petitioning for Supreme Court review of our decision
in Boudreaux I, although the remedy Boudreaux seeks for this alleged breach
is unclear. The Release does not state that Transocean relinquished its right
to petition for certiorari. In the Joint Motion, the parties “stipulated” that
upon receiving a final ruling from the United States Fifth Circuit,
the case will not need to be returned to the [district c]ourt’s trial
docket, and absent an instruction from the Fifth Circuit for further
findings by the trial court, the parties will promptly submit a
Motion to Dismiss as of Settlement.
Boudreaux argues that this stipulation is comparable to a contract and is
binding on the parties. See Rathborne Land Co., L.L.C. v. Ascent Energy, Inc.,
610 F.3d 249, 262 (5th Cir. 2010) (“Normally a party is bound by his
stipulations as a stipulation among the parties to a lawsuit is akin to a
contract.” (internal quotation marks and citation omitted)); 4 Williston on
Contracts § 8:50 (4th ed.) (“There is a class of agreements, known as
stipulations, made by adverse parties or their authorized attorneys with
reference to legal proceedings pending before a court, which are generally
upheld and enforced even in the absence of consideration.”). Assuming that the
parties are bound by the stipulation in the Joint Motion, that stipulation does
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not forbid Transocean from seeking Supreme Court review. 2 We have held that
“[a] stipulation binds parties only to the terms actually agreed upon.” Rice v.
Glad Hands, Inc., 750 F.2d 434, 438 (5th Cir. 1985). Although the parties
stated that they would “promptly submit a Motion to Dismiss” after our court’s
earlier ruling, the word “promptly” does not alone preclude a petition for
certiorari. Indeed, only six months elapsed between our ruling and the
Supreme Court’s denial of the petition for certiorari. See Transocean
Deepwater, Inc. v. Boudreaux, 134 S. Ct. 1001 (2014). In addition, “promptly”
modifies the promise to submit a motion to dismiss, which neither party filed
because they disputed the import of our ruling.
Boudreaux appears to have argued in the district court for the
application of Mississippi law to the interpretation of the Joint Motion, and, as
noted, he is bound by the theory of law that he argued below. See Petroleos
Mexicanos, 835 F.2d at 540. The Mississippi Supreme Court has held that a
waiver of appeal rights “should be very clear in its terms, and leave no doubt
of the intention of the party to cut himself off from the right of appeal.” Nobile
v. Nobile, 535 So. 2d 1385, 1387 (Miss. 1988); see also Cherokee Ins. Co. v.
Babin, 37 So. 3d 45, 48 (Miss. 2010) (holding that a settlement agreement did
not waive appeal rights because it did not contain language that “clearly
expresses a waiver”); State in Interest of Jones v. Jones, 430 So. 2d 169, 171
(La. Ct. App. 1983) (“Appeals are favored and any waiver of appeal must be
expressly made.”). Applying state law, the Joint Motion was not sufficiently
clear to waive Transocean’s right to seek Supreme Court review. Even if we
apply the general maritime law, as Boudreaux now requests, we reach the
2 Although we have previously reviewed a district court’s interpretation of a
stipulation for abuse of discretion, see Coastal States Mkt’g, Inc. v. Hunt, 694 F.2d 1358, 1368
(5th Cir. 1983), the district court here did not interpret the stipulation in the Joint Motion,
even though Boudreaux raised below the argument that he makes here.
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same result. Our court recently held, under the general maritime law: “[W]here
a settlement agreement does not resolve claims itself but instead establishes a
mechanism pursuant to which the district court will resolve claims, parties
must expressly waive what is otherwise a right to appeal from claim
determination decisions by a district court.” In re Deepwater Horizon, 785 F.3d
986, 997 (5th Cir. 2015). We believe the situation before us is analogous. The
Joint Motion does not itself resolve claims, but rather notifies the court of a
settlement and requests a revised schedule to allow for judicial resolution of
one disputed issue. On these facts, silence about the right to petition for
certiorari does not waive that right. 3
CONCLUSION
Because we find that the Release unambiguously entitles Boudreaux to
the higher settlement amount, we REVERSE the district court and REMAND
for proceedings consistent with this opinion.
