Opinion ID: 1742950
Heading Depth: 1
Heading Rank: 9

Heading: MSD Waived Its Present Claim in the Settlement Agreement

Text: Once the settlement agreement had been reached, MSD's claims against CDM and 3D were dismissed with prejudice by agreed order pursuant to the terms of the agreement. 3D's counter-claims were dismissed without prejudice. MSD's present claim  that 3D breached by failing to deliver a warranty on Surfpac's media  will therefore be barred by the doctrine of res judicata if there is an identity of both parties and causes of action. The fact that this matter was settled rather than tried does not abrogate the effect of the doctrine: [i]n general, a judgment by agreement, consent or compromise bars a subsequent action on the same cause of action. Blevins v. Johnson, 344 S.W.2d 375, 377 (Ky.1961). See also Sharp v. Bannon, 258 S.W.2d 713, 715 (Ky.1953). Identity of the subject matter and the parties is not alone a sufficient test for a former judgment to be res judicata of a later action; the true requirement is that the causes of action in the two suits shall be the same. Blevins, 344 S.W.2d at 377. As there is undoubtedly identity of parties, the only issue, then, is whether MSD waived the present contract claim by the settlement agreement that resulted in dismissal with prejudice. An agreement to settle legal claims is essentially a contract subject to the rules of contract interpretation. Cantrell Supply, Inc. v. Liberty Mutual Insurance Co., 94 S.W.3d 381, 384 (Ky.App. 2002). The primary objective is to effectuate the intentions of the parties. Id. When no ambiguity exists in the contract, we look only as far as the four corners of the document to determine the parties' intentions. Hoheimer v. Hoheimer, 30 S.W.3d 176, 178 (Ky.2000). The fact that one party may have intended different results, however, is insufficient to construe a contract at variance with its plain and unambiguous terms. Cantrell, 94 S.W.3d at 385. Generally, the interpretation of a contract, including determining whether a contract is ambiguous, is a question of law for the courts and is subject to de novo review. Id. We find the terms of the MSD/3D settlement agreement to be clear and unambiguous. By Item # 2, MSD waives all possible, potential, or actual claims, causes of actions, demands, or damages, both known and unknown, in contract or in tort against 3D. MSD's current breach of contract claim was an actual claim: in Count IV of its Second Amended Complaint, MSD alleged that 3D breached the construction contract. Again, in Count VI, MSD alleged that 3D had numerous contractual warranty obligations to MSD and that all had been breached. We are also persuaded by the fact that MSD waived all possible or potential claims against 3D. The issue of Surfpac's warranty was not even a possible or potential claim against 3D at the time of the settlement agreement  it was a known claim. Concerns about the value of the warranty arose as early as the lien action, over a year before the tower even collapsed. The language of this release is exceedingly broad, and the only logical reading of this contractual language is that MSD waived all claims against 3D, including the present claim. Moreover, Item # 2 goes on to specifically release 3D from any liability of any kind, character, or description whatsoever which does or may result from any factual or legal assertion that arises or might arise from the Lawsuit  (emphasis added). The subject of the lawsuit was the tower's collapse, potentially resulting from the internal collapse of the bioroughing media. A claim relating to the worthlessness of the warranty of this media would be an assertion that arises or might arise from the Lawsuit. Thus, it is our conclusion that, by Item # 2 of the settlement agreement, MSD waived all claims against 3D, and is therefore barred from now claiming that 3D breached its contract by delivering a warranty on Surfpac's media that later lost all value.