Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caDC-08-07123/USCOURTS-caDC-08-07123-0/pdf.json

Nature of Suit Code: 290
Nature of Suit: Other Real Property Actions
Cause of Action: 

---

United States Court of Appeals 

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued October 9, 2009 Decided November 3, 2009 

No. 08-7123 

T STREET DEVELOPMENT, LLC, 

APPELLANT

v. 

DEREJE AND DEREJE, ET AL., 

APPELLEES

Appeal from the United States District Court 

for the District of Columbia 

(No. 1:05-cv-00524) 

Thomas F. Murphy argued the cause for appellant. With 

him on the briefs was Robert E. Greenberg. 

Emil Hirsch argued the cause for appellees. With him on 

the brief was Steven A. Pozefsky. 

Before: HENDERSON and TATEL, Circuit Judges, and 

EDWARDS, Senior Circuit Judge. 

Opinion for the Court filed by Circuit Judge TATEL. 

USCA Case #08-7123 Document #1213761 Filed: 11/03/2009 Page 1 of 11
2 

TATEL, Circuit Judge: This case involves a dispute over 

the purchase of real property in the District of Columbia. 

Appellant, the buyer, seeks to enforce a settlement agreement 

it claims the parties reached during the pendency of its suit for 

specific performance. Finding that the parties had failed to 

agree to all material terms, the district court denied 

enforcement of the alleged settlement and then dismissed the 

buyer’s underlying specific performance action. We hold first 

that contrary to the seller’s argument, the district court had 

jurisdiction to entertain the buyer’s enforcement motion. 

Reviewing for clear error, we then affirm. 

I. 

Appellee Dereje & Dereje (“the seller”) owns 

commercial and residential real estate located at T Street and 

Florida Avenue, N.W., in the District of Columbia. In 

October 2004, the seller entered into a written contract to sell 

the property to Appellant T Street Development (“the buyer”) 

for $925,000. The contract called for the closing to occur by 

December 22, 2004. When it became clear that neither party 

could meet that deadline, the parties executed another contract 

that pushed back the closing date to January 28, 2005. 

Because the buyer was unable to obtain the necessary 

financing, however, the settlement did not go forward as 

planned. 

After the January deadline had passed, the parties 

discussed extending the settlement date. The parties now 

disagree about whether those discussions culminated in an 

agreement: the buyer was under the impression that an 

agreement had been reached and that the closing was slated to 

occur on February 16, 2005; the seller failed to show up at the 

closing and returned the buyer’s deposit. The buyer then sued 

the seller in D.C. Superior Court seeking specific performance 

of the contract, and the seller removed the case on diversity 

USCA Case #08-7123 Document #1213761 Filed: 11/03/2009 Page 2 of 11
3 

grounds to the U.S. District Court for the District of 

Columbia. At around the same time, the buyer filed a lis 

pendens against the property. 

The district court ordered the parties to engage in 

settlement negotiations before a magistrate judge. On March 

14, 2007, the parties appeared before the magistrate judge and 

announced that they had reached a settlement, which they 

expected to reduce to writing in the form of a consent order 

they would submit to the district court. Specifically, the 

parties agreed that the seller would list and sell the property to 

a third party, subject to the buyer’s right of first refusal. 

Two issues, however, were tabled for further negotiation. 

First, the buyer asserted at the settlement conference that there 

was still “some work to do on the mechanics” of the first 

refusal right. Settlement Conference Tr. at 10 (Mar. 14, 

2007). Second, anticipating the possibility of a breach, the 

seller’s attorney asserted that enforcement of the settlement 

agreement by the district court would be the “sole and only 

remedy, and no further lis pendens will be filed” against the 

property. Id. at 6. The buyer’s lawyer protested: “the one 

thing I want to be able to do is file a lis pendens” in the event 

of a breach by the seller. Id. at 7. Acknowledging this “lastminute glitch,” the parties asked for an additional week to 

hash out the lis pendens issue. Id. at 9. 

Although the parties subsequently exchanged draft 

consent orders, they were ultimately unable to agree on the 

details of the buyer’s first refusal right or its remedies in the 

event of a breach. More than a year after the settlement 

conference, while the specific performance suit was still 

pending, the buyer filed a motion asking the district court to 

enforce the settlement agreement as reflected in the settlement 

conference transcript. 

USCA Case #08-7123 Document #1213761 Filed: 11/03/2009 Page 3 of 11
4 

Ruling from the bench, the district court denied the 

buyer’s enforcement motion, explaining: 

There is no question that there was not agreement on 

all of the material issues to be decided by the parties. 

