Central Laborers' Pension, Welfare and Annuity Funds v. Bland's Sewer & Water, Inc. et al
Filing
43
ORDER granting in part and denying in part defendnat Danny J. Bland's 31 motion for summary judgment and defendant Bland's Sewer & Water, Inc.'s 32 motion for summary judgment. Signed by Chief Judge David R. Herndon on 7/28/2011. (msdi)
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF ILLINOIS
CENTRAL LABORERS’ PENSION,
WELFARE AND ANNUITY FUNDS,
Plaintiffs,
v.
BLAND’S SEWER & WATER, INC.,
And DANNY J. BLAND, individually,
Defendants.
No. 09-553-DRH
ORDER
HERNDON, Chief Judge:
Defendant Danny Bland is no stranger to being involved in litigation with
plaintiffs Central Laborers’ Pension, Welfare and Annuity Funds for failure to
allegedly pay required fringe benefit contributions and turn in required reports. This
case represents the fourth time that either Bland or one his companies, here,
defendant Bland’s Sewer & Water, Inc. (Bland’s Sewer), has been sued by plaintiffs
for failure to make the required contributions or turn in required reports. The last
case (07-cv-252) between these parties resulted in a settlement and Bland and
Bland’s Sewer now claim in their motions for summary judgment that this current
suit is barred by the settlement agreement entered into between the parties and by
the doctrine of res judicata. For the reasons that follow, the Court grants Bland’s
and Bland’s Sewer’s motions for summary judgment (Docs. 31 & 32) in part and
Page 1 of 20
denies in part.
I. Background
The lawsuits against Bland’s companies stem back to February 17,
2004, when plaintiffs filed suit against two of Bland’s companies, Paradise
Environmental Services, Inc. (Paradise) (04-cv-104) and Bland Construction Co., Inc.
(Bland Construction) (04-cv-105), under the Employee Retirement Income Security
Act of 1974, 29 U.S.C. §§ 1001, et seq. (ERISA). Plaintiffs alleged generally that
Paradise and Bland Construction failed to make fringe benefit contributions to
plaintiffs required by various agreements entered into between plaintiffs and Paradise
and Bland Construction. Default judgment was entered in favor of plaintiffs and
against Paradise in the amount of $61,900.07 (Doc. 31, 04-cv-104) and against Bland
Construction in the amount of $34,978.87 (Doc. 15, 04-cv-105). The collection of
those judgments, however, became another issue and carried over into future
litigation between Bland and his companies and plaintiffs.
The plaintiffs next lawsuit against Bland was filed on April 10, 2007 (07cv-252) (the prior litigation). That complaint (Doc. 2, 07-cv-252) was filed against
Bland’s Sewer and Bland (collectively defendants) alleging three counts. Count I was
against Bland’s Sewer and alleged Bland’s Sewer was obligated to make fringe benefit
contributions to plaintiffs under the various agreements entered into between Bland’s
Sewer and plaintiffs, that according to the trust agreements between the parties,
plaintiffs are entitled to collect liquidated damages on all contributions that are paid
late, and that based “[u]pon careful review of all records maintained by plaintiffs
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there is a total of [$4,577.03] known to be due and owing from defendant to
plaintiffs.” The complaint further alleged that “there is a possibility that additional
contributions and liquidated damages will come due during the pendency of this
lawsuit,” and that an audit of defendant’s payroll records and books was necessary
to determine the amounts due and owing. The count referred the Court to plaintiffs’
attached exhibit eight. That exhibit showed the audit liabilities of Bland Construction
due between January 1, 2001, and June 30, 2004, and liquidated damages due,
totaling $34,783.87, the amount that plaintiffs claimed Bland Construction still owed
on the prior default judgment entered against Brand Construction. It also included
a page entitled new delinquencies for Bland Construction that was dated November
15, 2005. That page showed liquidated damages allegedly due plaintiffs from dates
ranging from September 2003 through October 2006, the total of which came to
$4,577.03.
Count II was also against Bland’s Sewer and alleged that Bland’s Sewer
was the alter-ego to Bland Construction, and/or its successor corporation, and was
therefore liable for the outstanding $34,783.87 judgment balance owed to plaintiffs
from the $34,978.87 judgment mentioned above. Count III was brought against
Bland individually, seeking to hold Bland personally liable for the actions alleged in
count I.
