Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca3-24-01383/USCOURTS-ca3-24-01383-0/pdf.json

Parties Involved:
Jocelyn Manship
Appellee
Harris Stein
Appellant
Herbert Stein
Appellant
Jason Stein
Appellant
Julie Weisman
Appellee

Document Text:

NOT PRECEDENTIAL

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

______________

No. 24-1383

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JOCELYN MANSHIP; JULIE WEISMAN

v.

JASON STEIN; HERBERT STEIN; HARRIS STEIN

 Appellants

______________

On Appeal from the United States District Court for the 

District of New Jersey

(District Court No. 2:21-cv-10389)

District Court Judge: Honorable Madeline Cox Arleo

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Submitted Pursuant to Third Circuit L.A.R. 34.1(a)

November 5, 2024

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Before: KRAUSE, SCIRICA, and RENDELL, Circuit Judges

(Filed: December 5, 2024)

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O P I N I O N*

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* This disposition is not an opinion of the full Court and pursuant to I.O.P. 5.7 does not 

constitute binding precedent.

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RENDELL, Circuit Judge.

Defendant-Appellants Jason Stein, Herbert Stein, and Harris Stein (“the Steins”)

appeal from the District Court’s denial of their motion for summary judgment and grant 

of Plaintiff-Appellees Jocelyn Manship and Julie Weisman’s motion for summary 

judgment. The Steins urge that the District Court erred by (1) finding that the Settlement 

Agreement and Indemnification Agreement could coexist, (2) holding that Appellees 

needed to prove only “potential” as opposed to “actual” liability to be entitled to 

indemnification, and (3) finding that Appellees did not waive their right to 

indemnification. We will affirm.

I.

The Steins, Manship, and Weisman were shareholders of Natural Flavors, Inc. 

(“Natural Flavors”). In 2017, Natural Flavors entered into an Asset Purchase Agreement 

(“APA”) to sell its assets to Firmenich Inc. (“Firmenich”). In 2019, after the sale was 

consummated, Firmenich sued the Steins, Manship, Weisman, and Natural Flavors in the 

Superior Court of Delaware (“Delaware Action”), alleging misrepresentations in and 

breaches of obligations under the APA. Manship and Weisman retained Saiber LLC 

(“Saiber”), to litigate the Delaware Action, while the Steins retained Greenberg Traurig, 

LLP (“Greenberg Traurig”).

Manship and Weisman believed themselves to be blameless in the Delaware 

Action and considered filing crossclaims against the Steins. Instead, however, they 

entered into an Indemnification Agreement with the Steins, whereby the Steins agreed to 

indemnify Manship and Weisman against any losses related to the Delaware Action.

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Manship and Weisman, in turn, agreed to allow the Steins to approve counsel to defend

them in the Delaware Action and to waive any conflicts of interest that might arise from 

such representation. The Steins chose Greenberg Traurig to represent Manship and 

Weisman. Although Saiber—Manship and Weisman’s then-current counsel—contacted

Greenberg Traurig, no party took steps to replace Manship and Weisman’s counsel and 

Saiber remained on the case.

The Delaware Action went to mediation in late 2020 and came to a settlement 

agreement by early 2021. It was clear during the mediation that the parties would not be 

able to reach an agreement without contributions from all shareholders (including 

Manship and Weisman). As a result, Manship and Weisman contributed the minimum 

payment Firmenich would accept from them under the parties’ negotiations. The final

Settlement Agreement included releases of known and unknown claims between 

Firmenich on one side and various other parties on the other.

1 The parties all agreed to 

bear their own costs for the settlement. The Settlement Agreement also included an 

integration clause providing that the final agreement superseded all previous agreements 

between the parties related to settling the Delaware Action.

Once the Delaware Action had settled, Manship and Weisman sought 

indemnification from the Steins based on the Indemnification Agreement. The Steins 

1 The relevant released claims in the agreement were between: (1) Firmenich on one side 

and the Steins on the other, (2) Firmenich on one side and Manship and Weisman on the 

other, and (3) Firmenich on one side and Natural Flavors on the other. J.A. 190–92.

