From Casetext: Smarter Legal Research

Kokkonen v. Guardian Life Ins. Co. of America

U.S.
May 16, 1994
511 U.S. 375 (1994)

Summary

holding that absent a reservation of jurisdiction in the stipulated dismissal order, federal courts lack jurisdiction to consider enforcement of a settlement agreement

Summary of this case from Wu v. Bernhardt

Opinion

CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT

No. 93-263

Argued March 1, 1994 Decided May 16, 1994

Following respondent's termination of an agency agreement between the parties, petitioner brought a state court suit alleging state law claims. Respondent removed the case to the Federal District Court on diversity grounds and filed state law counterclaims. The parties subsequently arrived at a settlement agreement and, pursuant to Federal Rule of Civil Procedure 41(a)(1)(ii), executed a Stipulation and Order of Dismissal with Prejudice, which did not refer to the settlement agreement or reserve District Court jurisdiction to enforce it. After the District Judge signed the Stipulation and Order, a dispute arose as to petitioner's obligations under the settlement agreement. Respondent filed a motion to enforce the agreement, which petitioner opposed on the ground, inter alia, that the court lacked subject matter jurisdiction. The District Court entered an enforcement order, asserting that it had "inherent power" to do so. The Court of Appeals agreed and affirmed.

Held: A federal district court, possessing only that power authorized by Constitution and statute, lacks jurisdiction over a claim for breach of a contract, part of the consideration for which was dismissal of an earlier federal suit. No federal statute makes that connection (if it constitutionally could) the basis for federal court jurisdiction over the contract dispute. Moreover, the doctrine of ancillary jurisdiction does not apply, since the facts to be determined with regard to the alleged breach of contract are quite separate from the facts to be determined in the principal suit, and automatic jurisdiction over such contracts is in no way essential to the conduct of federal court business. Julian v. Central Trust Co., 193 U.S. 93, 113-114, distinguished. If the parties wish to provide for the court's jurisdiction to enforce a dismissal-producing settlement agreement, they can seek to do so. In the event of dismissal pursuant to Federal Rule of Civil Procedure 41(a)(2), the court may, in its discretion, make the parties' compliance with the terms of the settlement agreement (or retention of jurisdiction over the agreement) part of its order. When dismissal occurs pursuant to Rule 41(a)(1)(ii), the District Court is empowered (with the consent of the parties) to incorporate the settlement agreement in the order or retain jurisdiction over the settlement contract itself. Absent such action, however, enforcement of the settlement agreement is for state courts, unless there is some independent basis for federal jurisdiction. Pp. 377-382.

993 F.2d 883, reversed and remanded.

SCALIA, J., delivered the opinion for a unanimous Court.

Michael Reynolds Jencks argued the cause and filed briefs for petitioner.

Frank C. Morris, Jr., argued the cause for respondents. With him on the brief were Thomas R. Bagby and Andrea R. Calem.

A brief of amici curiae urging reversal was filed for the State of Ohio et al. by Lee Fisher, Attorney General of Ohio, Richard A. Cordray, State Solicitor, and Simon B. Karas, Charles E. Cole, Attorney General of Alaska, John Payton, Corporation Counsel of the District of Columbia, Roland W. Burris, Attorney General of Illinois, Robert T. Stephan, Attorney General of Kansas, Scott Harshbarger, Attorney General of Massachusetts, Joe Mazurek, Attorney General of Montana, Susan B. Loving, Attorney General of Oklahoma, Ernest D. Preate, Jr., Attorney General of Pennsylvania, and Stephen Rosenthal, Attorney General of Virginia.