Defendants answered the complaint and a discovery schedule was set,
but the case was eventually dismissed after the parties filed a joint motion to dismiss,
advising the Court that a settlement had been reached. (Doc. 19). On March 31,
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2008, the Court entered judgment dismissing the case with prejudice (Doc. 20, 07-cv252).
The settlement agreement, dated December 3, 2007, provided, in
relevant part, that Bland, Bland’s Sewer, and Paradise (collectively the Bland Parties)
shall pay plaintiffs the sum of $42,000 within seven days of the agreement.
Furthermore, the agreement contained the following relevant provisions:
“
4.
Subject to the payment described in paragraph 1
hereof and except as otherwise provided in paragraph 5 hereof,
[plaintiffs] hereby release and forever discharge the Bland Parties
. . . of and from any and every claim, demand, cause of action or
suit of any character or description whatsoever relating to or
arising out of any claim against or liability or obligation of
Paradise or Bland’s Construction Co., Inc. (“Bland’s
Construction”) or any order or judgment entered in the Paradise
Case [04-cv-104] or [the] Bland Case [07-cv-252]. Except as
otherwise provided in paragraph 5 hereof, the foregoing is
intended as a general release of the Bland Parties and shall
forever release and discharge all claims of any character or
description whatsoever in favor of [plaintiffs] and against any one
or more of the Bland Parties that relate in any way to any one or
more of the Bland Parties, Bland’s Construction or Paradise,
including (without limitation) any claim that has been or could be
asserted in the Litigation.[1]
5.
Excluding unpaid contributions and related
liabilties specifically alleged in [plainitffs’] complaint in the Bland
Case (liability for which is hereby released and discharged),
[plaintiffs] reserve the right to recover from Bland Sewer for any
delinquent and unpaid employer contributions for the period
beginning December 1, 2005 through September 1, 2007, and
consistent with the agreements executed by Bland Sewer with the
various entities covered by the Central Laborers Pension, Welfare
and Annuity Funds prospectively, and so long as Bland Sewer is
bound by the terms and conditions of the agreements executed by
1
The “Litigation” referred to here is the Bland Case, 07-cv-252, and the
Paradise case, 04-cv-104.
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it.” (Doc. 42-3) (Emphasis in original).
The settlement agreement then set forth how and when an audit of Bland
Sewer’s payroll records and books would be conducted for the time period beginning
December 1, 2005, through September 1, 2007, “to determine what amount, if any,
is due and owing to [plaintiffs] as delinquent contributions, and any and all other
damages that reasonably flow from same, of which [plaintiffs] are entitled to collect.”
(Doc. 42-3). It then provided the procedures for Bland’s Sewer to follow should it
decide to challenge the results of the audit. The agreement stated in bold: “In the
event a dispute arises as to the [sic] whether any disputed amounts are subject
to collection by [plaintiffs], the parties shall submit same to a court of
competent jurisdiction for adjudication.” (Doc. 42-3).
On June 26, 2008, Kevin W. Bragee, a certified public accountant, sent
a letter to plaintiffs entitled “Independent Accountant’s Report on Applying AgreedUpon Procedures.” (Doc. 34-4). As a result of the procedures performed, Bragee
found that additional contributions were due in the amount of $123.27 for the time
period of December 1, 2005, through December 31, 2007.
On September 16, 2008, plaintiffs’ counsel sent defendants’ counsel a
letter stating the following:
“
Enclosed please find a copy of the completed audit and all
corresponding documents to same. Please also find a revised
breakdown of amounts due and owing delineating the audit
liabilities due and owing, along with newly discovered liquidated
damages, all of which were not included or contemplated in our
most recent settlement of the prior claims against Dan Bland, et
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al. As you can see, there are contributions and liquidated
damages due and owing to [plaintiffs] totaling $7,707.87.
Additionally, attorneys’ fees and costs incurred by my clients, to
date, total $895.50.
Based on the agreement(s) signed by Mr. Bland, including
the settlement agreement in the Paradise & Bland Construction
matter Mr. Bland owes [plaintiffs] $8,603.37. Please forward
said amount within ten days of the date of this letter. Please also
be advised, Mr. Bland has failed to provide ANY report forms
from April 2008 to the present.” (Doc. 34-7).
