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DISTRICT COURT OF THE VIRGIN ISLANDS DIVISION OF ST. THOMAS AND ST. JOHN CHAPIN, ET AL., Plaintiffs, v. GREAT SOUTHERN WOOD PRESERVING INCORPORATED, ET AL., Defendants. ) ) ) ) ) Civil No. 2012-77 ) ) ) ) ) ) ATTORNEYS: Bonnie Prober Daniel M. Cohen Cuneo Gilbert & LaDuca, LLP Washington, DC Terri L. Griffiths Lee J. Rohn Lee J. Rohn and Associates St. Croix, VI Jordan S. Cohen Wicker Smith O’Hara McCoy & Ford Fort Lauderdale, Fla. Rhea Lawrence Rohn & Carpenter St. Croix, U.S.V.I. Counsel for Gary Chapin Daniel M. Cohen Cuneo Gilbert & LaDuca, LLP Washington, DC Terri L. Griffiths Lee J. Rohn Lee J. Rohn and Associates St. Croix, VI Rhea Lawrence Rohn & Carpenter St. Croix, U.S.V.I. Counsel for Barbara Douma, Emily J. Bratton, John Baldwin, Dean Baldwin, Harry Eisener, Denise Barbier, Truman Barbier, Jean Cottrell, Stephen Cottrell, Mark Anderson, Conch Villa Condominium Association, Concordia Campgrounds, Inc., Jerry Daly, Carlos Di Blasi, John Fitzgerald, Rune Fremlin, Birgitta Fremlin, Bonita Corbeil. Case: 3:12-cv-00077-CVG-RM Document #: 590 Filed: 09/30/14 Page 1 of 18 Chapin et al. v. Great Southern Wood Preserving Inc., et. al. Civil No. 2012-77 Order Terri L. Griffiths Lee J. Rohn Lee J. Rohn and Associates St. Croix, VI Rhea Lawrence Rohn & Carpenter St. Croix, U.S.V.I. Counsel for Terry R. Whitham, individually and as representative of a class of persons similarly situated, Ann McCrave, Jeffrey J. McCrave, Celso Principaal, Cynthia Sauers, Nancy Nemeth, Joseph Nemeth, Irene Patton, Richard Hathaway, Nina C. Hahler, Rick Hoy, Susan Hoy, Barbara Jakobsen, Arne Jakobsen, Avis James, Oscar James, Philip Jones, Marjorie Jones, Dan Near, Rudy Patton, Ed Pieper, Barbara Pieper, Deborah Ramsay, Upper Deck Villas Association, Sharon Schott. Lee J. Rohn Lee J. Rohn and Associates St. Croix, VI Rhea Lawrence Rohn & Carpenter St. Croix, U.S.V.I. Counsel for Michael Barry, Barbara Barry, Donald Sussman, Emicar LLC. Charles J. LaDuca Cuneo Gilbert & LaDuca, LLP Bethesda, MD Daniel M. Cohen Cuneo Gilbert & LaDuca, LLP Washington, DC Michael James Flannery Cuneo Gilbert & LaDuca, LLP St. Louis, MO Terri L. Griffiths Lee J. Rohn Lee J. Rohn and Associates St. Croix, VI Rhea Lawrence Rohn & Carpenter St. Croix, U.S.V.I. Counsel for Elisa Adams. Lee J. Rohn Lee J. Rohn and Associates St. Croix, VI Counsel for Douglas R. Bentorn, Michael L. Kridnik, as trustee of the Miachel Krienik Trust, Barry Devine, Dominic Watson, as trustee of the Rogers Family Trust, Susan Greer-Littlefield, Patricia Mertensen, Elliot C. Hooper, Jeffrey A. Smock, Jay Case: 3:12-cv-00077-CVG-RM Document #: 590 Filed: 09/30/14 Page 2 of 18 Chapin et al. v. Great Southern Wood Preserving Inc., et. al. Civil No. 2012-77 Order Goldman, Vicky Brown-Goldman, Gloria P. Samuel, Maria Applewhite, Warren Family LLC, Denise Veldman, Burt Veldman, Donald L. Robinson, Molly K. Robinson, Great Caribbean LLC, as assignee of Denise Geary. Daryl C. Barnes Sunshine S. Benoit Bryant, Barnes, Moss & Beckstedt St. Croix, VI John Stewart Baker Lee M. Hollis Stewart Andrew Kelly Lightfoot, Franklin & White, LLC Birmingham, AL Terri L. Griffiths Lee J. Rohn and Associates St. Croix, VI Counsel for Great Southern Wood Preserving, Incorporated. Lisa M. Komives Bolt Nagi PC St. Thomas, VI Robert A. Carlson Lana M. Naghshineh Ryan M. Charlson Lee, Hernandez, Landrum, Garofalo and Blake APC Miami, FL Terri L. Griffiths Lee J. Rohn and Associates St. Croix, VI Counsel for Putnam Lumber & Export Company. Lisa M. Komives Bolt Nagi PC St. Thomas, VI Robert A. Carlson Lana M. Naghshineh Lee, Hernandez, Landrum, Garofalo and Blake APC Miami, FL Terri L. Griffiths Lee J. Rohn and Associates St. Croix, VI Counsel for Putnam Family Properties, Inc. Alex Moskowitz Dudley Topper & Feuerzeig St. Thomas, VI Counsel for MSI Building Supplies. Case: 3:12-cv-00077-CVG-RM Document #: 590 Filed: 09/30/14 Page 3 of 18 Chapin et al. v. Great Southern Wood Preserving Inc., et. al. Civil No. 2012-77 Order Chad C. Messier Dudley Topper & Feuerzeig