Dhx, Inc. v. Allianz Agf Mat, Ltd., 03-55426.

• Decision Date: 19 September 2005
• Docket Number: No. 03-55426.,No. 03-55455.,03-55426.,03-55455.
• Citation: 425 F.3d 1169
• Parties: DHX, INC., a California corporation, Plaintiff-Appellant, v. ALLIANZ AGF MAT, LTD., a foreign corporation, doing business in the State of California, Defendant-Appellee. DHX, INC., a California corporation, Plaintiff-Appellee, v. ALLIANZ AGF MAT, LTD., a foreign corporation, doing business in the State of California, Defendant-Appellant.
• Court: U.S. Court of Appeals — Ninth Circuit

425 F.3d 1169

DHX, INC., a California corporation, Plaintiff-Appellant, v. ALLIANZ AGF MAT, LTD., a foreign corporation, doing business in the State of California, Defendant-Appellee.

DHX, INC., a California corporation, Plaintiff-Appellee, v. ALLIANZ AGF MAT, LTD., a foreign corporation, doing business in the State of California, Defendant-Appellant.

No. 03-55426.

No. 03-55455.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted December 6, 2004.

Filed September 19, 2005.

David E.R. Woolley, Attorney at Law, Los Angeles, CA, for the plaintiff-appellant/appellee.

G. Geoffrey Robb, Gibson Robb & Lindh LLP, San Francisco, CA, for the defendant-appellee/appellant.

Appeal from the United States District Court for the Central District of California; Percy Anderson, District Judge, Presiding. D.C. Nos. CV-02-06397-PA.

Before REINHARDT, BEEZER, and WARDLAW, Circuit Judges.

ORDER

The parties have informed the court that they have settled the economic issues in this case. Because the parties have agreed in open court on appeal that there are no objections to vacating the district court's October 17, 2002 order denying the motion to dismiss for improper venue,¹ we remand for a determination by the district court whether that order, the summary judgment order, and/or the judgment entered on February 18, 2003, should be vacated. See U.S. Bancorp Mortgage Co. v. Bonner Mall P'ship, 513 U.S. 18, 29, 115 S.Ct. 386, 130 L.Ed.2d 233 (1994) (holding that "mootness by reason of settlement does not justify vacatur of a judgment under review," but stating that a court of appeals may "remand the case with instructions that the district court consider the [vacatur] request"); see also Am. Games, Inc. v. Trade Prods. Inc., 142 F.3d 1164, 1169-70 (1998) (holding that when settlement moots a case, the district court may apply an equitable balancing test in considering vacatur).

The case is REMANDED for the purpose of considering vacatur. After remand either or both of the parties may move the district court for vacatur of the order denying the motion to dismiss for improper venue, the order denying plaintiff's motion for summary judgment and granting defendant's motion for summary judgment, and the above referenced judgment, as permitted under Fed. R. Civ. Pro. 60(b).

BEEZER, Circuit Judge, concurring.

The parties arrived at a complete financial settlement but agreed to continue to litigate. Without informing us, the parties created a facade: Allianz entered into a complete financial settlement with DHX, but Allianz also paid DHX attorney's fees so that DHX could continue to litigate the case and play the part of an aggrieved party, even though DHX no longer had any interest in the matter.

The parties have settled their entire underlying dispute, depriving us of a live case or controversy which permits adjudication. I write separately to emphasize the fundamental principle that settlements such as the one before us deprive us of an actual case or controversy. I also emphasize the duty upon attorneys to affirmatively disclose settlements to the court and our highly circumscribed authority to vacate district court judgments after parties have reached a settlement.

I

The underlying dispute arises out of an insurance contract. The insured, Dependable Hawaiian Express, Inc. ("DHX"), filed suit, alleging that Allianz AGF MAT Ltd. ("Allianz")¹ breached its insurance contract in bad faith. DHX's insurance claim arose from the theft from its premises of two shipping containers which contained, among other merchandise, 504 cartons of shoes that were owned by the corporation now known as Foot Locker, Inc. Allianz moved to dismiss the suit for improper venue, relying on the policy's forum selection clause which provides that:

This Policy shall be construed according to and governed by English law and any dispute between the Assured and Insurers shall be submitted to the exclusive jurisdiction of the High Court of Justice, England.

The district court declined to enforce the forum selection clause as Allianz requested, because doing so, it held, would "deprive DHX of its constitutional and statutory right to a trial by jury." DHX, Inc. v. Allianz AGF MAT Ltd., 2002 WL 31421952, at *1, 2002 A.M.C. 2463 (C.D.Cal. Oct.17, 2002) ("forum clause order"). Ultimately, the district court entered judgment in favor of Allianz, concluding that Allianz was not the insurer and was an improper party to the suit.²

DHX appealed the summary judgment order. See Ninth Cir. Case No. 03-55426. Allianz cross-appealed the district court's forum clause order, in which the district court declined to enforce the forum selection clause and denied Allianz's motion to dismiss. See Ninth Cir. Case No. 03-55455.

