CHRISTIAN F. HUMMEL, Magistrate Judge.
Currently pending before the Court is plaintiff's letter motion seeking the Court to issue an order to "reopen my case above as a result, and to re-negotiate the present settlement reached in the above case." Dkt. No. 48 at 1. On February 13, 2017, defendant Excelsior College filed a response. Dkt. No. 52. On March 17, 2017, defendant filed a further response in opposition to plaintiff's letter motion. Dkt. No. 55. On March 22, 2017, a conference was conducted with plaintiff
On June 8, 2004, plaintiff filed a complaint, commencing this action. Dkt. No. 1 ("COmpl."). On July 6, 2004 plaintiff filed an amended complaint. Dkt. No. 4. On November 9, 2004 defendant filed an answer to the amended complaint. Dkt. No. 15. Plaintiff, a resident of Rhode Island, was previously enrolled as a nursing student at defendant Excelsior College which is located in Albany New York. Dkt. No. 4. ¶¶ 1, 2 ("Amended Compl."). On July 13, 1996, plaintiff was scheduled to take the Clinical Performance in Nursing Examination ("CPNE").
In 2005, the parties entered into a written settlement agreement. Dkt. No. 52-1. The parties also executed a stipulation of voluntary dismissal with prejudice which was "So Ordered" by then United States Magistrate Judge David R. Homer. Dkt. No. 52-1 at 12-13. The 2005 settlement agreement provided, among other things, that defendant would waive a re-enrollment fee "one-time" only, as well as certain other fees and requirements in connection with the nursing program plaintiff wishes to pursue. Dkt. No. 30, 31. Plaintiff was required to re-enroll within one year of June 27, 2005, the date on which plaintiff executed the settlement agreement.
On March 4, 2009, plaintiff filed a letter motion seeking to reopen the case. Dkt. No. 32. Plaintiff alleged that "[D]efendant (Excelsior College) did not do was necessary and needed to have me RE-Enroll as per Stipulated Agreement."
Pursuant to the terms of the second settlement agreement plaintiff was required to take and pass the CPNE no later than December 31, 2015. Dkt. No. 43 at 3. Plaintiff did not reenroll or complete the requirements for her nursing degree by December 31, 2015. Dkt No. 52 at 3.
Plaintiff contends that due to "my medical conditions of various flashbacks and pain, it was impossible for me to study and effectuate the contract agreements to the present time." Dkt. No. 48 at 2. Defendant opposes re-opening and re-litigating this matter. Dkt. Nos. 52, 55.
On February 13, 2017, defendant Excelsior College filed a response to plaintiff's letter motion seeking to reopen the case. Dkt. No. 52. Defendant filed an affidavit of service indicating that the response was served on plaintiff by Federal Express on February 13, 2017. Dkt. No. 52-3. On March 17, 2017, defendant filed a further response in opposition to plaintiff's letter motion. Dkt. No. 55. That letter indicates that a copy was served on plaintiff.
During the conference, the Court asked plaintiff if she had received defendant's letter dated February 13, 2017 (Dkt. No. 52). Plaintiff acknowledged that she had received a copy of that letter. Dkt. No. 58 at 3. The Court also asked plaintiff if she had received a copy of defendants' March 17, 2017 letter (Dkt. No. 55). Plaintiff indicated that she had not received the March 17, 2017 correspondence. Dkt. No. 58 at 3-4, 13. Defendant advised the Court that a copy of the letter had been sent to plaintiff by regular mail and also been emailed to plaintiff.
On May 1, 2017, plaintiff filed a reply. Dkt. No. 57. In her reply, plaintiff does not address any of the legal arguments raised by defendant in either the February 13, 2017 response (Dkt. No. 52) or the March 17, 2017 response (Dkt. No. 55.). Instead, plaintiff argues, somewhat remarkably, that she is not in position to respond to defendant's opposition letters because, "as of this letter today, I have not receive [sic] any of the documents defendant's lawyer told the court at the hearing on March 2017 that she em ailed and also had mailed such documents to me." Dkt. No. 57 at 2. The February 13, 2017 letter filed by defendant is the same letter which plaintiff acknowledged receiving and having in her possession during the March 22, 2017 conference with the Court. Dkt No. 58 at 3. Plaintiff also appears to contend in her reply that she never received the letter filed by defendant on March 17, 2017 (Dkt. No. 55) which is the same letter the Court provided to and discussed at great length with plaintiff during the March 22, 2017 conference. Dkt. No. 58.
On May 5, 2017, defendant filed a sur-reply. Dkt. No. 59. In the sur-reply, defendant confirms that during the Court conference conducted on March 22, 2017, plaintiff was provided with a complete copy of defendant's March 17, 2017 letter (Dkt. No. 55).
For the reasons set forth below is recommended that plaintiffs letter motion seeking to reopen and renegotiate the 2010 settlement agreement be denied. Dkt. No. 48.
Defendant contends that this Court lacks subject matter jurisdiction over the parties 2010 settlement agreement, and, therefore, lacks the ability to grant plaintiff the relief she seeks. The Court agrees. Before the Court may address plaintiff's request to re-open and re-negotiate the 2010 settlement agreement, the Court must consider whether it has jurisdiction. See
Here, the 2010 settlement agreement was "So Ordered" by Magistrate Judge Homer on March 10, 2011. Dkt. No. 43 at 11. Judge Homer did not expressly retain jurisdiction over the settlement agreement or incorporate the terms of the settlement agreement in an order. Dkt. No. 43. Accordingly, as the Court did not retain jurisdiction at the time the 2010 settlement agreement was executed, and did not incorporate the terms of the agreement in an order, the Court lacks subject matter jurisdiction to entertain plaintiff's application to reopen or renegotiate the 2010 settlement agreement.
Where a District Court lacks ancillary jurisdiction to enforce a settlement agreement "enforcement of the settlement agreement is for the state courts, unless there is some independent basis for federal jurisdiction."
The undersigned has also considered whether the Court has subject matter jurisdiction based on diversity of citizenship.
In addition to the requirement that the parties be citizens of different states, a Court may only have diversity jurisdiction if "the matter in controversy exceeds the sum or value of $75,000, exclusive of interest and costs. . . ." 28 U.S.C.§ 1332 (a). Here, the terms of the 2010 settlement agreement require defendant to waive plaintiff's undergraduate application fee of $75.00 and her re-enrollment fee of $895.00. Dkt. No. 43 at 3. Defendant further agreed to waive for one year the annual $440.00 fee to stay enrolled in the nursing program as well as waive fifty percent of the annual fee to stay enrolled through December 2015.
Accordingly, as the undersigned concludes that no basis for ancillary jurisdiction exists, it is recommended that plaintiff's letter motion seeking to reopen or renegotiate the 2010 settlement agreement (Dkt. No. 48) be denied because this Court lacks subject matter jurisdiction.
Plaintiff seeks to reopen and renegotiate the 2010 settlement agreement "[d]ue to my medical conditions as reasons of many flash backs conditions in this case, that do not enable me to continue the contract." Dkt. No. 48 at 1. Plaintiff contends that her "extreme pains as well as flashbacks emotional distress which have hamper [sic] my studying for contract, etc."
Federal Rule of Civil Procedure ("Fed. R. Civ. P.") 60(b) allows for a mechanism by which a court may relieve a party from a final judgment or order. It provides that a court may relieve a party from a final judgment or order due to: (1) mistake, inadvertence, surprise or excusable neglect; (2) newly discovered evidence; (3) fraud; (4) a void judgment; (5) the judgment has been satisfied, released or discharged; or (6) any other reason that justifies relief. FED. R. Civ. P. 60(b). A motion seeking relief from a final order or judgment must be made with the reasonable time, and, for mistake, inadvertence, surprise or excusable neglect, newly discovered evidence or fraud, it must be made no more than one year after the entry of the judgment or order. FED. R. Civ. P. 60(c). "A motion for relief from judgment is generally not favored and is properly granted only after a showing of exceptional circumstances."
Where the terms of the settlement agreement are unambiguous, "courts must take care not to alter or go beyond the express terms of the agreement, or to impose obligations on the parties that are not mandated by the unambiguous terms of the agreement itself."
In the present matter, plaintiff has not established or even alleged the existence of a mistake, fraud or newly-discovered evidence. Plaintiff has not shown that the judgment is void or has been satisfied, released or discharged. In addition, she has failed to set forth any other basis which would justify the relief which she seeks. The undersigned would note that the complaint in this matter was filed on June 8, 2004.
Accordingly, to the extent that plaintiff seeks to reopen the 2010 settlement agreement pursuant to Fed. R. Civ. P. 60 (b) is recommended that application be denied.
Pursuant to 28 U.S.C. § 636(b)(1), parties may lodge written objections to the foregoing report. Such objections shall be filed with the Clerk of the Court "within fourteen (14) days after being served with a copy of the . . . recommendation." N.Y.N.D. L.R. 72.1(c) (citing 28 U.S.C. §636(b)(1)(B)-(C)).
