UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF NEW YORK
August 14, 2012
BRICKLAYERS AND ALLIED CRAFTWORKERS LOCAL 2, ALBANY, NEW YORK PENSION FUND BY ITS ADMINISTRATOR, STEPHEN J. O'SICK; BRICKLAYERS AND ALLIED CRAFTWORKERS LOCAL 2, ALBANY, NEW YORK HEALTH BENEFIT FUND BY ITS ADMINISTRATOR, STEPHEN J. O'SICK; BRICKLAYERS AND ALLIED CRAFTWORKERS LOCAL 2, ALBANY, NEW YORK EDUCATION & TRAINING FUND BY ITS TRUSTEES, ROBERT MANTELLO, PASQUALE TIRINO, LUKE RENNA, MICHAEL SUPRENANT, NICHOLAS TIRINO, DALE STEHLIN, THOMAS MURRAY, VIC MION, KEVIN AUGUSTINI, J. D. GILBERT, THOMAS MARINELLO AND TODD HELFRICH; BRICKLAYERS AND TROWEL TRADES INTERNATIONAL PENSION FUND BY DAVID STUPAR, EXECUTIVE DIRECTOR; AND BRICKLAYERS AND ALLIED CRAFTWORKERS LOCAL 2, ALBANY NEW YORK, AFL-CIO BY ROBERT MANTELLO, PRESIDENT, PLAINTIFFS,
DIBERNARDO TILE AND MARBLE CO., INC.; AND GEORGE DIBERNARDO, JR. INDIVIDUALLY AND AS AN OFFICER OF DIBERNARDO TILE AND MARBLE CO., INC. DEFENDANTS.
MEMORANDUM-DECISION and ORDER
Plaintiffs brought this suit pursuant to the Employee Retirement Income Security Act ("ERISA"), as amended, 29 U.S.C. §§ 1001 et seq. Dkt. No. 1 ("Complaint"). On December 4, 2008, a Stipulation and Order of conditional discontinuance was entered in, stating that the parties had reached a settlement agreement. Dkt. No. 28 ("Stipulation and Order"). Presently before the Court is Plaintiffs' Motion requesting that the Court: (1) reopen the case; (2) enforce a judgment against Defendant; and (3) award attorney's fees to Plaintiffs. Dkt. No. 29 ("Motion"). Defendant filed a Response to the Motion, and Plaintiffs subsequently filed a Reply to the Response. Dkt. Nos. 31 ("Response"), 32 ("Reply"). For the following reasons, the Court concludes that it lacks subject matter jurisdiction to grant Plaintiffs' requests and denies Plaintiffs' Motion without prejudice.
On January 11, 2008, Plaintiffs filed the instant action, alleging, inter alia, that Defendant had failed to remit fringe benefit contributions to a pension plan under ERISA. See generally Compl.; see also Dkt. No. 22 ("Amended Complaint"). The parties eventually reached a settlement agreement, and on December 4, 2008, the Court entered a Stipulation and Order of conditional discontinuance. Stipulation The Stipulation and Order did not contain the terms of the parties' agreement and contained no language incorporating any such terms. Id. Instead, the Stipulation and Order stated that "the action is settled and is conditionally discontinued without prejudice, reserving Plaintiffs' rights to reopen the action and proceed with the entry of judgment." Id. The Stipulation and Order makes mention of an agreement reached on November 10, 2008 ("the November 2008 Agreement"), but no such agreement was presented to the Court. See generally Dkt.
Almost three years later, on September 7, 2011, Plaintiffs filed the instant Motion, alleging that Defendant had failed to comply with the terms of the parties' agreement and that as a result Plaintiffs were entitled to, inter alia, liquidated damages and attorney's fees. See generally Mot.
Along with their Motion and other supporting documentation, Plaintiffs filed as "Exhibit A" what appears to be a copy of the November 2008 Agreement, signed by Defendant on November 10, 2008 and by Plaintiff Stephen J. O'Sick ("O'Sick") on April 15, 2009. Dkt. No. 29-3 ("Agreement"). The Agreement appears to lay out the terms of settlement, including provisions for the entry of a judgment and the payment of liquidated damages and attorney's fees in the event of Defendant's non-compliance or non-performance. See generally id. The Agreement also contains a provision stating that Defendant waives all defenses to the filing of the Agreement. Id. at 7.
