IN THE UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF PENNSYLVANIA

FPL ENERGY MARCUS HOOK, L.P. : CIVIL ACTION

:

v. :

:

STONE AND WEBSTER, INC., :

et al. : NO. 05-2102

MEMORANDUM

Bartle, J. October 7, 2005

Before the court are the cross-motions of the parties

for partial summary judgment under Rule 56 of the Federal Rules

of Civil Procedure.

Plaintiff FPL Energy Marcus Hook, L.P. ("FPL") alleges

that it suffered in excess of $35,000,000 in damages because

defendant Stone & Webster, Inc. ("Stone & Webster") has failed to

employ proper engineering practices in the design and

construction of a power plant for its use. Plaintiff also

maintains that defendant, The Shaw Group, Inc. ("Shaw"), a

corporation affiliated with Stone & Webster, breached its duty as

guarantor of Stone & Webster's obligations. Defendants have

filed a counterclaim which includes a count for a declaratory

judgment that a Settlement and Release Agreement ("Settlement

Agreement") bars certain claims of FPL.

On July 10, 2001, FPL and Stone & Webster entered into

an Engineering, Procurement, and Construction Agreement ("EPC

Agreement") in which Stone & Webster agreed to design and

Case 2:05-cv-02102-HB Document 58 Filed 10/07/05 Page 1 of 10
1. Shaw executed a separate Guaranty Agreement in favor of FPL

whereby it guaranteed the obligations of Stone & Webster under

the EPC Agreement. 

2. Although defendant Shaw was not a signatory to the Settlement

Agreement, it was binding upon and inured to the benefit of

affiliates of Stone & Webster, such as Shaw. 

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construct for FPL a 750 megawatt power plant in Marcus Hook,

Pennsylvania.1 The price was $442,000,000. Thereafter, as the

work progressed, disputes arose between the parties, and on

October 15, 2003, FPL and Stone & Webster entered into the

Settlement Agreement.2 The cross-motions for summary judgment

revolve around its interpretation. Defendants maintain that

under the Settlement Agreement, FPL waived its right, with

certain enumerated exceptions, to bring any claims against them

related to the EPC Agreement which arose on or before October 15,

2003. FPL maintains that only nine Controversies specifically

identified in the Settlement Agreement were resolved.

The Settlement Agreement's recitals provide in relevant

part:

WHEREAS, various disputes and issues, as

specifically set forth below (each a

"Controversy", and collectively, the

"Controversies"), have arisen between the

Parties in connection with the Parties'

respective obligations under the EPC

Agreement; and 

WHEREAS, the Parties acknowledge the

potential for costs, hazards, uncertainties

and pitfalls relating to the Controversies

and, as such desire to enter into this

Settlement Agreement in order to address and

lay to rest the Controversies in order to

avoid such costs and risks; and

WHEREAS, the Parties wish to resolve all

disputes and issues between them on the terms

and conditions set forth below;

Case 2:05-cv-02102-HB Document 58 Filed 10/07/05 Page 2 of 10
3. Article 1 is entitled "Definitions." It simply states, "All

capitalized terms which are not other wise [sic] defined in this

Settlement Agreement shall have the meanings given to them

pursuant to the EPC Agreement."

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NOW, THEREFORE, in consideration of the

premises [sic] and the releases,

representations, covenants and obligations

contained herein, and intending to be bound,

[FPL] and [Stone &Webster] agree as follows.

Settlement Agreement, at 1-2.

The operative sections of the Settlement Agreement then

follow.3 Article 2 begins: "The Controversies outstanding

between the Parties, which are currently unresolved but which the

parties propose to resolve pursuant to this Settlement Agreement,

are as follows." Settlement Agreement, Art. 2. Nine specific

unresolved Controversies between FPL and Stone & Webster are then

identified. They are described under the headings: (1) Control;

(2) Change Orders; (3) Surplus Piping Material; (4) Unit Rate;

(5) Letter of Credit; (6) Schedule Bonus; (7) Liquidated Damages; 

(8) Project Executive; and (9) Additional Fees and Incentives. 

Article 3, entitled, "Resolution of the Disputes and

Issues," provides that "the Parties hereby agree to fully and

unconditionally resolve the Controversies on the terms listed

below." Settlement Agreement, Art. 3. It proceeds to set forth

their agreement as to how each of the nine Controversies is to be

resolved. Some of the Controversies are settled by imposing

certain future obligations on the parties. Among other things,

FPL is given significant control and oversight over the project. 

See Settlement Agreement, Art. 3, ¶ A. 