St. Thomas, VI Counsel for Whitecap Investment Corp., d/b/a Paradise Lumber. ORDER GÓMEZ, J. Before the Court is the motion of third-party defendant Great Southern Wood Preserving, Inc. (“Great Southern”) for summary judgment as to the cross-claims asserted by Putnam Lumber and Export Company (“Putnam Lumber”), Putnam Family Properties, Inc. (“Putnam Family”), and Whitecap Investment Corp. d/b/a Paradise Lumber (“Whitecap”). The Court will also address Putnam Family and Putnam Lumber’s (the “Putnam Entities”) motion to strike and Whitecap’s motion to strike, to enforce the settlement agreement, and for sanctions, in so far as Whitecap moves to strike and enforce the settlement agreement. I. FACTUAL AND PROCEDURAL BACKGROUND From in or about 2003 until in or about 2009, Great Southern sold treated lumber and provided lumber-treatment services to Putnam Family. Putnam Family was a lumber wholesaler. Putnam Lumber is a successor of Putnam Family. Putnam Family allegedly sold lumber treated by Great Southern to Whitecap. In turn, Whitecap claimed that it sold Case: 3:12-cv-00077-CVG-RM Document #: 590 Filed: 09/30/14 Page 4 of 18 Chapin et al. v. Great Southern Wood Preserving Inc., et. al. Civil No. 2012-77 Order that lumber to various consumers in St. John. Whitecap further claimed that the lumber treated by Great Southern prematurely decayed, causing damage to the buildings into which it had been incorporated. On December 29, 2010, Whitecap filed a complaint in Whitecap v. Putnam Lumber, et. al., Civil No. 2010-139 against various defendants, including Putnam Family, Putnam Lumber, and Great Southern (the “Whitecap action”). Whitecap’s complaint set forth eight counts. Count One asserted a claim for breach of contract against Putnam Family and Putnam Lumber (the “Putnam Entities”). Count Two asserted a claim for breach of warranty against all defendants. Count Three asserted a claim for negligence against all defendants. Count Four asserted a claim for strict liability against all defendants. Count Five asserted a claim for indemnity against all defendants. Count Six asserted a claim for contribution against all defendants. Count Seven asserted a claim for fraudulent inducement and misrepresentation against all defendants. Count Eight asserted a claim for civil conspiracy against all defendants. Count Nine sought a declaration that all defendants were liable for the various claims set forth in the previous counts. Both Putnam Entities filed cross-claims against Great Southern. Each cross-claim asserted two counts. Count One Case: 3:12-cv-00077-CVG-RM Document #: 590 Filed: 09/30/14 Page 5 of 18 Chapin et al. v. Great Southern Wood Preserving Inc., et. al. Civil No. 2012-77 Order asserted a claim for indemnity. Count Two asserted a claim for contribution. These cross-claims were later amended to assert a third count, a claim for breach of contract. While the Whitecap action was pending, a number of consumers who allegedly purchased the hazardous wood originally sold to Whitecap filed the instant action against various defendants, including the Putnam Entities and Great Southern (the “Chapin action”). As amended, the complaint in the Chapin action asserts six counts. Count I asserts a claim for breach of contract. Count II asserts a claim for breach of warranty. Count III asserts a claim for negligence. Count IV asserts a claim for strict liability. Count V asserts a claim for fraud, intentional misrepresentation, and negligent misrepresentation. Count VI asserts a claim under the Virgin Islands Consumer Fraud and Deceptive Business Practices Act. The Putnam Entities then asserted cross-claims against Great Southern for indemnity and contribution in the Chapin action. Great Southern subsequently impleaded Whitecap as a third- party defendant in the Chapin action. In response, Whitecap asserted third-party counterclaims against Great Southern for indemnity and contribution in the Chapin action. Case: 3:12-cv-00077-CVG-RM Document #: 590 Filed: 09/30/14 Page 6 of 18 Chapin et al. v. Great Southern Wood Preserving Inc., et. al. Civil