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Federal Court Sets Aside Judgment of Dismissal and Reopens Judgment To Enter Settlement Agreement On Record

Money Centers of America, Inc. v. Regen, No. Civ. A. 04-1516-KAJ, 2005 WL 2663709 (D.Del. Oct. 17, 2005). Plaintiff filed a Motion To Vacate Dismissal and to enforce a Settlement Agreement that the parties had entered into earlier. Regen and Coast ATM (collectively "Defendants") contested subject matter jurisdiction. The Court vacated dismissal to the extent requested by the plaintiff. Plaintiff requested the court to: (1) reopen the case; (2) enter the settlement agreement ("Agreement") between the parties on the record; (3) permit plaintiff to depose Defendant Regen, his wife, Helene Regen, and a representative of Coast ATM ("Coast"), a joint defendant and; (4) permit Plaintiff Money Centers to recover its costs and attorney fees in connection with the case and this motion. The parties earlier dismissed the case by stipulation in 2005, based on the Agreement between them. However, the Agreement was not referred to in the Order dismissing the case. The Court did not reserve jurisdiction either. Thereafter, Defendant Regen breached the Agreement by failing to make timely payments to Plaintiff Money Centers of America, Inc. ("Plaintiff"), a Delaware corporation. The Court found that there was diversity and the amount-in-controversy requirement of $75,000 was met. The court noted the distinction between "enforcement of the settlement agreement ... [and] reopening of the dismissed suit by reason of breach of the agreement that was the basis for dismissal," quoting Kokkonen v. Guardian Life Ins. Co. of America, 511 U.S. 375,378 (U.S. 1994). The Court examined Third Circuit case law and observed that Sawka v. Healtheast, Inc., 989 F.2d 138 (3d Cir. 1993) had held that although a court cannot set aside a judgment of dismissal under Fed.R.Civ.P. 60(b)(6) simply because the settlement agreement was breached, it held that such relief could be "granted under extraordinary circumstances." The Court held that such extraordinary circumstances were present in this case, because Regen had violated the Agreement and the Court's Order. It therefore permitted the reopening of the judgment of dismissal for the limited purpose requested by the plaintiff, namely, entering the Agreement on the Record and permitting the requested depositions in Delaware. The Court also held that the defendants were jointly and severally liable for plaintiff's costs and reasonable attorney fees connected with this motion and its proceedings. Authored by: Raj Srivatsan 302.888.6831 rsrivatsan@morrisjames.com