United States District Court, Central District of Illinois, Peoria Division
November 23, 1987
LEE BUCHBINDER, PLAINTIFF,
WEISSER COMPANIES, INC., WEISSER OPTICAL COMPANY, WEISSER OPTICAL COMPANY-SPRINGFIELD, WEISSER UNION OPTICAL COMPANY, B & P INVESTMENTS, INC., JOLIET OPTICAL COMPANY, MEDICARE OPTICS & OPTICAL COMPANY, NEU OPTICAL COMPANY, DEFENDANTS.
The opinion of the court was delivered by: Mihm, District Judge.
This case is before the Court on the Motions of Plaintiff to
enforce the settlement and to join party. The issue on these
Motions is whether the Court should enforce an alleged oral
settlement agreement between the parties, where the settlement
agreement encompasses both state law and federal law causes of
actions. The Court finds that it should not. After reviewing
the briefs and affidavits submitted by the parties, and
hearing oral arguments, the Court submits the following
findings of fact and conclusions of law pursuant to Rule 52(a)
of the Federal Rules of Civil Procedure.
FINDINGS OF FACT
1. Plaintiff, Lee Buchbinder (hereinafter "Buchbinder"), was
formerly employed by one or more of the corporate Defendants.
Subsequent to the termination of his employment in 1985, he
filed several pieces of litigation. In the instant action, he
alleges that he was discharged on the basis of his age, in
violation of the Age Discrimination in Employment Act,
29 U.S.C. § 621 et seq. Local 536 of the United Food and
Commercial Workers Union, of which Buchbinder is a member, also
filed a lawsuit in this Court seeking enforcement of an
arbitrator's decision which had reinstated Buchbinder to
2. Buchbinder also filed an action in Illinois state court,
seeking recovery for an alleged breach of a written contract
of employment between Buchbinder and Weisser Optical Company
and Weisser Companies, Inc.
3. Phillip Hirsch (hereinafter "Hirsch"), president of the
corporate Defendants, had not been named a party to any of
this litigation prior to June 8, 1987, when the Tenth Circuit
Court of Illinois allowed Buchbinder to amend his complaint to
allege an intentional interference with the contract of
employment by Hirsch.
4. From May until December of 1986, Buchbinder's counsel and
counsel for Defendants had continuing discussions concerning
potential settlement of the three actions filed by Buchbinder.
The substantive provisions which were negotiated during these
discussions were reported at each step by defense counsel to
Defendants' principal, Hirsch.
5. On December 8, 1986, this Court was advised by counsel
for the parties that this matter had been settled.
6. On January 23, 1987, Buchbinder's counsel tendered a
written agreement to Defendants' attorney for the signature of
Phillip Hirsch. Defendants' attorney made minor,
non-substantive modifications to the agreement.
7. According to the settlement agreement, all three court
cases were to be settled for one lump settlement amount, with
no apportionment among the various underlying claims.
8. On February 17, 1987, Defendants' attorney advised
Plaintiff's counsel that Hirsch refused to execute the
9. In response to Hirsch's refusal to sign the settlement
agreement, Buchbinder filed a Motion to Enforce the Settlement
Agreement, in the form proposed by his counsel on January 23,
1987, and filed a related Motion to Join Hirsch, in his
individual capacity, as a party Defendant. The basis of the
Motion to Join Hirsch as a party Defendant was that he had
allegedly agreed to personally guarantee the settlement
CONCLUSIONS OF LAW
1. The dispositive issue in this case is whether this Court
lacks subject matter jurisdiction over Buchbinder's state
court claim. While it is well-established that a
federal court may enforce a settlement reached in an action
pending before it, this principle only applies if the
underlying substantive rights of the parties are created by
federal law or are ancillary to the federal claims. U.S. ex
rel. Great Lakes Plumbing v. Orr Construction Co., 560 F.2d 765
(7th Cir. 1977).
2. A settlement agreement is a contract, Air Line Stewards
and Stewardesses Association v. Trans World Airlines, Inc.,
713 F.2d 319, 321 (7th Cir. 1983), and may fall within the federal
court's jurisdiction if there is either diversity of
citizenship between the parties or a federal question involved.
That is, a settlement agreement requires an independent basis
of federal jurisdiction to be enforceable in federal, rather
than state, court. McCall-Bey v. Franzen, 777 F.2d 1178, 1185
(7th Cir. 1985).
3. While Buchbinder concedes that this Court would have no
original jurisdiction over the state law breach of contract
claim, he contends that this claim is pendent to his federal
claims. The Court disagrees. The claims raised in the state
court breach of contract action are not directly related to
the termination of Buchbinder's employment, but, rather,
pertain to additional wages allegedly due to Buchbinder
throughout much of his employment, and accruing as early as
1971. In short, the contract claims and the federal claims do
not arise out of a "common nucleus of operative facts," for
the latter claims are based upon Buchbinder's termination. For
this reason, the Court finds that there is no basis to invoke
the doctrine of pendent jurisdiction with respect to
Buchbinder's state law claims.
4. Buchbinder claims that the case of Southmark Properties v.
Charles House Corp., 742 F.2d 862 (5th Cir. 1984), supports his
position. In that case, Southmark bought certain real property
in the course of a Chapter 10 bankruptcy reorganization
proceeding. Subsequently, Charles House Corporation, the former
owner of the property, filed suit in Louisiana state court
seeking, among other things, money damages in an amount equal
to all the rents, profits, and income derived from the property
that Southmark had purchased. Southmark then filed suit in the
United States District Court for the Eastern District of
Louisiana, pursuant to the Declaratory Judgment Act, 28 U.S.C. § 2201,
et seq., requesting an order declaring that Southmark's
purchase of the property and the reorganization sale were valid
and that Charles House Corporation had no valid claims against
Southmark arising out of the reorganization sale. Southmark
also requested the federal court to enjoin any further state
court actions by Southmark based upon the reorganization sale.
The district court issued both declaratory judgment and the
injunction. On appeal, Charles House argued that the district
court lacked jurisdiction over Southmark's action, to which the
court of appeals responded that "a district court possesses
ancillary jurisdiction to secure or preserve the fruits and
advantages of a judgment or decree rendered by that court." The
court of appeals observed that Charles House's state court
action sought, in effect, to nullify the results of the
5. Southmark Properties is distinguishable from this case.
There, the district court clearly had jurisdiction over
Southmark's lawsuit, because it was filed pursuant to the
Declaratory Judgment Act and also because Southmark sought to
enforce a decree of the federal bankruptcy referee. Moreover,
the central issue in this case, the enforceability of
settlement agreements, was not specifically addressed by the
court in Southmark Properties.
6. The federal courts are courts of limited jurisdiction.
Because it is Buchbinder that seeks to invoke this Court's
jurisdiction, he bears the burden of establishing that
jurisdiction. The Court finds that he has not done so. Because
the alleged settlement agreement provided for one lump sum
payment as to all three of Buchbinder's claims, the agreement
is not severable, and must be enforced either in its entirety
or not at all. Since this Court does not have subject matter
jurisdiction over the portion of the settlement agreement
dealing with Buchbinder's state law
cause of action, it is impossible for this Court to enforce
the entire agreement. Consequently, the Court DENIES
Buchbinder's Motion to Enforce the settlement agreement.
7. In light of this disposition of the Motion to Enforce the
settlement agreement, no discussion of the parties' other
arguments as to the issue of enforcement of the settlement
agreement is necessary.
8. There is no basis to add Hirsch as a party Defendant
except on the basis of the settlement agreement. Because the
Court finds that it lacks jurisdiction to enforce that
agreement, the Motion to Join Hirsch is DENIED.
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