On September 22, 2008, defense counsel responded to the letter,
notifying plaintiffs that Bland’s Sewer objected to plaintiffs’ claim for additional
payment based upon three grounds: 1) the audit covered the wrong period as the
audit was conducted for the period from September 1, 2005, to December 31, 2007,
but it was only supposed to go through September 1, 2007; 2) that there was no
basis for the claim of liquidated damages; and 3) that there was no basis in the
settlement for the recovery of attorney’s fees.
On July 24, 2009, plaintiffs filed their complaint against Bland’s Sewer
and Bland alleging two counts, one against Bland’s Sewer and one against Bland
individually.2 In both counts, plaintiffs alleged that defendants were obligated to
make fringe benefit contributions to plaintiffs under the various agreements entered
into between defendants and plaintiffs, that according to the trust agreements
between the parties, plaintiffs are entitled to collect liquidated damages on all
contributions that are paid late, that upon careful review of all records maintained
2
Plaintiffs concede that it mistakenly labeled its count against Bland count
III as opposed to count II.
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by plaintiffs, there is a total of $8,879.26 known to be due and owing from
defendants to plaintiffs, and that there is a possibility that additional contributions
and liquidated damages would come due during the pendency of the lawsuit.
Plaintiffs also alleged that an audit of Bland’s Sewer’s payroll records was necessary
to determine the amounts due and owing. Plaintiffs referred the Court to exhibit ten
which showed audit liabilities due plaintiffs from December 1, 2005, through
December 31, 2007, in the amount of $123.27. Those figures were the exact same
figures from the audit3 Bragee conducted. Added to that amount was $12.33 in
liquidated damages and $725 for the audit cost, coming to a grand total of $860.60
plaintiffs claimed Bland Sewer owed for audit liabilities. Plaintiffs claimed Bland
Sewer also owed liquidated damages totaling $8,018.66 for dates ranging from
September 2003 through November 2008.
On November 16, 2009, defendants filed their answers to the complaint
(Docs. 9 & 10). On June 1, 2010, Bland’s Sewer filed a motion for leave to amend
its answer (Doc. 26). On August 20, 2010, the Court granted that motion, ordering
Bland’s Sewer to electronically file its amended answer by August 25, 2010. For
whatever reason, no amended answer was ever filed, and on October 19, 2010,
3
The Court uses the term “audit” loosely. In Bragee’s letter (Doc. 34-4) to
plaintiffs regarding his independent accountant’s report on applying agreed upon
procedures, Bragee notes that he “was not engaged to, and did not, perform an
audit, the objective of which would be the expression of an opinion on the
accompanying Statement of Amounts Due Various Funds.” Nevertheless, the
parties have referred to this as the audit and the Court has chosen to follow their
adaptation.
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defendants filed motions for summary judgment as to the claims against them (Docs.
31 & 32). The Court will address each of the motions in turn.
II. Standard of Review
“Summary judgment is appropriate where the evidence shows ‘there is
no genuine issue as to any material fact and that the movant is entitled to judgment
as a matter of law.’” Johnson v. Manitowoc Cnty., 635 F.3d 331, 334 (7th Cir. 2011)
(citing FED . R. CIV. P. 56(c)(2)). “A genuine issue of material fact arises only if
sufficient evidence favoring the nonmoving party exists to permit a jury to return a
verdict for that party.” Johnson, 635 F.3d at 334 (quoting Faas v. Sears, Roebuck
& Co., 532 F.3d 633, 640-41 (7th Cir. 2008)). In considering motions for summary
judgment, a court construes all facts and draws all inferences from the record in
favor of the nonmoving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255
(1986).
Contractual disputes, however, often lend themselves to resolution on
summary judgment because a contract’s meaning is a matter of law, and where there
is no contractual ambiguity, there is no resort to extrinsic evidence and therefore no
factual dispute to preclude summary judgment. Aerospace & Agric. Implement
Workers of Am. & Its Local 765, 102 F.3d 301, 305 (7th Cir. 1996); Temme v.
Bemis Co., 622 F.3d 730,734 (7th Cir. 2010). Still, “[s]ummary judgment is not
warranted when there are genuine issues of material fact with respect to the
interpretation of the contract.” Waterloo Furniture Components, Ltd. v. Haworth,
Inc., 467 F.3d 641, 645 (7th Cir. 2006). The Seventh Circuit reviews this court’s
summary judgment determinations and contract interpretations de novo as they are
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both questions of law. Fulcrum Fin. Partners v. Meridian Leasing Corp., 230 F.3d
1004, 1007 (7th Cir. 2000).
