Gilmartin v. Abastillas, 16078

• Decision Date: 14 March 1994
• Docket Number: No. 16078,16078
• Citation: 869 P.2d 1346,10 Haw.App. 283
• Parties: Dale M. GILMARTIN, Plaintiff-Appellee, v. Paz F. ABASTILLAS, Defendant-Appellant.
• Court: Hawaii Court of Appeals

Page 1346

869 P.2d 1346

10 Haw.App. 283

Dale M. GILMARTIN, Plaintiff-Appellee, v. Paz F. ABASTILLAS, Defendant-Appellant.

No. 16078.

Intermediate Court of Appeals of Hawai'i.

March 14, 1994.

Syllabus by the Court

1. A dismissal of a lawsuit with prejudice is generally regarded as an adjudication on the merits of all issues that were raised or could have been raised in the pleadings, thus barring, on res judicata grounds, any subsequent litigation involving the same claims, and terminating the trial court's jurisdiction over the lawsuit.

2. When a lawsuit has been dismissed as part of a settlement agreement which is subsequently breached, the trial court thereafter has no jurisdiction to enforce the settlement agreement, unless there has been a vacatur of the stipulated dismissal or an independent action has been brought for specific performance of the settlement agreement.

3. An unconditional dismissal with prejudice terminates the trial court's jurisdiction, except for the limited purposes of reopening and setting aside the judgment of dismissal within the scope allowed by HRCP Rule 60(b).

4. Subject-matter jurisdiction cannot be conferred upon a court by agreement, stipulation, or consent of the parties.

5. A trial court that vacates a prior dismissal order pursuant to HRCP Rule 60(b) has inherent authority to enforce the terms of a valid, underlying settlement agreement, as long as the trial court would have had jurisdiction to enforce the agreement in an original cause of action.

6. A motion to enforce a disputed settlement agreement is treated as a motion for summary judgment. Therefore, where there is a factual question as to the existence, validity, or terms of the alleged settlement agreement, a trial or evidentiary hearing is required to resolve the dispute.

7. Appellate courts have no jurisdiction to consider the merits of an appeal from an order which the trial court had no jurisdiction to enter.

Robert A. Smith, on the brief, Kaneohe, for defendant-appellant.

Jeffrey S. Portnoy (Cades Schutte Fleming & Wright, of counsel), on the brief, Honolulu, for plaintiff-appellee.

Before BURNS, C.J., and HEEN and WATANABE, JJ.

WATANABE, Judge.

The primary issue in this appeal is whether the trial court had jurisdiction to enforce a settlement agreement entered into by parties to a lawsuit, after that lawsuit had been unconditionally dismissed with prejudice by stipulation of the parties. We conclude that because Plaintiff had neither obtained a vacatur of the dismissal, nor filed a new lawsuit to enforce the settlement agreement, the trial court lacked jurisdiction to enter any orders enforcing the settlement agreement. We also conclude that if Plaintiff had obtained a vacatur of the dismissal, the trial court would have had jurisdiction to enforce the settlement agreement, but only after conducting an evidentiary hearing.

BACKGROUND

Defendant-Appellant Dr. Paz F. Abastillas (Defendant) owned a condominium unit which she rented to Plaintiff-Appellee Dale M. Gilmartin (Plaintiff) under a month-to-month lease. On or about May 25, 1989, Defendant and Plaintiff entered into an Option Agreement, whereby, for the price of $1,000, Defendant gave Plaintiff an option to purchase the condominium unit for $75,000, with a $15,000 down payment. When Plaintiff sought to exercise her option under the agreement, however, Defendant refused to sell the condominium unit. Plaintiff thereafter filed a lawsuit against Defendant for specific performance. Plaintiff also filed a notice of lis pendens with the Hawai'i Bureau of Conveyances.

On the morning of June 5, 1991, just before trial was to commence, the trial court ruled in favor of Plaintiff on several motions in limine. Later that same morning, both parties, through their attorneys, negotiated a settlement agreement, and apparently read the settlement terms into the record. ¹

Sometime in July of 1991, the parties executed a written "Release and Settlement Agreement" (Settlement Agreement), which spelled out in detail the settlement terms previously negotiated by the parties. The Settlement Agreement was neither approved by the trial court, nor incorporated into the order of dismissal.

On September 26, 1991, in accordance with the Settlement Agreement, a written "Stipulation to Dismiss All Claims with Prejudice and Cancellation of Notice of Pendency of Action" (Stipulated Dismissal), approved and ordered by the trial judge, was filed with the First Circuit Court.

Unfortunately, major snags developed between the parties regarding the Settlement Agreement. Defendant refused to sign any papers until Plaintiff paid her for unpaid rent, interest, and maintenance fees. In an effort to close the deal, Plaintiff proposed that the parties set aside a sum of money in a separate escrow account to cover the disputed sum. Defendant agreed to the proposal, $1,335 was subsequently set aside, and the sale of the condominium unit was finally closed.

