RIGSBY (WENDELL) VS. ASHLAND INC. , ET AL.
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RENDERED: AUGUST 21, 2009; 10:00 A.M.
NOT TO BE PUBLISHED
Commonwealth of Kentucky
Court of Appeals
NO. 2008-CA-001265-MR
WENDELL RIGSBY
v.
APPELLANT
APPEAL FROM JOHNSON CIRCUIT COURT
HONORABLE JOHN DAVID PRESTON, JUDGE
ACTION NO. 07-CI-00546
ASHLAND INC.; ASHLAND OIL, INC.,
NOW ASHLAND INC.; AND ASHLAND EXPLORATION
HOLDINGS, INC., PREVIOUSLY AS ASHLAND
EXPLORATION, INC.
APPELLEES
AND
NO. 2008-CA-001428-MR;
CAROL SKAGGS
v.
APPEAL FROM LAWRENCE CIRCUIT COURT
HONORABLE JOHN DAVID PRESTON, JUDGE
ACTION NO. 08-CI-00110
ASHLAND INC.; ASHLAND OIL, INC.,
NOW ASHLAND INC.; AND ASHLAND EXPLORATION
APPELLANT
HOLDINGS, INC., PREVIOUSLY AS ASHLAND
EXPLORATION, INC.
APPELLEES
NO. 2008-CA-001429-MR
ARTHUR JENKINS
v.
APPELLANT
APPEAL FROM LAWRENCE CIRCUIT COURT
HONORABLE JOHN DAVID PRESTON, JUDGE
ACTION NO. 08-CI-00111
ASHLAND INC.; ASHLAND OIL, INC.,
NOW ASHLAND INC.; AND ASHLAND EXPLORATION
HOLDINGS, INC., PREVIOUSLY AS ASHLAND
EXPLORATION, INC.
APPELLEES
NO. 2008-CA-001430-MR
GARNETT SKAGGS
v.
APPELLANT
APPEALS FROM LAWRENCE CIRCUIT COURT
HONORABLE JOHN DAVID PRESTON, JUDGE
ACTION NO. 08-CI-00112
ASHLAND INC.; ASHLAND OIL, INC.,
NOW ASHLAND INC.; AND ASHLAND EXPLORATION
HOLDINGS, INC., PREVIOUSLY AS ASHLAND
EXPLORATION, INC.
NO. 2008-CA-001431-MR
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APPELLEES
RALPH FERGUSON
v.
APPELLANT
APPEAL FROM LAWRENCE CIRCUIT COURT
HONORABLE JOHN DAVID PRESTON, JUDGE
ACTION NO. 08-CI-00113
ASHLAND INC.; ASHLAND OIL, INC.,
NOW ASHLAND INC.; AND ASHLAND EXPLORATION
HOLDINGS, INC., PREVIOUSLY AS ASHLAND
EXPLORATION, INC.
APPELLEES
NO. 2008-CA-001432-MR
LESLEE PHELPHRY
v.
APPELLANT
APPEALS FROM LAWRENCE CIRCUIT COURT
HONORABLE JOHN DAVID PRESTON, JUDGE
ACTION NO. 08-CI-00114
ASHLAND INC.; ASHLAND OIL, INC.,
NOW ASHLAND INC.; AND ASHLAND EXPLORATION
HOLDINGS, INC., PREVIOUSLY AS ASHLAND
EXPLORATION, INC.
APPELLEES
OPINION
AFFIRMING
** ** ** ** **
BEFORE: CLAYTON AND THOMPSON, JUDGES; LAMBERT,1 SENIOR
JUDGE.
1
Senior Judge Joseph E. Lambert sitting as Special Judge by assignment of the Chief Justice
pursuant to Section 110(5)(b) of the Kentucky Constitution and KRS 21.580.
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THOMPSON, JUDGE: In this appeal, the sole issue presented is whether
appellants were required to tender or return the amount of money received
pursuant to a settlement agreement executed as the result of a prior action filed
against appellees. We conclude that appellants were required to do so and,
therefore, affirm the trial court’s order dismissing the action.