Jennifer A. Clark Blitman, King Law Firm-Syracuse Office, Syracuse, NY, for Plaintiffs.
Christopher P. Langlois, Girvin, Ferlazzo Law Firm, Albany, NY, for Defendants.
LAWRENCE E. KAHN, District Judge.
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.
*2 "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, 125 S.Ct. 2611, 162 L.Ed.2d 502 (2005) (quoting Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377, 114 S.Ct. 1673, 128 L.Ed.2d 391 (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, ___ U.S. ___, ___, 132 S.Ct. 641, 648, 181 L.Ed.2d 619 (2012); Henderson ex rel. Henderson v. Shinseki, ___ U.S. ___, ___, 131 S.Ct. 1197, 1202, 179 L.Ed.2d 159 (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, 126 S.Ct. 1235, 163 L.Ed.2d 1097 (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.
"[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, 116 S.Ct. 862, 133 L.Ed.2d 817 (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."
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).
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.
Accordingly, it is hereby:
Michael Antonio Faillace, Raquel Amalia Gutierrez, Michael Faillace & Associates, P.C., New York, NY, for Plaintiffs.
Ira A. Sturm, Raab, Sturm & Ganchrow, LLP, New York, NY, for Defendants.
In this action, which is before this Court on consent pursuant to 28 U.S.C. § 636(c), plaintiffs Plutarcho Melchor, Jose Hernandez, and Emigdio Cruz (collectively, "Plaintiffs") brought claims against defendants Eisen & Son Inc. (d/b/a Lasagna Ristorante), Vadim Honig, Bernard Lipton, and Riki Honig (collectively, "Defendants") under the Fair Labor Standards Act ("FLSA") and New York State Labor Law ("NYLL") for unpaid minimum wages and overtime pay. Presently before the Court is Plaintiffs' motion pursuant to Fed. R. Civ. P. 60(b)(1) and (6) (Dkt. 26), requesting that the Court either (a) vacate its prior Order dated October 21, 2015 (Dkt. 22), by which the Court dismissed the action following its approval of a settlement reportedly reached by the parties, or (b) enter an enforceable judgment against Defendants based on the settlement agreement. Also before the Court is Defendants' letter motion dated January 8, 2016 (Dkt. 32), requesting that the Court strike certain factual allegations set forth in Plaintiffs' Reply Memorandum (Dkt. 31) or, in the alternative, seeking leave to file a sur-reply.
For the reasons discussed below, Plaintiffs' motion (Dkt. 26) is granted to the extent that this Court will reopen this action for the purpose of modifying its October 21 Order (Dkt. 22), so as to render it a conditional order of dismissal (as explained below), effective as of the date of this Memorandum and Order; Plaintiffs' motion is otherwise denied. As the Court has not relied on any of the factual allegations set out in Plaintiffs' reply, Defendants' motion to strike those allegations or for leave to file a surreply (Dkt. 32) is denied as moot.
Plaintiffs commenced this action on January 7, 2015, putatively on behalf of themselves and other similarly situated individuals, by bringing claims pursuant to the FLSA, 29 U.S.C. § 201 et seq., and the NYLL, N.Y. Lab. Law §§ 190 et seq. and 650 et seq. (See Complaint, dated Jan. 6, 2015 ("Compl.") (Dkt. 1), ¶ 14.) In their Complaint, Plaintiffs alleged that they were employed by the Defendants' restaurant business in one or more roles, including "chefs assistant, salad preparer, dishwasher[ ][,] busboy[,] and delivery worker." (Id. ¶ 3.) Plaintiffs alleged that, while acting as "busboy[s]/ delivery worker[s]," they were "required to perform various other restaurant duties." (Id. ¶ 4.) Plaintiffs further alleged that they "worked for Defendants in excess of 40 hours per week, without appropriate minimum wage and overtime compensation for the hours they worked each week." (Id. ¶ 5.) Plaintiffs additionally alleged that, inter alia, Defendants "disguis[ed] Plaintiff[s] actual duties in payroll records to avoid paying them at the minimum wage rate" (id. ¶ 10), "unlawfully appropriate[ed] Plaintiff[s] . . . tips and made unlawful deductions from Plaintiff[s] . . . wages" (id. ¶ 11), and "maintained a policy and practice of requiring employees to purchase clothing and equipment necessary for their jobs at the employees' own expense" (id. ¶ 12).
On October 9, 2015, Gutierrez submitted a letter to the Court, attaching an unsigned, but apparently fully negotiated, written settlement agreement (the "Settlement Agreement"), and stating that she was writing "jointly with defense counsel to respectfully request that the Court approve the parties' settlement" of the case. (Letter to the Court from Raquel A. Gutierrez, Esq., dated Oct. 9, 2015 ("10/9/15 Joint Submission") (Dkt. 21), citing, inter alia, Wolinsky v. Scholastic Inc., No. 11cv5917, 2012 WL 2700381 (S.D.N.Y. July 5, 2012) (holding that, where FLSA claims are settled for less than the amount of available statutory damages, court must scrutinize the settlement agreement to ensure that it is fair and reasonable); see also Cheeks v. Freeport Pancake House, Inc., 796 F.3d 1999 (2d Cir. 2015) (requiring judicial fairness review of FLSA settlements).) Defendants' counsel did not write separately to the Court and has never disputed that the October 9 letter accurately reflected the fact that the parties had reached an agreement to settle the case, or that the Settlement Agreement was being jointly submitted for the Court's approval.
Counsel's letter specifically advised the Court that the parties had "agreed to a negotiated settlement" (10/9/15 Joint Submission, at 1), and set out the terms of that agreement. In this regard, the submission stated: "The parties have agreed to settle this action for the total sum of $112,500 which will be paid in one lump sum on or before December 1, 2015 or ten days following the Court's approval of this agreement, whichever is later." (Id. at 2.) The submission also represented that "[a] Stipulation of Final Dismissal [would] be filed for so-ordering after execution of the agreement and upon receipt of confirmation from the Court that the settlement ha[d] been approved." (Id. at 5.)
The attached Settlement Agreement provided for this as well (see Settlement Agreement, annexed to 10/9/15 Joint Submission (Dkt. 21), ¶ 7 ("Plaintiffs shall file, within seven (7) days of receipt and the full execution of this Agreement and after the Court has approved the agreement, a Stipulation of Dismissal with Prejudice. . . ."), although the agreement also stated that Plaintiffs' counsel would file the stipulation of dismissal "once the Agreement has been approved by the Court and the payment check has been received by Plaintiffs and cleared Plaintiffs' counsel's escrow account" (id. ¶ 2(a) (emphasis added)).
It appears that, at some point following the Court's dismissal of this action on October 21, 2015, Sturm, as counsel for Defendants, advised Gutierrez that Adam Honig, "the defendant who was going to fund the settlement, was unable to secure a mortgage on his home, which mortgage was intended to be the source of the funding for the settlement." (Affirmation of Ira A. Sturm, Esq., in Opposition, dated Dec. 30, 2015 ("Sturm Aff.") (Dkt. 29), ¶ 2.) Thus, Sturm informed Gutierrez that Mr. Honig would not be able to pay the settlement amount "in the time frame as agreed." (Id.)
On November 19, 2015, Gutierrez filed a letter motion asking the Court to reopen the case, stating that "Defendants have made representations to their counsel that they will not be able to provide the funds that were agreed upon in the settlement." (Letter Motion to Reopen Case, dated Nov. 19, 2015 ("Letter Motion to Reopen") (Dkt. 23).) Plaintiffs' counsel further stated that "the [settlement] agreement [approved by the Court] remain[ed] unsigned by either party and [was] therefore unenforceable." (Id.)
Given the fact that Defendants had expressly agreed to the settlement amount at the settlement conference before the Court, and given that Defendants had never disputed that the terms contained in the fully drafted agreement that was then presented to the Court were agreed terms being submitted jointly for approval, the Court did not initially accept Plaintiffs' statement that the agreement — even if unsigned — was unenforceable against Defendants. Rather, on November 20, 2015, the Court entered a text Order on the Docket, denying without prejudice Plaintiffs' Letter Motion to Reopen, and noting that "it would appear that Plaintiffs' remedy for any noncompliance by Defendants with the terms of the negotiated [S]ettlement [A]greement would be to seek enforcement of the agreement." (Order, dated Nov. 20, 2015 (Dkt. 24).) The Court's Order provided, however, that Plaintiffs could renew their motion "upon a showing, based on legal authority, that reopening the case in these circumstances would be appropriate." (Id.)
Thereafter, Defendants apparently made one payment of $25,000 towards the settlement. It appears that this amount was paid by check, delivered to Gutierrez under a cover letter from Sturm, which was apparently mailed on December 9, 2015.
(Id.)
