Opinion
File No. 2020-431
02-08-2022
Administration Proceeding, ESTATE OF James ECKERT, a/k/a James R. Eckert, Deceased. Michelle Eckert, Plaintiff, v. Tara Connelly, Defendant.
Zachary Morahan, Esq., Attorney for Michelle Eckert, Coughlin & Gerhart, LLP, 99 Corporate Drive, Binghamton, NY 13902 David Bamdad, Esq., Attorney for Tara Connelly, Meltzer, Lippe, Goldstein & Breitstone, LLP 190 Willis Avenue. Mineola, NY 11501
Zachary Morahan, Esq., Attorney for Michelle Eckert, Coughlin & Gerhart, LLP, 99 Corporate Drive, Binghamton, NY 13902
David Bamdad, Esq., Attorney for Tara Connelly, Meltzer, Lippe, Goldstein & Breitstone, LLP 190 Willis Avenue. Mineola, NY 11501
David H. Guy, S.
James Eckert died intestate on December 7, 2018. Michelle Eckert is James Eckert's sole surviving child, and Tara Connelly is his surviving spouse. On August 17, 2020, Ms. Eckert filed a petition for letters of administration of the Estate of James Eckert. On September 23, 2020, Ms. Connelly filed a cross-petition for letters of administration, to which Ms. Eckert filed objections on December 7, 2020. Ms. Connelly filed objections to Ms. Eckert's petition for letters on December 14, 2020.
Ms. Eckert filed a verified document, titled as a complaint, with her objections to the Connelly cross-petition for administration on December 7, 2020, alleging the decedent lacked capacity to marry Ms. Connelly on July 31, 2018 and seeking an order declaring the marriage between Ms. Connelly and the decedent null and void.
On March 8, 2021, Ms. Connelly filed a petition for letters of temporary administration for the purpose of accessing any medical and financial records of the decedent. Letters of temporary administration dated March 23, 2021 were issued to Ms. Connelly for that limited purpose.
On March 18, 2021, Ms. Eckert commenced an action in Supreme Court against Ms. Connelly, alleging conversion, undue influence, lack of mental capacity, unjust enrichment, and constructive trust, in relation to certain non-probate retirement accounts held by John Hancock, The Trustee of MATCO Associates, Inc; and Edward Jones Trust Company.
On August 12, 2021, the Court issued an order referring the parties and their counsel to alternative dispute resolution ("ADR"), in accordance with the presumptive Alternative Dispute Resolution Program instituted by Chief Judge Janet DiFiore in 2019. On September 20, 2021, an ADR session was held in person at the Broome County Courthouse with Surrogate's Court Principal Court Attorney, Justin Harby-Conforti, Esq. Ms. Eckert appeared with her attorney, Zachary Morahan, Esq., and Ms. Connelly appeared with her attorney, David Bamdad, Esq. During the ADR session, the parties, with counsel, came to a mutual verbal agreement that Ms. Connelly would pay Ms. Eckert $515,000 in full settlement of the Surrogate's and Supreme Court matters. The attorneys cancelled previously scheduled depositions with witnesses necessary for further litigation of this matter.
Mr. Harby-Conforti sent an email to the attorneys on September 21, 2021, confirming that the matters had been settled and asking to be informed as to the status of the filing of stipulations of discontinuance. He sent a similar email to the Chief Clerk of the Surrogate's Court to advise her of the settlement.
On September 21, 2021, Eckert's counsel sent an email to Connelly's counsel, stating the following:
This and the next quoted/referenced emails between counsel are attached as exhibits to Eckert's motion papers and/or Connelly's reply papers
I wanted to follow up to the settlement reached at mediation yesterday. We will handle the first draft of the Settlement Agreement and send for your review. Pursuant to the settlement reached, we will incorporate the following terms:
1) $515,000.00 payment within 20 days of fully signed agreement/stipulations of discontinuance being provided. Payment to be made by certified check made payable to Michelle Eckert and delivered to C & G;
2) Stipulation of discontinuance with prejudice as to petitions in Surrogate's Court;
3) Stipulation of discontinuance with prejudice as to Sup. Ct. action;
4) Non-disparagement provision;
5) Confidentiality provision;
6) Mutual general releases;
7) Affirmation that Michelle and Tara have or will destroy any medical records in their possession.
If there is anything I missed, please let me know. Also, as we discussed yesterday, to the extent we need to be flexible on payment dates to minimize tax implications, we are willing to work in good faith to ensure that tax treatment is minimized by timing.
