Petition for Writ of Certiorari — Ahktar v. Bird Oil Co.

IN THE J a

Supreme Court of the Gnited States

October Term, 1990

PERVESE AHKTAR, d/b/a CIRCLE MOBILE,

Petitioner,

BIRD OIL COMPANY,

Respondent.

ON PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

PETITION FOR WRIT OF CERTIORARI

James H. Moss, Esquire

MOSS, DORE, KUHN

& McINTYRE, P.A.

Post Office Drawer 507

1501 North Street

Beaufort, South Carolina 29901

(803) 524-3373

Counsel of Record for Petitioner

Appellate Printing Sernces * Heritage Building * Suite 906 * Richmond, VA 23219 * (800) 642-7789

QUESTION PRESENTED FOR REVIEW

DOES THE FAILURE OR INABILITY TO POST A

SUPERSEDEAS BOND JUSTIFY THE DISMISSAL

OF AN APPEAL FROM A UNITED STATES

DISTRICT COURT TO A UNITED STATES COURT

OF APPEALS?

TABLE OF CONTENTS

QUESTION PRESENTED FOR REVIEW

Py, Be ee ee

TABLE OF AUTHRRRIEIES 2 ove cesses

REFERENCE TO OPINIONS .........

STATEMENT OF JURISDICTIONAL

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DISTRICT COURT ORDERS:

FILED MAY 9, 1500 2.6 sc eees

FILED JULY 12, 198 2.8% 2%,

COURT OF APPEALS DECISIONS:

FILED OCTOBER 2, 1989 ....

FILED OCTOBER 30, 1989 ...

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TABLE OF AUTHORITIES

Statutes Page

Ce err 4

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a ee aaa ae Pr 2

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Rules

Rule 8(a), Federal Rules of Appellate Procedure ....... 5

Rule 62(d), Federal Rules of Civil Procedure ....... 3,5

Rule 17.1(a), United States Supreme Court Rules ...... 7

Cases

In re Farrell Lines, Inc., 761 F.2d 796, 797

eee Sh as iow ak ak a oe we 7

Koster & Wythe v. Massey, 262 F.2d 60, 62 (9th Cir. 1958) . 7

Thorpe v. Thorpe, 364 F.2d 692, 693 (D.C. Cir. 1966) ....7

Miscellaneous

11 Wright & Miller, Federal Practice and Procedure, 5 2905

ee ee ks 564 bad 0b Oo 4 6 a Oe wees 7

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REFERENCE TO OPINIONS

The opinions and decisions of the United States District

Court and the United States Court of Appeals in this case have

not been published. These opinions and decisions are re-

printed in the Appendix of this Petition.

STATEMENT OF JURISDICTIONAL GROUNDS

Review is sought of the Order entered by the United

States Court of Appeals for the Fourth Circuit on October 2,

1989, in which Petitioner’s appeal was ordered to be dismissed.

Petitioner’s motion to reconsider this Order was denied

by the Court of Appeals by an Order filed on October 30,

1989.

Jurisdiction to review these Orders by writ of certiorari

is conferred upon the United States Supreme Court by 28

U.S.C. § 1254(1).

STATUTES OR RULES INVOLVED

Rule 62. Stay of Proceedings to Enforce a Judgment.

(d) Stay Upon Appeal. When an appeal is taken the

appellant by giving a supersedeas bond may obtain a stay

subject to the exceptions contained in subdivision (a) of this

rule. The bond may be given at or after the time of filing the

notice of appeal or of procuring the order allowing the appeal,

as the case may be. The stay is effective when the supersedeas

bond is approved by the court.

FEDERAL RULES OF CIVIL PROCEDURE, Rule 62(d).

STATEMENT OF THE CASE

This action arises out of a dispute between the parties

concerning the lease of a gas station located on Hilton Head

Island, South Carolina, in which Bird Oil Company, Inc. is the

landlord and Pervese Ahktar, doing business as "Circle Mobile”,

is the tenant. The Complaint includes a cause of action based

upon the Petroleum Marketing Practices Act, 15 U.S.C. § 2801

et seq. This case was originally brought in state court and then

removed to federal court, with federal jurisdiction based on 15

U.S.C. § 2805 and 28 U.S.C. § 1331.

Prior to trial, the parties settled the suit. Pursuant to

the settlement agreement, Ahktar was to purchase the gas

station from Bird Oil for a set price, with the closing on the

sale to occur within sixty days after the South Carolina

Department of Health and Environmental Control (DHEC)

approved a remediation or clean-up project that had been

ordered performed on the property due to a gas tank leak.

The settlement agreement provided that Bird Oil would be

financially responsible for the cost of the clean-up project up

to $100,000.00, and that Ahktar would be responsible for the

reasonable clean-up expenses in excess of $100,000.00.

A clean-up project was subsequently undertaken by Bird

Oil, and the expenses exceeded $100,000.00. Ahktar objected

to some of the expenses being claimed by Bird Oil as being

unreasonable or excessive. Bird Oil filed a motion to compel

specific performance of the settlement agreement. After

holding a hearing, the District Court filed an Order on May 9

1989. In its Order, the District Court found that some of the

claimed expenses were excessive or unreasonable, while others

were reasonable. The Court entered a judgment against

Ahktar totalling $94,941.99 ($25,000.00 and $48,101.52 in favor

of Bird Oil and $21,840.47 in favor of "SRK", one of the

contractors) on the expenses it found to be reasonable. The

Court granted Bird Oil’s request for specific performance, and

ordered that the closing take place on June 8, 1989.

After the District Court issued this Order, and before

the closing could take place, DHEC, by letter dated May 16,

1989, informed the parties that it was withdrawing its approval

of the clean-up project and was re-opening the project for

further remediation.

Ahktar then filed a motion to amend the judgment

because of after-discovered evidence, or alternatively for a new

trial, contending that the withdrawal of DHEC approval made

it impossible for Bird Oil to convey to him a fee simple title

free of liens and encumbrances. By Order filed July 12, 1989,

the District Couri denied this motion and set a new closing

date for July 24, 1989.

