The opinion of the court was delivered by: LEWIS KAPLAN, District Judge
This Lanham Act case was brought in 2002 and settled pursuant to an
agreement dated January 29, 2003 which called for certain defendants to
make periodic payments to plaintiff. The agreement further provided
that, upon execution and receipt of the initial payment, the parties
would discontinue the action without prejudice and then recited that
"[n]otwithstanding such dismissal, the Court shall retain continuing
jurisdiction to enforce [its]. . . terms." Finally, it stated that
plaintiff, in the event of an uncured default, would have the right "to
enter judgment . . . for the full amount of all unpaid payments, with
Following the execution of the agreement and the receipt by plaintiff
of the initial payment, the parties filed a stipulation of discontinuance without
prejudice which was approved unconditionally by the Court. The settlement
agreement never was filed or approved. Plaintiff now contends that there
has been a default under the settlement agreement and moves to reopen the
case and to enter judgment for the unpaid balance.
In Kokkonen v. Guardian Life Insurance Co. of America, 511 U.S. 375
(1994), the Supreme Court held that a district court, absent an express
reservation by the Court, does not have "jurisdiction . . . over disputes
arising out of an agreement that produces" a stipulation of dismissal.
While these parties certainly wished to have the Court retain
jurisdiction for purposes of enforcing their agreement, they never
submitted the settlement agreement to the Court and did not so provide in
their stipulation of dismissal. The Court therefore did not retain
jurisdiction for the purpose of enforcing the settlement agreement and
lacks jurisdiction over plaintiff's current claim. See, e.g., 8 Moore's
Federal Practice ¶ 41.34[h] (3d ed.2000). Plaintiff's remedy is to
sue on the settlement agreement.
This is not a matter of formalism. A district court is not obliged to
retain jurisdiction to enforce a settlement simply because parties may
wish it to do so. It might, for example, perhaps properly decline to
retain jurisdiction where the administration of a settlement threatened
to impose undue burdens on it. See id., at 41-123. Hence, if parties wish
to have a district court retain jurisdiction to enforce a settlement,
they must apply for that relief and allow the court to make a reasoned
determination as to whether retention is appropriate.
These parties did not do so. In consequence, although the parties
obviously intended that the Court retain jurisdiction, that intention
will not be given effect.
This will cause no hardship in this case. There appears to be diversity
of citizenship and thus a basis for subject matter jurisdiction in this Court. Nor
does it appear, although the Court does not so decide, that the statute
of limitations has run on the claim for breach of the settlement
agreement. Thus, the only practical effect of this ruling is that the
plaintiff will have to commence a new action and pay a filing fee to sue
on the agreement. But the fact that plaintiff will have the federal forum
that the parties contemplated is a bit of luck.
Motion denied without prejudice to the commencement of an action for
breach of the settlement agreement.
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