                              In the
 United States Court of Appeals
               For the Seventh Circuit
                          ____________

Nos. 05-4096, 06-1255
NATHANIEL S. SHAPO,
                                                                   Plaintiff,
                                  v.

CLYDE WM. ENGLE,
                                                Defendant-Appellant.
                                  v.

FOLEY & LARDNER, LLP,
                                                               Appellee.
                          ____________
            Appeals from the United States District Court
        for the Northern District of Illinois, Eastern Division.
                No. 98 C 7909—Amy J. St. Eve, Judge.
                          ____________
     ARGUED JUNE 13, 2006—DECIDED SEPTEMBER 11, 2006
                          ____________


  Before POSNER, COFFEY, and RIPPLE, Circuit Judges.
   POSNER, Circuit Judge. This appeal challenges the dis-
trict court’s jurisdiction to resolve a dispute between
the defendant, Engle, and the law firm, Foley & Lardner,
that represented him in a suit charging Engle and
others with unlawful acts that included violations of
RICO. Several years into the case the parties agreed to settle
it and so advised the court. In February of 2004 the court
2                                      Nos. 05-4096, 06-1255

ordered the suit “dismissed, without prejudice and with
leave to reinstate on or before the ‘Execution Date,’ ”
defined in the order as the date on which the various
undertakings set forth in it, including the parties’ “sign[ing]
all related agreements and exchang[ing] the consideration
to which they have agreed,” were completed. The order
goes on to provide 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.”
An accompanying minute order states: “this case is hereby
dismissed without prejudice, with leave to reinstate by or on
6/7/04 at which time the dismissal will be with prejudice.
This Court shall retain jurisdiction to enforce the terms of
the Settlement Agreement.”
  The relation between the “Execution Date” and June 7,
2004, is obscure (as best we can determine, it was the date
on which the district judge expected the parties to execute
the settlement agreement) but not necessarily critical,
because the deadline for reinstatement was extended by
timely orders of the judge until January 28, 2005. That day
came and went without reinstatement. 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. That agreement required Engle to pay the firm
$100,000 every three months for three years as consideration
for the work it had done for him in the underlying litigation.
With interest, the total due Foley & Lardner will amount,
according to the law firm, to at least $1.8 million.
  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
Nos. 05-4096, 06-1255                                         3

installment of $100,000. The judge based jurisdiction to issue
these orders on her having retained jurisdiction to enforce
the terms of the settlement, although the “Master Payment
Agreement” was a discrete agreement and Foley & Lardner
was not a party to the underlying litigation. Engle appeals
from both orders, challenging the district court’s jurisdic-
tion.
  There is a question of our jurisdiction as well—namely
whether the orders are final. 28 U.S.C. § 1291. They direct
the payment of the $100,000 installments “with interest,”
and undoubtedly the reference is to prejudgment as well as
postjudgment interest (the latter does not affect, but rather
presupposes, finality), since the Master Payment Agreement
specifies that interest is to accrue at a specific rate from the
date of the agreement. But the agreement is not dated, so the
amount of interest due cannot be calculated from the
existing record. Nor does the agreement say whether simple
or compound interest is contemplated.
   But finality must be distinguished from clarity. The test of
finality is whether the district judge has finished with the
case. Chase Manhattan Mortgage Corp. v. Moore, 446 F.3d 725
(7th Cir. 2006). It is not whether the judgment ending the
case is clear enough to be enforced. If it is unclear, that is a
basis for either party’s challenging it on appeal, Sweat v. City
of Fort Smith, 265 F.3d 692, 696 (8th Cir. 2001); United States
v. Terry, 17 F.3d 575, 580 (2d Cir. 1994), but neither party is
doing so. Probably they agree on what “with interest”
means, though they have not bothered to tell us. All that
matters, however, so far as finality and hence our jurisdic-
tion is concerned, is that the district judge had thought
herself finished with the case upon entering the orders.
  So we have jurisdiction of the appeals and turn now to the
question of the district court’s jurisdiction. We have criti-
4                                        Nos. 05-4096, 06-1255