After the parties filed and briefed these appeals, but before oral argument, Allianz and DHX informed us that "DHX and AGF M.A.T., S.A." have "entered into a settlement of certain proceedings before the English courts." Stipulation Limiting Issues For Appeal ("Stipulation").³ The stipulation, signed and submitted by the attorneys for each party, asserts that "AGF M.A.T., S.A. is the principal underwriter of the insurance policy that is the subject of these appeals but is not a party to these appeals." Id. Despite the settlement, the parties asked us to adjudicate the dispute "between DHX, Inc. and Allianz" that arises from Allianz's appeal of the district court's forum clause order. Id. ("The remaining disputed issue is the subject insurance policy's forum selection clause in favor of English courts, which the District Court found unenforceable for lack of an express waiver of the right to jury trial. A dispute as to the enforceability of that clause and its collateral estoppel effect remains."). In the stipulation, signed by representatives for Allianz and DHX, the parties agreed that this was "[t]he only remaining issue[ ]." DHX thus agreed to abandon its entire appeal of the district court's judgment in favor of Allianz.

At oral argument, we inquired of counsel whether we were presented with a live case or controversy which we could properly decide:

THE COURT: The case is over. All you're now litigating, if you are, is this question about whether that clause in the contract is valid or not. And I wonder whether that's of general interest to you that you want to fight to preserve or whether you no longer really have any interest in it.

DHX: I have no interest in it any longer. But the bar has. As [Allianz's attorney] reports, he's been called by other lawyers. I've been called by other lawyers. It's the problem of putting the genie back in the bottle. The genie is out. It is a published opinion.

...

THE COURT: Is this something that you really want to pursue, whether under the Allianz whatever it is contract, where the cases must be tried. Does your client have an interest in pursuing that?

DHX: My client has very little interest.

THE COURT: That's what I figured.

DHX: The interest is Allianz's....

Allianz's attorney revealed at oral argument that it issues numerous policies that provides for claims litigation exclusively in England and counsel pressed for a decision on the merits. The attorney for Allianz asked us, if we declined to reach the merits, to simply vacate the district court's decision, a request to which DHX did not object.

The wording of the stipulation made it appear that the only parties to the settlement "of certain proceedings" were DHX and AGF M.A.T., S.A. If, as it seemed, Allianz were not a party to the settlement, it would at least arguably be permissible, on the surface, for us to reach the forum clause issue on the merits or simply vacate the district court's opinion.

But in light of our "constitutional obligation to police jurisdictional matters assiduously," Gator.Com Corp. v. L.L. Bean, Inc., 398 F.3d 1125, 1128 (9th Cir.2005) (en banc), after considerable deliberation, we ordered the parties to turn over any relevant settlement agreements so that we could assess whether the case is moot.⁴ See id. (requesting a copy of the parties' settlement agreement to determine whether a settlement mooted the case.).

II

The parties' detailed and highly unusual settlement agreement reveals an embarrassingly ill-conceived attempt to preserve a live controversy despite taking all economic issues off the table. The parties' agreement, and the corresponding effort to "craft" around the mootness bar, is nothing less than a failure. The settlement, which is reproduced in its entirety as Appendix B, leads to the inescapable conclusion that the case is moot.

A

The parties submitted copies of the settlement agreement, which was signed by representatives of DHX, Allianz, and AGF M.A.T., S.A., as well as the two attorneys appearing before us. Under no circumstances can it be fairly agreed that Allianz was not a party to the settlement.

The principal monetary component of the settlement is the agreement of Allianz's principal, AGF M.A.T., S.A., to pay DHX $219,000.⁵ Settlement at ¶ 1. The settlement provides for the dismissal of related proceedings in England between AGF M.A.T., S.A. and DHX. Id. at ¶ 2. DHX agreed to release both Allianz and AGF M.A.T., S.A. "and any other company obligated in any way under the policy of insurance" from all claims deriving from the theft of the shipping containers. Id. at ¶ 3. DHX also released these entities "concerning the matters relating to or arising out of" this lawsuit. Id. DHX "agree[d] to file any dismissals with prejudice of [this lawsuit] that may become necessary to conclude the action consistent with this agreement." Id.

With the matter settled, typically the parties would simply ask us to dismiss the case in light of the parties' settlement. But DHX and Allianz had other intentions.

Despite the settlement, DHX and Allianz agreed to continue to litigate the forum clause order. The settlement agreement commanded that "DHX will oppose the venue appeal on such terms and...