Amtax Holdings 303, LLC et al v. Phase I Management, L.L.C. et al

Filing 184

ORDER AND REASONS adopting the 172 Report and Recommendations. ORDER denying 154 MOTION to Enforce Settlement Agreement. Signed by Judge Lance M Africk on 10/2/2014.(blg)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA

AMTAX HOLDINGS 303, LLC ET AL.

CIVIL ACTION

VERSUS

No. 06-2499

PHASE I MANAGEMENT, L.L.C. ET AL.

SECTION I

ORDER AND REASONS
Before the Court is a motion1 filed by Victor Loraso (“Loraso”) to enforce the settlement
agreement.2 The Court referred such motion to U.S. Magistrate Judge Karen Roby,3 who
conducted a hearing4 and issued a report and recommendation that the motion be denied.5 Loraso
timely filed an objection to the U.S. Magistrate Judge’s report and recommendation, which was
opposed by Gozone, L.L.C. (“Gozone”), MAC-RE, L.L.C. (“MAC-RE”), Lymac, L.L.C.
(“Lymac”), and Murray A. Calhoun (“Calhoun”), who are the targets of Loraso’s motion.6
This Court reviews the U.S. Magistrate Judge’s report and recommendation de novo. 28
U.S.C. § 636(b)(1)(B)-(C). Having considered the briefs of the parties, the record, and the law, as
well as Loraso’s objection, which is OVERRULED, the Court adopts the report and
recommendation. The Court writes separately only to make explicit a finding that was implicitly
made by U.S. Magistrate Judge Roby: that this Court has jurisdiction over the motion.
Gozone, MAC-RE, Lyman, and Calhoun (collectively, “Defendants”) note that they
“asserted a variety of challenges . . . to this Court’s subject matter jurisdiction” in their briefing

1

R. Doc. No. 154.
See R. Doc. No. 147.
3
R. Doc. No. 161.
4
R. Doc. No. 170.
5
R. Doc. No. 172.
6
R. Doc. No. 174.
2

before the U.S. Magistrate Judge.7 U.S. Magistrate Judge Roby implicitly found that the Court
retained subject matter jurisdiction to hear the motion, but she did not explicitly analyze the
issue.8 On September 23, 2014, this Court ordered the parties to file supplemental briefing
regarding the jurisdictional issues.9 Loraso asserts that this Court retained subject matter
jurisdiction to enforce the settlement agreement,10 but Defendants assert that any retention of
jurisdiction has expired or, alternatively, that this Court should exercise its discretion to decline
jurisdiction.11
In Kokkonen v. Guardian Life Insurance Co. of America, 511 U.S. 375 (1994), the U.S.
Supreme Court “specified two ways in which a court may make a settlement agreement part of
its dismissal order: ‘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.’” Hospitality House, Inc. v. Gilbert, 298 F.3d 424, 430 (5th Cir. 2002) (quoting Kokkonen,
511 U.S. at 380-81); see also SmallBizPros, Inc. v. MacDonald, 618 F.3d 458, 461-62 (5th Cir.
2010).
The Court’s September 16, 2008 order of dismissal stated “that the action be and it is
hereby dismissed without prejudice to the right, upon good cause shown, to reopen the action or
to seek summary judgment enforcing the compromise if settlement is not consummated within a

7

R. Doc. No. 174, at 4 n.2. The Court notes that Defendants did not object to the report and
recommendation on the basis of the implicit jurisdictional ruling; Defendants merely noted that
they had raised such challenges. Defendants’ opposition to Loraso’s objection “only addresses
the purported substantive objections asserted by Loraso.” R. Doc. No. 174, at 4 n.2.
8
The report and recommendation notes Defendants’ arguments relative to jurisdiction, R. Doc.
No. 172, at 5, but it resolves the motion on its merits, thereby finding (though not explicitly) that
that the Court has jurisdiction over the motion.
9
R. Doc. No. 181.
10
See R. Doc. No. 182.
11
See R. Doc. No. 183.
2

