"The law favors and encourages compromises." W.J. Perryman Co. v. Penn. Mut. Fire Ins. Co., 324 F.2d 791, 793 (5th Cir. 1963) (citing J. Kahn Co. v. Clark, 178 F.2d 111 (5th Cir. 1949)); see also Courtney v. Andersen, 264 Fed. Appx. 426, 429 (5th Cir. 2008). Settlements may provide for the release of future damages, if the parties so intend. W.J. Perryman Co., 324 F.2d at 793; Courtney, 264 Fed. Appx. at 429.

I begin with the language of the Settlement Agreement, particularly the definition of Released Claims. It is not in dispute that if parties to a settlement clearly and unambiguously agree to do so, “[f]uture damages may be released if such is the intent of the parties.” W.J. Perryman & Co. v. Penn. Mut. Fire Ins. Co., 324 F.2d 791, 793 (5th Cir.1963). However, the language of a settlement agreement determines whether that is so. “Litigation or settlement will not automatically bar a later suit for a second, identical breach.”

Preclusion extends to all matters the parties intended to be covered under the settlement agreement, even if not formally presented in the complaint that initiated that prior suit. W.J. Perryman Co. v. Perm. Mut. Fire Ins. Co., 324 F.2d 791, 793 (5th Cir. 1963). In determining what the parties intended to be covered, the rules of contract law govern the interpretation of the meaning and reach of settlement agreements.

Public policy "favors and encourages" the settlement of claims between parties and permits them to release future damages as part of a settlement agreement. W.J. Perryman Co. v. Penn. Mut. Fire, Ins. Co., 324 F.2d 791, 793 (5th Cir. 1963). "In the context of contract interpretation, only when there is a choice of reasonable interpretations of the contract is there a material fact issue concerning the parties' intent that would preclude summary judgment."

Public policy "favors and encourages" the settlement of claims between parties and permits them to release future damages as part of a settlement agreement. W. J. Perryman Co. v. Penn Mut. Fire Ins. Co., 324 F.2d 791, 793 (5th Cir. 1963). "In the context of contract interpretation, only when there is a choice of reasonable interpretations of the contract is there a material fact issue concerning the parties' intent that would preclude summary judgment."

Consequently, the scope of the preclusive effect of the 1977 Dismissal should not be determined by the claims specified in the original complaint, but instead by the terms of the Settlement Agreement, as interpreted according to traditional principles of contract law. See W.J. Perryman Co. v. Penn. Mut. Fire Ins. Co., 324 F.2d 791, 793 (5th Cir. 1963) ("The compromise, settlement and release are as conclusive as a judgment would have been if the claim had been litigated rather than compromised and settled. The dismissal with prejudice adds res judicata to the release as barring recovery by the appellant.

Pearson v. Ecological Science Corp., 522 F.2d 171 (5th Cir. 1975), states the principle that "'[s]ettlement agreements are highly favored in the law and will be upheld whenever possible because they are a means of amicably resolving doubts and preventing lawsuits'. D.H. Overmyer Co. v. Loflin, 5 Cir. 1971, 440 F.2d 1213, 1215; W.J. Perryman Co. v. Penn Mutual Fire Insurance Co., 5 Cir. 1963, 324 F.2d 791, 793." Id. at 176.

Further, we are guided throughout our decision by the principle that "[s]ettlement agreements are highly favored in the law and will be upheld whenever possible because they are a means of amicably resolving doubts and preventing lawsuits". D.H. Overmyer Co. v. Loflin, 5 Cir. 1971, 440 F.2d 1213, 1215; W.J. Perryman Co. v. Penn Mutual Fire Insurance Co., 5 Cir. 1963, 324 F.2d 791, 793. In considering the validity of the district court's findings of fact contained in the March 28, 1974 order, we are governed by the "clearly erroneous" standard.

Thus the presence of an uncertainty here supports rather than detracts from the vitality of this settlement. See Browne v. Merchants Co., 186 Miss. 398, 191 So. 58 (1939); W.J. Perryman Co. v. Penn Mutual Fire Ins. Co., 324 F.2d 791 (5th Cir. 1963); 15 Am.Jur.2d Compromise and Settlement § 11 (1964). Next Overmyer argues that the payments to Loflin were made through inadvertence and a mistake of fact, and that such inadvertence and mistake vitiated any accord and satisfaction that might otherwise have resulted.

Defendants detail that Alabama law allows for indemnity for claims resulting solely from negligence and for future damages. (Doc. 37-1 at 6 (citing Holcim (US), Inc. v. Ohio Ca. Ins. Co., 30 So. 3d 722, 728 (Ala. 2009); Jehle-Slauson Const. Co. v. Hood-Rich Architects and Consulting Engineers, 435 So.2d 716, 719-720 (Ala. 1983) (quoting W.J. Perrymore & Co. v. Penn Mutual Fire Insurance Co., 324 F.2d 791, 793 (5th Cir.1963))).)