ENTERGY GULF STATES LOUISIANA, L.L.C. and Entergy Texas, Inc. v. LOUISIANA GENERATING, L.L.C. CIVIL ACTION 14-385-SDD-RLB United States District Court, M.D. Louisiana Signed November 05, 2018 Counsel Cory R. Cahn, Marquest J. Meeks, Entergy Services, Inc. - Litigation, Andy J. DuPre, The DuPre Law Firm, LLC, Gary M. Carter, Jr., The Carter Firm, LLC, New Orleans, LA, Ilijana Todorovic, The DuPre Law Firm, Metairie, LA, for Entergy Gulf States Louisiana, L.L.C., Entergy Texas, Inc. Linda Sarradet Akchin, Alan James Berteau, Benn Vincent, James P. Dore’, Melissa M. Cresson, Randal R. Cangelosi, William L. Caughman, III, Matthew Brandon Smith, Kean, Miller, Hawthorne, D'Armond, McCowan & Jarman, Baton Rouge, LA, for Louisiana Generating, LLC. Dick, Shelly D., United States District Judge RULING *1 This matter is before the Court on the Motion to Enforce December 13, 2002 Settlement Agreement or, Alternatively, Motion to Compel Production of Coal Supply and Transportation Contracts[1] filed by Plaintiffs, Entergy Gulf States Louisiana, L.L.C. and Entergy Texas, Inc. (“Entergy”). Defendant, Louisiana Generating, L.L.C. (“LaGen”), has filed an Opposition,[2] to which Entergy filed a Reply.[3] For the following reasons, the Court finds that the Motion should be DENIED. I. BACKGROUND On April 1, 2000, Entergy and LaGen became co-owners of Unit 3, one of three units at Big Cajun II, a coal-powered steam-generating power plant in New Roads, Louisiana.[4] The rights and obligations of the parties as co-owners are governed by the Joint Ownership Participation and Operating Agreement (“JOPOA”). Section 7.4 of the JOPOA provides that “the Co-owners ... shall have the right ... to inspect or audit ... the books of account or other records ... maintained by [LaGen] ... at any reasonable time.”[5] On April 29, 2002, Entergy sent LaGen a letter, styled as a “Notice of Default of Obligations under the JOPOA.”[6] In it, Entergy alleged that, in violation of Section 7.4 of the JOPOA, “[s]ince April 1, 2000, the Entergy audit team has not been given access to any documents (including invoices and contracts) that would allow an audit”[7] of the amounts LaGen billed Entergy for “almost 24 months of fuel costs.”[8] Entergy issued a demand: “LaGen must allow Entergy to conduct a meaningful audit of all charges that are being billed,”[9] specifically by granting “access to the coal invoices.”[10] On July 11, 2002, Entergy and LaGen met “to discuss the Notice of Default of Obligations under the JOPOA.”[11] The product of that meeting was the December 13, 2002 Settlement Agreement (“the Settlement Agreement” or “the Agreement”) that Entergy now seeks to enforce. The Agreement is a two-page document with six numbered provisions. The provision most relevant to the instant Motion to Enforce is Provision 1, which states: Pursuant to confidentiality agreements to be executed by Entergy and the respective parties to the coal sales and transportation contracts, auditors for Entergy will be provided access to all the contracts and monthly invoices pertaining to the cost of coal as delivered to Big Cajun II and as billed to Entergy. The necessary confidentiality agreements were executed by November 22, 2002.[12] In January 2018, more than fifteen years after the execution of the Settlement Agreement, Entergy filed the instant Motion, urging the Court to find that LaGen is now “required to produce the coal supply and transportation contracts ... to allow Entergy to audit the almost $200 million in coal costs that it paid to LaGen between 2012 and 2018.”[13] Entergy argues that LaGen is compelled to produce those contracts “pursuant to Section 7.4 of the JOPOA, the December 13, 2002 Settlement Agreement, and Rule 26 of the Federal Rules of Civil Procedure.”[14] LaGen counters that “Entergy's Motion must be denied because the December 13, 2002 Settlement Agreement applied to different facts and parties”[15] and thus cannot be construed as applying to the current circumstances. *2 Entergy asserts that the Settlement Agreement was intended broadly, to “acknowledge[ ] Entergy's right to review the contracts under Section 7.4 of the JOPOA.”[16] Thus, it claims, the Settlement Agreement is an appropriate mechanism to force production of the 2012 to 2018 contracts that Entergy now seeks. LaGen counters that it would be improper to enforce the Settlement Agreement now, when the Agreement was, in fact, narrowly written to be “nothing more than a compromise to resolve the then-existing dispute between the parties – a demand for access to invoices and contracts for an audit of books and records of LaGen for a 24-month period from April 1, 2000 through April 1, 2002.”