OPINION OF THE COURT
(February 21, 2008)
Appellants Judi’s of St. Croix Car Rental, Linda Denner and Dennis Denner (collectively “Appellants”) appeal both the Superior Court order setting aside entry of dismissal and entering judgment in favor of Appellee Jahmeca Weston (“Weston”) and the order denying Appellants’ Motion for Reconsideration. For the reasons which follow, the order setting aside entry of dismissal and entering judgment for Weston will be reversed and the order denying Appellants’ Motion for Reconsideration will be dismissed as moot.
I. BACKGROUND
Weston entered into a rent-to-own agreement with Appellants, who own a car rental company in St. Croix, for the purchase of an automobile then valued at approximately $5,000. After partial payment of the purchase price, Appellants allegedly repossessed the vehicle for nonpayment. Weston alleged that Appellants stole her vehicle as well as
After a complaint and an answer were filed, the parties submitted their dispute to mediation which produced a settlement agreement. Appellants agreed to pay Weston a total sum of $60,000, $10,000 of which was to be paid within thirty (30) days with the remaining $50,000 to be paid in monthly installments of $2,000. The agreement also provided that if Appellants paid in full by January 15, 2006, they would be entitled to a $5,000 deduction from the total amount due.
On October 14,2005, relying upon the mediator’s report that the matter had been completely settled, the Superior Court judge dismissed the complaint but explicitly retained jurisdiction for sixty days “in order that the dismissal be vacated in the event that the settlement reported by the parties is not consummated.” (App. 18). The Order of Dismissal cautioned that “if the parties desire that the Court retain jurisdiction over the settlement agreement, they shall, within sixty (60) days of entry of this Order, file an executed copy of the settlement along with a consent motion for the Court to retain jurisdiction over the settlement” or the court could lose jurisdiction to enforce the settlement. (Id.). Because neither party acted on the order, the trial court, sua sponte, dismissed the case without prejudice on January 31, 2006.
Thereafter, Appellants paid the initial $10,000 but they did so three days late. They also missed their first four monthly installment payments. On March 17, 2006, however, Appellants tendered a bulk payment of $45,000 to Weston and her counsel, both of whom signed a “Settlement and General Release of All Claims” agreement stating that the $55,000 total amount tendered represented “payment in full.” (App. 22). The parties then jointly signed a Stipulation for Dismissal with Prejudice, which was dated March 17, 2006 and filed with the Superior Court on March 21, 2006.
Ancillary to the monetary issues, the settlement agreement required Weston to make “a good faith effort” to supply Appellants with a bank record proving withdrawal of the $1,500 allegedly stolen from Weston’s
On March 30, 2006, Weston, allegedly realizing for the first time that Appellants had taken the $5,000 deduction despite failing to pay in full within the time required by the agreement, filed a “Motion to Set Aside Entry of Dismissal and to Enforce Settlement Agreement.” Weston sought to recover the $5,000 plus $120.17 in interest owed on the four late monthly installments. Rejecting Appellants’ opposition, the trial court granted Weston’s motion and the relief sought on February 7, 2007. Appellants thereafter filed a Motion for Reconsideration, which was denied on March 6, 2007.
On April 3, 2007, Appellants’ filed a Notice of Appeal, appealing both the order that set aside entry of dismissal and entered judgment in favor of Weston and the order that denied Appellants’ Motion for Reconsideration.
II. DISCUSSION
A. Jurisdiction and Standards of Review
“The Supreme Court [has] jurisdiction over all appeals arising from final judgments, final decrees or final orders of the Superior Court.” V.I. Code Ann. tit. 4 § 32(a). Because the March 6, 2007 order denying Appellants’ Motion for Reconsideration was a final judgment, the appeal was properly filed with this Court on April 3, 2007.
Our review of the Superior Court’s application of law is plenary. St. Thomas-St. John Bd. of Elections v. Daniel,
Before we can decide whether the Superior Court had jurisdiction to set aside the several dismissals that were filed in the trial court to determine which comprised the final order in the case. According to the Third Circuit Court of Appeals, orders that dismiss an action pending settlement automatically ripen into final orders if the parties fail to reopen the matter within the timetable provided for in the order. Berke v. Bloch,
The record before us indicates that three dismissals were filed in the trial court. First, on October 14, 2005, the trial court entered an “Order of Dismissal” (hereafter “October Dismissal”) that dismissed the case but retained jurisdiction for sixty days to allow for the dismissal to be vacated if the settlement agreement was not consummated.
