Opinion
No. 600094–11.
2012-09-7
Ronald PALOGER and No Strings Attached, Inc. Retirement Trust, Plaintiffs, v. Richard Baron COHEN, Defendant.
Peter M. Agulnick, P.C., by Peter M. Agulnick, Esq., Great Neck, Attorney for Plaintiff. Herrick, Feinstein, LLP, by David R. King, Esq., New York, Attorney for Defendant.
Peter M. Agulnick, P.C., by Peter M. Agulnick, Esq., Great Neck, Attorney for Plaintiff. Herrick, Feinstein, LLP, by David R. King, Esq., New York, Attorney for Defendant.
VITO M. DESTEFANO, J.
The following papers and the attachments and exhibits thereto have been read on this motion:
+-----------------------------------------+ ¦Notice of Motion ¦1 ¦ +--------------------------------------+--¦ ¦Affirmation in Opposition ¦2 ¦ +--------------------------------------+--¦ ¦Affidavit of David R. King ¦3 ¦ +--------------------------------------+--¦ ¦Notice of Motion ¦4 ¦ +--------------------------------------+--¦ ¦Affirmation in Opposition ¦5 ¦ +--------------------------------------+--¦ ¦Affidavit of David R. King ¦6 ¦ +--------------------------------------+--¦ ¦Memorandum of Law in Support of Motion¦7 ¦ +--------------------------------------+--¦ ¦Affidavit of Aviva Wein ¦8 ¦ +--------------------------------------+--¦ ¦Second Affidavit of David R. King ¦9 ¦ +--------------------------------------+--¦ ¦Reply Memorandum of Law ¦10¦ +-----------------------------------------+
Richard Baron Cohen (“Defendant”) moves, inter alia, for an order pursuant to CPLR 6301 and 6311 enjoining Ronald Paloger and No Strings Attached, Inc. Retirement Trust (collectively referred to as “Plaintiff”) from making statements about the case and the settlement other than the statement “agreed upon” by the parties; and “enforcing the terms of the parties' May 16, 2012 settlement”.
Defendant also moves, pursuant to 22 NYCRR 216.1, to seal certain court records filed in conjunction with the motion.
Cohen sought in the remaining branches of the motion to enjoin Plaintiffs from presenting their claim in the bond and limiting any claim on the bond to the settlement amount of $740,000. However, after the filing of the instant motion, “the parties agreed to allow the Surety to make payment from the appeal bond in the amount of $740,000, without prejudice to Plaintiff's rights to seek additional payments after this motion is decided” (Affidavit in Further Support at p 1, note 1).
The underlying dispute concerned the purchase of a set of collectible cards by Defendant from Plaintiff for $700,000 (Affidavit in Support at ¶ 3). In exchange for the cards, Defendant gave Plaintiff two post-dated checks for $350,000 each (Affidavit in Support at ¶ 3). Thereafter, Defendant stopped payment on the two checks because he wanted to rescind the deal and return the cards (Affidavit in Support at ¶ 4).
Procedural Background
Plaintiff moved for an order pursuant to CPLR 3213 on the ground that the checks were instruments for the payment of money only. In an order dated June 28, 2011, this Court (Warshawsky, J.), granted the motion in favor of Plaintiff in the amount of $730,135 (Ex. “A” to Affidavit in Support). Judgment was entered on July 22, 2011 (Ex. “A” to Motion). Defendant appealed and oral argument at the Appellate Division was scheduled for May 17, 2012 (Affidavit in Support at ¶ 7).
On May 16, 2012, the day before oral argument on the appeal, Plaintiff's counsel (William Savino, Esq.) and Defendant's counsel (David King, Esq.) exchanged numerous e-mails discussing settlement (“May 16 e-mails”) (Exs. “E” through “K” to Motion). Specifically, on May 16, King wrote to Savino with the following settlement offer:
We are looking at the case as it stands today, and trying to reach a settlement that we believe is fair. We place no monetary value on Mr. Paloger's comments about wishing to publicize the litigation. It is customary in settlements to agree in advance as to what will or will not be said about the settlement,. And that will be a requirement in any settlement reached in this dispute.