No. 2012-77 Order By May 31, 2013, the Court had dismissed all counts against Great Southern in the Whitecap action other than Counts Five, Six, and Nine. Accordingly, Whitecap’s claims for indemnity, contribution, and declaratory judgment against Great Southern were still pending in the Whitecap action as of that date. The Putnam Entities’ cross-claims against Great Southern also remained pending in the Whitecap action. On May 31, 2013, the parties in the Whitecap action, including the Putnam Entities, Whitecap, and Great Southern indicated to the Court that they had entered into a settlement agreement (the “Whitecap settlement”). The Court inquired on the record whether the parties wished to “petition to close [the proceedings for] at least this portion for the recitation of the agreement between the parties . . . .” (ECF. No. 326-4, filed under seal.) An attorney present suggested that the parties could, instead, “leave the amount out and . . . execute the piece of paper that has the amount.” (ECF. No. 326-4, filed under seal.) The Court agreed to the option proposed by that attorney. None of the other attorneys or clients present objected. Thereafter, most of the material terms in the settlement agreement were recited on the record in open court. The sum to be paid by the parties was not recited. On the record, the Court Case: 3:12-cv-00077-CVG-RM Document #: 590 Filed: 09/30/14 Page 7 of 18 Chapin et al. v. Great Southern Wood Preserving Inc., et. al. Civil No. 2012-77 Order established that all representatives had authority to consent on behalf of their clients and that the agreement recited was the settlement agreement in its entirety. Each party then orally agreed to the settlement agreement in open court. A copy of the settlement agreement was also filed under seal. Shortly thereafter, the Court dismissed all parties’ claims pending in the Whitecap action. Great Southern then moved for summary judgment on the third-party counterclaims and cross-claims pending in the Chapin action. Great Southern argued that the Whitecap settlement barred the third-party counterclaims and cross-claims in the Chapin action. Great Southern attached a copy of the Whitecap settlement to its motion for summary judgment. In its filing, Great Southern redacted from the settlement agreement the sum that the parties had agreed to pay. In response, the Putnam Entities and Whitecap filed a number of motions in the Chapin action. Whitecap filed a motion to strike, to enforce the settlement agreement, and for sanctions. The Putnam Entities filed a motion to strike. II. DISCUSSION Summary judgment is appropriate “if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. Case: 3:12-cv-00077-CVG-RM Document #: 590 Filed: 09/30/14 Page 8 of 18 Chapin et al. v. Great Southern Wood Preserving Inc., et. al. Civil No. 2012-77 Order P. 56(a); see also Hersh v. Allen Prods. Co., 789 F.2d 230, 232 (3d Cir. 1986). The movant has the initial burden of showing there is no genuine issue of material fact, but once this burden is met it shifts to the non-moving party to establish specific facts showing there is a genuine issue for trial. Gans v. Mundy, 762 F.2d 338, 342 (3d Cir. 1985). The non-moving party “may not rest upon mere allegations, general denials, or . . . vague statements.” Quiroga v. Hasbro, Inc., 934 F.2d 497, 500 (3d Cir. 1991). “[T]here is no issue for trial unless there is sufficient evidence favoring the nonmoving party for a jury to return a verdict for that party.