The opinion of the court was delivered by: JOY CONTI, District Judge
On April 7, 2004, plaintiff Standard Steel, LLC ("plaintiff" or
"Standard Steel"), commenced the above-captioned case seeking a
declaratory judgment declaring the respective rights of Standard
Steel and defendant Buckeye Energy, Inc. ("defendant" or
"Buckeye") relating to certain agreements entered into between
the parties for the sale of natural gas. On August 17, 2004,
Douglas Westmoreland, L.P. ("Douglas"), was joined as a
On January 17, 2005, the parties submitted this case to private
mediation presided over by mediator and former Chief Judge of the
United States District Court for the Western District of
Pennsylvania Donald Ziegler. On January 21, 2005, counsel for the
parties advised the court that, after submitting the case to
mediation, the case had settled. On that same day, the court
ordered the case closed, but expressly retained jurisdiction in
the matter to consider any issue arising during the period when
settlement was being finalized, including but not limited to
enforcing settlement. On February 4, 2005, new counsel entered a
praecipe of attorney appearance for defendant. On February 11,
2005, defendant filed a motion to reopen the case. On February 25, 2005, plaintiffs filed a motion to enforce
settlement. On July 27, 2005, this court heard evidence and
argument during an evidentiary hearing on plaintiffs' motion to
enforce settlement. On September 12, 2005, the parties filed
proposed findings of fact and conclusions of law.
In order to decide the motions, the court must address (1)
whether the parties reached an oral agreement to settle the
litigation; and, if so, (2) whether the oral settlement agreement
is affected by a no-oral modification clause in one of the three
underlying agreements at issue in the litigation and (3) whether
there is a Statute of Frauds problem with enforcing the oral
Pursuant to Federal Rule of Civil Procedure 52, this court
makes the following findings of fact and conclusions of law.
1. On April 7, 2004, plaintiff Standard Steel filed a complaint
seeking a declaratory judgment declaring the respective rights of
Standard Steel and defendant Buckeye pursuant to certain
agreements entered into between Standard Steel and Ter-Ex, Inc.,
Buckeye's predecessor in interest, for the sale of natural gas.
Complaint at ¶¶ 6-16; Complaint, Ex. A, B, C.
2. One of the three agreements underlying the litigation (the
"Farmout Agreement") dated May 20, 1980, contains the following
7. The foregoing constitutes the entire agreement
between Standard Steel and Ter-Ex [Buckeye's
predecessor in interest]. No change, modification or
alteration of this agreement shall be valid unless
the same be made or specified in writing and signed
by the parties hereto, their successors, and their
assigns; provided, however, that neither this
agreement nor the leasehold estate above mentioned
may be assigned in whole or in part without first
securing Standard Steel's written consent thereto,
and further provided that any assignment hereafter executed
shall specifically refer to and be made subject to
the terms and conditions hereof.
Respondent's Ex. 2 at 6, ¶ 7 (emphasis added).
3. The agreements underlying the litigation are contracts for
the sale of goods valued at five hundred dollars or more.
Complaint, Ex. A, B, C.
4. On May 14, 2004, defendant Buckeye filed an Answer, Defense
and Counterclaim against Standard Steel seeking a declaratory
judgement declaring the respective rights of Buckeye and Standard
Steel regarding the same agreements and adding a counterclaim for
breach of contract against Standard Steel. Answer at ¶¶ 6-16.
5. On August 4, 2004, Buckeye filed a motion to compel joinder
of Douglas pursuant to Fed.R.Civ.P. 19(a). Doc. No. 10.
Standard Steel did not oppose the joinder. Doc. No. 11. The court
ordered that Douglas be made a party-plaintiff to the litigation
on August 17, 2004.
6. On December 6, 2004, the parties filed a joint motion to
stay discovery pending mediation. Doc. No. 20. On December 9,
2004, the court entered an order staying proceedings pending the
outcome of the mediation.