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Article 4, captioned "Waivers and Releases," reads in

relevant part:

Release of Claims by Owner [FPL]:

Subject only to the Reservation of

Rights in the next paragraph of this Article

4B, as of the Effective Date [October 15,

2003], Owner [FPL], intending to be legally

bound on behalf of itself, its parents,

subsidiaries, affiliates, successors,

predecessors, assigns (past, present and

future), directors, officers, agents,

attorneys, insurers, employees, stockholders,

and representatives, and their decedents,

dependents, heirs, executors, administrators,

trustees, and guardians, ABSOLUTELY,

IRREVOCABLY, AND UNCONDITIONALLY FULLY AND

FOREVER ACQUITS, RELEASES, AND DISCHARGES

CONTRACTOR [Stone & Webster], its parents,

subsidiaries, affiliates, successors,

predecessors, assigns (past, present and

future), directors, officers, agents,

attorneys, insurers, employees, stockholders,

and representatives, from any and all claims,

causes of action, demands, obligations,

charges, complaints, controversies, damages,

liabilities, costs, expenses, judgments,

guarantees, agreements, or defaults of every

and any nature, relating to or arising under

the EPC Agreement, whether in law or equity

and whether arising in contract (including

breach), tort or otherwise, and irrespective

of fault, negligence or strict liability,

which Owner [FPL] may have had, or may now

have, before or as of the Effective Date

[October 15, 2003].

Reservation of Owner's Rights:

The preceding paragraph shall not apply

to (i) Contractor's obligations contained in

this Settlement Agreement, or (ii) except to

the extent specifically addressed herein, the

obligations or liabilities of Contractor,

including but not limited to Contractor's

obligations and liabilities with respect to

completion of (a) all Work required to be

performed through Final Acceptance, (b) all

project guarantees under Article 11,

warranties and guarantees under Article 12

and Section 18.16, (c) indemnities under

Article 16 and Section 18.16, and (d)

Case 2:05-cv-02102-HB Document 58 Filed 10/07/05 Page 4 of 10
4. There are similar provisions which release FPL.

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confidentiality under Article 18 thereof. 

Notwithstanding the foregoing, nothing in

this Agreement shall preclude Owner from

(i) fully defending itself against and/or 

(ii) seeking indemnity and/or contribution

from Contractor (or any other party)

in the event that any action, claim or

arbitration demand is filed against Owner in

connection with the Plant or the Work in a

manner consistent with the EPC Contract.4

Settlement Agreement, Art. 4, ¶ B. 

Finally, Article 5, with the heading "Covenants Not to

Sue," states:

It is the intent of the Parties that the

consideration received by each pursuant to

this Settlement Agreement satisfies and

finally resolves the Controversies indicated

herein, and it is expressly intended and

agreed that the releasing Party shall not

assert against the released Party, whether on

its behalf or on behalf of a party not a

signatory to this Agreement, any future

claims based on the past conduct, act, or

omission encompassed in such releasing

Party's release set forth in and of the

Settlement Agreement, except for non-payment

of any Reimbursable Costs and Fees; provided

that such Reimbursable Costs and Fees are not

the result of any Changes or Change Orders as

resolved pursuant to Article 3B of this

Agreement.

Settlement Agreement, Art. 5.

Summary judgment is appropriate only where there is no

genuine issue of material fact and the moving party is entitled

to judgment as a matter of law. Anderson v. Liberty Lobby, Inc.,

477 U.S. 242, 248 (1986); see Fed. R. Civ. P. 56(c). The

Settlement Agreement states and the parties agree that it is

governed by New York law. Settlement Agreement, Art. 7, ¶ B. 

Case 2:05-cv-02102-HB Document 58 Filed 10/07/05 Page 5 of 10
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"Releases are contracts to be interpreted in accordance with

principles of contract law." Zilinskas v. Westinghouse Elec.

Corp., 669 N.Y.S.2d 703, 705 (N.Y. App. Div. 1998). Generally, a

clear and unambiguous contract is to be enforced according to its

terms, without reference to extrinsic evidence as to its meaning. 

W.W.W. Assoc., Inc. v. Giancontieri, 566 N.E.2d 639, 642 (N.Y.

1990). The clarity of a contract is a question of law for the

courts, and a contract must be read as a whole to determine

whether it is unambiguous. Id. "A contract is unambiguous if

the language it uses has 'a definite and precise meaning,

unattended by danger of misconception in the purport of the

[agreement] itself, and concerning which there is no reasonable

basis for a difference of opinion.'" Greenfield v. Philles

Records, Inc., 780 N.E.2d 166, 170-71 (N.Y. 2002) (brackets in

original).

We need look no further than the four corners of the

Settlement Agreement itself to determine the scope of the

release. The wording of the document is clear and unambiguous.

The Settlement Agreement first provides that nine specific

Controversies between FPL and Stone & Webster are being settled. 

However, the Settlement Agreement encompasses much more. Subject

only to its "Reservation of Owner's Rights" paragraph, Article 4

releases Stone & Webster from:

 [A]ny and all claims, causes of action,

demands, obligations, charges, complaints,

controversies, damages, liabilities, costs,

expenses, judgments, guarantees, agreements,

or defaults of every and any nature, relating

to or arising under the EPC Agreement,

Case 2:05-cv-02102-HB Document 58 Filed 10/07/05 Page 6 of 10
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whether in law or equity and whether arising

in contract (including breach), tort or

otherwise, and irrespective of fault,

negligence or strict liability, which Owner

may have had, or may now have, before or as

of the Effective Date."

