Does a trial court lose jurisdiction to enforce a settlement agreement after a case is dismissed by the parties? The Ohio Supreme Court recently answered this question, definitively providing an important Litigation Lesson for trial attorneys. Cincinnati Office Managing Attorney Daniel J. Donnellon discusses the decision in his latest “Litigation Lesson” video, which you can watch for free here.
About the Decision
As most trial lawyers know, over 95 percent of cases get resolved without going to trial, and the vast majority of those are resolved through a settlement agreement. Once a settlement agreement is signed, the lawyers will file a notice or stipulation of dismissal; the settlement agreement often includes duties and obligations that continue beyond the execution of the agreement itself.
So under what circumstances can the litigants return to the same judge who had familiarity with the case to enforce the terms of the settlement agreement? That’s the dispute decided by the Ohio Supreme Court in Infinite Security Solutions, L.L.C. v. Karam Properties II, Ltd.
Until the Ohio Supreme Court weighed in, district courts in Ohio were split between when a court retained jurisdiction to enforce a settlement agreement through a simple motion to enforce, or whether the litigants had to file an entire new action for breach of the settlement agreement.
The simple motion to enforce was obviously preferred by litigators, as the court who had familiarity with the underlying case could look at the settlement agreement and determine what obligations arose. Filing a new action would involve new court costs and delays associated with service of process, pleadings, and even discovery.
In late March 2015, the Ohio Supreme Court once and for all settled the determination. Unless the settlement agreement itself is incorporated into the notice of dismissal or stipulation of dismissal, or unless the language of the stipulation specifies that the Court retains jurisdiction to enforce the settlement, the Court lacks jurisdiction and the case must be filed anew as a breach of contract.
Litigation Lesson Takeaway
When filing a notice or stipulation of dismissal, oftentimes in business cases the settlement agreement cannot be attached to the notice because it contains confidentially terms. The solution is simply to add the language that the trial court retains jurisdiction to enforce the settlement agreement. Without that language, under the Infinite Solutions case, a whole new action is required to be filed. It’s as simple as that.
Perhaps the Ohio Supreme Court, who has control over the Ohio Civil Rules, can simply amend Rule 41, which addresses dismissal of action, to add in the language that, unless a stipulation or notice of dismissal reserves jurisdiction of the court, jurisdiction would be lost.
Until that time, Infinite Solutions provides us with a Litigation Lesson. If you are practicing in Ohio, make sure that language is included in your stipulation or notice of dismissal, providing the trial court the retention of jurisdiction. As a best practice outside of Ohio, specifying in the notice of stipulation that the Court will have jurisdiction will at least overcome those instances where a Court may question its ability to resolve the dispute once the action has been dismissed with prejudice.
Watch “Litigation Lesson: Preserving Jurisdiction after Dismissal”
Click here to view video.