Steverson v. GlobalSantaFe Corp.

Citations: 508 F.3d 300; 2007 A.M.C. 2920; 2007 U.S. App. LEXIS 26559; 2007 WL 3380156Docket: 06-60674

Court: Court of Appeals for the Fifth Circuit; November 15, 2007; Federal Appellate Court

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James Brad Steverson appeals the denial of his Rule 60(b) motion by the district court concerning a settlement agreement with GlobalSantaFe Corporation. Steverson, who sustained severe injuries while employed as a Derrickman on a drilling rig, initially sought recovery under the Jones Act and maritime law after a fall on October 11, 2003, resulting in damages exceeding $4 million. Following unsuccessful settlement negotiations, a magistrate judge recorded a settlement where GlobalSantaFe agreed to pay $350,000. However, Steverson later terminated his attorney, Pam Jenner, and rejected the settlement, claiming he had not authorized its acceptance. GlobalSantaFe sought to enforce the settlement, leading Steverson to file a Rule 60(b) motion to vacate the dismissal of his case. Jenner contended that Steverson had accepted the offer but also supported his request for an evidentiary hearing. The magistrate judge recommended denying Steverson's motion without a hearing, which the district court adopted. The appellate court found that the district court abused its discretion by not granting an evidentiary hearing and thus vacated the judgment and remanded the case for further proceedings.

Steverson argues that the district court erred in denying his Rule 60(b) motion for relief from a dismissal order. Rule 60(b) permits relief from a final judgment under several conditions, including mistakes, newly discovered evidence, fraud, or other justifiable reasons, particularly under the catch-all provision 60(b)(6) meant for exceptional circumstances. The court has discretion in deciding such motions, with reversals only occurring in cases of abuse of that discretion. As a seaman, Steverson’s rights are highly protected under admiralty law, requiring careful scrutiny of any releases or settlements involving his rights. The validity of a release hinges on whether it was executed with an informed understanding of his rights and the consequences. The shipowner must prove that the release was made freely and with full comprehension. 

Steverson claims he believed he had 30 days from August 5 to accept or decline a $350,000 settlement offer, referencing the dismissal order that stated the case would be closed but allowed for reopening within 10 days if the settlement was not consummated. The language of the order has been deemed potentially confusing, suggesting the court may lose jurisdiction to enforce the settlement after 30 days. Additionally, affidavits from Steverson’s wife and a friend support his understanding of the 30-day acceptance window.

Steverson's notification to his counsel within 30 days of the dismissal order strengthens his claim regarding the settlement's validity. Concerns arise from the settlement negotiations, where Steverson, the plaintiff-seaman, was not present in the room with his attorneys and the magistrate judge, and the court did not confirm his agreement to the $350,000 settlement. No documentation exists to show that Steverson authorized Jenner to accept this settlement on his behalf. Although Jenner has not been accused of misconduct, the absence of evidence indicating that Steverson knowingly waived his rights and understood the settlement's implications is problematic. After terminating Jenner's services, Jenner acknowledged a lack of supporting evidence for Steverson’s understanding of his rights and agreed to an evidentiary hearing regarding the settlement. The court emphasizes that while final judgments should not be disturbed lightly, they are open to liberal interpretation for substantial justice. Steverson acted promptly after the dismissal order, informing Jenner of his disagreement within eight days and obtaining new counsel shortly thereafter. The court views the timing of Steverson's Rule 60(b) motion as reasonable, prioritizing justice over finality due to the absence of evidence showing that Steverson understood his rights at the time of the settlement. GlobalSantaFe's reliance on Stipelcovich is countered by the fact that, in that case, there was clear evidence of informed consent, which is lacking here. Ultimately, Steverson's firing of Jenner and his claim of not authorizing the settlement further complicate the legitimacy of the agreement.

Steverson claimed that Jenner misled him into believing he had thirty days to decide on a settlement agreement, which Jenner denied. The district court did not conduct a hearing to resolve these conflicting accounts or evaluate the legal advice provided to Steverson, a step it should have taken. Citing Garrett, the court emphasized the importance of understanding the legal advice at the time of signing the agreement. As a result, the district court's denial of Steverson’s Rule 60(b) motion was deemed an abuse of discretion, leading to the decision to vacate that denial and remand for an evidentiary hearing. Upon remand, the court is instructed not to enforce the settlement unless evidence shows Steverson had an informed understanding of his rights and the consequences of the settlement. The court must protect Steverson’s rights and recognize that the burden lies with the party seeking to enforce the settlement. The decision is vacated and remanded for further proceedings.