On July 12, 1989, Ahktar filed his notice of appeal and

moved before the District Court for a stay of enforcement of

its Orders pending appeal, asking that the District Court not

require the posting of a supersedeas bond as a prerequisite to

obtain a stay. In its July 12, 1989 Order, the District Court

deniec this request stating:

"[The] defendant (Ahktar) has filed a motion for

a stay of the closing. He bases his motion on

Rule 8(a) of the Federal Rules of Appellate

Procedure. That rule, of course, requires that

~ the party first seek a stay pending appeal in the

district court. It is our understanding that the

defendant filed a notice of appeal on July 12,

1989. As this court stated in its order of May

9th, strict compliance with Rule 62(d) shall be

required in the event of appeal including the

posting of a supersedeas bond in a amount equal

to the amount due from the defendant on July

24, 1989, at the closing. The defendant has

failed to post a supersedeas bond and his motion

for a stay is hereby denied."

Appendix, pg. 32

Ahktar then proceeded with his appeal, intending to

challenge the District Court’s judgments against him totalling

$94,941.99 in its May 9, 1989 Order, and also intending to

challenge the District Court’s finding in its July 12, 1989 Order

that the closing should go forward despite DHEC’s withdrawal

of approval.

Unfortunately, Ahktar’s appeal never got that far. Bird

Oil filed a motion to dismiss the appeal on the ground that

Ahktar did not post security for the appeal. By Order dated

October 2, 1989 the Fourth Circuit Court of Appeals granted

this motion and dismissed the appeal. Ahktar asked the Court

of Appeals to reconsider its dismissal of his appeal, which it

refused to do by Order dated October 30, 1989.

Ahktar now requests that this Court review the

dismissal of his appeal by writ of certiorari.

ARGUMENT

Rule 17 of the United States Supreme Court Rules

provides that review on writ of certiorari is not a matter of

right, but of judicial discretion, and will be granted only when

there are special and important reasons therefor. The Rule

helpfully gives examples of reasons when review by writ of

certiorari would be appropriate. One of the given examples is

when a federal court of appeals has rendered a decision in

conflict with the decision of another federal court on the same

matter. Jd., Rule 17.1(a). That is exactly the situation in this

case.

The Fourth Circuit Court of Appeals dismissed Ahktar’s

appeal because he had not posted a supersedeas bond.

The Ninth Circuit Court of Appeals has held that a

"person who cannot furnish supersedeas bond does not lose his

right to appeal.” Koster & Wythe v. Massey, 262 F.2d 60, 62

(9th Cir. 1958).

The District of Columbia Court of Appeals has also

held that "an appellant who fails to furnish a supersedeas bond

does not thereby lose his right to appeal.” Jn re Farrell Lines,

Inc., 761 F.2d 796, 797 (D.C. Cir. 1985). Accord, Thorpe v.

Thorpe, 364 F.2d 692, 693 (D.C. Cir. 1966).

The Commentators have also recognized that "a person

who cannot furnish a supersedeas bond does not lose his right

to appeal”. 11 Wright & Miller, Federal Practice and Procedure,

§ 2905 (1973).

In dismissing Ahktar’s appeal in this case for failing to

file a supersedeas bond, the Fourth Circuit Court of Appeals

created a direct conflict with the rulings of its sister Courts of

Appeals. This is precisely the type of situation which is

suitable for review by writ of certiorari.

January 26, 1990

Respectfully Submitted,

James H. Moss

MOSS, DORE, KUHN

& McINTYRE, P.A

Attorney for Petitioner

—

FILED MAY 9, 1989

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF SOUTH CAROLINA

CHARLESTON DIVISION

BIRD OIL COMPANY, INC.,

Plaintiff,

VS. CIVIL ACTION NO. 2:86-1327-2

PERVESE AKHTAR, d/b/a

CIRCLE MOBIL,

Defendant.

AMENDED FINDINGS OF FACT AND

CONCLUSIONS OF LAW AND ORDER

This matter is before the court on motion of the plaintiff,

Bird Oil Company, Inc. (Bird Oil), to enforce a settlement

agreement entered into by the parties to this action. The

settlement was agreed to in open court in Charleston, South

Carolina, on March 3, 1987. The Defendant, Mr. Pervese

Akhtar (Akhtar), now objects to certain costs the plaintiff

contends he obligated himself to pay under the terms of the

agreement as being excessive. He further alleges that because

of these inflated expenditures he is relieved of his obligations

under the settlement agreement. Because Mr. Akhtar objected

to the cost of the remediation project and refused to tender

performance, an evidentiary hearing as to the method and cost

of the project was held on September 29, and September 30,

1988. The court issued its findings of fact and conclusions of

law in the matter on March 3, 1989.

Shortly thereafter, the defendant filed a motion to amend

the findings of fact and judgment pursuant to Rule 52(b) of

the Federal Rules of Civil Procedure. Except as hereinafter

granted the motion is denied. The court has, however,

determined that the defendant’s objection to finding of fact #9

is partially correct. That objection states, in pertinent part:

"the Court erroneously interpreted the November 25, 1987

letter from the Department of Health and Environmental

Control as concluding that DHEC was satisfied with the soil

remediation project, when in fact, an approval letter was not

received until March, 1988..." A telephone conference was

held between the parties and the court at which time the

plaintiff was given fifteen (15) to respond to the defendant’s

motion and to make any other filings it deemed necessary. On

April 3, 1989, the plaintiff filed a memorandum in opposition

to the defendant’s motion and a motion for an addendum to

the order.

Because.of the court’s mistaken use of the November 25,

1987, date, several of the amounts listed in the March 3, 1989,

order are incorrect and must be amended. Therefore, in the

interest of clarity, the court issues these amended findings of

fact and conclusions of law. The court’s earlier order of March

3, 1989, is hereby rescinded.

The plaintiffs motion for an addendum to the order raises

issues that were not addressed at the September 1988 hearing.

Resolution of these issues would necessitate reopening the

record and taking additional testimony. The plaintiff has made

no such request and the court, if asked to do so, would be

inclined to deny the same.

The court having heard the testimony of the several

witnesses and considered the documentary evidence introduced

at the hearing, makes the following findings of fact and

conclusions of law pursuant to Rule 52 of the Federal Rules of

Civil Procedure.

