Williams v. Professional Transportation, Inc. , 294 F.3d 607 ( 2002 )

PUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
PERRY WILLIAMS; TEDDI WILLIAMS, 
d/b/a Williams Transport,
Plaintiffs-Appellees,
v.
PROFESSIONAL TRANSPORTATION,  No. 99-1011
INCORPORATED; UNITED LEASING,
INCORPORATED; CSX
TRANSPORTATION, INCORPORATED,
Defendants-Appellants.

PERRY WILLIAMS; TEDDI WILLIAMS, 
d/b/a Williams Transport,
Plaintiffs-Appellants,
v.
PROFESSIONAL TRANSPORTATION,  No. 99-1080
INCORPORATED; UNITED LEASING,
INCORPORATED; CSX
TRANSPORTATION, INCORPORATED,
Defendants-Appellees.

Appeals from the United States District Court
for the Southern District of West Virginia, at Bluefield.
David A. Faber, District Judge.
(CA-95-81)
Argued: December 1, 1999
Decided: July 1, 2002
Before WIDENER and LUTTIG, Circuit Judges, and
Margaret B. SEYMOUR, United States District Judge
for the District of South Carolina, sitting by designation.
2 WILLIAMS v. PROFESSIONAL TRANSPORTATION
Affirmed in part and reversed in part by published opinion. Judge
Widener wrote the opinion, in which Judge Luttig and Judge Seymour
concurred.
COUNSEL
ARGUED: John Harlan Mahaney, II, HUDDLESTON, BOLEN,
BEATTY, PORTER & COPEN, Huntington, West Virginia, for
Appellants. Michael Warren Carey, CAREY, HILL, SCOTT, WIN-
TER & JOHNSON, P.L.L.C., Charleston, West Virginia, for Appel-
lees. ON BRIEF: Andrew S. Zettle, HUDDLESTON, BOLEN,
BEATTY, PORTER & COPEN, Huntington, West Virginia, for
Appellants. Pamela C. Deem, CAREY, HILL, SCOTT, WINTER &
JOHNSON, P.L.L.C., Charleston, West Virginia, for Appellees.
OPINION
WIDENER, Circuit Judge:
Defendant, CSX Transportation, Inc. ("CSXT"), a subsidiary of
CSX Corporation, appeals from the district court’s judgment order
and accompanying findings of fact and conclusions of law enforcing
a previous settlement agreement between CSXT and plaintiff, Wil-
liams Transport ("Williams"). CSXT also appeals the district court’s
award of attorneys’ fees to Williams. Williams cross-appeals the dis-
trict court’s denial of an award of punitive damages. We affirm the
district court’s grant of Williams’ motion to enforce the settlement;
however, we reverse the district court’s award of attorneys’ fees to
Williams. We also affirm the district court’s denial of punitive dam-
ages to Williams.
I.
Williams is a common carrier authorized under the laws of West
Virginia to provide specialized limousine service to the public. CSXT
has utilized Williams for transport of its train crewmen and property
in areas of West Virginia since 1987. The settlement agreement at
WILLIAMS v. PROFESSIONAL TRANSPORTATION 3
issue in this case stems from an underlying dispute between the par-
ties that began in 1993.
On February 11, 1993, Williams filed a complaint against CSXT,
Professional Transportation, Inc. ("Professional"), and United Leasing
Inc. ("United Leasing") before the West Virginia Public Service Com-
mission ("Public Service Commission") alleging that Professional and
United Leasing displaced Williams pursuant to an illegal contract
with CSXT. On March 18, 1994, the Public Service Commission
determined that neither Professional nor United Leasing had authority
to provide transportation services to CSXT and ordered them to cease
and desist from operation of the unlawful transportation services. Fol-
lowing the Public Service Commission’s February 2, 1995 decision,
Williams filed a complaint in the district court against Professional
and United Leasing alleging that the unlawful transportation services
provided for CSXT resulted in injury to Williams. While that district
court case was pending, CSXT filed a complaint against Williams
before the Public Service Commission alleging that Williams had
billed CSXT improperly under its tariff. Subsequently, Williams filed
a petition with the Public Service Commission to clarify the tariff.