II. Analysis
A. Bland’s motion for summary judgment
In Bland’s motion for summary judgment (Doc. 31), Bland claims that
he is entitled to judgment as a matter of law because all claims against him were
previously released in a settlement between the parties in the prior litigation and
because the judgment in the prior action bars plaintiffs’ cause of action under the
doctrine of res judicata. Plaintiffs respond by contending that “[t]he prior litigation
and settlement . . . referenced in Bland’s [m]otion for [s]ummary [j]udgment did not
account for, or release him from newly discovered liabilities due the funds. Thus, the
doctrine of res judicata is inapplicable in the instant action.” (Doc. 40).
Since this case was brought pursuant to ERISA, federal common law
principles would normally govern. GCIU Emp’r Ret. Fund v. Chi. Tribune Co., 66
F.3d 862, 864-65 (7th Cir. 1995). The motions for summary judgment that are the
subject of this order, however, relate to the settlement agreement entered into by the
parties. Settlement agreements are a particular kind of contract, and contracts
are interpreted according to the law of the jurisdiction in which the contract was
created. Newkirk v. Vill. of Steger, 536 F.3d 771, 774 (7th Cir. 2008). Thus,
typically the law of Illinois would govern and Illinois courts generally adhere to a
contract’s choice of law provisions so long as the contract is valid and does
contradict Illinois’s fundamental public policy. Sound of Music Co. v. Minn. Mining
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& Mfg. Co., 477 F.3d 910, 915 (7th Cir. 2007); Thomas v. Guardsmark, Inc., 381
F.3d 701, 705 (7th Cir. 2004). Here, the settlement agreement itself provides that
the agreement shall be interpreted according to “[f]ederal [l]aw and the [l]aws of the
State of Illinois.” The agreement further provides that “[i]n the event of a conflict
between [f]ederal and Illinois [l]aw, [f]ederal [l]aw shall control on the matter in
dispute.”
In their briefs, neither party mentions the agreement’s choice of law
provisions. Nevertheless, defendants assert that the Court should follow the “four
corners” rule of Illinois contract interpretation. See Lease Mgmt. Equip. Corp. v.
DFO P’ship, 392 Ill. App. 3d 678, (Ill. App. Ct. 2009) (“In determining whether an
ambiguity exists, the court applies the ‘four corners rule’ and looks to the language
of the agreement alone.”). Plaintiffs do not contest that the “four corners” rule is
followed under Illinois state law, but contend that “[f]ederal common law principles
of contract interpretation govern and require the agreements executed by defendants,
and the declaration of trusts, by giving the terms of the agreements its ordinary
meaning.” Thus, plaintiffs argue that “the course of conduct of the parties clearly
demonstrates that the Settlement Agreement did not and does not supersede the
various other agreements executed by defendants.” Because the Court finds that the
same result would be reached by applying federal or Illinois law and because the
settlement agreement provides that federal law shall govern if it conflicts with Illinois
law, the Court will apply federal law.
When applying the federal common law rules of contract interpretation,
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the Court must first determine whether the clause of the contract at issue is
ambiguous. Funeral Fin. Sys. v. United States, 234 F.3d 1015, 1018 (7th Cir.
2000). “The language of a contract is ambiguous if a section of that contract ‘is
subject to reasonable alternative interpretations.’” Id. (quoting Grun v. Pneumo Abex
Corp., 163 F.3d 411, 420 (7th Cir. 1998)). Under the federal common law rules of
contract interpretation, the Court interprets “the settlement agreement ‘in an
ordinary and popular sense as would a person of average intelligence.’” United States
v. Rand Motors, 305 F.3d 770, 774 (7th Cir. 2002) (quoting Grun, 163 F.3d at 420).
In doing so, the Court attempts to construe a contract to give the full intention of the
parties by applying an objective standard of reasonableness to determine the
meaning of the settlement agreement. Rand Motors, 305 F.3d at 774. “If a contract
is not open to any other reasonable interpretations, and is therefore unambiguous,
then the written words of the contract must dictate the disposition of a dispute
involving the contract.” Funeral Fin. Sys., 234 F.3d at 1018. “Extrinsic evidence
should not be used where the contract is unambiguous.” Chi. Tribute Co., 66 F.3d
at 865. “When the language of an unambiguous contract ‘provides an answer, then
the inquiry is over.’” Funeral Fin. Sys., 234 F.3d at 1018 (quoting Grun, 163 F.3d
at 420).