[17] The question before the Court is essentially one of contract interpretation. II. LAW AND ANALYSIS A. Louisiana Law of Compromise Under the Erie doctrine, federal courts sitting in diversity apply state substantive law. Entergy filed the instant suit in this Court based on diversity jurisdiction under 28 U.S.C. § 1332;[18] thus, Louisiana substantive law controls. A settlement is known as a “compromise” under Louisiana law, which provides that “[a] compromise is a contract whereby the parties, through concessions made by one or more of them, settle a dispute or an uncertainty concerning an obligation or other legal relationship.”[19] A compromise must either be made in writing or recited in open court.[20] However, the form of the compromise is not sacrosanct, and the details of the compromise need not be contained in a single document.[21] “The burden of proving the invalidity of such an agreement is on the party attacking it.”[22] A compromise is governed by the same general rules of construction applicable to contracts.[23] “Contracts are interpreted based on the parties’ intent.”[24] “The reasonable intention of the parties to a contract is to be sought by examining the words of the contract itself, and not assumed.”[25] If the contract is unambiguous and does not have absurd consequences, we apply the ordinary meaning of the contractual language. We must interpret “[e]ach provision in a contract ... in light of the other provisions so that each is given the meaning suggested by the contract as a whole.” “[T]he rule of strict construction does not authorize perversion of language or the creation of ambiguity where none exists....”[26] As with any contract, a meeting of the minds or mutual consent of the parties is required.[27] For a valid compromise there must be mutual consent to all of the terms of the agreement.[28] “A compromise settles only those differences that the parties clearly intended to settle, including the necessary consequences of what they express.”[29] “There can be no binding compromise where the terms of the release from liability are unknown.”[30] B. Interpretation of the December 13, 2002 Agreement *3 Because it is in writing and signed by both parties,[31] the Settlement Agreement is valid in form under Louisiana law. The question before the Court is not whether a valid settlement exists; the question is whether Entergy's current demand for production is within the scope of what the parties contemplated when they signed the Agreement fifteen years ago. To determine if there was a meeting of the minds on that point, the Court turns to the language of the Settlement Agreement, which is the best evidence of the common intent of the parties. There are several reasons to believe, as LaGen has argued, that the Settlement Agreement was narrowly drafted to address a specific situation, namely, Entergy's April 29, 2002 “Notice of Default of Obligations Under the JOPOA.” First, the preamble to the Settlement Agreement expressly states that the Agreement was drafted in response to Entergy's Notice of Default: WHEREAS, Entergy Gulf States, Inc. (Entergy) and Louisiana Generating LLC (LaGen) (collectively the “Parties”) met on July 11, 2002, to discuss the Notice of Default of Obligations under the JOPOA sent by Entergy in a letter of April 29, 2002 and WHEREAS representatives of the respective Parties exchanged relevant information and having met to discuss the issues set forth in the Notice, have agreed to resolve said issue and have resolved issues as described herein.[32] The preamble conveys the scope of the Agreement by stating that it was negotiated in response to the demands presented in Entergy's Notice of Default. However, Entergy now argues that, even if scope of the Settlement Agreement was coextensive with the issues raised in the Notice of Default, this fact does not compel the conclusion that the Settlement Agreement was intended narrowly, because the Notice of Default was itself broad. Entergy asserts that the Notice of Default was a document addressing its “overall contractual right to review the contracts under the JOPOA, not just a dispute over billings related to the prior 24 months.”[33] Entergy's argument is supported to some extent by the language of the Notice of Default, which is framed as an attempt to address “a number of issues [that] have arisen between the co-owners”[34] since LaGen succeeded to the interest of Entergy's former co-owner, Cajun, on April 1, 2000. Entergy's demand in the Notice of Default is likewise framed in relatively general terms, seeking to force LaGen “to perform under the JOPOA”[35] and “allow access to the coal invoices.”