In the

United States Court of Appeals

For the Seventh Circuit

____________

No. 04-3080

JOHN A. HILL and SUSAN M. HILL,

Plaintiffs-Appellees,

v.

BAXTER HEALTHCARE CORPORATION,

FUJISAWA USA, INC., AMERICAN

PHARMACEUTICAL PARTNERS, INC., et al.,

Defendants-Appellees.

APPEAL OF: NEAL LEWIS

____________

Appeal from the United States District Court for

the Northern District of Illinois, Eastern Division.

No. 01 C 9315—Rebecca R. Pallmeyer, Judge.

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ARGUED FEBRUARY 10, 2005—DECIDED APRIL 21, 2005

____________

Before MANION, EVANS, and SYKES, Circuit Judges.

EVANS, Circuit Judge. This appeal concerns whether a

federal trial judge had the authority to resolve an attorney

lien dispute after the underlying case settled. In December

of 2001, Indiana residents John Hill and wife Susan filed a

diversity action in federal district court against manufac-
2 No. 04-3080

turers of the drug Heparin. Their complaint alleged that

Mr. Hill’s use of Heparin following bypass surgery caused

the loss of three limbs. The suit was filed by a Chicago

attorney, David Fitzpatrick, only a week after the plaintiffs

fired Neal Lewis, an attorney from Orland, Indiana. Lewis

did not participate in the lawsuit.

In November of 2003, Lewis filed a lien action in Indiana

state court seeking a share of any settlement or damages

awarded in the plaintiffs’ federal lawsuit. Lewis alleged in

his complaint that the Hills’ decision to dump him as counsel

constituted a breach of contract and that Fitzpatrick tortiously interfered with their pact in wresting control over

the case. Lewis contends that he put in 18 months of work

on the case and deserves a piece of the pie.

The parties in the federal litigation reached settlements

in June of 2004. On June 29, Judge Pallmeyer approved the

settlement agreements and dismissed all of plaintiffs’

claims with prejudice, noting that the case was “fully and

finally resolved.” Her order did not incorporate the settlement agreements nor did it expressly retain jurisdiction to

enforce them.

Despite these settlements, the proceedings were far from

over. On July 5, Lewis faxed to the defendants a notice of

his attorney’s lien, along with a request asking them to withhold payment of the settlement funds until the Indiana

proceeding regarding his claim was resolved. On July 8, the

plaintiffs filed a “petition to quash and/or adjudicate attorney’s lien,” arguing that the lien should be quashed because

Lewis failed to comply with the Illinois Attorneys Lien Act,

770 ILCS 5/1 (2004). The plaintiffs did not identify any

authority for the district court to consider this request. The

plaintiffs did provide Lewis with notice of the petition but

did not serve him with a summons or seek to have him

added as a party to the now-dismissed federal lawsuit. The
No. 04-3080 3

next day, back in Indiana state court, Lewis sought leave to

file an amended complaint in order to add the settling drug

companies as defendants in that action.

On July 15, the district court granted the plaintiffs’

petition to quash the lien:

Mr. Lewis having filed no objection to the motion, it is

granted. All Defendants other than Fujisawa are directed to pay settlement proceeds to the court pursuant

to an order to be drafted by counsel. Plaintiff acknowledges that Fujisawa has paid its portion of the settlement in full. The court will retain jurisdiction for

purposes of distribution. Notice of liens received by

Fujisawa after the date of its payment to Plaintiff are

hereby declared void.

That is all the order said. The court did not specify its

authority for entering such an order.

On July 23, Lewis asked for leave to file a “non-party

motion to dismiss petition and vacate order.” Lewis asserted

that the district court acted without subject matter and

personal jurisdiction in granting the plaintiffs’ petition to

quash the attorney’s lien. On July 26, the plaintiffs countered by filing a motion asking Judge Pallmeyer to halt the

Indiana lien proceeding. Their request sought injunctive

relief in the form of

an order Enjoining and Restraining Mr. Neal Lewis,

pursuant to the All Writs Act, 28 U.S.C. § 1651(a) from

commencing any action or proceeding of any kind relative to his claimed lien interest against the defendant

pharmaceutical companies, and further enjoining and

restraining the Porter County, Indiana state court from

accepting any action or proceeding of any kind from Mr.

Neal Lewis relative to his claimed lien interest against

the defendant pharmaceutical companies . . . .

