791 F.3d 354 | 2d Cir. | 2015
This appeal arises from an attempt to enforce a settlement agreement signed by Plaintiffs-Appellees William and Patricia Hendrickson, the United States, and the district court more than thirty years ago. In 1985, the district court clearly indicated its approval of the terms of a settlement agreement resolving Plaintiffs’ suit against the United States; in 2013, Plaintiffs allege, the United States fell out of compliance with certain payment obligations contained in that agreement. This case requires us to decide whether the actions taken by the district court in 1985 — verbally expressing approval of the settlement terms, dismissing the case on the merits in a brief order, and subsequently signing and so-ordering the parties’ settlement agreement — sufficed to retain jurisdiction over the enforcement of the agreement. Because the district court’s order of dismissal failed expressly to retain jurisdiction or to incorporate the terms of the agreement, and because the district court’s so-ordering of the settlement agreement took place after the court had already relinquished jurisdiction over the case and was thus ineffective to retain it, we conclude that the district court did not have jurisdiction over the enforcement of the settlement agreement. Accordingly, we vacate the district court’s orders enforcing the agreement and denying the United States’ motion for reconsideration, and we remand to the district court with instructions to transfer this case to the Court of Federal Claims.
BACKGROUND
In 1982, William Hendrickson and Patricia Hendrickson brought an action against the United States in the United States District Court for the Western District of New York pursuant to the Federal Tort Claims Act, 28 U.S.C. § 1346(b). Plaintiffs sought monetary damages from the United States for injuries sustained in an automobile accident. The case proceeded to trial in 1985. After two and a half days of trial, however, on March 29, 1985, the parties informed the. district court that they had reached a settlement.
At the March 29 hearing, the district court (Michael A. Telesca, Judge), informed that the United States was to provide periodic future payments as part of the settlement, told the parties to “[s]pread the. settlement on the record.” J.A. 9. After hearing the general terms of the agreement and ascertaining that Plaintiffs consented to them, the district court stated, “I will approve it. I will dismiss the action and I think it’s an excellent settlement for you.” J.A. 14. The court then informed counsel that an order of discontinuance would be entered, “so there won’t be anything else for you to do here.
A few days later, on April 2, 1985, the Clerk of Court entered an order of dismissal signed by the district judge. The order read, in its entirety, “The Court having been advised by the counsel for the parties that the above action has been settled; IT IS ORDERED that this action is hereby dismissed without costs and on the merits.” J.A. 17. The April 2 order of dismissal is the last entry to appear on the district court’s docket sheet.
On April 29, 1985, nearly a month later, the parties signed and submitted to the district court a “Stipulation for Compromise Settlement Pursuant to 28 U.S.C. § 2677” (“Settlement Agreement”) that provided the final terms of the settlement, including the precise amounts of the payments the United States had agreed to make. Paragraph 8 of the Settlement Agreement provided that “[t]he execution of this agreement and approval by the Court to provide such future periodic payments shall constitute a complete release” regarding any future claims arising from the events that had resulted in Plaintiffs’ pending suit. J.A. 19. The district court signed the Settlement Agreement on the same date it was submitted, underneath a notation that read “SO ORDERED.” J.A. 25. The Settlement Agreement, for unknown reasons, does not appear on the district court’s docket sheet. Pursuant to its terms, the United States agreed, inter alia, to provide for periodic future payments to Plaintiffs by purchasing an annuity from Executive Life Insurance Company of New York (“ELNY”). The United States purchased such an annuity, and for 28 years Plaintiffs received monthly payments from ELNY.
The matter returned to federal court in October 2013, almost 30 years after the parties’ settlement, when Plaintiffs filed a motion in the Western District, on the same docket, styled a “Motion to Enforce a Compromise Settlement.”
DISCUSSION
I.
We review de novo a district court’s legal determination regarding its own subject matter jurisdiction. Rogers v. Petroleo Brasileiro, S.A., 673 F.3d 131, 136 (2d Cir.2012). “Federal courts are courts of limited jurisdiction” that “possess only that power authorized by Constitution and statute.” Kokkonen, 511 U.S. at 377, 114 S.Ct. 1673 (citation omitted). In keeping with this principle, a district court “does not automatically retain jurisdiction to hear a motion to enforce” a settlement agreement simply by virtue of having disposed of the original case. In re Am. Express Fin. Advisors Sec. Litig., 672 F.3d 113, 134 (2d Cir.2011). Instead, a motion to enforce a settlement agreement is fundamentally “a claim for breach of a contract, part of the consideration of which was dismissal of an earlier federal suit,” Kokkonen, 511 U.S. at 381, 114 S.Ct. 1673, and therefore “requires its own basis for jurisdiction,” id. at 378, 114 S.Ct. 1673.