After respondent Guardian Life Insurance Company terminated petitioner's general agency agreement, petitioner brought suit in California Superior Court alleging various state law claims. Respondent removed the case to the United States District Court for the Eastern District of California on the basis of diversity jurisdiction, and filed state law counterclaims. After closing arguments, but before the District Judge instructed the jury, the parties arrived at an oral agreement settling all claims and counterclaims, the substance of which they recited, on the record, before the District Judge in chambers. In April, 1992, pursuant to Federal Rule of Civil Procedure 41(a)(1)(ii), the parties executed a Stipulation and Order of Dismissal with Prejudice, dismissing the complaint and cross-complaint. On April 13, the District Judge signed the Stipulation and Order under the notation "It is so ordered." The Stipulation and Order did not reserve jurisdiction in the District Court to enforce the settlement agreement; indeed, it did not so much as refer to the settlement agreement.

Guardian Life is the sole respondent. The Guardian Insurance and Annuity Corporation and the Guardian Investor Services Corporation were listed as appellees below, but in fact they had been dismissed prior to trial.

Thereafter, the parties disagreed on petitioner's obligation to return certain files to respondent under the settlement agreement. On May 21, respondent moved in the District Court to enforce the agreement, which petitioner opposed on the ground, inter alia, that the court lacked subject matter jurisdiction. The District Court entered an enforcement order, asserting an "inherent power" to do so. Order Enforcing Settlement (ED Cal., Aug. 19, 1992), App. 180. Petitioner appealed, relying solely on his jurisdictional objection. The United States Court of Appeals for the Ninth Circuit affirmed, quoting its opinion in Wilkinson v. FBI, 922 F.2d 555, 557 (1991), to the effect that, after dismissal of an action pursuant to a settlement agreement, a "`district court ha[s] jurisdiction to decide the [enforcement] motion under its inherent supervisory power.'" App. to Pet. for Cert. A-5 (Apr. 27, 1993) (unpublished), judgt. order reported at 993 F.2d 883 (1993) (final brackets in original). We granted certiorari, 510 U.S. 930 (1993).

Federal courts are courts of limited jurisdiction. They possess only that power authorized by Constitution and statute, see Willy v. Coastal Corp., 503 U.S. 131, 136-137 (1992); Bender v. Williamsport Area School Dist., 475 U.S. 534, 541 (1986), which is not to be expanded by judicial decree, American Fire Casualty Co. v. Finn, 341 U.S. 6 (1951). It is to be presumed that a cause lies outside this limited jurisdiction, Turner v. Bank of North-America, 4 Dall. 8, 11 (1799), and the burden of establishing the contrary rests upon the party asserting jurisdiction, McNutt v. General Motors Acceptance Corp., 298 U.S. 178, 182-183 (1936).

The dismissal in this case issued pursuant to Federal Rule of Civil Procedure 41(a)(1)(ii), which provides for dismissal "by filing a stipulation of dismissal signed by all parties who have appeared in the action," and causes that dismissal to be with prejudice if (as here) the stipulation so specifies. Neither the Rule nor any provision of law provides for jurisdiction of the court over disputes arising out of an agreement that produces the stipulation. It must be emphasized that what respondent seeks in this case is enforcement of the settlement agreement, and not merely reopening of the dismissed suit by reason of breach of the agreement that was the basis for dismissal. Some Courts of Appeals have held that the latter can be obtained under Federal Rule of Civil Procedure 60(b)(6). See, e.g., Keeling v. Sheet Metal Workers Int'l Assn., 937 F.2d 408, 410 (CA9 1991); Fairfax Countywide Citizens Assn. v. Fairfax County, 571 F.2d 1299, 1302-1303 (CA4 1978). But see Sawka v. Healtheast, Inc., 989 F.2d 138, 140-141 (CA3 1993) (breach of settlement agreement insufficient reason to set dismissal aside on Rule 60(b)(6) grounds); Harman v. Pauley, 678 F.2d 479, 480-481 (CA4 1982) (Rule 60(b)(6) does not require vacating dismissal order whenever a settlement agreement has been breached). Enforcement of the settlement agreement, however, whether through award of damages or decree of specific performance, is more than just a continuation or renewal of the dismissed suit, and hence requires its own basis for jurisdiction.

