FI L ED U.S. COURT OF A P P E A LS E LE V E N T H C IR C U IT J UNE 3,, 2004 THOMAS K. KAH

N CL ERK

Honora ble Richard Mills, United States District Court for the Centr al District of * I llinois , sitti ngby

desig nation. [PUBLISH]

IN THE UN ITED STATES COURT OF APPEALS FO R T HE EL EV EN TH CIRC UI T

____ ____ ____ _ N o. 03- 1447 3

____ ____ ____ _ D.C. Dock etNo. 0 0- 00 36 6- CV-J -2 1HTS NORFOLK SOUTHERN CORPORATION, GEORGIA SOUTHERN AN D FLORIDA RAILWA Y COMPANY, Pl ai nt iff s- App el la nt s,

ve rs us CHEVRON, U.S.A., INC., D efendant-Appellee.

____ ____ ____ Appeal f rom the United State s District Court fo r the Mi ddl e D istri ct

of F lor ida

____ ____ ____ (J U N E 3, 200 4) Before TJO FL AT and HI LL , C ircuit Judg es, and MILL S , D istrict Judg e. *2

TJO FL AT , C ircuit Judg e: The S t. Johns River Te rm inal Com pany leased a tr act of land (the “ Le ased Si te ”) i n J ack so nv il le , Flo rid a, to th e Gul f Oil Co rp or at io n fr om 19 06 to 19 61 . G ulf c onstru ct ed

above -g ro und tanks on the land t o st or e oil and f ue l. I n 19 77, the United States C oast Guard inform ed St. Johns that oil was leaking from the Le ased Si te ont o th e sur fa ce of

the ne ar by L ong Br an chCr ee k and r equir ed S t. Joh ns t o re m ed ia te the le ak ag e at

it s own e xpe nse . S t. Joh ns s ue d G ulf f or r ei m bur se m en t fo r th e co st of t he cle an up . Pr ior to tr ia l, the part ie s se ttl ed . G ulf a gr ee d to pay

S t. Joh ns $ 163, 000 to help cover the cost of the containm ent efforts, and St. Johns executed a r elease, statin g: St . Joh ns R ive r T er

m ianl [ sic ] Co m

pany doe s he re by

r el ea se and fo re ve r dis ch ar ge sa id Gulf O il Co m pany , it s su cc es sor s and a ssi gns, from any and all actions, causes of action, claim s and dem ands for, upon or by

rea son of any

dam age, loss o r inj ury , which heretofore has been or w hich hereafte r m ay be sustained bySt. Johns River T erm inal Co m pany ari sin g ou t of

any c ont am inatio n by

oil of the T al le yrand T er m ina l pr ope rty

in Ja ck sonv ill e, F lor ida , w hic h is a lle ge d to have oc curr ed dur ing G ulf

O il Co rp or at ion ’ s us e an d oc cu panc y of sa id pr op ert y an d a ll th os e m at te rs all eg edin [St . Jo hn s’s 1 97 7 l aws ui t]. T his r el ea se e xte nds an d a ppl ie s to , and a lso c ove rs and i nc lud es , a ll unkn ow n, unf

or es ee n, unanti ci pa te d and unsus pe ct ed inj ur ie s, da m ag es , los s and l ia

bil ity , and the c onse que nc es the re of , ari sin g ou t of sa id a lle ge d oi l c ont am inatio n, a s w el l a s th ose nowdis cl ose d and known to e xis t.3

W e shall ref

er to this as the “ Settlem ent Agre em ent.” Once the parties entere d int o th is A gr ee m en t, the dis tr ic t c ourt e nte re d aj udgm en t of dis m iss al w ith pr ej udi ce ( the “ 1977 D ism iss al ”) ba se d up on the part ie s’ j oin t st ipu la tio n, statin g,

