The $230,000 Email

PERSONAL INJURY ACTION – BINDING AND ENFORCEABLE SETTLEMENT – EMAIL CONFIRMATION
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."

Motion to Vacate Stipulations of Settlement Denied, Carothers Trial Result Notwithstanding

NO-FAULT – STIPULATION OF SETTLEMENT – MOTION TO VACATE
Deajess Med. Imaging, P.C. v. Country-Wide Ins. Co.
(NYC Civil Ct., Kings Co., decided 10/7/2008)

Through defense counsel, Country-Wide entered into two stipulations of settlement with plaintiff medical provider, the first in this action in July 2006 to vacate an $18,694.39 November 2005 judgment, and the second so-ordered stipulation in March 2007 in a Nassau County action. The first stipulation provided that ""[p]laintiff agrees to vacate the judgment for assignor Trinece Summer [and] defendant agrees to pay the remaining claims as per the Court's Order of November 4, 2005 within 30 days inclusive of interest up until the day of payment." In the second stipulation, Contry-Wide agreed that plaintiff's right "to enforce voluntary settlements that have been entered into with any of the Insurers," including Country-Wide, would not be impaired.

Country-Wide moved to vacate the November 2005 judgment and stipulation of settlement in this action on the ground that newly discovered evidence existed which "if introduced at trial would probably have produced a different result and which could not have been discovered in time to move for a new trial under section 4404" (CPLR § 5015 [a] [2]). The newly discovered evidence Country-Wide cited included a federal case involving Robert Scott Schepp, M.D., New York State appellate case law involving the plaintiff, a news article from Law.com, as well as the Andrew Carothers, M.D., P.C. trial in the New York City Civil Court, Richmond County, all of which Country-Wide argued established that plaintiff was fraudulently incorporated. Country-Wide also argued that the judgment was the product of "fraud, misrepresentation, or other conduct of an adverse party" (CPLR § 5015 [a] [3]) and that there was no meeting of the minds when the parties entered into the written stipulation of settlement.

Noting that settlement stipulations are judicially favored and should not be lightly set aside, New York City Civil Court Judge George Silver rejected Country-Wide's arguments and denied its motion to vacate, holding:

The only evidence offered by defendant in support of its claim that the settlement was procured through fraud or collusion are the conclusory allegations contained in the affirmations of defendant's attorney. Bare, unsubstantiated allegations such as "[t]he purported judgment premised upon plaintiff's misrepresentations" and "[p]laintiff obtained its judgment under false pretenses" and "[t]he judgment was obtained under collusion by the plaintiff and its attorney since plaintiff's attorney was well aware of several litigations pending against their client based on their client's corporate structure" are insufficient to vacate the stipulation as a product of collusion or fraud. Such speculation also fails to make the requisite showing to reform the stipulation on the ground that it was executed under a mutual or unilateral mistake (see M.S.B Dev. Co., Inc. v Lopes, 38 AD3d 723 [2d Dept 2007] [A party seeking reformation must show clearly that there has been a mistake] [emphasis added]). Moreover, defendant, a sophisticated insurer well-versed in no-fault litigation and represented by able and competent counsel at the time the stipulation was entered into, does not claim that the settlement was a product of duress or that its counsel lacked the authority to enter into the settlement.

Defendant's claim that the stipulation of settlement should be vacated based upon newly discovered evidence of plaintiff's allegedly fraudulent incorporation is also without merit.

Plaintiff and defendant entered into a second stipulation, so-ordered on March 26, 2007, in the Nassau County action in which defendant agreed that plaintiff's right "to enforce voluntary settlements that have been entered into with any of the Insurers," including defendant, would not be impaired. As a party to the Nassau County action defendant was certainly aware on March 26, 2007 that the plaintiff professional corporation may be fraudulently incorporated. Despite that awareness, defendant nevertheless agreed that plaintiff could freely enforce any and all voluntary settlements which plaintiff had previously entered into. This concession by defendant to plaintiff belies defendant's argument that had it been aware of plaintiff's allegedly fraudulent incorporation on July 10, 2006 it would not have entered into the stipulation at issue here. "Courts will not set aside a stipulation . . . simply because, in hindsight, a party decides that the agreement was improvident" (Town of Clarkstown v. M.R.O. Pump & Tank, Inc., 287 AD2d 497, 498, 731 NYS2d 231 [2d Dept 2001]). Therefore, because defendant has failed to meet any of the criteria necessary for the court to vacate the parties' voluntary stipulation of settlement, defendant's Order to Show Cause is denied in its entirety.