Mr. Cohen will pay $740,000 in full and final settlement of the dispute, with an agreement that the two parties will agree to a statement concerning the litigation, which will be the only thing either part has to say about the case in the future. That statement will be along the lines of the following: “There was a dispute between parties concerning Mr. Cohen's purchase of a set of trading cards. The dispute has been resolved, and the terms of the settlement are confidential.” The parties will agree to penalties should either party be shown to have materially deviated from that statement in discussing the matter. We will agree to prepare the first draft of the settlement papers.
My client will be unavailable for the remainder of the day to discuss additional offers. If this offer is acceptable to your clients, we can advise the Court that the matter has been settled this afternoon and save both of our clients the additional fees that will be incurred through the appeal process and any trial (or subsequent appeal) that would follow. If not, we will see you in Court tomorrow....
(Ex. “E” to Motion). In response, Mr. Savino replied:
Mr. King: we have a deal. Settlement presupposes that payment of $740k will be received this month and that the statement will make clear that Mr. Cohen completed his purchase of the Set even if the settlement amount thereon is not disclosed. Please advise Bernie and me when you have informed the Second Department of this disposition. Please also advise us when I might have the draft settlement papers. Please say hello to Josh Angel for me. Thank you.
(Ex. “F” to Motion).
Importantly, this email was not signed and did not include anything that may be considered an electronic signature, including manual, typewritten, or automatic insertion.
King then e-mailed that the “condition (including in the allowed statement that sale was completed) is fine”, that his office would “reach out to the Second Department to get us off the calendar” and that Savino will “have a draft settlement agreement” the following week (Ex. “G” to Motion).
Savino responded to King stating, “my client just reemphasized to me that time is of the essence on remittance this month so the sooner Damon Morey [Plaintiff's counsel firm] has the draft settlement papers, the less likely there will be any further issues between us” (Ex. “H” to Motion). King indicated that he “understood” (Ex. “H” to Motion).
On the same day, the attorneys for both Plaintiff and Defendant executed a stipulation withdrawing the appeal. The stipulation withdrawing the appeal was filed on May 17, 2012.
The settlement documents, which were subsequently drafted by Defense counsel, contained a confidentiality provision which set forth a penalty stating that if Plaintiff “violates this [confidentiality] provision, he shall be required to pay back the Settlement Amount [$740,000] less $100.00 which shall constitute consideration under the release as set forth in Paragraph 3.” The draft settlement agreement also contained a non-disparagement clause which restricted the parties from making any defamatory statements about the other. The penalty for violation of the non-disparagement clause was the same as that for violating the confidentiality provision. Absent from the draft settlement agreement was a penalty for Defendant's violation of either the confidentiality provision or non-disparagement provision (Ex. “L” to Motion).
On May 22, 2012, King e-mailed Savino asking that if he had concerns with the draft, “rather than questioning whether the settlement can be completed ... it would make sense for you and Bernie to send a draft back with your comments/proposed changes and we will see if we can finalize terms. We look forward to seeing a revised agreement so we can move this forward” (Ex. “N” to Motion).
On May 24, 2012, Savino sent back the proposed changes and additions, most of which dealt with the confidentiality and non-disparagement provisions. While some of the proposed changes were agreed to by the Defendant, the parties could not agree on either the time frame of the confidentiality provision or the penalty to be imposed in the event of violation thereof (Ex. “P” to Motion).
On May 25, 2012, King e-mailed Savino with responses to Plaintiff's proposed additional terms to the settlement and stated that “[h]opefully, we can continue to move this process forward to an executed settlement agreement and release” (Ex. “P” to Motion).
Ultimately, the parties were unable to finalize the settlement agreement in writing and, as such, the Plaintiff now seeks the full amount of the original judgment, with interest (Affidavit in Support ¶ 2). Defendant seeks an injunction “enforcing the terms of the parties' May 16, 2012 settlement” and enjoining the Plaintiff from making statements about the case and the settlement other than that agreed upon by the parties May 16 purported settlement. In addition, Defendant seeks to have certain court records sealed pursuant to 22 NYCRR 216.1.
For the reasons that follow, the Defendant's motions are denied.
