Norfolk Southern Railway Company v. Drummond Coal Sales, Inc.
Filing
117
MEMORANDUM OPINION. Signed by District Judge Michael F. Urbanski on 8/29/16. (mka)
CiJ:ru<'s OFFICE U.S. D!ST. COURT
~"'''
AT ROANOKE, VA.
FILED
IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF VIRGINIA
ROANOKE DIVISION
NORFOLK SOUTHERN RAILWAY
COMPANY,
Plaintiff,
v.
DRUMMOND COAL SALES, INC.,
Defendant.
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AUG 2 9 2016
Civil Action No. 7:08cv00340
By: Hon. Michael F. Urbanski
United States District Judge
MEMORANDUM OPINION
More than a decade ago, the parties to this case entered into a contract pursuant to
which plaintiff Norfolk Southern Railway Company agreed to haul for defendant
Drummond Coal Sales, Inc. certain coal products by rail from Charleston, South Carolina to
various other destinations. In May 2008, Norfolk Southern flled suit against Drummond
alleging breach of that contract. The undersigned, then a United States Magistrate Judge,
conducted a settlement conference on December 14, 2009, at which the parties reached a
resolution of their dispute. The resolution was memorialized in a Settlement Agreement,
pursuant to which Drummond agreed to pay Norfolk Southern a certain sum and the parties
agreed to amend various provisions of the contract and extend the contract term through
2019. The parties further agreed that any disputes concerning the terms of the Settlement
Agreement would be resolved by the undersigned. A Mutual Release was executed and the
action thereafter was dismissed.
In January 2016, Drummond brought suit on the contract in the Northern District of
Alabama. Norfolk Southern flled a motion to transfer venue to the Western District of
Virginia in the Alabama case and simultaneously filed the Motion to Reopen the Case,
Assign to Judge Urbanski, and Enforce Settlement Agreement and Mutual Release that is
currently pending in the instant case. The case was reopened, transferred to the
undersigned, and a hearing was held on May 10, 2016 on Norfolk Southern's motion to
enforce the Settlement Agreement and Mutual Release. At the court's request, the parties
flied supplemental briefs and the matter is now ripe for adjudication.
For the reasons set forth herein, the court Ends that Counts One and Two of
Drummond's Alabama complaint are barred by the Mutual Release. Counts Three through
Seven assert claims stemming from circumstances alleged to have arisen after the parties'
settlement. Thus, these counts do not directly implicate the terms of the Settlement
Agreement or the scope or construction of the Mutual Release. This court does not have
jurisdiction to consider the merits of Counts Three through Seven absent a decision by the
presiding district judge in the Northern District of Alabama that this is a more convenient
forum and a transfer of the case pursuant to 28 U.S.C. § 1404(a). As such, Norfolk
Southern's Motion to Reopen the Case, Assign to Judge Urbanski, and Enforce Settlement
Agreement and Mutual Release (ECF No. 85) will be GRANTED in part and DENIED
in part.
I.
On January 20,2006, Norfolk Southern and Drummond entered into a contract for
the transportation of coal and coal products from a terminal in Charleston, South Carolina
to Drummond's utility customers at various destinations. The term of this Transportation
Contract C-9337 (the "2006 Transportation Contract") began December 31, 2005 and ended
2
July 31, 2016. The 2006 Transportation Contract required Drummond to ship a minimum
volume of coal each year of the contract term and pay Norfolk Southern a shortfall fee if it
failed to meet that guaranteed volume. It further provided that Norfolk Southern would
build specific improvements to its rail infrastructure in South Carolina in order to facilitate
the coal transportation contemplated under the agreement. Drummond agreed to pay
Norfolk Southern for the cost of the infrastructure improvements up to a certain amount.
Per the contract terms, Norfolk Southern then would refund that cost at a rate per net ton of
coal shipped from Charleston via Norfolk Southern until the infrastructure costs paid by
Drummond to Norfolk Southern had been fully refunded.