3 We further reject Boudreaux’s argument that Transocean made two judicial
admissions in its briefs that precluded it from seeking a writ of certiorari. Transocean’s
statements—that “the appeal will end the litigation, as there is no need for further
proceedings in the trial court,” and that “the legal question certified for appeal is res nova
and a decision will resolve this case”—do not reflect the clarity required for a judicial
admission. See United States v. Chavez-Hernandez, 671 F.3d 494, 501 (5th Cir. 2012) (“[F]or
a statement of counsel to qualify as a judicial admission it must be made intentionally as a
waiver, releasing the opponent from proof of fact.” (internal quotation marks and citation
omitted)); see also In re Corland Corp., 967 F.2d 1069, 1074 (5th Cir. 1992) (“[O]nly deliberate,
clear and unequivocal statements can constitute conclusive judicial admissions.” (internal
quotation marks and citation omitted)).
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PRISCILLA R. OWEN, Circuit Judge, dissenting:
I would affirm the district court’s judgment because the court below
correctly construed the settlement agreement and release. Judge Ivan
Lemelle, who presided below, was involved at every stage of the proceedings in
this somewhat convoluted case, and enforced the settlement agreement in
accordance with its straightforward terms.
Boudreaux concedes that when he applied for employment with
Transocean, he knowingly failed to disclose prior, documented injuries and
therefore, when he was subsequently injured while working for Transocean,
Transocean would have been entitled under McCorpen 1 to withhold
maintenance and cure payments. Transocean paid Boudreaux $276,263.36 in
maintenance and cure before it discovered Boudreaux’s fraud. In Boudreaux’s
Jones Act suit, Transocean counterclaimed, seeking to recover the
maintenance and cure payments it made. The parties then reached the high-
low settlement agreement that is the subject of this appeal.
The panel majority’s opinion reversing the district court is premised on
a fundamental misunderstanding of both the terms of the release and
settlement agreement and our court’s prior decision in this case (Boudreaux
I). 2 The parties agreed in the release that Boudreaux suffered Jones Act
damages in the net amount of $90,000. Of that amount, again by agreement,
$50,000 has been paid to Boudreaux. The parties agreed that the remaining
$40,000 of the Jones Act damages are to be paid, or not, depending on whether
“a Jones Act employer is allowed to recover maintenance and cure payments”
that were “made to a seaman who was never entitled to such payments under
1 McCorpen v. Cent. Gulf S.S. Corp., 396 F.2d 547, 549 (5th Cir. 1968).
2 Boudreaux v. Transocean Deepwater, Inc., 721 F.3d 723 (5th Cir. 2013).
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McCorpen.” The panel majority is therefore mistaken when it says that
“[b]ecause Boudreaux dismissed all his claims against Transocean, there was
no possibility that he could receive damages that could be offset.” 3 The parties
have expressly agreed in the settlement that an additional amount of $40,000
in Jones Act damages are available to be “recovered” by Boudreaux, 4 depending
on the outcome of the appeal in Boudreaux I. Accordingly, a major premise on
which the majority opinion is based is a false premise.
The majority opinion also erroneously concludes that the only offset
recognized in Boudreaux I is for maintenance and cure payments that
duplicate Jones Act damages for past medical expenses, food, and lodging. 5
But the Boudreaux I decision was not so limited; it recognized “explicit[ly]” 6 for
the first time that an employer may offset against Jones Act damages
maintenance and cure payments that the employer was not required to pay
under McCorpen. 7 The parties have agreed that Transocean has a McCorpen
defense worth $40,000 (the difference between the $90,000 “high” amount and
the $50,000 “low” amount in the settlement agreement). The only question is
whether the settlement agreement intended for Boudreaux to recover the
additional $40,000 when on appeal, our court held that although an employer
could not recover maintenance and cure payments that it did not owe by means
3 Ante at 8.
4 The release and settlement agreement provides: “If a Jones Act employer is not
allowed to recover maintenance and cure payments made to a seaman who is not entitled to
such payments under McCorpen, Boudreaux will recover $90,000.00 (the ‘high’ amount or the
‘maximum’).” (emphasis in original).
