Fairfax Countywide Citizens Association, Gum Springs Civicassociation, Springdale Civic Association, Cooktown Citizensassociation, William L. and Jeanne G. Paige, Ulysses O. Andada M. Scott, Roy and Evelyn A. Brent, Earnest W. Andmargaret E. Gibson, Appellees, v. County of Fairfax, Virginia, Joseph Alexander, Mrs. Marthav. Pennino, John Herrity, Alan H. Magazine, Mrs. Audreymoore, James M. Scott, Marie B. Travesky, John P.schacochis, Warren I. Cikins, Individually and Members,county of Fairfax Board of Supervisors, Appellants.fairfax Countywide Citizens Association, Gum Springs Civicassociation, Springdale Civic Association, Williaml. and Jeanne G. Paige, Ulysses O. Andada M. Scott, Roy and Evelyna. Brent, Appellants, v. County of Fairfax, Virginia, Joseph Alexander, Mrs. Marthav. Pennino, John Herrity, Alan H. Magazine, Mrs. Audreymoore, James M. Scott, Marie B. Travesky, John P.schacochis, Warren I. Cikins, Individually and Members,county of Fairfax Board of Supervisors, and Douglas B.fugate, Individually, and As Virginia State Highwaycommissioner, Appellees, 571 F.2d 1299 (4th Cir. 1978)

The County of Fairfax, Virginia (County) appeals from an order of the district court directing County to perform its remaining obligations under a 1972 settlement agreement between it and Fairfax Countywide Citizens Association (Association). Because we conclude that the district court lacked jurisdiction to issue the order, we reverse.¹ 

In August 1971, several citizens associations located in Fairfax County, Virginia, and six individuals, filed suit in the district court alleging racial discrimination in the delivery of public services in violation of 42 U.S.C. §§ 1981, 1983 and the Equal Protection Clause of the Fourteenth Amendment. Specifically, plaintiffs claimed that a disproportionate number of unpaved and substandard roads in Fairfax County were located in predominantly black neighborhoods. Plaintiffs prayed a mandatory injunction compelling County to pave and upgrade the roads in question, including the construction of adequate drainage facilities, curbs, gutters and sidewalks.²  In addition to naming County and certain of its officials as defendants to the action, plaintiffs also joined Douglas B. Fugate, the Virginia State Highway Commissioner and chief administrator of the Virginia Highway System. Following a denial of defendants' motions to dismiss, the case was set for trial on June 1, 1972.

On May 31, 1972, following extensive pretrial discovery, plaintiffs entered into two separate settlement agreements. The first, between plaintiffs and defendant Fugate, required the Commonwealth to upgrade six streets located in black neighborhoods in Fairfax County. These streets were already part of the Virginia secondary highway system³  and, therefore, within the jurisdiction of the State Highway Department.⁴  The second settlement agreement, between plaintiffs and County, required County to upgrade seventy-six additional roads in black neighborhoods within a three-year period. None of these roads was, at the time of the agreement, included in the Virginia secondary highway system. County, however, promised to "make every effort to have the . . . streets, when improved, taken into the State Highway System." If these efforts proved unsuccessful, County nonetheless recognized a "continuing responsibility to maintain these streets in a fair and equitable manner."

After securing these agreements, plaintiffs moved for dismissal of their claims against State and County. The motion was granted and three dismissal orders, each naming different defendants, were entered on June 1, 1972. The orders each recited that on plaintiffs' motion, and with defendants' consent, the case was dismissed. While Associations' later motion alleged that the settlement agreements were filed in open court (the docket entries do not so recite and the clerk's file does not contain them), the orders themselves did not mention that the parties had entered into settlement agreements; and they neither approved nor incorporated either settlement agreement.

Thereafter, the Commonwealth substantially performed its obligations under the settlement agreement. County likewise commenced performance of its obligations and, in the ensuing three years, upgraded twenty-five roads in black neighborhoods. In 1975, after certain black residents not party to the settlement agreement obtained a permanent injunction preventing County from upgrading one of the subject roads, County reviewed its obligations and determined that the settlement agreement was, at least in part, void as contrary to state law. Following this determination, County's Board of Supervisors passed a resolution, dated April 28, 1975, repudiating the settlement agreement.⁵ 

On August 5, 1975, plaintiffs moved the district court to vacate the dismissal order of June 1, 1972. Plaintiffs did not pray reinstatement of their law suit and an opportunity to try it. Rather, they prayed enforcement of the settlement agreements and, if state law prohibited County's performance, a declaration of the invalidity of the various statutes, regulations and administrative rulings pertaining to the Virginia State Highway System which purportedly prohibited such performance. On January 30, 1976, under authority of Rule 60(b) (6), F.R.Civ.P., the district court vacated its previous order of dismissal; and, on November 26, 1976, it entered an order directing County to upgrade the forty-three roads still in controversy.⁶ 

Neither in the proceedings in the district court nor in its initial brief filed with this court, did County challenge the jurisdiction of the district court to resolve what had become essentially a contract dispute between the parties. Because it appeared to us that, at the time enforcement was sought by Association, it was possible that federal subject-matter jurisdiction was lacking, we requested that the jurisdictional issue be briefed and argued. Upon consideration of the various arguments advanced and authorities cited, we conclude that this issue is indeed dispositive and that the district court lacked jurisdiction to enter an enforcement order.

