Summary
finding no subject-matter jurisdiction where settlement agreement had not been reduced to a writing executed by all parties
Summary of this case from Patterson v. Glaxosmithkline Pharmaceutical CompanyOpinion
CIVIL ACTION NO. 01-5351
October 20, 2003
ORDER — MEMORANDUM
AND NOW, this 20th day of October, 2003, upon consideration of Plaintiff' s Motion to Enforce Settlement Agreement and Alternative Motion to Vacate (Docket No. 216), all responses thereto, and the hearing held in open court on August 18, 2003, IT IS HEREBY ORDERED that said Motion is DENIED in its entirety.
The parties to this action agreed upon the terms of a settlement during a conference with Magistrate Judge Smith on May 13, 2003. Those terms were placed on the record by counsel during that conference (the "Settlement Agreement"). The Court then entered the following Order dismissing this proceeding:
AND NOW, TO WIT: This 13th day of May, 2003, it having been reported that the issues between the parties in the above action have been settled, and upon Order of the Court pursuant to the provisions of Rule 41.1(b) of the Local Rules of Civil Procedure of this Court, it is
ORDERED that the above action is DISMISSED with prejudice, pursuant to agreement of counsel, without costs.
(May 13, 2003 Order.)
The Settlement Agreement has not been reduced to a writing executed by all parties. Indeed, the parties have been unable to agree that all of the terms that they discussed on the record before Magistrate Judge Smith are part of their agreement. Specifically, Defendant Mitchell Greenspan has taken the position that, during the May 13, 2003 conference, the parties agreed that Plaintiff' s counsel would be carved out of the mutual release of claims. Defendant Greenspan relies on the following portion of the transcript of the May 13, 2003 hearing:
Mr. Delcato: Mr. Mann asked your Honor for a mutual release from Mr. Greenspan in favor of State Farm.
We would agree to that without expansive language to include attorneys and other people, State Farm, its shareholders, employees, yes, but attorneys from this case would be specifically excluded. And, as your Honor noted, they are not on the caption as a party.
The Court: Okay.
(May 13, 2003 N.T. at 12.) Plaintiff admits that this discussion took place on the record, but denies agreeing to exclude its attorneys from the release. Plaintiff has moved the Court to enforce the Settlement Agreement without this carve out and to order the parties, including Defendant Greenspan, to execute a written settlement agreement which includes Plaintiff' s counsel in the mutual release of claims. In the event that the Court denies this motion, Plaintiff has also moved, in the alternative, for an order vacating the May 13, 2003 Order dismissing this action and reopening this proceeding.
This Court lacks jurisdiction to enforce the Settlement Agreement unless "the parties' obligation to comply with the terms of the settlement agreement had been made part of the order of dismissal-either by separate provision (such as a provision retaining jurisdiction' over the settlement agreement) or by incorporating the terms of the settlement agreement in the order," or unless there is an independent basis for federal court jurisdiction. Kokkonen v. Guardian Life Insur. Co. of Amer., 511 U.S. 375, 381-82 (1994). The use of the phrase, "pursuant to the settlement" in the dismissal order, placing the terms of the settlement agreement on the record, or approving the terms of the settlement, are all insufficient to retain subject matter jurisdiction.See In re Phar-Mor, Inc. Securities Litig., 172 F.3d 270, 274 (3d Cir. 1999); Shaffer v. GTE North, Inc., 284 F.3d 500, 502-03 (3d Cir. 2002) (citations omitted). In this case, the parties' obligation to comply with the Settlement Agreement was not made a part of the May 13, 2003 dismissal Order as that Order does not incorporate any of the terms of the Settlement Agreement and does not contain any provision retaining jurisdiction over the settlement. Phar-Mor, 172 F.3d at 274. Consequently, before considering Plaintiff' s Motion, the Court must determine whether there is an independent basis for exercise of subject matter jurisdiction over this dispute.