As for counsel's "earlier discussions," as referenced in Sturm's letter, it seems that, before sending that letter and payment, counsel had at least one additional telephone conversation. According to Sturm (who is, again, the only one with knowledge who has attested to the substance of that conversation), he advised Gutierrez, on the call, of the same information as was then confirmed in his January 9 letter — i.e., that Mr. Honig had only been able, as of that time, to obtain $25,000 towards satisfying the settlement, but that he was prepared to make continued efforts to "fully comply" with the parties' agreement. (See id. ¶ 4; 12/9/15 Letter.) Sturm denies that he ever told Gutierrez (as Faillace suggests in his Declaration) that no further payments would ever be forthcoming. (See Sturm Aff. 3, 4.)
Faillace represented in his December 21, 2015 Affirmation that, as of that date, Plaintiffs had not deposited Defendants' check, and would "not do so." (Faillace Decl. ¶ 15.) In his Affirmation in Opposition of December 30, however, Sturm noted that Plaintiffs had not returned the payment. (Sturm Aff. ¶ 5.) In their Reply Memorandum of Law, Plaintiffs state that the $25,000 check was "in fact not cashed and mailed back to Defendants' counsel" (see Plaintiffs' Reply Memorandum of Law in Support of Plaintiffs' Motion to Vacate, dated Jan. 6, 2016 ("Pl. Reply") (Dkt. 31)), although this statement is not supported by any affidavit, declaration, or other evidentiary submission.
On December 30, 2015, Defendants submitted an opposition to Plaintiffs' motion. (See Sturm Aff. (Dkt. 29); Memorandum of Law in Opposition to Plaintiffs' Motion to Vacate, dated Dec. 30, 2015 ("Def. Mem.") (Dkt. 30).) On January 6, 2016, Plaintiffs filed a reply memorandum of law in further support of their motion. (Pl. Reply (Dkt. 31).)
On January 8, 2016, Defendants filed a letter motion requesting an order "striking the factual allegations set forth in the Plaintiffs' Reply Memorandum" or, in the alternative, requesting the Court to accept the affirmation submitted with Defendants' letter motion as a sur-reply to Plaintiffs' motion to vacate. (See Letter to the Court from Ira A. Sturm, Esq., dated Jan. 8, 2016 ("Defendants' Motion to Strike") (Dkt. 32).) Later on January 8, 2016, Plaintiffs filed a response to Defendants' Motion to Strike. (See Letter to the Court from Michael A. Faillace, Esq., dated Jan. 8, 2016 (Dkt. 33).)
In the context of enforcing a settlement agreement, as in any other context, "[Aurisdiction is a threshold issue which a court must address and may raise sua sponte even if the parties themselves have not raised it." Shanghai China Garments J & Y Import & Export Corp. v. Brooks Fitch Apparel Grp., No. 11cv2363 (JCF), 2013 WL 1499378, at *2 (S.D.N.Y. Apr. 11, 2013). Where a case has been dismissed, and the plaintiff thereafter asks the court to enforce the parties' settlement agreement, the court must first satisfy itself that it has retained ancillary jurisdiction to act. See Kokkonen v. Guardian Life Ins. Co., 511 U.S. 375, 379-80 (1994). In order for a district court to exercise jurisdiction to enter an enforceable judgment in such circumstances, the court must: (1) have expressly retained jurisdiction over the settlement agreement in its order of dismissal; (2) have incorporated the terms of the settlement agreement in the order of dismissal; or (3) have an independent basis for asserting jurisdiction over the enforcement of the settlement agreement. See id. at 381-82; see also Hendrickson v. United States, 791 F.3d 354, 358 (2d Cir. 2015) ("[T]o retain ancillary jurisdiction over enforcement of a settlement agreement, Kokkonen prescribes that a district court's order of dismissal must either (1) expressly retain jurisdiction over the settlement agreement, or (2) incorporate the terms of the settlement agreement in the order."); Scelsa v. City Univ. of N.Y., 76 F.3d 37, 40 (2d Cir. 1996) ("In the absence of . . . 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.").
Even where a court has not retained jurisdiction to enforce a settlement agreement, it may consider a motion for relief under Rule 60(b) of the Federal Rules of Civil Procedure. See Kokkonen, 511 U.S. at 378; see also Hendrickson, 791 F.3d at 360 ("When a district court issues a final decision, it `disassociates itself from a case,' and its jurisdiction over that case comes to an end, except for certain collateral matters especially reserved by . . . the Federal Rules, see, e.g., . . . Fed. R. Civ. P. 60(b) (motions for relief from judgment)." (citations omitted)); Krauth v. Exec. Telecard, Ltd, No. 95cv0106 (RWS), 1995 WL 272556, at *3 (S.D.N.Y. May 9, 1995) ("[N]othing in Kokkonen bars Plaintiffs 60(b) motion to vacate the . . . order of dismissal.").
Rule 60(b) of the Federal Rules of Civil Procedure provides that:
(5) the judgment has been satisfied, released, or discharged; it is based on an earlier judgment that has been reversed or vacated; or applying it prospectively is no longer equitable; or
Fed. R. Civ. P. 60(b).
"A motion under Rule 60(b) must be made within a reasonable time — and for reasons (1), (2), and (3) no more than a year after the entry of the judgment or order or the date of the proceeding." Fed. R. Civ. P. 60(c)(1). The grounds for relief provided for by Rule 60(b) have been construed as mutually exclusive, so that if relief is available under one of the specific provisions of subsections (1) through (5), relief under subsection (6) of Rule 60(b) is inappropriate. See United States v. Intl Bhd. of Teamsters, 247 F.3d 370, 391-92 (2d Cir. 2001) (citing Liljeberg v. Health Servs. Acquisition Corp., 486 U.S. 847, 863 (1988); Nemaizer v. Baker, 793 F.2d 58, 63 (2d Cir. 1986)).
A motion for relief under Rule 60(b) is "addressed to the sound discretion of the district court. . . ." Nemaizer, 793 F.2d at 61-62 (citing Griffin v. Swim-Tech Corp., 722 F.2d 677, 680 (11th Cir. 1984); Matter of Emergency Beacon Corp., 666 F.2d 754, 760 (2d Cir. 1981)). "Properly applied[,] Rule 60(b) strikes a balance between serving the ends of justice and preserving the finality of judgments." Nemaizer, 793 F.2d at 61. "While Rule 60(b) `should be broadly construed to do substantial justice,' it may be `invoked only upon a showing of exceptional circumstances.'" United States v. Manne, 510 Fed.Appx. 83, 85 (2d Cir. 2013) (quoting Nemaizer, 793 F.2d at 61)).
Relief under Rule 60(b)(1) requires that the moving party demonstrate "mistake, inadvertence, surprise, or excusable neglect." Fed. R. Civ. P. 60(b)(1). "When assessing claims of `excusable neglect' [courts] look to the . . . so-called Pioneer factors: `(1) the danger of prejudice to the [non-movant], (2) the length of the delay and its potential impact on judicial proceedings, (3) the reason for the delay, including whether it was within the reasonable control of the movant, and (4) whether the movant acted in good faith.'" Padilla v. Maersk Line Ltd., 721 F.3d 77, 83 (2d Cir. 2013) (second alteration in original) (quoting Silivanch v. Celebrity Cruises, Inc., 333 F.3d 355, 366 (2d Cir. 2003)); see also Pioneer Inv. Servs. Co. v. Brunswick Assocs. Ltd. P'ship, 507 U.S. 380, 395 (1993). The Second Circuit "focuses closely on the third Pioneer factor: the reason for the delay, including whether it was within the reasonable control of the movant." Padilla, 721 F.3d at 83 (citing Silivanch, 333 F.3d at 366). "[T]he determination is at bottom an equitable one, taking account of all relevant circumstances surrounding the party's omission." Cruz v. T D. Bank, N A., No. 10cv8026 (PKC), 2015 WL 437393, at *2 (S.D.N.Y. Feb. 3, 2015) (quoting Pioneer, 507 U.S. at 395).
Under Rule 60(b)(6), a court may vacate a judgment or order "for any other reason that justifies relief." Fed. R. Civ. P. 60(b)(6). Rule 60(b)(6) "allows courts to vacate judgments whenever necessary to accomplish justice, although such relief should be granted only in extraordinary circumstances." Aczel v. Labonia, 584 F.3d 52, 61 (2d Cir. 2009) (citing Liljeberg v. Health Serv. Acquisition Corp., 486 U.S. 847, 863 (1988)).