In some circumstances, that basis may be found in the doctrine of ancillary jurisdiction, which allows a district court to decide matters that are “factually interdependent” with another matter before the court, or to take actions necessary “to manage its proceedings, vindicate its authority, and effectuate its decrees.” Id. at 379-80, 114 S.Ct. 1673. But to 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. Id. at 381, 114 S.Ct. 1673; see also StreetEasy, Inc. v. Chertok, 752 F.3d 298, 305 (2d Cir.2014) (reiterating these two Kokkonen alternatives).
The district court in this case, and Plaintiffs in their briefing, endeavor to fashion a third category of cases in which a district court may retain ancillary jurisdiction to enforce a settlement agreement: cases in
We acknowledge that dicta in our decision in In re American Express Financial Advisors Securities Litigation, 672 F.3d 113, which appears similarly to mischarac-terize Perez, may have encouraged the district court’s mistake. The district court’s order of dismissal in In re American Express explicitly retained jurisdiction over “all matters relating to this Action and the Settlement,” clearly satisfying the first prong of Kokkonen. Id. at 134. We noted as an aside, however, that Perez had indicated that “where ‘there is ample evidence that the District Court intended to place its judicial imprimatur on a settlement,’ the court retains jurisdiction to oversee the enforcement of the agreement.” Id. (alterations omitted) (quoting Perez, 587 F.3d at 152). We could not have meant this observation, however, to establish a new route to retaining jurisdiction in addition to those prescribed by Kokkonen. Allowing a district court to retain jurisdiction on such a basis would directly contradict Kokkonen’s admonition that a “judge’s mere awareness and approval of the terms of the settlement agreement do not suffice to make them part of his order” and thus to create ancillary jurisdiction. Kokkonen, 511 U.S. at 381, 114 S.Ct. 1673. In addition, as discussed above, construing Perez — a fee-shifting case — to create a jurisdictional rule clearly would be incompatible with Perez itself. And if there were any lingering doubt as to the legal force of this particular obiter dictum, it should have been removed by our most recent ancillary jurisdiction decision, StreetEasy, Inc. v. Chertok, which correctly recites Kokko-nen’s two options for retaining jurisdiction, and makes no mention of the concept of “judicial imprimatur.” 752 F.3d at 306.
The district court’s conclusion that its own stamp of “judicial imprimatur” alone could support its exercise of ancillary jurisdiction over the settlement agreement was therefore error. We take this opportunity to reaffirm Kokkonen’s longstanding rule that there are only two ways in which
II.
The dismissal order in this case, entered on April 2,1985, mentions that the parties had reached a settlement, but it does not contain any language retaining jurisdiction over the enforcement of that settlement. And although the general terms of the settlement were known to the court, having been spread on the record at a recent hearing, those terms are not incorporated into the brief order of dismissal. Thus, the April 2 dismissal order, standing alone, does not meet either of Kokkonen’s requirements, and cannot support the district court’s exercise of ancillary jurisdiction over the settlement agreement. Plaintiffs contend, however, that the so-ordered Settlement Agreement, signed April 29, 1985, either: (1) is itself a court order incorporating the terms of the Settlement Agreement; or (2) had the effect of modifying the April 2 dismissal order to include those terms, and that Kokkonen is satisfied in either case. We address these arguments in turn.
