Young v. BP Exploration & Production, Inc.
786 F.3d 344
| 5th Cir. | 2015Background
- After the Deepwater Horizon explosion, BP authorized the Gulf Coast Claims Facility (GCCF) to evaluate and settle certain claims on its behalf; claimants receiving offers ≥ $500,000 could be appealed by BP within 14 days of the determination letter.
- Elton Johnson, a seaman, submitted medical and economic evidence to GCCF and received a Determination Letter offering $2,698,095 as a “Final Payment Offer,” stating: to accept, check the Election Form and the GCCF would then send a Release to be signed and returned for payment.
- Johnson timely checked and returned the Final Payment Election Form; BP did not appeal within 14 days. Afterwards, Tidewater and an investigator produced evidence suggesting Johnson’s injury claims were fabricated; GCCF issued a Denial Letter and did not send a Release or payment.
- Johnson sued/intervened seeking enforcement of the putative settlement; one district court found no contract due to lack of a signed release, but the Fifth Circuit transferred/remanded and the Eastern District later enforced the settlement without an evidentiary hearing.
- On appeal, the Fifth Circuit panel held a binding settlement formed by offer (Determination Letter) and acceptance (Election Form), excused Johnson’s failure to sign the Release by the doctrine of prevention (GCCF/BP refused to mail it), but vacated the judgment and remanded for an evidentiary hearing on BP’s fraudulent-inducement defense.
Issues
| Issue | Plaintiff's Argument (Johnson) | Defendant's Argument (BP) | Held |
|---|---|---|---|
| Whether GCCF Determination Letter + Election Form created a binding settlement (offer/acceptance) | Determination Letter was a clear offer; Election Form acceptance formed contract; BP’s failure to appeal sealed contract | Determination Letter was only a valuation; a signed Release was required for contract formation | Contract formed: objective language constituted offer and acceptance; release was not a precondition to formation |
| Whether essential terms (scope of Release) were missing for a meeting of minds | Determination Letter described scope sufficiently (release of bodily injury and all potentially responsible parties); precise release language not required | Release’s full text contained additional, material provisions unknown to claimant | Held for Johnson: material terms were sufficiently described; precise release language need not be finalized |
| Whether failure to sign Release bars recovery (condition precedent / prevention) | Signing was a condition precedent to payment but GCCF/BP prevented mailing the Release; prevention doctrine excuses nonperformance | Signed Release was required for payment; BP’s refusal was proper given fraud concerns | Held for Johnson: BP’s refusal to send Release excused Johnson’s failure to sign; payment condition thus satisfied for enforcement purposes |
| Whether BP can avoid enforcement by showing fraudulent inducement | Johnson: no proven fraud; medical records support injury; settlement should stand absent clear proof | BP: newly obtained evidence (crew statements, investigation) suggests Johnson fabricated injuries; fraud-in-the-inducement defense permits setting aside settlement | Court: Fraud claim raises genuine disputed facts; district court erred by denying an evidentiary hearing — remand for hearing on fraudulent inducement |
Key Cases Cited
- Mid-South Towing Co. v. Har-Win, Inc., 733 F.2d 386 (5th Cir. 1984) (standard for summary enforcement of settlements and need for hearing when validity disputed)
- Autera v. Robinson, 419 F.2d 1197 (D.C. Cir. 1969) (settlement-enforcement principles cited re: summary procedures)
- Tiernan v. Devoe, 923 F.2d 1024 (3d Cir. 1991) (noting similarity between summary enforcement of settlements and summary judgment concerns)
- Stipelcovich v. Sand Dollar Marine, Inc., 805 F.2d 599 (5th Cir. 1986) (enforcing settlement against seaman; standards for adequacy and voluntariness of releases)
- Russell v. Puget Sound Tug & Barge Co., 737 F.2d 1510 (9th Cir. 1984) (remanding for evidentiary hearing where post‑settlement evidence suggested claimant fabricated injury; used as model for fraud-in-inducement inquiry)
- Ballard v. El Dorado Tire Co., 512 F.2d 901 (5th Cir. 1975) (doctrine of prevention and excuse of performance when promisor causes failure of condition precedent)