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refused, so Manship and Weisman brought suit for breach of contract. Each party 

subsequently moved for summary judgment.

Manship and Weisman urged that they were entitled to indemnification based on 

the plain language of the Indemnification Agreement. The Steins urged that the language 

of the Settlement Agreement superseded the language of the Indemnification Agreement, 

and that Manship and Weisman waived their right to indemnification by contributing to 

the settlement and continuing to use their original lawyers. The District Court considered 

the language of the Indemnification Agreement and its interaction with the Settlement 

Agreement and found that the two contracts addressed different issues and could 

therefore coexist with one another. Next, the District Court concluded that Manship and 

Weisman were entitled to indemnification because they had shown that they would be 

potentially liable but for the settlement. Lastly, the District Court found that Manship and 

Weisman had not waived their right to indemnification by contributing a payment to the 

Settlement Agreement or continuing to use their own counsel after the consummation of 

the Indemnification Agreement. This appeal followed.

II.

The District Court had subject matter jurisdiction pursuant to 28 U.S.C. § 1332.

We have jurisdiction pursuant to 28 U.S.C. § 1291. We exercise plenary review of an 

award of summary judgment, applying the same standard as the district court. Blunt v. 

Lower Merion Sch. Dist., 767 F.3d 247, 265 (3d Cir. 2014). Summary judgment is 

warranted when, viewing the evidence in the light most favorable to the non-moving 

party (here, Appellants), there are no genuine issues of material fact, and the non-movant 

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is entitled to judgment as a matter of law. FED. R. CIV. P. 56(a); Bletz v. Corrie, 974 F.3d 

306, 308 (3d Cir. 2020).

III.

A. Supersedure

Like the District Court, we apply New York law.2 Under New York law, a 

subsequent contract supersedes a prior contract where the contracts pertain to “precisely 

the same subject matter” or where the subsequent contract “has definitive language 

indicating it revokes, cancels or supersedes [the] specific prior contract.” Alessi, 578 F. 

Supp. 3d at 504 (quoting A & E Television Networks, LLC v. Pivot Point Ent., LLC, No. 

10 Civ. 09422, 2013 WL 1245453, at *10 (S.D.N.Y. Mar. 27, 2013)); see also Applied 

Energetics, Inc. v. NewOak Cap. Markets, LLC, 645 F.3d 522, 526 (2d Cir. 2011)

(“Under New York law, ‘[i]t is well established that a subsequent contract regarding the 

2 The Indemnification Agreement is governed by New York law and the Settlement 

Agreement is governed by Delaware law. Neither party challenges the District Court’s 

decision to apply New York law. We agree that under the choice-of-law rules of the 

forum state—New Jersey—there is no reason to disturb the parties’ contractual choice of 

law. See Collins v. Mary Kay, Inc., 874 F.3d 176, 183–84 (3d Cir. 2017) (explaining that, 

“[o]rdinarily, when parties to a contract have agreed to be governed by the laws of a 

particular state, New Jersey courts will uphold the contractual choice” absent certain 

exceptional circumstances). Moreover, to the extent that Delaware law may govern the 

supersedure analysis, it does not conflict with New York law. Compare Haft v. Dart Grp. 

Corp., 841 F. Supp. 549, 568 (D. Del. 1993) (a new contract supersedes an old one where 

they govern the same subject matter and cannot coexist, or where parties expressly intend 

for the new contract to supersede the old one) and BioVeris Corp. v. Meso Scale 

Diagnostics, LLC, No. CV 8692-VCMR, 2017 WL 5035530, at *7 n. 71 (Del. Ch. Nov. 

2, 2017) (same), aff’d, 202 A.3d 509 (Del. 2019) with Alessi Equip., Inc. v. Am. 

Piledriving Equip., Inc., 578 F. Supp. 3d 467, 504 (S.D.N.Y. 2022) (same).

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same matter will supersede the prior contract.’” (quoting Barnum v. Millbrook Care Ltd. 

