Kobatake v. E.I. DuPont De Nemours and Co.

• Decision Date: 03 December 1998
• Docket Number: Nos. 97-8899,97-8914,s. 97-8899
• Citation: 162 F.3d 619
• Parties: 12 Fla. L. Weekly Fed. C 377 Warren KOBATAKE; Pleasonton Corp., a Hawaii Corporation, et al., Plaintiffs-Appellants, v. E.I. DUPONT DE NEMOURS AND COMPANY; Alston & Bird, A Georgia Partnership Including Professional Corporations, Defendants-Appellees. Ellis W. LAY, Individually and d.b.a. Wintergreen Nurseries; Prince Nurseries, Inc., a North Carolina corporation, et al., Plaintiffs-Appellants, v. E.I. DUPONT DE NEMOURS AND COMPANY, a Delaware corporation; Alston & Bird, a Georgia Partnership, Defendants-Appellees.
• Court: U.S. Court of Appeals — Eleventh Circuit

Page 619

162 F.3d 619

12 Fla. L. Weekly Fed. C 377

Warren KOBATAKE; Pleasonton Corp., a Hawaii Corporation, et

al., Plaintiffs-Appellants, v. E.I. DUPONT DE NEMOURS AND COMPANY; Alston & Bird, A

Georgia Partnership Including Professional

Corporations, Defendants-Appellees.

Ellis W. LAY, Individually and d.b.a. Wintergreen Nurseries;

Prince Nurseries, Inc., a North Carolina

corporation, et al., Plaintiffs-Appellants, v. E.I. DUPONT DE NEMOURS AND COMPANY, a Delaware corporation;

Alston & Bird, a Georgia Partnership, Defendants-Appellees.

Nos. 97-8899, 97-8914.

United States Court of Appeals Eleventh Circuit.

Dec. 3, 1998.

Rehearing and Suggestion for Rehearing En Banc Denied Jan. 29, 1999.

Howard Glickstein, Judith A. Pavey, Honolulu, HI, for Kabatake and Pleasonton Corp.

Don C. Keenan, Atlanta, GA, for Plaintiffs-Appellants.

Stephen T. Cox, San Francisco, CA, Peter Molligan, David Moyer, John Hentschel, Chad McGowan, Atlanta, GA, for Saxby and Puna Certified.

John H. Fleming, John A. Chandler, Atlanta, GA, for Alston and Bird.

William H. Boice, James F. Bogan, A. Stephens Clay, Atlanta, GA, for E.I. DuPont De Nemours & Co.

Thomas A. Pendarvis, P. Benjamin Zuckerman, Anne D. Zuckerman, A. Camden Lewis, Mary G. Lewis, Columbia, SC, for Plaintiffs-Appellants in 97-8914.

Appeals from the United States District Court for the Northern District of Georgia.

Before TJOFLAT and DUBINA, Circuit Judges, and HILL, Senior Circuit Judge.

PER CURIAM:

The judgment in this case is affirmed for the reasons stated in the district court's thorough and well-reasoned order filed on July 18, 1997, and attached hereto as an appendix.

AFFIRMED.

APPENDIX

IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN

DISTRICT OF GEORGIA ATLANTA DIVISION

Ellis Lay, individually and d/b/a/ Wintergreen Nurseries;

Prince Nurseries, Inc.; James Oliver Prince, Jr.; Lynn

Hayes, individually and d/b/a/ Lynn's Nurseries; Thomas O.

Mahaffey, Jr. Greenhouse, Inc.; Thomas O. Mahaffey Jr.; and

George S. Ferguson, individually and d/b/a/ Scrub Oak Foliage

v.

E.I. Dupont De Nemours and Company and Alston & Bird

Warren Kobatake, Pleasonton Corporation, Malcolm R. Saxby,

and Puna Certified Nursery

v.

E.I. Dupont De Nemours and Company and Alston & Bird

Nos. 1:96

-cv-2303-RCF, 1:96-cv-3417-RCF

ORDER

RICHARD C. FREEMAN, Senior District Judge:

These related actions are before the court on defendants' motions to dismiss the complaints in both litigations. The court addresses the actions together because defendants rely on the same legal theories in both cases to argue that the complaints do not state a claim upon which relief may be granted. In addition, plaintiffs rely on the same legal theories in both cases to counter defendants' argument.

BACKGROUND

Plaintiffs are nursery owners whose plants were allegedly damaged by Benlate 50DF, a product manufactured by defendant E.I. DuPont de Nemours and Company [DuPont]. Approximately five years ago, plaintiffs filed several products liability lawsuits against DuPont to recover the money lost from the damage to their plants. ¹ The Kobatake plaintiffs proceeded to trial against DuPont and, while the jury was deliberating, settled the case. At the same time, the Lay plaintiffs also settled their action against DuPont. Pursuant to the terms of the settlement agreements, plaintiffs executed general releases, all of which provide, in relevant part:

[Plaintiff] hereby now and fully, finally and forever, releases and discharges DuPont, [and] its ... attorneys from any and all liability, claims, demands, damages or rights of action (hereinafter referred to as "claims") of any kind or character and of any nature whatsoever, whether known or unknown, fixed or contingent, arising from the beginning of time to the present, including but not limited to (1) any and all claims arising from or allegedly arising from or in any way related to [plaintiff's] use of Benlate or any Benomyl-containing fungicide; (2) any and all claims arising from or allegedly arising from or in any way related to Benlate or any Benomyl-containing fungicide or any constituents thereof, and (3) any and all claims which might have been alleged, or which were alleged, in the Civil Action.

