Opinion ID: 3036326
Heading Depth: 2
Heading Rank: 2

Heading: retained jurisdiction over the

Text: SETTLEMENT AGREEMENT The district court affirmed the bankruptcy court’s order on a different theory, holding that when that court approved the settlement agreement between VFDA and Sea Hawk, it was thereby adopting the terms of the settlement agreement as part of its order. This, it held, was sufficient for it to have implicitly retained jurisdiction over that agreement. [3] Bankruptcy courts are courts of limited jurisdiction. Having concluded that there was no “related to” jurisdiction over this proceeding, we next consider whether the bankruptcy court had ancillary jurisdiction. Ancillary jurisdiction may rest on one of two bases: (1) to permit disposition by a single court of factually interdependent claims, and (2) to enable a court to vindicate its authority and effectuate its decrees. Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 379-80 (1994). Only the second basis is relevant in this case. Thus, the question here is whether the bankruptcy court’s jurisdiction over this proceeding is necessary in order to vindicate its authority or effectuate its decree. Where a settlement agreement led to the dismissal of a case, a court has jurisdiction to vindicate its authority or effectuate its decree if the court’s dismissal order explicitly retained jurisdiction or incorporated the terms of the settlement agreement. Id. at 381. Otherwise, enforcement of the settlement agreement is for state courts. Id. at 382. [4] Here, the bankruptcy court entered an order approving the settlement agreement and a second order dismissing the case, reciting the prior approval and stating that “[t]he conditions of the settlement hav[e] been fulfilled.” The orders neither “retain[ed] jurisdiction” over the settlement agreement nor incorporated “the parties’ obligation to comply with [its] terms.” Id. at 381. The State seeks to distinguish Kokkonen on two grounds. First, it argues that Kokkonen does not apply because the set1928 IN RE VALDEZ FISHERIES DEVELOPMENT ASSOC. tlement agreement here required and received the bankruptcy court’s approval. But Kokkonen specifically states that “[t]he judge’s mere awareness and approval of the terms of the set- tlement agreement do not suffice to make them part of his order.” Id. It noted that even in a dismissal under Federal Rule of Civil Procedure 41(a)(2), which requires a court order, enforcement of the settlement agreement is for state courts in the absence of a specific retention of jurisdiction or a condition requiring the parties’ compliance with the terms of the settlement agreement. Id. at 381-82; see also O’Connor v. Colvin, 70 F.3d 530, 532 (9th Cir. 1995) (stating that “even a district court’s expressed intention to retain jurisdiction is insufficient to confer jurisdiction if that intention is not expressed in the order of dismissal”); Hagestad v. Tragesser, 49 F.3d 1430, 1433 (9th Cir. 1995) (holding that even though the district court had announced that it would oversee the drafting of settlement papers and the construction and execution of the settlement, it had not retained jurisdiction). Next, the State argues that Kokkonen involved enforcement of a settlement agreement, while this proceeding is brought to interpret an agreement. It relies on dicta in two Ninth Circuit cases stating that a bankruptcy court “retains subject matter jurisdiction to interpret orders entered prior to dismissal of the underlying bankruptcy case.” In re Taylor, 884 F.2d 478, 481 (9th Cir. 1989) (citing In re Franklin, 802 F.2d 324, 32627 (9th Cir. 1986)). We need not decide the efficacy of these statements in light of the subsequent decision in Kokkonen. Suffice it to say that neither Franklin nor Taylor supports bankruptcy court jurisdiction over this proceeding. In Franklin, the court found that the bankruptcy court had “arising under” jurisdiction under 28 U.S.C.§ 1334(b) of a declaratory judgment action to determine the validity of a prior stay order issued by another bankruptcy judge. 802 F.2d at 326. In Tay- lor, the court held that the bankruptcy court lacked jurisdiction to grant relief from a stay order entered in a prior bankruptcy case that had been dismissed. 884 F.3d at 481. We find these cases not remotely apposite to the matter before us. IN RE VALDEZ FISHERIES DEVELOPMENT ASSOC. 1929 So far as the application of the Kokkonen principle is concerned, we find no relevant difference between a proceeding to enforce a settlement agreement and one to interpret it. [5] We have considered the other arguments advanced by the State and find them without merit. We conclude that because this proceeding between Sea Hawk and the State is not one to “vindicate the [court’s] authority” or to “effectuate its decree,” Kokkonen, 511 U.S. at 380, the bankruptcy court lacked jurisdiction.