"Extraordinary circumstances will be found if and only if, without such relief, an extreme and unexpected hardship would occur," and, in the context of a Rule 60(b)(6) motion premised on the breach of a settlement agreement, "such a showing cannot be made where [a party] may file a separate action on the settlement agreement itself." Supervalu, Inc. v. Ectaco, Inc., No. 10cv5267 (RLM), 2011 WL 3625567, at *2 (E.D.N.Y. Aug. 12, 2011) (internal quotations omitted) (citing Diaz v. Loews N. Y. Hotel, No. 97cv2731 (SAS), 1998 WL 326736, at *2 (S.D.N.Y. June 18, 1998)); see also Manning v. Dubois, No. 95cv1806 (JGK), 1996 WL 153950, at *2 (S.D.N.Y. Apr. 2, 1996) ("failure of performance under [a] settlement agreement, . . . does not require upsetting the final judgment of the Court, and is best addressed in an action based on the agreement itself" (citing Hetchkop v. Finest Carpet Workroom, Inc., No. 92cv4316 (PKL), 1995 WL 746594, at *1 (S.D.N.Y. Dec. 14, 1995))); Rolex Watch, U.S.A., Inc. v. Bulova Watch Co., Inc., 820 F.Supp. 60, 62 (E.D.N.Y. 1993) ("Plaintiff may obtain virtually the same relief by filing a new action in state . . . court."). Thus, although a party's repudiation of a settlement agreement can give rise to extraordinary circumstances warranting relief under Rule 60(b)(6), Shor Intl Corp. v. Eisinger Enters., No. 90cv2352, 1993 WL 452546, at *1-2 (S.D.N.Y. Nov. 3, 1993), such circumstances generally do not exist if the underlying settlement agreement is enforceable.
As an initial matter, this Court finds that there is no independent basis for federal jurisdiction for the enforcement of the Settlement Agreement, as Plaintiffs have not alleged that the parties are of diverse citizenship (Compl. 18-31), and their contractual dispute arises under New York law (see Settlement Agreement ¶ 15; Collins v. Harrison-Bode, 303 F.3d 429, 433 (2d Cir. 2002) (applying New York law in action to enforce a settlement agreement, where agreement contained a New York choice-of-law clause)). Moreover, in dismissing this action, this Court did not expressly retain jurisdiction to enforce the Settlement Agreement or incorporate that agreement's terms in a Court order. Therefore, under the precedent cited above, this Court would lack jurisdiction to enforce the parties' agreement, by entering a judgment or otherwise. See Hendrickson, 791 F.3d at 358-59.
Putting aside the fact that the Settlement Agreement remains unsigned, the fact that it provides that "[t]he parties consent and stipulate to the personal jurisdiction of the United States District Court for the Southern District of New York, in any subsequent proceeding to enforce this Agreement" (Settlement Agreement ¶ 15), cannot change the jurisdictional analysis. In determining whether a federal court retains jurisdiction to enforce a settlement agreement reached before it, the salient question is generally not whether the court has personal jurisdiction over the parties (who, in this case, have already appeared before the court), but whether it retains subject matter jurisdiction over the dispute arising from the settlement agreement's breach, given the limited nature of federal subject matter jurisdiction. See Kokkonen, 511 U.S. at 377-78.
Subject matter jurisdiction, unlike personal jurisdiction, cannot be created by agreement, consent, or any other act of a party. See Ins. Corp. of Ireland v. Compagnie des Bauxites de Guinee, 456 U.S. 694, 702 (1982) ("[N]o action of the parties can confer subject-matter jurisdiction upon a federal court. Thus, the consent of the parties is irrelevant. . . ."). Accordingly, any consent by the parties to the Court's exercise of personal jurisdiction would be irrelevant to the issue of whether the Court has jurisdiction to enforce the Settlement Agreement after dismissal of the underlying action. Even if the parties had professed to stipulate to the Court's subject matter jurisdiction to enforce the Settlement Agreement, the Court would lack the power to act, absent one of the bases for exercising jurisdiction identified in Kokkonen and Hendrickson.
Plaintiffs also argue that the Court "knew" that it was retaining ancillary jurisdiction to enforce the Settlement Agreement when it approved and "so ordered" that agreement. (Pl. Reply, at 6-7.) As explained above, however, ancillary jurisdiction over the enforcement of a settlement agreement exists in only two situations: (1) where a court has explicitly stated that such jurisdiction is being retained; and (2) where a court expressly incorporates the terms of a settlement agreement into an order of the court. See Hendrickson, 791 F.3d at 358. Here, contrary to Plaintiffs contention, this Court did not "so order" the Settlement Agreement itself.
As to Plaintiffs' application under Rule 60(b), the Court finds, as an initial matter, that Plaintiffs have complied with the time limitations governing motions under that Rule. (See Section I(B) supra.) The Order from which Plaintiffs seek relief was entered on October 21, 2015. (Dkt. 22.) On December 21, 2015, after attempting unsuccessfully to secure Defendants' compliance with the terms of the settlement and seeking relief in a November 19, 2015 letter motion, which this Court denied without prejudice (see Section II(C) infra), Plaintiffs filed the instant motion pursuant to Rule 60(b). (Dkt. 26.) On this record, the Court concludes that Plaintiffs' motion to vacate the Order of Dismissal was "made within a reasonable time," and, as is required to obtain relief under Rule 60(b)(1), was filed within one year after entry of the Dismissal Order. Fed. R. Civ. P. 60(c)(1).
With respect to their motion under Rule 60(b)(1), Plaintiffs principally argue that relief is appropriate here on the ground of "excusable neglect." (See Pl. Mem., at 3-6.) In their reply memorandum, Plaintiffs also argue, for the first time, that this Court erred in dismissing this action prior to the execution of the Settlement Agreement and the filing of a stipulation of dismissal by the parties, and that this judicial error also furnishes a ground for relief under Rule 60(b)(1), as well as under Rule 60(a), which permits a court to correct a clerical mistake in a prior judgment or order. (See Pl. Reply, at 2-3.) For the reasons set forth below, the Court denies Plaintiffs' motion to the extent that it seeks relief on the grounds of excusable neglect or clerical mistake, as Plaintiffs have shown neither. Plaintiffs, however, are more persuasive in their suggestion that judicial error provides a ground for relief from the Order of Dismissal. As discussed further below, this Court is convinced that it erred in dismissing this action in the way in which it did — by effectively issuing an unconditional order of dismissal, rather than affording Plaintiffs an opportunity to proceed with the action if, within a reasonable period of time, the parties failed to execute the Settlement Agreement and thereby render it effective in accordance with its terms. Accordingly, the Court will reopen the action for the sole purpose of modifying its Order to remedy that error.
In arguing that the Order of Dismissal should be vacated under Rule 60(b)(1), Plaintiffs set forth the factors that courts consider in determining whether to grant relief on the ground of excusable neglect, then contend that each of these factors support their position that the Order of Dismissal should be vacated. (Pl. Mem., at 4-6.) Nowhere in their submissions, however, do Plaintiffs identify exactly how Plaintiffs or their counsel acted neglectfully or why such neglect was excusable. For their part, Defendants contend that there simply was no "mistake," "inadvertence," or "neglect" in this case, and that "the only surprise was the inability by Mr. Honig to obtain a loan to pay off the settlement." (Def. Mem., at 2.) Defendants further argue that this is insufficient to reopen the case under Rule 60(b)(1), as a party "`cannot be relieved of . . . a choice [to settle] merely because [its] assessment of the consequences [of that choice] were incorrect.'" (Id. (quoting U.S. v. Bank of New York, 14 F.3d 756, 758 (2d Cir. 1999) (citations omitted)).)
Plaintiffs' counsel, however, did inform the Court by letter that a stipulation of dismissal would be "filed for so-ordering" only after the agreement was executed and the parties had received confirmation of the Court's approval of the settlement, and the submitted Settlement Agreement also provided for the eventual filing of such a stipulation. (See 10/9/15 Joint Submission, at 5; Settlement Agreement ¶ 2(a).) Counsel thus did not "neglect" to inform the Court of the way in which the parties were seeking to proceed. Similarly, it is difficult to conclude that counsel's decision to submit a proposed agreement to the Court in unsigned form — when, under Cheeks, an FLSA settlement cannot be made final without Court approval — constituted an act of "neglect." Trying to characterize what happened here as an instance of "excusable neglect" is the equivalent of trying to squeeze a square peg into a round hole — the characterization simply doesn't fit.
Moreover, Defendants are correct that Plaintiffs cannot obtain relief under Rule 60(b)(1) merely because they were surprised by Defendants' failure to comply with the terms of the parties' negotiated agreement. Although a mistake of fact as to whether an enforceable agreement was actually reached can constitute grounds for relief under Rule 60(b)(1), see Witek v. City of New York, No. 12-CV-981 (CBA) (VVP), 2015 WL 9460132, at *8 (E.D.N.Y. Dec. 23, 2015), an opposing party's unanticipated breach of its obligations under an agreed settlement does not constitute mistake, inadvertence, surprise, or excusable neglect within the meaning of Rule 60(b)(1), see Diaz, 1998 WL 326736, at *2 (holding that the breach of a settlement agreement does not constitute grounds for relief under Rule 60(b)(1) or (6)).
This Court therefore cannot conclude that Plaintiffs have provided "highly convincing" evidence that this Court should vacate its Order of Dismissal due to excusable neglect. (See Discussion, supra, at Sections I(B) and I(B) (1).)