10

a

FINDINGS OF FACT

1. Plaintiff Bird Oil is a South Carolina corporation

which has its principal place of business on Hilton Head Island,

South Carolina. Bird Oil is engaged in the business of

wholesale fuel sales and owns a service station known as the

Circle Mobile Station located on Hilton Head Island, South

Carolina. Mr. Akhtar is a resident of the State of Georgia.

2. Bird Oil and Akhtar entered into a settlement

agreement on March 3, 1987. By the terms of the agreement

Bird Oil agreed to sell to Akhtar all that property known as

Circle Mobil located on Hilton Head Island, South Carolina.

The purchase price was set at $450,000.00. The settlement

required that the plaintiff institute an immediate soil

remediation project to rectify environmental contamination of

the soil at the location.’ The agreement provided that the

closing date for the transaction would be within a reasonable

time, not to exceed sixty (60) days from the date of approval

by the South Carolina Department of Health and

Environmental Control (DHEC) of the soil remediation at the

property.

3. In the agreement the plaintiff assumed financial

responsibility for the cost of the soil remediation up to

$100,000.00 All expenses therefor in excess of $100,000.00

were to be the responsibility of the defendant. At the

settlement hearing in Charleston, South Carolina, on March 3,

1987, the settlement was explained as follows:

Mr. Moss: The purchase price would be $450,000.00,

and would be payable within a reasonable time for

closing, not to exceed, I assume, 60 days from the

' The South Carolina Department of Health and Environmental Control

had ordered the soil remediation at the location because of ground

contamination caused by gas leaks from the underground tanks located on the

property.

11

approval by DHEC of the cleanup that I will explain

to you in just a minute.

William Bird further agrees that he would

be responsible for the first hundred thousand dollars

to be spent on the cleanup of the premises concerning

gas leaks, which DHEC alleges have occurred a

number of years ago.

Quite frankly, we are not sure that even

the gas leaks are attributable to Bird’s station, because

we know that unleaded product was found there, and

the unleaded tanks weren’t leaking. But in any event

he’s responsible for that hundred thousand.

Both parties will cooperate...

Mr. Byers: Excuse me one moment. Let

the record show that’s Bird Oil Company and not

William Bird individually.

Mr.-Moss: All right. In any event, both

parties have some insurance, Judge. We are not sure

to the extent that insurance will be available, but to

the extent that insurance can be made available by

either party for this, we certainly would agree to apply

Mr. Akhtar’s policy and Mr. Bird, I understand has a

$20,000.00 policy that may apply, so to the extent that

we can get insurance to pay this, certainly we would

seek to recover that, but Mr. Bird would be

responsible for the initial cost of the cleanup, up to

$100,000.00.?

Mr. Bowen: That’s Bird Oil Company, not

Mr. Bird.

Mr. Moss: Bird Oil Company.

The Court: Let me ask you this Mr. Moss,

the insurance that the parties have that may or may

not be applied to the cleanup ordered by DHEC, will

2 It was subsequently determined that neither party could defray any of

the expense of the soil remediation project with proceeds from insurance;

therefore, insurance coverage is not an issue before the court.

12

it reduce this $100,000.00 amount, or will it be applied

to the total cost?

Mr. Moss: It would reduce that

$100,000.00 amount that he had to pay plus any cost

above that if the insurance ... Mr. Akhtar has a million

dollar policy. It’s a liability policy. I am not sure it

covers this. In fact, 1 am not counting on that it does.

The Court: Let’s assume that Mr. Akhtar’s

policy pays $25,000.00 or $50,000.00 towards this cost.

And Mr. Bird has a $25,000.00 policy that pays toward

the cost. Would that $75,000.00 reduce Mr. Bird’s

obligation to $25,000.00?

Mr. Moss: As I understand it, yes, sir.

The Court: What if the initial cost of the

cleanup is $200,000.00?

Mr. Moss: That Mr. Akhtar would pay the

next $100,000.00 in cleanup costs.

Mr. Byars: That’s our understanding, too,

Your Honor. The insurance would initially accrue to

Mr. Bird’s benefit toward the $100,000.00

The Court: That is Mr. Bird’s insurance

that will accrue to his benefit or Mr. ...

Mr. Byars: All insurance or any third-party

payments that might be received from anywhere.

The Court: ... Will accrue to Mr. Bird’s

benefit toward the $100,000.00.

_ Mr. Byars: For the first $100,000.00, and

after that it would accrue to the next level.

The Court: And the next level, anything

over $100,000.00 would be Mr. Akhtar’s responsibility.

Mr. Moss: Yes, sir.

Now, Your Honor, Mr. Akhtar is going to

vacate the premises in ten days, that’s he and all his

subcontractors will vacate the premises, and Bird Oil

Company agrees to proceed with all due diligence to

clean up the premises as required by DHEC.

Your Honor, we don’t know what they are

going to require fully at this time, but Mr. Safran has

been in touch with them at my firm, Mr. Byars has

been in touch with them at Mr. Bird’s firm, and as I

understand it, to the extent that DHEC tells us

whatever has got to be done, we are going to try to

expedite that.

4. In compliance with the terms of the settlement

agreement, the plaintiff initiated ground water contamination

studies, sunk monitoring wells, obtained approval from DHEC

of a method of remediation and instituted a soil remediation

project at the property in November of 1987.

5. In March of 1987, Mr. Bird contacted Phillip

Kimbrell, an hydrogeologist with the firm of Steffen, Robertson

and Kirsten Consulting Engineers (SRK). Mr. Kimbrell was

assigned the task of determining how best to proceed with the

soil remediation project. After a thorough study of the

possible methods of remediation, Mr. Kimbrell concluded that

soil incineration would be the most time and cost effective

method.* The soil incineration method requires that the

contaminated soil be excavated and placed in an incinerator to

burn out all of the contaminates. The soil is then placed back

in the ground. This process is the least expensive and most

time efficient way to remove the contamination from the

property.

6. Bird Oil contracted with P&I for the soil remediation

project and P&I subcontracted the incineration portion of the

project out to Petroleum Services of Florida (Petroleum

Services). There was conflicting testimony as to the actual

* Two other methods of remediation were considered but rejected. The

first involved removing the contaminated soil from the site to a landfill.

Because this method would entail transportation of a hazardous waste to a

restricted landfill it was concluded that the project would be a cost prohibitive.

