Shanghai China Garments J & Y Import & Export Corp. v. Brooks Fitch Apparel Group, LLC

Filing 24

MEMORANDUM AND ORDER denying 18 Motion for Judgment. For the foregoing reasons, the plaintiff's motion (Docket no. 18) is denied. The defendant's application for an award of fees and costs incurred in connection with opposing this motion is also denied. (Signed by Magistrate Judge James C. Francis on 4/11/2013) Copies Mailed By Chambers. (lmb)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
- - - - - - - - - - - - - - - - - -:
SHANGHAI CHINA GARMENTS J&Y IMPORT :
& EXPORT CORP.
:
:
Plaintiff,
:
:
- against :
:
BROOKS FITCH APPAREL GROUP,
:
:
Defendant.
:
- - - - - - - - - - - - - - - - - -:
JAMES C. FRANCIS IV
UNITED STATES MAGISTRATE JUDGE

(ECF)
11 Civ. 2363 (JCF)
MEMORANDUM
AND ORDER

The plaintiff seeks to reopen this matter to enforce a
settlement agreement that was purportedly reached between the
parties.

The defendant opposes the motion, arguing that there was

no settlement.1

For the following reasons, the motion is denied.

Background
A.

Procedural History

On April 7, 2011, Shanghai China Garments J&Y Import & Export
Corporation (“Shanghai”) initiated this action against Brooks Fitch
Apparel Group, LLC (“Brooks”), alleging state law claims of breach
of

contract,

estoppel.

unjust

enrichment,

conversion,

and

promissory

The plaintiff informed the Court that the matter had

been settled, and on February 23, 2012, the Court dismissed the
case with prejudice. (Order of Dismissal dated Feb. 23, 2012). On

1

The parties consented to proceed before a United States
Magistrate Judge for all purposes pursuant to 28 U.S.C. § 636(c).
At the time the action was dismissed, it was assigned to the
Honorable Theodore H. Katz, U.S.M.J.
Judge Katz subsequently
retired, and after the instant motion was filed, the case was
reassigned to me.
1

February 28, 2012, the plaintiff moved to reopen the case in order
to have the Court compel defense counsel to sign the Stipulation of
Settlement.

(Notice of Motion dated Feb. 28, 2012; Affirmation

Declaration of Ming Hai dated Feb. 28, 2012, ¶ 10).

The Court

denied the motion, noting that the plaintiff had submitted a signed
“Settlement

Agreement

to

enforceable agreement.”

the

Court,

which

appears

to

be

an

(Memorandum Endorsement dated March 7,

2012, at 2).
B.

Factual Background

The

parties’

settlement

versions

agreement

of

differ

events

regarding

significantly.

the

purported

According

to

the

plaintiff, the principal of Brooks, Joseph Safdieh, contacted
Shanghai directly, stating that he would like to negotiate a
settlement without his attorneys in order to avoid incurring legal
fees.

(Affirmation of Ming Hai dated May 21, 2012 (“Hai Aff.”), ¶

4). Ming Hai, counsel for the plaintiff, contacted defense counsel
who purportedly informed Mr. Hai that they had lost contact with
their client.

(Hai Aff., ¶ 4).

On January 18, 2012, Mr. Safdieh allegedly faxed a proposed
Stipulation of Settlement in which he offered to settle the case
for $55,000.
the offer.

(Hai Aff., ¶ 5).

The plaintiff immediately accepted

(Hai Aff., ¶ 5).

Later, the defendant purportedly

sought to revise the settlement amount from a total payment of
$55,000 to $45,000, to which the plaintiff agreed.
6).

(Hai Aff., ¶

The defendant allegedly made handwritten changes to the

Stipulation of Settlement then signed and delivered it to the
2

plaintiff on February 24, 2012.

(Hai Aff., ¶ 7).

The revised

Stipulation of Settlement was submitted to the Court on February
28, 2012, as an attachment to the plaintiff’s motion to reopen the
case.

(Hai Aff., ¶ 7).

According to the plaintiff, Judge Katz

then held a conference with the parties and “found [the Stipulation
of Settlement] good.” (Hai Aff., ¶ 7). Shanghai contends that the
defendant has yet to make any payments under the Stipulation of
Settlement even after Mr. Hai wrote to defense counsel, reminding
them of Brooks’ obligation to pay.

(Hai Aff., ¶ 8).

According to defense counsel, the only settlement discussion
they had with plaintiff’s counsel was prior to September of 2011,
and was unsuccessful.

(Declaration of Thomas Carulli dated March

7, 2012 (“Carulli Decl.”), attached to Memorandum of Defendant
Brooks Fitch Apparel Group LLC in Opposition to Plaintiff’s Motion
to Reopen, ¶ 4). They contend that during the seven months leading
up to the dismissal, the plaintiff had not diligently prosecuted
its case and, in fact, they had no contact with plaintiff’s counsel
until the dismissal.

(Carulli Decl., ¶¶ 2-3).

When Mr. Hai

contacted defense counsel for the first time after the dismissal,
they informed him that they had not discussed this case with their
client in many months because the plaintiff had not pursued the
action and that they were unaware of any stipulation of settlement.
(Carulli Decl., ¶ 6).

They claim that they have no knowledge of

any alleged changes made to any proposed stipulation, nor did they
submit any comment -- handwritten, oral, or otherwise -- regarding
possible settlement terms.

(Carulli Decl., ¶¶ 7-8).
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Discussion
Jurisdiction is a threshold issue which a court must address
and may raise sua sponte even if the parties themselves have not
raised it.