Both sides, however, continued to disagree on who was entitled to the $1,335. On March 13, 1992, almost six months after the parties had filed the Stipulated Dismissal, Plaintiff filed a motion with the trial court seeking the award to her of the remaining escrowed Defendant raises four arguments in support of her appeal. First, Defendant argues that the trial court lacked jurisdiction to enter the order releasing the escrowed funds to Plaintiff and awarding to Plaintiff attorneys' fees and costs. Second, Defendant asserts that she was entitled to a separate trial, or at least an evidentiary hearing, on the question of entitlement to the disputed escrowed funds. Third, Defendant claims that Plaintiff's dilatory conduct estops her from complaining. Finally, Defendant maintains that on the merits, she, not Plaintiff, should have been awarded the remaining escrowed funds.

funds plus attorneys' fees and costs. The trial court summarily granted Plaintiff's motion on April 9, 1992, prompting this appeal.

DISCUSSION

I. Jurisdiction

The Stipulated Dismissal imposed no conditions on the dismissal of the lawsuit. The Stipulated Dismissal provided only that:

Pursuant to Rule 41(a)(2) of the Hawai'i Rules of Civil Procedure, ² Plaintiff DALE M. GILMARTIN ("Gilmartin") hereby dismisses her claims against Defendant PAZ F. ABASTILLAS ("Abastillas") with prejudice. Furthermore, Abastillas dismisses her counterclaim against Gilmartin with prejudice. There are no remaining parties and/or issues.

Notice of the pendency of this action, recorded on February 3, 1990, at the Bureau of Conveyances of the State of Hawai'i as Document No. 90-016115, is released.

Record on Appeal (R.A.), vol. 5 at 237-38 (footnote added).

A dismissal of a lawsuit with prejudice is generally regarded as an adjudication on the merits of all issues that were raised or could have been raised in the pleadings, thus barring, on res judicata grounds, any subsequent litigation involving the same claims, Land v. Highway Constr. Co., 64 Haw. 545, 551, 645 P.2d 295, 299, recon. denied, 64 Haw. 688 (1982), and terminating the trial court's jurisdiction over the lawsuit. Hinsdale v. Farmers Nat'l Bank & Trust Co., 823 F.2d 993, 995 (6th Cir.1987); McCall-Bey v. Franzen, 777 F.2d 1178, 1185 (7th Cir.1985).

When an action is dismissed with prejudice as part of a settlement agreement which is subsequently breached, the trial court thereafter has no jurisdiction to enforce the settlement agreement unless a party to the agreement takes one of two courses of action.

First, an independent action may be brought for specific performance of the settlement agreement. Hinsdale, 823 F.2d at 996; Musifilm, B.V. v. Spector, 568 F.Supp. 578, 581 (S.D.N.Y.1983); Brigando v. Republic Steel Corp., 180 Ill.App.3d 1016, 1021-22, 536 N.E.2d 778, 782, n. 1, cert. denied, 127 Ill.2d 612, 136 Ill.Dec. 581, 545 N.E.2d 105 (1989).

Second, a motion to vacate the dismissal order and reopen the original proceedings may be filed. ³ Unless the vacatur is first In Hinsdale, supra, for example, the parties to a lawsuit signed an unconditional stipulation of dismissal with prejudice, even though the formal settlement documents had yet to be drafted and signed. The trial judge then entered an order dismissing the case with prejudice. After one defendant claimed that she had not agreed to settle the case on the terms urged, the district court ordered specific performance of the settlement agreement, and appeal was taken.

                granted, however, no jurisdiction would exist in the court to enter any remedial orders in the case.   [10 Haw.App. 290]  Hinsdale, 823 F.2d at 996;  McCall-Bey, 777 F.2d at 1186;   Harman v. Pauley, 678 F.2d 479, 481 (4th Cir.1982);  Kelly v. Greer, 334 F.2d 434, 436-37 (3d Cir.1964)
                

The Sixth Circuit Court of Appeals held that the district court lacked jurisdiction to enter the order:

This unconditional dismissal with prejudice terminated the district court's "jurisdiction except for the limited purposes of reopening and setting aside the judgment of dismissal within the scope allowed by Rule 60(b)" of the Federal Rules of Civil Procedure. McCall-Bey v. Franzen, 777 F.2d 1178, 1190 (7th Cir.1985). Thus, the parties were in a position to seek enforcement of the settlement agreement only by means of an independent action for specific performance or by means of a Rule 60(b) motion to vacate the prior order of dismissal for the purpose of enforcing the agreement.

* * * * * *

Because the prior unconditional dismissal was not vacated nor the proceedings reopened, the district court was without jurisdiction to enforce the settlement agreement.

823 F.2d at 995-96 (emphasis in original, footnote omitted).

Similarly, in Kelly, supra, the parties informed the district court shortly before trial that a settlement of two lawsuits appeared imminent. When an agreement was reached, both parties met with the trial judge and read the settlement agreement into the record. In accordance...