Continental Casualty Company et al v. Healthprime, Inc. et al
Filing
138
OPINION AND ORDER that Plaintiffs' 129 Motion for Relief From a Stipulation of Dismissal to File Consent Judgment Pursuant to the Parties' Settlement Agreement is DENIED. IT IS FURTHER ORDERED that Plaintiffs' 130 Motion to Al low Settlement and Release Agreement to be Filed Under Seal is DENIED AS MOOT. IT IS FURTHER ORDERED that Defendants' 136 Motion for Leave to File Supplemental Response is DENIED AS MOOT. Signed by Judge William S. Duffey, Jr on 2/9/2015. (anc)
Integrated Therapy Services, Inc., Prime Senior Services, Inc. and Douglas K.
Mittleider (collectively, “Defendants”).
On October 11, 2007, Plaintiffs filed an action against Defendants seeking
damages in the amount of $3,920,275.85, for an unpaid judgment and unpaid
insurance premiums. In July 2010, the parties entered into a Settlement Agreement
and executed a Consent Judgment, in the amount of $2,250,000, in favor of
Plaintiffs. On August 3, 2010, the parties filed a Stipulation of Dismissal with
Prejudice (the “Stipulation”), agreeing to voluntarily dismiss this case with
prejudice and without cost to either party. In the Stipulation, the parties stated:
“This Court shall retain jurisdiction to enforce the terms of the Settlement and
Release Agreement entered into by the parties” [128]. The Stipulation was not
presented to the Court and the Court did not agree to retain jurisdiction over the
dismissed action.
Under the terms of the Settlement Agreement, the Consent Judgment was
held in escrow unless Defendants defaulted on their obligations, including the
promise to pay Plaintiffs $2,000,000, in monthly installments of $27,777.77, from
August 2010 to August 2016. If Plaintiffs breach the agreement by failing to pay
the monthly installments, the Settlement Agreement allows Plaintiffs to file the
Consent Judgment with the Court. Plaintiffs allege that Defendants breached the
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Settlement Agreement because they have failed to make payments pursuant to the
schedule in the Settlement Agreement.
II.
DISCUSSION
A plaintiff may voluntarily dismiss an action without a court order by filing
a notice of dismissal signed by all parties at any time during the litigation. See
Fed. R. Civ. P. 41(a)(A)(ii). A stipulation of dismissal dismisses the case and
divests the court of jurisdiction. See Anago Franchising Inc. v. Shaz, LLC,
677 F.3d 1272, 1277 (11th Cir. 2012). Plaintiffs argue that, pursuant to the
stipulation, to which they agreed without approval of the Court, the Court retains
jurisdiction to enforce the terms of the Settlement Agreement. It does not. On
August 3, 2010, the parties entered into a stipulation of dismissal with prejudice, in
which they agreed that the Court shall retain jurisdiction to enforce the terms of the
Settlement Agreement. On August 4, 2010, the Clerk of the Court approved the
stipulation of dismissal and terminated this case. The parties cannot extend the
Court’s jurisdiction by agreement. Id. at 1280. To retain jurisdiction, the Court
must either (1) enter an order before the stipulation becomes effective or (2) the
parties must condition the stipulation on the entry of an order retaining jurisdiction.
Id. The Court did not retain jurisdiction to enforce the terms of the Settlement
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Agreement because it did not enter an order doing so.
Plaintiffs argue that Rule 60(b)(6) allows the Court to enter a Consent
Judgment. The Court disagrees. Under Rule 60(b)(6), Plaintiffs must show that
“the circumstances are sufficiently extraordinary to warrant relief. Even then,
whether to grant the requested relief is . . . a matter for the district court’s sound
discretion.” Ramsey v. Walker, 304 F. App’x 827, 829 (11th Cir. 2008) (citations
omitted). Plaintiffs must show that, without relief, an “‘extreme’ and ‘unexpected’
hardship will result.” Galbert v. West Carribean Airways, 715 F.3d 1290, 1294
(11th Cir. 2013). A district court does not retain inherent authority to enforce or
interpret a settlement agreement after the parties voluntarily dismiss a lawsuit
pursuant to that agreement. McAlpin v. Lexington 76 Auto Truck Stop, Inc., 229
F.3d 491, 503 (6th Cir. 2000). Plaintiffs are not “trying to reopen the dismissed
suit, which would be the effect of a Rule 60(b)(6) motion setting aside the final
judgment, but [are] instead trying to get the [Court] to interpret the [Settlement
Agreement] [to give] them the benefit of [of their bargain].” Id. (internal quotation
marks and citations omitted).
Rule 60(b)(6) cannot be used as a vehicle to enforce the Settlement
Agreement after the action is voluntarily dismissed with prejudice because the
breach does not constitute an extreme or extraordinary circumstance warranting
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relief. Id.; see also Williams v. Pennsylvania Bd. of Probation and Parole, 160 F.
App’x 212, 215 (3d Cir. 2005) (holding that breach of a settlement agreement does
not satisfy the requirements of Rule 60(b)(6) even if it may give rise to a cause of
action to enforce the agreement); Neuberger v. Michael Reese Hosp. Foundation,
123 F.3d 951, 955 (7th Cir. 1997) (affirming the denial of a Rule 60(b)(6) motion
seeking to enforce a settlement agreement after plaintiff voluntarily dismissed the
action with prejudice); Harman v. Pauley, 678 F.2d 479, 480-81 (4th Cir. 1982).
Plaintiffs’ reliance on Keeling v. Sheet Metal Workers Int’l Ass’n, Local
Union 162 is misplaced. 937 F.2d 408, 410 (9th Cir. 1991). In Keeling, the Ninth
Circuit held that “repudiation” of a settlement agreement that terminates the
litigation constitutes, under Rule 60(b)(6), as an extraordinary circumstance if
there is evidence of “bad faith noncompliance.” Id. Plaintiffs do not present
evidence of “bad faith noncompliance” and “repudiation” of the Settlement
Agreement. Plaintiffs seek to reopen this case because Defendants have failed to
make certain installment payments. A mere breach of contract does not constitute
“repudiation” that frustrates the purpose of an agreement to settle the dispute.
Williams v. Horel, No. C 09-5314 MMC (PR), 2012 WL 1965748, at *2
(N.D. Cal. May 31, 2012) (distinguishing Keeling to deny 60(b)(6) motion to
reopen the case on account of a breach of contract); see also Stratman v. Babbitt,
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42 F.3d 1402 (9th Cir. 1994) (applying Keeling to conclude that Rule 60(b)(6)
relief was warranted because the parties to the settlement agreement operated
under a material mistake of fact that went to the heart of the contract).
The Court concludes that Plaintiffs have failed to show that the
circumstances are sufficiently extraordinary, under Rule 60(b)(6), to warrant relief
from the voluntary dismissal of this action.
III.
CONCLUSION
Accordingly, for the foregoing reasons,
IT IS HEREBY ORDERED that Plaintiffs’ Motion for Relief From a
Stipulation of Dismissal to File Consent Judgment Pursuant to the Parties’
Settlement Agreement is DENIED [129].
IT IS FURTHER ORDERED that Plaintiffs’ Motion to Allow Settlement
and Release Agreement to be Filed Under Seal is DENIED AS MOOT [130].
IT IS FURTHER ORDERED that Defendants’ Motion for Leave to File
Supplemental Response is DENIED AS MOOT [136].
SO ORDERED this 9th day of February, 2015.
_______________________________
WILLIAM S. DUFFEY, JR.
UNITED STATES DISTRICT JUDGE
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