Norfolk Southern flied the instant action in May 2008, alleging Drummond had
breached its obligations under the 2006 Transportation Contract-specifically, its obligations
to pay infrastructure improvement costs and ship guaranteed volumes or, alternatively, pay
the required shortfall fees for years 2007 and 2008. For its part, Drummond asserted that,
pursuant to paragraph 29 of the 2006 Transportation Contract, it notified Norfolk Southern
on April 4, 2006 of a force majeure event impacting its ability to transport the guaranteed
volumes of coal to Norfolk Southern and any failure to perform under the contract
therefore was excused. The force majeure event was alleged to be Kinder Morgan's failure
to expand its Shipyard River Terminal in Charleston, which, according to Drummond,
significantly reduced the amount of coal that Drummond could deliver to Norfolk Southern.
The parties ultimately reached a resolution of the contract dispute that was the
subject of the instant case at a December 14, 2009 settlement conference conducted by the
3
undersigned, then serving as United States Magistrate Judge. The resolution was
memorialized in a Settlement Agreement, which provided for:
•
payment of a certain sum by Drummond to Norfolk Southern
•
extension of the term of the 2006 Transportation Contract through December 31,
2019
•
reduction in the guaranteed volume of coal per year Drummond is required to
ship via Norfolk Southern pursuant to the 2006 Transportation Contract
•
as to future shipments, credit to Drummond per short ton shipped until the
remaining infrastructure balance is repaid and, thereafter, a reduction in credit due
Drummond per short haul as well as credit for all other hauls for the remaining
term of the 2006 Transportation Contract
•
amendment of the 2006 Transportation Contract to conform to the terms of the
Settlement Agreement
•
execution of a complete Mutual Release by the parties
•
resolution by the undersigned of any disputes regarding the terms of the
Settlement Agreement
Settlement Agreement, ECF No. 86-1.
As contemplated by the Settlement Agreement, the parties executed a Mutual Release
dated January 14,2010, in which each party agreed to release the other
from all claims, demands, debts, causes of action, or obligations
of any kind whatsoever, known or unknown, arising or accruing
from the beginning of time to the Effective Date of this mutual
release, and arising out of the formation or performance of the
Contract, including but not limited to all claims, defenses or
4
avoidances made or asserted in the action, and all claims,
defenses or avoidances that could have been made or asserted
in the Action.
Mutual Release, ECF No. 86-2, at ·rr~ 3, 4. Additionally, the Mutual Release provides:
7. In the event any future dispute arises concerning the scope
or construction of this mutual release, the undersigned parties
agree that, as a material element of the Settlement Agreement,
such dispute shall be submitted to Judge Michael F. Urbanski,
or, should he no longer be sitting as a judge, sucli successor of
his as may be sitting as a United States Magistrate Judge at
Roanoke, Virginia, for resolution.
The parties also executed an amendment to the 2006 Transportation Contract, titled
"Amendment Number 1 to the Transportation Contract NS-9337," pursuant to the terms of
the Settlement Agreement. The recitals to Amendment Number 1 state that Norfolk
Southern and Drummond are "parties to that certain transportation contract designated C933 7 dated as of January 20, 2006," that "the parties have entered into that certain
Settlement Agreement dated as of December 14, 2009, specifying certain amendments to be
made to the Contract," and that "the parties desire to amend the Contract pursuant to the
Settlement Agreement and pursuant to 49 U.S.C. Section 10709." Amendment Number 1,
ECF No. 86-3. Amendment Number 1 goes on to outline revisions to Article 3, Article
20(a), (b) and (c), Article 27(e)(1), (2) and (3), Article 27(g), and Article 29 of the 2006
Transportation Contract, reflecting the terms of the parties' settlement. The final paragraph
5
8 of Amendment Number 1 provides: "Except as amended herein, the Contract1 shall
remain in full force and effect." Id.
The breach of contract action was dismissed with prejudice by order entered January
19, 2010, which also provided that the court would retain jurisdiction to enforce the
Settlement Agreement. Dismissal Order, ECF No. 84.
