United States v. Centex-Simpson ( 2000 )

UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
UNITED STATES OF AMERICA, for the
use of McDermitt, Incorporated, 83
Hunterstown Road, Gettysburg,
Pennsylvania 17325,
Plaintiff-Appellant,
v.
CENTEX-SIMPSON CONSTRUCTION
No. 99-1213
COMPANY, INCORPORATED; SEABOARD
SURETY COMPANY; ST. PAUL FIRE &
MARINE INSURANCE COMPANY;
NATIONAL UNION FIRE INSURANCE
COMPANY OF PITTSBURG,
PENNSYLVANIA; FEDERAL INSURANCE
COMPANY,
Defendants-Appellees.
Appeal from the United States District Court
for the Northern District of West Virginia, at Martinsburg.
W. Craig Broadwater, District Judge.
(CA-96-54-3)
Argued: December 1, 1999
Decided: January 19, 2000
Before MURNAGHAN and WILKINS, Circuit Judges,
and HAMILTON, Senior Circuit Judge.
_________________________________________________________________
Affirmed by unpublished per curiam opinion.
_________________________________________________________________
COUNSEL
ARGUED: William Anthony Kolibash, PHILLIPS, GARDILL, KAI-
SER & ALTMEYER, Wheeling, West Virginia, for Appellant. David
L. Cole, Jr., OBER, KALER, GRIMES & SHRIVER, P.C., Balti-
more, Maryland, for Appellees. ON BRIEF: David B. Hamilton,
OBER, KALER, GRIMES & SHRIVER, P.C., Baltimore, Maryland,
for Appellees.
_________________________________________________________________
Unpublished opinions are not binding precedent in this circuit. See
Local Rule 36(c).
_________________________________________________________________
OPINION
PER CURIAM:
This case arises from a dispute between Centex-Simpson, a general
contractor, and McDermitt, a subcontractor. The parties verbally set-
tled their dispute during a telephonic conference held on the record
and attended by the district court judge. Centex-Simpson agreed to
pay McDermitt $217,500, and both parties agreed to release all claims
against the other. After the conference concluded, however, the par-
ties could not agree on the language of the release provision in the
written settlement agreement.
The district court granted in part Centex-Simpson's motion to
enforce the settlement agreement and ordered that the written agree-
ment include certain challenged language. The language prohibits
either party from encouraging, sponsoring, suggesting or otherwise
fostering any claim against the other party undertaken by any person
or entity. McDermitt filed this appeal alleging that the district court
abused its discretion by construing the agreement to include the "do
not encourage" language in the release provision.
For the reasons discussed below, we affirm.
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I.
Centex-Simpson was awarded the general contract for construction
of the U.S. Fish and Wildlife Service National Education and Train-
ing Center in Shepherdstown, West Virginia ("NETC"). In 1994,
McDermitt entered into a subcontract with Centex-Simpson to pro-
vide concrete, labor, and materials for that project. A dispute arose
between the parties concerning completion of the work and payment.
McDermitt filed suit against Centex-Simpson in the U.S. District
Court for the Northern District of West Virginia in September of
1996. Centex-Simpson filed an answer and a counter claim against
McDermitt for breach of contract concerning a different construction
project, that was the State Farm Mutual Automobile Insurance Com-
pany Seabord Regional Office in Frederick, Maryland ("State Farm").
After several unsuccessful attempts to settle the disputes, the par-
ties participated in a telephonic settlement conference before the
Court on May 15, 1998. At that time, on the record and in the pres-
ence of the district court judge, Centex-Simpson and McDermitt
agreed verbally to settle their dispute. The parties agreed that Centex-
Simpson would pay McDermitt $217,500 in return for settlement and
release of all claims, with one specific exception. A potential $31,000
claim regarding a supplier was excepted from the settlement agree-
ment.
On May 26, 1998, McDermitt's counsel prepared a proposed writ-
ten settlement agreement which provided for the release of both par-
ties from any claims arising out of the NETC and State Farm projects.
In response, Centex-Simpson's counsel prepared a different proposed
written settlement agreement. Centex-Simpson's proposal contained
broader language in the release provision. In addition to the agree-
ment to release all future claims arising out of the two construction
projects, the counter-proposal also included a "do not encourage" pro-
vision:
McDermitt further covenants that it will in no way encour-
age, sponsor, suggest or otherwise foster any claim or cause
of action arising out of or pertaining to the NETC project
and/or State Farm Project against [any party to this Agree-
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ment or the officers of any party to this agreement]
undertaken by (1) . . . any party to this Agreement . . . or,
(4) any other person or entity.
The additional language in the release provision prevents either party
from encouraging another person or entity to bring a suit related to
either the NETC or State Farm construction projects.
McDermitt would not agree to the "do not encourage" language,
and Centex-Simpson would not agree to remove the challenged lan-
guage. In the months following the settlement conference, both par-
ties petitioned the court to enforce the settlement agreement and to
resolve the dispute over the language used in the release provision.
On January 7, 1999, the district court issued a memorandum opin-
ion and order granting Centex-Simpson's motion and instructing the
parties to comply with the written settlement agreement proposed by
Centex-Simpson, including the challenged language in the release
provision.
McDermitt now appeals and insists that it never agreed to the "do
not encourage" restriction contained in the challenged language.
McDermitt alleges that the district court abused its discretion by
ordering the parties to execute an agreement which contains the chal-
lenged language in the release provision.
II.
This court reviews the district court order enforcing the settlement
agreement for abuse of discretion. Young v. FDIC , 103 F.3d 1180,
1194 (4th Cir. 1997). We must decide whether including the "do not
encourage" language in the release provision of the written settlement
agreement constitutes an abuse of discretion. We hold that it does not.
District courts possess the inherent authority to enforce a settle-
ment agreement and to enter judgment based on an agreement. Petty
v. Timken Corp., 849 F.2d 130, 132 (4th Cir. 1988). Neither party dis-
putes that a settlement was reached at the telephonic conference in
May of 1998; however, during the settlement conference there was no
discussion of the precise terms of the release of claims provision. The
district court judge reviewed the transcript of the settlement confer-
ence and concluded that the "do not encourage" language was consis-
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tent with the general release of claims that was agreed to during the
conference.
Our review of the transcript of the settlement conference and
indeed the entire purpose of a "settlement" conference convince us
that the parties intended to arrive at a dollar figure that would be paid
by Centex-Simpson to settle all claims between Centex-Simpson and
McDermitt. If McDermitt agreed to give up any future claims against
Centex-Simpson in exchange for money, they should not be allowed
now to reserve the right to goad others into similar action from the
courtroom sidelines.
The district court judge had this to say about the dispute over the
language in the release provision:
In the present case, as in the cases cited herein, the parties
knew precisely what they were agreeing to at the first tele-
phonic settlement conference. In exchange for $217,500,
McDermitt agreed to release all present and future claims,
with the explicit exception of a single potential claim.
McDermitt had ample opportunity to inform the Court and
Centex that it also intended to except any other contem-
plated action against Centex from the agreement but did not
do so. Thus, all evidence before the court at the time of the
agreement indicated the essential scope of the settlement.
McDermitt agreed to settle all claims, save one, in exchange
for $217,500.
By adopting the broad language contained in Centex-Simpson's
draft of the release provision, the district court implicitly found that
such broad language was in keeping with the agreement reached on
May 15, 1998. Nothing in the record of the original settlement confer-
ence suggests otherwise. The judge, therefore, did not abuse his dis-
cretion by construing the agreement to include the broad release
language in the Centex-Simpson proposal.
The district court judgment is accordingly
AFFIRMED.
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