Plaintiffs’ Asbestos-Related Claims Time-Barred Due to Prior Settlement Agreement U.S. Court of Appeals, Fifth Circuit, January 4, 2018

LOUISIANA — Plaintiffs-Appellants are the widow and surviving children of Raymond J. Lemieux, Sr.. Mr. Lemieux, Sr. worked for Johns-Manville in Marrero, Louisiana from 1956 to 1970 during which time he wore a respirator designed by American Optical, Defendant-Appellee. Raymond, Sr. developed asbestos-related lung cancer, which eventually caused his death in 2015; prior to his death, he filed suit in 2011 against American Optical stemming from his use of their respirator. Represented by his attorney, Raymond, Sr. entered into settlement negotiations with American Optical. The plaintiffs were unaware of these discussions, but as a condition of Raymond, Sr.’s settlement with American Optical, they eventually signed sworn, notarized Settlement agreements.

Nearly one year after Raymond Sr.’s death and over five years after executing the settlement agreements, the plaintiffs filed suit against American Optical in the U.S. District Court for the Eastern District of Louisiana. In bringing their claims, the plaintiffs raised the unenforceability of the settlement agreement asserting that it was null and void under Louisiana law and sought a declaration holding as much.

American Optical filed a Rule 12(b)(6) motion to dismiss the plaintiffs’ claims on the basis that (1) the settlement agreement plainly barred their claims, (2) the plaintiffs’ claim that the Settlement agreement is relatively null was time-barred because more than five years have passed since it was executed, and (3) even if the plaintiffs could challenge the settlement agreement, the plaintiffs’ complaint failed to allege sufficient facts to set forth any plausible claim of relative nullity. The district could hold that the plaintiffs’ claim that the settlement agreement is relatively null is barred by Louisiana’s five-year prescription period for such claims. Even if the claim was not barred, the court alternatively held that the plaintiffs’ consent to the settlement agreement was not vitiated by error, fraud, or duress. The district court dismissed the plaintiffs’ claims with prejudice; The plaintiffs’ timely appealed.

Under Louisiana Law, a suit seeking annulment of a relatively null contract must be brought within five years from the time the ground for nullity either ceased, as in the case of incapacity or duress, or was discovered, as in the case of error or fraud. Prescription statutes are strictly construed against prescription and in favor of the obligation sought to be extinguished. As to the settlement agreement, The plaintiffs only allege relative nullity and do not dispute that absent the settlement agreement being declared null, their claims against American Optical would be barred by its plain terms.

The plaintiffs allege three reasons why they failed to discover their nullity cause of action due to fraud and misrepresentation: (1) Raymond Sr.’s attorney falsely advised the plaintiffs that they were required to sign the released solely to assist Raymond, Sr. with receiving a settlement and the plaintiffs’ relied on that advice; (2) American Optical misrepresented in the release that Raymond Sr.’s attorney was acting as the plaintiffs’ attorney; and (3) Raymond Sr.’s lawyer remained silent regarding his ethical duty to disclose his conflict of interest and advise the plaintiffs that they ought to retain their own counsel.

The appeals court held that even if it accepted the plaintiffs’ allegations as true, these bases were readily apparent or reasonably ascertainable at the time the agreement was signed or the years that followed. With reasonable diligence, the plaintiffs’ could have recognized their misunderstanding of the terms of the settlement agreement. Further, the plaintiffs fail to assert how, if at all, Raymond, Sr.’s death changed the plaintiffs’ understanding of the settlement agreement or their ability to assert a nullity cause of action within the five-year prescriptive period.

The appeals court affirmed the district court’s dismissal of the plaintiffs’ claims against American Optical.

Read the full decision here.


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