Settlement Agreement, Art. 4, ¶ B (emphasis added). This

language could hardly be more expansive. "Controversies" is

simply one of many terms used. The claims released were not only

those known, that is the nine Controversies, but also those

claims which FPL "may have had or may now have." FPL's reading

of the Settlement Agreement limiting its effect to the nine

Controversies specifically described in Articles 2 and 3 would

render the above-quoted portion of Article 4 virtually

meaningless. Courts "should not 'adopt an interpretation' which

will operate to leave a 'provision of a contract ... without

force and effect.'" Laba v. Carey, 277 N.E.2d 641, 644 (N.Y.

1971). 

The "Reservation of Owner's Rights" paragraph in

Article 4 does not help FPL. It simply is a limited carved-out

provision, which excludes certain enumerated matters from the

release language. The "Reservation of Owner's Rights" paragraph

makes explicit the obvious, that the obligations of the parties

set forth in the Settlement Agreement itself are not released. 

The paragraph also clarifies that the Settlement Agreement does

not release Stone & Webster from its obligations under the EPC

Agreement going forward as it completes its work on the power

plant. In addition, it preserves warranty, guarantee, indemnity,

and confidentiality provisions in the EPC Agreement. None of the

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"Reservations of Owner's Rights" is inconsistent with the notion

that except for specifically identified carve-outs all disputes

and claims arising on or before October 15, 2003, the date of the

Settlement Agreement, are released. 

The recitals, on which FPL relies, do not undermine

this result. They provide not only that "the Parties ... desire

to enter into this Settlement Agreement in order to address and

lay to rest the Controversies," but also that "the Parties wish

to resolve all disputes and issues between them on the terms and

conditions set forth below." Settlement Agreement, at 1-2

(emphasis added). Thus, the recitals include more than the nine

Controversies.

Finally, an examination of Article 5, which is entitled

"Covenants Not to Sue," further illustrates the broad scope of

the release. In addition to stating that the "Settlement

Agreement satisfies and finally resolves the Controversies

indicated herein," it recites that with certain specified

exceptions "it is expressly intended and agreed that the

releasing Party shall not assert against the released Party ...

any future claims based on the past conduct, act, or omission

encompassed in such releasing Party's release ...." This is

totally inconsistent with the notion that only the nine specified

Controversies are being released.

While the initial impetus for the Settlement Agreement

may have been the existence of the nine Controversies, the

parties' ultimate focus was not so narrow. The Settlement

Case 2:05-cv-02102-HB Document 58 Filed 10/07/05 Page 8 of 10
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Agreement concerned a complex engineering project. Not

surprisingly, the language used by the parties wiped the slate

clean except as explicitly noted and allows the parties to move

forward without being bogged down by litigation over past events

or breaches, whether then known or unknown. See Murphy v. City

of New York, 83 N.E. 39 (N.Y. 1907); Herman v. Malamed, 487

N.Y.S.2d 791, 793 (N.Y. App. Div. 1985).

Both parties have presented extrinsic evidence of their

intent, none of which is being considered. The terms of the

Settlement Agreement, as previously noted, are clear and

unambiguous. Thus, we limit our consideration to what is

contained within the four corners of the document itself. W.W.W.

Assoc., 566 N.E.2d at 642. The parties to the Settlement

Agreement are large, sophisticated entities, represented at all

times by counsel. The underlying engineering project involved

hundreds of millions of dollars. Had the parties wanted to

confine the Settlement Agreement to the nine Controversies, their

counsel certainly knew how to express that intent in writing. In

sum, except as specifically carved out in the Settlement

Agreement, FPL released the defendants from all possible claims

which FPL may have had "relating to or arising under the EPC

Agreement" on or before October 15, 2003.

Accordingly, we will grant the motion of defendants for

partial summary judgment and deny the cross-motion of FPL for

partial summary judgment.

Case 2:05-cv-02102-HB Document 58 Filed 10/07/05 Page 9 of 10
IN THE UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF PENNSYLVANIA

FPL ENERGY MARCUS HOOK, L.P. : CIVIL ACTION

:

v. :

:

STONE AND WEBSTER, INC., :

et al. : NO. 05-2102

ORDER

AND NOW, this 7th day of October, 2005, it is hereby

ORDERED that:

(1) the motion of the defendants Stone & Webster, Inc.

and The Shaw Group, Inc. for partial summary judgment is GRANTED;

(2) the motion of the plaintiff FPL Energy Marcus

Hook, L.P. for partial summary judgment is DENIED; and

(3) judgment is entered in favor of the defendants

Stone & Webster, Inc. and The Shaw Group, Inc. and against the

plaintiff FPL Energy Marcus Hook, L.P. on its claim for

declaratory relief with respect to the scope of the Settlement

and Release Agreement dated July 10, 2001. Any and all claims

that plaintiff FPL Energy Marcus Hook, L.P. may have had against

the defendants Stone & Webster, Inc. and The Shaw Group, Inc.

relating to or arising under the Engineering, Procurement, and

Construction Agreement on or before October 15, 2003 are barred,

except as specifically referenced in said Settlement and Release

Agreement.

BY THE COURT:

/s/ Harvey Bartle III 

J.

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