The relevant provision of that Rule reads as follows:
"On motion and upon such terms as are just, the court may relieve a party or a party's legal representative from a final judgment, order, or proceeding for the following reasons: . . . (6) any other reason justifying relief from the operation of the judgment."

Respondent relies upon the doctrine of ancillary jurisdiction, which recognizes federal courts' jurisdiction over some matters (otherwise beyond their competence) that are incidental to other matters properly before them. Respondent appeals to our statement (quoting a then-current treatise on equity) in Julian v. Central Trust Co., 193 U.S. 93 (1904): "A bill filed to continue a former litigation in the same court . . . to obtain and secure the fruits, benefits and advantages of the proceedings and judgment in a former suit in the same court by the same or additional parties . . . or to obtain any equitable relief in regard to, or connected with, or growing out of, any judgment or proceeding at law rendered in the same court, . . . is an ancillary suit." Id., at 113-114 (citing 1 C. Bates, Federal Equity Procedure § 97 (1901)).

The doctrine of ancillary jurisdiction can hardly be criticized for being overly rigid or precise, but we think it does not stretch so far as that statement suggests. The expansive language of Julian can be countered by (equally inaccurate) dicta in later cases that provide an excessively limited description of the doctrine. See, e.g., Fulton Nat. Bank of Atlanta v. Hozier, 267 U.S. 276, 280 (1925) ("[N]o controversy can be regarded as dependent or ancillary unless it has direct relation to property or assets actually or constructively drawn into the court's possession or control by the principal suit"). The holding of Julian was not remotely as permissive as its language: Jurisdiction was based upon the fact that the court, in a prior decree of foreclosure, had expressly reserved jurisdiction to adjudicate claims against the judicially conveyed property, and to retake and resell the property if claims it found valid were not paid. 193 U.S., at 109-112.

It is to the holdings of our cases, rather than their dicta, that we must attend, and we find none of them that has, for purposes of asserting otherwise nonexistent federal jurisdiction, relied upon a relationship so tenuous as the breach of an agreement that produced the dismissal of an earlier federal suit. Generally speaking, we have asserted ancillary jurisdiction (in the very broad sense in which that term is sometimes used) for two separate, though sometimes related, purposes: (1) to permit disposition by a single court of claims that are, in varying respects and degrees, factually interdependent, see, e.g., Baker v. Gold Seal Liquors, Inc., 417 U.S. 467, 469, n. 1 (1974); Moore v. New York Cotton Exchange, 270 U.S. 593, 610 (1926); and (2) to enable a court to function successfully, that is, to manage its proceedings, vindicate its authority, and effectuate its decrees, see, e.g., Chambers v. NASCO, Inc., 501 U.S. 32 (1991) (power to compel payment of opposing party's attorney's fees as sanction for misconduct); United States v. Hudson, 7 Cranch 32, 34 (1812) (contempt power to maintain order during proceedings). See generally 13 C. Wright, A. Miller, E. Cooper, Federal Practice and Procedure § 3523 (1984); cf. 28 U.S.C. § 1367 (1988 ed., Supp. IV).

Neither of these heads supports the present assertion of jurisdiction. As to the first, the facts underlying respondent's dismissed claim for breach of agency agreement and those underlying its claim for breach of settlement agreement have nothing to do with each other; it would neither be necessary nor even particularly efficient that they be adjudicated together. No case of ours asserts, nor do we think the concept of limited federal jurisdiction permits us to assert, ancillary jurisdiction over any agreement that has as part of its consideration the dismissal of a case before a federal court.

But it is the second head of ancillary jurisdiction, relating to the court's power to protect its proceedings and vindicate its authority, that both courts in the present case appear to have relied upon, judging from their references to "inherent power," see App. to Pet. for Cert. A-2 and A-5; App. 180. We think, however, that the power asked for here is quite remote from what courts require in order to perform their functions. We have recognized inherent authority to appoint counsel to investigate and prosecute violation of a court's order. Young v. United States ex rel. Vuitton et Fils S. A., 481 U.S. 787 (1987). But the only order here was that the suit be dismissed, a disposition that is in no way flouted or imperiled by the alleged breach of the settlement agreement. The situation would be quite different if 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. In that event, a breach of the agreement would be a violation of the order, and ancillary jurisdiction to enforce the agreement would therefore exist. That, however, was not the case here. The judge's mere awareness and approval of the terms of the settlement agreement do not suffice to make them part of his order.