A. Did the April 29 Post-Dismissal Order Itself Retain Jurisdiction?
When a district court issues a final decision, it “disassociates itself from a case,” Swint v. Chambers Cnty. Comm’n, 514 U.S. 35, 42, 115 S.Ct. 1203, 131 L.Ed.2d 60 (1995), and its jurisdiction over that case comes to an end, except for certain collateral matters especially reserved by precedent or by the Federal Rules, see, e.g., Cooter & Gell v. Hartmarx Corp., 496 U.S. 384, 396, 110 S.Ct. 2447, 110 L.Ed.2d 359 (1990) (Rule 11 sanctions); Fed.R.Civ.P. 54(d)(2)(B) (attorneys’ fees); Fed.R.Civ.P. 60(b) (motions for relief from judgment). Indeed, the whole premise of Kokkonen is that a district court’s power to issue new orders regarding a settlement agreement is terminated by the dismissal of the underlying case, unless special measures are taken. Two of our sister circuits have accordingly held that a district court seeking to retain jurisdiction over a settlement agreement must take one of the steps prescribed by Kokkonen before a case is dismissed: a post-dismissal order, necessarily issued by a court that has already lost jurisdiction over the case, is ineffective. See SmallBizPros, Inc. v. MacDonald, 618 F.3d 458, 463 (5th Cir.2010) (“[T]o ensure that jurisdiction is retained so a district court has the power to enforce the terms of a settlement agreement, ... all of the requirements for retaining jurisdiction must be met at the time” of dismissal.); Anago Franchising, Inc. v. Shaz, LLC, 677 F.3d 1272, 1279 (11th Cir.2012) (“[A] district court cannot retain jurisdiction by issuing a postdismis-sal order to that effect.”). As the Fifth Circuit has said, “any action by the district court after the filing of ... a stipulation [of dismissal] can have no force or effect because the matter has already been dismissed,” and therefore amounts to mere “awareness and approval of the settlement
The difficulty with Plaintiffs’ first argument, then, is clear: the April 29 Settlement Agreement came nearly a month after the April 2 dismissal order, and thus was signed by a court that had already relinquished its jurisdiction over the underlying case. Whatever legal force the so-ordering of the April 29 Settlement Agreement might have had if filed prior to the district court’s order of dismissal — a question on which we take no position— “[a]fter-the-fact statements and actions of the parties, and even of the district court, cannot create ancillary jurisdiction where such jurisdiction was not retained upon dismissal.” StreetEasy, 752 F.3d at 306.
Plaintiffs seek to distinguish SmallBizPros and Anago on the ground that the underlying actions in those cases were dismissed by voluntary stipulation of the parties under Federal Rule of Civil Procedure 41(a)(1), while the original action in this case was dismissed by. the court upon the consent of the parties under Rule 41(a)(2). This is a distinction without a difference. Kokkonen expressly contemplates that a court may take the same steps to retain jurisdiction over a settlement agreement whether a case is dismissed under Rule 41(a)(1) or Rule 41(a)(2). Kokkonen, 511 U.S. at 381-82, 114 S.Ct. 1673. We therefore join the Fifth and Eleventh Circuits in holding 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. Thus, because the district court in this case dismissed the underlying action on the merits on April 2, its subsequent so-ordering of the settlement agreement did not establish jurisdiction over the enforcement of that agreement.
B. Did the April 29 Post-Dismissal Order Modify the April 2 Order, so as to Retain Jurisdiction?
Plaintiffs’ next argument — that the April 29 so-ordering of the Settlement Agreement constituted a “correction” of the April 2 dismissal order pursuant to Federal Rule of Civil Procedure 60(a), incorporating the settlement terms into the original dismissal order — likewise fails. Rule 60(a) permits a court to “correct a clerical mistake or a mistake arising from oversight or omission whenever one is found in a judgment, order or other part of the record,” either “on motion or on its own.” Plaintiffs’ argument appears to be that the April 2 dismissal order was always meant to “embody the settlement contract,” Kokkonen, 511 U.S. at 381, 114 S.Ct. 1673, and that the district court’s so-ordering of the final agreement nearly a month later was an attempt to correct this deficiency. As Plaintiffs themselves concede, however, “on April 2, 1985 ... the terms of the settlement ... were still being finalized.” Appellees’ Br. at 7. It thus cannot have been a “mistake” for the district court’s April 2 order of dismissal not to include them. Additionally, the so-ordered Settlement Agreement does not even mention the prior dismissal order that Plaintiffs' contend it was intended to “correct,” much less identify any “oversight” in the dismissal order that ’ required correction. Plaintiffs’ attempt to cast the so-ordering of the Settlement Agreement as a “correction” of the dismissal order is thus unavailing.
III.