By letter dated January 29, 2016, Drummond gave Norfolk Southern notice of a force
majeure event, namely
governmental environmental regulation that has caused the
destination power plants identified in the Contract to either
close completely or substantially reduce their use of coal. This
Force Majeure Event prevented [Drummond] from performing
under the Contract during 2015, and absent unforeseen changes
in circumstances, will likely prevent [Drummond] from
performing under the Contract in 2016.
Force Majeure Letter, ECF No. 86-5. That same day, Drummond flied a complaint against
Norfolk Southern in the Northern District of Alabama seeking declaratory relief, unjust
enrichment, and rescission, modification or reformation of the parties' contract as amended
on January 12, 2010 (the "Amended Contract"). See Case No. 2:16-cv-180-AK.K, ECF No.
1 (N.D. Ala. filed Jan. 29. 2016). Drummond alleges in Count One that the Amended
Contract is void because it is unconscionable, contains illegal and unenforceable penalties,
and lacks mutuality of obligation and consideration. In Count Two, Drummond seeks
monies "paid since 2011 under this void Contract," as well as amounts yet to be refunded
for infrastructure improvements to Norfolk Southern's rail lines. Count Three seeks a
declaration that Drummond's performance under the Amended Contract is excused due to
The "Contract" is deflned in the recitals to Amendment Number 1 as "that certain transportation contract designated
C-9337 dated as of January 20, 2006." Id.
1
6
Norfolk Southern's failure to meet its obligation to work with Drummond in good faith to
find alternatives that would allow Drummond to meet guaranteed volumes and avoid
shortfall fees. Counts Four through Six of Drummond's Alabama complaint all stem from
Drummond's allegation that environmental regulations have caused reduction in use of
imported coal by power plants specified as destinations under the Amended Contract.
Specifically, Count Four alleges a force majeure event, Count Five frustration of purpose,
and Count Six impossibility /impracticability of purpose. Count Seven of the Alabama
complaint seeks rescission, modification, or reformation of the Amended Contract "[t]o the
extent the Court declares in [Drummond's] favor, in whole or in part, as set forth above."
Ala. Compl., ECF No. 86-4.
Norfolk Southern filed an answer to Drummond's Alabama complaint on February
25, 2016 and simultaneously filed a motion to transfer the case to the Western District of
Virginia pursuant to 28 U.S.C. § 1404(a). The same day, Norfolk Southern filed a Motion to
Reopen the Case, Assign to Judge Urbanski, and Enforce Settlement Agreement and Mutual
Release on this court's docket. On March 4, 2016, the district judge to whom this case was
. originally assigned granted Norfolk Southern's motion in part by reopening this action and
transferring it to the undersigned. A May 10, 2016 hearing was scheduled on the remaining
issues raised.
Meanwhile, the parties briefed Norfolk Southern's motion to transfer venue in the
Alabama case and appeared before United States District Judge Abdul K. Kallon for a
hearing on March 25, 2016. Following that hearing, Judge Kallon entered an order staying
the case as well as any ruling on the pending motion to transfer, in order to allow the
7
undersigned to consider whether the claims asserted by Drummond are implicated by the
parties' Settlement Agreement.
To that end, the parties appeared before the undersigned on May 10, 2016 for
argument on Norfolk Southern's motion. At the court's request, the parties submitted
supplemental briefing on the issue of whether, should the court agree with Norfolk Southern
that certain counts of Drummond's Alabama complaint are barred by the Mutual Release,
the remaining counts should be resolved in this district or in the Northern District of
Alabama. The issues have been fully briefed and the matter is now ripe for adjudication.
II.
The parties to this case presently are fighting a two-front war. Endeavoring to
determine the proper venue for this dispute, the court first considers its authority under the
parties' Settlement Agreement and Mutual Release and then determines whether the claims
raised by Drummond in its Alabama complaint fall within the court's jurisdiction.
A.