“ It is hereby

agree d by

and betwee n all parties that the above entitled cause has been com prom ised and settled and th at this cause is dism issed with prej udice under Rule 41 of the Federa l Rules of Civil Procedure . . . .” T he pla int if

fs , N or fo lk S outhe rnCo rp or at ionand G eo rg iaS outhe rnand Fl or ida Ra ilw ay Co m pany ( co lle ct ive ly , “N or fo lk” ), are the suc ce sso rs -i n- int er es t to St. Johns. T he defendant, C hevron, is the successor-in-interest to Gulf. In 1999 , N orfolk discov ered that contam ination from oil storage tanks o n the Lea sed Site had leaked onto an adja cent salt m arsh (“ the Marsh”). T he contam inants are known as “ tank bot tom s” because they form ed from

the sludg e that acc um

ulated at th e b ot to m

of t he st or ag e ta nk s. Norf olk su ed Chevron under both the Com prehensive Environm ental Res po ns e, Co m

pe ns at io n a nd Liab il it y

Act (C ERCLA), 42 U.S.C. §§ 96 01 -9 67 5, and Florida com

m on law, seeking reim

bursem ent of expenses that it has incu rred an d w ill inc ur

in cl eanin g up the le ak ag e. T he dis tr ic t c ourt gr an te d C he vr on summ ary j udgm ent, c onclud ing th at N orfolk’ s claim s wer e barr ed by the res4

j udi catae ff

ec t of the 197 7 D ism iss al . I t he ld tha t a dis m iss al e nte re d purs uant t o a settlem ent agreem ent is presum ed to have the sam e re s judicata effe ct as any other j udgm en t, a lth oughthe sc ope of thi s pr ec lus ive e ff

ec t m ay be li m ite d by

the ag reem en t i nt o wh ic h t he pa rti es en te red . The district court explained that a claim that would ty

pically be barre d under res j udicata m ay

be preser ved onlyif a par

ty m akes a “ clear

expression” of a

“ re se rv at ionof

r igh t” to br ing sui t onthe ba sis of that c la im

in the f uture . B ec au se t h e S et t l emen tAg re emen td i dn o tex p re s s l y al l o w S t . J o h n s (N o rf o l k ’s pr ed ec es sor -i n- int er es t) to br ing any f uture c la im s r eg ar din g c ont am inatio n of the L ea se d S ite , the c ourt he ld tha t the A gr ee m en t di d no t c urta il the sc ope of traditional res j udicata principles. Apply ing th ose principles, the court held that N or fo lk’ s c ur

re nt c la im

w as pr ec lud ed

and d ism iss ed

the c as e. N or fo lk a

ppe al s, arg ui ng th atitsh ou ldbe en ti tl edto pro ceed wit h i ts laws ui t. Beca use res j udicata determ ination s are pure question s of law , w e re view them de novo. Israe l Discount Bank Ltd. v. E ntin, 951 F.2d 311, 314 (11 th Cir. 1992 ). W e dis ag re e w iththe dis tr ic t c ourt’ s ana ly sis be ca use , a lth oughthe 197 7 dis m iss al ha s ar es j udi catae ff ec t, that e ff

ec t i s c ontro lle d by

the S ettle m en t A gr ee m en t i nto w hic h th e part ie s e nte re d. I n th e ab se nc e of ase ttl em en t agreem ent, of c ourse, a j udgm ent of dism issal pursu ant to Rule 41 sh ouldbe givenIn B onne r v . Ci ty of Pr ic ha rd , 6 61 F .2 d 1 20 6, 12 09 (1 1th Cir . 1 98 1) (e n b anc ), thi s 1 c ourt a do pte d a s b ind ingpr e c e de nt a ll d e c isi on s o f t he fo rm e r F if

th C ir c uit ha nd e d d own p ri or

to October 1, 1981. 5 the sam e re s judicata effe ct as any other j udgm ent. S ee A stron Indus . A ssoc., Inc. v. Ch ry sle r Mot or s C or

p. , 405 F . 2d 9 58, 960 ( 5thCi r. 196 8) ( “ [A ] sti pul at ionof dis m iss al w ithpr ej udi ce . . . nor m al ly c onst itu te s af

ina l j udgm en t onthe m er its w hic h bars ala te r sui t onthe sam e ca use of a ct ion . ”) . Whe re the part ie s c onse nt