[36] Hence, the fact that the preamble of the Settlement Agreement confines its scope to the issues raised in Entergy's Notice of Default does not definitively show that the parties intended a narrow compromise, because the Notice of Default itself was somewhat broad in its language. However, where the Notice of Default language was relatively broad, the language that the parties assented to in Provision 1 is anything but. Provision 1 reads as follows: Pursuant to confidentiality agreements to be executed by Entergy and the respective parties to the coal sales and transportation contracts, auditors for Entergy will be provided access to all the contracts and monthly invoices pertaining to the cost of coal as delivered to Big Cajun II and as billed to Entergy. The necessary confidentiality agreements were executed by November 22, 2002.[37] Provision 1 states that Entergy “will be provided access to all the contracts and monthly invoices,”[38] but that broad grant of access is circumscribed by the clause “pursuant to confidentiality agreements.”[39] So, the access narrows from “all” contracts and invoices to only those contracts and invoices for which confidentiality agreements are or will be executed. The access is further narrowed by the last sentence of Provision 1, which states that “the necessary confidentiality agreements were executed by November 22, 2002.”[40] If Provision 1 was intended as a broad, forward-looking grant of rights that could extend upwards of fifteen years into the future, it would make no sense for the parties to state that the necessary confidentiality agreements had already been executed before November 22, 2002. Louisiana Civil Code Article 2045 provides that “the words of a contract must be given their generally prevailing meaning.” The generally prevailing meaning of a past-tense statement like “the necessary agreements were executed” is that that the confidentiality requirement has already been met and no further confidentiality agreements are contemplated. *4 Other provisions also indicate that the parties intended the Settlement Agreement to apply narrowly to Entergy's then-pending audit. First, Provision 1 specifies that “auditors for Entergy”[41] will be given access to the relevant contracts. Although it is possible to read this provision as granting access to any future auditors that Entergy may retain, it has a narrow application when read in pari materia with the Notice of Default, specifically, the statement that “[s]ince April 1, 2000, the Entergy audit team has not been given access to any documents.”[42] Second, Provision 1 specifies that Entergy will be given access to the contracts and invoices “pertaining to the cost of coal as delivered to Big Cajun II and as billed to Entergy.”[43] The use of the past tense here suggests that the provision was intended to grant access to documentation for deliveries already made and bills already issued. When the Settlement Agreement was executed in 2002, the 2012-2018 contracts for coal delivery that Entergy now seeks had, in all probability, not even been drafted yet. Thus, it is difficult to imagine that it was the common intent of the parties, in a provision referring to past deliveries and already-issued bills, to grant access to contracts that may come into being in the future. Overall, the totality of the language of Provision 1 suggests a relatively narrow compromise, crafted in response to Entergy's demand that its audit team be given access to the invoices and contracts it had not been privy to since LaGen became a co-owner or April 1, 2000. The parties’ conflicting interpretations of the Agreement are sufficiently at odds to give rise to doubt as to whether there was ever a meeting of the minds regarding the compromise. In Crowell v. CIGNA Group Ins.,[44] the United States Court of Appeals for the Fifth Circuit held that there was no meeting of the minds in a compromise where one party “intended only to negotiate the settlement of his past claims ... and was not negotiating to settle his future claims”[45] while the other party thought the compromise “included all [claims], past and future.”[46] Likewise, if Entergy and LaGen were laboring under completely different conceptions of the scope and application of their compromise, the Settlement Agreement cannot be documentation of a true meeting of the minds. Moreover, Louisiana federal courts have held that, when a settlement “instrument leaves any doubt as to whether a particular future action is covered by the compromise, it should be construed not to cover such future action.”[47] Although that holding, in Savoie v. Pennsylvania Gen. Ins. Co.,[48] concerned a settlement of wrongful death claims, the dissimilar subject matter does not make it inapposite here, because the issue is still one of contract interpretation. In Savoie, the Eastern District concluded that the parties’ “failure to use language in the release instrument which would have clearly provided for [future application] evidences a lack of intent to compromise such future action.”[49] The same can be said of the instant Settlement Agreement, which contains no language specifying its future application beyond the production of the contracts for which confidentiality agreements had already been executed. The Civil Code provides that “[a] compromise settles only those differences that the parties clearly intended to settle.”