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Heinz Kauhsen, D/B/A Classic Racing Cars v. Aventura Motors

July 9, 2012


The opinion of the court was delivered by: Hurley, Senior District Judge:


Plaintiff brings this diversity action arising from the 2008 purchase of a 1955 Porsche Cabriolet from defendant, Aventura Motors, Inc. Presently before the Court is plaintiff's motion for attorney's fees. For the reasons that follow, plaintiff's application is denied.


In December of 2009, after defendant failed to respond timely to the complaint, the Court entered a default judgment in plaintiff's favor and referred the matter to Magistrate Judge Michael Orenstein for an inquest on damages. (See Orders dated 12/01/09.) After a number of adjournments, Judge Orenstein held two consecutive days of hearing on damages on September 22 and 21, 2010. On the second day of hearing, the parties came to a mutual resolution of the matter, and dictated the terms of a settlement on the record. (See Minute Entry dated 9/22/10.) Therein, defendant agreed to pay plaintiff $40,000 in full satisfaction of plaintiff's claim within 90 days, viz. by December 21, 2010. (Affidavit of Martin F. Gusy ("Gusy Aff.") ¶ 11.) The Clerk of Court then administratively closed the case on September 22, 2010 in light of the parties' settlement agreement.*fn1

On December 20, 2010, on the eve of the deadline for payment, defendant's counsel contacted plaintiff's counsel to inform him that defendant would only be able to pay $10,000 by the due date, and that the remaining $30,000 payment would have to be tendered over the course of the following three months. (Gusy Aff. Ex. C.) After not receiving payment on either sum, plaintiff's counsel followed up by email dated January 5, 2011, stating that he had been "instructed to impose a last and final payment deadline" of January 7, 2011 for the entire $40,000. (Gusy Aff. Ex. D.) Defendant's counsel promptly responded the same day, stating that his clients "simply do not have the money," but that they would make a $10,000 payment immediately, if the parties could come to an agreement regarding payment of the balance over the next three months. (Id.)

Later that day, on January 5, 2011, defendant's counsel emailed plaintiff's counsel to confirm that he had received $10,000 in his IOLA account, and that he would wire the money "as soon as [they] have a settlement agreement that provides for the balance to be paid in installments of [$10,000] over the next three months." (Gusy Aff. Ex. E.) Plaintiff's counsel immediately responded that the prior deadline for full payment of the settlement proceeds had passed on December 21, 2010. (Gusy Aff. Exs. D, F.) No mention of the proposed installment agreement was made.

On January 7, 2011, plaintiff filed a request for a premotion conference in anticipation of a motion for either default judgment, summary judgment, and/or for an order compelling payment of the settlement proceeds. (See Letter dated 1/07/11, docket no. 31.) Defendant responded, arguing inter alia, that the Court did not have jurisdiction to entertain a motion to enforce the agreement because the Court never retained jurisdiction over the matter. (See Letter dated 1/13/11, docket no. 32.)

Shortly thereafter, on February 3, 2011, the parties signed a new agreement (hereinafter "Agreement" or "Contract"), which contemplated the immediate payment of $10,000 and payment of the $30,000 balance by February 28, 2011. (Agreement § 1.) After a number of inquiries by plaintiff's counsel, defendant finally made the initial $10,000 payment on March 11, 2011, but informed plaintiff that the balance could not be paid until April 25, 2011, "[d]ue to severe and unforeseen financial issues." (Gusy Aff. Ex. L.)

Having still not received payment on the balance, plaintiff filed a request with the Court on March 29, 2011 for an Order to Show Cause why a prejudgment order of attachment should not be entered against defendant for $30,000. (Motion for Order to Show Cause, docket nos. 38-40.) The Court issued the order to show cause on March 30, 2011, scheduling a hearing on the matter for April 8, 2011. However, before the date for a hearing, defendant tendered payment of the $30,000 balance, and plaintiff withdrew his motion. (Motion to Withdraw, docket no. 43.) Plaintiff then filed the instant motion seeking $33,594.83 in attorney's fees and $690.20 in costs pursuant to section eight of the parties' February 3, 2011 settlement agreement. That provision states: "In the event of any litigation concerning this agreement, the prevailing party shall be entitled to recover costs and reasonable attorney's fees through all appeals." (Agreement § 8.)


