Opinion
01-CV-0801E(F)
May 27, 2003.
MEMORANDUM and ORDER
This decision may be cited in whole or in any part.
Aderman brought a Title VII suit against her employer, the Niagara Wheatfield School District ("NWSD"), for alleged sexual harassment by her supervisor, Robert Mowry. On March 6, 2003 NWSD filed a motion seeking to enforce a purported settlement agreement and to dismiss this action. For the reasons set forth below, defendant's motion will be denied.
Plaintiff's attorney, David Rodriguez, Esq., sent defendant's attorney, Lynda M. Tarantino, Esq., a letter dated July 25, 2002 concerning a possible settlement ("the July 25 Letter"), which reads in relevant part:
"My client has discussed with me a settlement on demand to be put forth to your client in hopes of resolving this matter before any further expenditures.
"Specifically, Mrs. Aderman is willing to completely withdraw her claim and sign a General Release in full consideration of the defendant releasing from employment Mr. Robert Mowry.
"There are no other conditions set forth. Please discuss with your client and communicate at your earliest convenience."
In a letter dated August 21, 2002, NWSD purported to accept the "offer" made by the July 25 Letter ("Purported Acceptance" or "August 21, 2002 Letter"). NWSD's Purported Acceptance reads in relevant part:
"My client has considered your settlement offer dated July 25, 2002. The District is willing, as you requested, to release Mr. Mowry from his employment. Mr. Mowry will resign and the District will accept his resignation. Accordingly, I am enclosing a settlement agreement which includes the general release which you had offered. Also attached is a stipulation of discontinuance."
On August 22, 2002 Mowry resigned in a letter dated August 19, to be effective September 20, 2002.
Rodriguez called Tarantino on August 22, 2002 indicating that plaintiff wanted (1) her evaluation to be revised to remove the "weak" attendance notation and (2) NWSD to prevent Mowry from returning to NWSD's premises. Plaintiff threatened to file a claim with the EEOC regarding alleged Family and Medical Leave Act violations. Consequently, on August 23, Tarantino informed Rodriguez that defendants would strike Aderman's attendance grade from her evaluation and that Mowry would vacate the premises by September 20. Rodriguez stated that this would be acceptable. On September 4, the Board of Education accepted Mowry's resignation.
On September 13, NWSD sent plaintiff a revised settlement agreement addressing the evaluation. By letter dated September 26, Rodriguez sent Tarantino signed copies of the release and a revised settlement agreement. Plaintiff revised the settlement agreement by adding, inter alia, (1) a liquidated damages clause, (2) provision for a favorable attendance rating and (3) further restrictions against Mowry's return to NWSD. By letter dated October 7, NWSD objected to plaintiff's revisions and indicated that it had complied with plaintiff's sole demand — viz., to end Mowry's employment. NWSD also indicated that it would move to enforce the settlement agreement purportedly embodied in the July 25 Letter and the Purported Acceptance.
By letter dated October 11, Rodriguez indicated that Aderman conceded to NWSD with respect to the liquidated damages clause and the attendance evaluation. Rodriguez, however, noted that Aderman remained steadfast with respect to her demand that Mowry not return to NWSD premises absent judicial process directing him to so appear.
By letter dated October 16, NWSD indicated that it had no intent to re-hire Mowry. Plaintiff responded in a letter dated October 22, which sought written assurance that Mowry would never be re-hired. By letter dated November 1, defendant stated that it was legally prohibited from binding future School Boards by agreeing never to hire Mowry.
Although not attached to NWSD's moving papers, such was subsequently provided to this Court upon request.
By letter dated November 26, 2002, Tarantino asked Magistrate Judge Foschio to convene a settlement conference. A settlement conference was held on December 12 and defendant accepted language suggested by Magistrate Judge Bianchini whereby NWSD would defer its hiring decision to Paul Sikora, NWSD's human resource director, and that Sikora would agree not to re-hire Mowry. Nonetheless, no settlement was consummated. Consequently, NWSD conducted intensive discovery before the January 10, 2003 deadline. Judge Bianchini convened another settlement conference January 15, at which time defendant accepted another revision. Nonetheless, Aderman refused to sign the settlement agreement because of her demand for attorneys' fees — a demand that first arose on January 15.