See Bricklayers and Allied Craftworkers Local 2,

Albany, New York Pension Fund ex rel. O’Sick v. DiBernardo Tile and
Marble Co., No. 1:08-CV-00044, 2012 WL 3508931, at *2 (N.D.N.Y.
Aug. 14, 2012) (collecting cases); Lemus v. Manhattan Car Wash,
Inc., No. 06 Civ. 15486, 2010 WL 1372705, at *3 & n.7 (S.D.N.Y.
March 26, 2010) (“Although neither party questions our power to
adjudicate defendant[’s] [] motion, we must satisfy ourselves of
our authority to hear it.”).

If a federal lacks subject matter

jurisdiction, the action must be dismissed.

Fed. R. Civ. P.

12(h)(3); see Arbaugh v. Y & H Corp., 546 U.S. 500, 514 (2006);
Durant, Nichols, Houston, Hodgson & Cortese-Costa, P.C. v. Dupont,
565 F.3d 56, 62 (2d Cir. 2009).

“[A] federal court lacks

jurisdiction to enforce a settlement agreement in a closed case in
the absence of an independent basis for jurisdiction or a dismissal
order specifically reserving such authority.”

Supervalu Inc. v.

Ectaco Inc., No. 10 CV 5267, 2011 WL 3625567, at *1 (E.D.N.Y. Aug.
12, 2011) (citing Kokkonen v. Guardian Life Insurance Co. of
America, 511 U.S. 375, 381 (1994)). This is because “[e]nforcement
of the settlement agreement . . . is more than just a continuation
or renewal of the dismissed suit, and hence requires its own basis
for jurisdiction.”

Kokkonen, 511 U.S. at 378.

“It is ‘well

settled’ that a district court may ‘exercise ancillary jurisdiction
to enforce a settlement agreement only if the dismissal order

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expressly retained jurisdiction over that particular agreement, or
incorporated

it

into

the

order.’”

Bricklayers

and

Allied

Craftworkers Local 2, 2012 WL 3508931, at *2 (quoting State Street
House, Inc. v. New York State Urban Development Corp., 75 F. App’x
807,

810

(2d

Cir.

2003));

see

Kokkonen,

511

U.S.

at

381.

Otherwise, “construction and enforcement of private settlement
agreements is a matter for state courts.”

Lemus, 2010 WL 1372705,

at *3 (footnote omitted); see In re American Express Financial
Advisors Securities Litigation, 672 F.3d 113, 134 (2d Cir. 2011)
(noting that “motion[s] to enforce or otherwise apply a settlement
in a case that [a federal court] has previously dismissed . . . are
essentially state-law contract claims to be litigated in the state
courts” (internal citation omitted)).
Here,

it

is

clear

that

the

Order

of

Dismissal

neither

explicitly retained jurisdiction over the purported settlement
agreement nor incorporated the terms of the alleged agreement. The
Order only states that the “Plaintiff ha[s] informed the Court that
the matter has settled.”

(Order dated Feb. 23, 2011).

“The mere

reference in the order to the Agreement does not incorporate that
Agreement into the order.”

Scelsa v. City University of New York,

76 F.3d 37, 41 (2d Cir. 1996); see Kokkonen, 511 U.S. at 381
(noting that “judge’s mere awareness and approval of the terms of
the settlement agreement do not suffice to make them part of his
order”).

In fact, the Court did not see the Stipulation of

Settlement until after this case was dismissed, and thus the Court
could not have incorporated its terms in the dismissal order.

5

(Affirmation in Reply of Ming Hai dated June 21, 2012, ¶ 4); see
Bricklayers and Allied Craftworkers Local 2, 2012 WL 3508931, at *3
& n.2 (noting that it is clear that dismissal order did not
incorporate terms of settlement agreement because agreement was not
submitted to the court before dismissal order).

Thus, this Court

lacks ancillary jurisdiction to enforce the purported settlement.
Even if there were an independent basis of jurisdiction -diversity, for example -- the plaintiff could not simply file a
motion for enforcement in this closed case, but would be required
to commence a new action.

See Dover Ltd. v. A.B. Watley, Inc., No.

04 Civ. 7366, 2007 WL 4358460, at *3 (S.D.N.Y. Dec. 17, 2007);
Geiringer v. Pepco Energy Services, Inc., No. 05 CV 4172, 2007 WL
4125094, at *1 (E.D.N.Y. Nov. 16, 2007); Cross Media Markeing Corp.
v. Budget Marketing, Inc., 319 F. Supp. 2d 482, 482-83 (S.D.N.Y.
2004).

And, in any event, diversity jurisdiction is unavailable

here, since the value of the alleged settlement does not meet the
amount in controversy requirement.

28 U.S.C. § 1332(b).

The only

path to relief for Shanghai, then, is through the state courts.
Conclusion
For the foregoing reasons, the plaintiff’s motion (Docket no.
18) is denied.

The defendant’s application for an award of fees

and costs incurred in connection with opposing this motion is also
denied.

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SO ORDERED.

v·Q,4

c.. ~~ IE'

JAMES C. FRANCIS IV
UNITED STATES MAGISTRATE JUDGE
Dated:

New York, New York
April II, 2013

Copies mailed this date:
Ming
, Esq.
Law Office of Ming Hai
36-09 Ma
St., Ste. 7B
Flushing, NY 11354
Thomas Carulli, Esq.
fer Huang, Esq.
Kaplan, Massamillo & Andrews, L.L.C.
70 E. 55th St.
25th Floor
New York, NY 10022

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