Plaintiff argues that this Court has diversity jurisdiction to enforce the Settlement Agreement. However, even if all of the requirements for diversity jurisdiction pursuant to 28 U.S.C. § 1332 exist, this Court has no power to enforce the terms of the settlement because this proceeding was dismissed with prejudice. Jessup v. Luther, 277 F.3d 926, 929 (7th Cir. 2002) (citations omitted). The Settlement Agreement itself "is just another contract to be enforced in the usual way, that is, by a fresh suit." Id. While the Court may have independent diversity jurisdiction over the parties' dispute regarding the terms of the Settlement Agreement, "the proper vehicle to exercise that jurisdiction would not be the pending motions, but instead a separate action to enforce settlement." In re Nazi Era Cases, 213 F. Supp.2d 439, 450 (D.N.J. 2002). Accordingly, the Court denies Plaintiff's Motion to Enforce the Settlement Agreement.
Plaintiff has moved, in the alternative, for an Order vacating the May 13, 2003 Order dismissing this action. A dismissal upon settlement pursuant to Local Rule 41.1(b) "may be vacated, modified, or stricken from the record, for cause shown, upon the application of any party served within ninety (90) days of the entry of such order of dismissal." L. R. Civ. P. 41.1(b). Plaintiff' s Motion was filed within 90 days of the entry of the May 13, 2003 Order. Plaintiff argues that Defendant Greenspan's refusal to execute a complete mutual release, including Plaintiff's counsel, is good cause to vacate the dismissal of this action.
The evidence on the record of this Motion establishes that Defendant Greenspan agreed, on the record, to a mutual release of claims which excluded Plaintiff's counsel. (May 13, 2003 N.T. at 12.) Magistrate Judge Smith subsequently asked counsel for each party to this action to rise and state his concurrence with the settlement on the record. (Id. at 14.) After the parties had concurred in the Settlement Agreement, Plaintiff's Counsel, Joseph Mancano agreed, on behalf of Plaintiff, that all of the parties' differences had been resolved. (Id. at 16.) The evidence further shows that, after returning to his office, Mr. Mancano thought through the ramifications of this release, and decided that carving Plaintiff's counsel out of the release was not in his client's interest. (Greenspan Mem., Ex. C.) Mr. Mancano then called Defendant Greenspan's counsel and left the following voice mail message:
Listen, I wanted to get back to you on this settlement. There's an issue with respect to Mitchell's unwillingness to include the term attorneys in the mutual release. We got back to State Farm Bloomington and unfortunately we didn't have a chance to really think through the ramifications of that. Putting aside the issues with respect to the law firm, it's not in State Farm's interest to agree to that language. . . . That's the purpose of this release, the mutual release was to release any and all possible claims that Mitchell might have against State Farm. So, the term attorneys has to be in that release. Now if this is something that you know scotches the deal then so be it. . . .
(Id.) Based on the record cited above, the Court finds that the parties agreed that Plaintiff' s counsel would be excluded from the mutual release of claims in the Settlement Agreement and, further finds that, after making this agreement on the record before Magistrate Judge Smith, Plaintiff changed its position on this issue.
Mr. Mancano testified during the August 18, 2003 hearing that the transcript of this message included in Exhibit C to the Memorandum filed by Defendant Greenspan is accurate.
Good cause exists to vacate a dismissal where "the parties did not have a meeting of the minds on all issues so as to settle the matter." De Lage Landen Financial Services, Inc. v. Sprint Spectrum, L.P., No. Civ. A. 02-748, 2002 WL 1896123, at * 1 (E.D. Pa. Aug. 15, 2002) (citation omitted). However, "good cause is not demonstrated simply because a party changed his or her mind after entering into an otherwise valid settlement agreement." Jasmine Exports v. New View Gifts, No. Civ. A. 98-5139, 2000 WL 1286399, at *3 (E.D. Pa. Sept. 1, 2000). The Court finds that Plaintiff's decision, after entering into the Settlement Agreement, that the exclusion of its counsel from the mutual releases of the parties was not in its interest, is not good cause to vacate the dismissal of this action. Accordingly, Plaintiff's Alternative Motion to Vacate is denied.