The short of the matter is this: the suit involves a claim for breach of a contract, part of the consideration for which was dismissal of an earlier federal suit. No federal statute makes that connection (if it constitutionally could) the basis for federal court jurisdiction over the contract dispute. The facts to be determined with regard to such alleged breaches of contract are quite separate from the facts to be determined in the principal suit, and automatic jurisdiction over such contracts is in no way essential to the conduct of federal court business. If the parties wish to provide for the court's enforcement of a dismissal-producing settlement agreement, they can seek to do so. When the dismissal is pursuant to Federal Rule of Civil Procedure 41(a)(2), which specifies that the action "shall not be dismissed at the plaintiff's instance save upon order of the court and upon such terms and conditions as the court deems proper," the parties' compliance with the terms of the settlement contract (or the court's "retention of jurisdiction" over the settlement contract) may, in the court's discretion, be one of the terms set forth in the order. Even when, as occurred here, the dismissal is pursuant to Rule 41(a)(1)(ii) (which does not by its terms empower a District Court to attach conditions to the parties' stipulation of dismissal), we think the court is authorized to embody the settlement contract in its dismissal order (or, what has the same effect, retain jurisdiction over the settlement contract) if the parties agree. Absent such action, however, enforcement of the settlement agreement is for state courts, unless there is some independent basis for federal jurisdiction.

We reverse the judgment of the Court of Appeals and remand for further proceedings consistent with this opinion.

It is so ordered.


Summaries of

Kokkonen v. Guardian Life Ins. Co. of America

U.S.
May 16, 1994
511 U.S. 375 (1994)

holding that absent a reservation of jurisdiction in the stipulated dismissal order, federal courts lack jurisdiction to consider enforcement of a settlement agreement

Summary of this case from Wu v. Bernhardt

holding that if a district court wished to retain jurisdiction to later enforce the terms of a settlement agreement, the order dismissing a case with prejudice must incorporate the terms of the settlement agreement or expressly retain jurisdiction

Summary of this case from Hajro v. U.S. Citizenship & Immigration Servs.

holding that where a case is voluntarily dismissed and the order of dismissal fails to mandate the parties' compliance with the settlement agreement, the district court, absent an independent basis for exercising jurisdiction, lacks jurisdiction to enforce the agreement

Summary of this case from Farmer v. Banco Popular American

holding the law presumes that a cause lies outside the limited jurisdiction of the federal courts and "the burden of establishing the contrary rests upon the party asserting jurisdiction"

Summary of this case from Pappas v. United States

holding that a district court lacked jurisdiction to enforce a settlement that was "recited, on the record, before the District Judge"

Summary of this case from Guiuan v. Villaflor

holding that, absent an independent basis for federal jurisdiction, or the district court embodying "the settlement contract in its dismissal order" or retaining jurisdiction over the enforcement thereof, a motion for enforcement of the settlement agreement is a matter of state contract law

Summary of this case from Eurand, Inc. v. Impax Labs., Inc. (In re Cyclobenzaprine Hydrochloride Extended-Release Capsule Patent Litig.)

holding that a federal district court has the discretion to retain ancillary jurisdiction to enforce a settlement agreement

Summary of this case from Nissim Corp. v. ClearPlay, Inc.

holding that enforcement of a settlement agreement "is more than just a continuation or renewal of dismissed suit, and hence requires its own basis for jurisdiction"

Summary of this case from BURKE v. LASH WORK ENVIRONMENTS, INCORP

holding that the party asserting the jurisdiction of a federal court bears the burden

Summary of this case from Parish v. Federal Emergency Management

holding that the party asserting the jurisdiction of a federal court bears the burden