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249 (1986). “[A]t the summary judgment stage the judge’s function is not himself to weigh the evidence and determine the truth of the matter but to determine whether there is a genuine issue for trial.” Id. In making this determination, this Court draws all reasonable inferences in favor of the opposing party. See Bd. of Educ. v. Earls, 536 U.S. 822, 850 (2002); see also Armbruster v. Unisys Corp., 32 F.3d 768, 777 (3d Cir. 1994). III. ANALYSIS 1. Motion for Summary Judgment Case: 3:12-cv-00077-CVG-RM Document #: 590 Filed: 09/30/14 Page 9 of 18 Chapin et al. v. Great Southern Wood Preserving Inc., et. al. Civil No. 2012-77 Order Great Southern asserts that the claims in the Chapin action were dismissed with prejudice by the Whitecap settlement and are accordingly barred by res judicata. Res Judicata, or “[c]laim preclusion[,] requires: (1) a final judgment on the merits in a prior suit involving; (2) the same parties or their privities; and (3) a subsequent suit based on the same cause of action. If these three factors are present, a claim that was or could have been raised previously must be dismissed as precluded.” CoreStates Bank, N.A. v. Huls Am., Inc., 176 F.3d 187, 194 (3d Cir. 1999) (internal citations omitted) (internal quotation marks omitted). “[W]hen a claim is dismissed by a settlement agreement, it is ‘the express terms of a settlement agreement, not merely the terms of the judgment, [that] determine the bounds of preclusion after a settlement.’” Toscano v. Connecticut Gen. Life Ins. Co., 288 F. App'x 36, 38 (3d Cir. 2008)(alteration in original)(quoting Norfolk Southern Corp. v. Chevron, U.S.A., Inc., 371 F.3d 1285, 1291 (11th Cir.2004)(holding that “to preclude a wider range of matters than those specified in the Agreement would frustrate the parties' expressed intent and bestow upon [the defendant] a windfall of immunity from litigation”)(alteration in original)). “The scope of the preclusive effect of the [dismissal] should not be determined by Case: 3:12-cv-00077-CVG-RM Document #: 590 Filed: 09/30/14 Page 10 of 18 Chapin et al. v. Great Southern Wood Preserving Inc., et. al. Civil No. 2012-77 Order the claims specified in the original complaint, but instead by the terms of the Settlement Agreement, as interpreted according to traditional principles of contract law.” Norfolk Southern Corp, 371 F.3d at 1289. In Norfolk Southern Corp. v. Chevron, U.S.A., Inc., the parties agreed to a settlement agreement which stated that “[t]his release extends and applies to, and also covers and includes, all unknown, unforeseen, unanticipated and unsuspected injuries, damages, loss and liability, and the consequences thereof, arising out of said alleged oil contamination, as well as those now disclosed and known to exist.” Id. When the successor to the plaintiff in the previous action later discovered that tank bottoms had leaked into an adjacent marsh, it sued. Id. The Eleventh Circuit held that the claim was not precluded because the agreement only contemplated precluding suits involving contamination by oil, not suits involving contamination by tank bottoms. Id. Given that backdrop, the Court will assess what, if any, claim preclusion exists. First, the Court must assess whether there was a final judgment on the merits. In the Whitecap action, all claims were dismissed with prejudice. “Dismissal with prejudice constitutes an adjudication of the merits as fully and completely as if the order had been entered after Case: 3:12-cv-00077-CVG-RM Document #: 590 Filed: 09/30/14 Page 11 of 18 Chapin et al. v. Great Southern Wood Preserving Inc., et. al. Civil No. 2012-77 Order trial.” Gambocz v. Yelencsics, 468 F.2d 837, 840 (3d Cir. 1972) (citing Lawlor v. National Screen Service Corp., 349 U.S. 322, 327 (1955)). Accordingly, there was a final judgment on the merits. Second, the Court must assess whether the claims that Great Southern seeks to preclude in the Chapin action are between the same parties as those named in the Whitecap action. In the Chapin action, the Putnam Entities assert against Great Southern claims for indemnity, contribution, breach of contract, breach of implied warranty of merchantability, breach of implied warranty of fitness for a particular purpose, and breach of express warranty by affirmation or promise. In the Whitecap action, the Putnam Entities asserted against Great Southern claims for indemnity, contribution, and breach of contract. In the Chapin action, Whitecap asserts against Great Southern claims for indemnity and contribution. In the Whitecap action, Whitecap asserted against Great Southern claims