See, e.g., DuPont's Motion to Dismiss, Exhibit A. The releases also contain merger clauses, which provide that "[a]ll agreements and understandings between [plaintiff] and DuPont are embodied and expressed herein" and "[plaintiff] signs this Release as its own free act, without any promise, inducement, or representation not fully expressed herein." Id.

After settling with DuPont, plaintiffs discovered information that led them to believe that defendants acted improperly and fraudulently during the defense of the previous litigation by, inter alia, scheming to destroy harmful evidence and presenting perjured testimony. Plaintiffs subsequently filed these actions, alleging fraud, civil conspiracy, spoliation of evidence, violations of the Georgia Fair Business Practices Act, public nuisance, and racketeering. In addition, plaintiffs allege that they were fraudulently induced into settling the prior actions. Defendants seek dismissal of the pending actions on the grounds that the general releases prohibit plaintiffs from asserting their claims. ²

DISCUSSION

1. Collateral Estoppel

The parties first dispute whether defendants are collaterally estopped from arguing that the general releases bar plaintiffs' actions for fraud. Plaintiffs contend that the doctrine of collateral estoppel applies because defendants argued and lost this same point in the district court that presided over the products liability actions. See In re E.I. du Pont de Nemours and Co., 918 F.Supp. 1524, 1551 (M.D.Ga.1995), rev'd, 99 F.3d 363 (11th Cir.1996), petition for cert. filed, 65 U.S.L.W. 3767 (U.S. May 8, 1997) (No. 96- 1777). ^* This contention is without merit. The district court, in a lengthy opinion, made numerous factual and legal conclusions, including the determination that the general releases did not prevent the court from hearing plaintiffs' motion for contempt. The court then found DuPont in contempt and fined it in excess of $6 million. DuPont appealed, and, after determining the threshold issue of whether the district court had jurisdiction over the contempt proceeding, the Eleventh Circuit reversed and remanded the action. See In re E.I. DuPont De Nemours and Co., 99 F.3d 363 (11th Cir.1996). This reversal and remand for further proceedings negates any conclusive effect that the district court's judgment might have had, and thus the doctrine of collateral estoppel is not applicable here. See, e.g., Jaffree v. Wallace, 837 F.2d 1461, 1466 (11th Cir.1988) ("A judgment that has been vacated, reversed, or set aside on appeal is thereby deprived of all conclusive effect, both as res judicata and as collateral estoppel."); 18 Wright, Miller, and Cooper, Federal Practice and Procedure § 4432 (1981) ("Reversal and remand for further proceedings on the entire case defeats preclusion entirely until a new final judgment is entered by the trial court or the initial judgment is restored by further appellate proceedings."). Accordingly, the court finds it appropriate to address defendants' argument that plaintiffs released all claims against them, including the claims that are raised in these actions.

2. Releases

As set forth above, plaintiffs discharged defendants from "any and all liability, claims, demands, damages or rights of action of any kind or character," "whether known or unknown," "arising from the beginning of time to the present," "including ... any and all claims arising from or in any way related to [plaintiffs'] use of Benlate" when they executed the releases in exchange for a substantial amount of money. At the same time, plaintiffs also agreed that the releases represented the parties' entire agreement and would be governed by Georgia law. ³

Plaintiffs first argue that the releases do not encompass the claims alleged in the actions at bar. The court cannot agree. Under Georgia law, "[a] release or settlement agreement is a contract subject to construction by the court." Darby v. Mathis, 212 Ga.App. 444, 441 S.E.2d 905, 906 (Ga.App.1994). Nonetheless, "no construction of the contract is ... permissible when the language employed by the parties in the contract is plain, unambiguous and capable of only one reasonable interpretation." Sakas v. Jessee, 202 Ga.App. 838, 415 S.E.2d 670 (Ga.App.1992). Here, the releases could not be more plain; plaintiffs gave up all rights to seek damages from defendants in connection with their use of DuPont's Benlate product and agreed that the release represented the parties' entire agreement. ⁴ When "[a] contract provides plainly that it was the intent of the parties to settle and effect a resolution of all claims and disputes of every kind and nature among them ...; that it is the entire agreement of the parties; and that they released and waived all claims against each other of any kind whether known or unknown, ... [n]o grounds at law or in the contract itself exist to open [it] to jury examination." Sakas, 415 S.E.2d at 673. Thus, however egregiously defendants may have behaved during the prior litigation, plaintiffs' execution of such all-encompassing releases prohibits them from suing defendants for that behavior. ⁵

However, because plaintiffs have alleged that they were fraudulently induced to execute the releases, the releases are voidable. See, e.g., Gibbs v. Jefferson-Pilot Fire & Casualty Ins. Co., 178 Ga.App. 544, 343 S.E.2d 758, 759 (Ga.App.1986) ("Fraud in the procurement of a release will render it voidable."). In such a situation, plaintiffs have an election of remedies; they may (1) rescind the contract, thereby restoring to defendants the benefits they received as a result of the settlement, and sue in tort for damages resulting from the alleged fraud or (2) affirm the contract, thereby retaining the benefits...