Before the Court may address the merits of plaintiff's application, it must first evaluate defendant's contention that the Court lacks subject matter jurisdiction to hear this motion. Relying primarily on the Supreme Court case, Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375 (1994), defendant argues that because the Court did not explicitly retain jurisdiction to hear the matter, it is without the authority to rule on a dispute arising out of the agreement. Indeed, under Kokkonen, "in the absence of such an independent basis for jurisdiction, a federal court has jurisdiction to enforce a settlement agreement only if the dismissal order specifically reserves such authority or the order incorporates the terms of the settlement." Joseph v. Scelsa, 76 F.3d 37 (1996)(citing Kokkonen, 511 U.S. at 381-82).

The Kokkonen case, however, presented in a different procedural posture than the instant action. There, the parties filed a signed, written stipulation of dismissal pursuant to Fed. R. Civ. P. 41(a)(1)(ii), which the district court so ordered. Kokkonen, 511 U.S. at 376-77. In so ordering the stipulation, however, the court did not retain jurisdiction to enforce the underlying agreement, which the Supreme Court later held on appeal stripped it of the power to oversee the settlement dispute. Here, after the Court had granted plaintiff's motion for default judgment against defendant and referred the matter for an inquest on damages, the parties entered a settlement agreement on the record before the magistrate judge. Thereafter, the Clerk of Court administratively closed the case. At no point, however, did this Court ever "so order" the stipulation that was read into the record before Judge Orenstein. Subsequently, the parties entered into a second Agreement on February 3, 2011 that superseded*fn2 the prior agreement. The second Agreement was also never so ordered by the Court, nor was a request for the Court to do so ever made by the parties.

The parties offer differing views as to whether the case was actually dismissed. Defendant contends, of course, that it was, and plaintiff that it was not. Determining this question directly affects whether the Kokkonen jurisdictional rule applies. See, e.g., Brents v. Esprit De Corps Res. Group, 2004 U.S. Dist. LEXIS 19633 at *4 n.1 (D. Conn. Sept. 27, 2004)("The present action has not been dismissed and so Kokkonen does not apply.") The Court may exercise jurisdiction over a settlement dispute if-as is typically done in a dismissal order-it directs the parties to comply with the settlement agreement, or other otherwise retains jurisdiction within the language of the order. Kokkoken, 511 U.S. at 381-82. Otherwise, the Court may exercise ancillary jurisdiction where enforcement of the subject agreement would "permit disposition by a single court of claims that are, in varying respects and degrees, factually interdependent," or "enable a court to function successfully, that is, to manage its proceedings, vindicate its authority, and effectuate its decrees." Id. at 379-80 (internal citations omitted).

Although, the Clerk of Court administratively closed, or "terminated," the case following the parties' on-the-record stipulation of settlement, the case was never actually dismissed. Under Rule 41(a), Fed. R. Civ. P., a case may be voluntarily dismissed without order of a court where (i) the plaintiff provides a notice of dismissal prior to the service of an answer or motion for summary judgment by the opposing party, or (ii) where there is a stipulation of dismissal "signed by all parties." (Id.) As no answer or motion for summary judgment was filed in this case, the first situation applies. Plaintiff did not file a notice of dismissal here, and the Court declines to construe the stipulation read into the record by the parties as such notice. Although a stipulation is not necessarily required in this instance, the email correspondence between counsel makes clear that the parties contemplated dismissal of this case through the filing of a stipulation of discontinuance. (See Email of Defendant's Counsel dated 12/8/10, Gusy Aff. ...

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