cized the practice of dismissing suits before they’re really
over. E.g., Shah v. Intercontinental Hotel Chicago Operating
Corp., 314 F.3d 278, 281 (7th Cir. 2002); Goss Graphics Sytems,
Inc. v. DEV Industries, Inc., 267 F.3d 624, 626 (7th Cir. 2001);
King v. Walters, 190 F.3d 784, 786 (7th Cir. 1999); Adams v.
Lever Bros. Co., 874 F.2d 393, 396 (7th Cir. 1989). 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 signing of all agreements constituting the settlement
and the exchange of the consideration required by the
agreements) the fulfillment of which may require additional
litigation. The judge should have waited before entering any
order of dismissal until the various undertakings constitut-
ing the settlement were completed. Then the case would be
over and dismissal with prejudice appropriate.
  An even more serious problem is the conjunction of
dismissal with prejudice with retention of jurisdiction to
enforce the settlement agreement. We know from Kokkonen
v. Guardian Life Ins. Co., 511 U.S. 375, 380-81 (1994), that a
district court does not have jurisdiction to enforce a settle-
ment agreement merely because the agreement was the
premise of the court’s dismissal of the suit that the agree-
ment settled. And therefore, as we explained in Lynch v.
SamataMason, Inc., 279 F.3d 487, 489 (7th Cir. 2002), a district
judge cannot dismiss a suit with prejudice, thus terminating
federal jurisdiction, yet at the same time retain jurisdiction
to enforce the parties’ settlement that led to the dismissal
with prejudice. (An exception is the inherent power of a
court that has issued an injunction, even if that injunction
ended the lawsuit, to enforce it, as by contempt proceedings.
E.g., United States v. City of Chicago, 870 F.2d 1256, 1257 (7th
Cir. 1989).)
  But this case is unusual because despite the reference in
the minute order to June 7, 2004, it appears from the
Nos. 05-4096, 06-1255                                         5

judgment order itself that the judge’s intention was to retain
jurisdiction until the settlement—incomplete at the time that
the order was made—was fully implemented; for the order
retains jurisdiction to enforce the terms of settlement. If the
judge was correct in thinking the Master Payment Agree-
ment part of the settlement, then until Engle completes the
payments required by it the settlement will not be final.
  So here we have a concrete example of the confusion
injected by the “springing” type of judgment entered in this
case. By making the final judgment contingent on future
events, the judge created a situation in which it might be
(and turned out to be) uncertain when an appealable
judgment was entered. One interpretation, supported by the
minute order, is that the judgment became final on January
28, 2005, the extension of the June 7 date in the minute order
of February 5, 2004. But another interpretation, supported
by the judgment order, is that the judgment has not yet
become final if the Master Payment Agreement is a part of
the settlement, because if it is, the judgment will not be final
until the agreement is carried out—that is, until Foley &
Lardner is paid in full.
  Normally the judgment order would take precedence over
a minute order. The minute order states, however: “For
further detail see order attached to the original minute
order.” The order referred to is the judgment order. So
maybe rather than there being two inconsistent orders, one
of which (the judgment order) should take precedence, there
is a single, internally inconsistent order, in which event a
remand might be necessary to enable the district court to
clarify its meaning. Alpern v. Lieb, 38 F.3d 933, 935-36 (7th
Cir. 1994); United States v. Michaud, 907 F.2d 750, 751, 753-54
(7th Cir. 1990) (en banc); Holly D. v. California Institute of
Technology, 339 F.3d 1158, 1181 n. 28 (9th Cir. 2003). But in
6                                         Nos. 05-4096, 06-1255

