106 F. Supp. 3d 316
E.D.N.Y2015Background
- Valdin Investments (Panama corp.) sued Oxbridge Capital and nine related funds in 2008 for unpaid advisory fees under investment advisory agreements. Parties negotiated two settlement stipulations (First Stipulation March 6, 2009; Second Stipulation Feb. 11, 2010) and the Court so‑ordered an Attachment Order tied to liquidation reserves. Case was administratively closed in 2009.
- First Stipulation fixed certain past payments and set ongoing fee splits and a Court retention clause to enforce the settlement; Attachment Order required funds to create reserves upon dissolution/liquidation in conformity with NY LLC Law §704.
- Second Stipulation (not so‑ordered) resolved additional claimed shortfalls for 2009 with a negotiated payment schedule; it incorporated the First Stipulation and included a jurisdiction clause.
- Valdin moved in 2015 to re‑open, enforce the Settlement Orders, obtain discovery to establish damages, and recover attorneys’ fees, alleging Oxbridge breached the Attachment Order and First Stipulation by failing to maintain reserves and by not making payments after August 2010.
- Oxbridge defended mainly that (1) the Attachment Order only required reserves upon dissolution/liquidation of a fund and many funds were not in liquidation; and (2) Valdin dissolved on August 10, 2010, so post‑dissolution performance (and payments) was impossible.
- The Court denied Valdin’s motion, finding it lacked evidence that reserves were required absent liquidation and that Valdin’s dissolution terminated its service contracts, relieving Oxbridge of post‑dissolution payment obligations.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Court jurisdiction to enforce settlement | Court retained ancillary jurisdiction to enforce so‑ordered First Stipulation and Attachment Order; Second Stipulation incorporated First and included jurisdiction clause | No challenge to ancillary jurisdiction over so‑ordered items | Court has ancillary jurisdiction to enforce the Attachment Order and the so‑ordered First Stipulation and, given incorporation/jurisdiction clause, to adjudicate the Second Stipulation too |
| Proper standard/procedure for relief labeled a “motion to enforce” | Seeks discovery and fees under settlement (Paragraph 7) for alleged breach | Defendants note procedural uncertainty (not contempt or Rule 60) | Court applies breach‑of‑contract standard (preponderance) for proving settlement breach; contempt standard not invoked |
| Did Oxbridge breach the Attachment Order by failing to maintain reserves? | Valdin relies on letter admitting reserves were only established for some funds and on other allegations about disbanding reserves | Oxbridge argues Attachment Order applies only in event of dissolution/liquidation; funds not in liquidation had no reserve obligation | Court interprets Attachment Order as triggered only upon dissolution/liquidation (plain meaning + reference to NYLLC §704) and finds no preponderant evidence of breach |
| Did Oxbridge breach First Stipulation / advisory agreements by not paying after Aug 10, 2010? | Valdin contends payments stopped after Aug 12, 2010 and seeks damages and fees | Oxbridge contends Valdin dissolved Aug 10, 2010, and service contracts required Valdin’s continued existence; dissolution made performance impossible | Court holds Valdin’s dissolution terminated its ability to perform these service contracts; Oxbridge had no obligation to pay after dissolution, so no breach proven |
Key Cases Cited
- Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375 (federal court retains ancillary jurisdiction to enforce orders incorporating settlement terms)
- In re American Express Financial Advisors Securities Litigation, 672 F.3d 113 (motions to enforce settlements are state‑law contract claims absent court retention of settlement terms)
- StreetEasy, Inc. v. Chertok, 752 F.3d 298 (2d Cir.) (district courts can enforce settlement terms when they retain jurisdiction or incorporate settlement into order)
- Martens v. Thomann, 273 F.3d 159 (2d Cir.) (no Federal Rule "motion to enforce"; appropriate remedy depends on requested relief: contempt, new breach action, or Rule 60 motion)
- New York State Nat. Org. for Women v. Terry, 886 F.2d 1339 (2d Cir.) (elements/standard for civil contempt require clear and convincing evidence)
- First Investors Corp. v. Liberty Mutual Insurance Co., 152 F.3d 162 (breach of contract requires contract, plaintiff performance, defendant breach, and damages)