5 Ante at 9.
6 Boudreaux, 721 F.3d at 728.
7 Id. (“Today, we merely render explicit what has been implicit for many years: that
once a shipowner pays maintenance and cure to the injured seaman, the payments can be
recovered only by offset against the seaman’s damages award—not by an independent suit
seeking affirmative recovery.”).
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of an independent, affirmative recovery against a seaman that might exceed
the amount of Jones Act damages, an employer could offset maintenance and
cure payments against Jones Act damages. The unambiguous terms of the
settlement agreement and release reflect that because Transocean is entitled
to “recover” maintenance and cure payments that it did not owe under the legal
analysis set forth in Boudreaux I, Boudreaux receives only $50,000 under the
settlement agreement:
Transocean and Boudreaux agree to compromise and settle
all disputes between them, with the precise amount of the
settlement to be determined by the Court’s ruling on whether a
Jones Act employer is allowed to recover maintenance and cure
payments made to a seaman who was never entitled to such
payments under McCorpen. If a Jones Act employer is not allowed
to recover maintenance and cure payments made to a seaman who
is not entitled to such payments under McCorpen, Boudreaux will
recover $90,000.00 (the “high” amount or the “maximum”). If a
Jones Act employer is allowed to recover such maintenance and
cure payments, Boudreaux will recover only $50,000.00 (the “low”
or “minimum” amount).
I
The district court’s construction of the settlement agreement and release
is correct. Boudreaux’s right to receive the additional $40,000 did not turn on
whether Transocean obtained a ruling on appeal that a Jones Act employer is
entitled, by means of an independent, direct action, to recover maintenance and
cure payments made to an employee who was not entitled to them. The
settlement agreement and release provided that the right to receive the
additional $40,000 turns only “on whether a Jones Act employer is allowed to
recover maintenance and cure payments made to a seaman who was never
entitled to such payments under McCorpen.” Our court held in Boudreaux I
that a Jones Act employer is allowed to recover maintenance and cure
payments made to a seaman who was never entitled to such payments under
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McCorpen through means of an offset or setoff. The legal theory under which
such a “recover[y]” may be obtained is not determinative under the terms of
the release and settlement agreement, and in the present case, there are
agreed damages from which the offset can be satisfied.
The district court’s reasoning is thorough and compelling, and I quote it
at length:
In reviewing the Settlement Agreement, the Court finds no
ambiguity in the recovery provision and settlement terms. The
parties unambiguously agreed that the operative question for
determining whether the upper or lower settlement amount
controlled was “whether a Jones Act employer is allowed to recover
maintenance and cure payments made to a seaman who was never
entitled to such payments under McCorpen.” (Rec. Doc. No. 84-3
at 2). When compared to the language of the ultimate Fifth Circuit
opinion resolving the issue, it is clear that the question was
resolved in the affirmative – triggering the low settlement amount.
The Fifth Circuit held specifically in its amended opinion
“that once a shipowner pays maintenance and cure to the injured
seaman, the payments can be recovered . . .” Boudreaux, at 728
(emphasis added). The common use of the terms “recover” and
“recovered” in both the Settlement Agreement and the Fifth
Circuit’s opinion demonstrate the settlement provision was
answered with a “yes.”
