Settlement By Email – Timing is EverythingPrint Article
- Posted on: Nov 10 2021
By: Jeffrey M. Haber
In today’s article, we consider a case in which, as the title indicates, timing is everything. Before we discuss the case, let’s consider the following scenario.
The parties to a litigation reach a settlement in principle. They do so while a motion to dismiss the action (or a motion for summary judgment) is pending. Before the parties can execute the definitive agreement that memorializes their settlement, the court decides the motion and dismisses the action. Is there a settlement?
In Rawald v. Dormitory Auth. of the State of N.Y., 2021 N.Y. Slip Op. 06109 (1st Dept. Nov. 9, 2021) (here), the Appellate Division, First Department answered the question in the affirmative.
The case arose out of an alleged agreement by which plaintiffs’ counsel and counsel for defendants Sea Crest Construction Corp. and Peter Scalamandre & Sons, Inc. (together, “Sea Crest”) agreed to settle the underlying personal injury action for $275,000. The settlement agreement was set forth in an email communication in which plaintiffs’ counsel stated, “This is to confirm settlement in the sum of $275,000. Please send release language and parties to be released.” At the bottom of the email was a signature block with counsel’s name, firm name, address and telephone number. Later that day, plaintiffs’ counsel sent a follow-up email, stating, “Please confirm we are settled.” Unlike the first email, this email did not contain the prepopulated signature block. Sea Crest’s counsel responded, “Confirmed. I’ll have release information to you ASAP.” The email was sent by counsel’s phone and included an automatically generated footer stating that it had been sent from an iPhone.
Shortly after the parties agreed to settle plaintiffs’ claims, they learned that the motions for summary judgment that all defendants filed in the action had been granted and the action had been dismissed. Sea Crest then disavowed the settlement. Plaintiffs sought enforcement of the settlement agreement, which the motion court denied, finding that the settlement agreement did not contain all material terms of the settlement and had not been subscribed for purposes of CPLR § 2104.1
The Appellate Division, First Department unanimously reversed.
The Court held that the parties had an enforceable settlement agreement.2 The Court found that the emails, which counsel exchanged, agreeing to the settlement complied with CPLR § 2104, in that they were “subscribed” within the meaning of the statute.3 Relying on Matter of Philadelphia Ins. Indem. Co. v. Kendall, 197 A.D.3d 75, 80 (1st Dept. 2021), the Court explained that “the sender was identifiable and there was no contention that Sea Crest’s counsel did not send any of the emails intentionally.”4
In Philadelphia Insurance, the First Department held that it is “the transmission of an email, and not whether an email ‘signature’ can be shown to be retyped, is what determines that a settlement stipulation has been subscribed for purposes of CPLR 2104.”5 In other words, when “an attorney hits ‘send’ with the intent of relaying a settlement offer or acceptance, and their email account is identified in some way as their own, then it is unnecessary for them to type their own signature.”6 According to the First Department, CPLR § 2104 demands no more.7
[Ed. Note: This Blog wrote about Philadelphia Insurance, here.]
The Court also held that “[t]he emails … contained all material terms [of the settlement], since the sole issue was how much plaintiffs would accept in settlement of their claim.”8 The Court found persuasive the fact that “in emails leading up to the settlement, … the other defendants were not interested in negotiating a settlement before Supreme Court’s decision on the summary judgment motions,” and had authorized Sea Crest’s attorney “to settle the action on Sea Crest’s behalf regardless of whether she later received contribution from the other defendants.”9
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.”10 A court called upon to enforce a settlement must be satisfied that the agreement is “clear, final and the product of mutual accord.”11 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.”12 “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.”13
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) writing.14 This principle also holds true where, as in Rawald, the correspondence is by email rather than traditional physical means.
To meet the requirement of a subscribed writing in the context of email, “the party to be charged, or his or her agent,” must “type[ ] his or her name” at the end of the email “under circumstances manifesting an intent that the name be treated as a signature.”15 As shown in Rawald, where the sender of the emails are identifiable and there is no contention that counsel sent the emails unintentionally, CPLR § 2104 is satisfied. In other words, when “an attorney hits ‘send’ with the intent of relaying a settlement offer or acceptance, and their email account is identified in some way as their own, then it is unnecessary for them to type their own signature.”16
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.
- A copy of the Supreme Court’s decision and order can be found here.
- Slip Op. at *1 (citing, Bonnette v. Long Is. Coll. Hosp., 3 N.Y.3d 281, 286 (2004)).
- Philadelphia Ins., 197 A.D.3d at 79-80.
- Id. at 80.
- CPLR § 2014 provides: “An agreement between parties or their attorneys relating to any matter in an action, other than one made between counsel in open court, is not binding upon a party unless it is in a writing subscribed by him or his attorney or reduced to the form of an order and entered….”
- Slip Op. at *1 (citing, Philadelphia Ins., 197 A.D.3d at 81).
- Forcelli v. Gelco Corp., 109 A.D.3d 244, 247-248 (2d Dept. 2013) (internal quotation marks omitted).
- CPLR § 2014.
- Forcelli, 109 A.D.3d at 248 (internal quotation marks omitted).
- Id. at 249; Philadelphia Ins., 197 A.D.3d at 79.
- Forcelli, 109 A.D.3d at 251.
- Philadelphia Ins., 197 A.D.3d at 80.