The parties disputed the correct interpretation of Williams’ tariff and
whether a $30 per hour alternative rate could be charged for waiting
time.
Before the scheduled jury trial commenced in the district court, the
parties met to explore settlement options. On May 23, 1997, Williams
and CSXT, participating on behalf of Professional and United Leasing
pursuant to an indemnity agreement, reached a settlement agreement
at a settlement conference held before the district court.1 The settle-
ment agreement contained the following terms:
1. CSXT would pay to Williams $140,000;
2. CSXT and Williams would enter into a five-year non-
cancellable, but transferrable contract, whereby Wil-
liams would be the exclusive provider of intrastate ser-
1
According to Williams, the final settlement conference was off the
record. Neither a transcript nor notes from the conference are provided
in the Joint Appendix.
4 WILLIAMS v. PROFESSIONAL TRANSPORTATION
vice to CSXT in certain areas in accordance with the
Public Service Commission’s rules, regulations and
Williams’ tariff; and
3. CSXT agreed to dismiss its overcharge case against
Williams in the Public Service Commission.
In order to avoid a conflict with a settlement agreement CSXT had
entered in a similar but unrelated action, the settlement agreement
between CSXT and Williams was contingent upon Williams’ success
in a proceeding it had instituted against Mack’s Transportation, one
of its competitors, to have the Public Service Commission declare
Mack’s operating certificates dormant. The court noted that if the
contingency did not come to fruition, the case would not be settled.
The settlement agreement also permitted Williams to continue its tar-
iff clarification petition in the Public Service Commission.2
After the May 23rd settlement conference, the following occurred:
CSXT dismissed its overcharge case against Williams; the Public Ser-
vice Commission declared Mack’s Transportation dormant on April
10, 1998, removing the contingency for the settlement agreement to
commence; and the parties met several times to negotiate the terms
of the five-year contract, never reaching agreement on the terms. As
previously agreed, the parties continued to litigate the tariff clarifica-
tion and interpretation in the Public Service Commission. While the
rate dispute continued, the parties agreed that Williams would charge
and CSXT would pay for the services according to the billing prac-
tices used previously, that CSXT’s payment of such charges did not
constitute its admission of the charges’ correctness, and that CSXT
would forgo any right to initiate a complaint case or seek a refund of
its payments pending resolution of the rate matter. On December 4,
1997, the parties filed a joint motion to dismiss without prejudice the
tariff clarification case in the Public Service Commission. After the
dismissal, the parties continued under the previous billing scheme
until March of 1998 when CSXT began rejecting most of Williams’
2
On May 13, 1997, CSXT filed a written protest with the Public Ser-
vice Commission in Williams’ tariff clarification proceeding to protest
Williams’ interpretation of its tariff. The Public Service Commission
allowed CSXT to intervene as a party to prosecute its opposition.
WILLIAMS v. PROFESSIONAL TRANSPORTATION 5
invoices and returning them to Williams for recalculation and resub-
mission. CSXT again claimed the bills were overcharges. Nonethe-
less, the parties continued their unsuccessful negotiations over terms
of the five-year contract. On May 4, 1998, CSXT filed a formal com-
plaint in the Public Service Commission in which it alleged that after
the May 23, 1997 settlement, Williams continued to overcharge
CSXT for its services.