The second rejected method is known as “pump and treat". It involves

pumping out the ground water and treating it until all contaminates are

removed. Mr. Kimbrell rejected this method because it could take 5 years to

complete and would cost anywhere from $250,000.00 to over $1,000,000.00.

14

terms of the contract between Bird Oil and P&I, but the

defendant introduced into evidence an offer by P&I that was

accepted by Bird Oil.‘ The court finds that this document,

prepared by P&I and accepted and signed by Mr. Bird on

November 11, 1987, constitutes the written agreement between

Bird Oil and P&I for the soil remediation project. Under the

terms of that agreement P&I was to be paid $50,900.00 for the

removal of contaminates from 500 cubic yards of soil. Included

in this price was the cost of labor and materials to P&I. The

contract further provided that all required in excess of the 500

cubic yards would be at a cost to Bird Oil of $50.00 per cubic

yard.°

7. The soil remediation project commenced on November

5, 1987. It is undisputed that additional fuel was spilled into

the excavation site during removal of the tanks. The defendant

claims that some 2,000 gallons of fuel was spilled, thereby

significantly increasing the amount of contaminated soil.

However, the testimony of Dee O’Brian, DHEC’s representa-

tive on site, and Phillip Kimbrell, the hydrogeologist supervising

the project, reveal that the actual spillage was between 50 and

150 gallons.

8. The testimony further showed that a portion of the

spillage was water, thereby decreasing the amount of actual

contaminates released into the excavation site. Because the

site alreacy contained standing water, the spilled fuel floated to

the top. Mr. Kimbrell testified that, immediately following the

spiil, a towel-like product that absorbs fuel was placed in the

“ The offer was initially made on May 13, 1987, and contains provisions

that were later struck from the agreement. See defendant’s exhibit #10. The

final agreement was signed by Mr. Bird on November 11, 1987. See

defendant’s exhibit #13.

5 The defendant’s objection to the court’s inierpretation of the terms of

the P&I-Bird Oil contract is without merit. The contract is clear and

unambiguous. Defendant would have this court ignore the provision of the

contract which calls for soil removed in excess of 500 cubic yards to be at a

cost to Bird Oil of $50.00 per cubic yard.

15

site to soak up as much of the spill as possible. He estimated

that between 1 and 2 cubic yards of soil were contaminated by

the spill. However, and most importantly, the soil in question

was already contaminated and earmarked for excavation.

Further, Mr. O’Brian, who has witnessed numerous tank

removals, stated that spillage was a common occurrence and to

be expected during removal operations. Therefore, the court

finds that the spillage during the tank removal operation did

not significantly add to the amount of contaminated soil or

increase the total cost of the project. Furthermore, even if the

cost was increased, that does not excuse performance by the

defendant.®

9. The soil remediation project was completed by mid-

November 1987. By letter dated November 25, 1987, DHEC

informed the plaintiff that it was satisfied with the soil

remediation of the site, but that continued monitoring would be

necessary to ensure that further action was not required.’ The

plaintiff misinterpreted the November 25 letter as final

approval by DHEC and thereafter made several demands on

the defendant to consummate their agreement.® Instead, by

letter dated December 22, 1987,° counsel for the defendant

responded to the demand letter with the allegations that the

cost of the project was grossly underestimated"® and that the

6 The defendant seeks to impose supervisory responsibilities on Bird Oil

that are not contained in the settlement agreement. Bird Oil did not agree

to bear the cost of the negligence of any of the contractors. Therefore,

assuming, arguendo, that the spill did increase the cost of the project, the

defendant is responsible for that cost.

? Defendant’s exhibit #26. This is the letter that the court erroneously

interpreted as final approval in its March 3, 1989, order.

rp PP

® Defendant’s exhibit #27 and plaintiffs exhibit #27.

® Plaintiffs exhibit #28.

‘© The fact that SRK underestimated the pervasiveness of the contamina-

tion is, Of course, no excuse for the defendant to breach its obligations. The

(continued...)

16.

spillage from the tanks caused additional damage. The

defendant refused to tender any money for the expenses

incurred in the soil remediation project. Negotiations proved

fruitless and plaintiff filed its motion for enforcement of the

settlement agreement on February 17, 1988.

10. At the September hearing, both parties admitted upon

questioning by the court that final DHEC approval was

procured on March 28, 1988."' Therefore, under the terms of

the settlement agreement the closing date was to be no later

than May 27, 1988.'? Unfortunately, at this point the parties

were in hopeless dispute as to whether the defendant was

obligated to pay anything other than the purchase price of

$450,000.00. Despite several demands by Bird Oil that the

closing take place, the defendant on more than one occasion

reiterated its position that it was not responsible for any of the

soil remediation costs.'*

*0(_..continued)

settlement agreement, which was entered into before SRK’s assessment,

contemplates that the defendant will bear financial responsibility for all

remediation expenses in excess of $100,000.00. So long as the expenses

incurred were reasonably necessary for remediation of the soil, it makes little

difference that those expenses were in excess of SRK’s initial estimate.

Defendant does not claim, nor can he, that he reasonably relied on SRK’s

underassessment of the soil contamination when he entered into the settlement

agreement. See plaintiffs exhibit #28.

"' Plaintiff's exhibit #1

'2 The settlement agreement required that the transaction take place no

later than sixty (60) days after approval by DHEC.

13 In a letter dated December 22, 1987, the defendant sets forth his

objections to the way in which the project was handled and then states: "In

light of these facts, I believe that even you would admit we cannot accept the

imposition of an additional one hundred twenty-five thousand ($125,000)

dollars worth of liability." Plaintiffs exhibit #28.

In a letter dated May 26, 1988, the defendant through his attorney

states: "I believe that the amounts above $450,000.00 are due to the

negligence of William Bird and P&I Supply Company and the method which

was used to excavate the dirt and the gasoline tanks.... Mr. Akhtar should not

(continued...)