"[D]istrict courts have inherent authority, deriving from their equity power, to
enforce settlement agreements." Hensley v. Alcon Laboratories, Inc., 277 F.3d 535, 540 (4th
Cir. 2002). To exercise that authority, a court must find the parties have reached a complete
agreement and must be able to determine its terms and conditions. I d. at 540-41 (citing
Moore v. Beaufort Cnty., 936 F.2d 159, 162 (4th Cir. 1991); Ozyagcilar v. Davis, 701 F.2d
306, 308 (4th Cir. 1983)). "Motions to enforce settlement agreements draw upon standard
contract principles." Bradley v. Am. Household Inc., 378 F.3d 373, 380 (4th Cir. 2004)
(citing Hensley, 277 F.3d at 540).
8
The parties do not dispute that following a settlement conference on December 14,
2009, they reached a complete agreement to settle the claims raised in the instant case arising
out of the 2006 Transportation Contract. This agreement was memorialized in a written
Settlement Agreement dated December 14, 2009. The terms of the parties' settlement are
clear and unambiguous. The Settlement Agreement provided for payment by Drummond to
Norfolk Southern, extension of the Transportation Contract through 2019, and changes to
certain provisions of the 2006 Transportation Contract. The parties agreed to amend the
2006 Transportation Contract to reflect those changes and further agreed to execute "a
complete mutual release of all claims against all parties in this case." Settlement Agreement,
ECF No. 86-1, at ,-r 7. Consistent with their agreement, the parties entered into Amendment
Number 1 to the Transportation Contract NS-9337 on January 12, 2010. Amendment
Number 1, ECF No. 86-3. On January 14, 2010, they executed a Mutual Release in which
each party released the other
from any and all claims, demands, debts, causes of action, or
obligations of any kind whatsoever, known or unknown, arising
or accruing from the beginning of time to the Effective Date of
this mutual release, and arising out of the formation or
performance of the Contract, including but not limited to all
claims, defenses or avoidances made or asserted in the Action,
and all claims, defenses or avoidances that could have been
made or asserted in the Action.
Mutual Release, ECF No. 86-2, at 11,-r 3, 4. The parties also expressly agreed that:
In the event any future dispute arises concerning the scope or
construction of this mutual release, the undersigned parties
agree that, as a material element of the Settlement Agreement,
such dispute shall be submitted to Judge Michael F. Urbanski,
or, should he no longer be sitting as a judge, such successor of
his as may be sitting as a United States Magistrate Judge at
Roanoke, Virginia, for resolution.
9
Id. at ,-r 7; see also Settlement Agreement, ECF No. 86-1, at ,-r 12 (providing disputes
regarding the terms of the Settlement Agreement shall be resolved by the undersigned).
Neither party challenges the validity of the Settlement Agreement and Mutual
Release. Rather, the question presented is whether the contract claims recently raised by
Drummond in its Alabama complaint were released in connection with the settlement of the
instant case. As that question concerns the scope and construction of the Mutual Release, it
is properly pending before the undersigned pursuant to the parties' forum selection clause.
See Mid Atl. Paper, LLC v. Scott Cty. Tobacco Warehouses, Inc., No. 1:03CV00126, 2004
WL 326710, at *1 (W.D. Va. Feb. 23, 2004) Gones,J.) ("Forum selection clauses are
enforceable, so long as they are not unreasonable or unjust, or obtained by fraud.").
B.
The court now turns to the specific claims raised by Drummond in its Alabama
complaint. Norfolk Southern argues Counts One, Two, and Seven are barred by the Mutual
Release. Drummond insists all of its Alabama claims arise out of the new, stand-alone
contract executed by the parties in 2010-not the original2006 Transportation Contractand therefore are properly pending in its preferred forum, the Northern District of Alabama.
1.
The court disagrees with Drummond that the parties entered into a separate, standalone contract in 2010. Drummond relies on Smith v. Snyder, 82 Va. 614, 618 (1886),2 for
the principle that "where a valid, binding change is made in a contract, the old one is done
2
The 2006 Transportation Contract contains a choice-of-law provision, stating that interpretation and performance of
the Contract shall be governed by the laws of the Commonwealth of Virginia. 2006 Transportation Contract, ECF No.
86-3, at~ 5.
