Jurisdiction to Enforce a Settlement

Lawyer Blog Post 2010/09/03 17:38   Bookmark and Share
When parties settle a case, there are good feelings all around and relief that the dispute is over. However, parties who have been disagreeable prior to settlement often remain that way after they have compromised their dispute. A recent Fifth Circuit case makes the point that it is important to think about how the settlement will be enforced should the parties go back to feuding.

In SmallBiz Pros, the parties settled a dispute which required turnover of documents among other things. They entered a Stipulation of Dismissal pursuant to Rule 41(a)(1)(A)(ii). This was a non-bankruptcy case. However, the same provision would apply under Bankruptcy Rule 7041. The Stipulation referenced a "Stipulated Settlement Order." The Court signed the Stipulated Settlement Order. However, the order did not contain "so ordered" language and did not provide for the Court to retain jurisdiction to enforce the order.

Disagreements arose and SmallBiz Pros returned to court to have MacDonald held in contempt. The District Court obliged and MacDonald appealed. The Fifth Circuit reversed, finding that the District Court lacked jurisdiction to enforce the settlement.

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