Emails Following Mediation Sufficient to Confirm Settlement of Third-Party Contractual Indemnification Claim

• Posted on: Oct 30 2023

By: Jeffrey M. Haber

In New York, as in other jurisdictions, settlement agreements “are judicially favored, will not lightly be set aside,” and will be enforced “with rigor and without a searching examination into their substance.”¹ A court called upon to enforce a settlement must be satisfied that the agreement is “clear, final and the product of mutual accord.”² Thus, an out-of-court agreement settling an action is binding on each party to the agreement only if “it is in a writing subscribed by him or his attorney.”³ “In addition, since settlement agreements are subject to the principles of contract law, for an enforceable agreement to exist, all material terms must be set forth” in that writing, “and there must be a manifestation of mutual assent.”⁴ 

In Nash v. Walker Mem. Baptist Church, Inc., 2023 N.Y. Slip Op. 05447 (1st Dept. Oct. 26, 2023) (here), the Appellate Division, First Department considered the foregoing principles in connection with a settlement by mediation and the post-mediation emails purporting to reserve certain indemnification rights.

Nash arose out of an agreement in which the parties agreed to settle a personal injury action. In that action, plaintiff, Curtis Nash, sought damages after he was injured while working for Rosalyn Yalow Charter School (“Rosalyn”), which had leased a building owned by defendant/third-party plaintiff Walker Memorial Baptist Church, Inc. (“Walker”). Plaintiff sued Walker, alleging that it had been negligent in its duty to maintain the premises; Walker then filed a third-party action against Rosalyn seeking contractual indemnification based on the lease between them.

During a virtual mediation session, the parties and their insurance carriers reached an agreement concerning the amounts that would be paid to plaintiff. The agreement also specified that Walker’s insurance carrier, Philadelphia Indemnity Insurance Company (“PIIC”), reserved its rights against nonparty Munich Re Insurance, Rosalyn’s excess liability carrier. The mediator memorialized the terms of the settlement in a post-mediation agreement, which also contained language specifying that each party released the others from all claims or liability arising from the matter. Soon after the mediation session concluded, in response to an email from Munich Re’s counsel, Walker’s counsel confirmed that the settlement resolved all direct claims and third-party claims; the email did not reserve any specific claims. Several other emails among the parties and the court followed, indicating that the matter had been settled. Walker later took the position that PIIC’s request to reserve its rights included the third-party claims against Rosalyn.

Thereafter, Rosalyn filed a motion to enforce the settlement, seeking to dismiss the third-party claim against it. The motion court granted the motion. In doing so, the motion court held:

Here, Rosalyn established prima facie that the parties had an enforceable settlement agreement by submitting an email from Walker’s counsel agreeing to the settlement. The November 23, 2021 email that Walker’s counsel sent only minutes after the mediation confirmed that “all claims” were resolved at the mediation. The email, which reduced the settlement to a writing in accordance with CPLR 2104, was “subscribed” within the meaning of the statute, as the sender was identifiable and there is no contention that Walker’s counsel did not send the email intentionally (Philadelphia Ins. Indem. Co., 197 AD3d at 80). The email also contained all material terms, since the sole issue was whether all claims, amongst all parties (to the underlying case), were fully resolved.

Walker appealed. The First Department unanimously affirmed.

The Court held that the motion court “correctly determined that a binding settlement existed between Walker and Rosalyn and that Walker released its third-party contractual indemnity claim.”⁵ In so holding, the Court noted that “[n]o party dispute[d] that Walker’s counsel had authority to accept the settlement, and that the confirmation email he sent to Munich Re’s counsel came from his email account.”⁶ Importantly, said the Court, “[c]ounsel’s email did not contain any language setting conditions on the settlement or explicitly reserving any specific claims.”⁷

The Court found that “the postmediation agreement and confirmatory email from Walker’s counsel contained all material terms, as the only relevant issues were the amounts that would be paid to plaintiff by the parties and their insurance carriers, and whether all claims had been resolved by the settlement agreement.”⁸ 

Finally, the Court held that “objective evidence established that the parties intended to be bound and corroborated the existence and terms of the agreement”: “The emails that followed also indicated that Walker intended to be bound by the agreement reached during the mediation session and did not intend to pursue further litigation against Rosalyn.”⁹

[Eds. Note: On many occasions, we have discussed the enforceability of a settlement reached by the exchange of emails. See, e.g., here, here, here, here, here, here and here.] 

Takeaway

As explained by the Court in Nash, the parties to the mediation fully and completely resolved the dispute. The settlement reflected the parties’ intention that all claims between them were fully resolved. Counsel confirmed the settlement immediately after the mediation and did not give any indication that any rights were being reserved. The only reservation of rights concerned non-parties PIIC and Munich Re. Under these circumstances, the settlement was held to be binding and enforceable. 

Footnotes

1. Forcelli v. Gelco Corp., 109 A.D.3d 244, 247-248 (2d Dept. 2013) (internal quotation marks omitted).
2. Id.
3. CPLR § 2014.
4. Forcelli, 109 A.D.3d at 248 (internal quotation marks omitted).
5. Slip Op. at *1.
6. Id.
7. Id. (citing Philadelphia Ins. Indem. Co. v. Kendall, 197 A.D.3d 75, 80 (1st Dept. 2021)).
8. Id. (citing Rawald v. Dormitory Auth. of the State of N.Y, 199 A.D.3d 477, 477 (1st Dept. 2021). See also Forcelli v. Gelco Corp., 109 A.D.3d 244, 249 (2d Dept. 2013) (Correspondence between the parties or counsel “can qualify as an enforceable stipulation of settlement under CPLR 2104,” so long as that correspondence “set[s] forth the material terms of the stipulation” and is a properly subscribed (i.e., signed) in writing).
9. Id. (citing Flores v. Lower E. Side Serv. Ctr., Inc., 4 N.Y.3d 363, 369 (2005).

Jeffrey M. Haber is a partner and co-founder of Freiberger Haber LLP. 

This article is for informational purposes and is not intended to be and should not be taken as legal advice.