P'ship, 850 F. Supp. 1227, 1236 (S.D.N.Y. 1994))).

A court, in conducting this analysis, must consider whether (1) the subsequent 

contract contains an integration clause indicating that the prior provision is 

superseded; (2) the two provisions have the same general purpose or address the same 

general rights; and (3) the two provisions can coexist or work in tandem. Alessi, 578 F. 

Supp. 3d at 504.

We agree with the District Court’s conclusion that the Settlement Agreement did 

not supersede the Indemnification Agreement. First, the Settlement Agreement’s 

integration clause does not sufficiently indicate an intent to supersede the Indemnification 

Agreement. A contract must contain “definitive language” demonstrating which prior 

agreement, if any, will be superseded. Globe Food Servs. Corp. v. Consol. Edison Co. of 

N.Y., 584 N.Y.S.2d 820, 821 (N.Y. App. Div. 1992); see also Mallad Constr. Corp. v. 

Cnty. Fed. Sav. & Loan Ass’n, 298 N.E.2d 96, 99 (N.Y. 1973) (a clause explicitly naming 

the prior contract to be superseded was sufficiently definitive). No such language occurs 

in the Settlement Agreement, which includes only a general statement about its scope 

with respect to the Delaware Action. Such imprecise language does not indicate an intent 

to supersede the Indemnification Agreement.

Next, although the Indemnification Agreement and the Settlement Agreement both 

relate to the Delaware Action, they do not conflict. As the District Court explained, the 

parties to the agreements and “the nature and extent of [the] obligation[s] in each 

agreement are drastically different.” Joint Appendix (“J.A.”) 6; see also Nat’l Lab. Rels. 

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Bd. v. Newark Elec. Corp., 14 F.4th 152, 167 (2d Cir. 2021) (supersedure applies only 

where “two successive agreements governing the same subject matter are entered into by 

identical parties”). The Indemnification Agreement is exclusively between Manship and 

Weisman, the Steins, and Natural Flavors, while the Settlement Agreement is between 

Firmenich, Manship and Weisman, the Steins, and Natural Flavors. The Indemnification

Agreement covers all losses by Manship and Weisman relating to the Delaware Action,

while the Settlement Agreement resolves only claims between Firmenich and various 

parties. The Settlement Agreement says nothing to preclude Manship and Weisman’s 

reimbursement by the Steins; it only considers their interactions with Firmenich.

Finally, because the parties’ obligations are reconcilable—of Manship and 

Weisman to pay their own costs in the settlement, and of the Steins to reimburse Manship 

and Weisman for costs they incurred in relation to the Delaware Action—the 

Indemnification Agreement and Settlement Agreement can coexist. Cf. A & E Television 

Networks, LLC, 2013 WL 1245453, at *11 (S.D.N.Y. Mar. 27, 2013) (finding an 

agreement to negotiate “anticipates” a later agreement regarding how to negotiate). 

Therefore, the Settlement Agreement did not supersede the Indemnification Agreement.

B. Potential versus actual liability

The District Court concluded that Manship and Weisman were entitled to 

indemnification because they demonstrated that they would have been potentially liable 

but for the settlement. The Steins do not dispute that Manship and Weisman have proved 

that they were potentially liable, rather, they urge that the District Court erred in requiring 

Manship and Weisman to prove potential liability, rather than actual liability, in assessing 

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whether they were entitled to indemnification. Under New York law, an indemnitee 

seeking indemnification for a settlement must prove either potential or actual liability to 

be successful, depending on the circumstances underlying the settlement. Atl. Richfield 

Co. v. Interstate Oil Transp. Co., 784 F.2d 106, 112 (2d Cir. 1986). An indemnitee need 

only prove potential liability if (1) the settlement is reasonable, and (2) the indemnitor 

had notice of the proposed settlement such that it had a “meaningful opportunity to 

defend” but “decline[d] either to approve the settlement or to take over the defense.” Id.

at 112–13. Otherwise, the indemnitee must show actual liability. Id. at 112. This rule has 

evolved to avoid situations in which an indemnitee might agree to unreasonable 

settlements without getting the approval of the indemnitor, because it (that is, the 

indemnitee) knows that it will not actually have to pay out the settlement. See, e.g., id. at 

113; Nesterczuk v. Goldin Mgmt., Inc., 911 N.Y.S.2d 367, 371 (N.Y. App. Div. 2010) 

(requiring potential, not actual, liability where settlement was reasonable and made in 

good faith).