Defendant filed a Response to the Motion, primarily relying on New York state contract law and arguing that the liquidated damages that Plaintiffs had requested amounted to an impermissible penalty. Response at 1-2. In their Reply, Plaintiffs quote language from the Agreement and argue that Defendant is obligated to pay liquidated damages and comply with the terms of the Agreement. See generally Reply.
III. LEGAL STANDARD
"The district courts of the United States . . . are 'courts of limited jurisdiction. They possess only that power authorized by Constitution and statute.'" Exxon Mobil Corp. v. Allapattah Servs., Inc., 545 U.S. 546, 552 (2005) (quoting Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994)). For a matter to properly be before a federal court, that court must have both subject matter and personal jurisdiction. Even if the parties themselves have not raised the issue, jurisdiction is a threshold issue which that a court must address and may raise sua sponte. See, e.g., Gonzalez v. Thaler, 132 S. Ct. 641, 648 (2012); Henderson ex rel. Henderson v. Shinseki, 131 S. Ct. 1197, 1202 (2011) ("[F]ederal courts have an independent obligation to ensure that they do not exceed the scope of their jurisdiction, and therefore they must raise and decide jurisdictional questions that the parties either overlook or elect not to press"); Transatlantic Marine Claims Agency, Inc. v. Ace Shipping Corp., 109 F.3d 105, 107 (2d Cir. 1997). If a federal court lacks subject matter jurisdiction, it must dismiss the action. See FED. R. CIV. P. 12(h)(3); Arbaugh v. Y & H Corp., 546 U.S. 500, 514 (2006); Durant, Nichols, Houston, Hodgson & Cortese-Costa, P.C. v. Dupont, 565 F.3d 56, 62-63 (2d Cir. 2009).
In this case, no party has questioned the Court's jurisdiction. See Mot., Resp., Reply. However, mindful of its "independent obligation to ensure that [it does] not exceed the scope of [its] jurisdiction," the Court addresses the issue of its subject matter jurisdiction sua sponte. Henderson, 131 S.Ct. at 1202. Therefore, the Court must apply Kokkonen to determine if the Court has authority to enforce the settlement agreement, or if such enforcement is properly the province of another court or the subject of another action.
An action seeking to enforce a settlement agreement "is more than just a continuation or renewal of [a] dismissed suit, and hence requires its own basis for jurisdiction." Kokkonen, 511 U.S. at 378. It is "well-settled" that a district court may "exercise ancillary jurisdiction to enforce a settlement agreement only if the dismissal order expressly retained jurisdiction over that particular agreement, or incorporated it into the order." State Street House, Inc. v. New York State Urban Development Corp., 75 F. App'x 807, 810 (2d Cir. 2003) (citing Herrick Co., Inc. v. SCS Communications, Inc., 251 F.3d 315, 327 (2d Cir. 2002) and Scelsa v. City University of New York, 76 F.3d 37, 41 (2d Cir. 1996) (underlying action based on federal claim jurisdiction)); see also Kokkonen, 511 U.S. at 378. A "judge's mere awareness and approval of the terms of the settlement agreement do not suffice to make them part of his order." Kokkonen, 511 U.S. at 381; see also Scelsa, 76 F.3d at 41 ("The mere reference in the order to the Agreement does not incorporate the Agreement into the order") (citing Miener v. Missouri Dep't of Mental Health, 62 F.3d 1126, 1128 (8th Cir. 1995)). Further, in Kokkonen, the Supreme Court emphasized the distinction between a new action to enforce a settlement agreement and "merely reopening . . . the dismissed suit," recognizing that enforcement of a settlement agreement posed more jurisdictional concerns and required an independent basis for jurisdiction. Kokkonen, 511 U.S. at 381.
Even if a dismissal order does not explicitly state that a court retains jurisdiction over a claim and does not explicitly incorporate the terms of the settlement agreement into the order, a federal court may still decide a motion to reopen a case and enforce a settlement agreement if an independent basis for jurisdiction exists. Id. at 382; see also Burke v. Lash Work Environments, Inc., 408 F. App'x 438, 439-41 (2d Cir. 2011);*fn1 Murphy v. First Reliance Standard Life Ins. Co., No. 00-CV-6647, 2008 WL 1787672 at *2 (E.D.N.Y. Apr. 17, 2008).