17

11. SRK’s fee for services rendered as of July 31, 1988,

was $26,948.00.'"* Mr. Kimbrell testified that since that time he

had invested an additional ten (10) hours and that his hourly

fee is $47.50. Therefore, as of the September 29th hearing

SRK’s total fee was $27,423.36. Of this amount Bird Oil has

paid $5582.89, leaving a balance owing of $21,840.47. SRK

assesses a finance charge of 1.5% per month for invoices not

paid within 30 days of invoice date."®

12. The main dispute in this case centers around the final

bill submitted by P&I."° Under the contract between P&I and

Bird Oil,'? P&I agreed to remove contaminates from 500 yards

of soilsfor $50,900.00 and to remove the same from additional

soil at a cost of $50.00 per cubic yard. The court finds that

2100 cubic yards of soil were removed during the project.'®

Therefore, under the terms of the contract, the allowable

13(...continued)

be held responsible for this negligence. Defendant’s exhibit #23.

Defendant’s argument that his tender of $450,000.00 constituted

performance on his part is completely without merit. What is clear is that the

defendant repudiated his obligation to pay a portion of the remediation cost

on more than one occasion.

4 Plaintiff's exhibit #3.

‘S At the time of the enforcement hearing in September 1988, the

defendant made no objection to this invoice, but had refused to pay it. Now

the defendant seeks to object to the 1.5% per month interest charge on the

ground that he never contractually agreed to it. We find this argument

frivolous; by the terms of the settlement agreement Bird Oil was the party

responsible for procuring the necessary services. Further, the charge is within

the legal limits allowed under South Carolina law. S.C. Code Ann. §37-2-201.

16 Plaintiff's exhibit #5.

7 In finding of fact #6 the court summarizes the contract between P&I

and Bird Oii for the soil remediation project.

‘8 2100 cubic yards is the quantity agreed on by both P&I and Petroleum

Services, the two contractors on site. Further, P&I paid Petroleum Services

$63,000.00 or $30.00 per cubic yard for 2100 cubic yards total pursuant to

their contract. See defendant’s exhibit #22.

18

charges for the soil remediation are as follows:

500 cubic yards $ 50,900.00

1600 cubic yards 80,000.00

$130,900.00

The contract further states that labor and materials are

included in that cost. Therefore, the charge for materials in

the amount of $11,528.88 and for labor in the amount of

$14,448.75 must be disallowed. The charge for water treatment

and equipment rental, $7,203.34, is a reasonable and appro- —

priate expense and will be allowed."®

13. The only other P&I charge objected to by the

defendant is a $2000.00 bill for concrete removal. The

testimony of Mr. Marion Hudson, president of P&I, revealed

that the concrete was actually removed by Bird Oil at a cost of

$1500.00. Mr. Hudson stated that Bird Oil was acting as P&I’s

subcontractor and that it is P&I’s customary practice to add

25% to the bills of its subcontractors. In essence, P&I is

attempting to make $500.00 by allowing the owner to do the

work. In equity and good conscience this charge should be for

$1500.00, the actual cost to Bird Oil for the work.®

14. Therefore, the allowable costs to P&I are as follows:

Soil remediation 2100 cu. yds. $130,900.00

Evacuation 22,238.33

Water treatment & equipment rental 7,203.34

Mileage 910.00

$161,251.67

‘8 The defendant objects to the $7,203.34 charge, but the court is not

persuaded by his argument that these expenses were included in the base

contract price. In fact, were P&I to do everything that the defendant alleges

it agreed to do for a total price of $50,900.00 it would have lost a considerable

amount of money on the project.

20 Defendant’s contention that the concrete was not removed was clearly

refuted at the hearing. All the concrete around the underground tanks was

removed as it would have been impossible to otherwise remove the tanks.

19

In addition, because of the defendant’s refusal to bear any of

the cost of the soil remediation, all but $37,106.66 of the

amount due P&I went unpaid. P&I instituted legal proceedings

in state court to collect on its contract with Bird Oil and

sought to have a mechanic’s lien placed on the property. In

order to avoid foreclosure on the property, Bird Oil settled the

case and paid P&I on its debt on April 8, 1988. The court

finds that the terms of the settlement were reasonable and

necessary in order for Bird Oil to protect the property.

Pursuant to the terms of its settlement Bird Oil also paid P&I

$4,321.08 in interest and $3,258.51 in attorney fees related to

the state court action.*’ Bird Oil may not recover the interest

and attorney fees because these were costs incurred by Bird Oil

before the defendant had any obligation to consummate the

transaction.”

15. On March 31, 1988, Bird Oil refinanced the loan on

the Circle Mobil Station in an effort to satisfy the creditors of

the soil remediation project and other mortgage holders. The

new loan was in the amount of $430,000.00. The cost to Bird

Oil of obtaining this new loan was $14,047.50.” Interest on

the loan is eleven and one half percent per annum. A second

mortgage was also obtained in the amount of $45,000.00 with

interest of eleven and one half percent per annum. The cost

to Bird Oil of obtaining this loan was $900.00.% Bird Oil may

not look to the defendant for the cost of obtaining the

refinancing because at the time it was procured the defendant

was under no obligation to perform. However, the court finds

2" Plaintiff's exhibit #9.

2 Bird Oil settled its debt with P&I in April 1988; Akhtar was not

obligated to perform under the settlement until May 27, 1988.

2 The cost breaks down as follows: application fee and appraisal $900.00

(Plaintiffs exhibit #19); survey $225.00 (plaintiffs exhibit #20); flood

insurance $675.00 (plaintiffs exhibit #21); 2 discount loan points $8428.00,

and closing costs and attorney fees $3,819.50.

24 This cost was for 2 discount loan pvints.

20

a ———————

z

that the interest rate on the refinancing, eleven and one half

percent per annum, is convincing evidence of the cost of

money to Bird Oil to the extent of the $475,000.00 financed at

that rate.

16. All other expenses incurred during the soil

remediation project were stipulated to by counsel of both

parties.~ They are as follows:

Savannah Labs* $1204.00 Paid by Bird Oil

Jones and Frank 3000.00 $1500.00 paid by

Bird Oil;

$1500.00 paid by

Akhtar

Sea Pines Public

Service District?’ 272.00 Paid by Bird Oil

Geothermics* 1542.00 Paid by Bird Oil

Coastal Surveying” 441.27 Paid by Bird Oil

McCameron & Associates® 35.00 Paid by Bird Oil

Bird Oil & Co.