for indemnity, contribution, and declaratory judgment. As such, the claims that Great Southern seeks to preclude in the Chapin action involve the same parties as those named in the Whitecap action. Third, the Court must assess whether the claims in the Chapin action between Great Southern and the Putnam Entities and between Great Southern and Whitecap are the same as those that Case: 3:12-cv-00077-CVG-RM Document #: 590 Filed: 09/30/14 Page 12 of 18 Chapin et al. v. Great Southern Wood Preserving Inc., et. al. Civil No. 2012-77 Order were dismissed by the terms of the Whitecap settlement agreement in the Whitecap action between Great Southern and the Putnam Entities and between Great Southern and Whitecap. Thus the issue remaining before the Court on summary judgment is whether the terms of the Whitecap settlement unambiguously bar Whitecap and the Putnam Entities’ assertion of claims against Great Southern involving unsettled consumer claims in the Chapin action. Those indemnity and contribution claims are only precluded by res judicata if the terms of the Whitecap settlement precludes those claims. “[C]ontract principles are generally applicable to the construction of settlement agreements.” New York State Elec. & Gas Corp. v. F.E.R.C., 875 F.2d 43, 45 (3d Cir. 1989). “The paramount goal of contract interpretation is to determine the intent of the parties.” Baldwin v. Univ. of Pittsburgh Med. Ctr., 636 F.3d 69, 75 (3d Cir. 2011) (quoting Am. Eagle Outfitters v. Lyle & Scott Ltd., 584 F.3d 575, 587 (3d Cir.2009)). Courts are to consider “not the inner, subjective intent of the parties, but rather the intent a reasonable person would apprehend in considering the parties' behavior.” Id. (quoting Am. Eagle Outfitters, 584 F.3d at 582. “The strongest objective manifestation of intent is the language of the contract.” Id. Case: 3:12-cv-00077-CVG-RM Document #: 590 Filed: 09/30/14 Page 13 of 18 Chapin et al. v. Great Southern Wood Preserving Inc., et. al. Civil No. 2012-77 Order (citing Mellon Bank, 619 F.2d at 1009). “Thus, where the words of the contract clearly manifest the parties' intent, a court need not ‘resort to extrinsic aids or evidence.’” Id. (quoting Am. Eagle Outfitters, 584 F.3d at 587 (citation and internal quotation marks omitted)). “This does not mean, however, that the court is confined to the ‘four corners of the written document.’” Pacitti v. Macy's, 193 F.3d 766, 773 (3d Cir. 1999). “Rather, the court reads the contract in the context in which it was made.” Id. The settlement agreement, in relevant part and as recited in open court, states that “[a]ll claims, counterclaims and cross-claims in the action are hereby . . . released and dismissed with prejudice each party to bear its own attorney’s fees, costs and expenses.”(ECF No. 326-4, filed under seal.) Here, when the parties agreed to the Whitecap settlement, the Chapin action was already pending. All the parties to the Whitecap settlement agreement were already present in the Chapin action. The cross-claims and counterclaims alleging indemnity and contribution on which Great Southern seeks summary judgment were also already pending in the Chapin action. Furthermore, at the time of the Whitecap settlement, the plaintiffs in Chapin were seeking class certification for all Virgin Islands Case: 3:12-cv-00077-CVG-RM Document #: 590 Filed: 09/30/14 Page 14 of 18 Chapin et al. v. Great Southern Wood Preserving Inc., et. al. Civil No. 2012-77 Order residents who purchased defective wood treated by Great Southern. (ECF No. 106.) Notwithstanding the pendency of the Chapin action, the Whitecap settlement agreement only dismissed with prejudice “[a]ll claims, counterclaims and cross-claims in the action . . . .” (ECF Doc. 326-4)(emphasis added). The settlement agreement expressly defines “the Action” as the “the captioned case.” The captioned case displayed on the settlement agreement is the Whitecap action, not the then already pending Chapin action. If the settlement contemplated dismissing claims already pending in the Chapin action, it would have said