1 to such a dism issal based on a settlem ent agreem ent, howe ver, the principles of res j udi cataappl y

( in a som ewha t m odi fi ed

f orm ) to t he m atte rs spe ci fi ed

in the se tt le m en t ag reem en t, ra th er t ha n t he ori gi na l co m pl ai nt . A j udgm en t di sm iss ing an a ct ionw ithpr ej udi ce ba se d up on the part ie s’ sti pul at ion , unl ike aj udgm en t i m pose d a t the e nd o f ana dve rs ar ia l pr oc ee din g, re ce ive s it s le git im at ing f or ce f ro m the f ac t tha t the part ie s c onse nte d to it . I n th e cl ose ly r el at ed c ont ex t of

c onse nt d ec re es , w e ha ve r ec ogni ze d th e im portanc e of confining their scope to m atters upon which the parties have consented. U nited St at es v. Mi am i, 6 64 F.2d 43 5, 4 40 (5t h C ir. 1 98 1) (en ba nc ) (Ru bi n, J ., concurring) (“ Even in a tw o-party litigation the parties m ay agree on as m

uch as the y c an , a sk the c ourt t o in co rp or at e that a gr ee m en t i nto ac onse nt d ec re e, and call upon th e court to decide the issues they cannot resolve.”) . The e xpressed intent of the parties is also th e determ ining fac tor in whether a consent-based6

j udgm en t i s gi ve n c oll at er al e sto ppe l e ff ec t. S ee Ba lbi re r v. A ust in, 790 F . 2d 1524 , 152 8 ( “ [A ] c onse nt j udgm en t c an not c onst itu te c oll at er al e sto ppe l un le ss the party ple ad ing c oll at er al e sto ppe l pr ove s f ro m the r ec or d of

the pr ior c as e or thr oughe xtr ins ic e vid en ce that the part ie s in te nde d th e co nse nt j udgm en t t o op erat e as a fi na l ad

jud ic at io n o f a p art ic ul ar i ss ue .”). Inde te rm ini ng the r es j udi catae ff ec t of an or de r of

dis m iss al ba se d up on a se ttl em en t a gr ee m en t, w e shou ld a lso a tte m pt t o e ff ec tuate the part ie s’ int en t. T he be st ev id en ce o f th atin te nt is , of c ou rs e, th e se tt le m en t ag reem en t i ts el f. Co nse que ntl y , the sc ope of the pr ec lus ive e ff

ec t of the 197 7 D ism iss al sho uld not be de te rm ine d by

the c la im s sp ec if

ie d inthe or igi na l c om

pla int , but

ins te ad by the term s of the Settlem ent Agre em ent, a s interpreted acc ording to traditional pr in ci pl es of c on tra ctlaw. See W .J. Perrym an & Co . v. Pen n M ut . Fire Ins . Co., 324 F.2d 791 , 793 (5th Cir. 1963 ) (“ The c om prom ise, settlem ent and release are as conclusiv e as a j udgm ent would have been if the claim had been litigated rather than c om pr om ise d and s ettle d. T he dis m iss al w ithpr ej udi ce a dds re s j udi catato the r el ea se a s barr ing r ec ove ry by the appe llant. ” (c itatio n om itt ed ; e m pha sis ad de d) ); se e al so B ar

be r v. I nt’ l B ro the rh ood of Bo ile rm ak er s, 778 F . 2d 7 50, 758 (1 1thCi r. 198 5) ( “ [W ] e re spe ct the part ie s’ c le ar