7. On January 17, 2005, the parties participated in private
mediation before former Chief Judge Donald Ziegler (the
"mediation"). Transcript of July 27, 2005 Hearing ("Tr.") at
8. Judge Ziegler previously served as a Judge in the Court of
Common Pleas of Allegheny County for five years and as a United
States District Court Judge for the Western District of
Pennsylvania for twenty-five years. Since leaving the bench,
Judge Ziegler had been engaged in private practice, doing
primarily mediation and arbitration. Tr. at 23-24. 9. Present at the mediation were Judge Ziegler and counsel and
client representatives for Standard Steel, Douglas, and Buckeye.
Tr. at 24-25. Those present representing the parties had
authority to make a binding agreement on behalf of the parties
that day. Tr. at 25.
10. The primary issues being mediated concerned the past and
future prices for the sale of natural gas. The five key issues
being mediated were the amount that Standard would pay Buckeye
for gas it had received in the past, the amount that Douglas
would pay Buckeye for gas it would receive in the future, the
surcharge that Douglas would pay Buckeye for gas it would receive
in the future, the amount of gas that Douglas would take from
Buckeye in the future, and the standard of merchantability for
the gas if one were applied. See Tr. at 26 (testimony of Judge
Ziegler) (emphasis added) as follows:
Q. What do you recall as being the key issue for the
A. Well, broadly speaking, it broke down to two
issues, the amount that standard [sic] would pay
Buckeye for gas it had received in the past and the
amount that Buckeye would receive for gas sales in
Now that second issue broke down into a number of
subset issues. First we had the price that Buckeye
would receive in the future from Standard for the
sale of gas. The second aspect of that was a
surcharge that Buckeye was demanding in addition to
the base price. The third aspect of that was the
amount of gas that Standard would take on an annual
basis from one of the three wells. And then a final
issue was whether or not the gas was to be
merchantable in quality because one of the wells was
producing natural gas that contained water.
Melody Pritchard, President and CEO of Buckeye, confirmed that
these were the key points discussed at the mediation. Tr. at 44,
11. Judge Ziegler testified that it was his understanding that
the parties reached an agreement to settle the litigation at the
mediation: Q. And, Judge Ziegler, did these parties reach an
agreement to settle the litigation at the mediation
that you were holding that day?
* * * (objection by Buckeye) * * *
Q. Judge Ziegler, did the parties reach an agreement
A. Yes, sir.
Tr. at 26-27 (emphasis added).
12. Judge Ziegler testified to his understanding of the content
of the agreement to settle the litigation:
Q. What was the agreement that was reached that
A. The agreement was as follows: Standard would pay
Buckeye $100,000 in four payments: $25,000 on March
31st, $25,000 on June 30th, $25,000 on September
30th, and $25,000 on December 31st.
Going forward, Buckeye would supply gas to Standard.
It would sell it for a price on the market, and the
parties would split that price fifty-fifty. Next,
that Standard would pay Buckeye a surcharge of ten
cents on each of the MCFs thousand cubic feet of
Next, that the one well would produce at least one
hundred thousand MCF on an annual basis. And that
Standard would take up to one hundred thousand MCF
from that well, which I believe was the Bearer well,
although I may be in error what well of the three it
was. I believe it was the Bearer well.
And, lastly, that this oral agreement would apply to
the parties with respect to all three wells.
Q. Was there any agreement as to merchantability?
A. Yes, sir; there was. Ms. Pritchard specifically
stated in Phase Three of the mediation when we were
all together would Standard and Douglas please define
merchantability. They did, and she said, "Very good,
I understand. I agree."
Q. Judge Ziegler, when you said as to the future
price that Buckeye would get one-half of what Douglas
was selling it for on the market, was it your understanding that it would truly be one-half
of whatever Douglas was getting for the gas?
A. Yes, sir.
Q. So there was no discussion about indexes or
anything like that?
A. None whatsoever. And one of the main contentions
going into the mediation was Standard was insisting
upon the continuation of the fixed price. Buckeye was
insisting on a variable going forward. And,
therefore, by pegging it to the price that Douglas
was able to sell the ...