so. The parties could have drafted a broad global settlement. They did not. Instead, they expressly limited the agreement to claims pending in the Whitecap action. Great Southern asks the Court to read the preclusive effect of the Whitecap settlement broadly. To do so, the Court would convey an unintended windfall on Great Southern contrary to what Norfolk Southern counsels, and contrary to the specific and appropriate limitations of the Whitecap settlement. Cf. Norfolk Southern Corp., 371 F.3d at 1291(“[T]o preclude a wider range of matters than those specified in the Agreement would frustrate the parties' expressed intent and bestow upon [the defendant] a windfall of immunity from litigation.”(alteration in original)). Case: 3:12-cv-00077-CVG-RM Document #: 590 Filed: 09/30/14 Page 15 of 18 Chapin et al. v. Great Southern Wood Preserving Inc., et. al. Civil No. 2012-77 Order Given the record in this case, and in light of the limitations of the preclusions in the Whitecap settlement, Great Southern has failed to demonstrate entitlement to judgment as a matter of law on Whitecap’s counterclaims and the Putnam Entities’ cross-claims. Accordingly, the Court will deny Great Southern’s motion for summary judgment. 2. Motions to Strike Whitecap has moved to strike Great Southern’s motion for summary judgment (ECF No. 344). The Putnam entities also moved to “strike any and all mention of the Whitecap mediation agreement from Great Southern’s Motion for Summary Judgment, and the Exhibits thereto containing th[ose] confidential documents.” (ECF Doc. 342.) These motions argue that these documents should be stricken because the documents are confidential and the Whitecap settlement states that it is inadmissible in this action. The Court has ruled on the motion for summary judgment in this order. For the reasons outlined in the Court’s previous order (ECF. No. 580) and the associated Report and Recommendation (ECF. No. 556), there was no prejudice to the parties here. Accordingly, Whitecap’s motion to strike (ECF No. 344) and the Putnam Entities’ motion to strike (ECF No. 342)are denied as moot. Case: 3:12-cv-00077-CVG-RM Document #: 590 Filed: 09/30/14 Page 16 of 18 Chapin et al. v. Great Southern Wood Preserving Inc., et. al. Civil No. 2012-77 Order 3. Motion to Enforce the Settlement Agreement In addition, Whitecap moves the Court to enforce the settlement agreement (ECF No. 342) by striking the motion for summary judgment. The Court has previously addressed a petition for this relief. Indeed, this Court found that: As in Kokkonen, the Court has no order before it that has been violated. See generally Kokkonen [v. Guardian Life Insurance Co. of America], 511 U.S. [ U.S. 375, 381]. “The judge's mere awareness and approval of the terms of the settlement agreement do not suffice to make them part of his order.” Id. Because no Court order here refers to the settlement agreement or reserves district court jurisdiction to enforce the settlement, the Court has neither ancillary jurisdiction nor subject-matter jurisdiction to enforce the settlement agreement. The Court is not inclined to reconsider this decision and sees no need to do so. Accordingly, the Court will deny Whitecap’s motion to enforce the Whitecap settlement. IV. CONCLUSION The premises having been considered, it is hereby ORDERED that Great Southern’s motion for summary judgment (ECF No. 321) is DENIED; it is further ORDERED that Whitecap’s motion seeking to strike Great Southern’s motion for summary judgment, to enforce the terms of the settlement, and for sanctions against Great Southern (ECF No. 339), in so far as it seeks to strike Great Southern’s Case: 3:12-cv-00077-CVG-RM Document #: 590 Filed: 09/30/14 Page 17 of 18 Chapin et al. v. Great Southern Wood Preserving Inc., et. al. Civil No. 2012-77 Order motion for summary judgment and to enforce the terms of the settlement, is DENIED. ORDERED that the Putnam Entities’ motion to strike (ECF No. 342) is DENIED. S\ Curtis V. Gómez District Judge Case: 3:12-cv-00077-CVG-RM Document #: 590 Filed: 09/30/14 Page 18 of 18