"[I]n cases involving settlement agreements whose enforcement requires interpretation or application of ERISA law, courts have ruled statelaw [sic] claims preempted and have found federal jurisdiction." Murphy, 2008 WL 1787672 at *2 (quoting Miele v. Pension Plan of N.Y. State Teamsters Conference Pension & Ret. Fund, 72 F. Supp. 2d 88, 95 (E.D.N.Y. 1999)); see also Burke, 408 F. App'x at 439-41. However, even in ERISA cases, courts have found federal jurisdiction lacking where enforcing a settlement agreement requires applying principles of contract law as opposed to interpreting statutory provisions. See, e.g., Peacock v. Thomas, 516 U.S. 349, 358 (1996) (finding no subject matter jurisdiction because "the alleged wrongdoing in this case took place after the ERISA judgment was entered"); Brown v. City of New York, No. CV 2009-1809, 2012 WL 628496, at *2-3 (E.D.N.Y. Jan. 30, 2012); LaBarbera v. Dasgowd, Inc., No. CV-03-1762, 2007 WL 1531895, at *2 (E.D.N.Y. May 22, 2007) (finding no subject matter jurisdiction to enforce an ERISA settlement and noting that "[a]ctions to enforce settlement agreements are, in essence, contract actions which are governed by state law"); cf. Scelsa, 76 F.3d at 41 (finding jurisdiction lacking to enforce a settlement agreement when the underlying action involved a federal claim); Bryant v. Emigrant Mortg. Co., Inc., No. 10-CV-0102, 2011 WL 3876978, at *6 (E.D.N.Y. Aug.31, 2011) (stating that disputes over federal settlements, even those that resolve federal claims, are "quintessentially . . . of contractual interpretation and performance and wholly governed by state law"); Stone v. Credit Solutions Corp., No. 09-CV-281A, 2011 WL 2747572, at *2 (W.D.N.Y. June 21, 2011) (finding jurisdiction lacking to enforce a settlement agreement when the underlying action involved a federal claim).
Here, it is clear that the Stipulation and Order did not incorporate the terms of the Agreement. No such language ever appeared in the Stipulation and Order. "In fact, [the Agreement] was never submitted to the Court. Accordingly, under Kokkonen, the Court lacks ancillary jurisdiction to hear the settlement dispute."*fn2 Murphy, 2008 WL 1787672 at *2 (citing Buckhannon Bd. and Care Home Inc. v. West Va. Dep't of Health and Human Resources, 532 U.S. 598, 604 n. 7 (2001)). Similarly, the Stipulation and Order does not explicitly reserve the Court's jurisdiction to enforce the Agreement. See Scelsa, 76 F.3d at 41 ("most importantly, the Dismissal Order neither expressly retains jurisdiction over the Agreement nor incorporates its terms. The mere reference in the order to the Agreement does not incorporate the Agreement into the order") (citation omitted).*fn3
While the Stipulation and Order does state that "the action is settled and is conditionally discontinued without prejudice, reserving Plaintiffs' rights to reopen the action and proceed with the entry of judgment," Stipulation, the Court considers such a statement to be geared towards preserving Plaintiffs' rights and preventing Plaintiffs from being left without legal recourse, rather than guaranteeing that the Court will reopen the case for the sole purpose of enforcing a judgment.*fn4
That is, the Court concludes that a plain reading of the Stipulation and Order does not demonstrate an intent to preserve the Court's jurisdiction over all issues that might arise in relation to the enforcement of the Agreement -- a document that the Court had neither inspected, approved, nor incorporated.*fn5 See LaBarbera, 2007 WL 1531895, at *2 ("Once a lawsuit is settled and dismissed, the district court does not generally have ancillary jurisdiction to enforce the parties' settlement agreement. A district court can, however, retain jurisdiction over a settlement agreement if the order of dismissal shows an intent to retain jurisdiction or incorporates the settlement agreement.") (quoting McKay v. U.S., No. 06-1194, 2006 WL 3291757, *1 (10th Cir. Nov. 14, 2006) (alterations in original). Rather, the Stipulation and Order appears designed to insure that Plaintiffs' would not be precluded from pursuing appropriate remedies in the event of Defendant's failure to abide by the terms of the Agreement. Cf. Murphy, 2008 WL 1787672, at *3 ("the Court finds that it may not exercise ancillary jurisdiction over the instant dispute pursuant to Kokkonen. Plaintiff may have recourse under Rule 60(b)(6), or he may file a separate action"); Rolex Watch, U.S.A., Inc. v. Bulova Watch Co., Inc., 820 F. Supp. 60, 63 (E.D.N.Y. 1993). Therefore, the Court cannot conclude that the Stipulation and Order provides a basis for the Court to exercise ancillary jurisdiction to enforce the settlement.