With respect to Plaintiffs' application under Rule 60(a), raised for the first time on reply, Plaintiffs argue that the Court made a "clerical" mistake when it inadvertently dismissed the case before the Settlement Agreement was finalized. As this Court in fact intended to dismiss this action, however, and explicitly directed the Clerk of Court to close the case, the Dismissal Order did not constitute a clerical mistake, and Rule 60(a) is simply inapplicable here. See Truskoski v. ESPN, 60 F.3d 74, 77 (2d Cir. 1995) (holding that Rule 60(a) "permits only a correction for the purpose of reflecting accurately a decision that the court actually made"); Guido v. Allegiance Healthcare Corp., No. 98cv1006 (DC), 2004 WL 2609414, at *2 (S.D.N.Y. Nov. 17, 2004) (holding that Rule 60(a) did not apply where party moved to amend order so that claims were dismissed without prejudice, because court actually intended to dismiss claims with prejudice). Plaintiffs' request for relief under Rule 60(a) must therefore be denied.
Relief under Rule 60(b)(1) is available for a district court to correct both factual and legal errors committed by the court. See United Airlines, Inc. v. Brien, 588 F.3d 158, 175 (2d Cir. 2009) (quoting In re 310 Associates, 346 F.3d 31, 35 (2d Cir. 2003)). Certainly, it is not error for a court to dismiss an FLSA case where the court has approved a settlement reached by the parties, and the parties have reduced their agreement to a signed writing. It is also not error for a court to dismiss such a case where, after court approval of the settlement, the parties submit a signed stipulation of dismissal. Here, however, the Court dismissed the action after approving the terms of the parties' proposed agreement, but prior to the agreement being signed or a written stipulation of dismissal being filed. Unfortunately, it appears that the Court's understanding that, as represented by counsel, the parties had reached a final resolution of Plaintiffs' claims should not have been coupled with an assumption by the Court that the parties would then proceed to execute their proposed written agreement, rendering it effective and presumably enforceable.
This is not to say that an argument could not be advanced by Plaintiff, upon an action in state court, that the parties' had at least reached an oral agreement, and that such agreement should be held valid and enforceable in its own right. While New York law generally requires settlement agreements to be written and signed by the party to be bound, N.Y.C.P.L.R. § 2104, New York courts and the Second Circuit have held that there are circumstances where strict compliance with that requirement may be excused, see, e.g., Figueroa v. N. Y. City Dep't of Sanitation, 475 Fed.Appx. 365, 366 (2d Cir. 2012) (holding that settlement agreement was enforceable based on "substantial compliance" with Section 2104); Gaglia v. Nash, 778 N.Y.S.2d 595, 596 (4th Dep't 2004) (holding that New York's subscription requirement can be satisfied by reference to a series of documents, such as an unsigned settlement agreement and subsequent signed letters that acknowledge the existence of the settlement). In light of Defendants' conduct here, which has included making representations to this Court that they had reached a settlement agreement (see, e. g., Sturm Aff. ¶ 1 (stating that "the case has settled"); ¶ 5 (referring to "the binding nature of the settlement")), acknowledging the existence of the settlement in a signed letter to Gutierrez (see 12/9/15 Letter (stating that Mr. Honig would "continue to make his best efforts to fully comply with the settlement")), and making a partial settlement payment to Plaintiffs, it may well be that a state court would find that Defendants, in fact, had agreed to be bound.
Especially in light of the possibility, suggested by Plaintiffs, that this Court's action in dismissing the case without a signed agreement in place may have removed any incentive for Defendants to execute the Settlement Agreement —and that the fact that the agreement remained unsigned may, in turn, have made it more difficult for Plaintiff to seek the agreement's enforcement (potentially leaving Plaintiffs without recourse on viable FLSA claims) — this Court finds that its premature dismissal of the action was a "mistake" under the meaning of Rule 60(b)(1), such that the case may be reopened. The right remedy for the Court's error, however, is not to have the case proceed immediately in litigation. Rather, as the Court concludes that it should have entered a conditional order of dismissal, it will reopen the case for the purpose of modifying its Order in that respect. This remedy will place the parties in the same position as they would have been in, had the Court entered an appropriate dismissal order in the first instance.
For all of the foregoing reasons, Plaintiffs' motion to vacate the Order of Dismissal or, in the alternative, for entry of an enforceable judgment (Dkt. 26), is granted, to the extent that this action is hereby reopened, pursuant to Fed. R. Civ. P. 60(b)(1), for the purpose of this Court's modification of its Order of October 21, 2015 (Dkt. 22). That Order is hereby modified as follows:
The last sentence of that Order (reading, "Given the Court's approval of the parties' settlement, the Clerk of Court is directed to close this case on the Court's docket") is stricken, and the following language is substituted in its place: "This action is hereby discontinued with prejudice and without costs, provided, however, that within 30 days of the date of this Order, if the parties' written documentation of the settlement is not completed, Plaintiffs may apply by letter for the restoration of the action to the active calendar of the Court."
The effective date of the Court's modified Order shall be the date of this Memorandum and Order.
Defendants' motion to strike (Dkt. 32) is denied as moot.
SO ORDERED
Susan S. Egan, Sandra Keller Dawes, Egan Law Firm, New York, NY, for Plaintiffs.
Daniel Chiu, Michael A. Cardozo Corporation Counsel of the City of New York, Lisa Marie Griffith, William A. Grey, Damion Kenneth Lee Stodola, City of New York, Law Department, New York, NY, for Defendants.
Peggy Kuo, United States Magistrate Judge
On June 17, 2015, Plaintiff Pack filed a motion pursuant to Federal Rule of Civil Procedure 60(b)(6), seeking relief from the dismissal of her action and enforcement of certain obligations that Pack maintains Defendants City of New York (the "City") and DOC assumed under the Settlement Agreement but failed timely to fulfill (the "Rule 60(b)(6) Motion"). See Dkt. No. 143.
After a hearing on the Rule 60(b)(6) Motion held on October 2, 2015, the Court terminated the motion as moot, and ordered further briefing on the issue of attorneys' fees (the "Fees Motion"). See January 11, 2016 Order.
On April 14, 2016, the Honorable Sterling Johnson, Jr. referred the Fees Motion to the undersigned for a Report and Recommendation. The undersigned respectfully recommends that the Fees Motion be denied in its entirety.
The Settlement Agreement provided for a lump sum payment of $170,000 to Pack. See Settlement Agreement ¶ 2, Dkt. No. 149-1. In return, Pack agreed to dismiss her claims with prejudice and retire from the DOC. See id. ifif 3, 4(a) and (b). Additional terms of settlement between Pack and the DOC specified that Pack agreed to "[i]rrevocably retire from the DOC no later than January 1, 2014" and to "[f]ile necessary paperwork with the Human Resources Department of the City of New York Department of Correction to effect the irrevocable retirement." Id. ¶¶ 4(a) and 4(b). The DOC further agreed "to enter into a Negotiated Plea Agreement, substantially in the form annexed hereto as Exhibit `E' (the `NPA'), closing and resolving the Disciplinary Charges," which were pending against Pack. Id. ¶ 4. In the NPA, Pack agreed to resolution of the disciplinary charges by accepting the recommended penalty of voluntary retirement. See Ex. E to Settlement Agreement, NPA, Dkt. No. 149-1. The NPA attached to the Settlement Agreement was signed by Pack on July 26, 2013, but did not have the signature of either the DOC Commissioner or Deputy Commissioner, which would indicate final approval by the DOC. See id. Pursuant to the Settlement Agreement, the DOC agreed that "[w]ithin 60 days of such resolution, defendant DOC shall provide to plaintiff Jacqueline Pack a written confirmation of the closing of the Disciplinary Charges." Settlement Agreement ¶ 4, Dkt. No. 149-1.
In her Rule 60(b)(6) Motion filed June 17, 2015, Pack requested four forms of relief: "a. To reopen the captioned case; b. To enter an order directing the City to resolve the disciplinary charges against me and issue a `good guy' letter immediately; c. To order a hearing at which I will be able to present the damages I have suffered as a result of the City's inexplicable and unconscionable delay in performing under this Agreement; and d. Award attorney's fees." Affidavit of Plaintiff Jacqueline Pack ("Pack Affidavit" or "Pack Aff.") ¶ 23, Dkt. No. 143-2.
The Rule 60(b)(6) Motion asserted that diversity jurisdiction under 28 U.S.C. § 1332 exists because Pack had become a resident of Georgia and that "the City's refusal to resolve the disciplinary charges against plaintiff and to provide her with a `good guy' letter has resulted in over $75,000 in lost wages." Memorandum of Law In Support of Motion to Relieve Plaintiff of Dismissal Pursuant to Rule 60(b)(6) and to Enforce the Settlement Agreement ("Pack MOL"), Dkt. No. 143-1, at 6; see also Pack Aff. ¶¶ 21-22.
