Infinite Security Solutions, L.L.C. v. Karam Properties II, Ltd.
143 Ohio St. 3d 346
| Ohio | 2015Background
- Two consolidated Lucas County cases arising from a fire: Infinite sued Karam entities; Travelers sued Infinite by subrogation for insurance payments.
- Parties announced an oral settlement at a May 19, 2011 pretrial conference but had not finalized allocation of settlement proceeds.
- Lucas County Gen.R. 5.05(F) gives counsel 30 days after settlement notification to submit a dismissal entry; the trial court instead sua sponte entered a dismissal on May 26, 2011 stating the case was "dismissed without prejudice" and reserving the parties’ right to file a dismissal entry within 30 days.
- Travelers moved to set aside the dismissal under Civ.R. 60(B); Infinite moved to enforce the settlement and tender funds to the court; the trial court later ruled it retained jurisdiction and ordered distribution of funds.
- The Sixth District held the May 26, 2011 entry was an unconditional dismissal that divested the trial court of jurisdiction; this Court accepted conflict certification and consolidated Travelers’ discretionary appeal.
Issues
| Issue | Plaintiff's Argument (Travelers) | Defendant's Argument (Karam / Trial Ct.) | Held |
|---|---|---|---|
| Whether a dismissal that refers to a settlement but does not incorporate its terms or expressly reserve jurisdiction is an unconditional dismissal | The dismissal here was conditional because it referenced settlement, reserved time for a final entry, was without prejudice, and set a deadline — so the court retained jurisdiction to enforce the settlement | A dismissal that does not incorporate settlement terms or expressly retain jurisdiction is final and divests the court of jurisdiction | The Court rejects the "conditional dismissal" concept; a court retains jurisdiction to enforce a settlement only if the dismissal entry either incorporates the settlement terms or expressly states the court is retaining jurisdiction; the May 26 entry did neither, so it divested jurisdiction |
| Whether a trial court may retain jurisdiction after dismissal to enforce a settlement agreement | Courts may enforce settlements if the dismissal order makes the obligation part of the dismissal (by incorporation or explicit reservation of jurisdiction) | If dismissal is final and lacks incorporation/reservation, court cannot later adjudicate settlement disputes | The Court adopts the rule that retention of jurisdiction requires an express journal entry either incorporating the agreement or stating retention of jurisdiction |
| Whether the Ohio Rules or precedent permit "conditional" dismissals | Travelers and several appellate decisions support a broader view that mentioning settlement suffices | Majority view: Civ.R.41 provides for dismissals with/without prejudice but not for a separate category of "conditional" dismissal; prior language about "unconditional" dismissals should not be read as authorizing conditional dismissals absent explicit retention language | The Court disavows the conditional/unconditional dichotomy and clarifies the controlling standard (incorporation or express retention) |
| Whether Travelers’ Civ.R. 60(B) motion merits relief | Travelers argues the dismissal was erroneous and seeks to vacate it under Civ.R. 60(B) | Karam argued the court lacked jurisdiction and Travelers’ post-dismissal claims are improper | The Court did not decide the Civ.R. 60(B) merits and remanded for the trial court to decide Travelers’ motion on the merits |
Key Cases Cited
- Continental W. Condominium Unit Owners Assn. v. Howard E. Ferguson, Inc., 74 Ohio St.3d 501 (Ohio 1996) (settlement agreements are contracts and favored by law)
- Rulli v. Fan Co., 79 Ohio St.3d 374 (Ohio 1997) (trial judge may promote and encourage settlements)
- Mack v. Polson Rubber Co., 14 Ohio St.3d 34 (Ohio 1984) (trial court authority to enforce settlement in pending suit)
- Spercel v. Sterling Indus., Inc., 31 Ohio St.2d 36 (Ohio 1972) (settlement enforcement precedent cited)
- Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375 (U.S. 1994) (federal courts retain ancillary jurisdiction to enforce settlement only if dismissal order incorporates settlement or expressly retains jurisdiction)
- Knapp v. Knapp, 24 Ohio St.3d 141 (Ohio 1986) (finality doctrine and need for an end to litigation)
- State ex rel. Rice v. McGrath, 62 Ohio St.3d 70 (Ohio 1991) (trial court lacks authority after unconditional or voluntary dismissal)
- Ohio Pyro, Inc. v. Ohio Dept. of Commerce, 115 Ohio St.3d 375 (Ohio 2007) (presumption of finality for journal entries)
- Kostelnik v. Helper, 96 Ohio St.3d 1 (Ohio 2002) (court should hold a hearing if there is uncertainty whether an enforceable agreement exists)
- Logsdon v. Nichols, 72 Ohio St.3d 124 (Ohio 1995) (trial court may sometimes correct an improperly filed dismissal entry)