Here, the Court finds no ambiguity exists in part of the agreement that
relates to Brand.
With regard to Bland specifically, the settlement agreement
provides that “[plaintiffs] hereby release and forever discharge the Bland Parties . .
. of and from any and every claim, demand, cause of action or suit of any character
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or description whatsoever relating to or arising out of any claim against or liability
or obligation of Paradise or [Bland’s Construction] or any order or judgment entered
in the Paradise Case [04-cv-104] or Bland Case [07-cv-252].” The next sentence then
clarifies this by stating, “Except as otherwise provided in paragraph 5 hereof, the
foregoing is intended as a general release of the Bland Parties and shall forever
release and discharge all claims of any character or description whatsoever in favor
of [plaintiffs] and against any one or more of the Bland Parties that relate in any way
to any one or more of the Bland Parties, Bland’s Construction or Paradise, including
(without limitation) any claim that has been or could be asserted in the Litigation.”
Paragraph five then sets forth, in relevant part, the following:
“5.
Excluding unpaid contributions and related
liabilities specifically alleged in [p]laintiffs’] complaint in the
Bland Case (liability for which is hereby released and
discharged), [plaintiffs] reserve the right to recover from Bland
Sewer for any delinquent and unpaid employer contributions for
the period beginning December 1, 2005 through September 1,
2007, and consistent with the agreements executed by Bland
Sewer with the various entities covered by [plaintiffs]
prospectively, and so long as Bland Sewer is bound by the terms
and conditions of the agreements executed by it.” (Emphasis in
original).
Based upon the Court’s reading of the settlement agreement there is but
one reasonable interpretation of the above provision: that Bland is released and
forever discharged from any claims against or liability or obligation of Paradise or
Bland’s Construction or from any claims brought or that could have been brought in
the prior litigation between the parties (07-cv-252). In the prior litigation, plaintiffs
sued for $34,783.87, the amount it claimed Bland Construction still owed plaintiffs
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from the default judgment entered against Bland Construction in case number 04-cv105, and for liquidated damages in the amount of $4,577.03 for time periods ranging
from September 2003 through October 2006.4 In this case, plaintiffs base their
cause of action on the audit that Bragee conducted with regard to Bland’s Sewer, on
the same liquidated damages claims5 that it made in the prior litigation, and on
additional liquidated damages claims in the amount of $3,705.47 for dates ranging
from November 2006 through November 2008.
Here, paragraph four specifically released Bland “from any claim,
demand, cause of action or suit of any character or description whatsoever relating
to or arising out of any claim against or liability or obligation of . . . [Bland’s
Construction] or any order or judgment entered in the . . . Bland case [07-cv-252].”
Thus, the only reasonable interpretation of this clause is that Bland is released from
all claims that were settled previously in the prior litigation. The next sentence
clarifies this by stating that “[e]xcept as otherwise provided in paragraph 5,” which
does not apply to Bland, “the foregoing is intended as a general release of [Bland] and
shall forever release and discharge all claims of any character or description
whatsoever in favor of [plaintiffs] and against any one or more of the Bland Parties
4
In fact, the page plaintiffs attached alleging the liquidated damages due in
that case against Bland’s Sewer bore Bland’s Construction’s name (Doc. 2-9, 07cv-252), but in that case plaintiffs alleged that Bland’s Sewer was the alter-ego of
Bland’s Construction and/or the successor corporation.
5
Plaintiffs do not claim liquidated damages in this case for December 2003
($97.92) and for February 2006 ($165.92) but it made those claims in the prior
litigation.
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that relate in any way to any one or more of the Bland Parties, Bland’s Construction
or Paradise, including (without limitation any claim that has been or could be
asserted in the Litigation.” Thus, the Court interprets the settlement agreement to
unambiguously release Bland from every claim that could have been brought in the
prior litigation. This is further supported by the fact that plaintiffs specifically
reserved the right to recover from Bland Sewer for any delinquent and unpaid
employer contributions for the period beginning December 1, 2005, through
September 1, 2007, yet did not make any reservations with regard to Bland. Thus,
plaintiffs are precluded from bringing all claims against Bland that could have been
brought in the prior litigation.