Connelly's counsel sent a reply email dated September 22, 2021, stating:
Leave the timing of payment open until we have more information. There should also be an indemnification for Tara and, in addition to destroying records in her possession, a representation that Michelle has not provided copies of medical records to any other person. We will provide any other comments we may have when we review the draft agreement.
Eckert's counsel sent a proposed settlement agreement for Connelly's counsel's review, by email dated September 29, 2021. Connelly's counsel replied via email on October 20, 2021, indicating that they had researched the tax implications of the settlement, which would require his client to withdraw from the inherited retirement accounts to make the lump sum payment to Ms. Eckert and "trigger an enormous tax regardless of what year it is done." He concluded, "[W]e cannot settle upon those terms."
Mr. Harby-Conforti independently followed up with counsel for a status update and was informed by counsel on October 27, 2021 that the parties no longer agreed to settle these matters and litigation to enforce the settlement was anticipated. The Court held an attorneys-only conference via Microsoft Teams on November 16, 2021, which did not resolve these matters.
On November 24, 2021, Eckert's counsel filed a motion to enforce the settlement and enjoin Connelly from accessing the assets related to these litigated matters, in both Surrogate's and Supreme Court, with a proposed order to show cause, his own attorney affidavit, Ms. Eckert's affidavit, a memorandum of law, and supporting exhibits. The Court signed the order to show cause, setting the matter for return on December 20, 2021, on submission. Counsel communicated the desire for oral argument and scheduling conflicts for December 20, so the Court issued an amended order to show cause returnable December 21, 2021.
The order to show cause contains a temporary restraining order restraining Ms. Connelly from using or modifying any and all assets derived from James Eckert. Connelly's counsel filed opposition to the motion on December 20, 2021, consisting of his own attorney affirmation, a memorandum of law, and supporting exhibits. The Court held oral argument on the motion via Microsoft Teams on December 21, 2021. Over objection from Connelly's counsel, the TRO contained in the order to show cause remains in effect to-date. Decision on the motion follows.
Stipulations of settlement are judicially favored, will not lightly be set aside, and are to be enforced with rigor and without a searching examination into their substance as long as they are clear, final and the product of mutual accord. Herz v Transamerica Life Ins. Co. , 172 AD3d 1336, 1337 (2d Dept 2019). A settlement stipulation is enforceable so long as it complies with the requirements of CPLR 2104 and sets forth all the material terms of settlement. Phila Ins. Indem. Co. v Kendall , 197 AD3d 75 (1st Dept 2021). CPLR 2104 requires that a settlement stipulation must be in writing and subscribed by the party or party's attorney against which enforcement is sought. Emails exchanged between counsel can constitute a settlement reduced to writing within the meaning of CPLR 2104. Id. ; see also Rawald v Dormitory Auth. of the State of NY , 2021 NY App.Div LEXIS 6114 (1st Dept 2021) (internal citations and quotations omitted). To be enforceable as a binding settlement agreement, a writing must set forth all material terms of the agreement; contain an expression of mutual assent; and not be conditioned on a further occurrence. Forcelli v Gelco Corp. , 109 AD3d 244 (2d Dept 2013).
Settlement-related writings will not be found to have created a binding agreement if they expressly anticipate a subsequent writing that is to officially memorialize the existence of a settlement agreement and set forth all of its material terms. Matter of Pittsford Canalside Props., LLC v Village of Pittsford Zoning Bd. of Appeals , 181 A.D3d 1235, 1237 (4th Dept 2020) (parties only had an "agreement to agree" and no enforceable settlement when party's counsel explicitly indicated that he required additional information and documents before any agreement could be reached).
The First Department has granted a party's request for specific performance of a settlement agreement when the emails exchanged between attorneys were subscribed to and contained the material terms of settlement. Phila Ins. , supra at 77. In that case, the parties presented their cases before an arbitrator and reached an agreement to settle their dispute for $400,000 prior to their awareness of the arbitrator issuing his decision. Id. On the same day the parties reached the agreement, respondent's counsel emailed petitioner's counsel stating: "Confirmed — we are settled for 400k." Id. Petitioner's counsel responded with an attached proposed release agreement. Id. Before the agreement was signed, the parties received the arbitrator's decision awarding $975,000 to the respondent, who then refused to execute the settlement agreement. Id. The Court upheld the agreement, finding the "email exchange exhibits offer and acceptance ..." Id. at 82.
