Linebarger v. US, C-83-20238-RMW.

• Decision Date: 14 May 1996
• Docket Number: No. C-83-20238-RMW.,C-83-20238-RMW.
• Citation: 927 F. Supp. 1280
• Parties: David Blanchard LINEBARGER, Plaintiff, v. UNITED STATES of America, Defendant.
• Court: U.S. District Court — Northern District of California

927 F. Supp. 1280

David Blanchard LINEBARGER, Plaintiff, v. UNITED STATES of America, Defendant.

No. C-83-20238-RMW.

United States District Court, N.D. California.

May 14, 1996.

Chester G. Moore, Thomas J. LoSavio, Law, Ball & Lynch, San Francisco, CA, for Plaintiff.

Michael T. Truscott, U.S. Department of Justice, Torts Branch, Civil Division, Washington, D.C., for Defendant.

ORDER DENYING MOTION TO ENFORCE SETTLEMENT AGREEMENT

WHYTE, District Judge.

Plaintiff's motion to enforce settlement agreement was heard on May 10, 1996. The court has read the moving and responding papers and heard the oral argument of counsel. For the reasons set forth below, the court denies plaintiff's motion to enforce the settlement agreement.

I. BACKGROUND

On February 7, 1996, plaintiff filed his motion to enforce the terms of a settlement agreement entered into between the United States of America and him in 1984. Plaintiff filed an action against the United States in 1983 under the Federal Tort Claims Act ("FTCA") for injuries sustained in an accident involving the United States Postal Service. The parties ultimately settled the action resulting in a stipulation and order approving compromise settlement ("settlement") being entered on November 29, 1984. Declaration of David Blanchard Linebarger ("Linebarger Decl."), Ex. A.

The settlement provided that defendant United States of America shall pay in full and final settlement of this matter the following amounts:

Plaintiff, DAVID BLANCHARD LINE-BARGER shall receive an initial cash payment of $110,378.00. In addition, Defendant shall purchase an annuity contract with the Executive Life Insurance Company at a cost of $52,122.00. Funds from the annuity contract will be disbursed to Plaintiff as follows:

$15,000.00 in the third year, $20,000.00 in the sixth year, $30,000.00 in the tenth year, $60,000.00 in the fifteenth year, and a final payment of $90,000.00 in the twentieth year.

Linebarger Decl., Ex. A, ¶ 1. The settlement was approved by United States District Judge Robert P. Aguilar who signed the stipulation and order on November 28, 1984. The terms of the settlement also were included in the dismissal and release ordered by the judge and filed November 29, 1984. Linebarger Decl., Ex. B.

Plaintiff received the initial payment of $110,378 and the third and sixth year payments under the annuity. Plaintiff asserts, however, that the tenth year payment was not $30,000 but only $18,756. The shortfall in the amount is due to the fact that Executive Life Insurance Company ("ELIC") went bankrupt and was put into a rehabilitation plan under which Aurora National Life Assurance Company assumed and reinsured the liability of ELIC. Under the terms of the rehabilitation plan, all ELIC annuity contracts were reevaluated by Aurora resulting in the potential shortfalls.¹ Plaintiff claims that the fifteenth and twentieth year payments will result in shortfalls as well. Thus, plaintiff claims that the United States has breached the terms of the settlement agreement because it was obligated to make sure plaintiff received the aforementioned amounts. Plaintiff therefore seeks an order compelling the United States to pay him the total of the tenth payment shortfall plus the future shortfall amounts in a lump sum payment now or an order compelling payment of the tenth year shortfall now and purchase of an annuity to make future shortfall payments on the fifteenth and twentieth payment dates.²

Defendant filed its opposition to plaintiff's motion on April 19, 1996. Defendant makes two primary arguments: (1) that this court does not have jurisdiction to enforce the settlement agreement and (2) that, in any event, the United States has complied with the terms of the settlement agreement.

II. ANALYSIS

A. Jurisdictional Issue

Defendant relies on Kokkonen v. Guardian Life Ins. Co. of America, 511 U.S. 375, 114 S.Ct. 1673, 128 L.Ed.2d 391 (1994) for the proposition that this court does not have jurisdiction to enforce the terms of the settlement agreement. However, defendant's reliance is misplaced because Kokkonen actually supports this court's jurisdiction to enforce the terms of the settlement agreement in this case. In Kokkonen, the Supreme Court explicitly states:

The situation would be quite different if the parties' obligation to comply with the terms of the settlement agreement had been made part of the order of dismissal — either by separate provision ... or by incorporating the terms of the settlement agreement in the order. In that event, a breach of the agreement would be a violation of the order, and ancillary jurisdiction to enforce the agreement would therefore exist.

Id. at ___, 114 S.Ct. at 1677 (emphasis added); see Hagestad v. Tragesser, 49 F.3d 1430 (9th Cir.1995). Defendant contends that the terms of the settlement agreement were not incorporated into the order of dismissal, yet paragraph 1 of the order of dismissal plainly sets forth the obligations of the parties under the settlement agreement. Linebarger Decl., Ex. B.³ Thus, the terms were incorporated as part of the dismissal order and this court therefore retains jurisdiction to enforce the terms of the settlement agreement.⁴

B. Terms of Settlement Agreement

The settlement agreement provides that "Defendant shall purchase an annuity contract with the Executive Life Insurance Company at a cost of $52,122.00." The agreement goes on to describe how the annuity funds will be disbursed once the United States has purchased the annuity. The United States' only obligation under the terms of the agreement was to purchase the annuity, which it did. Once the United States purchased the annuity, plaintiff was subject to the terms and conditions attached to the annuity by ELIC. The United States no longer had any authority regarding the annuity. Thus, because the United States fulfilled its obligations under the terms of the settlement agreement, i.e. paid the initial lump sum amount and purchased the annuity, it cannot be held liable for ELIC's failure to make the full payments.

The plain language of the settlement provides that the government's obligation was fully satisfied upon its purchase of the annuity, and the circumstances existing at the time of the settlement support this reading of the agreement. Plaintiff argues that the following language in the settlement agreement call for the government to guarantee the payments made by ELIC: "All of the above distributions shall be based upon the date that the premium is paid and the contract is purchased and all such distributions shall be guaranteed...