The Court's Determination
Initially, the court notes that it is without authority to entertain the instant motions given that judgment in the action was entered on July 22, 2011. The law is well-settled that the entry of judgment terminates a lawsuit and that a party seeking to enforce a purported settlement post-judgment must do so by plenary action (Teitelbaum Holdings, Ltd. v. Gold, 48 N.Y.2d 51 [1979] ).
In any event, a preliminary injunction is not warranted under the circumstances presented. A party moving for a preliminary injunction must demonstrate by clear and convincing evidence, a likelihood of ultimate success on the merits, irreparable injury if the injunction were not granted, and a balancing of equities in favor of the moving party (Family–Friendly Media, Inc. v. Recorder Television Network, 74 AD3d 738 [2d Dept 2010] ). An injunction is a provisional remedy to maintain the status quo until a full hearing can be held on the merits, not to determine the ultimate rights of the parties.
As such, the decision whether to grant or deny a preliminary injunction is within the sound discretion of the court ( Id.; Masjid Usman, Inc. v. Beech 140, LLC, 68 AD3d 942 [2d Dept 2009] ). Assuming arguendo that a preliminary injunction could be sought here, the Defendant has failed to demonstrate entitlement to such relief.
While Defendant's notice of motion indicates that he is seeking a preliminary injunction, it appears to the court that Defendant is not seeking a provisional remedy but, rather, a permanent remedy, to wit, enforcement of a purportedly existing settlement agreement.
Likelihood of Ultimate Success on the Merits
Defendant cannot demonstrate a likelihood of success on the merits that the purported settlement agreement espoused in the May 16 e-mails constituted an enforceable settlement agreement because it is in violation of both the statute of frauds and CPLR 2104.
Statute of Frauds
The May 16 e-mails relied upon by Defendant in support of his contention that the parties had reached a settlement agreement is barred by the statute of frauds as the May 16 e-mails did not contain an essential term, were not signed by the Plaintiff or his attorney, and evidenced an intent that any settlement reached must be reduced to writing.
“To satisfy the statue of frauds, a writing must identify the parties, describe the subject matter, state all the essential terms of an agreement, and be signed by the party to be charged” ( Durso v. Baisch, 37, AD3d 646 [2d Dept 2007] ). Given the numerous e-mails with respect to the confidentiality provision, the court considers confidentiality a material term of the purported settlement. Specifically, the exact wording of the confidentiality provision as well as the penalty imposed for violation of the confidentiality provision was not set forth in the May 16 e-mails, the absence of which undermines Defendant's contention that an agreement was even reached in the first place ( see RNK Capital LLC v. Natsource LLC, 76 AD3d 840 [1st Dept 2010]; Ortiz v. Mastromarino, D.D.S., 2008 WL 279227 [Sup Ct New York County 2008] [defense counsel contemplated an exchange and execution of documents, including a confidentiality agreement, before finalization] ). “If an agreement is not reasonably certain in its material terms, there can be no legally enforceable contract' “ (Trueforge Global Machinery Corp. v. Viraj Group, 84 AD3d 938 [2d Dept 2011] [citations omitted]; Teutul v. Teutul, 79 AD23d 851 [2d Dept 2010] ).
Moreover, the parties also intended, as evidenced by the express language in the May 16 e-mails, that the settlement reached would be reduced to a formal writing. Defense counsel wrote that he would “prepare the first draft of the settlement papers” and that Plaintiff's counsel will “have a draft settlement agreement” the following week (RNK Capital LLC v. Natsource LLC, 76 AD3d 840 [1st Dept 2010] ).
Most importantly, the May 16 e-mails which Defendant contends constituted a settlement agreement were not signed by the Plaintiff or Plaintiffs' counsel. The law is well settled that an e-mail transmission that bears the name of the sender at the foot of the message constitutes a writing for statute of frauds purposes (GOL 5–701[b][3][a] ). However, the May 16 e-mails were not subscribed, even electronically, by the Plaintiff or counsel for the Plaintiff. The fact that the attorney for the Plaintiff was “identified as the sender in the e-mail” to which Plaintiff is sought to be bound does not satisfy the subscription requirement ( see Leist v. Tugendhaft, 64 AD3d 687 [2d Dept 2009] ).