In Berke, as here, the trial court ordered a dismissal without prejudice and left the case open for sixty days to allow for reinstatement of the action if settlement was not reached. See
Appellants argue that the March dismissal, which purported to voluntarily dismiss the case with prejudice, was the final order in this case. (Pet’rs’ Br. 11-12). Stipulated dismissals, however, do not become effective until the date they are filed with the court. See McCall-Bey v. Franzen, 777 F.2d 1178, 1185 (7th Cir. 1985). The March dismissal was not filed until nearly two months after the judge entered dismissal without prejudice; therefore, it is not the operative dismissal in this case. See id. (declaring the court’s dismissal without prejudice to be the effective dismissal in that case because, “[wjhen the parties filed their stipulation, the judge had already ordered the case dismissed-without prejudice”). Thus, this Court will not address Appellants’ arguments concerning the trial court’s jurisdiction to enforce settlement agreements that have been dismissed pursuant to a Federal Rule of Civil Procedure 41(a)(1)(h) dismissal.
Having established that the October Dismissal was the final order below, we now examine the language of that order to determine whether
On the contrary, the U.S. Supreme Court and the Third Circuit Court of Appeals have explicitly held that when a trial court dismisses a case because the parties have settled, the court does not have jurisdiction to enforce the terms of the settlement agreement simply because it had jurisdiction to decide the underlying action. See Kokkonen v. Guardian Life Ins. Co. of Am.,
Accordingly, we hold that absent an independent jurisdictional basis, the Superior Court was without jurisdiction to enforce the settlement agreement, despite an alleged breach by the Appellants, because the court did not explicitly retain enforcement jurisdiction or incorporate the terms of the settlement agreement in its dismissal order.
C. Rule 60(b)(1) and (6) of the Federal Rules of Civil Procedure Do Not Provide an Independent Basis for Asserting Jurisdiction over the Settlement Agreement
Because the trial court did not explicitly retain enforcement jurisdiction or incorporate the terms of the settlement agreement, the trial court required an independent basis in order to assert jurisdiction after expiration of the sixty-day period. In the proceedings below, the trial court concluded that a breach of the settlement agreement was grounds for Federal Rule of Civil Procedure 60(b)(1) and (6) relief and thus vacated the dismissal and entered judgment on the settlement agreement in favor of Weston. (App. 39-40).
Rule 60(b)
Relief under Rule 60(b)(6)’s “any other reason that justifies relief’ clause is granted only “under extraordinary circumstances where, without such relief, an extreme and unexpected hardship would occur.” Sawka v. Healtheast, Inc.,
According to the Third Circuit Court of Appeals, breach of a settlement agreement may give rise to a separate cause of action to enforce the agreement but is not a basis for Rule 60(b) relief. Id. Consequently, barring compliance with the Kokkonen factors, Weston’s remedy for Appellants’ alleged breach was to initiate a new action based on the settlement agreement.
D. Superior Court Rule 40(f) Does Not Provide an Independent Basis for Asserting Jurisdiction over the Settlement Agreement
The trial court, in denying Appellants’ Motion for Reconsideration and rejecting their argument that the court lacked jurisdiction after dismissal, cited Superior Court Rule 40(f)(3) as providing an independent jurisdictional basis for enforcing the settlement agreement. (App. 56). The rule provides: “[i]n the event of any breach or failure to perform under the [mediated] agreement, the Court upon motion may impose sanctions, including costs, attorney fees, or other appropriate remedies including entry of judgment on the agreement.” Super. Ct. R. 40(f)(3) (emphasis added). In order to invoke this sanction provision, however, the parties must first comply with the requirements of Rule 40(f)(2), which provides, in relevant part:
[i]f an agreement is reached, it shall be reduced to writing and signed by the parties and their counsel, if any. The agreement shall be filed when required by law or by the parties ’ consent. If the agreement is not filed, a joint stipulation of dismissal or consent judgment shall be filed.
Super. Ct. R. 40(f)(2) (emphasis added).