By letter dated January 24, NWSD made a final attempt to obtain compliance before making the present motion to enforce the settlement agreement reflected in plaintiff's July 25 Letter and NWSD's August 21, 2002 Letter. On March 6, 2003 NWSD filed its motion to enforce the settlement agreement and to dismiss this action. Plaintiff responds that no final agreement was ever reached because NWSD never agreed in writing to not re-hire Mowry. Oral argument was heard April 25.
This Court must determine whether an enforceable settlement agreement was entered into by Aderman and NWSD via their respective attorneys. Accordingly, this Court must ascertain whether (1) a contract was formed and, if so, (2) whether such contract is enforceable. See Sears, Roebuck Co. v. Sears Realty Co., 932 F. Supp. 392, 401-403 (N.D.N.Y. 1996). New York law governs both propositions. Ibid. For the reasons set forth below, the Court finds that no contract was formed.
See also Eardman v. Bethlehem Steel Corp., 1994 WL 721386, at *3-4 (W.D.N.Y. 1994) (holding that New York law governed a dispute involving a settlement agreement); Hughes v. Lillian Goldman Family, LLC, 153 F. Supp.2d 435, 445 (S.D.N.Y. 2001) (discussing New York law governing settlement agreements).
This Court finds that all of the elements for contract formation did not exist on August 21, 2002 when NWSD purported to accept an alleged offer made by Aderman's July 25 Letter. The parties do not dispute that, under New York law, the formation of a contract requires offer, acceptance and consideration. Nonetheless, "[i]nterwoven in the analysis of the offer and the acceptance is the requirement of mutual assent, which considers whether there has been a meeting of the minds between the parties on all essential terms of the agreement." Ostman v. St. John's Episcopal Hosp., 918 F. Supp. 635, 643 (E.D.N.Y. 1996). There was no mutual assent or "meeting of the minds" here. Accordingly, no contract was ever formed.
"Settlement agreements are contracts and must therefore be construed according to general principles of contract law." See Red Ball Interior Demolition Corp. v. Palmadessa, 173 F.3d 481, 483 (2d Cir. 1999).
See N.F.L. Ins. Ltd. v. BB Holdings, Inc., 874 F. Supp. 606, 610-611 (S.D.N.Y. 1995) (cited by both parties for the proposition that contract formation under New York law requires offer, acceptance and consideration).
Aderman's conduct indicated that there was no meeting of the minds. For example, Aderman immediately made additional requests and modified her initial request by seeking a written guarantee. Aderman contends in her Memorandum of Law:
"Plaintiff's initial offer to defendant and subsequent negotiations made it clear to defendant that Plaintiff wanted Mr. Robert Mowery released from employment. The essential requirements of that term were that defendant would release Mr. Mowery from employment and agree to guarantee in writing that they would not rehire Mr. Robert Mowery in the future ***." Pl.'s Mem. of Law.
More importantly, Aderman displayed objective signs that the July 25 Letter was intended as an offer to negotiate rather than a binding offer. Indeed, the July 25 Letter concluded with: "[p]lease discuss with your client and communicate at your earliest convenience." July 25 Letter (emphasis added). This concluding language expressly contemplated that, if NWSD was interested, its counsel was encouraged to engage in further communications.
See Int'l Minerals Resources v. Pappas, 96 F.3d 586, 593 (2d Cir. 1996) ("Under both New York and English law, a contract is formed when all of the contracting parties express an intent to be bound and where all of the essential terms of the agreement have been spelled out.") (emphasis added); Brause v. Goldman, 199 N.Y.S.2d 606, 611 (1st Dep't 1960) ("When the wording and sense of letters exchanged between the parties reveal no present intent to form a binding contract, but rather to continue negotiations with the possible ultimate meeting of the minds deferred until some future time, either party may withdraw with impunity prior to that time."), aff'd, 9 N.Y.2d 620 (1961). The existence of objective signs that Aderman was not making a binding offer distinguishes this case from the case where one party maintains an unexpressed subjective intent such as that described by Judge Hand in Hotchkiss v. Nat'l City Bank of N.Y., 200 F. 287, 293 (S.D.N.Y. 1911) ("A contract has, strictly speaking, nothing to do with the personal, or individual, intent of the parties. A contract is an obligation attached by the mere force of law to certain acts of the parties, usually words, which ordinarily accompany and represent a known intent. If, however, it were proved by twenty bishops that either party, when he used the words, intended something else than the usual meaning which the law imposes upon them, he would still be held, unless there were some mutual mistake, or something else of the sort. Of course, if it appear by other words, or acts, of the parties, that they attribute a peculiar meaning to such words as they use in the contract, that meaning will prevail, but only by virtue of the other words, and not because of their unexpressed intent."), aff'd, 201 F. 664 (2d Cir. 1912), aff'd, 231 U.S. 50 (1913).
