           IN THE UNITED STATES COURT OF APPEALS
                    FOR THE FIFTH CIRCUIT United States Court of Appeals
                                                   Fifth Circuit

                                                                            FILED
                                                                         February 1, 2008

                                     No. 07-20347                     Charles R. Fulbruge III
                                   Summary Calendar                           Clerk


JEFFREY COURTNEY

                                                  Plaintiff - Appellant
v.

ARTHUR ANDERSEN LLP; RODNEY R PROTO; EARL E DEFRATES;
WASTE MANAGEMENT INC

                                                  Defendants - Appellees



                   Appeal from the United States District Court
                        for the Southern District of Texas
                             USDC No. 4:05-CV-1031


Before KING, DAVIS and CLEMENT, Circuit Judges.
PER CURIAM:*
       The petition for rehearing is DENIED. This Court's opinion issued on
January 3, 2008 is hereby withdrawn, and the following opinion is substituted:
       This case arises out of the settlement agreement from the Waste
Management, Inc. (“WMI”) securities class action. In re Waste Management, Inc.
Securities Litigation, 177 F. Supp. 2d 1373 (J.P.M.L. 2001). After receiving and



       *
        Pursuant to 5TH CIR. R. 47.5, this Court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH CIR.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.
                                   No. 07-20347

cashing his settlement check, class member Jeffrey Courtney sued WMI, WMI’s
auditor, Arthur Andersen, LLP, and WMI officers Rodney Proto and Earl
Defrates (collectively, the “WMI defendants”) alleging that he was not
compensated for a block of 37,902 WMI shares which were not included in the
settlement agreement. The district court found that Courtney released his
claims when he signed the settlement agreement and cashed the settlement
check. For the reasons stated below, we affirm.
                        I. FACTS AND PROCEEDINGS
        Courtney acquired 37,902 shares of stock in USA Waste in May 1998. USA
Waste merged with the old Waste Management, Inc. in July 1998 to form the
new WMI. Following the July 1998 merger, Courtney’s USA Waste stock
changed names from USA Waste to WMI. In July 1999, WMI announced that it
would miss its projected earnings for the second quarter of the year. WMI’s stock
price declined dramatically, and a large number of shareholder derivative suits
followed. The Judicial Panel on Multidistrict Litigation (“JPML”) consolidated
all of the securities actions against WMI in the Southern District of Texas in
November 2001. The district court approved a class action settlement in May
2002.
        The WMI Notice of Settlement defined the class as all of those who
“purchased or otherwise acquired” WMI stocks during the class period,
“including but not limited to, individuals . . . who purchased or otherwise
acquired USA Waste securities . . . on or after June 11, 1998.” The class period
extended from June 11, 1998 until November 8, 1999.
        Courtney received the Notice of Settlement, which included a release of all
claims against WMI (“the Release”). Courtney did not opt out of the class, and
he identified two blocks of WMI stock on his proof-of-claim form. The first block
consisted of 37,902 shares of USA Waste stock, which Courtney acquired in May
1998, prior to the beginning of the class period (“Block 1”). The second block


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consisted of 9,842 WMI stocks which Courtney acquired in December 1999,
during the class period (“Block 2”). Courtney called the office of the claims
administrator in July 2003 and was informed that Block 1 was not included in
his claim because he acquired the stock before the class period. In March 2004,
Courtney received and cashed a settlement check for $6,569.32. In June 2006,
the claims administrator sent Courtney a letter informing him that his Block 1
shares were not included in the settlement because they “were not exchanged for
shares or assets during the Class Period as USA Waste (the acquiring company)
and its securities simply underwent a name change.”
       Courtney filed suit against the WMI defendants in Louisiana state court
in April 2004, alleging securities fraud and negligence for WMI’s conduct during
and following the July 1998 merger. The WMI defendants removed the case to
federal court in Louisiana and the JPML ordered the case transferred to the
Southern District of Texas.1 The WMI defendants then moved to dismiss for
failure to state a claim. The district court denied their motion and ordered the
WMI defendants to file a motion for summary judgment on whether “the Release
prevent[s] Courtney from pursuing claims for the value that his block of 37,902
shares lost, even though the Settlement compensated Courtney only for the
value that the block of 9,842 shares lost.” The WMI defendants filed the
requested motion for summary judgment, which the district court granted.
Courtney appealed.
                           II. STANDARD OF REVIEW
       This Court reviews a grant of summary judgment de novo and applies the
same criteria as the district court. Fed. Deposit Ins. Corp. v. Laguarta, 939 F.2d
1231, 1236 (5th Cir. 1991). Summary judgment is appropriate if the record
discloses “that there is no genuine issue as to any material fact and that the