10
away with, and a new one is substituted for it." Smith concerned the appropriateness of
certain jury instructions. The parties entered into a contract for delivery of iron on
September 19, 1879. In a breach of contract suit, Snyder contended he was entitled to
immediate delivery of the iron. However, Snyder had written Smith on October 11, 1879,
agreeing to wait three weeks, until November 1, 1879, for delivery. The Virginia Supreme
Court held that by so agreeing, "Snyder had so bound himself that he could not have
brought suit before that date; and such a binding promise is the making of a new contract
and an abrogation of the old one." Id. at 617. The record reflected that this promise to wait
an additional three weeks for delivery was entirely voluntary on Snyder's part. Thus, the
Supreme Court held that the circuit court erred in refusing to instruct the jury that Snyder
was not entitled to sue on the original contract if he indeed intended to bind himself to wait
an additional three weeks from the date of his October 11, 1879 letter.
Smith stands for the proposition that one cannot sue under an original term of a
contract if that term has been amended by agreement of the parties-specifically, in Smith, it
was the term of delivery. Smith does not support Drummond's argument that the 2010
Amendment Number 1 to the 2006 Transportation Contract created a new, discrete
agreement between the parties. Amendment Number 1 plainly reads as an amendment to a
handful of the 2006 Transportation Contract's provisions and expressly states that the
remainder of the original Contract remains in full force and effect. See Amendment
Number 1, ECF No. 86-3,
at~
8. As such, the court cannot fmd that Amendment Number
1 is a novation.
11
"[N]ovation is defined as a mutual agreement among all parties concerned for
discharge of a valid existing obligation by the substitution of a new valid obligation on the
part of the debtor or another." Honeywell, Inc. v. Elliott, 213 Va. 86, 89, 189 S.E.2d 331,
334 (1972). Novations are never to be presumed; rather, '"to effect a novation there must
be a clear and definite intention on the part of all concerned that such is the purpose of the
agreement."' J.M. Turner & Co. v. Delaney, 211 Va. 168,172,176 S.E.2d 422,425 (1970)
(quoting Arlington Towers Land Corp. v. McFarland, 203 Va. 387, 392, 124 S.E.2d 212, 215
(1962)). The essential elements are "a previous valid obligation, the agreement of all parties
to the new contract, the extinguishment of the old contract, and the validity of the new
contract." Honeywell, 213 Va. at 89-90, 189 S.E.2d at 334. Proof of these elements must be
clear and satisfactory. Id. at 89, 189 S.E.2d at 334. Whether an intention to effect a
novation existed "is to be determined from all the facts and circumstances incident to the
new agreement." Dillenbergv. Thott, 217 Va. 433,435,229 S.E.2d 866, 868 (1976) (citing
Mitchell v. Cox, 189 Va. 236,243, 52 S.E.2d 105, 109 (1949)).
The court rejects Drummond's contention that the 2010 Amendment Number 1
extinguished the provisions of the 2006 Transportation Contract and substituted a new,
stand-alone contract. There is simply no way to read the document titled "Transportation
Contract NS-9337 Amendment Number 1" to be a novation. Cf. T.M. Turner, 211 Va. at
-~
172 ("The July 1964letter standing alone is not an enforceable contract since it does not
even describe the subject matter of the contract between the parties."). Nothing in this
document, the Settlement Agreement, or the Mutual Release suggests an intention by the
parties to create a new contract in 2010 that supersedes the 2006 Transportation Contract.
12
See Settlement Agreement, ECF No. 86-1,
at~
5 ("The parties agree to amend the existing
Transportation Contract to conform to this Settlement Agreement."); Mutual Release, ECF
No. 86-2 (reciting that the Settlement Agreement contemplates that the parties will "make
certain amendments to the Contract in order to conform the Contract to the Settlement
Agreement"). Indeed, the entire purpose of Amendment Number 1 was to incorporate the
terms of the parties' settlement into the existing 2006 Transportation Contract. Amendment
Number 1 expressly states it is a "Contract Amendment," in which the parties contemplate
the Transportation Contract "shall remain in full force and effect" except as amended
therein. Amendment Number 1, ECF No. 86-3,
at~
8. More still, Drummond represents in
its Alabama complaint that the parties' 2006 Transportation Contract "was amended on
January 12, 2010," and Drummond uses the term "Contract" throughout its complaint to
describe "[t]he contract as amended." Ala. Compl., ECF No. 86-4,
at~
7. There is simply
no merit to Drummond's argument that the parties entered into a new, stand-alone contract
in 2010. Amendment Number 1 must be read together with the 2006 Transportation
Contract (referred to herein as the "Amended Contract").
