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Zeco Equipment, LLC v. Greentown Oil Company, LLC

United States District Court, D. Utah

October 11, 2018

ZECO EQUIPMENT, LLC, Plaintiff,
v.
GREENTOWN OIL COMPANY, LLC, and PACIFIC ENERGY & MINING COMPANY, Defendants.

          MEMORANDUM DECISION AND ORDER GRANTING MOTION TO ENFORCE SETTLEMENT AGREEMENT AND MOTION FOR ATTORNEYS' FEES

          DAVID NUFFER, UNITED STATES DISTRICT JUDGE

         Plaintiff Zeco Equipment, LLC (“Zeco”) seeks to enforce a settlement agreement it entered with Defendants Greentown Oil Company, LLC and Pacific Energy & Mining Company (collectively, “G/P”) by entry of judgment against G/P.[1] Zeco also seeks to recover the attorneys' fees it incurred in enforcing the settlement agreement.[2] G/P responded that terms of the settlement agreement do not permit it to be enforced by entry of judgment.[3]

         Because the settlement agreement is an enforceable contract, and G/P breached the agreement, Zeco's Motion to Enforce Settlement Agreement[4] is GRANTED. Additionally, because Zeco prevailed in enforcing the settlement agreement, and its requested attorneys' fees are reasonable, Zeco's Motion for Attorneys' Fees[5] is GRANTED.

         BACKGROUND

         Zeco performed services related to drilling activities at an oil and gas well owned or operated by G/P.[6] G/P allegedly failed to pay Zeco for its services and Zeco initiated suit against G/P in Utah state court, asserting claims for:

(1) breach of contract/account stated; (2) misrepresentation; (3) lien foreclosure; (4) bailment/negligence; and (5) quantum meruit/unjust enrichment.[7]

         The case was later removed on the basis of diversity jurisdiction.[8] And G/P asserted counterclaims against Zeco for:

(1) breach of contract; (2) breach of implied covenant of good faith and fair dealing; (3) breach of warranty; (4) fraudulent inducement; (5) abuse of lien right; and (6) negligence.[9]

         The case then proceeded through discovery and prior to the dispositive motion deadline, [10] the parties entered a settlement agreement wherein G/P agreed to pay $100, 000 to Zeco (“Settlement Payment”), and $10, 000 would be paid to G/P by or on behalf of Zeco's insurance carrier (“Carrier Payment”).[11] The payments were to be exchanged within fifteen days after the parties executed the agreement.[12] And the parties agreed to file a stipulated motion to dismiss all claims after the payments were made.[13]

         The settlement agreement became effective on May 23, 2018, [14] making June 7, 2018, the date by which the payments were to be exchanged. Zeco's insurance carrier was ready, able, and willing to exchange the Carrier Payment on June 7, 2018, but G/P refused to provide the Settlement Payment to Zeco.[15] G/P assert they had the funds to pay the Settlement Payment, but due to unforeseen circumstances, the funds were instead utilized for a G/P pipeline.[16] G/P also assert they have since attempted to negotiate a payment plan with Zeco.[17]

         Zeco now seeks to enforce the settlement agreement and requests judgment be entered against G/P in the amount of the Settlement Payment, $100, 000.[18] Zeco also seeks an award of its attorneys' fees incurred in enforcing the settlement agreement.[19]

         DISCUSSION

         The settlement agreement is enforceable against G/P as a judgment

         Zeco argues that summary enforcement of the settlement agreement is proper because the settlement agreement is a binding contract and G/P breached the agreement by refusing to provide the Settlement Payment on June 7, 2018.[20] Zeco also argues that it is entitled to prejudgment interest on the Settlement Payment amount, $100, 000.[21]

         G/P acknowledge they did not provide the Settlement Payment on June 7, 2018, as the settlement agreement required, [22] but assert they have since attempted to negotiate a payment plan with Zeco.[23] They also argue that enforcement of the settlement agreement by entry of judgment is not provided for in the terms of the agreement.[24] G/P's assertion has no bearing on whether the settlement agreement is enforceable, and their argument lacks merit.

         The settlement agreement provides that it “shall be interpreted and enforced in and according to the laws of the State of Utah.”[25] Therefore, Utah law is applied to determine whether the settlement agreement is enforceable against G/P as a judgment.

         In Utah, “it is a basic rule that the law favors the settlement of disputes.”[26] And “[i]t is quite well established that a settlement agreement may be summarily enforced by motion in the court of the original action.”[27] “[B]asic contract principles affect the determination of when a settlement agreement should be enforced.”[28] This is because “[a]n agreement of compromise and settlement constitutes an executory accord[, and] an executory accord constitutes a valid enforceable contract[.]”[29] Therefore, a settlement agreement may be summarily enforced where “a binding settlement bargain is conceded or shown, and the excuse for nonperformance is comparatively unsubstantial.”[30] When summary enforcement is appropriate, “[t]he trial court has the power to enter a judgment enforcing a settlement agreement[.]”[31]

         There is no dispute that the settlement agreement is a valid, binding contract. There is no dispute that Zeco's insurance carrier was ready, able, and willing to exchange the Carrier Payment on June 7, 2018. And there is no dispute that G/P refused to provide the Settlement Payment on June 7, 2018, in breach of its obligations under the settlement agreement. G/P's decision to utilize its funds on other matters, [32] and their attempts to renegotiate payment terms after breaching the settlement agreement, [33] do not excuse their breach or preclude enforcement of the settlement agreement. Therefore, summary enforcement of the settlement agreement is appropriate.[34] Zeco is entitled to judgment against G/P in the amount of the Settlement Payment, $100, 000.[35]

         Zeco is also entitled to prejudgment interest. “[A]n award of prejudgment interest simply serves to compensate a party for the depreciating value of the amount owed over time and, as a corollary, deters parties from intentionally withholding an amount that is liquidated and owing.”[36] “[P]rejudgment interest may be recovered where the damage is complete, the amount of the loss is fixed as of a particular time, and the loss is measurable by facts and figures.'”[37]

         The parties' settlement agreement establishes a liquidated amount due and owing to Zeco ($100, 000)[38] as of a fixed date (June 7, 2018-fifteen days after the parties executed the agreement).[39] G/P breached the settlement agreement by failing to pay Zeco the Settlement Payment on that date, thereby causing Zeco damages. Therefore, Zeco is entitled to prejudgment interest on $100, 000 at a rate 10% per annum[40] from June 7, 2018.

         Zeco is entitled to the attorneys' fees it incurred in enforcing the settlement agreement

         Zeco seeks an award of the attorneys' fees it incurred in enforcing the parties' settlement agreement.[41] G/P argue that Zeco's request for attorneys' fees is contrary to G/P's attempts to renegotiate a payment plan.[42] G/P's argument lacks merit.

         “In Utah, attorney fees are awardable only if authorized by statute or contract.”[43] And “[i]f the legal right to attorney fees is established by contract, Utah law clearly requires the court to apply the contractual attorney fee provision and to do so strictly in accordance with the contract's terms.”[44]

         The parties' settlement agreement includes the following attorney fee provision:

In the event it becomes necessary for any person to retain an attorney to enforce this AGREEMENT, the prevailing party in said effort shall be entitled to recover any and all costs, fees and expenses, including reasonable attorneys fees and expert fees, incurred in enforcing or seeking ...

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