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UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF NEW JERSEY

HOWARD JOHNSON 

INTERNATIONAL, INC.,

Plaintiff,

v.

RAY & RAJ, INC. and RAJENDRA B. 

PATEL,

Defendants.

Civ. No. 2:11-00730 (WJM)

OPINION

WILLIAM J. MARTINI, U.S.D.J.:

Plaintiff Howard Johnson International, Inc. (“Howard Johnson”) settled the 

above-captioned franchise dispute in 2011 and voluntarily dismissed its claims 

with prejudice. The settlement fell through. Howard Johnson now asks the Court 

to enter a consent judgment for the balance due under the settlement agreement. 

The Supreme Court’s decision in Kokkonen v. Guardian Life Ins. Co. of America, 

511 U.S. 375 (1994), allows, but does not require, the Court to exercise its 

diversity jurisdiction over this settlement dispute. For the foregoing reasons, the 

Court chooses to exercise its jurisdiction, and it will GRANT Howard Johnson’s

motion for entry of the consent judgment.

Roughly five months into this litigation, the parties entered into a 

confidential settlement agreement (the “Agreement”) providing for a series of 

installment payments. Couch Certification ¶¶ 4-5, ECF No. 10-1. The Agreement, 

which the Court has reviewed in camera, references a proposed consent judgment. 

That proposed consent judgment was signed by Defendants on July 7, 2011. Id. at 

Ex. A. The plan was that if Defendants missed an installment payment, Howard 

Johnson would add its signature and fill in the amount it was owed: $276,845.41 

less any monies already paid under the Agreement. With the proposed judgment in 

hand, Howard Johnson voluntarily dismissed its claims with prejudice, and the 

case was closed. ECF No. 7. 

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Months later, Defendants missed a payment, and Howard Johnson 

threatened to seek entry of the consent judgment if the installment was not

forwarded in short order. Couch Certification, Ex. B. Apparently, the threats went 

nowhere. Howard Johnson proceeded to sign the proposed judgment, fill in the 

amount it was owed under the Agreement, and file the instant motion. When it 

filled in the proposed judgment, Howard Johnson mistakenly wrote $74,345.41. 

Id. ¶ 4 n.1. Since Defendants had only paid $43,511.28, Howard Johnson was

actually owed $233,334.13 ($276,845.41 less $43,511.28). 

The Court begins its analysis with subject matter jurisdiction. Based on 

Kokkonen v. Guardian Life Insurance Co. of America, 511 U.S. 375 (1994), the 

Court concludes that it has jurisdiction. Kokkenen holds that “enforcement of [a]

settlement . . . 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. at 378. In Kokkenen, a plaintiff 

voluntarily dismissed its claims with prejudice after it entered into a settlement 

agreement. Unfortunately, “settled” is a relative term. One party alleged breach of 

the settlement agreement, and it asked the court to enforce the agreement; it did not 

ask the court to revisit the claims that were dismissed with prejudice. Id. The 

enforcement request might have appeared proper at the time, but it was not. As the 

Supreme Court explained, the district court lacked jurisdiction over the settlement 

dispute for three reasons. First, the district court lacked inherent authority to 

exercise jurisdiction. Id. at 380-81. Second, the district court did not have 

ancillary jurisdiction since (a) there was no “factual[] interdependen[ce]” between 

the settlement dispute and the underlying dispute, and (b) the settlement agreement 

was not incorporated into a court order. Id. at 380-82. Finally, the district court

lacked an independent basis for jurisdiction. Id. at 382. 

Kokkenen is explicit: in the absence of ancillary jurisdiction, courts may not

enforce settlement agreements without an “independent basis for jurisdiction.” But 

it is not explicit about whether lower courts possessing an independent basis for 

jurisdiction can, or must, exercise that jurisdiction. Some courts refuse to exercise 

their jurisdiction. They require plaintiffs to bring a new lawsuit for breach of the 

settlement agreement. See, e.g., Cross Media Mktg. Corp. v. Budget Mktg., Inc., 

319 F. Supp. 2d 482, 482-83 (S.D.N.Y. 2004). Others take the opposite approach. 

They consider the settlement dispute in the same case as the underlying dispute. 

See, e.g., Brown v. M/V “Global Link”, No. 1-8298, 2003 WL 22015439, at **1-2

(S.D.N.Y. Aug. 26, 2003). The Third Circuit has not ruled on the question.

This Court agrees with the United States Court of Appeals for the Seventh 

Circuit: “Kokkonen is about adjudicatory competence, not the number of filing fees 

a plaintiff must pay. As long as [an independent basis for jurisdiction] supplies 

authority to decide, the court may act without a fresh complaint.” Blue Cross & 

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Blue Shield Ass’n v. Am. Express Co., 467 F.3d 634, 638 (7th Cir. 2006). Where 

jurisdiction lies, and where it would be efficient to do so, courts should exercise 

their jurisdiction and adjudicate a settlement dispute without requiring the plaintiff 

to file a “fresh complaint.”

Here, the settlement dispute falls under the Court’s diversity jurisdiction 

because the parties are citizens of different states, Compl. ¶¶ 1-3, ECF No. 1, and 

the amount in controversy ($233,334.13) exceeds $75,000. See 28 U.S.C. §

1332(a). Basically, the Court only has to sign a proposed order to provide the 

requested relief. It would be inefficient to make Howard Johnson file a new 

complaint under a new docket number when this Court can resolve the dispute with 

little more than the stroke of a pen. The Court will sign the proposed judgment. 

Because Howard Johnson’s certification—which Defendants have chosen not to 

challenge—provides a “clear, precise, and convincing” explanation for why the 

$74,351.41 figure does not comport with the parties’ intent, the Court will also 

correct the scrivener’s error and enter judgment for $276,845.41. See Int’l Union 

v. Murata Erie North Am., Inc., 980 F.2d 889, 900 (3d Cir. 1992) (“Under the 

doctrine of the scrivener’s error, the mistake of a scrivener in drafting a document 

may be reformed based upon parol evidence, provided the evidence is ‘clear, 

precise, convincing and of the most satisfactory character’ that a mistake has 

occurred and that the mistake does not reflect the intent of the parties.”) (internal 

citation omitted).

Accordingly, the Court will exercise its jurisdiction, reform the proposed 

consent judgment to reflect an award of $233,334.13, and GRANT Howard 

Johnson’s unopposed motion. An appropriate order follows.

 /s/ William J. Martini 

 WILLIAM J. MARTINI, U.S.D.J.

 

Date: November 15, 2012

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