Although the parties continued to propose and counter-propose
terms for their contract, on June 2, 1998, Williams informed CSXT
it would seek a hearing before the district court to enforce the settle-
ment agreement. Williams reiterated it was still willing to negotiate,
but not under its current tariff. On July 21, 1998, the district court
held a hearing on Williams’ motion to reopen3 and enforce the settle-
ment agreement. The district court issued its memorandum opinion
and order on August 20, 1998, granting the Williams’ motion to
enforce the settlement agreement and finding that CSXT violated the
terms of the agreement by not negotiating in good faith, by refusing
to pay Williams’ invoices, and by filing a second complaint in the
Public Service Commission. The court also granted the Williams’
attorneys’ fees. Subsequently, CSXT filed a motion described on the
docket sheet as one for clarification and/or reconsideration. On Octo-
ber 27, 1998, the court granted the motion to reconsider and set the
matter for rehearing, withdrawing its previous memorandum opinion
and order.4 After the rehearing, the court issued its findings of facts
and conclusions of law and judgment order on December 11, 1998,
enforcing the settlement agreement; ordering CSXT to pay Williams
all past due invoices at the rates specified in Williams’ tariff; ordering
CSXT and Williams to enter into the five-year exclusive, noncancel-
lable, but transferable contract at Williams’ current tariff rate, or at an
agreed upon rate to be approved by the Public Service Commission;
and ordering CSXT to pay Williams all its reasonable costs and attor-
3
In February 1998, the district court closed the case for statistical pur-
poses. The court reserved its authority to reopen the action upon motion
of any party and for good cause shown.
4
On December 9, 1998, the court ordered the joinder of CSXT as a
party to the action. Prior to the order, CSXT had participated in the
action because it assumed the defense of Professional and United Leas-
ing under an indemnity agreement.
6 WILLIAMS v. PROFESSIONAL TRANSPORTATION
neys’ fees incurred incident to these proceedings. The court denied
Williams’ request for punitive damages. Both parties appeal from that
order.
II.
As an initial matter, CSXT asserts that the district court’s order
exceeds the scope of its jurisdiction specified by the Johnson Act of
1934, 28 U.S.C. § 1342. The Johnson Act provides in pertinent part:
[T]he district courts shall not enjoin, suspend or restrain the
operation of, or compliance with, any order affecting rates
chargeable by a public utility and made by a State adminis-
trative agency or rate-making body of a State political sub-
division where:
(1) Jurisdiction is based solely on diversity of citizenship
. . . and,
(2) The order does not interfere with interstate commerce;
and,
(3) The order has been made after reasonable notice and
hearing; and,
(4) A plain, speedy and efficient remedy may be had in the
courts of such State.
28 U.S.C. § 1342. The Johnson Act’s limitation on federal jurisdiction
applies only when all four of its conditions are met. See Aluminum
Co. of Am. v. Utilities Comm’n of N. C., 713 F.2d 1024, 1028 (4th
Cir. 1983), cert. denied, 465 U.S. 1052 (1984). The party invoking the
Johnson Act has the burden to show the conditions have been met.
See US West, Inc. v. Nelson, 146 F.3d 718, 722 (9th Cir. 1998) (citing
Nucor Corp. v. Nebraska Pub. Power Dist., 891 F.2d 1343, 1346 (8th
Cir. 1989)). We must first determine if the district court’s order is an
"order affecting rates chargeable by a public utility." 28 U.S.C.
§ 1342; Shrader v. Horton, 471 F.Supp. 1236, 1238-39 (W.D. Va.
1979), aff’d, 626 F.2d 1163 (4th Cir. 1980).
WILLIAMS v. PROFESSIONAL TRANSPORTATION 7
CSXT argues that the court’s order established the price Williams
may collect, which CSXT contends is above the lawful price set forth
in the tariff, and that by setting this price, the court’s order restrains
the operation of or compliance with the Public Service Commission’s
specific rate order. As a matter of fact, however, the court ordered
CSXT to pay the past invoices it had returned unpaid to Williams "at
the rates specified in Williams’ current tariff in the amounts set forth
in those invoices." As to the five-year contract rate, the court reiter-
ated that "[t]he contract rate shall be the rate contained in Williams’
current tariff unless, and until, the parties agree on a new, or different,
rate," but recognized "that any contract rate is subject to P[ublic] S[er-
vice] C[ommission] approval." The court did not resolve the rate
interpretation dispute between the parties, rather it directed the parties
to submit disputes about the interpretation of the tariff to the Public
Service Commission.