When a district court lacks ancillary jurisdiction over the enforcement of a settlement agreement, “enforcement of the settlement agreement is for state courts, unless there is some independent basis for federal jurisdiction.” Kokkonen, 511 U.S. at 382, 114 S.Ct. 1673. In this case, Plaintiffs have not identified such an “independent basis for federal jurisdiction,” and there appears to be none in the district courts. “Controversies to which the United States shall be a Party” are, of course, within the Article III jurisdiction of the federal courts, U.S. Const. art. III § 2, cl. 1, but this is not the end of the inquiry: because the district courts have only that jurisdiction which Congress confers upon them by statute, see Sheldon v. Sill, 49 U.S. 441, 449, 8 How. 441, 12 L.Ed. 1147 (1850), a ease must be within both a court’s Article III jurisdiction and its statutory jurisdiction, see Kokkonen, 511 U.S. at 377, 114 S.Ct. 1673 (“Federal courts ... possess only that power authorized by Constitution and statute.”). In many circumstances, the district courts are statutorily granted jurisdiction over cases to which the United States is a party, see, e.g., 28 U.S.C. § 1345 (jurisdiction where United States is plaintiff); 28 U.S.C. § 1346(b) (jurisdiction in tort suits where United States is defendant). A contract claim'against the United States, however, is an exception to that general rule: such claims do not fall within the statutory jurisdiction of the district courts if the claim is for an amount exceeding $10,000. See 28 U.S.C. § 1346(a). Here, Plaintiffs are seeking significantly more than $10,000 from the United States, on what is “essentially [a] state-law contract claim[ ].” In re Am. Express, 672 F.3d at 134. The district court thus had neither ancillary jurisdiction nor any “independent basis” for its jurisdiction, and we vacate the district court’s orders granting Plaintiffs’ motion to enforce the settlement agreement and denying the United States’ motion for reconsideration.
Claims like Plaintiffs’ claim under the Settlement Agreement do, however, fall within the ambit of. the Tucker Act, which grants the Court of Federal Claims jurisdiction over “any claim against the United States founded ... upon any ex
In this case, there is no evidence that Plaintiffs’ choice to move for enforcement of the Settlement Agreement in the district court was the product of anything other than a good-faith mistake or error in interpreting the law. And, although there is no reason to believe that Plaintiffs’ claim would be barred as untimely if filed in the Court of Federal Claims, a transfer would expedite the resolution of Plaintiffs’ claim, “thereby furthering the interest of justice.” Ruiz, 552 F.3d at 276 (transferring case even though claims would be timely if re-filed). Finally, the United States has indicated that it is amenable to such a transfer. “Given each of these factors, we conclude that the interest of justice is better served by transfer to” the Court of Federal Claims “than by dismissal.” Id. We therefore remand this case to the district court and respectfully direct that court to transfer the case to the Court of Federal Claims pursuant to 28 U.S.C. § 1631.
CONCLUSION
For the foregoing reasons, we VACATE the order of the district court enforcing the parties’ settlement agreement and REMAND this matter for transfer to the Court of Federal Claims pursuant to 28 U.S.C. § 1631.
. As we have noted before, the Federal Rules of Civil Procedure do not provide for such a motion. In re Am. Exp. Fin. Advisors Sec. Litig., 672 F.3d 113, 124 n. 9 (2d Cir.2011). Nevertheless, we have over the years reviewed judgments ruling on purported motions to enforce without addressing the "potential error of terminology,” id.; see, e.g., StreetEasy, Inc. v. Chertok, 752 F.3d 298, 306 (2d Cir.2014), and, concluding that the district court’s judgment presents an appealable question, we do so here.
. After briefing had closed before the district court, the United States submitted a letter raising for the first time the argument that the Federal Tort Claims Act's-waiver of sovereign immunity does not apply to an action seeking to enforce a settlement agreement. Because we decide that the district court lacked subject matter jurisdiction over this case, we need not and do not reach the sovereign im
. We express no view as to whether it would have been appropriate under Rule 60(a) for the district court to issue an amended judgment retaining jurisdiction over enforcement of the Settlement Agreement had the court actually done so. Cf. F.A.C., Inc. v. Cooperativa de Seguros de Vida de P.R., 449 F.3d 185, 191 (1st Cir.2006) (holding that the district