Specifically, there was no agreement on the scope of 

remedies or any of the important issues about 

remedies. . . . [R]ight in front of [the] Magistrate 

Judge . . . there was a disagreement between counsel 

as to whether a lis pendens could or could not be 

entered or filed by the plaintiff under certain 

situations. Obviously that is a matter of great 

significance. . . . There was no meeting of the minds 

on all material elements. 

Trial Tr. at 6–7 (Sept. 9, 2008). The district court then 

proceeded to trial on the buyer’s suit to compel the sale of the 

property pursuant to the original contract (as modified by the 

alleged oral agreement). Finding that the parties never orally 

agreed to extend the settlement date, the district court entered 

judgment in favor of the seller. T St. Dev., LLC v. Dereje & 

Dereje, 581 F. Supp. 2d 26, 32–33 (D.D.C. 2008). 

The buyer now appeals the district court’s denial of its 

enforcement motion, as well as the court’s subsequent 

dismissal of its specific performance suit. In response, the 

seller argues, among other things, that the district court lacked 

jurisdiction to consider the enforcement motion. 

 

II. 

We begin, as we must, with jurisdiction. In support of its 

claim that the district court lacked jurisdiction over the 

settlement agreement, the seller relies on Kokkonen v. 

Guardian Life Insurance Co. of America, 511 U.S. 375 

USCA Case #08-7123 Document #1213761 Filed: 11/03/2009 Page 4 of 11
5 

(1994). There, the parties settled the underlying diversity 

action and executed a stipulation of dismissal. Nothing in that 

stipulation, however, expressly provided that the district court 

would retain jurisdiction to enforce the settlement. After the 

district court dismissed the case, the original defendant filed a 

motion in federal court seeking to enforce the agreement. The 

Supreme Court held that the district court lacked ancillary 

jurisdiction to do so because enforcement of the agreement 

would not serve the purpose of enabling the district court to 

“protect its proceedings and vindicate its authority.” Id. at 

380. The Court observed, however, that the “situation would 

be quite different if the parties’ obligation to comply with the 

terms of the settlement agreement had been made part of the 

order of dismissal—either by separate provision (such as a 

provision ‘retaining jurisdiction’ over the settlement 

agreement) or by incorporating the terms of the settlement 

agreement in the order.” Id. at 381. Absent some 

independent basis for federal jurisdiction, however, the 

defendant’s only recourse was to enforce the settlement 

agreement in state court. Id. at 382. 

Noting that the settlement agreement was never 

incorporated into a final order, the seller argues that the 

district court lacked jurisdiction to entertain the enforcement 

motion in the first place. In pressing this argument, however, 

the seller overlooks a key distinction between Kokkonen and 

this case. In Kokkonen, the district court had already 

dismissed the underlying suit and was then asked to enforce 

the settlement agreement. Here, the district court ruled on the 

buyer’s enforcement motion while the specific performance 

suit was still pending before the court. 

This distinction is critical. The rationale underlying 

Kokkonen is that unless the district court retains jurisdiction 

over the matter, a settlement agreement amounts to nothing 

USCA Case #08-7123 Document #1213761 Filed: 11/03/2009 Page 5 of 11
6 

more than a freestanding contract, “part of the consideration 

for which was dismissal of an earlier federal suit.” Id. at 381. 

In that circumstance, the doctrine of ancillary jurisdiction, 

which “recognizes federal courts’ jurisdiction over some 

matters (otherwise beyond their competence) that are 

incidental to other matters properly before them,” provides no 

basis for federal jurisdiction over a settlement agreement. Id.

at 378. Where settlement occurs during litigation, however, 

enforcing the settlement enables the “court to function 

successfully, that is, to manage its proceedings”—one of the 

purposes of ancillary jurisdiction recognized in Kokkonen. Id.

at 380. 

Indeed, we have consistently held that nothing in 

Kokkonen precludes district courts from enforcing settlements 

that occur during litigation. For example, in Foretich v. 

American Broadcasting Cos., 198 F.3d 270 (D.C. Cir. 1999), 

after the district court dismissed Foretich’s defamation suit 

against ABC, ABC filed a motion seeking to recover 

attorney’s fees, the parties negotiated a settlement, and ABC 

then sought to enforce that agreement while its fees motion 

remained pending. We held that the district court had 

jurisdiction over the enforcement motion: 

If enforced, the settlement agreement would require 

withdrawal of ABC’s motion for fees and costs. The 

motion to enforce, therefore, could moot the motion 

for fees and costs and, concordantly, any judgment 

on that motion. The motions were thus interrelated 

and resolution of the motion to enforce allowed the 

court to resolve the motion for fees and costs in a 

manner that “effectuate[d] its decree[].” 