We agree with Williams’ characterization of the court’s order as
one merely enforcing a settlement agreement. Williams’ underlying
suit in this case was not a challenge to any order of the Public Service
Commission, instead it alleged two causes of action: (1) injury caused
by violation of certain statutes relating to the illegal transportation of
passengers and (2) tortious interference. The settlement agreement
encompassed a compromise of the parties’ claims. Furthermore, any
rate disputes and new rates agreed upon by the parties must be sub-
mitted to the Public Service Commission. The court declined to make
any orders affecting these rates. We are thus of opinion that the John-
son Act does not bar federal jurisdiction in this matter. In that respect,
we observe that the case of Shrader v. Horton, infra, even if not on
all fours, is so near thereto as to be persuasive, and we follow that
precedent.
III.
Neither party appeals the portion of the judgment order ordering
CSXT to pay Williams the sum of $140,000 with interest from April
10, 1998.5 CSXT appeals the portions of the judgment ordering
5
On April 10, 1998, the Public Service Commission affirmed the deter-
mination of Mack’s Transportation’s dormancy, removing the settlement
agreement’s contingency factor.
8 WILLIAMS v. PROFESSIONAL TRANSPORTATION
immediate payment to Williams of all past due invoices at Williams’
current tariff and payment of all submitted invoices until the parties
execute their new contract. CSXT also disputes the court’s construc-
tion of the settlement agreement as barring CSXT from instituting its
second overcharge case in the Public Service Commission. The court
found that CSXT breached the settlement agreement by "[f]iling a
new overcharge complaint case with the PSC alleging that invoices
were billed improperly under Williams’ tariff despite the fact that a
virtually identical case had been dismissed as part of the settlement."
The May 23, 1997 settlement agreement required CSXT to dismiss its
pending overcharge case in the Public Service Commission, which it
did. However, on May 4, 1998, CSXT filed a second complaint
asserting approximately the same factual and legal claims advanced
in the first overcharge case.
A trial court possesses the inherent authority to enforce a settle-
ment agreement and to enter judgment based on that agreement. Perry
v. Timken, 849 F.2d 130, 132 (4th Cir. 1988). A settlement agreement
upon a contract must be interpreted as such. United States v. ITT Con-
tinental Baking Co., 420 U.S. 223, 238 (1975). Because contract con-
struction is a question of law, we review the district court’s
interpretation of the settlement agreement de novo. Nehi Bottling Co.
v. All-American Bottling Corp., 8 F.3d 157, 161 (4th Cir. 1993). We
review the district court’s order enforcing the settlement agreement
for abuse of discretion. Young v. FDIC, 103 F.3d 1180, 1194 (4th Cir.
1997).
Both parties agreed they reached a binding settlement agreement,
and both sides asked the court to enter an enforcement order. After
a hearing on the matter, the court interpreted the settlement agreement
as barring CSXT’s second overcharge case because CSXT agreed to
forego the prior overcharge case based on the same claims. CSXT
argued that it never agreed to forego claims against Williams for
overcharges occurring after May 23, 1997 and that it could file its
overcharge case despite having just dismissed it. The court, having
participated at length in the original settlement negotiations, found
CSXT’s position "totally inconsistent with [its] undertakings as part
of the settlement. It strains credibility to suppose . . . that Williams
would have settled this case knowing that CSXT would presently
refile a new case for overcharges." We agree with the district court’s
WILLIAMS v. PROFESSIONAL TRANSPORTATION 9
reading of the original settlement agreement and with the district
court’s finding that by filing an identical overcharge case against Wil-
liams after agreeing to dismiss the same, CSXT breached the May
23rd settlement agreement.6
CSXT also asserts that the district court’s ruling requiring the par-
ties to enter promptly into the five-year contract is flawed.7 CSXT
believes the five-year contract should have a retroactive commence-
ment date of April 10, 1998, the date upon which the contingency for
settlement was removed. CSXT did not present this contention to the
district court and raises it for the first time on appeal. In fact, CSXT’s
counsel argued at the last hearing before the district court on Novem-
ber 16, 1998 that the agreed five-year service under the contract
should begin on November 16, 1998.
Issues raised for the first time on appeal are generally not consid-
ered absent exceptional circumstances. See Muth v. United States, 1
F.3d 246, 250 (4th Cir. 1993) (allowing consideration of issues first
raised on appeal only when failure to do so is plain error or results
in miscarriage of justice). The date a contract should begin is not an
exceptional circumstance that warrants consideration of the issue in
this case.
