511 U.S. 375 (1994), 93-263, Kokkonen v. Guardian Life Ins. Co. of America

Docket Nº:No. 93-263
Citation:511 U.S. 375, 114 S.Ct. 1673, 128 L.Ed.2d 391, 62 U.S.L.W. 4313
Party Name:KOKKONEN v. GUARDIAN LIFE INSURANCE COMPANY OF AMERICA
Case Date:May 16, 1994
Court:United States Supreme Court
 
FREE EXCERPT

Page 375

511 U.S. 375 (1994)

114 S.Ct. 1673, 128 L.Ed.2d 391, 62 U.S.L.W. 4313

KOKKONEN

v.

GUARDIAN LIFE INSURANCE COMPANY OF AMERICA

No. 93-263

United States Supreme Court

May 16, 1994

Argued March 1, 1994

CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT

Syllabus

Following respondent's termination of an agency agreement between the parties, petitioner brought a state-court suit alleging state-law claims. Respondent removed the case to the Federal District Court on diversity grounds and filed state-law counterclaims. The parties subsequently arrived at a settlement agreement and, pursuant to Federal Rule of Civil Procedure 41(a)(1)(ii), executed a Stipulation and Order of Dismissal with Prejudice, which did not refer to the settlement agreement or reserve District Court jurisdiction to enforce it. After the District Judge signed the Stipulation and Order, a dispute arose as to petitioner's obligations under the settlement agreement. Respondent filed a motion to enforce the agreement, which petitioner opposed on the ground, inter alia, that the court lacked subject-matter jurisdiction. The District Court entered an enforcement order, asserting that it had "inherent power" to do so. The Court of Appeals agreed and affirmed.

Held:

A federal district court, possessing only that power authorized by Constitution and statute, lacks jurisdiction over a claim for breach of a contract, part of the consideration for which was dismissal of an earlier federal suit. No federal statute makes that connection (if it constitutionally could) the basis for federal-court jurisdiction over the contract dispute. Moreover, the doctrine of ancillary jurisdiction does not apply, since the facts to be determined with regard to the alleged breach of contract are quite separate from the facts to be determined in the principal suit, and automatic jurisdiction over such contracts is in no way essential to the conduct of federal-court business. Julian v. Central Trust Co., 193 U.S. 93, 113-114, distinguished. If the parties wish to provide for the court's jurisdiction to enforce a dismissal-producing settlement agreement, they can seek to do so. In the event of dismissal pursuant to Federal Rule of Civil Procedure 41(a)(2), the court may, in its discretion, make the parties' compliance with the terms of the settlement agreement (or retention of jurisdiction over the agreement) part of its order. When dismissal occurs pursuant to Rule 41(a)(1)(ii), the district court is empowered (with the consent of the parties) to incorporate the settlement agreement in the order or retain jurisdiction over the settlement contract itself. Absent such action, however, enforcement

Page 376

of the settlement agreement is for state courts, unless there is some independent basis for federal jurisdiction. Pp. 377-382.

993 F.2d 883, reversed and remanded.

Michael Reynolds Jencks argued the cause and filed briefs for petitioner.

Frank C. Morris, Jr., argued the cause for respondent. With him on the brief were Thomas R. Bagby and Andrea R. Calem[*]

Justice Scalia delivered the opinion of the Court.

After respondent Guardian Life Insurance Company[1] terminated petitioner's general agency agreement, petitioner brought suit in California Superior Court alleging various state-law claims. Respondent removed the case to the United States District Court for the Eastern District of California on the basis of diversity jurisdiction and filed state-law counterclaims. After closing arguments but before the District Judge instructed the jury, the parties arrived at an oral agreement settling all claims and counterclaims, the substance of which they recited, on the record, before the District Judge in chambers. In April 1992, pursuant to Federal Rule of Civil Procedure 41(a)(1)(ii), the parties executed a

Page 377

Stipulation and Order of Dismissal with Prejudice, dismissing the complaint and cross-complaint. On April 13, the District Judge signed the Stipulation and Order under the notation "It is so ordered." The...

To continue reading

FREE SIGN UP