       1
         Courtney’s case was assigned to the district court judge who presided over the WMI
class action settlement.

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moving party is entitled to judgment as a matter of law.” FED. R. CIV. P. 56(c).
This Court looks to the pleadings, depositions, answers to interrogatories, and
affidavits to determine whether any genuine issue of material fact remains. Fed.
Deposit Ins. Corp., 939 F.2d at 1236. “Accordingly, we review the evidence and
inferences to be drawn therefrom in the light most favorable to the non-moving
party.” Id. (internal quotations omitted).
      “Once the moving party presents the district court with a properly
supported summary judgment motion, the burden shifts to the nonmoving party
to show that summary judgment is inappropriate.” Morris v. Covan World Wide
Moving, Inc., 144 F.3d 377, 380 (5th Cir. 1998). To defeat summary judgment,
“the nonmoving party may not rest upon the mere allegations or denials of its
pleadings, and unsubstantiated or conclusory assertions that a fact issue exists
will not suffice.” Id.
                              III. DISCUSSION
      Courtney argues that the Release was ambiguous, and that he reasonably,
but mistakenly, believed that he had not released his claims with regard to any
uncompensated stock when he filed his proof of loss and later accepted the
settlement check. We affirm the district court’s finding that the Release is not
ambiguous and that it bars Courtney’s claims.
      “Whether a written agreement is ambiguous or whether it clearly
demonstrates the intent of the parties is a question of law. Likewise, . . . the
interpretation of an unambiguous instrument is a question of law.” Shelton v.
Exxon Corp., 921 F.2d 595, 602–03 (5th Cir. 1991). Public policy “favors and
encourages” the settlement of claims between parties and permits them to
release future damages as part of a settlement agreement. W. J. Perryman & Co.
v. Penn Mut. Fire Ins. Co., 324 F.2d 791, 793 (5th Cir. 1963). “In the context of
contract interpretation, only when there is a choice of reasonable interpretations
of the contract is there a material fact issue concerning the parties’ intent that

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would preclude summary judgment.” Amoco Prod. Co. v. Tex. Meridian Res.
Exploration, Inc., 180 F.3d 664, 669 (5th Cir. 1999).
      Courtney argues that “resolution of [whether he reasonably interpreted
the Release] will determine whether [he] can establish a defense of mistake
under Federal common law (or vice of consent under Louisiana law).” Without
deciding which law is applicable to this case—an issue which Courtney fails to
brief—we hold that Courtney has failed to allege a claim under either Federal
or Louisiana law.
      Federal courts have recognized that section 153 of the Restatement
(Second) of Contracts

      explains that the result of a unilateral mistake as to a basic
      assumption is that the contract becomes voidable if the mistaken
      party does not bear the risk of the mistake and (a) the mistake
      makes enforcement of the contract unconscionable, or (b) the other
      party had reason to know of the mistake or his fault caused the
      mistake.
See, e.g., Johnson Mgmt. Group CFC, Inc. v. Martinez, 308 F.3d 1245, 1260 (Fed.
Cir. 2002). Under Louisiana law, “[e]rror vitiates consent only when it concerns
a cause without which the obligation would not have been incurred and that
cause was known or should have been known to the other party,” LA. CIV. CODE
ANN. art. 1949 (2007), and “unilateral error does not vitiate consent if the cause
of the error was the complaining party’s inexcusable neglect in discovering the
error,” Smith v. Remodeling Serv., Inc., 648 So. 2d 995, 999 (La. Ct. App. 1994).
      The Release, which is part of the settlement agreement, states that class
members who accept the settlement release all claims “arising out of or related,
directly or indirectly, to the purchase, acquisition, exchange, retention, transfer
or sale of, or investment decision involving, any Waste Management security
during the class period.” The district court found that the Release is not
ambiguous. The district court also found that although the Block 1 stock was


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acquired prior to the class period (and therefore not covered by the settlement),
it was stock retained during the class period and covered by the broad terms of
the Release. We agree.
      Courtney does not argue that his Block 1 stocks are not WMI stocks which
he retained during the class period; he only argues that the meaning of
“retained” is ambiguous in the Release and that he did not understand that he
was releasing his claims with regard to his Block 1 stocks when he ratified the
Release.
      Under the terms of the Release, Courtney bore the risk of mistake and
cannot avoid the contract on that basis. Johnson, 308 F.3d at 1260. Section
154(c) of the Restatement (Second) of Contracts states that a party bears the risk
of mistake when “the risk is allocated to him by the court on the ground that it
is reasonable in the circumstances to do so.” The Release stated: “[i]f you are a
Class Member and this settlement is approved, your rights will be affected. You
should read this Notice carefully.” The release also stated that class members
should “CAREFULLY REVIEW THE TERMS OF THE RELEASE” because “[i]t
will affect your rights if you remain in the class.” Courtney, a sophisticated
investor, was in the best position to determine whether the settlement was
advantageous to him. Under these circumstances, Courtney bore the risk of
mistake and he cannot avoid the contract under Federal common law.
      Louisiana law requires that Courtney show that his mistake was known
or should have been known to WMI. LA. CIV. CODE ANN. art. 1949. Courtney has
not introduced any evidence to show that WMI knew or had any reason to know
of his mistaken interpretation of the Release. Summary judgment against
Courtney was proper because WMI had no reason to know that Courtney
unilaterally misinterpreted the unambiguous terms of the Release.
      Courtney also argues that summary judgment is improper because he
attempted to rescind the settlement agreement by tendering the settlement


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proceeds to WMI in November 2006, nearly two years after he filed this lawsuit
and more than three years after the claims administrator informed him, in July
2003, that his Block 1 stocks would not be compensated under the settlement.
The district court found that Courtney’s “offer to give back the consideration,
years later and in the course of litigation, does not negate the manifestation of
his assent to be bound by the settlement agreement through knowingly receiving
and retaining consideration for his claims.” Courtney cites the Restatement
(Second) of Contracts § 381 in support of his position. The Restatement states
that “[t]he power of a party to avoid a contract for misrepresentation or mistake
is lost if after he . . . has reason to know of a non-fraudulent misrepresentation
or mistake he does not within a reasonable time manifest to the other party his
intention to avoid it.” RESTATEMENT (SECOND) OF CONTRACTS § 381(2). Courtney
argues that the question of whether he rescinded the contract in a “reasonable
time” is for the jury. As discussed above, however, the settlement agreement is
not a contract that Courtney can “avoid for . . . mistake.” Therefore, his
argument for recission must fail.
                              IV. CONCLUSION
      The judgment of the district court is AFFIRMED.




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