Bender v. Allegra

ANDERSON, Circuit Judge, dissenting:
I respectfully disagree with the district court’s, and the majority’s, characterization
of the appellants’ motion as one to modify. I agree with appellants that their motion is
properly construed as one to enforce the settlement agreement. The agreement specified
that the price of appellants’ warrants would be adjusted depending upon the price of
Coram stock at a specified future date, which turned out to be June 5-- 9, 1995, and June
12-16, 1995 (the measuring period). Part and parcel of the settlement agreement was the
duty of good faith imposed by Georgia law. Appellants alleged, and in the posture of this
case we must assume their allegations to be true, that defendants at that relevant early
June time knew certain facts which meant that the price of Coram stock was grossly
inflated as of the crucial June 5-9 and June 12-16, 1995, measuring period. Assuming
appellants’ allegations to be true, as we must, defendants would have had a duty to
disclose such information to the public, and the price of Coram stock would have fallen
dramatically during the measuring period, rather than later in August when the
information was actually disclosed. More significantly, the settlement agreement as
supplemented by the Georgia law duty of good faith required disclosure of such
information to the appellants; and the duty of good faith was breached by defendants
when they concealed such information for the purpose of artificially inflating the price of
the stock during the measuring period. In other words, the defendants breached the
settlement agreement as written, including the duty of good faith which was part and
parcel thereof. Respectfully, I disagree with the conclusion of the district court, and the
majority, that appellants sought to modify the settlement agreement, rather than to
enforce same.
Having established that appellants’ effort is to enforce the settlement agreement, I
conclude that the district court had jurisdiction. The district court expressly retained
“continuing jurisdiction over ... (e) all parties hereto ... [for] the purpose of enforcing” the
settlement agreement. District Court’s May 19, 1995, Final Judgment and Order of
Dismissal at 8, ¶ 12. In Kokkonen v. Guardian Life Ins. Co. of America, 114 S.Ct. 1673,
1677 (1994), the Supreme Court held on the facts there that a district court did not have
jurisdiction to enforce a settlement agreement. However, the Supreme Court expressly
recognized that the district court would have had jurisdiction if it had retained jurisdiction
to enforce the agreement:
The situation would be quite different if the parties’ obligation to comply
with the terms of the settlement agreement had been made part of the order
of dismissal – either by separate provision (such as a provision “retaining
jurisdiction over the settlement agreement) .... In that event, a breach of the
agreement would be a violation of the order, and ancillary jurisdiction to
enforce the agreement would therefore exist.
Id. at 1677.
Accordingly, I dissent.