[50] The plain language of the Settlement Agreement between Entergy and LaGen suggests a relatively narrow, past-looking scope. For that reason, and because relevant case law requires the Court to construe against future application in ambiguous cases, Entergy's Motion to Enforce December 13, 2002 Settlement to gain access to “all coal supply and transportation contracts in effect from 2012 through 2018”[51] is denied. C. The Motion to Compel Entergy prays in the alternative for an order “granting their motion to compel and ordering LaGen to produce all coal supply and transportation contracts pursuant to which coal was delivered to Big Cajun II between 2012 and 2018, as well as going forward.”[52] LaGen objects, arguing that granting the Motion to Compel would be inappropriate in light of the Magistrate Judge's January 22, 2018 Order staying discovery with regard to, among other claims in the instant litigation, Entergy's claim for the production of the coal supply and transportation contracts.[53] That stay is still in place. However, the Court notes that the Magistrate Judge specified that discovery would be stayed “until the district judge's resolution of LaGen's Motion to Stay.”[54] That Motion, styled as LaGen's Motion for Limited Stay of Proceedings,[55] was granted by this Court on May 7, 2018. In its Ruling granting that Motion, this Court found that “a stay is warranted in this case”[56] because LaGen would potentially be prejudiced “if forced to comply with discovery requests”[57] during the pendency of its own Motion to Enforce Compromise.[58] This Court denied LaGen's Motion to Enforce Compromise after hearing on September 12, 2018.[59] Thus, the pendency of that Motion can no longer serve as a basis for staying discovery in this matter. *5 In any event, the Motion to Compel, like all discovery matters, is properly handled by the Magistrate Judge. Since the Motion to Enforce will be denied, the alternative Motion to Compel will be referred to the Magistrate Judge for consideration. III. CONCLUSION For the reasons set forth above, the Motion to Enforce December 13, 2002 Settlement Agreement or, Alternatively, Motion to Compel Production of Coal Supply and Transportation Contracts[60] shall be DENIED. Entergy's Motion for Oral Argument on the Motion to Enforce December 13, 2002 Settlement Agreement[61] is likewise DENIED as moot. The Motion to Compel is referred to the Magistrate. IT IS SO ORDERED. Footnotes [1] Rec. Doc. No. 70. [2] Rec. Doc. No. 93. [3] Rec. Doc. No. 110. [4] Rec. Doc. No. 70-5, p. 1. [5] Rec. Doc. 70-4, p. 80. [6] Rec. Doc. No. 70-5. [7] Rec. Doc. No. 70-5, p. 2. [8] Id. [9] Rec. Doc. No. 70-5, p. 3. [10] Id. [11] Rec. Doc. No. 70-6, p. 1. [12] Red. Doc. No. 70-6, p. 1. [13] Rec. Doc. No. 70-1, pp. 6-7. [14] Id. at p. 6. [15] Rec. Doc. No. 93, p. 1. [16] Rec. Doc. No. 70-1, p. 3. [17] Rec. Doc. No. 93, p. 10. [18] Rec. Doc. No. 1, p. 2. at ¶ 3 and 4. [19] La. C. C. art. 3071. [20] La. C. C. art. 3072. [21] Morrison v. Allstate Ins. Co., Civ. A 07–6644, 2009 WL 82557 (E.D.La.1/12/09) (citing Charbonnet v. Ochsner, 236 So.2d 86, 88 (La. App. 4th Cir. 1970)), aff'd, 258 La. 507, 246 So.2d 844 (La. 1971). [22] Sileo v. Berger, 2011–0295, 74 So.3d at 758-759 (citing Elder, 2006–0703 at p. 3, 948 So.2d at 350). [23] Smith v. Walker, 96–2813 (La. App. 1st Cir. 1998), 708 So.2d 797, 802, writ denied, 98–0757 (La.5/1/98), 718 So.2d 418. [24] Prejean v. Guillory, 2010–0740, p. 6 (La.7/2/10); 38 So.3d 274, 279. [25] Id. at 279. [26] Am. Totalisator Co. v. Fair Grounds Corp., 3 F.3d 810, 814 (5th Cir. 1993) (quoting Ransom v. Camcraft, Inc., 580 So.2d 1073, 1077 (La. App. 4th Cir. 1991)). [27] Pat O'Brien’s Bar, Inc. v. Franco's Cocktail Products, Inc., 615 So.2d 429 (La. App. 4th Cir. 1993). [28] Id. [29] La. C. C. art. 3076. [30] Anthony v. Liberty Mut. Ins. Co., 759 So.2d 910 (La. App. 3rd Cir. 2000), citing Townsend v. Square, 643 So.2d 787 (La. App. 4th Cir. 1994). [31] Rec. Doc. No. 70-6. [32] Rec. Doc. No. 70-6, p. 1. [33] Rec. Doc. No. 110, p. 2. [34] Rec. Doc. No. 70-5, p. 1. [35] Rec. Doc. No. 70-5, p. 3. [36] Id. [37] Rec. Doc. No. 70-6, p. 1. [38] Id. (emphasis added). [39] Id. [40] Id. [41] Id. [42] Rec. Doc. No. 70-5, p. 2. [43] Rec. Doc. No. 70-6, p. 1 (emphasis added). [44] 410 Fed. Appx. 788 (5th Cir. 2011). [45] Id. at 792. [46] Id. [47] Savoie v. Pennsylvania Gen. Ins. Co., No. CV 15-1220, 2017 WL 4574197, (E.D. La. Oct. 13, 2017). [48] Id. [49] Id. at *4. [50] La. C. C. art. 3076. [51] Rec. Doc. No. 70, p. 1. [52] Rec. Doc. No. 70, pp. 1-2. [53] Rec. Doc. No. 76. [54] Rec. Doc. No. 76, p. 5. [55] Rec. Doc. No. 41. [56] Rec. Doc. 115. [57] Id. [58] Rec. Doc. No. 50. [59] Rec. Doc. No. 129. [60] Rec. Doc. No. 70. [61] Rec. Doc. No. 86.