United States District Court, D. New Mexico
MURUGA, LLC. ET AL., Plaintiff,
CITY OF RIO RANCHO, ET AL., Defendants.
MEMORANDUM OPINION AND ORDER
August 26, 2019, Plaintiffs Muruga, LLC and Dr. Senthil
Ramasamy, M.D. (“Plaintiffs”) filed a MOTION TO
ENFORCE SETTLEMENT AGREEMENT (Doc. No. 57)
(“Motion”). Plaintiffs seek enforcement of their
May 18, 2017, Settlement Agreement and Release of All Claims
(“SARAC”). See id., Ex. 1. Defendants
City of Rio Rancho and Mayor Greggory D. Hull
(“Defendants”) argue that the Court no longer has
jurisdiction to hear this case. See DEFENDANTS'
RESPONSE IN OPPOSITION TO THE MOTION TO ENFORCE SETTLEMENT
AGREEMENT (Doc. No. 58) at 2. Having reviewed the briefing
and controlling law, the Court will deny Plaintiffs'
Motion for lack of subject matter jurisdiction.
April 25, 2016, Plaintiffs sued Defendants for civil rights
violations under 42 U.S.C. § 1981. See
COMPLAINT FOR DAMAGES AND DECLARATORY JUDGMENT FOR VIOLATION
OF CIVIL RIGHTS (Doc. No. 1). Plaintiffs alleged that
Defendants deprived them of due process and equal protection
under the law in their handling of a building permit of an
office building in Rio Rancho, New Mexico. Id. at
2-3. On May 11, 2017, United States Magistrate Judge Kirtan
Khalsa held a settlement conference with the Plaintiffs and
Defendants (collectively, “Parties”).
See CLERK'S MINUTES REGARDING RULE 16 SETTLEMENT
CONFERENCE (“Settlement Minutes”) (Doc. No. 51).
At this conference, Parties settled the case and agreed that
“[t]he parties may, if necessary, seek leave to reopen
this case within six months and twenty days of today's
date for the sole and limited purpose of enforcing that part
of the settlement agreement to be satisfied within six months
and ten days.” Id. On May 18, 2017, Plaintiffs
signed the SARAC. See Motion, Ex. 1. On May 24,
2017, Parties dismissed this case with prejudice by
stipulation under Federal Rule of Civil Procedure
(“Rule”) 41(a)(1)(ii). Two years later, Plaintiffs
filed their Motion, asserting that Defendants have not
complied with the terms of the settlement agreement.
See Motion at 2-3.
to Enforce Settlement Agreement
seek “a Court Order enforcing the SARAC, to monetarily
sanction the City of Rio Rancho for its unlawful conduct in
amount significant enough to send the appropriate message,
and for reimbursement of their attorney's fees in having
to bring this enforcement action.” Motion at 4.
Plaintiffs argue that the Court is duty-bound under New
Mexico law to enforce the settlement agreement. See
Id. (citing Envtl. Control, Inc. v. City of Santa
Fe, 2002-NMCA-003, ¶ 19, 131 N.M. 450, 38 P.3d
891). While the Court does not disagree that New Mexico
courts have such a duty, as courts of limited jurisdiction,
federal district courts do not share in this duty. See
Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375,
district courts “have an independent obligation to
determine whether subject-matter jurisdiction exists”
and may raise the issue sua sponte or upon party
suggestion. See 1mage Software, Inc. v. Reynolds &
Reynolds Co., 459 F.3d 1044, 1048 (10th Cir. 2006)
(quoting Arbaugh v. Y & H Corp., 546 U.S. 500
(2006)). Defendants assert that the Court lacks jurisdiction
to enforce the SARAC because Plaintiffs' claims sound in
state contract law and there is no independent federal basis
for the suit. See DEFENDANTS' RESPONSE IN
OPPOSITION TO THE MOTION TO ENFORCE SETTLEMENT AGREEMENT
(Doc. No. 58) at 2. The Court agrees. Parties dismissed this
case under Rule. 41(a)(1)(ii). See supra, n. 1. Rule
“provides for dismissal by filing a stipulation . . .
signed by all parties who have appeared in the action, and
causes that dismissal to be with prejudice if . . . the
stipulation so specifies. Neither the Rule nor any provision
of law provides for jurisdiction of the court over disputes
arising out of an agreement that produces the
stipulation.” Kokkonen, 511 U.S. at 378.
of a settlement agreement . . . whether through award of
damages or decree of specific performance, is more than just
a continuation or renewal of the dismissed suit, and hence
requires its own basis for jurisdiction.” Id.
may retain jurisdiction to enforce settlement agreements by
party stipulation under Rule (41)(a)(1)(ii), or by an order
incorporating a settlement agreement that includes a
retained-jurisdiction clause under Rule 41(a)(2).