2.
Drummond contends that none of its Alabama claims are barred by the Mutual
Release because all arise out of the Amended Contract and events that occurred in 2010 and
beyond. Drummond insists "[n]o relief is sought for any payments made by [Drummond]
under the 2006 Contract." Drummond Opp. Br., ECF No. 97, at 3. The court cannot
agree.
13
a) CountOne
Count One of the Alabama complaint seeks a declaration that the Amended Contract
is void. Drummond alleges Norfolk Southern enjoys (at worst) monopolistic and (at best)
oligopolistic bargaining power with respect to the destinations covered under the agreement.
It claims it had little choice but to accept whatever contract terms Norfolk Southern insisted
upon, including those Drummond considers "highly unusual, if not unheard of, in coal
shipping contracts." Ala. Compl., ECF No. 86-4,
at~~
32, 36, 37. Drummond points out
that the Amended Contract requires performance by Drummond but requires nothing of
Norfolk Southern other than to "live up to its legally required common carrier obligations."
Id.
at~
33. Drummond specifically complains of the "Cancellation" provision that gives
Norfolk Southern sole discretion to cease service to all contract destinations at any time, see
2006 Transportation Contract, ECF No. 86-3, ~ 8, as well as the unreasonable "double
dipping" provisions that provide for both rate escalation and fuel surcharges, see id.
at~~
14,
15.
Count One may reference the Amended Contract, but Drummond's allegations
plainly concern terms found in the original2006 Transportation Contract-not provisions
that were amended or added in 2010. So, too, would Norfolk Southern's alleged
"monopolistic bargaining power" have existed at the time the parties' agreement was
negotiated back in 2006. Thus, Drummond's claims that the parties' agreement is void as
unconscionable, contains illegal and unenforceable terms, and lacks both mutuality of
obligation and consideration could have been raised in the previous breach of contract
action filed and settled in this court. As such, Count One of the Alabama complaint is
14
barred by Drummond's release of "all claims ... of any kind whatsoever, known or
unknown, arising or accruing from the beginning of time to the Effective Date of this
mutual release, and arising out of the formation or performance of the Contract, including ..
. all claims, defenses or avoidance that could have been made or asserted in the Action." Mutual
Release, ECF No. 86-2,
at~
4 (emphasis added); see also id.
at~
5 (defining "Effective
Date").3 4
b) Count Two
Count Two of Drummond's Alabama complaint, asserting a claim for unjust
enrichment, is barred for the same reason. In Count Two, Drummond "requests that the
Contract be declared void" as "set forth above," and asks the court to require Norfolk
Southern to repay monies it has been paid "since 2011 under this void Contract," as well as
infrastructure improvement payments yet to be refunded to Drummond. Ala. Compl., ECF
No. 86-4,
at~~
40-43.
The unjust enrichment claim in Count Two is premised entirely on Drummond's
allegations in Count One that the parties' Amended Contract is void. Under Virginia law,
unjust enrichment is an implied contract action based on equitable principles. Butts v.
Weltman, Weinberg & Reis Co., LPA, No. 1:13CV1026 JCC/IDD, 2013 WL 6039040, at *2
(E.D. Va. Nov. 14, 2013) (citing Kern v. Freed Co., Inc., 224 Va. 678, 680-81, 299 S.E.2d
363, 365 (1983)).
3
"Courts interpret release agreements, like all contract terms, in light of the parties' expressed intentions." Adams v.
