Opinion
05 Civ. 2653 (PKL).
August 24, 2006
MEMORANDUM ORDER
Plaintiff John Baxter brought an action for breach of contract and detrimental reliance against his former employer, defendant Havens, Inc., as well as three individual-defendant officers of Havens: Alexander Cole, Dejan Bucevski, and Robert Cohen. Plaintiff, formerly an Executive Vice President at Havens, alleged that defendants, in terminating his employment, breached both his employment agreement and a separate agreement that made plaintiff a Director of Havens and granted him additional shares of stock. Plaintiff filed the action in New York Supreme Court on February 7, 2005. On March 7, 2005, defendants removed it to this Court and shortly thereafter filed an answer and counterclaim.
The parties ultimately agreed to settle the case. On August 29, 2005, the Court "so ordered" a Stipulation of Dismissal. Under the terms of the parties' settlement agreement (the "Settlement Agreement"), defendant Havens was to pay a total of $80,000. (Wolf Decl. ¶ 3, Ex. A ¶ 2.) Of this sum, Havens was to pay $55,807.48 directly to plaintiff and the balance of $24,192.52 to plaintiff's counsel as attorneys fees. (Wolf Decl. ¶ 3, Ex. A ¶ 2.) Plaintiff now seeks to enforce that portion of the Settlement Agreement relating to defendant Havens' obligations to make payments to plaintiff's counsel, payments which defendant Havens has failed to make for several months. (Wolf Decl. ¶ 6.) Accordingly, plaintiff moves the Court to enforce the Settlement Agreement by entering a judgment of $21,993.20, plus $2,500 in attorneys fees pursuant to the Settlement Agreement. Plaintiff also requests that the Court find defendants in contempt and impose sanctions, "including but not limited to incarceration, for their blatant disregard" of the Settlement Agreement. (Pl.'s Notice Mot. 2, June 28, 2006.) However, as the Court lacks subject matter jurisdiction over this matter, plaintiff's motion is denied.
As indicated, plaintiff's motion addresses only the payments Havens owes to plaintiff's counsel. Prior to the execution of the Settlement Agreement, plaintiff filed for bankruptcy in the United States Bankruptcy Court for the District of Connecticut. (Wolf Decl. ¶ 4.) Plaintiff first moved to enforce the Settlement Agreement on December 27, 2005, seeking a judgment of $62,222.24, plus $2,500 in attorneys fees. (See Pl.'s Notice Mot. 1, Dec. 27, 2005.) However, pursuant to the bankruptcy proceeding, it subsequently was determined that all payments owed to plaintiff were property of the bankruptcy estate, while those payments due to plaintiff's counsel were not property of the bankruptcy estate. (Wolf Decl. Ex. B.) Plaintiff's counsel soon thereafter wrote to inform the Court that it was withdrawing its motion on behalf of its client. (See Letter from Jason M. Wolf, Esq., to the Court, dated Jan. 5, 2006.) As plaintiff's first motion remains on the docket at this time, the Court hereby formally denies it as moot.
The parties have not raised the issue of subject matter jurisdiction. However, subject matter jurisdiction may not be waived, and may be raised by the court sua sponte. Lyndonville Sav. Bank Trust Co. v. Lussier, 211 F.3d 697, 700 (2d Cir. 2000). "If subject matter is lacking, the action must be dismissed." See id. (citing Bender v. Williamsport Area Sch. Dist., 475 U.S. 534, 541 (1986)). It is settled law that the enforcement of a settlement agreement requires its own basis of jurisdiction, Scelsa v. City University of New York, 76 F.3d 37, 40 (2d Cir. 1996) (citing United States v. Kokkonen, 511 U.S. 375, 378 (1994)), and that in the absence of such an independent basis of 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." Id. (citingKokkonen, 511 U.S. at 381); see also Diaz v. Loews New York Hotel, No. 97 Civ. 2731, 1998 WL 326736, at *2 (S.D.N.Y. 1998) ("Here, the Stipulation of Discontinuance neither expressly retains jurisdiction over the Agreement nor does it incorporate its terms. Accordingly, this Court is without jurisdiction to enforce the Agreement."). In the instant matter, the Stipulation of Dismissal signed by the Court on August 29, 2005, has no provision stating that the Court retains jurisdiction to enforce the Settlement Agreement. Nor does the Stipulation of Dismissal make any reference to the Settlement Agreement. Therefore, an independent basis of jurisdiction is required.
Indeed, defendants have not responded to plaintiff's motion. On July 17, 2006, the Court granted defendants' counsel's motion to withdraw from its representation of defendants because of defendants' failure to pay legal bills and to respond to counsel's repeated attempts to contact them.
The Stipulation of Dismissal simply states: "This matter, having been amicably resolved by the parties, is hereby dismissed with prejudice and without the assessment of costs or attorneys fees." (Stip. Dismiss. 1, Aug. 29, 2005.)
Federal jurisdiction is available only when a "federal question" is presented, see 28 U.S.C. § 1331 (2000), or when plaintiff and all defendants are of diverse citizenship and the amount in controversy exceeds $75,000, see 28 U.S.C. § 1332 (2000). Plaintiff's claim is a garden variety breach-of-contract claim, and while plaintiff and defendants are of diverse citizenship, plaintiff seeks a judgment of only $21,993.20. Accordingly, the Court denies plaintiff's motion for lack of subject matter jurisdiction.
SO ORDERED.