A recent decision of the U.S. Court of Appeals for the Fourth Circuit addressed a dispute concerning a ship repair contract that the U.S. Navy signed with a company called East Coast Repair. East Coast Repair claimed the Navy owed money for the repairs. But the court’s decision turned not on the ship repair contract, but on a settlement agreement the parties had recently signed to resolve a separate lawsuit on a separate contract. Based on its interpretation of the settlement agreement, the court held that East Coast Repair had settled and released the later claim.
The decision reminds litigants of the importance of precision in settlement agreements. Those agreements can have a profound impact on the parties’ ongoing business relationships.