Summary of this case from Davis v. Fema

holding that a District Court did not have ancillary jurisdiction but stating that "[t]he situation would be quite different if the parties' obligation to comply with the terms of the settlement agreement had been made part of the order of dismissal"

Summary of this case from Transtech v. a Z Septic

holding that federal district court lacks jurisdiction to enforce terms of settlement agreement after underlying action has been dismissed unless court specifically retains jurisdiction to do so

Summary of this case from Drayton v. Kyler

holding that a district court lacks jurisdiction to enforce a settlement agreement unless the court retains jurisdiction over the agreement or incorporates the terms of the agreement into its dismissal order

Summary of this case from Penn West Associates, Inc. v. Cohen

holding that district court lacks ancillary jurisdiction to enforce settlement agreement after underlying lawsuit has been dismissed unless the parties agree to such continuing authority or the court retains jurisdiction for such purpose

Summary of this case from Covanta Onondaga Ltd. Partnership v. Onondaga County Resource Recovery Agency

holding that the district court was without jurisdiction to enforce a settlement agreement even though the substance of the agreement was read into the record

Summary of this case from Hospitality House, Inc. v. Gilbert

holding that the jurisdiction of the federal courts "is not to be expanded by judicial decree"

Summary of this case from Marathon Oil Co. v. Ruhrgas, A.G

holding that the party seeking to invoke a federal court's jurisdiction bears the burden of demonstrating the existence of federal jurisdiction

Summary of this case from White v. Barrington Golf Club

holding that a court can retain enforcement jurisdiction only by incorporating agreement's terms into order or expressly retaining jurisdiction

Summary of this case from Go N.Y. Tours, Inc. v. Tour Cent. Park

holding that a court lacks jurisdiction to enforce settlement agreements unless the obligation of the parties to comply with the settlement agreement is made part of the dismissal order

Summary of this case from Thompson v. Lombardi

holding that court had no jurisdiction to enforce settlement of earlier lawsuits, where order of dismissal did not incorporate settlement agreements

Summary of this case from Ewing v. Canopy Energy Cal.

holding that the district court lacked jurisdiction over a motion to enforce settlement following entry of a stipulated dismissal with prejudice where there was no provision in the settlement agreement retaining jurisdiction, and the settlement agreement was not incorporated into the order dismissing with prejudice

Summary of this case from Springfield v. Valencia

holding federal courts "possess only that power authorized by the Constitution and statute, which is not to be expanded by judicial decree."

Summary of this case from United States v. Singleton

holding that federal courts have no jurisdiction to enforce a settlement agreement entered into by the parties without an order or judgment specifically retaining jurisdiction over the settlement agreement or incorporating the terms of the settlement agreement

Summary of this case from Cummings v. Worktap, Inc.

holding that a federal district court does not have authority to enforce a settlement agreement entered in one of its cases, absent the court incorporating the settlement into a court order with the parties' consent

Summary of this case from McGoldrick v. Bradstreet

holding the district court lacked jurisdiction over a motion to enforce settlement following entry of a stipulated dismissal with prejudice where there was no provision in the settlement agreement retaining jurisdiction, and the settlement agreement was not incorporated into the order dismissing with prejudice

Summary of this case from Maksoud v. Hopkins
Case details for

Kokkonen v. Guardian Life Ins. Co. of America

Case Details

Full title:MATT T. KOKKONEN, PETITIONER v . GUARDIAN LIFE INSURANCE COMPANY OF AMERICA

Court:U.S.

Date published: May 16, 1994

Citations

511 U.S. 375 (1994)
114 S. Ct. 1673

Citing Cases

Macias v. New Mexico Dept. of Labor

Ms. Simmons cites Kokkonen v. Guardian Life Insurance Co. of America, 511 U.S. 375, 114 S.Ct. 1673,…

United States v. Borrego

“Once a lawsuit is settled and dismissed, the district court does not generally have ‘ancillary jurisdiction…