reasonable time. The Court retains jurisdiction for all purposes, including enforcing the
settlement agreement entered into by the parties.”12
Defendants’ jurisdictional argument is premised on their assertion that the September 16,
2008 order of dismissal “only purported to retain jurisdiction [over] the case to allow for
judicially-enforced consummation of the agreed-to settlement ‘within a reasonable time,’” and
that this “‘reasonable time’ expired long ago and with it the Court’s jurisdiction to entertain
Loraso’s Motion.”13 Although subsequent dismissals with prejudice were entered in this matter,14
the parties agree that they are not relevant here because “no such dismissal motion was ever filed
in conjunction with the Settlement” or against the parties presently before the Court, and no
dismissal with prejudice was entered.15
The language of the September 16, 2008 order is clear: the Court “retains jurisdiction for
all purposes, including enforcing the settlement agreement entered into by the parties,” without
any time limitation.16 The time limitation only applies to motions “to reopen the action” or “to
seek summary judgment” in the event that the “settlement is not consummated within a
reasonable time.”17 Although Defendants argue that the Court could not have possibly intended
to retain jurisdiction “ad infinitum,”18 this assertion finds no support in the language of the

12

R. Doc. No. 147, at 1.
R. Doc. No. 162, at 9.
14
R. Doc. Nos. 150, 152.
15
R Doc. No. 183, at 4; see also R. Doc. No. 182, at 17-19.
16
R. Doc. No. 147, at 1 (emphasis added)
17
R. Doc. No. 147, at 1.
18
R. Doc. No. 183, at 5 (citing Brass Smith, LLC v. RPI Indus., Inc., 827 F. Supp. 2d 377, 379
(D.N.J. 2011) (“Retention of indefinite jurisdiction, however, raises important questions
regarding the limits of federal judicial authority.”)). In Brass Smith, the court decided not to
approve the parties’ stipulated order of dismissal that provided for an indefinite retention of
jurisdiction over the settlement agreement. 827 F. Supp. 2d at 379. The court exercised its
discretion to “decline to extend its jurisdiction indefinitely” and directed the parties to file an
13

3

September 16, 2008 order. Because the Court explicitly retained jurisdiction over the settlement
agreement, the Court has the authority to adjudicate Loraso’s motion in order “to protect its
proceedings and vindicate its authority.” See Kokkonen, 511 U.S. at 380-81.
To the extent that the Court has the discretion to decline jurisdiction,19 the Court
exercises such discretion to assert its jurisdiction and to decide Loraso’s motion.
Accordingly, for the reasons stated in the U.S. Magistrate Judge’s report and
recommendation,
IT IS ORDERED that the motion is DENIED.

New Orleans, Louisiana, October 2, 2014.

_______________________________________
LANCE M. AFRICK
UNITED STATES DISTRICT JUDGE

amended order “if the parties wish the Court to retain ancillary jurisdiction under reasonable
terms and for a reasonable time.” Id. at 383-84.
Defendants also cite a pre-Kokkonen decision, McCall-Bey v. Franzen, 777 F.2d 1178
(5th Cir. 1985). The Seventh Circuit ultimately came to a conclusion that is very similar to
Kokkonen’s holding: “There must be a deliberate retention of jurisdiction, as by issuing an
injunction or stating that jurisdiction is retained for a particular purpose. . . . In this case,
however, we have found that the district judge did deliberately retain jurisdiction . . . .” Id. at
1190 (emphasis added).
19
R. Doc. No. 183, at 6-7 (citing Arata v. Nu Skin Int’l, Inc., 96 F.3d 1265, 1268-69 (9th Cir.
1996)); see also Chisom v. Jindal, 890 F. Supp. 2d 696, 711 (E.D. La. 2012) (Morgan, J.)
(“Exactly how a court should enforce and protect its orders is an issue largely left to the
discretion of the court entering the order, so long as that discretion is exercised reasonably.”).
4