Id. at 381. Plaintiffs contend that the six-month
timeframe to challenge the settlement evinces an intent by
the Court to retain jurisdiction over the SARAC indefinitely.
See REPLY TO RESPONSE [DOC 58] TO MOTION TO ENFORCE
SETTLEMENT AGREEMENT (Doc. No. 59) at 5-6. Plaintiffs'
argument fails for two reasons. First, the agreement of a
six-month deadline to challenge the settlement preceded
execution of the SARAC and was not incorporated into the
terms of the SARAC. A court's “mere awareness and
approval of the terms of the settlement agreement” does
not suffice to incorporate the settlement agreement, let
alone negotiation terms, into the dismissal. See
Kokkonen, 511 U.S. at 381. Further, neither stipulated
dismissal contains any reference to the six-month deadline or
to the SARAC itself. Under Kokkonen, the Court
cannot exercise retained jurisdiction that was not reflected
in either the ultimate settlement agreement or the stipulated
even if the terms had been incorporated, the settlement
agreement allowed an enforcement suit ten days after the time
to comply with the SARAC terms. See Settlement
Minutes (“The parties may, if necessary, seek leave to
reopen this case within six months and twenty days
of today's date for the sole and limited purpose of
enforcing that part of the settlement agreement to be
satisfied within six months and ten days.”)
(emphasis added). Plaintiffs had ten days after the six-month
and ten-day compliance period to sue for non-compliance and
failed to do so.
alternatively argue that the Court has jurisdiction to
enforce settlement agreements where “the rights of the
litigants and the operative legal policies derive from a
federal source.” REPLY TO RESPONSE [DOC 58] TO MOTION
TO ENFORCE SETTLEMENT AGREEMENT (Doc. No. 59) at 5.
Plaintiffs cite Snider v. Circle K Corp., 923 F.2d
1404 (10th Cir. 1991) in support of their argument. The
plaintiff in Snider sought enforcement of an
employment discrimination settlement agreement for claims
under Title VII of the Civil Rights Act, 42 U.S.C. §
2000 et seq. (“Title VII”) and requested
a jury trial on the issue of breach of the settlement
agreement. Snider, 923 F.2d at 1407. Despite the
enforcement claim sounding in contract, the Snider
Court reasoned that as a claim derivative of Title VII, where
“rights of the litigants and the operative legal
policies derive from a federal source[, ]” federal
common law applies. Id. The Snider Court
concluded that the plaintiff was not entitled to a jury trial
on the issue of breach under federal common law. Id.
On the jurisdictional issue, the Snider Court simply
reiterated that the Tenth Circuit had previously
“affirmed a district court's award of damages for
breach of a Title VII settlement agreement without discussing
the jurisdictional issue.” Id.
stands for the proposition that federal common law guides the
interpretation of breach of settlement claims under Title
VII. Id.; accord, Chavez v. New
Mexico, 397 F.3d 826, 830 (10th Cir. 2005). The Tenth
Circuit has, however, limited the scope of Snider in
the wake of the Supreme Court's Kokkonen
opinion. See Morris v. City of Hobart, 39 F.3d 1105,
1110 (10th Cir. 1994). In Morris, the plaintiff
sought post-dismissal enforcement of a Title VII settlement
agreement. Id. at 1108. The district court
determined it had jurisdiction under Snider.
Id. at 1110. The Tenth Circuit reversed, concluding
that because the settlement agreement did not retain federal
jurisdiction, as Kokkonen required, the court would
need an independent federal basis for jurisdiction.
Id. at 1110-11. After finding no basis for diversity
jurisdiction, the Morris Court turned to federal
question jurisdiction, acknowledging that “federal
jurisdiction can be found in state-law created causes of
action if the right to relief turns on the construction of a
federal law.” Morris, 39 F.3d at 1111 (citing
Smith v. Kansas City Title & Trust Co., 255 U.S.
180, 199-200 (1921)). “Nevertheless, the ‘mere
presence of a federal issue in a state cause of action does
not automatically confer federal-question
jurisdiction.'” Morris, 39 F.3d at 1111
(quoting Merrell Dow Pharmaceuticals, Inc. v.
Thompson, 478 U.S. 804, 813 (1986)). “A court
examining whether a case turns on a question of federal law
should focus on whether Congress evidenced an intent to
provide a federal forum.”Id. The Morris
Court determined that Congress did ...