Here, Manship and Weisman contributed a relatively small payment to the 

settlement once it became clear that the settlement could not proceed if they did not 

contribute. Their contribution was reasonable—it made up a small percentage of the total 

settlement amount, and represented the minimum negotiated amount needed to resolve 

the case. By contrast, had they not contributed to the settlement, Manship and Weisman

would have risked being held jointly and severally liable for the entirety of a multimillion dollar judgment. We agree with the District Court that Appellees’ settlement 

contribution was reasonable. Cf. Koch Indus., Inc. v. Aktiengesellschaft, 727 F. Supp. 2d 

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199, 225 (S.D.N.Y. 2010) (“In the context of indemnification, courts routinely find 

settlements to be ‘reasonable’ when the recovery at trial could have been greater.”). 

The Steins also had adequate notice of the settlement: they were parties to 

settlement negotiations, and, prior to agreeing to the settlement contribution, Manship 

and Weisman’s attorney suggested to the Steins’ attorney that Manship and Weisman 

contribute to the settlement, and that the Steins repay them afterward. On the whole, then, 

the District Court correctly concluded that Appellees were entitled to indemnification, as 

they demonstrated that they were potentially liable, but for their settlement contribution.

C. Waiver

Separately, the Steins urge that Manship and Weisman waived their right to 

indemnification under the Indemnification Agreement for two reasons. First, they urge 

that Manship and Weisman waived their right by voluntarily paying into the settlement. 

Second, they urge that Manship and Weisman waived their right by not taking active 

steps to engage the Steins’ counsel to defend them.

The Steins submit that Manship and Weisman’s settlement contribution amounts 

to waiver of their right to indemnification because (1) the Steins were “already 

negotiating a global settlement which would resolve all claims against them” and (2) the 

Steins expressly advised Manship and Weisman that they would not indemnify them for 

the contribution. Appellants’ Br. 29. The first argument is easily dispensed with: it is 

clear from the record that a settlement could not go forward without contributions from 

all shareholders, including Manship and Weisman. The second argument is also 

unpersuasive. While Manship and Weisman understood that the Steins were perhaps illCase: 24-1383 Document: 66 Page: 9 Date Filed: 12/05/2024
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prepared to comply with their obligations under the Indemnification Agreement, they 

nevertheless contributed to the settlement with the understanding that the Steins were 

obligated to repay them. Under those circumstances, we cannot conclude that Appellees’

settlement contribution represents a knowing, voluntary, and intentional abandonment of 

their right to indemnification. See Fundamental Portfolio Advisors, Inc. v. Tocqueville 

Asset Mgmt., L.P., 850 N.E.2d 653, 658 (N.Y. 2006).

Appellees’ failure to substitute counsel also does not constitute waiver. Under the 

Indemnification Agreement, Manship and Weisman did not need to take active steps to 

retain the Steins’ counsel. The Agreement allowed the Steins to approve counsel for 

Manship and Weisman and waived any conflicts of interest that might arise from the 

Steins’ selection. Even so, Manship and Weisman’s counsel reached out to the Steins’ 

counsel, whom the Steins had selected, to facilitate Manship and Weisman’s transfer to 

the new attorneys. After that contact, no party acted to replace Manship and Weisman’s 

counsel. Manship and Weisman did not renege on the terms of the Indemnification

Agreement and did not waive their right to indemnification for that reason.

IV

Because the Settlement Agreement did not supersede the Indemnification 

Agreement and Manship and Weisman did not waive their rights to indemnification, we 

will affirm the District Court’s order.

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