Despite this, the Court finds that a question of material fact exists as to
what claims could have been brought in the prior litigation and finds that the
settlement is ambiguous as to whether plaintiffs are precluded from seeking recovery
for those claims that could not have brought in the prior litigation. Thus, the Court
grants summary judgment in favor of Bland with regard to all claims that could have
been brought in the prior litigation and denies summary judgment with regard to
those claims that could not have been brought in the prior litigation.
With regard to Bland’s Sewer’s contention that summary judgment
should be granted to him because the doctrine of res judicata applies, the Court finds
that res judicata applies in part and would only bar the claims that the Court has
already determined are barred by the settlement agreement. “To determine whether
res judicata applies, [the Court applies] the preclusion law of Illinois, the state that
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rendered the judgment.” Arlin-Golf, LLC v. Village of Arlington Heights, 631 F.3d
818, 821 (7th Cir. 2011). In Illinois, “[r]es judicata applies when ‘(1) there was a
final judgment on the merits rendered by a court of competent jurisdiction, (2) there
is an identity of cause of action, and (3) there is an identity of parties or their
privies.’” Arlin-Golf, LLC, 631 F.3d at 821 (quoting Nowak v. St. Rita High Sch., 757
N.E.2d 471, 477 (Ill. 2001)). Here, there is no question that the first and third
requirements have been met. At issue is whether the second requirement has also
been met.
“To determine whether the second requirement is met, Illinois employs
a transactional test:
[S]eparate claims will be considered the same cause of action for
purposes of res judicata if they arise from a single group of
operative facts, regardless of whether they assert different
theories of relief . . . . [T]he transactional test permits claims to
be considered part of the same cause of action even if there is not
a substantial overlap of evidence, so long as they arise from the
same transaction.”
Arlin-Golf, LLC, 631 F.3d at 821 (quoting River Park, Inc. v. City of Highland Park,
703 N.E.2d 883, 893 (Ill. 1998)). Here, the liquidated damages claims brought in the
prior litigation, i.e., for the time period of September 2003 through October 2006,
would be precluded by res judicata, but the claims arising out of different
transactions, i.e., the failure to pay contributions in subsequent months would not
be barred because they are based on new transactions. Furthermore, it appears that
the claim based upon the audit liabilities owed as a result of Bragee’s audit would
also be barred but the Court need not decide whether those claims would be barred
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because the Court already found those claims to be barred by the settlement
agreement.
Thus, because the settlement agreement unambiguously releases Bland
from all claims that could have been brought in the prior litigation, Bland’s summary
judgment motion is granted in part with regard to those claims. The settlement
agreement is ambiguous, however, as to whether the parties intended to release
Bland from any subsequent claims that could not have been brought in the prior
litigation. Accordingly, Bland’s motion is denied in part with regard to those claims.
B. Bland’s Sewer’s motion for summary judgment
Bland’s Sewer claims in its motion for summary judgment that plaintiffs
recovery against Bland’s Sewer cannot exceed $123.27 based on the following
undisputed facts: 1) the settlement agreement releases Bland’s Sewer from all claims
asserted in count I except for unpaid employer contributions in the amount of
$123.37 as determined by plaintiffs’ audit; 2) the settlement agreement releases
Bland’s Sewer from all claims for liquidated damages during the period covered by
the audit; 3) plaintiffs have sustained no damages resulting from Bland Sewer’s
alleged unpaid employer contributions during the period covered by the settlement
agreement; 4) plaintiffs failure to comply with the settlement agreement by providing
Bland Sewer’s with notice of their decision, if any, with respect to Bland Sewer’s
objection to their claim bars recovery; and 5) the judgment in the prior action bars
plaintiffs’ cause of action under the doctrine of res judicata. Plaintiffs contend that
the prior litigation and settlement did not account for, or release it from newly
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discovered liabilities due plaintiffs. Further, plaintiffs argue that Bland’s Sewer was
not released from the continued obligations under the agreements executed between
the parties.
Here, again the Court finds that the settlement agreement is
unambiguous in part. This time, however, the Court finds that plaintiffs specifically
reserved the right to sue Bland’s Sewer for the right to recover delinquent and unpaid
employer contributions for the period beginning December 1, 2005, through
September 1, 2007, and for any claims that occurred after September 1, 2007.