(pump removal)*" 1250.00 Unpaid

Hilton Head Auto Parts* 22.69 Paid by Bird Oil

Total $7,766.96

2° Defendant’s objection to these expenses now after stipulating to them

at the September 1988, hearing comes too late. Suffice it to say that he has

presented no evidence to support his new allegation that he has paid those

amounts. They are, therefore, due and owing.

26 Plaintiff's exhibits #11 and 12.

27 Plaintiff's exhibit #14.

26 Plaintiff's exhibit #15.

2% Plaintiff's exhibit #16.

* Plaintiff's exhibit #16.

*' Plaintiff's exhibit #18.

% Plaintiff's exhibit #17.

21

CONCLUSIONS OF LAW

A. This court has jurisdiction over the subject matter of

the action pursuant to 28 U.S.C. §1332, and venue is properly

laid in this district under 28 U.S.C. §1391(a).

B. The court has personal jurisdiction over the defendant

pursuant to §36-2-803 of the South Carolina Code, Annotated

(1976), in that the cause of action arose from the defendant's

transaction of business in the state of South Carolina.

C. It is well settled that a district court retains inherent

jurisdiction and equitable power to enforce agreements entered

into in settlement of litigation. Ozyagcilar v. Davis, 701 F.2d

306 (4th Cir. 1983); Miller v. Norfolk and Western Ry. Co., 643

F.2d 1005 (4th Cir. 1981). However, it is clear that this court

only retains the power to enforce complete settlement

agreements; it does not have the power to impose, in the role

of a final arbitrator, a settlement agreement where there was

never a meeting of the parties’ minds. Ozyagcilar, 701 F.2d at

308.

D. The first inquiry, then, is to determine whether there

was a meeting of the minds between the parties as to the soil

remediation project. At the settlement hearing in Charleston,

South Carolina, on March 3, 1987, counsel for the defendant

explained the settlement.“ His statement conclusively es-

tablishes that there existed a meeting of the minds between

the parties as to the terms of the settlement now in dispute.

Therefore, under the dictates of Ozyagcilar, this court retains

inherent jurisdiction and equitable power to enforce the

agreement. The court concludes that the parties agreed that

Bird Oil would "proceed with all due diligence to clean up the

premises as required by DHEC.” Further, the parties agreed

that Bird Oil would be responsible for the initial $100,000.00

of expense incurred in remediating the soil and that Mr.

® See finding of fact #3.

22

Akhtar would be responsible for any expense in excess of that

amount.

E. This settlement agreement, like all contracts, contains

an implied covenant of good faith and fair dealing. Commercial

Credit Corporation v. Nelson Motors, 147 S.E.2d 481 (S.C.

1966); 17A C.J.S. Contracts 5328. The covenant required that

Bird Oil act reasonably to protect both its interests and the

interests of Mr. Akhtar when procuring the services necessary

for the soil remediation. However, once it is determined that

Bird Oil did not breach its covenant of good faith and fair

dealing, the court’s only duty is to enforce the agreement

entered into by the parties. Courts are without authority to

alter a contract by construction or to make new contracts for

the parties. Our duty is limited to the interpretation of the

contract made by the parties themselves "... regardless of its

wisdom or folly, apparent unreasonableness or failure to guard

their rights carefully.” Gilstrap v. Culpepper, 320 S.E.2d 445, 447

(S.C. 1984); Blakely v. Rabon, 266 S.C. 68, 73, 221 S.E.2d 767,

768 (1976).

F. The defendant, who was represented by counsel, chose

not to concern himself with the task of procuring the necessary

services to complete the soil remediation. While in hindsight,

Mr. Akhtar claims that the costs were excessive and that he

could have procured the services for less money, his argument

is without merit. By the clear terms of his agreement, the

defendant must bear the cost of the project in excess of

$100,000.00. Furthermore, Mr. Akhtar cannot now claim that

the parties did not anticipate that the project would cost more

than $100,000.00. To the contrary, the settlement agreement

clearly provided for such an occurrence.

G. In matters such as this, the plaintiff has the option of

pursuing several remedies. In this case Bird Oil seeks to

pursue specific performance rather than its remedy of recision.

Specific performance of a contract is a matter of sound judicial

discretion controlled by established principles of equity. Wright

v. Patrick, 262 S.C. 434, 205 S.E.2d 175 (1974). In determining

whether to grant or withhold relief of this sort, the court

23

should consider all of the circumstances of the particular case

in the light of equitable principles. It is an elementary

principle, of course, that one who seeks to invoke the equitable

powers of the court to enforce a settlement to which he was a

party, must show that the settlement has been performed on

his part, or at least that he was at the appropriate time able,

ready and willing so to perform it. State v. Riley, 64 S.E.2d 127

(S.C. 1951). It is also well settled in contract law that if a

party by its contract charges itself with an obligation possible

of performance, then the party must make good. Pearce-

Young-Angel Co., Inc. v. Charles R. Allen, Inc. 50 S.E. 698 (S.C.

1948). A settlement contract may not be unilaterally rescinded.

Dacanay v. Mendoza, 573 F.2d 1075, 1078 (9th Cir. 1978).

Upon breach by one party, the other party may obtain damages

or specific performance as appropriate. United States v. ITT

Continental Baking Co., 420 U.S. 223 (1975); Village of

Kaktavik v. Watt, 689 F.2d 222 (D.C. Cir. 1982).

H. Applying the above principles, the court concludes

that Bird Oil is entitled to specific performance. Bird Oil met

all of its obligations under the settlement and stood ready, able

and willing to proceed with the transaction on May 27, 1988.

The court further concludes that the defendant indicated his

intention to breach the settlement agreement by letter dated

December 22, 1987,* and again by letter dated May 26, 1988,*

and that he did, in fact; breach said agreement by refusing to

consummate the agreement within the prescribed time.

I. Further, it appears clear to the court that Bird Oil

incurred additional expense in the form of interest charges that

are directly attributable to the defendant’s breach. When a

court orders specific performance, the decree must as nearly as

possible order performance according to the terms of the

agreement, and one of those terms is the date fixed by the

agreement for its completion. This date having passed, the

* Plaintiff's exhibit #28.

% Defendant’s exhibit #23.

