Opinion ID: 1187678
Heading Depth: 2
Heading Rank: 1

Heading: The Circuit Court Lacked Subject Matter Jurisdiction to Hear OTS's Motion to Enforce Settlement After all Parties Stipulated to Dismiss all Claims and Parties with Prejudice.

Text: An appellate court reviews a circuit court's determination of an HRCP Rule 60 motion for an abuse of discretion. See Island Ins. Co., Inc. v. Santos, 86 Hawai`i 363, 366, 949 P.2d 203, 206 (App.1997) (citing Richardson v. Lane, 6 Haw.App. 614, 622, 736 P.2d 63, 69, cert. denied, 484 U.S. 953, 108 S.Ct. 345, 98 L.Ed.2d 371 (1987), reh'g denied, 484 U.S. 1037, 108 S.Ct. 764, 98 L.Ed.2d 781 (1988)). The existence of jurisdiction is a question of law that we review de novo under the right/wrong standard. Lester v. Rapp, 85 Hawai`i 238, 241, 942 P.2d 502, 505 (1997) (quoting State ex. rel . Bronster v. Yoshina, 84 Hawai`i 179, 183, 932 P.2d 316, 320 (1997)); see also State v. Ontiveros, 82 Hawai`i 446, 448, 923 P.2d 388, 390 (1996) (citation omitted). Questions regarding subject matter jurisdiction may be raised at any stage of a cause of action. See Waikiki Marketplace Inv. Co. v. Chair of Zoning Bd. of Appeals of the City and County of Honolulu, 86 Hawai`i 343, 348, 949 P.2d 183, 188 (App.1997) (citing Wong v. Wong, 79 Hawai`i 26, 29, 897 P.2d 953, 956 (1995)). When reviewing a case where the circuit court lacked subject matter jurisdiction, the appellate court retains jurisdiction, not on the merits, but for the purpose of correcting the error in jurisdiction. See id. A judgment rendered by a circuit court without subject matter jurisdiction is void. See id.
The dispositive issue in the instant appeal is whether the circuit court lacked jurisdiction to enforce an oral settlement, entered on the record before the circuit court, after all parties stipulated to dismiss with prejudice all claims and parties. Based upon the following, we hold that the circuit court lacked jurisdiction. In Gilmartin v. Abastillas, 10 Haw.App. 283, 869 P.2d 1346 (1994), the Intermediate Court of Appeals (ICA) addressed a substantially similar issue. Gilmartin involved an action for specific performance on an option to purchase a condominium unit. Just before trial, the parties negotiated a settlement agreement and read its terms into the record. Approximately one month later, they executed a release and settlement agreement that was neither approved by the circuit court nor incorporated into their stipulated dismissal. The parties stipulated to dismiss the matter with prejudice. A disagreement thereafter arose with respect to unpaid lease rent, interest, and maintenance fees; however, in order to complete the closing on the condominium unit, the parties agreed to settle the issue at a later date and to set aside a sum of money in escrow to cover the disputed sum. After further disagreement, Gilmartin moved the circuit court to enforce the specific terms of the settlement agreement and to award her the remaining escrow funds, plus attorneys' fees and costs. The circuit court summarily granted the motion. See id. at 285-86, 869 P.2d at 1348-49. Upon review, the ICA reversed the circuit court, stating that [a] dismissal of a lawsuit with prejudice is generally regarded as an adjudication on the merits of all issues that were raised or could have been raised in the pleadings, thus barring, on res judicata grounds, any subsequent litigation involving the same claims, Land v. Highway Constr. Co., 64 Haw. 545, 551, 645 P.2d 295, 299, recon. denied, 64 Haw. 688 (1982), and terminating the trial court's jurisdiction over the lawsuit. Hinsdale v. Farmers Nat'l Bank & Trust Co., 823 F.2d 993, 995 (6th Cir. 1987); McCall-Bey v. Franzen, 777 F.2d 1178, 1185 (7th Cir.1985). When an action is dismissed with prejudice as part of a settlement agreement which is subsequently breached, the trial court thereafter has no jurisdiction to enforce the settlement agreement unless a party to the agreement takes one of two courses of action. First, an independent action may be brought for specific performance of the settlement agreement. Hinsdale, 823 F.2d at 996; Musifilm, B.V. v. Spector, 568 F.Supp. 578, 581 (S.D.N.Y.1983); Brigando v. Republic Steel Corp., 180 Ill.App.3d 1016, 1021-22, 129 Ill.Dec. 728, 536 N.E.2d 778, 782, n. 1, cert. denied, 127 Ill.2d 612, 136 Ill.Dec. 581, 545 N.E.2d 105 (1989). Second, a motion to vacate the dismissal order and reopen the original proceedings may be filed. Unless the vacatur is first granted, however, no jurisdiction would exist in the court to enter any remedial orders in the case. Hinsdale, 823 F.2d at 996; McCall-Bey, 777 F.2d at 1186; Harman v. Pauley, 678 F.2d 479, 481 (4th Cir.1982); Kelly v. Greer, 334 F.2d 434, 436-37 (3d Cir.1964). Id. at 289-91, 869 P.2d at 1349-50 (emphasis added); accord Kokkonen v. Guardian Life Ins. Co. of America, 511 U.S. 375, 377, 381, 114 S.Ct. 1673, 128 L.Ed.2d 391 (1994) (holding that a district court lacked jurisdiction and did not have inherent authority to enforce settlement where parties stipulated to dismiss the matter with prejudice). We agree with and hereby adopt the ICA's reasoning. Because the parties in the instant case entered into a stipulation to dismiss with prejudice as to all parties and claims, which was filed on July 1, 1996, but no party either (1) moved to vacate the dismissal or (2) instituted a separate action for specific performance of the settlement, the circuit court lacked jurisdiction to enforce the oral settlement entered on the record. Consequently, the circuit court's August 26, 1997 order enforcing settlement is void. Therefore, the circuit court abused its discretion in denying Amantiad's September 16, 1997 HRCP Rule 60(b) motion to vacate the order granting OTS's motion to enforce settlement. On this basis alone, we reverse (1) the circuit court's December 16, 1997 order denying Amantiad's motion to vacate and (2) the circuit court's August 26, 1997 order enforcing settlement i.e., forcing Amantiad to sign the Amended Release Agreement or, in the alternative, invalidating the May 24, 1996 Agreement. However, inasmuch as Amantiad also properly raised the issue of the circuit court's subject matter jurisdiction over a wash of future workers' compensation benefits and the circuit apparently concluded that it retained said jurisdiction, we are compelled to address this issue.