In a supporting affidavit signed by Pack on June 15, 2015, Pack states that she retired from the DOC effective January 1, 2014 and filed the required retirement paperwork, as was required under the Settlement Agreement. See Pack Aff. ¶ 6, Dkt. No. 143-2. However, Pack "never received written confirmation of the resolution of the disciplinary charges." Id.
Pack further states in her affidavit that she expected that the DOC would provide her with a "good guy" letter following the DOC's resolution of her disciplinary charges.
Id. ¶¶ 3,4. 4.
Defendants opposed the Rule 60(b)(6) Motion, arguing, first, that the Settlement Agreement does not cover issuance of a "good guy" letter to Pack, and second, that Pack's recourse in connection with denial of the "good guy" letter was to file a petition under Article 78 of the New York Civil Practice Law and Rules ("CPLR"). See Defendants' Memorandum of Law in Opposition to Plaintiffs Rule 60(b)(6) Motion ("Defs' MOL"), Dkt. No. 148, at 2-6 (citing, inter alia, CPLR § 7803(3)).
On October 26, 2015, Pack's attorney filed a letter to the Court, which reported that Pack "has finally received her `good guy' letter from the Department of Correction" and also stated that "counsel at the hearing on October 2d provided proof of the closing of the disciplinary charges to which [Pack] pled guilty." See Oct. 26, 2016 letter from Susan B. Egan, Dkt. No. 150, at 1. The letter stated that Pack was withdrawing all aspects of the Rule 60(b)(6) Motion other than the request for an award of attorneys' fees, and attached an invoice from the Egan Law Firm to Jacqueline Pack dated October 23, 2015 consisting of time entries between June 25, 2014 and October 13, 2015 totaling $14,190.00 for 37.2 hours of work. See Dkt. Nos. 150, 150-1.
On January 11, 2016, Judge Johnson terminated Pack's Rule 60(b)(6) Motion as moot, and ordered further briefing on the issue of attorneys' fees. See January 11, 2016 Order.
Before the Court can consider Pack's application for an award of attorneys' fees in connection with her efforts to enforce the Settlement Agreement, including her Rule 60(b)(6) Motion, the Court must consider whether it has jurisdiction. See Melchor v. Eisen & Son Inc., No. 15-cv-113 (DF), 2016 WL 3443649, at *5 (S.D.N.Y. June 10, 2016) ("Where a case has been dismissed, and the plaintiff thereafter asks the court to enforce the parties' settlement agreement, the court must first satisfy itself that it has retained ancillary jurisdiction to act.") (citing Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 381 (1994)).
Defendants argue that because the Court was without jurisdiction to award relief on Pack's Rule 60(b)(6) Motion under Kokkonen, the Court "lacks jurisdiction over the only claim that Plaintiff argues entitles her to fees." Jan. 28, 2016 letter from William A. Grey Dkt. No. 153, at 3.
Under the rule established by the Supreme Court in Kokonnen, "[i]n order for a district court to exercise jurisdiction to enter an enforceable judgment in such circumstances, the court must: (1) have expressly retained jurisdiction over the settlement agreement in its order of dismissal; (2) have incorporated the terms of the settlement agreement in the order of dismissal; or (3) have an independent basis for asserting jurisdiction over the enforcement of the settlement agreement." Melchor, 2016 WL 3443649, at *5 (citing Kokonnen, 511 U.S. at 381-82). Further, the Second Circuit has held that "once a case has been dismissed with prejudice, a district court's post-dismissal actions cannot confer upon the court ancillary jurisdiction to enforce a settlement agreement." Hendrickson v. United States, 791 F.3d 354, 361 (2d Cir. 2015).
Here, the Court did not expressly retain jurisdiction over enforcement of the parties' Settlement Agreement, and the Stipulation of Dismissal did not incorporate any of the Settlement Agreement's terms. See Dkt. No. 141. Indeed, the Stipulation of Dismissal, so-ordered by the Court, does not make any reference to the Settlement Agreement. Id. Accordingly, the Court only has jurisdiction over the Fees Motion if there is an "independent basis for asserting jurisdiction over the enforcement of a settlement agreement." See Melchor, 2016 WL 3443649, at *5.
Pack filed an affidavit stating that she has been a Georgia resident since the beginning of 2014, whereas the City of New York and DOC, the only two Defendants directly involved in implementation of the Settlement Agreement, are New York residents for diversity purposes. See Pack Aff. ¶ 21, Dkt. No. 143-2; Dkt. No. 154. Pack also submits that the amount in controversy requirement is met because if she did not agree to retire from DOC based on the consideration in the Settlement Agreement, she would have continued to earn a $91,000 base salary at the DOC (plus overtime wages up to a total of $120,000), and would have continued to litigate her claims of discrimination and retaliation. See Pack Aff. ¶ 22, Dkt. No. 143-2.
While Defendants do not dispute that Pack is a Georgia resident for diversity purposes, they question whether she has satisfied the "amount in controversy" requirement, pointing out that "Plaintiff fails to state what portion of the alleged lost income was due to the failure to issue her a letter telling her the charges were properly dismissed, and what portion derives from her failure to receive a `good guy' letter." Dkt. No. 153.
Pack does not specify the exact amount in controversy in the Motion; however, in her affidavit, she contends that, if not for the promises made in the Settlement Agreement, she would have continued to work for the DOC (where she had worked for 25 years), earning at least $91,000 per year. See Pack Aff. ¶¶ 4, 11, 22. Pack also makes clear that, as of the date of her affidavit, she had not found work in the law enforcement field since retiring from the DOC. See id. ¶ 10. Whether this period of unemployment is due to Defendants' failure to provide the confirmation letter or Pack's lack of a "good guy" letter, the relief and damages Pack sought in her Rule 60(b)(6) Motion exceeded $75,000 in value.
Accordingly, this Court had subject matter jurisdiction under § 1332 to entertain the Rule 60(b)(6) Motion to the extent that the motion sought to enforce the Settlement Agreement, and such jurisdiction continues for the Fees Motion now pending.
Pack's claims in this action alleged, inter alia, violation of her civil rights under 42 U.SC. § 1983 and under Title VII. Courts have discretion under 42 U.S.C. § 1988 to award attorneys' fees to a "prevailing party" on Section 1983 claims and under 42 U.S.C. § 2000e-5(k) on Title VII claims. See 42 U.S.C. § 1988(b) ("In any action or proceeding to enforce a provision of . . . [42 U.S.C. § 1983] . . ., the court, in its discretion, may allow the prevailing party, other than the United States, a reasonable attorney's fee as part of the costs. . . ."; 42 U.S.C. § 2000e-5(k) ("In any action or proceeding under this subchapter [Title VII], the court, in its discretion, may allow the prevailing party, other than the [Equal Employment Opportunity] Commission or the United States, a reasonable attorney's fee (including expert fees) as part of the costs. . . ."); see also Small v. N.Y.C. Transit Auth., No. 03-cv-2139 (SLT) (MDG), 2014 WL 1236619, at *3 (E.D.N.Y. Mar. 25, 2014) ("A court may, in its discretion, award attorneys' fees to the prevailing party in a Title VII or section 1983 action.").
Pack argues that only by bringing this action did she achieve the results she sought. In other words, because she received the "good guy" letter, as well as notification that the disciplinary charges were closed, "Plaintiff appears to have prevailed completely." Dkt. No. 154 at 1. However, saying it doesn't make it so. Pack may have gotten everything she wanted, but she is not a "prevailing party" as defined by the U.S. Supreme Court in Buckhannon Board & Care Home, Inc. v. West Virginia Department of Health & Human Resources, 532 U.S. 598, 605 (2001) and its progeny.
In order to establish that she is a "prevailing party" on her Rule 60(b)(6) Motion, Pack needs to establish two elements: first, that she "achieved some material alteration of the legal relationship" with the DOC; and second, that this "change bears a `judicial imprimatur.'" Perez v. Westchester Cty. Dep't. of Corr., 587 F.3d 143, 149 (2d Cir. 2009) (quotation omitted); see also Buckhannon, 532 U.S. at 605.
Defendants argue that there was no material alteration of Pack's legal relationship with the DOC, emphasizing that the Settlement Agreement "did not contemplate, and was not in any way dependent on, the issuance of a `good guy' letter" to Pack. According to Defendants, Plaintiff's ultimate receipt of a "good guy" letter in October 2015 was the product of a voluntary decision by the DOC to "conduct a new review of plaintiff's disciplinary record to determine if a `good guy' letter could now be issued." Dkt. No. 153, at 1-2.
The plain and unambiguous terms of the Settlement Agreement placed no obligation on Defendants to issue a "good guy" letter to Pack. See Settlement Agreement ¶ 4, Dkt. No. 149-1.
