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Over & Under Piping Contractors, Inc. v. Vermont Gas Systems, Inc.

United States District Court, D. Vermont

January 2, 2019

OVER & UNDER PIPING CONTRACTORS, INC., Plaintiff,
v.
VERMONT GAS SYSTEMS, INC., Defendant.

          OPINION AND ORDER

          William K. Sessions III District Court Judge

         This case centers on a payment dispute between Over & Under Piping Contractors, Inc. (“Over & Under”) and Vermont Gas Systems, Inc. (“VGS”) with respect to work performed on a large natural gas pipeline project. Before the Court is VGS's motion to enforce the parties' oral settlement agreement. VGS submits that counsel for the parties agreed to settle the case, with Over & Under to receive a payment in exchange for mutual general releases and the dismissal of all claims. Over & Under contends that there was no final agreement because material terms of the general releases, including whether those releases would cover VGS's “agents” and “employees, ” remained open for negotiation.

         As set forth below, the Court finds that the parties contemplated general release language that is standard in the State of Vermont, that such standard language includes the terms “employees” and “agents, ” and that Over & Under's efforts to carve out such terms after agreeing to settle the case violated the oral settlement agreement. The motion to enforce is granted.

         Background

          In late August of 2018, with this case approaching trial, the parties discussed settlement. Upon a request from VGS's counsel for a final settlement offer, Over & Under proposed to settle the case for a payment from VGS of $4 million. On September 1, 2018, counsel for VGS responded that their client had agreed to such payment in exchange for the dismissal of all claims and mutual general releases.

         During the September 1 conversation with opposing counsel, Attorney Jeffrey Behm, representing VGS, specified that the general releases would include broad language that is customary in State of Vermont. Attorney Shannon Bertrand, representing Over & Under, understood that the terms of the settlement would include such broad language, and that the general releases would be mutual. On September 2, 2018, Attorney Bertrand telephoned counsel for VGS and reported that he and his co-counsel, Roger Bradley, had spoken with Over & Under owner Joseph Panna, and that Mr. Panna had agreed to the terms of the settlement. Counsel for the parties also discussed a separate general release for Mr. Panna. While counsel on both sides concurred that any general release of claims against Over & Under would include Mr. Panna, VGS agreed to provide him with a separate general release. The parties further agreed that VGS would release all potential warranty claims against Over & Under.

         On September 4, 2018, counsel for VGS forwarded proposed settlement documents to counsel for Over & Under. The proposed general release stated that Over & Under

unconditionally remises, releases, discharges and covenants not to sue VGS and each of its past and present officers, directors, principals, legal owners, beneficial owners, shareholders, employees, predecessors, subsidiaries, parent companies, legal representatives, insurers, agents, contractors and all persons acting by, through, under or in concert with any of them (collectively referred to as the “Released Parties”), of and from any and all action . . . relating to O&U's performance of work on VGS's Addison Natural Gas Pipeline . . . .

ECF No. 172-3 at 10. On September 6, 2018, having received no word from counsel for Over & Under, Attorney Behm sent an email asking when VGS could expect to hear about the settlement documents. Attorney Bertrand responded that Over & Under would be in touch “as soon as we are able.” On September 11, 2018, Attorney Behm emailed opposing counsel and suggested the parties notify the Court that the case had been settled. Attorney Bradley responded via email that Over & Under could not authorize such a communication with the Court because the parties were still working out differences in the settlement agreement and releases. Attorney Behm replied that he was not aware what those differences might be, as he not received any response to the settlement documents sent on September 4.

         On September 14, 2018, Attorney Bertrand sent VGS'S attorneys marked-up versions of the settlement documents. The mark-ups removed several terms from the general release, including “subsidiaries, ” “parent companies, ” “insurers, ” “employees, ” and “agents.” Attorney Bertrand also proposed that the release state: “This release does not release any claims against any agent of VGS.” When counsel for VGS asked for an explanation, Attorney Bertrand replied via email that Over & Under would not agree to a blanket release of “agents, ” but would consider excluding specific individuals from the releases being given to VGS. Those exclusions would include PriceWaterhouseCoopers, Joey Wilson of Wilson Engineering PLC, and Charlie Pughe of Charlie Pughe Associates, LLC. Counsel for VGS responded that the proposed limitations were inconsistent with the September 1-2, 2018 agreement and would not effectively settle the lawsuit since VGS agents and employees, if sued by Over & Under, could pursue indemnification and/or third-party claims against VGS. VGS subsequently filed the instant motion to enforce the parties' initial agreement to exchange general releases.

         The Court held an evidentiary hearing on December 19, 2018. In the course of the hearing, two long-time Vermont attorneys testified about their understanding of standard general release language for corporate entities. Both attorneys testified that, in their experience, general releases in the State of Vermont always include the release of employees and agents.

         Discussion

          The question before the Court is whether, as a result of the attorneys' conversations on September 1 and September 2, 2018, the parties had a binding and enforceable settlement agreement. In the course of those discussions, VGS made an offer of payment and proposed broad general releases and a stipulation of dismissal. Attorneys for Over & Under understood those terms, spoke with their client, and accepted the proposal. Over & Under now argues that the settlement, and in particular the material terms of the general releases, were never finalized.

         It is well established that an oral agreement can be binding. See Winston v. Mediafare Entm't Corp., 777 F.2d 78, 80 (2d Cir. 1985). “This freedom to contract orally remains even if the parties contemplate a writing to evidence their agreement. In such a case, the mere intention to commit the agreement to writing will not prevent contract formation prior to execution.” Id. With respect to the terms of an oral settlement agreement, “[t]he settlement remains binding even if a party has a change of heart ...


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