all likelihood the reference to June 7 in the minute order was
merely a guess and the judge would not have wanted to
relinquish jurisdiction merely because the settlement was
not finally agreed to by that date.
  Some disputes between a litigant and his lawyer (or his
opponent’s lawyer) are within the federal courts’ ancillary
jurisdiction. See, e.g., Baer v. First Options of Chicago, Inc., 72
F.3d 1294, 1300-01 (7th Cir. 1995); Novinger v. E.I. DuPont De
Nemours & Co., 809 F.2d 212, 217 (3d Cir. 1987); Jenkins v.
Weinshienk, 670 F.2d 915, 918 (10th Cir. 1982); Valerio v. Boise
Cascade Corp., 645 F.2d 699 (9th Cir. 1981) (per curiam). In
Baer, for example, the provision relating to the lawyer’s fee
was an express part of the settlement agreement, and the
court had moreover an independent legal duty to determine
the reasonableness of the fee. (Novinger was similar: the
court had a legal duty to consider the reasonableness of the
contingent-fee contract between the plaintiffs and their
lawyer.) In another of our cases, Dale M. ex rel. Alice M. v.
Board of Education, 282 F.3d 984 (7th Cir. 2001), after we
reversed the judgment for the plaintiff with directions to
vacate the award of attorney’s fees the plaintiff’s lawyer,
who had pocketed the fee, refused to return it to the defen-
dant. We upheld the district court’s power to order her to
return it. The order was necessary to implement our judg-
ment.
  But if the Master Payment Agreement in this case was not
a part of the settlement, Engle’s compliance with it has no
more federal significance than any routine postlitigation
disagreement between lawyer and client. Taylor v. Kelsey,
666 F.2d 53 (4th Cir. 1981) (per curiam). And even if the
Master Payment Agreement was part of the settlement, this
would not automatically place disputes over the agreement
within federal jurisdiction. The purpose of the ancillary
Nos. 05-4096, 06-1255                                           7

jurisdiction of the federal courts, well illustrated by Dale M.,
is to enable a federal court to render a judgment that
resolves the entire case before it and to effectuate its judg-
ment once it has been rendered. Peacock v. Thomas, 516 U.S.
349, 355-59 (1996); Kokkonen v. Guardian Life Ins. Co. of
America, supra, 511 U.S. at 379-80; Lucille v. City of Chicago, 31
F.3d 546, 548 (7th Cir. 1994); Smyth ex rel. Smyth v. Rivero,
282 F.3d 268, 282 (4th Cir. 2002); McAlpin v. Lexington 76
Auto Truck Stop, Inc., 229 F.3d 491, 501 (6th Cir. 2000). It is
not to enable a federal court to encroach on the jurisdiction
reserved to the states merely because the parties would
prefer to have a federal court resolve their future disputes
(not necessarily future disputes between them, more-
over—Foley & Lardner was not a party to Shapo’s suit). The
settlement agreement could not require that if one of the
parties and his lawyer had a falling out, and the party sued
the lawyer for malpractice in the litigation that was settled,
the suit could be brought in the federal court even if the
malpractice suit was not based on federal law and there was
no diversity of citizenship. Parties cannot confer federal
jurisdiction by agreement. Hays v. Bryan Cave LLP, 446 F.3d
712, 714 (7th Cir. 2006); Wolf v. Cash 4 Titles, 351 F.3d 1348,
1357 (11th Cir. 2003); Presidential Gardens Associates v. United
States ex rel. Secretary of Housing & Urban Development, 175
F.3d 132, 140 (2d Cir. 1999). There would have to be special
circumstances to allow a federal court to enforce such a
requirement, such as an existing dispute between lawyer
and client that if unresolved would preclude a settlement.
  But the prior question is whether the Master Payment
Agreement was a part of the settlement agreement. If it
was not, there could be no argument that the suit by a
lawyer for one of the parties against that party to collect
his fee was ancillary to the original suit. The Supreme Court
8                                        Nos. 05-4096, 06-1255