Even though the Court did not incorporate the terms of the Agreement into its Stipulation and Order and did not manifest a clear intent to exercise jurisdiction over future enforcement of the Agreement, the Court might still appropriately exercise jurisdiction over Plaintiffs' Motion if a federal question persists. Burke, 408 F. App'x at 439-41. The Court finds no such federal foothold here. While the Court is mindful of the federal courts' exclusive jurisdiction over ERISA matters and also of the clear ubiquity of federal issues in Plaintiffs' initial Complaint, the Court concludes that the Motion and the request that the Court enforce the Agreement require a state law contract analysis and do not implicate the niceties of ERISA. See, e.g., Peacock, 516 U.S. at 358 ("the alleged wrongdoing in this case took place after the ERISA judgment was entered . . . . Other than the existence of the ERISA judgment itself, this suit has little connection to the ERISA case"); Brown, 2012 WL 628496, at *3 ("such an action is simply 'a claim for breach of contract, part of the consideration for which was dismissal of an earlier federal suit,' the effect of which is that 'enforcement of the settlement agreement is for state courts unless there is some independent basis for federal jurisdiction.'") (quoting Kokkenen, 511 U.S. at 381-82); see also Scelsa, 76 F.3d at 41 (finding no subject matter jurisdiction despite the fact that the settlement agreement was entered into to resolve a claim under federal statute).
Here, enforcement of the Agreement appears to hinge on a determination
of: (1) whether Defendant failed to abide by the terms of the
Agreement; and (2) whether the terms of the Agreement that relate to
liquidated damages comport with principles of contract law. The Court
is unconvinced that either of these avenues of analysis require any
degree of engagement with ERISA or other federal law.*fn6
Absent any need to interpret provisions of ERISA or apply
federal law, the resolution of this matter falls outside of the
province of the federal courts and would appropriately be resolved as
a contract dispute in state court.*fn7 Therefore, the
Court denies Plaintiffs' Motion requesting the Court to reopen the
case, enforce judgment against Defendant, and award attorney's
B. Leave to Re-File
In concluding, the Court emphasizes that it has addressed the jurisdictional question sua sponte and absent any briefing from the parties. That the Court finds denial of Plaintiffs' Motion the only proper course of action in no way leaves Plaintiffs without recourse if -- as alleged -- Defendant has failed to abide by the terms of the parties' Agreement and if Plaintiffs wish to persist in pursuing this judgment. Nevertheless, cognizant of the fact that the Stipulation and Order discontinued the case without prejudice, and in an effort to avoid unnecessary and costly duplicate litigation and to ensure that the parties are heard fully, the Court denies Plaintiffs' Motion without prejudice. If Plaintiffs wish to re-file, they must do so within thirty days. Plaintiffs are advised that if they do so, they must provide full briefing on the jurisdictional question and the enforceability of the Agreement's liquidated damages provisions.*fn9
Accordingly, it is hereby:
ORDERED, that Plaintiffs' Motion (Dkt. No. 29) requesting that the Court reopen the case, enforce a judgment against Defendant, and award attorney's fees is DENIED without prejudice. If Plaintiffs wish to re-file a motion seeking the same relief, they must do so within thirty (30) days. Plaintiffs are advised that if they do so, they must provide full briefing on the jurisdictional question and the enforceability of the Agreement's liquidated damages provisions; and it is further
ORDERED, that the Clerk serve a copy of this Order on all parties.
IT IS SO ORDERED.