Arizona Court of Appeals Division Two holds that superior courts have discretion to retain ancillary jurisdiction to enforce a settlement agreement as part of a stipulation of dismissal.

Plaintiff sued defendants, and they entered a settlement agreement.  The settlement agreement provided that defendants would make payments to the plaintiff and that if the defendants defaulted, the plaintiff could file a stipulation for entry of judgment and a form of judgment with the superior court.  The parties then filed a stipulation for dismissal with prejudice, while allowing the superior court to retain jurisdiction to adjudicate a default in payments under the settlement agreement.  The superior court refused to enter the order, claiming the requested relief was inconsistent with rules of civil procedure.  The defendants appealed, and the court of appeals dismissed for lack of jurisdiction, while recommending that the parties stipulate for a dismissal with prejudice without the language the superior court objected to and then appeal from that order.  The parties did this, and defendants appealed again.

The Court of Appeals reversed.  The Court noted that there was no Arizona case law, statute, or rule authorizing a superior court to retain jurisdiction to enforce a settlement agreement, and that authority from the federal courts and other states was split.  Examining authority on both sides of the issue, it concluded that the authority allowing superior courts to retain jurisdiction was more persuasive, and that the power to retain jurisdiction to enforce a settlement fit with the inherent or incidental powers of a court.  The Court of Appeals held that allowing superior courts to retain ancillary jurisdiction, in their discretion, would encourage settlement and provide a mechanism to easily enforce settlements.

Presiding Judge Eppich delivered the unanimous opinion of the court.  Vice Chief Judge Staring and Judge Brearcliffe joined.