Thus, if the parties wish the trial court to have independent jurisdiction to impose sanctions for breach or failure to perform a mediated settlement agreement under Rule 40(f)(3), they must take the affirmative step of filing the settlement agreement with the court by consent or as required by law so the court can address the settlement or incorporate it into the dismissal order. This procedure is, in fact, the exact one suggested to the parties by the trial court in the October dismissal. Neither party, however, availed itself of the suggestion, nor did they
III. CONCLUSION
Because the October Dismissal dismissed the underlying action without incorporating the agreement or manifesting an intent to retain enforcement jurisdiction, this Court holds that the trial court lacked jurisdiction to review any alleged breach of the settlement agreement absent a separate action for breach of contract. Additionally, on the facts presented, the trial court erred in utilizing Federal Rule of Civil Procedure 60(b)(1) and (6) as an independent jurisdictional basis to set aside dismissal because a breach of an unincorporated settlement agreement does not justify relief when the parties can bring a separate cause of action to enforce the agreement. Moreover, we hold that the trial court could not apply Superior Court Rule 40(f)(3) as a sanction for breach of the settlement agreement because neither the agreement nor a consent judgment were properly filed with the court. Accordingly, the trial court’s
Notes
Judge Hollar is a Sitting Judge of the Superior Court of the Virgin Islands, Division of St. Thomas-St. John sitting in this matter by designation pursuant to V.I. Code Ann. tit. 4 § 24(a).
Weston initially stated, in her Complaint, that the amount allegedly stolen was $1,000 but she later claimed that the amount was $1,500.
Weston initial told Appellants that the money had been withdrawn on August 6,2002, not April 6, 2002.
The October Dismissal stated:
THE ABOVE ENTITLED matter having been reported settled and it appearing that it is no longer necessary that it remain on the trial calendar and the Court being otherwise fully advised in the premises, it is
ORDERED, ADJUDGED and DECREED that the complaint be and the same is hereby dismissed. Notwithstanding said dismissal, the Court will retain jurisdiction of the matter for a period of SIXTY (60) DAYS in order that the dismissal be vacated in the event that the settlement reported by the parties is not consummated; and it is further
ORDERED, ADJUDGED and DECREED that any application to vacate this dismissal shall be filed on or before the SIXTIETH (60th) DAY following the date of the entry of this Order; and it is finally
ORDERED, ADJUDGED and DECREED that if the parties desire that the Court retain jurisdiction over the settlement agreement, they shall, within SIXTY (60) DAYS of entry of this Order, file an executed copy of the settlement agreement along with a consent motion for the Court to retain jurisdiction over the settlement. Consent motions not filed within the prescribed time may result in the Court losing jurisdiction to enforce the settlement.
The January Dismissal stated:
ORDERED that the above-captioned action is DISMISSED WITHOUT PREJUDICE.
The March “Stipulation for Dismissal with Prejudice” stated:
THIS MATTER having been settled in mediation, the parties hereby stipulate that this case be dismissed with prejudice, the parties to bear their own court costs and attorney’s fees.
We are cognizant of the fact that, unlike state courts, federal courts are courts of limited jurisdiction. See Kokkonen,
We find, nevertheless, that Kokkonen is applicable to dismissals granted by the Virgin Islands Superior Court. Procedurally, Virgin Islands courts are similar to federal courts. For example, in the Virgin Islands, as in federal courts, cases are commenced with the filing of
Although decisions of our predecessor court, the Appellate Division of the District Court of the Virgin Islands, are not binding on us, we have found guidance in that court’s analysis of similar circumstances in Berne. See
The two main cases cited by Weston to support her contention that the October dismissal retained jurisdiction to enforce the settlement agreement are not helpful. The first case, Re/Max Int’l, Inc. v. Realty One, Inc.,
The Federal Rules of Civil Procedure are made applicable hereto by Superior Court Rule 7 which reads in full: “The practice and procedure in the [Superior] Court shall be governed by the Rules of the [Superior] Court and, to the extent not inconsistent therewith, by the Rules of the District Court, the Federal Rules of Civil Procedure, the Federal Rules of Criminal Procedure and the Federal Rules of Evidence.”
We reach the same conclusion with respect to Appellants’ claim that Weston breached the settlement agreement by failing to turn over the bank record confirming the $1,500 cash withdrawal.
We note that any potential argument that judicial economy necessitates that a party not be required to file a separate action on the settlement agreement when a breach occurs will not support the expansion of the trial court’s jurisdiction. See Hanson,
The joint stipulation of dismissal in this case was belatedly filed in March 2006, after the case was already dismissed by the court.
Superior Court Rule 40(f) is identical to and was modeled after Florida’s Rule of Civil Procedure 1.730(c). Florida courts, utilizing such mediation rules, consistently manifest the intention to retain jurisdiction over settlement agreements when dismissing cases. See, e.g., Commercial Capital Resources, LLC v. Giovannetti,
We do not here decide whether the trial court’s sanction authority under Superior Court Rule 40(f)(3) extends beyond “entry of judgment on the agreement” to include enforcement of the terms of the settlement agreement where the case is dismissed without incorporating the terms of the agreement in the dismissal order or without specifically retaining enforcement jurisdiction.