On August 3, Lewis filed another motion, this time asking

to be joined as an indispensable party under Federal Rule
4 No. 04-3080

of Civil Procedure 19(b). He also asked the district court to

declare its July 15 order void because it was entered without

jurisdiction, see Fed. R. Civ. P. 60(b)(4), and to dismiss the

plaintiffs’ original petition because the court did not have

subject matter jurisdiction over the lien dispute.

On August 6, the district court conducted a hearing on

Lewis’s motions filed on July 23 and August 3, as well as

the plaintiffs’ July 26 request for injunctive relief. Later

that day, the court issued three summary orders, ruling

against Lewis on every front. The court also asked the

parties to collaborate and draft a detailed order granting

the plaintiffs’ request for injunctive relief. But the parties

could not agree to language, and on August 10, the plaintiffs

submitted a proposed order on their own. On August 11,

Lewis filed a submission explaining that he could not agree

with the proposed order drafted by the plaintiffs because it

would effectively extinguish his ability to pursue his lien

claim. That same day, Lewis filed a notice of appeal, specifying the three August 6 orders as those being appealed.

On August 12, the district court, citing as authority the

All Writs Act, 28 U.S.C. § 1651, issued an order enjoining

Lewis from pursing his lien claim and the Indiana state

court from adjudicating it. Furthermore, it explicitly retained jurisdiction to distribute the settlement funds.

On appeal, Lewis argues that the district court acted

without jurisdiction when it entered its orders on July 15,

August 6, and August 12 relating to his asserted lien, and

that it erred by denying his motion for relief from judgment

under Rule 60(b)(4). Although we generally review Rule 60(b)

decisions for abuse of discretion, we review challenges to

Rule 60(b)(4) decisions de novo to the extent they turn on

errors of law. In re Hanson, 397 F.3d 482, 484 (7th Cir.

2005). Lewis argues that the case was over on June 29 and

that the court’s later orders are void. He is correct. The case

ended when Judge Pallmeyer dismissed the case with pre-
No. 04-3080 5

judice, which, in her own words, rendered the dispute “finally

and fully resolved.” Despite this language, however, the court

continued to preside over the case, resolving Lewis’s lien

and taking hold of the settlement funds. But a case that is

dismissed with prejudice is unconditional; therefore, it’s

over and federal jurisdiction is terminated. See Jessup v.

Luther, 277 F.3d 926, 929 (7th Cir. 2002); McCall-Bey v.

Franzen, 777 F.2d 1178, 1190 (7th Cir. 1985). Thus, the court

erred by denying Lewis’s motion to vacate under Rule 60(b)(4)

because its orders entered on July 15, August 6, and August

12 are void for lack of jurisdiction. See Marques v. Fed.

Reserve Bank of Chi., 286 F.3d 1014, 1018 (7th Cir. 2002)

(judgment entered without subject matter jurisdiction is

void).

The plaintiffs disagree and make three arguments to justify the district court’s actions. First, they argue that the

case really wasn’t over on June 29 because they filed a timely

motion for reconsideration under Federal Rule of Civil

Procedure 59(e). Indeed, the filing of a proper motion to alter

or amend a judgment under that rule would have permitted

further proceedings. See Romo v. Gulf Stream Coach, Inc.,

250 F.3d 1119, 1121 n.3 (7th Cir. 2001). But the plaintiffs’

petition to quash the lien did not come under the scope of

Rule 59(e), as it did not in any way seek to reconsider and

revise the June 29 decision. See Curry v. United States, 307

F.3d 664, 666 (7th Cir. 2002); see also White v. N.H. Dep’t of

Employment Sec., 455 U.S. 445, 451 (1982) (request for

attorneys fees under 42 U.S.C. § 1988 raises issues collateral to the judgment and may not be characterized as a

Rule 59(e) request); Lentomyynti Oy v. Medivac, Inc., 997

F.2d 364, 367 (7th Cir. 1993).

Next, the plaintiffs argue that the district court had supplemental jurisdiction to resolve the lien dispute, 28 U.S.C.

§ 1367, as the lien action was a direct assault on the settlement agreement itself. Courts do not automatically have

supplemental jurisdiction over any agreement that has as
6 No. 04-3080

part of its consideration the dismissal of a federal case, but

may retain the power to protect and enforce their judgments.