Complicating the analysis is the Fifth Circuit’s limitation in
the same sentence that payments may be recovered “only by offset
against the seaman’s damages award – not by an independent suit
seeking affirmative recovery.” Id. Although this limitation
provided neither side with a clear victory on appeal, and constrains
the reach of the holding, this does not change the settlement
calculation. The opinion unambiguously held that a “Jones Act
employer is allowed to recover maintenance and cure payments
made to a seaman who was never entitled to such payments under
McCorpen.” (Rec. Doc. No. 84-3 at 2). The fact that the recovery
is limited is of minimal relevance to the instant dispute. The
Settlement Agreement contains no reference to the amount of
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recovery. Instead, the low amount is triggered per the agreement
if “a Jones Act employer is allowed to recover,” without reference
to a required recovery amount or a limitation on the means for
seeking recovery. Absent more express language demanding a
different result for limited recovery – which is absent from the
Settlement Agreement as it was drafted by the parties – the Court
must conclude the low amount is applicable.
Boudreaux provides almost no analysis in his original
Motion or Reply on the terms as used in the Settlement Agreement
and the Fifth Circuit’s opinion. Rather, Boudreaux attempts to
argue that statements made by Transocean throughout the course
of litigation establish that Boudreaux is entitled to the high
settlement amount. These arguments fail.
Boudreaux attempts to frame the issue as follows – the
high/low settlement amount is controlled by which party was
successful on appeal. Since the Fifth Circuit did not accept
Transocean’s argument that an affirmative cause of action for past
maintenance and cure payments exists, Boudreaux argues that it
was the prevailing party on appeal and should be entitled to the
high settlement amount. This analysis fails to recognize the actual
provisions agreed to by the parties. The Settlement Agreement
does not speak in terms of the prevailing party on appeal. Rather,
the measure of damages is “whether a Jones Act employer is
allowed to recover maintenance and cure payments made to a
seaman who was never entitled to such payments under
McCorpen.” (Rec. Doc. No. 84-3 at 2). As already stated, this
question was answered affirmatively by the Fifth Circuit. It is
irrelevant that Transocean was not a complete victor on appeal.
The Settlement Agreement does not require it to be for the low
settlement amount to be triggered.
I would affirm the district court.
II
Boudreaux has contended in our court that the high-low settlement
agreement would have been meaningless and Boudreaux would not have had
an incentive to enter the agreement if the parties intended a right of offset to
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trigger the “allowed to recover” language in the release and settlement
agreement since Transocean always had the right to offset maintenance and
cure payments from an award of Jones Act damages. However, Boudreaux can
cite to no authority in our circuit, prior to the decision in Boudreaux I, that
recognized such an offset against Jones Act damages. The Boudreaux I
decision was the first to recognize such a right in our circuit, and in the briefing
in the district court and before our court in Boudreaux I, neither of the parties
considered the possibility that an offset might be a means of recovering
maintenance and cure payments.
In Boudreaux I our court refused to recognize an independent cause of
action that might permit an employer to obtain a free-standing judgment
against a seaman for maintenance and cure payments, but our court did, for
the first time, “explicit[ly]” recognize the right to offset such payments against
Jones Act damages recovered by an injured seaman. 8 Although the Boudreaux
I decision said “[t]oday, we merely render explicit what has been implicit for
many years,” it cited no authority for this proposition. The only authority
mentioned in Boudreaux I that discusses the possibility of an offset or setoff is
a 1972 decision from the Eastern District of Pennsylvania, which determined
that an employer may use a contractual setoff to recover maintenance and cure
payments procured by fraud. That Pennsylvania decision is referenced only in
Judge Clement’s concurring opinion in Boudreaux I. 9
8 Id.; see also id. (“If the employer finds any ‘causal link’ between the seaman’s present
injury and a concealed pre[e]xisting disability, it can bring suit under McCorpen and
terminate its obligation to pay—even if the seaman’s on-the-job accident (and the employer’s
negligence) contributed to the injury. And to the extent that the employer has already paid
benefits, it is entitled to recoup them when there are damages to offset.”).