24

» inane

court, in order to relate the performance back to it, equalizes

any losses occasioned by the delay by offsetting them with

money payments. Often the result is more like an accounting

between the parties than like an assessment of damages. White

v. Felkel, 82 S.E.2d 813 (S.C. 1954), citing, Specific Performance:

Compensation or damages awarded purchaser for delay in

conveyance in land, 7 A.L.R. 1206. The court concludes that

Bird Oil is entitled to compensation for the losses it suffered

that were caused by the defendant’s breach.

J. The total expense incurred as a result of the soil

remediation project is as follows:

Soil Remediation Project

P&I Supply Co. $161,251.67

SRK 27,423.36

Savannah Labs 1,204.00

Jones & Frank 3,000.00

Sea Pines Public Service District 272.00

Geothermics 1,542.00

Coastal Surveying 441.27

McCameron and Associates 35.00

| Bird Oil Co. 1,250.00

| Hilton Head Auto Parts 22.69

$196,441.99

Of this amount, $196,441.99, Bird Oil is responsible for

$100,000.00 and Mr. Akhtar is responsible for $96,441.99. As

of September 30, 1988, Bird Oil had paid $171,851.52 of the

expense and was owed an additional $1,250.00 for work it had

done on the project. Mr. Akhtar had paid $1,500.00 and

$21,840.47 was still owed to SRK. Therefore, at closing,

Akhtar shall pay to Bird Oil the $450,000.00 purchase price,

plus $71,851.52 for expenses owed by Akhtar but paid by Bird

Oil, and $1,250.00 for work done by Bird Oil on the project. In

25

addition, Akhtar shall pay to SRK the amount of $21,840.47,

the balance due for its services.

K. The remaining question concerns the appropriate rate

of interest that the defendant shall be required to pay on his

debt. Under a long line of South Carolina cases interest may

accrue On even an unliquidated sum found owing a party "from

the time the money should have been paid until the time of

the judgment." Montgomery Wara & Co. v. Collins Estate, Inc.,

268 F.2d 830, 838 (4th Cir. 1959) (citing South Carolina

authority); see also, Johnson v. Aetna Insurance Company, 308

F. Supp. 33, 36 (D.S.C. 1970). Moreover, the South Carolina

courts and those in the Fourth Circuit have held that the rate

of interest, whether recoverable specifically as interest, or

included as an element of general damages, should not be

determined according to any specific statutory rate, but should

be reasonable in amount as the circumstances of the case

warrant. M.B.A.F.B. Federal Credit Union v. Cumis Insurance

Society, Inc., 507 F. Supp. 794, 798 (D.S.C. 1981), aff'd 681

F.2d 930 (4th Cir. 1982). The value of money to the plaintiff

at the times in question would normally determine what is a

reasonable rate of interest. The problem is that, except for the

finance charge of SRK, the only evidence bearing on this issue

is the loan plaintiff refinanced on the property on March 31,

1988, and the situation is further complicated by the fact that

those transactions only involved $475,000.00. We can, however,

conclude that during the term of those loans the sum of

$475.000.00 was worth 11 1/2% per annum to plaintiff. Beyond

that, the failure of proof requires us to look to applicable

statutes to determine a reasonable rate of interest to apply.

L. The purchase price of $450.000.00 was due and owing

from Akhtar on May 27, 1988. Accrual of interest on this

amount shall commence on May 27, 1988, and will continue to

run until paid at the rate of 11.5% per annum.*

% This rate reflects the actual cost to Bird Oil for the new loans. The

defendant does not contest the reasonableness of this rate of interest. It

(continued...)

26

M. As to the remaining balance due to Bird Oil from

Akhtar, $25,000.00 of said amount siall accrue interest from

May 27, 1988, and will continue to run until paid at the rate of

11.5% per annum. The remaining balance, $48,101.52, shall

accrue interest from May 27, 1988, and will continue to run

until paid at the present statutory rate of 9.15% per annum.

N. Finally, the defendant is responsible for the unpaid

debt to SRK. The defendant shall pay to SRK the sum of

$21,840.47 plus interest of 1.5% per month from September 30,

1988, until said sum is paid.

NOW, THEREFORE, IT IS ADJUDGED, ORDERED

AND DECREED,

1. The parties shall consummate the closing on the real

estate transaction not later than 12:00 noon June 8, 1989, in

the clerk of court’s office for Beaufort County. The plaintiff

shall provide a general warranty deed subject to any restrictions

on the property in exchange for a purchase price of

$450,000.00, pius interest as enumerated above. All existing

mortgages shall be satisfied out of the proceeds.

2. The defendant shall pay to the plaintiff at said closing

the sums listed above plus interest as enumerated above.

3. The defendant shall pay to SRK at the closing the

sum of $21,840.47 plus interest of 1.5% from September 30,

1988.

4. All other provisions of the settlement agreement shall

be complied with.

%(...continued)

should be noted that this does not account for the full $475.000.00 in 11.5%

loans. There remains $25,000.00 of said amount which will be dealt with

hereinafter.

27

AND IT IS SO ORDERED.®*’

/s/ C. Weston Houck

C. WESTON HOUCK

UNITED STATES DISTRICT JUDGE

May 5, 1989

Florence, South Carolina

3” The parties’ attention is directed to Rule 62 of the Federal Rules of

Civil Procedure, particularly paragraph (d) Strict compliance with the rule will

be required in the event of appeal.

28

FILED JULY 12, 1989

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF SOUTH CAROLINA

CHARLESTON DIVISION

BIRD OIL COMPANY, INC.,

Plaintiff,

VS. CIVIL ACTION NO. 2:86-1327-2

PERVESE AKHTAR, d/b/a

CIRCLE MOBIL,

Defendant.

ORDER

This matter came before the court on motion of the

plaintiff, Bird Oil Company, Inc. (Bird Oil), to enforce a

settlement agreement entered into by the parties to this action.

The court issued its Amended Findings of Fact and Conclusions

of Law on May 9, 1989. In that order we directed that the

closing for the real estate transaction between Bird Oi! and Mr.

Akhtar take place no later than 12:00 noon June 8, 1989.'

Shortly thereafter, on May 30, 1989, the defendant filed a

motion to amend the judgment because of after discovered

' For a more detailed discussion of the settlement agreement and each

party’s obligation under it, see this court’s Amended Findings of Fact and

Conclusions of Law filed May 9, 1989.