c ontra ct ua l i nte nt . . . to giv e the relea se preclusive eff

ect . . . . ”).7

It m igh t be arg ue d th at

thi s w ay of a ppl y ing r es j udi catato dis m iss al s predicated upon settlem ent agreem ents does no t adequately respect the f

act that su ch a di sm is sa l i s an actua l ju dg m en t. We bel ie ve itdo es , ho wev er, fo r two reasons. F irst, r es j udicata is an affir m ative defense w hich m

ust be pled, and m ay be w ai ve d, by

the de fe ndant. L oui svi lle & N . R. Co . v. M/V Bay ou L ac om be , 597 F. 2d 46 9, 471 n.1 (5th Cir. 1979 ) (“ Res j udicata is an affir m ative defense. T hat de fe nse w as w ai ve d w he n th e de fe ndant f ai le d to r ai se it

be low . ”) . Whe n a de fe ndant s ign s ase ttl em en t a gr ee m en t st at ing that on ly som e cl ai m s w ill be pr ec lud ed in the f uture , it is as if the de fe ndant i s pr ee m

pti ve ly w ai vin g any pot en tia l r es j udi catade fe nse he w oul d have ha d a s ar es ult of the dis m iss al to w hic h th e part ie s c onse nt unde r the a gr ee m en t. T hus, w e ar e not tr eatin g a di sm is sa l b as edup on a joi nt st ip ul at io n d iff eren tl y th an an y ot he r jud gm en t; we sim ply r ec ogni ze that a

c onc om itantl y

c re at ed se ttl em en t a gr ee m en t m ay f ai rl y be re ad a s w ai vin g c er

ta in r es j udi catar igh ts t o w hic h th e dis m iss al w oul d othe rw ise gi ve ris e. A nothe r im

portant c onsi de ratio n is that, e ve n un de r the c as el awthe defendant cites, par

ties m ay avoid part of the res j udicata eff ect of a consent-based dis m iss al sim

ply by m ak ing an “ expr es s r es er va tio n” of

the r igh t t o su e on a pa rti cu la r cl ai m

in th e fu tu re. See , e.g., Ep ic Met al s C or p. v . H.H. Ro be rts on Co .,8

870 F.2d 157 4, 1576 (Fed. Cir. 1989 ) (stating that, in order to avoid the full res j udi catae ff

ec t of asti pul at ed

j udgm en t of

dis m iss al , part ie s m

ust “ expr es sly re se rv e in a

c onse nt j udgm en t the r igh t t o r el iti ga te som e or a ll iss ue s th at

w oul d have otherwise bee n barred”) . While we wholehearte dly agree with such decisions , w e fe el that they undu ly constrain the right of parties to shape the res j udi catae ff

ec t of ac onse nt- ba se d di sm iss al . I f w e w ill e nf or ce the part ie s’ int en t w h e n th e y l i s tth e typ e s o f s u i t s th a tmay b e b r o u g h ti n th e f u tu r e , i ts e e ms inc onsi ste nt t o ig nor e the ir int en t w he n th e part ie s a gr ee to ane xc lus ive li st o f the sui ts tha t are sub

j ec t t o pr ec lus ion( the re by im pli ci tly a llo w ing a ll oth er

c la im s to be brough t in the future). Both m ethods o f phrasing a settlem ent agreem ent are func tio na lly

e qui va le nt w ay s of

doi ng the sam e thi ng, and w e do n ot s ee ane ed to tr eat an e xpr es s de sc ri pti on o f cl ai m s e xc ep te d f ro m r es j udi cataany

dif fe re ntl y fr om an e xpr es s de sc ri pti on o f cl ai m s su bj ec t t o r es j udi cata . I n bo th c as es , “ the preclusive effe ct of the earlier j udgm ent is determ ined by the intent of the parties.” See, e.g ., Keit h v . Ald rid ge , 90 0 F .2d73 6, 7 40 -4 1 (4 th Cir . 19 90 ). U nde r the appr oa chw e ad opt tod ay , the dis tr ic t c ourt e rr ed in be gin nin g it s an al y sis by