Settlement Agreements Under CPLR 2104
Pursuant to CPLR 2104, “[a]n 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.”
In Bonnette v. Long Island College Hospital (3 NY3d 281, 286 [2004] ), the Court of Appeals held that, in order to be binding, a settlement agreement “itself must be in writing signed by the party (or attorney) to be bound.” The Court further held that “an out-of-court settlement must be adequately described in a signed writing” ( Id.; DeVita v. Macy's East, Inc., 36 AD3d 751 [2d Dept 2007] [confirmatory email “did not constitute a writing sufficient to bring the purported settlement into the scope of CPLR 2104”]; Barrett v. Carela, 33 AD3d 830 [2d Dept 2006] [evidence did not include a “signed writing incorporating all material terms of the purported settlement”] ).
Here, none of the e-mails discussing the possible settlement sent from Savino to King in the May 16 e-mail chain were subscribed by the Plaintiff or Plaintiff's counsel and, thus, fail to demonstrate that the parties entered into a binding settlement agreement in compliance with CPLR 2104 (Barrett v. Carela, 33 AD3d 830 [2d Dept 2006]; Ruffini v. 41 Fifth Owners Corp., 21 Misc.3d 1140(A) [Civ Ct New York County 2008] [e-mail exchange did not constitute an enforceable stipulation of settlement within the requirements of CPLR 2104 where parties approved of the stipulation in an e-mail exchange but negotiations broke down before the parties and their attorneys signed the stipulation]; cf. Williamson v. Delsener, 59 AD3d 291 [1st Dept 2009] [“e-mails exchanged between counsel, which contained their printed names at end, constituted signed writings (CPLR 2104) within meaning of statute of frauds”] ).
The relevant e-mail in which the parties agreed to settlement was the following: “My client has approved the latest stipulation. When you have a better idea of when I may expect an executed stipulation back from your client let me know so that I may make arrangements for a check to be drafted” ( Ruffini v. 41 Fifth Owners Corp., 21 Misc.3d 1140(A) [Civ Ct New York County 2008] ).
Irreparable Injury
Defendant argues that the damage to his reputation that would result if the Plaintiff is not enjoined from speaking about the case constitutes irreparable harm (Memo of Law in Support at p 8). Notwithstanding the fact that damage to one's reputation is often sufficient to justify a finding irreparable injury ( see, e.g., Klein, Wagner & Morris v. Lawrence A. Klein, P.C., 186 A.D.2d 631 [2d Dept 1992] ), the irreparable harm must nevertheless be shown to be imminent, not remote or speculative (Golden v. Steam Heat, Inc., 216 A.D.2d 440, 442 [2d Dept 1995] ). Here, the Defendant admits that the Plaintiff “ may damage Cohen's reputation....” (Memorandum of Law in Support at p 8). Therefore, the Defendant has not demonstrated irreparable injury that is imminent.
Furthermore, the Court can only enjoin the Plaintiff from discussing the case if there was an enforceable confidentiality agreement. However, as discussed, it is unlikely that the Defendant will succeed on the merits that the May 16 e-mails constituted a settlement agreement and, thus, similarly unlikely that an enforceable confidentiality provision exists. In the absence of a confidentiality agreement, the Plaintiff is not prevented from speaking about the litigation.
Balance of Equities
Defendant contends that the Plaintiff acted in bad faith to induce Defendant to withdraw the appeal and, therefore, the balance of equities are in Defendant's favor (Affidavit in Support at 24–40; Memorandum of Law in Support at p 9). Contrary to Defendant's contention, it does not appear that Plaintiff “induced” Defendant to withdraw the appeal. Rather, the topic of withdrawing the appeal and saving the clients the “additional fees that will be incurred through the appeal process” was raised by defense counsel (Ex. “E” to Motion). Moreover, in light of the prevailing Court of Appeals interpretation of CPLR 2104 and its rationale, Defendant acted precipitously in withdrawing the appeal because of the indefinite nature of the unsigned purported settlement agreement.
Based on the foregoing, it is hereby ordered that the Defendant's motion is denied in its entirety.
This constitutes the decision and order of the court.