The settlement agreement provides that “[plaintiffs] hereby release and
forever discharge [Bland’s Sewer] . . . of and from any and every claim, demand,
cause of action or suit of any character or description whatsoever relating to or
arising out of any claim against or liability or obligation of . . . any order or judgment
entered in the . . . Bland Case [07-cv-252].” The next sentence then clarifies the
release by stating, “Except as otherwise provided in paragraph 5 hereof, the foregoing
is intended as a general release of [Bland’s Sewer] and shall forever release and
discharge all claims of any character or description whatsoever in favor of [plaintiffs]
and against any one or more of the Bland Parties that relate in any way to any one or
more of the Bland Parties, Bland’s Construction or Paradise, including (without
limitation) any claim that has been or could be asserted in the Litigation.”
Paragraph five then provides the following:
“5.
Excluding unpaid contributions and related
liabilities specifically alleged in [plaintiffs’] complaint in the
Bland Case (liability for which is hereby released and
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discharged), [plaintiffs] reserve the right to recover from Bland
Sewer for any delinquent and unpaid employer contributions
from the period beginning December 1, 2005, through September
1, 2007, and consistent with the agreements executed by Bland
Sewer with the various entities covered by [plaintiffs]
prospectively, and so long as Bland Sewer is bound by the terms
and conditions of the agreements executed by it.” (Emphasis in
original).
Here, plaintiffs specifically sought liabilities from December 1, 2005,
through December 31, 2007, the time period for which Bragee conducted the audit.
Paragraph five, however, explicitly provides that plaintiffs “reserve the right to recover
from Bland[‘s] Sewer for any delinquent and unpaid employer contributions from the
period beginning December 1, 2005, through September 1, 2007, and . . .
prospectively . . . .” (Emphasis in original). The only reasonable interpretation of
this provision is that plaintiffs reserved the right to recover from Bland’s Sewer for
any delinquent and unpaid contributions from December 1, 2005, and thereafter.
Thus, plaintiffs are not barred by the settlement agreement from pursuing the
$123.27 in delinquent and unpaid contributions. Nor are they are barred from
pursuing the $12.33 in liquidated damages and the $725 in audit costs associated
therewith as paragraph five explicitly provides that plaintiffs are entitled to “any and
all other damages that reasonably from [the audit], of which [plaintiffs] are entitled
to collect.”
Plaintiffs are, however, precluded from recovering any liabilities
specifically alleged in the prior litigation.
The first sentence of paragraph five
specifically excludes “unpaid contributions and related liabilities specifically alleged
in [plaintiffs’] complaint in the Bland case.” (Emphasis in original). Thus, the
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liquidated damages claims made in the prior litigation, i.e., for the time periods
September 2003 until October 2006, were specifically alleged in the prior litigation
and plaintiffs are precluded from recovering those claims. Furthermore, like the
Court found against Bland above, the Court finds that plaintiffs’ are barred from
pursuing all claims that could have been brought in the prior litigation with the
exception of those claims it specifically reserved, i.e., from December 1, 2005 and
thereafter. As to those claims that were not specifically alleged and that could not
have been brought in the prior litigation, the Court finds the contract ambiguous as
to whether the settlement agreement precludes plaintiffs from pursuing those claims.
Finally, with regard to Bland’s Sewer’s claim that res judicata should apply, as
analyzed above the Court finds that only those claims that were in fact alleged in the
prior litigation would be barred by res judicata and that applying that doctrine any
further here will not change the results reached above. Accordingly, the Court
declines to consider that doctrine any further.
IV. Conclusion
For the reasons stated above, the Court grants Bland’s motion for
summary judgment (Doc. 31) in part and denies it in part. Judgment is entered in
favor of Bland for all of plaintiffs’ claims that were brought or could have been
brought in the prior litigation against Bland. A question of material fact exist as to
whether plaintiffs are entitled to pursue the claims that could not have been brought
in the prior litigation so that part of the motion is denied. Bland’s Sewer’s motion
for summary judgment (Doc. 32) is also granted in part and denied in part.
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Judgment is entered in favor of Bland’s Sewer for all claims were brought or could
have been brought in the prior litigation with the exception of those claims that
plaintiffs specifically reserved, i.e., from December 1, 2005, going forward.
Questions of material fact exist as to whether plaintiffs are entitled to pursue the
claims that could not have been brought in the prior litigation so that part of the
motion is denied.
IT IS SO ORDERED.
Signed this 28th day of July, 2011.
Digitally signed by David
R. Herndon
Date: 2011.07.28 11:11:01
-05'00'
Chief Judge
United States District Court
Page 20 of 20
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