Id. at 273–74 (citing Kokkonen, 511 U.S. at 379) (alterations 

in original) (record citation omitted). 

USCA Case #08-7123 Document #1213761 Filed: 11/03/2009 Page 6 of 11
7 

We reached a similar conclusion in Bailey v. Potter, 478 

F.3d 409 (D.C. Cir. 2007). There, the district court accepted 

the parties’ settlement agreement but failed to issue a separate 

order dismissing the plaintiff’s claims. Citing Kokkonen, the 

district court concluded that it lacked jurisdiction to enforce 

the agreement. We disagreed, explaining that “[b]ecause the 

district court did not issue the appropriate order pursuant to 

Rule 58(a) dismissing the complaint, it continued to have 

jurisdiction over [the plaintiff’s] case. The district court’s 

reliance on Kokkonen was therefore misplaced.” Id. at 412 

(citations omitted). 

The inescapable lesson of these cases is this: where, as in 

Kokkonen, a party seeks to enforce a settlement agreement 

after the district court has dismissed the case, the district court 

lacks jurisdiction over the agreement unless the court either 

incorporated the agreement’s terms into the dismissal order or 

expressly retained jurisdiction over the agreement. If, 

however, a party seeks to enforce a settlement while the 

underlying suit remains pending, then the district court has 

jurisdiction to enforce the related settlement. See Autera v. 

Robinson, 419 F.2d 1197, 1200 (D.C. Cir. 1969) (“It is now 

well established that the trial court has power to summarily 

enforce on motion a settlement agreement entered into by the 

litigants while the litigation is pending before it.”). Here, the 

buyer filed its enforcement motion while its underlying 

lawsuit was pending in district court, and a ruling on that 

motion could have mooted the buyer’s specific performance 

action. The district court therefore had jurisdiction to decide 

whether the parties had entered into a binding settlement. We 

thus turn to the merits of the buyer’s appeal, which we can 

dispose of in short order. 

USCA Case #08-7123 Document #1213761 Filed: 11/03/2009 Page 7 of 11
8 

III. 

The parties agree on our standard of review. With 

respect to the district court’s denial of the buyer’s motion to 

enforce the settlement agreement, we review the court’s 

factual findings for clear error. Foretich, 198 F.3d at 273. A 

finding is clearly erroneous when the appeals court is “left 

with the definite and firm conviction that a mistake has been 

committed.” Anderson v. Bessemer City, 470 U.S. 564, 573 

(1985) (internal quotation marks omitted). Contract law 

governs settlement agreements, and we apply local law in 

determining whether a settlement agreement was formed. 

Makins v. District of Columbia, 277 F.3d 544, 546–47 (D.C. 

Cir. 2002). In the District of Columbia, a valid contract 

requires “both (1) agreement as to all material terms; and (2) 

intention of the parties to be bound.” Jack Baker, Inc. v. 

Office Space Dev. Corp., 664 A.2d 1236, 1238 (D.C. 1995) 

(internal quotation marks omitted). 

The district court denied the buyer’s enforcement motion 

because it found that the parties had failed to agree on all 

material terms at the settlement conference. In particular, the 

court highlighted the parties’ failure to agree on whether the 

buyer could file a lis pendens against the property in the event 

of a breach. On appeal, the buyer does not seriously contest 

the district court’s determination that the parties failed to 

agree on this issue. Rather, the buyer complains that the 

district court erred in finding that the unresolved lis pendens 

matter was in fact material because, according to the buyer, 

“terms defining a party’s rights in the event of a breach are 

not considered material terms.” Reply Br. 7. 

 

In support, the buyer cites Tauber v. Quan, 938 A.2d 724 

(D.C. 2007), in which the D.C. Court of Appeals stated that 

“even if the parties expected to negotiate over possible default 

terms, ‘the mere fact that a contract, definite in material 

USCA Case #08-7123 Document #1213761 Filed: 11/03/2009 Page 8 of 11
9 

respects, contains some terms which are subject to further 

negotiation . . . will not bar a decree for specific 

performance.’” Id. at 730–31 (quoting Hackney v. Morelite 

Constr., 418 A.2d 1062, 1068–69 (D.C. 1980)). Nothing in 

Tauber, however, suggests that terms pertaining to remedies 

are always immaterial. Rather, Tauber stands for the 

unremarkable proposition that failure to reach agreement on 

default terms will not defeat formation, so long as the contract 

is “definite in material respects.” Id. It is axiomatic that the 

parties to a contract are free to decide for themselves what is 

material and what is not. Indeed, the D.C. Court of Appeals 

has made clear that materiality is not, as the buyer asserts, 

preordained, but is instead a factual question that depends on 

what the parties “deem to be the material elements of their 

agreement.” Georgetown Entm’t Corp. v. District of 

Columbia, 496 A.2d 587, 590 (D.C. 1985). 