As the sole authority supporting the district court's exercise of federal jurisdiction to enforce the settlement agreement, Association cites Aro Corp. v. Allied Witan Co., 531 F.2d 1368 (6 Cir.), cert. denied, 429 U.S. 862, 97 S. Ct. 165, 50 L. Ed. 2d 140 (1976), a case arising on facts virtually indistinguishable from those in the case at bar.

In the Aro case, Aro Corporation had originally filed an action for patent infringement against Allied Witan Company (Allied) under 28 U.S.C. § 1338. Prior to trial, Aro and Allied settled their dispute by means of a licensing agreement, and by stipulation of the parties, the complaint was dismissed. Six weeks later, Allied breached the agreement by refusing to tender the initial royalty payment. Aro thereupon filed a motion under Rule 60(b) (6), F.R.Civ.P., praying both that the district court vacate its prior dismissal order and that Allied be compelled to perform its obligations under the licensing agreement. Defendant challenged the district court's jurisdiction to grant the relief sought; but the district court ruled that it had the requisite subject-matter jurisdiction, 65 F.R.D. 513 (N.D. Ohio 1975), and the Sixth Circuit affirmed, holding first that defendant's repudiation of the settlement agreement constituted "full justification" under Rule 60(b) (6) for reopening the proceedings; and second, that the district court was empowered to enforce the settlement agreement notwithstanding the lack of diversity of citizenship between the parties. 531 F.2d at 1371.

We are in agreement with the Sixth Circuit that, upon repudiation of a settlement agreement which had terminated litigation pending before it, a district court has the authority under Rule 60(b) (6)⁷  to vacate its prior dismissal order and restore the case to its docket. See also Chief Freight Lines Co. v. Local Union No. 886, 514 F.2d 572 (10 Cir. 1975); Kelly v. Greer, 334 F.2d 434 (3 Cir. 1964). We respectfully differ, however, with the Aro court in its conclusion that, once the proceedings are reopened, the district court is necessarily empowered to enforce the settlement agreement against the breaching party. We are of the opinion that the district court is not so empowered unless the agreement had been approved and incorporated into an order of the court, or, at the time the court is requested to enforce the agreement, there exists some independent ground upon which to base federal jurisdiction.⁸ 

A district court is a court of limited jurisdiction "(a)nd the fair presumption is (not as with regard to a court of general jurisdiction, that a cause is within its jurisdiction unless the contrary appears, but rather) that a cause is without its jurisdiction till the contrary appears," Turner v. President, Directors and Company of the Bank of North America, 4 Dall. 7, 10, 1 L. Ed. 718, 719 (1799). The burden of establishing jurisdiction is on the party claiming it. McNutt v. General Motors Accept. Corp., 298 U.S. 178, 182-83, 56 S. Ct. 780, 80 L. Ed. 1135 (1936). After canvassing the possible sources of jurisdiction in the instant case, we do think that Association has not met its burden.

Association's contract claim did not arise "under the Constitution, laws, or treaties of the United States." 28 U.S.C. § 1331. The settlement agreement between Association and County, while serving to terminate litigation of a federal claim, was a private contract entered into after private negotiations between the parties. Both its validity and the interpretation of its terms are governed by Virginia law.⁹  If, instead of filing a motion under Rule 60(b) (6), Association had filed a new complaint in the district court, alleging breach of contract and seeking specific performance, there is little doubt that the claim would have been dismissed on jurisdictional grounds.¹⁰  See Arvin Industries, Inc. v. Berns Air King Corp., 510 F.2d 1070 (7 Cir. 1975). The same is true if the parties had negotiated and entered into a settlement agreement prior to any litigation, and thereafter Association, alleging the breach of the agreement, sought to invoke federal jurisdiction to enforce it. See Kysor Industrial Corporation v. Pet, Incorporated, 459 F.2d 1010 (6 Cir.), cert. denied, 409 U.S. 980, 93 S. Ct. 314, 34 L. Ed. 2d 243 (1972).

Thus, since there is neither federal question nor diversity jurisdiction in the instant case, we must look elsewhere if the jurisdiction of the district court is to be sustained.¹¹  In Aro, the Sixth Circuit advanced what appeared to be alternative jurisdictional theories and we turn to them.