9 Id. n.1 (Clement, J., concurring) (citing Bergeria v. Marine Carriers, Inc., 341 F.
Supp. 1153, 1156 (E.D. Pa. 1972)).
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Nor has Boudreaux cited authority for the proposition that at the time
he and Transocean entered into the settlement agreement and release, our
precedents recognized an offset or setoff when a McCorpen defense to payment
of maintenance and cure has been established. The Boudreaux I decision
recognized that our cases prohibited a double recovery to the extent that Jones
Act damages duplicate maintenance and cure payments. 10 But that is a
different matter from a holding that when an employer establishes under
McCorpen that maintenance and cure was not owed, the employer is entitled
to offset maintenance and cure payments from Jones Act damages without
proof of duplication. The “explicit” right to offset announced in Boudreaux I is
not dependent upon showing that the Jones Act damages duplicate, to some
extent, the maintenance and cure payments.
At oral argument, Boudreaux relied upon our court’s decision in Johnson
v. Cenac Towing, Inc. 11 In Johnson, this court held that McCorpen does not
bar a Jones Act claim. 12 We acknowledged that contributory negligence applies
in Jones Act cases and held that “contributory negligence may be found where
a seaman has concealed material information about a pre-existing injury or
physical condition from his employer.” 13 In other words, “[a]lthough the
McCorpen rule is not applicable to a Jones Act negligence claim,” 14 conduct
underlying a McCorpen defense can give rise to a valid defense of “contributory
negligence.” 15 The court in Johnson described contributory negligence as an
10 Boudreaux, 721 F.3d at 727.
11 544 F.3d 296 (5th Cir. 2008).
12 Id. at 302.
13 Id. at 303-04.
14 Id. at 302.
15 Compare id. at 301 (discussing the elements of a McCorpen defense), with id. at 303-
04 (explaining that contributory negligence can be found under essentially the same facts).
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“affirmative defense” that would give rise to proportionate responsibility and
potentially a proportionate reduction in damages, not an “offset” or a “set-off”
determined by the amount of maintenance and cure payments wrongfully
received.
Arguing to a jury that false statements about pre-existing injuries should
be considered some degree of contributing fault is not the same thing as
seeking an offset for all maintenance and cure payments under a McCorpen
defense. An employer who establishes that a concealed prior condition is
causally linked to the subsequent injury is entitled to be relieved from making
any maintenance and cure payments, not just a percentage of maintenance and
cure payments representing the extent that the pre-existing condition
contributed to cause the subsequent injury. The offset described in Boudreaux
I similarly does not limit an offset to only a portion of the maintenance and
cure payments.
III
Boudreaux raises other arguments as to why he should be entitled to
recover the additional $40,000 in Jones Act damages under the settlement
agreement, but the district court correctly rejected each of those arguments. I
additionally note that with regard to the argument that the mandate rule or
the law of the case should foreclose Transocean’s claims in this appeal, only a
summary judgment that the district court granted on a pure question of law
was before our court in the Boudreaux I appeal. Although our court was
certainly aware of the terms of the settlement agreement, the meaning of the
settlement agreement was not before our court. The parties had not put the
terms of the settlement agreement at issue, and this court had no occasion to
resolve how the resolution of the pure legal questions presented by the appeal
in Boudreaux I would affect the parties’ rights under the settlement
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agreement. In fact, the concurring opinion, which fully joined the judgment in
Boudreaux I, expressly noted that it agreed with the right to a setoff and that
“[t]his is the result Boudreaux and Transocean sought by way of their
bracketed settlement agreement. On the facts of this case, I would find
recovery permissible.” 16 The majority opinion in Boudreaux I did not take
issue with this conclusion.
* * *
I respectfully dissent.
16Boudreaux v. Transocean Deepwater, Inc., 721 F.3d 723, 729 n.2 (5th Cir. 2013)
(Clement, J., concurring).
21