Thus, regardless of whether terms defining a party’s 

rights in the event of a breach are typically considered to be 

material, the key is whether the parties in this case deemed 

them to be. And the record here makes clear that the parties 

viewed the resolution of the lis pendens question as essential 

to any settlement. When the issue arose at the settlement 

conference before the magistrate judge, the parties sparred 

about it at length. The buyer’s lawyer made clear that “the 

one thing” that he wanted was to be able to file a lis pendens 

in the event of a breach, and the parties then requested an 

additional week to “work out” the dispute. Settlement Tr. at 

7, 9. Given this, we can easily understand why the district 

court found that the parties had failed to reach agreement on a 

material element. 

The buyer makes much of the fact that the seller had 

initially filed its own enforcement motion, which it then 

withdrew before the district court could act. In filing that 

USCA Case #08-7123 Document #1213761 Filed: 11/03/2009 Page 9 of 11
10 

motion, however, the seller was not seeking to enforce the 

transcript of the settlement conference. Instead, it asked the 

court to adopt the proposed consent order that it drafted, an 

order that would have barred the buyer from filing any lis 

pendens against the property in the event of a breach—

precisely the outcome the seller sought but was unable to 

obtain at the settlement conference. This post hoc effort by 

the seller to insert its preferred term into the settlement 

agreement in no way changes the fact that the parties viewed 

resolution of the lis pendens issue as essential to agreement. 

Moreover, the district court took account of the seller’s 

motion: the court acknowledged that the seller had first 

submitted its own enforcement motion yet it nonetheless 

concluded that the parties had failed to agree on all material 

terms at the settlement conference. Trial Tr. at 5–6. We see 

no clear error in that ruling. 

The buyer next contends that even if the settlement 

agreement was unenforceable, the district court erred in 

dismissing its specific performance suit. According to the 

buyer, the “day before the scheduled closing, [the seller’s] 

agent orally agreed to allow [the buyer] to extend closing 

provided [the buyer] paid $200.00 for each day closing was 

extended,” Appellant’s Br. 2–3, and the buyer relied on that 

agreement to its detriment. See Landow v. GeorgetownInland West Corp., 454 A.2d 310, 313 n.3 (D.C. 1982) (oral 

modification to land purchase agreement falls outside the 

statute of frauds if the purchaser materially changes its 

position in reliance thereon). Again, we review the court’s 

factual findings for clear error. Steven R. Perles, P.C. v. 

Kagy, 473 F.3d 1244, 1249 (D.C. Cir. 2007) (“We accept the 

factual findings underlying the District Court’s contract 

determination unless they are clearly erroneous.”). 

USCA Case #08-7123 Document #1213761 Filed: 11/03/2009 Page 10 of 11
11 

The district court’s conclusion that the parties never 

agreed to extend the closing date flows directly from its 

resolution of the parties’ factual dispute over the sequence of 

the oral negotiations. The court found that in early February 

2005—after the parties had failed to close by the January 28 

deadline set forth in the contract—the seller offered to extend 

the closing date. The buyer made a counteroffer, which the 

seller rejected, and neither party made any subsequent 

proposals. Accordingly, the court determined that the 

contract had expired without any agreement to extend the 

closing date. In reaching this conclusion, the district court 

expressly credited the testimony of the seller’s witness and 

discredited that of the buyer’s witness. Such credibility 

determinations “are entitled to the greatest deference from this 

court on appeal,” United States v. Broadie, 452 F.3d 875, 880 

(D.C. Cir. 2006) (internal quotation marks omitted), and the 

buyer has failed to provide any reason for us to second guess 

the trial court’s decision to credit the seller’s version of 

events. Given this, and given the district court’s thorough and 

careful analysis, we have no basis for upsetting its dismissal 

of the buyer’s specific enforcement action. 

For the reasons stated above, we affirm. 

So ordered. 

 

USCA Case #08-7123 Document #1213761 Filed: 11/03/2009 Page 11 of 11