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Atmosphere Hospitality Management, LLC v. Shiba Investments, Inc.

United States District Court, D. South Dakota, Western Division

March 21, 2019

ATMOSPHERE HOSPITALITY MANAGEMENT, LLC, Plaintiff,
v.
SHIBA INVESTMENTS, INC., KARIM MERALI, and ZELJKA CURTULLO, Defendants.

          ORDER GRANTING SECOND MOTION TO ENFORCE SETTLEMENT AGREEMENT AND DENYING MOTION TO AMEND COMPLAINT

          KAREN E. SCHREIER UNITED STATES DISTRICT JUDGE.

         Defendants 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.

         BACKGROUND

         The 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).

         After 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.

         Atmosphere 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.

         DISCUSSION

         I. Second Motion to Enforce the Settlement Agreement

         Defendants 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.

         In its 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.

         “District 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.

         Because 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.

         A 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.

         The 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 ...


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