In 1996, the six appellants filed actions against Ashland Inc. and
Ashland Exploration, Inc. (Ashland) asserting trespass, nuisance, and negligence
claims as a result of oil exploration and production activities on appellants’
property. Appellants’ claims focused on allegations that Ashland’s activities
resulted in the release of naturally-occurring radioactive material (NORM).
In 1997, appellants and Ashland settled the claims and, as a result, the
parties executed a settlement agreement and release pursuant to which the stated
consideration given by Ashland to appellants was an undisclosed amount of
money. The settlement agreement is pivotal to the present controversy.
The agreement contains several provisions which reference Ashland’s
participation in the “Martha Reclamation Program.” The program was the result of
the discovery of NORM in the Martha Oil Field in Johnson County and a
subsequent 1995 agreement entered into between the Commonwealth of Kentucky
and Ashland in which Ashland agreed to remediate and restore property in the area
including that owned by appellants.
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Material to the settlement agreement entered into between appellants
and Ashland was Ashland’s participation in the Martha Reclamation Program and
appellants’ release of Ashland’s liability. Paragraph four of the parties’ agreement
states: “Furthermore as specifically stated in Section 8 of this Settlement
Agreement and Release, the parties intend to foreclose the possibility of future
litigation of Claims arising out of Ashland’s implementation and completion of the
Martha Reclamation Program.” In part, paragraph eight states:
The Claimants agree that this Settlement Agreement and
Release includes settlement, release, and a covenant not
to sue as to any and all claims associated with Ashland’s
reclamation, remediation, and restoration of the Property
pursuant to the state-approved implementation and
completion of the Martha Reclamation Program,
including, but not limited to, the detection, removal,
transportation, storage, and ultimate disposal of
radioactive and any other material, as well as the
restoration of properties which have been remediated.
Finally, and again emphasizing that appellants released any claims as a result of
Ashland’s remediation of the property involved in the controversy, paragraph ten
states in emphasized print:
BY ENTERING INTO THIS SETTLEMENT
AGREEMENT AND RELEASE, THE CLAIMANTS
AGREE AND UNDERSTAND THAT THEY ARE
RELEASING, AND COVENANTING NOT TO SUE
CONCERNING ANY RIGHT TO ASSERT ANY
CLAIMS CONCERNING ASHLAND’S
OPERATIONS, ANY TYPE OF ALLEGED
CONTAMINATION BY ASHLAND, OR ASHLAND’S
IMPLEMENTATION AND COMPLETION OF THE
MARTHA RECLAMATION PROGRAM, NOW OR
AT ANY TIME IN THE FUTURE.
-5-
The present controversy was initiated in November 2007, when
appellants filed an action against Ashland purporting to seek specific performance
of a remediation portion of the settlement agreement and additional monetary
compensation because of Ashland’s alleged fraudulent breach of that agreement.
Appellants alleged that they did not discover Ashland’s failure to remediate the
radioactive waste on their property until 2007 when they hired a radiation safety
officer who conducted tests and discovered illegal, hazardous, and toxic levels of
radioactive material on the property. Although each acknowledged in their
complaints that Ashland obtained a full release on their properties from the
Kentucky Department of Environmental Protection, appellants contended that the
scientific basis used for release of property under the Martha Reclamation Plan
was insufficient to protect the public health and did not comply with Kentucky’s
radiation regulations.
Ashland filed motions to dismiss the complaints asserting that
appellants were precluded from seeking to set aside the settlement agreement
because they had not tendered or offered to tender the money paid in consideration
for the 1997 settlement agreement. The circuit court agreed and dismissed the
complaints. Because of the facts, parties and issues are identical in the six appeals
filed, the cases were consolidated for our review.
Ashland argues that appellants were required to tender or return the
settlement proceeds prior to filing their 2007 complaints. It is the general rule that
“[b]efore one can maintain an action to avoid a settlement and recover a larger
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amount, he must return or tender a return of the sum received by him in the
settlement.” McGregor v. Mills, 280 S.W.2d 161, 162-163 (Ky. 1955).
