Opinion ID: 1861206
Heading Depth: 1
Heading Rank: 5

Heading: Jurisdiction of the Federal Court

Text: Pilié avers that the federal court judgment should not be given preclusive effect because the federal court lacked jurisdiction, but it does not present any real argument or explanation. In our opinion, this contention is without merit. Pilié waived any objection to personal jurisdiction by appearing in the New York proceedings. Insurance Corp. of Ireland v. Compagnie de Bauxites de Guinee, 456 U.S. 694, 102 S.Ct. 2099, 72 L.Ed.2d 492 (1982); McDonald v. Mabee, 243 U.S. 90, 37 S.Ct. 343, 61 L.Ed. 608 (1917). Furthermore, Pilié raised the jurisdictional issue in its federal court pleadings and the court implicitly rejected it. If a party appears and contests a court's jurisdiction, the court has the power to decide the jurisdictional issue. Its determination may be reviewed only by appeal, and the judgment may not be collaterally attacked. Pilié did not appeal. In this situation, the jurisdiction issue itself is res judicata, and the prior judgment is entitled to full faith and credit. Durfee v. Duke, 375 U.S. 106, 84 S.Ct. 242, 11 L.Ed.2d 186 (1963); Stoll v. Gottlieb, supra; Davis v. Davis, 305 U.S. 32, 59 S.Ct. 3, 83 L.Ed. 26 (1938); see also 1B Moore's Federal Practice, supra, ¶ 0.405, at 209-10. Even if Pilié had not waived its right to contest subject-matter jurisdiction, the contention would be without merit because the federal court clearly had jurisdiction. It is well settled that a federal court may resolve controversies over attorneys' fees when the dispute arises from litigation before it, under both the court's ancillary jurisdiction and its inherent power to regulate attorneys who practice before it. See, e.g., Cluett, Peabody & Co. v. CPC Acquisition Co., 863 F.2d 251 (2d Cir.1988); Pay Television of Greater New York, Inc. v. Sheridan, 766 F.2d 92 (2d Cir.1985); American Federation of Tobacco-Growers v. Allen, 186 F.2d 590 (4th Cir.1951); Iowa v. Union Asphalt & Roadoils, Inc., 409 F.2d 1239 (8th Cir.1969); Jenkins v. Weinshienk, 670 F.2d 915 (10th Cir.1982). This jurisdiction continues even after the original dispute has gone to judgment or been settled. Novinger v. E.I. DuPont de Nemours & Co., 809 F.2d 212 (3d Cir.), cert. denied, 481 U.S. 1069, 107 S.Ct. 2462, 95 L.Ed.2d 871 (1987); Sherrier v. Richard, 600 F.Supp. 527 (S.D.N.Y.1984). In addition, where the dispute concerns fees to be paid out of proceeds of the litigation, the court's ancillary jurisdiction arises from its authority to control the distribution of those proceeds. See, e.g., Grimes v. Chrysler Motors Corp., 565 F.2d 841 (2d Cir.1977). Pilié and Metz entered into the contingent fee contract in order to bring the New York litigation. As part of the same transaction, Metz agreed to pay Pilié for other legal services with an additional fee to be paid out of Metz's personal injury recovery from that litigation. The dispute over the amount of attorneys' fees owed by Metz thus arose out of the New York litigation, and the federal court had subject matter jurisdiction to decide the issues presented both under its inherent power to control the fees of attorneys practicing before it and under its ancillary jurisdiction. Because the dispute concerned the distribution of the settlement proceeds, the court also had the power to dispose of the questions by virtue of its control over the distribution of the proceeds.