This alone is not sufficient to make Pack a "prevailing party." In Buckhannon, the Supreme Court held that a "defendant's voluntary change in conduct, although perhaps accomplishing what the plaintiff sought to achieve by the lawsuit, lacks the necessary judicial imprimatur on the change" to make the plaintiff in such a case a "prevailing party" eligible for attorneys' fees. See Buckhannon, 532 U.S. at 605 (emphasis in original); see also Sanchez v. Pataki, No. 95-cv-3803 (DGT), 2008 WL 729097, at *4 (E.D.N.Y. Mar. 18, 2008) (explaining that under Buckhannon and its progeny in the Second Circuit, "a plaintiff cannot be considered a prevailing party when the defendant has acted voluntarily to moot the controversy").
In determining whether the required "judicial imprimatur" exists in a given case to make a litigant eligible for attorneys' fees, courts in this circuit look to the Buckhannon Court's discussion of two "examples" of relief that bear sufficient judicial imprimatur: "judgments on the merits and settlement agreements that are enforced through court-ordered consent decrees." Roberson v. Giuliani, 346 F.3d 75, 80 (2d Cir. 2003) (citing Buckhannon, 532 U.S. at 605); see also Elliott v. U.S. Dep't of State, 122 F.Supp.3d 39, 43 (S.D.N.Y. 2015). The Second Circuit has found that a consent decree is not necessary for a resolution that is mutually agreed upon by the parties to possess "judicial imprimatur," but that finding "judicial imprimatur" requires evidence that the district court intended to "judicially sanction[ ]" a settlement. See Perez, 587 F.3d at 151 (citing Roberson, 346 F.3d at 81 and Torres v. Walker, 356 F.3d 238, 245 n.6 (2d Cir. 2004)).
Here, the Court did not order the DOC to notify Pack about the resolution of her disciplinary charges, or to comply with any other aspect of the Settlement Agreement. See September 29, 2015 Order; Minutes of 10/2/2015 Motion Hearing.
Pack got all the relief she sought but she did so without judicial imprimatur. By failing to meet the definition of "prevailing party," Pack is not entitled to attorneys' fees.
Accordingly, the undersigned recommends a finding that Pack is not a "prevailing party" on her Rule 60(b)(6) Motion to enforce the Settlement Agreement. Because Pack has failed to establish this statutory threshold requirement for any discretionary award of fees under 42 U.S.C. § 1988 or 42 U.S.C. § 2000e-5(k), the undersigned respectfully recommends that the Fees Motion be denied in its entirety.
Based on the foregoing, the undersigned respectfully recommends a finding that the Court has subject matter jurisdiction as to Pack's Fees Motion (Dkt. No. 150), but that the Fees Motion should be denied in its entirety as a matter of law.
Written objections to this Report and Recommendation must be filed with the Clerk of Court within 14 days of service of this report, with a copy to the Honorable Sterling Johnson Jr. 28 U.S.C. § 636(b)(1); Fed. R. Civ. P. 72(b). Failure to file objections within the specified time waives the right to appeal any order or judgment entered based on this Report and Recommendation. 28 U.S.C. § 636(b)(1); Fed. R. Civ. P. 72(b).
Affirmed.
Sheldon Spitz, pro se, Massapequa Park, NY. Argued by Christopher A. Bacotti, Law Office of Christopher A. Bacotti, Middle Island, NY, for Appellant.
Richard L. Herzfeld, Bahn, Herzfeld & Muller, LLP, New York, NY, for Appellees.
PRESENT: JON O. NEWMAN, WALKER, and GERARD E. LYNCH, Circuit Judges.
Because the settlement agreement had already been ratified by the court at a fairness hearing on August 11, 2008, the district court did not abuse its discretion in construing Spitz's letter to the court as a motion under Rule 60(b) to vacate the agreement. See Powell v. Omnicom, BBDOIPHD, 497 F.3d 124, 128 (2d Cir.2007). This Court reviews a district court's denial of a motion under Rule 60(b) to vacate a settlement agreement for abuse of discretion. Id. A settlement agreement is a contract which is "binding and conclusive," id., and is interpreted according to general principles of contract law, Red Ball Interior Demolition Corp. v. Palmadessa, 173 F.3d 481, 484 (2d Cir.1999).
In this case, the parties agreed that the settlement agreement would be governed by New York law. Under New York law, a court may vacate a stipulation of settlement only upon a showing of good cause, such as fraud, collusion, mistake, duress, lack of capacity, or where the agreement is unconscionable, contrary to public policy, or so ambiguous that it indicates by its terms that the parties did not reach agreement. See McCoy v. Feinman, 99 N.Y.2d 295, 302, 755 N.Y.S.2d 693, 785 N.E.2d 714 (2002) (finding a stipulation of settlement is "generally binding on parties that have legal capacity to negotiate"); Hallock v. State, 64 N.Y.2d 224, 230, 485 N.Y.S.2d 510, 474 N.E.2d 1178 (1984) ("Only where there is cause sufficient to invalidate a contract, such as fraud, collusion, mistake or accident, will a party be relieved from the consequences of a stipulation made during litigation. . . .").
The district court did not abuse its discretion in denying Spitz's motion. Spitz was represented by counsel during settlement negotiations and at the subsequent fairness hearing. In his pro se letter to the district court, Spitz alleged that he was ill and taking medication at the time he agreed to settle, but he submitted no medical evidence that he did not understand and agree to the settlement. These unsupported allegations were insufficient to demonstrate that he "lacked the mental capacity to understand and agree to the terms of the stipulation of settlement. . . ." Weissman v. Weissman, 42 A.D.3d 448, 839 N.Y.S.2d 798, 800 (2d Dep't 2007); see Mohrmann v. Lynch-Mohrmann, 24 A.D.3d 735, 809 N.Y.S.2d 115, 116 (2d Dep't 2005) (finding that party failed to
Spitz proffers additional documents to this Court in support of his lack of capacity claim—including a list of drugs he purchased from his pharmacy and an unsworn letter from a doctor stating that various medical conditions "may alter his cognitive abilities." However, we may not consider these documents because they were never filed in the district court. See Weinstock v. Columbia Univ., 224 F.3d 33, 46 (2d Cir.2000) (finding that evidence submitted for the first time on appeal was "simply not part of the record" and "cannot be considered in deciding this case"). Even if we were to consider these materials, they do not demonstrate that Spitz lacked capacity to enter into the settlement agreement. See Smith v. Comas, 173 A.D.2d 535, 570 N.Y.S.2d 135, 136 (2d Dep't 1991) (finding litigant did not demonstrate lack of capacity to enter into a contract where his "medical expert was unable to state with a reasonable degree of medical certainty that the appellant at the time of the transaction at issue would have been unable to understand the nature of the transaction and the consequences of his signing of the contract").
Accordingly, the judgment of the district court is
JAMES C. FRANCIS IV, United States Magistrate Judge.
On April 7, 2011, Shanghai China Garments J & Y Import & Export Corporation ("Shanghai") initiated this action against Brooks Fitch Apparel Group, LLC ("Brooks"), alleging state law claims of breach of contract, unjust enrichment, conversion, and promissory estoppel. The plaintiff informed the Court that the matter had been settled, and on February 23, 2012, the Court dismissed the case with prejudice. (Order of Dismissal dated Feb. 23, 2012). On February 28, 2012, the plaintiff moved to reopen the case in order to have the Court compel defense counsel to sign the Stipulation of Settlement. (Notice of Motion dated Feb. 28, 2012; Affirmation Declaration of Ming Hai dated Feb. 28, 2012, ¶ 10). The Court denied the motion, noting that the plaintiff had submitted a signed "Settlement Agreement to the Court, which appears to be an enforceable agreement." (Memorandum Endorsement dated March 7, 2012, at 2).
The parties' versions of events regarding the purported settlement agreement differ significantly. According to the plaintiff, the principal of Brooks, Joseph Safdieh, contacted Shanghai directly, stating that he would like to negotiate a settlement without his attorneys in order to avoid incurring legal fees. (Affirmation of Ming Hai dated May 21, 2012 ("Hai Aff."), ¶ 4). Ming Hai, counsel for the plaintiff, contacted defense counsel who purportedly informed Mr. Hai that they had lost contact with their client. (Hai Aff., ¶ 4).
On January 18, 2012, Mr. Safdieh allegedly faxed a proposed Stipulation of Settlement in which he offered to settle the case for $55,000. (Hai Aff., ¶ 5). The plaintiff immediately accepted the offer. (Hai Aff., ¶ 5). Later, the defendant purportedly sought to revise the settlement amount from a total payment of $55,000 to $45,000, to which the plaintiff agreed. (Hai Aff., ¶ 6). The defendant allegedly made handwritten changes to the Stipulation of Settlement then signed and delivered it to the plaintiff on February 24, 2012. (Hai Aff., ¶ 7). The revised Stipulation of Settlement was submitted to the Court on February 28, 2012, as an attachment to the plaintiff's motion to reopen the case. (Hai Aff., ¶ 7). According to the plaintiff, Judge Katz then held a conference with the parties and "found [the Stipulation of Settlement] good." (Hai Aff., ¶ 7). Shanghai contends that the defendant has yet to make any payments under the Stipulation of Settlement even after Mr. Hai wrote to defense counsel, reminding them of Brooks' obligation to pay. (Hai Aff., ¶ 8).
