Tuesday, August 13, 2013

The $230,000 Email

Forcelli v. Gelco Corp.
(2nd Dept., decided 7/24/2013)

Those who practice or work in casualty claims probably know that a settlement is binding and enforcement if it is either (1) confirmed in writing and signed by the parties or their attorneys or (2) "spread" on the record in open court.

New York CPLR Rule 2104 provides:
Rule 2104.  Stipulations. 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. With respect to stipulations of settlement and notwithstanding the form of the stipulation of settlement, the terms of such stipulation shall be filed by the defendant with the county clerk.
So if a claims adjuster for a defendant confirms a settlement in an email to plaintiff's counsel at the end of which her name is printed is there a binding, enforceable settlement agreement?  Yes there is, says the Appellate Division, Second Department.

Forcelli sued Gelco and other defendants for injuries he allegedly sustained in a three-car accident.  Following discovery, Gelco and the driver of its vehicle moved for summary judgment.  Approximately two and a half months later, on March 18, 2011 that motion and plaintiff's cross motion for summary judgment were fully submitted to the court.  That same day the parties attended a mediation at which a claims adjuster from Sedgwick CMS, Gelco's liability insurer (or claims administrator for Gelco or its liability insurer) appeared.  The action did not settle at the mediation.

On April 22, 2011, Sedgwick's adjuster contacted plaintiff's counsel by telephone to revive settlement negotiations.  She offered $200,000 that day, and on May 3, 2011, she increased her offer to $230,000, which plaintiff's counsel orally accepted.  That same day the Sedgwick adjuster sent the following email to plaintiff's counsel:
Per our phone conversation today, May 3, 2011, you accepted my offer of $230,000 to settle this case. Please have your client executed [sic] the attached Medicare form as no settlement check can be issued without this form. 
You also agreed to prepare the release, please included [sic] the following names: Xerox Corporation, Gelco Corporation, Mitchell G. Maller and Sedgwick CMS. Please forward the release and dismissal for my review. Thanks Brenda Greene.
On May 4, 2011, Forcelli signed a release in favor of the Gelco defendants.  On May 10, 2011, before Sedgwick has issued the settlement payment, the court issued an order granting summary judgment to the Gelco defendants dismissing plaintiff's complaint against them.  Counsel for the Gelco defendants learned of that order by email the next day, May 11, 2011, and immediately served a copy of the court's order with written notice of entry on plaintiff's counsel by overnight mail.  Meanwhile, on the very same day, plaintiff's counsel sent to the Sedgwick adjuster by fax and certified mail the plaintiff's signed release.

On May 12, 2011, defense counsel for the Gelco defendants sent a fax to plaintiff's counsel purporting to reject the release and stipulation of discontinuance.  On May 23, 2011, plaintiff moved to vacate the court's May 10, 2011 order awarding summary judgment to the Gelco defendants and to enforce the settlement agreement as set forth in the Sedgwick adjuster's email.  At issue on that motion was whether the adjuster's May 3, 2011 email constituted a binding written settlement agreement within the meaning of CPLR Rule 2104.  The court granted plaintiff's motion and judgment was entered against the Gelco defendants in the principal sum of $230,000.

In AFFIRMING the judgment, the Appellate Division, Second Department, held that "where, as here, an email message contains all material terms of a settlement and a manifestation of mutual accord, and the party to be charged, or his or her agent, types his or her name under circumstances manifesting an intent that the name be treated as a signature, such an email message may be deemed a subscribed writing within the meaning of CPLR 2104 so as to constitute an enforceable agreement."

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