29

evidence or, in the alternative, for a new trial. A hearing was

convened in the matter in Charleston, South Carolina, on June

8, 1989, at which all parties and their attorneys were present.

After several hours of testimony and argument, it was

determined that the parties needed additional time in which to

clarify the issues and applicable law. The hearing was recessed

until June 27, 1989. In the meantime, the closing on the real

estate transaction was postponed.

The pertinent facts are as follows. The settlement

agreement between Bird Oil and Mr. Akhtar required that the

closing take place within a reasonable time, not to exceed sixty

(60) days from the date of approval by the South Carolina

Department of Health and Environmental Control (DHEC) of

the soil remediation project taking place at the property. Said

final approval was received from DHEC by letter dated March

28, 1988.2 Therefore, under the terms of the settlement

agreement the closing date was to be no later than May 27,

1988. The court previously found in its order of May 9th that

the defendant was in breach of the settlement agreement when

he refused to close on that date.

Approximately one year later, after Akhtar should have

performed under the settlement agreement, DHEC informed

Bird Oil on May 16, 1989, of its decision to reopen the project

for further remediation. In its letter, DHEC indicates that

ground-water monitoring results from February 12, 1988, and

March 21, 1988, show that ground water at the site is

contaminated with hydrocarbons. Benzene levels in monitoring

wells MW-1 and MW-2 greatly exceed the current state class

GB ground-water standard of five (5) parts per billion for

benzene.

The question then becomes what, if any, benzene standard

was applicable when DHEC approved the cleanup of the

instant property in March 1988. At the June hearing on the

matter several former and current officiais of DHEC, including

2 Plaintiffs exhibit #1.

its chief legal counsel, testified as to the applicable regulations

as Of March 1988 and now. It is clear that the only

enforceable numerical standard for benzene is the Maximum

Contaminant Level (MCL) of five (5) parts per billion.

However, that standard did not become effective until January

9, 1989, some seven plus months after Akhtar should have

performed under the settlement agreement. At the time of the

approval in March 1988 there was no specific enforceable

benzene standard applicable to the property.

Donald Duncan, who was Director of the Groundwater

Division at DHEC at the time of the March approval testified

that the applicable standard at the time was subjective and

contained in 25 S.C. Code Ann. Reg. 61-68, para. E(11)(c).

That regulation states that the levels for various contaminants

are "[nJot to exceed concentrations or amounts such as to

interfere with use, actual or intended, as determined by the

Department."* Using this standard DHEC looked at a number

of factors, including the level of decrease in contaminants at

the site, depth of groundwater, speed at which groundwater

flows, and usage in the vicinity. It concluded that the

remediation was satisfactory and approved the project.

Therefore, the March 28th letter was a final approval made in

accordance with DHEC standards then in force.

The issue of whether DHEC may reopen projects it has

previously approved is, of course, not before us. The sole issue

before this court is limited to whether this newly discovered

evidence operates to excuse the defendant’s breach of May

27th. Since under the terms of its settlement agreement, the

defendant, but for his breach, would have been the owner of

the property, we cannot see how events taking place almost a

year later can operate to excuse the breach. Courts are

without authority to alter a contract by construction or to make

new contracts for the parties. Our duty is limited tc the

interpretation of the contract made by parties themselves

8The regulation does not specifically mention benzene by name, but

Duncan stated that benzene would be included under this section.

31

"...regardless of its wisdom or folly, apparent unreasonableness

or failure to guard their rights carefully.” Gilstrap v. Culpepper,

320 S.E.2d 445, 447 (S.C. 1984); Blakely v. Rabon, 226 S.C. 68,

73, 221 S.E.2d 767, 768 (1976).

In this case, the defendant, who was represented by

counsel, chose to make the transaction contingent upon

approval by DHEC of the project. That approval having been

obtained, he was under an obligation to perform. Any dispute

he now has is with DHEC, not Bird Oil. Therefore, the

defendant’s motion to amend the judgment or, in the

alternative, for a new trial is hereby denied. The court’s earlier

order of May 9, 1989, is in full force and the closing shall take

place no later than 2:30 P.M. July 24, 1989, as verbally ordered

by the court on June 27, 1989.

In response to the court’s verbal order of June 27, 1989,

to the same effect as this order, the defendant has filed a

motion for a stay of the closing. He bases his motion on Rule

8(a) of the Federal Rules of Appellate Procedure. That rule,

of course, requires that the party first seek a stay pending

appeal in the district court. It is our understanding that the

defendant filed a notice of appeal on July 12, 1989. As this

court stated in its order of May 9th, strict compliance with

Rule 62(d) shall be required in the event of appeal including

the posting of a supersedeas bond in an amount equal to the

amount due from the defendant on July 24, 1989, at the

closing. The defendant has failed to post a supersedeas bond

and his motion for a stay is hereby denied.

AND IT IS SO ORDERED.

/s/ C. Weston Houck

C. WESTON HOUCK

UNITED STATES DISTRICT JUDGE

July 12,1989

Florence, South Carolina

32

FILED OCTOBER 2, 1989

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

No. 89-2423

Bird Oil Company,

Plaintiff - Appellee,

Vv.

Perverse Akhtar

d/b/a Circle Mobil,

Defendant - Appellant.

Appea! from the United States District Court for the District

of South Carolina, at Charleston. C. Weston Houck, District

Judge.

Upon consideration of appellee’s motion to dismiss this

appeal, and the responses thereto,

It is ORDERED that appellee’s motion to dismiss is

granted.

Entered at the direction of Judge Russell, with the

concurrence of Judge Sprouse and Judge Wilkins.

For the Court

JOHN M. GREACEN

Clerk

33

FILED OCTOBER 30, 1989

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

No. 8-2423

Bird Oil Company,

Plaintiff - Appellee,

We

Perverse Akhtar

d/b/a Circle Mobil,

Defendant - Appellant.

ORDER

Upon consideration of appellant’s motion for

reconsideration, modification, and vacation of this Court’s order

dismissing this appeal,

IT IS ORDERED that appellant’s motion is denied.

Entered at the direction of Judge Russell, with the

concurrence of Judge Sprouse and Judge Wilkins.

For the Court

_JOHN M. GREACEN _

Clerk