f ir st a ssu m ing that r es j udi cataappl ie d inf ull to al l of

the c la im s inthe or igi na l 19 77 c om

pla int and the n “ carv ing out ” fr om the sc ope of

thi s pr ec lus ive ef fe ct onl y tho se c la im s th at

S t. Joh ns e xpr es sly

r es er ve d inthe S ettle m en t9

A gr ee m en t. I nst ea d, the c ourt sh oul d have loo ke d to the S ettle m en t A gr ee m en t t o de te rm in e wha t cl ai m s i t p recl ud edfro m fut ur e li ti ga ti on . N or fo lk c ont en ds tha t w e m ust loo k be y ond the te rm s of the S ettle m en t A gr ee m en t i tse lf

to de te rm ine the f

ull r an ge of

c la im s th at

the part ie s in te nde d to pr ec lud e in the f

uture . A s N or fo lk p oin ts o ut, how ev er , ase ttl em en t a gr ee m en t i s essentially

a contrac t and is sub

j ect to the traditional rules of contract int er pr et at ion . Mo nahan v. Co m m ’ r, 321 F . 3d 1 063, 106 8 ( 11th C ir . 200 3) (“ Pr inc ipl es gov er

nin g ge ne ra l c ontra ct

lawappl y

to int er pr et se ttl em en t ag re em en ts. ” (quot at ionm ar ks and c itatio n om itt ed )) . Whe re the pla in m eanin g of ana gr ee m en t i s c le ar , w e m ay not go b ey ond the f

our c or ne rs of the doc um en t t o loo k f or a ddi tio na l e vid en ce of

the dr af te rs ’ int en tio ns. S ee Re state m en t ( Se co nd) of Co ntr ac ts c h. 9, intro duc tor y not e (1 981) ( “ Whe re the part ie s have a dopt ed a w ri tin g a s th e fi na l e xpr es sio n of a ll or part of the ir a gr ee m en t, int er

pr et at ion fo cu se s onthe w ri tin g, and i ts t er m s m ay sup er ce de oth er

m an if es ta tio ns o f int en tio n. ”) ; se e al so M onahan, 321 F . 3d at 10 68 ( “ If the a gr ee m en t i s f

ound to be fr ee of a m big uity , it s m eanin g c anbe de cl ar ed by the c ourt w ith out

the use of ex tri ns ic ev id en ce.”) . He re, the Settlem ent Agre em ent clear ly specifies the range of claim s subject to p re cl usi on. S t. Joh ns r el ea se d G ulf f ro m any li ab ili ty f or “ da m ag e, los s or10

inj ur y , w hic h he re tof

or e ha s be enor

w hic h he re af

te r m ay be sus ta ine d by

S t. Joh ns River T erm inal Com

pany arising out o f any

contam ination by

oil of the [L eased Si te ] . ” By

im pli catio n, thi s A gr ee m en t do es not c ove r: ( 1) any

dam ag e ar isi ng d

ue to c ont am inatio n by

anythi ng o the r than oi l ( suc h a s tank b ott om s) , or ( 2) any da m ag e ar isi ng d

ue to co ntam inatio n of

an are a oth er

than th e L ea se d S ite by

oil , if suc h c ont am inatio n oc curr ed dir ec tly ( that i s, if

it w as not de pe nde nt u

pon co ntam inatio n of

the L ea se d S ite ). T he sc ope of the r el ea se c ont ai ne d w ith in the A gr ee m en t do es not

tou chupo n th es e subj ec ts. C onse que ntl y , an “ expr es s re se rv at ion ” of

ar igh t t o su e w as unn ec es sary to al lowN or fo lk t o br ing it s c ur re nt cl ai m s. B ec au se N or fo lk’ s c la im s are pr ed ic at ed upo n le ak ag e of