In Kentucky Central Life & Accident Ins. Co. v. Burrs, 256 Ky. 64, 75
S.W.2d 744, 745 (1934), it was emphasized that it is a widely accepted rule and
one embedded in our jurisprudence:
There is a general rule prevailing in this and
practically all other jurisdictions that one seeking to
avoid or set aside a compromise settlement and to be
remitted to his original rights must return or offer to
return whatever he has received under the compromise
settlement, and the party seeking such a rescission should
allege the return or tender of return prior to or
contemporaneous with the institution of the action.
(Citations omitted).
Appellants do not deny that if they sought to set aside the agreement
on grounds of fraud or any other ground, as a condition precedent to their claims
they were required to tender or return the settlement proceeds. Their argument is
that they do not seek to set aside the agreement. To distinguish the long line of
cases cited by Ashland, appellants contend that they seek to enforce the agreement
and claim additional damages as a result of the failure to remediate the radioactive
waste on their property.
Unquestionably, a settlement agreement is a contract and its terms
may be forced by an action subsequent to its execution. Spot-A-Pot, Inc. v. State
Resources Corp., 278 S.W.3d 158 (Ky.App. 2009). The factual incompatibility
with appellants’ claims for specific performance of a provision obligating Ashland
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to remediate the NORM on appellants’ property is that the agreement does not
impose the obligation upon Ashland. It only binds the appellants to the release of
any claims arising from Ashland’s participation in the Martha Reclamation
Program.
Appellants counter that it was implied that Ashland’s participation in
the Martha Reclamation Program would be conducted in accordance with the
proper scientific method and all radioactive material removed. The agreement
disproves appellants’ argument. Its terms unambiguously state that the
remediation process would be exclusively subject to the supervision and approval
of the Commonwealth and repeatedly states that appellants released any claims
related to Ashland’s participation in the Martha Reclamation Program. Thus,
appellants’ attempt to base their claims on an implied term of the agreement is
negated by the agreement’s unambiguous language and cannot serve as a basis for
specific performance. See Calhoun v. Everman, 242 S.W.2d 100, 103 (Ky. 1951)
(If specific relief is sought, the contract must be specific as to the term sought to be
enforced).
Despite appellants’ attempt to persuade this Court otherwise, the
remedy they seek is for the 1997 settlement agreement to be set aside. Pursuant to
its terms, appellants released any future claims as a result of Ashland’s remediation
of the property, thus the relief sought in the present action is precluded.
Therefore, the only possible avenue for the relief now sought is to successfully set
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aside the parties’ 1997 agreement. Because appellants failed to tender or return the
consideration given for the 1997 settlement agreement prior to commencing the
present action, the trial court properly dismissed their complaints.
We briefly comment on appellants’ contention that public policy
dictates that the release provisions pertaining to Ashland’s remediation of the
property be deemed unenforceable. The remediation process and approval of
Ashland’s remediation was subject to the supervision and control of the
Commonwealth. If, as appellants suggest, Ashland’s compliance with the Martha
Reclamation Program was insufficient to remedy the hazards on the property,
appellants’ complaints should be voiced to the appropriate agency. This Court is
without power to grant relief.
Based on the foregoing, the order of the Johnson Circuit Court is
affirmed.
ALL CONCUR.
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BRIEFS FOR APPELLANTS:
BRIEF FOR APPELLEES:
Eugene Sisco
Pikeville, Kentucky
Anne A. Chesnut
Phillip D. Scott
John F. Billings
Lexington, Kentucky
Kevin Thompson
Williamson, West Virginia
ORAL ARGUMENT FOR
APPELLANTS:
Kevin Thompson
Williamson, West Virginia
Michael J. Schmitt
Paintsville, Kentucky
ORAL ARGUMENT FOR
APPELLEES:
Anne A. Chestnut
Lexington, Kentucky
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