rejected the invocation of ancillary jurisdiction in the Peacock
case, where the plaintiff, having obtained a judgment he
could not collect, sued a shareholder of the defendant on the
ground that he was the defendant’s alter ego. Yet that suit
might have been thought an effort to effectuate the judg-
ment for the plaintiff; a lawyer’s suit for his fee could not be.
  The district judge assumed that the Master Payment
Agreement on which Foley & Lardner’s fee claim was based
was part of the settlement agreement, but she did
not explain the basis of her assumption. It is true that the
execution date was to be deferred until all related agree-
ments were signed and that the Master Payment Agreement
was a related agreement. Foley & Lardner had liens on some
of the property that Engle was to transfer to the plaintiff in
the underlying litigation as part of the settlement. The
Master Payment Agreement released those liens in exchange
for Engle’s promise to pay the fees set forth in the agree-
ment. The agreement recites that it is “made in connection
with the settlement” and is “to facilitate the settlement.” The
judgment order does not postpone the execution date until
the related agreements are performed, however, but only
until they are signed. It was doubtless important to the
settlement to get the liens cleared; but it is unclear whether
Foley & Lardner would have refused to release them unless
the district court agreed to enforce Engle’s promise to pay
the law firm’s fees, that promise being the consideration for
the release of the liens.
  The order does, as we know, retain jurisdiction “to enforce
the terms of the Parties’ settlement,” and it is at least
arguable that those terms include the terms in the Master
Payment Agreement, since “settlement” is not defined and
could spread over multiple agreements. But the argument
is not found in the district judge’s orders enforcing the
Nos. 05-4096, 06-1255                                        9

agreement, and we cannot exclude the possibility that the
judge mistakenly thought she could retain jurisdiction after
dismissing the suit with prejudice. For nowhere does she
state that the automatic conversion of dismissal without
prejudice to dismissal with prejudice would not occur until
Engle completed payment of the fees required of him by the
Master Payment Agreement—which would take at least
three years, and could take much longer. And nowhere does
she explain why, had she refused to retain jurisdiction to
enforce the Master Payment Agreement, the settlement
would have fallen through. Foley & Lardner would have
been in breach of its fiduciary duty to its client had it
blocked settlement merely to obtain an advantageous forum
in which to collect its legal fees if the client failed to pay
them. See Hanania v. Loren-Maltese, 212 F.3d 353, 356 (7th
Cir. 2000); Staton v. Boeing Co., 327 F.3d 938, 964 (9th Cir.
2003); Streber v. Hunter, 221 F.3d 701, 725-26 (5th Cir. 2000).
It seems anomalous to make a settlement obtained by a
plaintiff depend on the resolution of a fee dispute between
the defendant and his lawyer, a dispute to which the
plaintiff is a stranger.
  A remand will be necessary to enable the district judge
to clarify the judgment.
   At argument the question arose what a judge should do
who wants to enter a final judgment in order to preclude
further litigation of the same claim between the same
parties, by operation of the doctrine of res judicata, but
to retain jurisdiction over some incidental matter that may
take years to resolve, in this case a fee agreement that is (if
it is—a question for remand) a part of the settlement but not
so large a part that it should prevent the judgment’s having
preclusive effect. The answer is that either the settlement
should include a release of the plaintiff’s claims, thus
10                                      Nos. 05-4096, 06-1255

barring relitigation of them, as in Isbell v. Allstate Ins. Co.,
418 F.3d 788, 797 (7th Cir. 2005); Williams Electronics Games,
Inc. v. Garrity, 366 F.3d 569, 580 (7th Cir. 2004); Hoseman v.
Weinschneider, 322 F.3d 468, 477 (7th Cir. 2003), and Gonzalez
v. Kokot, 314 F.3d 311, 316 (7th Cir. 2002), or the district
court should state that judgment is being entered in order to
allow the parties to enforce it and that the “without preju-
dice” language shall not allow them to reopen issues
resolved by the judgment. See Brunswick Corp. v. Chrysler
Corp., 408 F.2d 335, 337-38 (7th Cir. 1969); Wallace Clark &
Co. v. Acheson Industries, Inc., 532 F.2d 846, 849 (2d Cir.
1976). Either course of action would achieve the preclusive
goal of a final judgment without creating the paradox of a
court’s at once relinquishing jurisdiction by dismissing a
suit with prejudice and retaining jurisdiction.
  The orders are vacated and the case returned to the
district court for further proceedings consistent with this
opinion.
                                   VACATED AND REMANDED.
Nos. 05-4096, 06-1255                                     11

A true Copy:
       Teste:

                         _____________________________
                          Clerk of the United States Court of
                            Appeals for the Seventh Circuit




                   USCA-02-C-0072—9-11-06