non oil co ntam inants ( tank b ott om s) , the y are out sid e the sc ope of

the S ettle m en t A gr ee m en t, w hic h a ddr es se d on ly oil c ont am inatio n, and N or fo lk’ s c ur re nt s uit m ay pro ceed . W e re co gni ze that r es j udi cataty pic al ly pr ec lud es not

onl y the spe ci fi c c l a i ms b r o u g h ti n ac o mp l a i n t , b u tan y o t h e r c l a i ms th a ts t e m “o u to f

th e s a me nuc le us o f ope rativ e fa ct , or is ba se d up on the sam e fa ct ua l pr ed ic at e. ” Ra gsda le v. Ru bbe rm ai d, I nc . , 193 F . 3d 1 235, 123 9 ( 11th C ir . 199 9) ( quot at ionm ar ks and ci ta tio n om itt ed ). I n m ak ing the se de te rm inatio ns, c ourts a sse ss a vari ety of factors, includin g whether the later cla im s invo lve the sam e statutes, evidence,11

events or occurrence s, parties, and w itnesses. Id. U nder these traditional res j udi catapr inc ipl es , j udgm en t i n asui t ba se d onoil c ont am inants w oul d ina ll lik el iho od b ar

asub se que nt s uit

ba se d onoth er , non oil c ont am inants f ro m the sa m e sour ce . Am aj or

f unc tio n of

the doc tr ine of

r es j udi catais to p re ve nt pie ce m ea l l iti ga tio n, se e G en . E le c. Co . v. D eu tz A G , 270 F . 3d 1 44, 157 -5 8 ( 3d Ci r. 20 01 ), an d a ll owi ng su it s t o b e sp li t i n t hi s way woul d frus tra te th atgo al . Fo r the r ea sons dis cu sse d a bove , how ev er , w e be lie ve that a se ttl em en t agreem ent entered into in the context of a voluntary dism issal with prej udice under Ru le 41 s houl d be int er

pr et ed a cc or din g to it s e xpr es s te rm s, r athe r than a cc or din g to tradition al principles of res j udiciata. T he Suprem e Court held, in U nited States v. A rm our

& Co . , in the r el at ed

c ont ex t of

c onse nt d ec re es , “ Be ca

use the defendant has, by

the [consent] decre e, wa ived his righ t to litig ate the issues ra ise d, ar igh t gu ar an te ed to him by the D ue P ro ce ss C lause , the c ondi tio ns u pon w hic h he ha s gi ve n th at

w ai ve r m

ust be r es pe ct ed , and the ins tr um en t m ust be co nstru ed a s it is w ri tte n. ” 402 U . S. 673 , 682 , 91 S . Ct . 175 2, 175 7, 29 L . E d. 2d 256 (1 971) . H er e, a lso , the c ourt’ s di sm iss al is pr ed ic at ed upo n th e Se ttl em en t A gr ee m en t; to p re cl ude aw ide r range of m atte rs than th ose spe ci fi ed in the A gr ee m en t w oul d f

ru str at e the part ie s’ e xpr es se d in te nt and b es towupo n C he vr on a win df al l o f imm

un it y fro m li ti ga ti on .12

In co nc lu si on , wher e th e p art ie s s ti pu la te to ha vi ng a cas e d is m is se d, a som ewha t m odi fi ed

f orm of r es j udi cataappl ie s to the w ri tte n se ttl em en t ag re em en t up on whic h su chdis m iss al is pr ed ic at ed , if one e xis ts. I n th e ins tant ca se , the S ettle m en t A gr ee m en t di d no t pr ec lud e fu tur e sui ts b as ed on n onoi l co ntam inants , or

ba se d onc ont am inatio n of oth er are as that di d no t st em

f ro m co ntam inatio n of

the L ea se d S ite . C onse que ntl y , N or fo lk’ s su it ag ai nst Ch ev ro n m ay proceed. In light of this h oldin g, w e need not reac h any of the other issues rai se d b y th e p art ie s. The jud gm en t o f th e d is tri ctco ur t i s R EVERSED.