Memorandum of Decision Re: Breach of Settlement Agreement

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Judge's Decisions
UNITED STATES BANKRUPTCY COURT
NORTHERN DISTRICT OF CALIFORNIA
In re MARY GODEK HALL,                                           No. 96-12904      Debtor(s). ______________________________________/ MICHAEL STEVEN SMITH,      Plaintiff(s),    v.                                                                              A.P. No. 96-1335 MARY GODEK HALL,      Defendant(s). _______________________________________/
Memorandum of Decision
     On July 31, 1997, plaintiff Michael Smith and defendant Mary Hall entered into a settlement of this adversary proceeding. Under the terms of the settlement, a large nondischargeable judgment would be entered against Hall, but no action would be taken to enforce the judgment so long as Hall made certain payments. The judgment was entered on September 30, 1997.      Hall did not make all the payments as agreed, and Smith began enforcing the judgment. On December 31, 1998, Hall moved the court for relief from entry of the judgment and a stay of its execution, arguing that she has substantially complied with the terms of the settlement and that Smith has waived his right to declare Hall in breach of the settlement agreement by accepting payments from her.      The motion states no grounds whatsoever justifying vacation of the judgment. The "excusable neglect" cited by Hall has to do with payments under the settlement agreement, not entry of the judgment itself, and in any event her motion was filed more than one year after entry of the judgment.      The crux of the motion is that under the terms of a 16-page settlement agreement, which was not even made part of the record in this case until 15 months after entry of judgment, Smith is not entitled to enforce the judgment. This is a state contract law dispute, and has nothing to do with the judgment itself or federal bankruptcy law.      Smith argues that this court has no jurisdiction over this motion, citing In re Hunter, 66 F.3d 1002 (9th Cir. 1995). However, that case dealt with an independent action, not a motion brought under FRCP 60. The court has jurisdiction to hear the motion, but sees no reason why it should rule on most of the issues it raises. Neither the rights of the bankruptcy estate nor the debtor's discharge rights are at issue. If the same issues had been raised by independent action, under Hunter the court could not hear it. The court will accordingly abstain from hearing the contract issues pursuant to 28 U.S.C. § 1334(c)(1).      For the foregoing reasons, the court will order as follows:
     1. Insofar as the motion seeks relief under FRCP 60(b)(1), it will be denied with prejudice.
     2. Insofar as the motion seeks a determination of Hall's rights under the settlement agreement, the motion will be denied without prejudice to proceedings in state court. Counsel for Smith shall submit an appropriate form of order.
Dated: January 31, 1999                                                                              ____________________________                                                                                                                      Alan Jaroslovsky                                                                                                                      United States Bankruptcy