United States, No. CIV.A.97-0706-R, 1999 \X'L 1059680, at *2 (W.D. Va. Mar. 3, 1999), affd, 201 F.3d 435 (4th Cir.
1999) (citing First Sec. Fed. Sav. Bank. Inc. v. McQuilken, 480 S.E.2d 485,87 (Va. 1997)).
4
In fact, Drummond conceded at the May 10, 2016 hearing that if the court rejects its novation argument, Count One is
barred and must be stricken from its Alabama complaint. See Hearing Tr., ECF No. 110, at 34-35.
15
A condition precedent to the assertion of such a claim is that no
express contract exists between the parties. Vollmar v. CSX
Transp., Inc., 705 F. Supp. 1154, 1176 (E.D. Va. 1989). Logic
dictates that "an express contract defining the rights of the
parties necessarily precludes the existence of an implied contract
of a different nature containing the same subject matter." S.
Biscuit Co., Inc. v. Lloyd, 17 4 Va. 299, 311, 6 S.E. 2d 601
(1940). "[1lhere can be no recovery in quantum meruit where a
valid express contract between the parties exists. Parties to an
express contract are entitled to have their rights and duties
adjudicated exclusively by its terms." Ciliv v. UXB Int'l, Inc.,
Civil Action No. 7:12-cv-290, 2012 WL 5245323, at *2 (W.D.
Va. Oct. 22, 2012) (citation and internal quotation marks
omitted); see also U.S. ex rel. Badr v. Triple Canopy, Inc., Case
No. 1:11-cv-288 (GBL/JFA), 2013 WL 3120204, at *15 (E.D.
Va. June 19, 2013) (noting that a claim of unjust enrichment
cannot survive when an express contract governs the parties'
dispute).
Id. at *3.
Drummond cannot maintain a cause of action for unjust enrichment if it has a valid,
express contract with Norfolk Southern. And the only allegations Drummond raises that the
parties' Contract is invalid are those set forth in Count One. Count One is barred by the
Mutual Release for the reasons set forth above. Because it is necessarily tied to Count One,
Count Two is barred for those same reasons.
c) Counts Three through Six
Norfolk Southern concedes that Counts Three through Six of Drummond's Alabama
complaint are not barred by the Mutual Release It argues nevertheless that the court should
retain jurisdiction over these counts in order to avoid inefficient administration of justice.
In each of Counts Three through Six, Drummond seeks relief from performance
under the Amended Contract for calendar year 2015 as well as future performance under the
remaining Contract term. In Count Three, Drummond alleges excused performance as a
16
result of Norfolk Southern's failure to work in good faith to find alternatives that would
allow Drummond to meet guaranteed volumes and avoid shortfall fees. Counts Four, Five,
and Six stem from Drummond's allegation that governmental environmental regulations
have prevented it from meeting guaranteed volume shipping requirements in 2015.
Drummond frames Count Four in terms of force majeure, Count Five in terms of
frustration of purpose, and Count Six in terms of impossibility /impracticability of
performance.
Norfolk Southern argues Counts Five and Six mount a collateral attack on the
Settlement Agreement as they seek to void Drummond's obligations under the Amended
Contract. Therefore, these counts "fall within the exclusive jurisdiction and inherent
authority of this Court to enforce the Settlement Agreement." NSRC Suppl. Br., ECF No.
114, at 7. Norfolk Southern asks the court to use its wide discretion to resolve these claims,
which are factually interdependent with and require a working knowledge of the parties'
Settlement Agreement. Norfolk Southern further asks the court to retain ancillary
jurisdiction over Counts Three and Four in order to avoid disruption to justice.
The parties agreed that this court would retain jurisdiction to resolve "disputes
regarding the terms of th[e] Settlement Agreement," as well as disputes "concerning the
scope or construction of th[e] mutual release." Settlement Agreement, ECF No. 86-1,
12; Mutual Release, ECF No. 86-2,
at~
at~
7. Drummond's claims in Counts Three through Six
of its Alabama complaint are premised on circumstances alleged to have occurred after the
parties' settlement of the instant breach of contract case. Thus, they do not directly
17
implicate the terms of the Settlement Agreement or the scope or construction of the Mutual
Release and do not squarely fall within the court's jurisdiction.