According to defense counsel, the only settlement discussion they had with plaintiff's counsel was prior to September of 2011, and was unsuccessful. (Declaration of Thomas Carulli dated March 7, 2012 ("Carulli Decl."), attached to Memorandum of Defendant Brooks Fitch Apparel Group LLC in Opposition to Plaintiff's Motion to Reopen, ¶ 4). They contend that during the seven months leading up to the dismissal, the plaintiff had not diligently prosecuted its case and, in fact, they had no contact with plaintiffs counsel until the dismissal. (Carulli Decl., ¶¶ 2-3). When Mr. Hai contacted defense counsel for the first time after the dismissal, they informed him that they had not discussed this case with their client in many months because the plaintiff had not pursued the action and that they were unaware of any stipulation of settlement. (Carulli Decl., ¶ 6). They claim that they have no knowledge of any alleged changes made to any proposed stipulation, nor did they submit any comment—handwritten oral, or otherwise regarding possible settlement terms. (Carulli Decl., ¶¶ 7-8).
Here, it is clear that the Order of Dismissal neither explicitly retained jurisdiction over the purported settlement agreement nor incorporated the terms of the alleged agreement. The Order only states that the "Plaintiff ha[s] informed the Court that the matter has settled." (Order dated Feb. 23, 2011). "The mere reference in the order to the Agreement does not incorporate that Agreement into the order." Scelsa v. City University of New York, 76 F.3d 37, 41 (2d Cir.1996); see Kokkonen, 511 U.S. at 381 (noting that "judge's mere awareness and approval of the terms of the settlement agreement do not suffice to make them part of his order"). In fact, the Court did not see the Stipulation of Settlement until after this case was dismissed, and thus the Court could not have incorporated its terms in the dismissal order. (Affirmation in Reply of Ming Hai dated June 21, 2012, ¶ 4); see Bricklayers and Allied Craftworkers Local 2, 2012 WL 3508931, at *3 & n. 2 (noting that it is clear that dismissal order did not incorporate terms of settlement agreement because agreement was not submitted to the court before dismissal order). Thus, this Court lacks ancillary jurisdiction to enforce the purported settlement.
For the foregoing reasons, the plaintiffs motion (Docket no. 18) is denied. The defendant's application for an award of fees and costs incurred in connection with opposing this motion is also denied.
SO ORDERED.
Borrowers brought action against lenders to enforce amended loan restructuring agreement. The United States District Court for the Southern District of New York, Pauley, J., dismissed complaint, and borrowers appealed. The Court of Appeals held that district court did not have ancillary jurisdiction to enforce loan restructuring agreement.
Affirmed.
UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, ADJUDGED, AND DECREED that the judgment of the District Court be and it hereby is AFFIRMED.
Arnold Weiss, Raichle Banning Weiss PLLC, Buffalo, NY, for Plaintiffs-Appellants.
Robert N.H. Christmas, Nixon Peabody LLP, New York, N.Y. (Christopher J. Porzio, of counsel), for Defendants-Appellees.
PRESENT: WINTER, CALABRESI, and KATZMANN, Circuit Judges.
In January 1972, Houses and Associates entered into a mortgage loan agreement with defendant-appellee UDC. That mortgage, in turn, was subsidized by the federal Department of Housing and Urban Development (HUD) pursuant to an agreement between HUD, plaintiffs and UDC. In 1983, Associates, UDC, MLC, and PFA, along with other property owners and interest-holders, filed suit against Dow Chemical Company, alleging failure of a "Sarabond" mortar additive, which had been utilized in the construction of Kennedy Plaza. The complaint sought compensatory and punitive damages. New York State Urban Development Corp. et al. v. Dow Chemical Company, Inc., et al., 83 CV 4327(VLB) (Broderick, J.). During the course of the litigation, in 1985, Associates granted power of attorney to UDC to negotiate and approve a settlement on Associates' behalf. At approximately the same time, Associates and Houses entered a Loan Restructuring Agreement with UDC, PFA, and MLC. That Agreement, according to plaintiffs, set forth a distribution scheme for any settlement proceeds which might accrue from the Sarabond Action, and provided that a portion of the monies would be paid, on plaintiffs' behalf, to HUD in satisfaction of a HUD Flexible Subsidy Loan.
In 1991, UDC, using its acquired power of attorney, entered a Settlement Agreement with Dow before Judge Broderick. The settlement provided for $20 million in compensatory damages and a waiver of all Sarabond plaintiffs' claims against Dow, except as they related to enforcement of the agreement. The agreement originally included a provision allocating approximately 35 percent of the settlement proceeds to Houses, Associates, and Horwitz. That particular provision was literally crossed out of the final Settlement Agreement, dated April 10, 1991.
After entry of the order, Judge Broderick rejected the State Street parties' motion to vacate the settlement and to release the Sarabond plaintiffs to pursue their claims. Plaintiffs appealed the denial of their motion to vacate to this Court. Prior to submission, in July 1992, plaintiffs reached a settlement with UDC, PFA, and MLC, and the appeal was withdrawn with prejudice.
Plaintiffs assert that UDC never made the HUD Flexible Loan Subsidy payment. As a result, they off-set the cost of that payment against their mortgage debt. And in April 2002, plaintiffs filed a complaint in the United States District Court for the Southern District of New York (Pauley, I), alleging a variety of claims—including equitable reformation, fraud in the inducement, rescission, and breach of contract—in an effort to enforce the amended 1992 Loan Restructuring Agreement. They also sought a preliminary injunction, pursuant to Fed.R.Civ.P. 65, against foreclosure of the Kennedy Plaza property. Defendants cross-moved to dismiss the complaint under Fed.R.Civ.P. 12(b)(1) and (b)(6), arguing that the court lacked subject matter jurisdiction and that the claims were all time barred.
The district court granted defendant's motion to dismiss on the ground that the court lacked jurisdiction.
It is well settled in this circuit that, under Kokkonen, the district court can 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. See, e.g., Herrick Co. v. SCS Communications, Inc., 251 F.3d 315, 327 (2d Cir.2001); Scelsa v. City University of New York, 76 F.3d 37, 41 (2d Cir.1996). It is undisputed that Judge Broderick did not incorporate any agreement into his dismissal order. Thus, the only question is whether he retained jurisdiction to enforce the terms of a subsequent agreement the 1992 amendment to the 1985
Loan Restructuring Agreement relating to allocation of settlement proceeds—between plaintiffs and defendants. He did not. The dismissal order "retain[ed] jurisdiction ... solely with respect to enforcement of the terms of the written Settlement Agreement executed by the parties simultaneously herewith" (emphasis added). Plaintiffs do not dispute that allocation of settlement funds was not a term of the written Settlement Agreement executed on April 10, 1991; indeed, they admit that a clause concerning distribution was crossed out of that agreement.
Moreover, the April 10 agreement conceived of the "various documents and agreements ... regarding the distribution of the funds payable under this Settlement Agreement" as distinct from the "written Settlement Agreement" over which the district court retained jurisdiction. One of those separate "documents and agreements" was the Loan Restructuring Agreement, as amended in 1992, a year following the entry of the original dismissal order. It is a breach of that later agreement which forms the basis of plaintiffs' relevant claims.
We find that the Order of Dismissal, by its terms, did not retain jurisdiction over that agreement, and therefore, per Kokonnen and its progeny, the district court lacks ancillary jurisdiction to adjudicate claims arising under it. See Kokonnen, 511 U.S. at 381, 114 S.Ct. 1673 (holding that violation of an agreement is not a breach of a district court's order unless the court has specifically retained jurisdiction to enforce that particular agreement); cf. Hester Indus., Inc. v. Tyson Foods, Inc., 160 F.3d 911, 917 n. 2 (2d Cir.1998) ("[T]he text of the dismissal order ... did not clearly communicate an intention of the parties and of the district court" to retain jurisdiction over the agreement in question.).
Plaintiffs additionally urge this court to find supplemental and incidental jurisdiction over the 1992 Loan Restructuring Agreement and claims arising under it. Their arguments in this regard do not avail. Supplemental jurisdiction as to some claims exists only when the court is empowered to exercise original jurisdiction over other claims presented in the same suit. See Cicio v. Does, 321 F.3d 83, 97 (2d Cir.2003) (noting that a district court has supplemental jurisdiction over all other claims "`that are so related to claims in the action within such original jurisdiction'
We have considered all of plaintiffs' claims and find them meritless. Accordingly, we AFFIRM the judgment of the district court.
Scelsa, 76 F.3d at 42 (citing United States v. Local 359, United Seafood Workers, 55 F.3d 64, 68 (2d Cir.1995).
2008 WL 1787672 at *2-3 (citations omitted).