Kokkonen v. Guardian Life Ins. Co., 511 U.S. 375, 380 (1994);

Lucille v. City of Chicago, 31 F.3d 546, 548 (7th Cir. 1994).

“Thus if the judgment explicitly incorporates the settlement,

or reserves authority to enforce the settlement, the court

possesses ancillary jurisdiction.” Lucille, 31 F.3d at 548

(citing Kokkonen, 511 U.S. at 381-82); see also Goulding v.

Global Med. Prods. Holdings, Inc., 394 F.3d 466, 468 (7th

Cir. 2005). Judge Pallmeyer’s order did neither:

The Court, having reviewed the stipulation of dismissal . . . finds that all claims asserted by Plaintiffs against

the above-named Defendants have been fully and finally resolved through separate settlement agreements

with each of the respective Defendants, and that all claims

asserted against the named Defendants in this lawsuit

are hereby dismissed with prejudice. The Court further

finds, as stipulated by the parties through their respective undersigned counsel, that each of the settlement

agreements reached between Plaintiffs and

Defendants . . . was the result of arms-length negotiations conducted in good faith; that the agreed-upon

consideration and the releases and settlement agreements between Plaintiffs and each of the Defendants, respectively, constitute fair, reasonable and good faith

settlements . . .; and that each such settlement should

operate as a bar to the bringing of any actions for

contribution and/or indemnification against any of the

above-named Defendants by any person or party or

tortfeasor arising out of Plaintiffs’ claimed injuries and

causes of action.

The court did not expressly retain jurisdiction, nor did it

make the terms of the settlement agreements part of its

judgment, which would have rendered a violation of the

agreement a violation of a court order. This is in contrast to
No. 04-3080 7

1 The parties also debate whether the district court had personal

jurisdiction over Lewis, but we need not resolve this issue in light

of our determination that it lacked subject matter jurisdiction over

the lien dispute.

the court’s later order of July 15, which stated explicitly

that “the court will retain jurisdiction for purposes of distribution.” But that element was lacking in the June 29

order and therefore the court could not exercise supplemental jurisdiction over the lien dispute.

Finally, the plaintiffs contend that the district court

was authorized to resolve the lien dispute by virtue of the

All Writs Act, which authorizes federal courts to “issue all

writs necessary or appropriate in aid of their respective

jurisdictions and agreeable to the usages and principles of

law.” 28 U.S.C. § 1651(a); In re Campbell, 264 F.3d 730, 731

(7th Cir. 2001). But the All Writs Act does not itself create

jurisdiction, it merely confers supplemental jurisdiction

where jurisdiction already exists. Syngenta Crop Prot., Inc.

v. Henson, 537 U.S. 28, 33 (2002); Campbell, 264 F.3d at

731. The district court therefore needed an independent

basis of federal jurisdiction in order to consider the plaintiffs’ motion to quash the lien. But there is none. The

plaintiffs’ original suit triggered diversity jurisdiction, but

their request to quash the lien did not. The plaintiffs and

Lewis all hail from Indiana and are nondiverse, see 28

U.S.C. § 1332, and the lien dispute is a matter of state law

that does not involve a federal question, see Commercial

Nat’l Bank of Chi. v. Demos, 18 F.3d 485, 489 (7th Cir.

1994).1

Accordingly, the district court’s orders issued on July 15,

August 6, and August 12 are VACATED, and the case is
8 No. 04-3080

2 The dispute, at this point, only involves the Hills, the obvious

and unquestioned interests of attorney Fitzgerald in receiving his

attorney’s fees, and the interest, if any, of attorney Lewis to receive some attorney’s fees out of the settlement proceeds. The

defendants have no dog in this fight. We trust that the district

judge, in consultation with the interested parties, will appropriately answer the question of what to do with the proceeds of the

settlement that were paid in to the court while the interests,

again if any, of attorney Lewis are determined. The defendants

deserve to be excused from any further participation in this case,

and we trust that an appropriate order (or better yet, an agreement between the interested parties) to that effect will be entered.

USCA-02-C-0072—4-21-05

REMANDED2 with instructions for the court to dismiss the

plaintiffs’ requests to quash the lien. Costs are awarded to

Mr. Lewis.

A true Copy:

Teste: 

 ________________________________

Clerk of the United States Court of

Appeals for the Seventh Circuit