United States District Court, D. South Dakota, Western Division
ORDER GRANTING SECOND MOTION TO ENFORCE SETTLEMENT
AGREEMENT AND DENYING MOTION TO AMEND COMPLAINT
E. SCHREIER UNITED STATES DISTRICT JUDGE.
Shiba Investments, Inc. and Karim Merali move to enforce the
settlement agreement for the second time. Docket 385.
Plaintiff, Atmosphere Hospitality Management, LLC, opposes
defendants' motion. Docket 389. Atmosphere also moves to
amend/supplement the amended complaint to add a claim for
breach of the settlement agreement. Docket 387. Defendants
oppose Atmosphere's motion to amend. Docket 390. For the
reasons that follow, the court grants defendants' motion
to enforce the settlement agreement and denies
Atmosphere's motion to amend or supplement the complaint.
court will briefly summarize the facts relevant to the
pending motions, but a more thorough factual background can
be found in previous orders. See Docket 367 (denying
defendants' first motion to enforce the settlement
agreement and denying defendants' motion to dismiss with
prejudice); Docket 384 (granting Atmosphere's motion for
attorney fees in part and denying in part).
the parties entered into a settlement agreement in this
matter, the court entered an order and judgment of dismissal
without prejudice on September 27, 2016. Docket 329. The
court retained jurisdiction until the settlement is completed
and the parties file a joint motion for dismissal with
prejudice. Id. On August 30, 2017, defendants filed
a motion to reopen the case and enforce the settlement
agreement (Docket 333) and a motion to dismiss with prejudice
(Docket 334). Atmosphere did not oppose reopening the case
and enforcing the agreement but did oppose dismissal with
prejudice. Docket 344. Following an evidentiary hearing, the
court denied defendants' motion to enforce the settlement
agreement and motion to dismiss, finding that defendants had
not fully complied with the settlement agreement. Docket 367.
then moved for an award of attorney fees and costs for
compelling enforcement of the terms of the settlement
agreement. Docket 368. Based on the settlement agreement
language, the court concluded that Atmosphere was entitled to
$19, 792 in attorney fees but no costs. Docket 384.
Second Motion to Enforce the Settlement Agreement
move to enforce the settlement agreement for a second time,
arguing that the court should dismiss the case with prejudice
because the terms of the settlement agreement have been
fulfilled. Docket 385. Specifically, defendants state that
following the evidentiary hearing on February 8, 2018, and
March 8, 2018, defendants retained Blue Ocean Global
Technology to remove all references and links to Adoba hotels
from defendants' website and social media. Id.
at 2. Blue Ocean is an Online Reputation Management company
with expertise in “build[ing] a positive reputation for
[its] clients around select key words and mitigat[ing] a
negative online reputation.” Docket 371-1 at 11.
Defendants attached the Blue Ocean reports to their
memorandum in opposition to Atmosphere's motion for
attorney fees. Dockets 379-1, 379-2, 379-3.
memorandum in opposition to defendants' second motion to
enforce the settlement agreement, Atmosphere argues that
dismissing this action is premature because defendants have
not yet paid the attorney fees awarded by this court on July
30, 2018. Docket 389 at 2-3. Atmosphere also argues that the
court should retain jurisdiction over this matter because it
has filed a motion to amend the amended complaint to add two
new causes of action for defendants' breach of the
settlement agreement. Id. at 3-4.
courts do not have inherent power, that is, automatic
ancillary jurisdiction, ” to enforce settlement
agreements. Miener v. Mo. Dep't of Mental
Health, 62 F.3d 1126, 1127 (8th Cir. 1995) (citing
Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S.
375 (1994)). Ancillary jurisdiction to enforce a settlement
agreement exists when “the parties' obligation to
comply with the terms of the settlement agreement [is] made
part of the order of dismissal . . . such as a provision
‘retaining jurisdiction' over the settlement
agreement” because breaching the agreement violates the
court's order of dismissal or judgment.
Kokkonen, 511 U.S. at 381.
the court retained jurisdiction until the settlement is
completed, the court has jurisdiction to enforce the
settlement agreement here. See Kokkonen, 511 U.S. at
381. The settlement agreement term at issue states that
defendants “will remove from the Internet, including
their web site and social media, and all references and links
within their control to their association, past or present,
with Adoba hotels.” Docket 346 at 3. Atmosphere has
neither refuted defendants' argument that all terms of
the settlement agreement have been fulfilled nor addressed
whether the efforts by Blue Ocean Global Technology are
sufficient to remove the Adoba references from
defendants' website and social media.
district court “has inherent power to enforce a
settlement agreement as a matter of law when the terms are
unambiguous.” Barry v. Barry, 172 F.3d 1011,
1013 (8th Cir. 1999) (citation omitted). The Eighth Circuit
has held that an evidentiary hearing “need be held only
if there are substantial questions of fact that are not
already a matter of record.” Id. (citing
Stewart v. M.D.F., Inc., 83 F.3d 247, 251 (8th Cir.
1996)). It is well established that settlement agreements are
governed by contract law principles. See id.
court first concludes that an evidentiary hearing is
unnecessary because the parties previously held a two-day
evidentiary hearing, defendants have attached the extensive
Blue Ocean Global Technology report showing how defendants
have removed references to Adoba hotels since that
evidentiary hearing, and Atmosphere has not disputed any
factual issues arising from the Blue ...