Enforcing Settlement Not A Federal Case

Posted on | December 3, 2009 | 1 Comment

2010-1094 Kawasaki Hvy Indus v. Bombardier Rec
ED/TX 5:06-cv-222
Judge David Folsom

Kawasaki appeals from the order of Judge David Folson denying its FRCP 60(b)(3) motion to set aside a stipulated dismissal and to enforce the terms of a settlement agreement.  The dismissal was entered after the parties had resolved a patent infringement dispute and entered into a settlement agreement.

Judge Folsom concluded that the court lacked subject matter jurisdiction over the matter, which he characterized as purely a contract case in which Bombardier had allegedly breached the terms of the settlement by failing to have certain of its security agreements subordinated to the Kawasaki agreement.

The Court relied primarily on the Supreme Court’s decision in Kokkonen v. Guardian Life Ins. Co., 511 U.S. 375 (1994), which essentially held that where neither the parties’ stipulation nor the Court’s order of dismissal incorporated the settlement agreement (and where the Court did not expressly reserve jurisdiction over the settlement), any subsequent disagreement over its terms “is more than just a continuation or renewal of the dismissed suit, and hence requires its own basis for jurisdiction.” Id. at 378. 

Finding here that the Court neither incorporated the settlement terms into its order nor expressly retained jurisdiction, Judge Folsom denied the motion (after also noting the apparent inconsistency of seeking to both undue the dismissal for fraud (FRCP 60(b)(3)) and also to enforce the terms of the settlement.)

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