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Kile v. United States

United States Court of Appeals, Tenth Circuit

February 11, 2019

ANGELA KILE; JODY LEMMINGS, Plaintiffs,
v.
UNITED STATES OF AMERICA, Defendant-Appellee, and COMPHEALTH, INC., a Delaware corporation formerly known as C.H.S., Inc; COMPHEALTH MEDICAL STAFFING, INC., a Delaware corporation; ROMULO G. PEREZ, Defendants. BARBARA LEMMINGS; ORAN HURLEY, JR., Movants - Appellants.

          Appeal from the United States District Court for the Eastern District of Oklahoma (D.C. No. 6:00-CV-00404-KEW)

          George W. Braly, Braly, Braly, Speed & Morris, PLLC, Ada, Oklahoma, appearing for Appellants Barbara Lemmings and Oran Hurley, Jr.

          Elliott M. Davis, Trial Attorney, United States Department of Justice, Washington D.C. (Susan Stidham Brandon, Assistant United States Attorney, United States Attorney's Office, Muskogee, OK, with him on the brief), appearing for Appellee United States of America.

          Before McHUGH, MURPHY, and CARSON, Circuit Judges.

          CARSON, CIRCUIT JUDGE.

         Federal Rule of Civil Procedure 17 controls when a district court must appoint a guardian ad litem for a minor settling claims with a defendant. The plain language of the Rule is clear: a district court is not required to appoint a guardian ad litem every time it considers the fairness of a settlement. Rather, a district court need only appoint a guardian ad litem where the minor is not otherwise represented by a general guardian or other appropriate person. We thus reject Appellants Barbara Lemmings and Oran Hurley, Jr.'s contention that the rule requires the formal appointment of a guardian ad litem whenever a parent and child settle their claims with a defendant. We further reject the contention that an inherent conflict of interest always exists where a minor is represented by a parent who is a party to the same lawsuit as the minor.

         I.

         Plaintiff Millard Lance Lemmings ("Lance") was born at a government-operated hospital in Ada, Oklahoma. During his birth, Lance suffered a brain injury. He cannot speak, walk, or care for himself. Lance and his parents, suing as "parents and next friends," filed this civil action against Defendants on August 8, 2000. Plaintiffs alleged that Defendants committed medical malpractice during Lance's birth and sued under the Federal Tort Claims Act.

         The parties settled the case on September 28, 2001. Lance's parents were simultaneously engaged in a state court proceeding regarding guardianship of Lance. On the morning of October 25, 2001, Lance's parents filed an application for an order approving the agreed settlement, attorneys' fees, and litigation costs in the state court action. The state district court appointed Lance's parents as the guardians of Lance's estate. Following that court order, Lance's parents withdrew their state court application for an order approving the settlement. Later that day, Lance's parents appeared before the federal district court for a fairness hearing regarding the settlement. Lance's parents represented him at the fairness hearing. The district court did not appoint a guardian ad litem.

         At the fairness hearing, Plaintiffs' counsel recited the terms of the settlement into the record in detail. The parties settled the matter for $5, 000, 000.00. Of that amount, the United States paid $1, 350, 000.00 into a reversionary medical trust ("Irrevocable Governmental Trust") and the remaining two Defendants paid a combined $1, 000, 000.00 into a separate trust ("Non-Governmental Trust"). The United States funded the Irrevocable Governmental Trust with annuities. By its terms, the Irrevocable Governmental Trust is a "secondary payor" after Lance exhausts coverage from Medicare, Medicaid, and any tribal or insurance benefits. In the event of Lance's death, the Irrevocable Governmental Trust benefits revert to the United States. The United States paid an additional $2, 650, 000.00 to Plaintiffs outside of the Irrevocable Governmental Trust. Of that amount, Plaintiffs' attorneys received $1, 425, 000.00.

         Lance's parents, Angela Kile and Jody Lemmings, testified at the fairness hearing. Both Kile and Lemmings acknowledged that they understood the terms of the settlement. Additionally, they stated that they had cared for Lance since his birth and confirmed their plan to care for him in the future. The court sealed the fairness hearing transcript.

         On October 25, 2001, the district court approved the settlement. At the same time, the parties executed a Stipulation for Compromise Settlement and Release of Federal Tort Claims Act Claims and Judgment Dismissing Action by Reason of Settlement. The next day, the parties filed a Release of Claims. On December 5, 2001, the case concluded with the filing of a Stipulation of Dismissal with Prejudice. The district court did not retain jurisdiction to further affect the settlement or the trusts the settlement documents created.

         Over fifteen years later, on June 16, 2017, Appellants filed a motion seeking to intervene, in which they contended: (1) the parties presented materially inaccurate information to the district court in 2001 in order to obtain the district court's approval; (2) the district court did not have jurisdiction to approve the settlement because it did not appoint a guardian ad litem to represent Lance; and (3) a conflict of interest existed between Lance and his parents which required the appointment of a guardian ad litem. Belatedly, Appellants further sought access to the 2001 sealed fairness hearing transcript. In the motion to intervene, Appellants asserted that Lance's parents spent a large portion of the proceeds and abandoned him in 2011, leaving him in the care of his paternal grandmother, Appellant Barbara Lemmings. The state district court appointed her Lance's guardian in January 2017. After Ms. Lemmings suffered a health issue, the state court appointed Appellant Oran Hurley, Jr. as co-guardian. Appellants sought to reopen the district court action, vacate the dismissal, intervene, and rewrite the terms of the Irrevocable Governmental Trust in order to access the proceeds contained in that trust. The United States objected.

         In December 2017, the district court issued an Order denying Appellants' request. It held that no basis in law existed to invade the finality of the stipulation of dismissal. The district court therefore concluded it lacked jurisdiction to consider Appellants' requested relief. As to Appellants' requested access to the sealed transcript of the fairness hearing, the district court denied the request. The district court stated that because it lacked the jurisdiction to grant the relief requested, intervention would be futile. And, because the district court did not allow Appellants to intervene, it concluded they remained ...


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