In conclusion, we are of opinion the district court did not abuse its
discretion by enforcing the settlement order in the manner it did.
6
CSXT argues that West Virginia law prohibits waiver of future over-
payments. CSXT bases its argument on West Virginia Code § 24A-2-4.
§ 24A-2-4 prohibits a carrier from receiving or charging greater or less
than the rates legally established and filed with the Public Service Com-
mission. W.Va. Code § 24A-2-4. The court acknowledged such supervi-
sion by the Public Service Commission and incorporated that into its
findings of facts and conclusions of law and its order. Any rate differen-
tials between customers or customer classes are subject to approval by
the Public Service Commission. West Virginia AAA Statewide Ass’n v.
Public Serv. Comm’n of West Va., 412 S.E.2d 481, 485 (W.Va. 1991).
7
We do not further address CSXT’s argument regarding the rate struc-
ture because the district court’s order amply covers the issue by recog-
nizing the Public Service Commission’s authority over new rates and by
requiring tariff interpretation disputes to be submitted to the Public Ser-
vice Commission.
10 WILLIAMS v. PROFESSIONAL TRANSPORTATION
IV.
CSXT appeals the district court’s award of attorneys’ fees to Wil-
liams. Under the American Rule, each party bears its own costs of liti-
gation unless statutory authority exists for an award of attorneys’ fees
or an exception to the rule applies. See Aleyska Pipeline Serv. Co. v.
Wilderness Soc’y, 421 U.S. 240, 245-47 (1975). One exception to the
rule allows a district court to assess attorneys’ fees against a losing
party when it has acted in bad faith, vexatiously, or wantonly. See
Aleyska, 421 U.S. at 258; Chambers v. Nasco, Inc., 501 U.S. 32, 45-
46 (1991). In this case, the district court found the following to sup-
port its award of attorneys’ fees: CSXT willfully breached the settle-
ment agreement by prolonging the negotiations; CSXT refused to pay
the invoices submitted by Williams;8 CSXT filed a new over charge
complaint case; CSXT continued to support McLine Transportation
("McLine") in McLine’s effort to obtain Public Service Commission
approval to operate statewide in West Virginia; and CSXT had an
obligation to notify the court that the settlement was in jeopardy.
While CSXT may have breached the settlement agreement by refus-
ing to pay Williams’ invoices and by refiling its overcharge case, we
are of opinion that these actions do not support the award of attor-
neys’ fees to Williams. CSXT’s actions do not rise to the level of bad
faith required for an award. Furthermore, CSXT’s support of
McLine’s application for approval in the Public Service Commission
does not constitute a breach of the settlement agreement. The settle-
ment agreement has no provision requiring CSXT to refrain from sup-
porting such applicants. Additionally, even if McLine obtained
statewide authority to operate, CSXT admits McLine would not
replace Williams in the areas covered by the settlement agreement.
The award of attorneys’ fees to Williams is reversed.
V.
Williams appeals the district court’s denial of punitive damages.
Punitive damages in a breach of contract case are available only in an
exceptional case in which the breach amounts to an independent and
willful tort. Goodwin v. Thomas, 403 S.E.2d 13, 16 (W.Va. 1991); see
8
The court noted the "dramatic disparity" in financial and bargaining
power between the two parties as part of this finding.
WILLIAMS v. PROFESSIONAL TRANSPORTATION 11
also LaVay Corp. v. Dominion Fed. Sav. & Loan Ass’n, 830 F.2d 522,
526-27 (4th Cir. 1987). We affirm the district court’s denial of puni-
tive damages on its reasoning that CSXT’s conduct was not sufficient
to support such an exceptional award.
Accordingly, the judgment order of the district court entered
December 11, 1998 is affirmed in each respect except the award of
attorney’s fees to the Williams is reversed. The award of costs to the
Williams is also affirmed if the brief of CSXT may be taken as con-
testing that item.
AFFIRMED IN PART, REVERSED IN PART