Seventh Circuit holds ruling to reverse attorney fees.

• Author: Ziemer, David

Byline: David Ziemer

A court can't retain jurisdiction over a settled case to ensure that the defendant pays its attorney fees, the Seventh Circuit held on Sept. 11.

Nathaniel S. Shapo brought suit in Illinois federal court against Clyde Engle, alleging RICO violations. Engle was represented by Foley & Lardner, LLP.

Several years into the case, the parties agreed to settle it, and advised the court. In February 2004 the court ordered the suit "dismissed, without prejudice and with leave to reinstate on or before the 'Execution Date.'"

The order provides that upon that completion date "the dismissal of the claims in this action shall be with prejudice and without leave to reinstate," except that the court "shall retain jurisdiction to enforce the terms of the Parties' settlement and the Parties agree to this Court's jurisdiction."

Six months later, Foley & Lardner moved the district court to order Engle to pay the firm money that he owed it under a "Master Payment Agreement" that they had made at the time of the settlement. The agreement required Engle to pay the firm $100,000 every three months for three years.

The court issued the order requested by Foley & Lardner, directing Engle to pay the firm $200,000 plus interest, and later issued a similar order directing him to pay a third installment of $100,000.

The judge based jurisdiction to issue the orders on her having retained jurisdiction to enforce the terms of the settlement, although the "Master Payment Agreement" was a discrete agreement.

Engle appealed, and the Seventh Circuit vacated the orders in a decision by Judge Richard Posner.

The court began by criticizing the practice of "dismissing suits before they're really over," opining, "It is a potent source of confusion with no redeeming virtues in a case such as this in which the ripening depends on conditions."

The court called the case a "concrete example" of such...