First, it was said that "courts retain the inherent power to enforce agreements entered into in settlement of litigation pending before them." 531 F.2d at 1371. See also United States v. Newport News Shipbuilding and Dry Dock Co., 571 F.2d 1283, (4 Cir. 1978) (dictum); Meetings & Expositions, Inc. v. Tandy Corp., 490 F.2d 714, 717 (2 Cir. 1974); Kukla v. National Distillers Products Co., 483 F.2d 619, 621 (6 Cir. 1973); Massachusetts Casualty Insurance Co. v. Forman, 469 F.2d 259, 260 (5 Cir. 1972); Autera v. Robinson, 136 U.S.App.D.C. 216, 419 F.2d 1197, 1200 (1969); Kelly v. Greer, 365 F.2d 669, 671 (3 Cir. 1966), cert. denied, 385 U.S. 1035, 87 S. Ct. 772, 17 L. Ed. 2d 682 (1967); Cummins Diesel Michigan, Inc. v. The Falcon, 305 F.2d 721, 723 (7 Cir. 1962).

While this principle is sound under appropriate circumstances, it is not a principle of federal jurisdiction. An analysis of the cases cited by the Aro court in support of the principle shows that, except for one, they all concerned settlement agreements which were intended to be incorporated into final orders¹²  or for which independent federal jurisdiction existed.¹³  The single exception was a state case which involved a court of general, not limited, jurisdiction.¹⁴  Likewise, in Newport News Shipbuilding and Dry Dock Co., a recent decision of this court where the principle was repeated with approval, the jurisdiction of the district court was not at issue.¹⁵ 

In our view, the inherent power of a district court to enforce settlement agreements, like any other power inherently vested in a federal court, presupposes the existence of federal jurisdiction over the case or controversy.

As a second alternative ground for upholding federal jurisdiction, both the district court and the court of appeals in Aro invoked a concept of derivative jurisdiction. Because the settlement agreement resolved the dispute giving rise to the original litigation over which the district court had jurisdiction, any dispute involving the agreement itself was likewise properly before the court. As stated by the district court: "(J)urisdiction rests upon the same footing as when the case began . . . ." 65 F.R.D. at 514. The court of appeals developed the point as set forth in the margin.¹⁶ 

It is, of course, well established that, under appropriate circumstances, a federal court may exercise derivative jurisdiction over a dispute despite the absence of an independent basis for federal jurisdiction. The doctrines of both pendent and ancillary jurisdiction fall within this category. See, e. g., Moor v. County of Alameda, 411 U.S. 693, 714-15, 93 S. Ct. 1785, 36 L. Ed. 2d 596 (1973) (dictum); United Mine Workers v. Gibbs,383 U.S. 715, 86 S. Ct. 1130, 16 L. Ed. 2d 218 (1966); Dery v. Wyer, 265 F.2d 804 (2 Cir. 1959). We think, however, that derivative jurisdiction should be grounded on something more substantial than a mere showing that the settlement agreement would not have been entered into but for the existence of litigation pending in federal court.

Consideration of the rationale of Gibbs and Dery supports this conclusion. In each, derivative jurisdiction was upheld only because the claim for which no independent jurisdiction existed derived from the same nucleus of operative facts as the claim for which there did exist independent jurisdictional grounds. For reasons of economy, reasoned the courts, it makes little sense to remit one of two related claims to state court since the same facts will form the basis of decision in both.¹⁷ 

That consideration is absent here. Association's contract claim is factually and legally distinct from the claim giving rise to the original litigation. To remit Association to state court in order to have its agreement with County enforced will not create duplicating litigation since the operative facts bearing on the validity of the agreement bear no relation to those underlying Association's § 1983 claim.

While not relying on the sort of economy interest upon which the doctrines of pendent and ancillary jurisdiction are based, Aro nonetheless suggests that to divest a district court of jurisdiction to enforce a settlement agreement in cases such as this will "render settlement . . . a trap for the unwary." 531 F.2d at 1371. We think that this is not so. As in the instant case where federal jurisdiction to sue for a breach of a settlement agreement does not otherwise exist, a plaintiff who claims a breach of his settlement agreement has available two courses of action. He may take his contract claim to state court where he may seek enforcement of the settlement agreement. Because enforceability is likely to turn on questions of state law, the state court is an appropriate forum for resolving this dispute.¹⁸  Alternatively, the injured plaintiff may file a Rule 60(b) (6) motion in federal court, requesting that the prior dismissal order be vacated and the case restored to the court's trial docket. This restores the litigants to the status quo ante and allows the plaintiff to prove his case and obtain his relief on the merits of the underlying claim.

To summarize: We find no independent basis for asserting jurisdiction over the contract dispute, and we see no considerations of either judicial economy or fairness requiring the settlement agreement to be enforced in federal court. We therefore conclude that the district court lacked jurisdiction to enforce the agreement. We reverse the order of the district court compelling County to perform its remaining obligations under its agreement with Association. We do not disturb the portion of the district court's order which struck its order of dismissal. Association may proceed to the trial of its original claim if it be so advised.

REVERSED AND REMANDED.