The opinion of the court was delivered by: TENNEY
This action was terminated by a Stipulation and Order of Dismissal entered on February 14, 1975. The defendants, Myles S. Spector and Helen T. Haskell, doing business as No Moss Co. ("No Moss") and Dragon Aire, Ltd. ("Dragon Aire") now move for a declaratory judgment interpreting the rights of the parties under their settlement agreement. For the reasons discussed below, defendants' motion is denied.
Musifilm, B.V. ("Musifilm") commenced this action on October 16, 1974 to recover from defendants money owed to it under a contract of sale.Pursuant to the contract, defendants had acquired from Musifilm all distribution rights in the movie "Ladies and Gentlemen: The Rolling Stones" ("the Picture"). This action never went to trial, however, because the parties reached a settlement. Under their agreement, defendants conveyed back to plaintiff certain of the distribution rights to the Picture. In particular, defendants conveyed back to plaintiff
3.1.1 All of their right, title and interest to distribute the Picture theatrically, nontheatrically, and by any and all other means and/or devices, now known or hereafter discovered, in all of the world, except for the United States, its territories and possessions and Canada, and all of their right, title, and interest in and to incidental gross respects [sic] arising therefrom;
3.1.2 All of their right, title and interest to distribute the Picture on television throughout the world, including the United States, its territories and possessions and Canada.
Agreement between Musifilm, No Moss and Dragon Aire dated November 30, 1974 ("the Agreement") (Exhibit B to Defendants' Notice of Motion filed April 11, 1983) at 2. In exchange, Musifilm cancelled defendants' debt. The parties subsequently submitted a Stipulation of Dismissal, which was "So Ordered" by the Court and filed on February 14, 1975.
Now, more than eight years later, defendants move for "an order enforcing the settlement agreement." They do not, however, charge plaintiff with any violation of the Agreement. What defendants want is a determination of the parties' rights under the Agreement.
The dispute centers around P3.1.2 of the Agreement, in which defendants granted back to Musifilm "their right to distribute the Picture on television." Defendants want to sell the cable/pay television rights to the Picture, and Musifilm has threatened legal action if they do so, claiming that the cable/pay television distribution rights belong to it rather than to the defendants, pursuant to P3.1.2 of the Agreement. Therefore, defendants seek a declaratory judgment from this Court, urging the Court to find that P3.1.2 was intended to reconvey only conventional television rights, and not cable/pay television rights, which they claim were commercially nonexistent at the time they entered the Agreement.
Characterizing their request as one "for an order enforcing the settlement agreement incorporated into the stipulation of dismissal ordered by the Court," defendants attempt to use this action, terminated more than eight years ago, as a vehicle for obtaining a declaratory judgment in their current contract dispute.
The threshold question is whether this Court has subject matter jurisdiction over the dispute. Defendants contend that it does, citing Meetings & Expositions, Inc. v. Tandy Corp., 490 F.2d 714 (2d Cir. 1974). In Tandy, the court of appeals stated that "the district court had not only the power but the duty to enforce a settlement agreement which it had approved." Id. at 717. In Tandy, however, plaintiff sought to enforce by contempt proceedings an "Agreement and Stipulation of Settlement" that had been approved by the district court and "So Ordered" at the foot of the agreement. Id. at 715, 716 n.1. In the instant case, the Agreement was never reviewed or approved by the Court.It was never made part of the record in this case, and was not ordered by the Court.
The circuits are split on the question whether a district court has the power to enforce a settlement agreement that was not approved by the court or made part of its order of dismissal. Compare Aro Corp. v. Allied Witan Co., 531 F.2d 1368, 1371-72 (6th Cir.), cert. denied, 429 U.S. 862, 50 L. Ed. 2d 140, 97 S. Ct. 165 (1976), with Fairfax Countywide Citizens Ass'n v. County of Fairfax, 571 F.2d 1299, 1302-03 (4th Cir.), cert. denied, 439 U.S. 1047, 58 L. Ed. 2d 706, 99 S. Ct. 722 (1978).In Aro Corp., the Sixth Circuit concluded that the district court does have the power to enforce such an agreement. However, in Fairfax the Fourth Circuit concluded that "the district court is not so empowered unless the agreement had been approved and incorporated into an order of the court, or at the time the court is requested to enforce the agreement, there exists some independent ground upon which to base federal jurisdiction." Fairfax Countywide Citizens Ass'n, supra, 571 F.2d at 1303 (footnote omitted). Accord Backers v. Bit-She, 549 F. Supp. 388 (N.D. Cal. 1982); see also Denali Seafoods, Inc. v. Western ...