To be sure, the parties' assumptions and expectations at the time of execution of the
Settlement Agreement, Mutual Release, and Amended Contract may come into play in
resolving Counts Three through Six. But Drummond's point is not lost on the court: "The
purpose of the forum selection clauses in [the Settlement Agreement and Mutual Release]
was for this Court to enforce the dismissal and release of all such pre-existing claims. The
purpose was not to appoint this Court arbiter of all aspects of the parties' business dealings
going forward, or disputes based entirely on events occurring cifter the Prior Action was
dismissed." Drummond Supp. Br., ECF No. 115, at 2-3 (emphasis in original). In retaining
jurisdiction to enforce the terms of the Settlement Agreement and Mutual Release, this court
did not intend to retain exclusive jurisdiction over the parties' contractual disputes in
perpetuity.
There is no procedural avenue by which this court can reach into another district and
bring certain claims into the jurisdiction of this court. All that is pending at present on the
docket of this case is a motion to enforce the Settlement Agreement and Mutual Release.
Because Counts Three through Six do not directly involve the terms of the parties'
Settlement Agreement or scope or construction of their Mutual Release, the court will not
undertake to resolve those claims at this time.
However, a motion to transfer pursuant to 28 U.S.C. § 1404(a) is pending in the
Northern District of Alabama. Should Judge Kallon determine this court is better suited to
resolve Drummond's claims in light of this court's history with the parties, the settlement,
18
and the Amended Contract, and taking into account the factors for transfer under 28 U.S.C.
§ 1404, the undersigned will consider the merits of Drummond's claims in due course.
Whether transfer is appropriate under§ 1404(a) is a decision to be made by Judge Kallon,
not this court.
d) Count Seven
Count Seven of Drummond's Alabama complaint contains two paragraphs:
68. [Drummond] realleges and incorporates by reference the
allegations contain in paragraphs 1 through 66 as if set forth
fully herein.
69. To the extent the Court declares in [Drummond's] favor, in
whole or in part, as set forth above, [Drummond] requests that
the Court rescind the Contract, or in the alternative, modify or
reform it to account for the changed circumstances which have
occurred since 2010.
Ala. Compl., ECF No. 86-4. To the extent the relief sought by Drummond in Count Seven
is based on the relief sought in Count One, it is barred by the Mutual Release for the reasons
stated supra. Without digging into the merits of Counts Three through Six, the court cannot
say that Count Seven is barred in its entirety, however. As such, the merits of Count Seven
should be addressed by the district judge who considers the merits of Counts Three through
Six.
III.
In sum, the court finds that Counts One and Two of Drummond's Alabama
complaint-and Count Seven, to the extent dependent on Count One-are barred by the
Mutual Release.
19
Counts Three through Six, and Count Seven as it relies on those counts, do not
directly implicate the terms of the Settlement Agreement or scope or construction of the
Mutual Release. Thus, the court declines to exercise any jurisdiction it may have to resolve
these claims at this time. The court will defer to the presiding district judge in the Northern
District of Alabama as to the appropriate venue to litigate the merits of those claims.
Finally, the court is not inclined to grant Norfolk Southern's request for attorneys'
fees. The court is not aware of any applicable statutory or contractual fee-shifting provision,
and it declines to award fees under its inherent sanction power. This case simply does not
present the kind of bad faith or extraordinary circumstances that would warrant sanctions.
See Chambers v. NASCO, Inc., 501 U.S. 32,45 (1991); Hensley v. Alcon Laboratories, Inc.,
277 F.3d 535, 543 (4th Cir. 2002).
Accordingly, the court will GRANT in part and DENY in part Norfolk Southern's
Motion to Reopen the Case, Assign to Judge Urbanski, and Enforce Settlement Agreement
and Mutual Release (ECF No. 85).
An appropriate Order will be entered.
Entered:
()
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l~lrrticla,tJI,d f. ~~
Michael F. Urbanski
United States DistrictJudge
20
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