In the case presently before the Court, the settlement agreement is similarly enforceable. At the ADR session, the parties mutually agreed to resolve this matter by Ms. Connelly making a lump-sum cash payment of $515,000 to Ms. Eckert, in exchange for Ms. Eckert discontinuing these actions against Ms. Connelly. The post-ADR email exchange between Morahan and Connelly's counsel constituted a subscribed settlement stipulation with all material terms of the parties’ settlement agreement. Phila Ins. , supra at 81. The email from Eckert's counsel on September 21, 2021 contained a detailed account of the material terms of the parties’ agreement. Connelly's counsel's September 22, 2021 email response constituted an acknowledgment of the terms of those terms. Connelly's counsel did not reject any of the terms Eckert's counsel set forth. He did suggest a typical indemnification provision and expanded language regarding decedent's medical records, which were incorporated in the draft agreement forwarded by Eckert's counsel a week later, three weeks before Connelly communicated rejection of the settlement. Connelly's counsel did not state that the agreement was conditioned on a further occurrence, and he did not indicate that the form of payment stated in Eckert's counsel's email, a lump-sum cash payment of $515,000, was an unresolved issue. In totality, these circumstances constituted both attorneys’ mutual assent to the material terms of the agreement. Forcelli , supra at 248.
Each attorney's reference to timing in their respective emails does not make the timing of payment a material term of the agreement. The suggestion by Eckert's counsel that she could "be flexible on payment dates to minimize tax implications" and the response of Connelly's counsel to "leave the timing of payment open" are not consistent with the position now taken by Connelly, first expressed a month after the ADR resolution, that in fact no time at all will work.
Ms. Connelly appears to have changed her mind once the tax implications of the agreed settlement became fully apparent to her. Simply put, if Ms. Connelly wished to make the settlement contingent upon a review of her tax consequences, it was incumbent on her and/or her counsel to make the term material by explicitly communicating to Ms. Eckert and/or her counsel that such review was a prerequisite to her full assent to this agreement. These are not casual email communications. A party is entitled to rely upon the communications made by opposing counsel on behalf of the other party with respect to settlement, whatever the mode of communication. Phila Ins. , supra at 80-81.
The material term of this agreement is the amount to be paid by Connelly in satisfaction of the pending claims in Supreme and Surrogate's Courts, all of which arise out of the same set of transactions. The execution of stipulations of discontinuance, non-disparagement and confidentiality provisions, mutual releases and the confirmation of destruction of medical records are all typical, essentially ministerial; indeed, none of those terms contained in Eckert's counsel's confirming email is disputed. Id.; compare Teixeira v Woodhaven Ctr. of Care, 173 AD3d 1108, 1109 (2d Dept 2019) (email exchange did not show mutual accord for settlement of Supreme Court matter when the attorney wrote that "pending the resolution of the Surrogate proceedings" the parties may have to "work something out in terms of the client's funds.")
It is clear to the Court that the parties reached a settlement agreement, the material terms of which were assented to in the attorneys’ email exchange. The parties both took affirmative steps — cancellation of scheduled depositions — in furtherance of the settlement. Ms. Connelly then changed her mind about the agreement following her further research on the tax consequences of the agreed resolution. While a factor in the parties’ negotiations, confirmation of the tax implications to Ms. Connelly was not made a condition precedent or a material term of the settlement.
Connelly's argument that the different negotiating positions of the parties renders the settlement unenforceable is unavailing. The Court recognizes that the parties’ initial positions on the most appropriate form of any settlement payment were likely different, with Ms. Connelly preferring to transfer a portion of the retirement assets at issue in-kind, and Ms. Eckert seeking a lump-sum cash payment. The undisputed terms of the settlement negotiated by these represented parties include a lump-sum cash payment to Eckert by Connelly. If this issue remained open and material to Ms. Connelly, it was incumbent upon her to communicate that, which was not done. Forcelli , supra at 248.
The Court hereby grants Michelle Eckert's motion to enforce this settlement. This decision makes the TRO in place against Ms. Connelly ultimately moot; it will remain in place pending the order to be issued in response to this decision.
In furtherance of this decision, it is hereby
ORDERED, that Michelle Eckert's motion to enforce the settlement reached by the parties on September 20, 2021 is granted, and it is further
ORDREED, that Zachary Morahan, Esq. is directed to submit a proposed order/orders, on notice, within 15 days of the date of this decision.