In re Flagstaff Foodservice Corp., 25 B.R. 844, 849 (Bankr.S.D.N.Y. 1982) (construing letter ostensibly offering to purchase assets and finding such to be an offer to negotiate rather than a binding offer because there was no meeting of the minds where "essential terms and conditions remained open for determination" — despite the letter's self-characterization as an "offer" that expired on a date certain); Braun v. CMGI, Inc., 2001 WL 921170, at *8 (S.D.N.Y. 2001) (construing letter offering to negotiate an employment contract and finding no "meeting of the minds" because "the existence of open terms to be negotiated further weighs against the finding of a contract"); cf. In re Application of United States Surgical Corp., 549 N.Y.S.2d 732, 732 (1st Dep't 1990) (finding that a letter did not constitute a settlement agreement because it expressly contemplated additional negotiations).
Such language undermines any contention that the July 25 Letter was a binding offer rather than a preliminary entreaty for settlement. See Winston v. Mediafare Entertainment Corp., 777 F.2d 78, 80 (2d Cir. 1986) ("In any given case it is the intent of the parties that will determine the time of contract formation. To discern that intent a court must look to the words and deeds [of the parties] which constitute objective signs in a given set of circumstances.") (internal quotations omitted). Furthermore, Aderman never rendered any performance — further demonstrating that she did not believe that a contract had been entered into. Accordingly, no contract was ever formed.
The analysis would be different if the July 25 Letter had concluded with language such as "please discuss with your client and give us an answer [or response] at your earliest convenience" or if it contained a deadline. See, e.g., Thomas America Corp. v. Fitzgerald, 968 F. Supp. 154 (S.D.N.Y. 1997) (finding that letter made a binding offer where it concluded with statement that the offer is valid for 48 hours).
An examination of the four Winston factors demonstrates that Aderman did not intend to be bound when she sent the July 25 Letter. First, as noted above, the July 25 Letter made an"express reservation of the right not to be bound in the absence of a writing" where it invited additional "communication" as opposed to an answer or a response. Winston, at 80-83. Second, there was no performance by Aderman, thus suggesting that she never believed that a contract was formed. Third, not all terms of the agreement had been agreed upon. For example, the terms of Mowry's "release" were indefinite. Finally, an agreement was never memorialized; the parties only traded un-executed drafts. Ibid. The purported settlement agreement must be "construed in accordance with the intent of the parties." See Bank of N.Y. v. Amoco Oil Corp., 35 F.3d 643, 661 (2d Cir. 1994). Consequently, Aderman never intended the July 25 Letter to serve as a binding offer and no contract was formed because her objective manifestations belied such an intent. Cf. Dodge Street, LLC. v. Livecchi, 2002 WL 518533, at *3 (2d Cir. 2002) ("Under New York law, even if a party subjectively does not intend to be legally bound, if his actions, gauged by an objective standard, support the conclusion that he accepted the agreement, he will be legally bound to honor the contract") (emphasis added).
Inasmuch as Rule 2104 of New York's Civil Procedure Law and Rules was not complied with in any event, this Court need not address NWSD's contention that an oral agreement was formed during the January 15, 2003 settlement conference.
Accordingly, it is hereby ORDERED that defendant's motion to enforce the Settlement Agreement is denied and that the parties shall file any motions for summary judgment by June 23, 2003 and that, barring such, the parties shall appear before Part III of this Court on June 27, 2003 at 3:00 p.m. (or as soon thereafter as they may be heard) to set a date for trial.