Opinion
112121/2011
02-17-2021
Ronald RAWALD and Maureen Rawald, Plaintiffs, v. DORMITORY AUTHORITY OF the State of NEW YORK, Turner Construction Company, Sea Crest Construction Corp., Peter Scalamandre & Sons, Inc., Specialty Flooring Systems, Inc., and Component Assembly Systems, Inc., Defendants.
O'Dwyer & Bernstien, LLP, New York, NY ( Christopher Downes of counsel), for plaintiffs. Perry, Van Etten, Rozanski & Kutner, LLP, New York, NY ( Amanda Millea of counsel), for defendants Sea Crest Construction Corp. and Peter Scalamandre & Sons, Inc.
O'Dwyer & Bernstien, LLP, New York, NY ( Christopher Downes of counsel), for plaintiffs.
Perry, Van Etten, Rozanski & Kutner, LLP, New York, NY ( Amanda Millea of counsel), for defendants Sea Crest Construction Corp. and Peter Scalamandre & Sons, Inc.
Gerald Lebovits, J.
In this Labor Law action, this court previously granted summary judgment dismissing plaintiffs’ claims against defendants Sea Crest Construction Corporation and Peter Scalamandre & Sons, Inc. (together, Sea Crest). Plaintiffs now move to enforce what they contend to be a binding settlement agreement with Sea Crest on May 6, 2020—the day before entry of this court's decision dismissing plaintiffs’ claims against Sea Crest.
Plaintiffs’ motion is based on emails exchanged on May 6 between counsel for plaintiffs and counsel for Sea Crest. This court concludes that this email correspondence did not constitute an agreement between counsel on all material terms of a settlement and was not subscribed as required by CPLR 2104. Plaintiffs’ motion to enforce is denied.
BACKGROUND
This action arises from an accident suffered by plaintiff Ronald Rawald on a construction project financed by defendant Dormitory Authority of the State of New York (DASNY). Plaintiffs (Rawald and his wife Maureen Rawald) sued DASNY, Sea Crest (the general contractor on the project), and defendant Turner Construction Company (the on-site construction manager).
DASNY and Sea Crest cross-claimed against each other for common-law and contractual indemnification. Turner brought a third-party action against Sea Crest, and also against Rawald's employer, Component Assembly Systems, Inc. Turner sought common-law and contractual indemnification from Sea Crest. Sea Crest and Component Assembly Systems each counterclaimed against Turner, and cross-claimed against each other, for common-law and contractual indemnification.
Turner also sought damages for Sea Crest's alleged breach of a contractual obligation to procure insurance for Turner's benefit.
DASNY, Sea Crest, and Turner each separately moved for summary judgment under CPLR 3212 to dismiss plaintiffs’ claims against them. DASNY's motion also sought, in the alternative, judgment in its favor on its cross-claims against Sea Crest. Turner's motion sought dismissal of all cross-claims against it. Sea Crest's motion sought summary judgment dismissing DASNY's cross-claims and Turner's third-party claims against it.
Upon consideration of these related motions, this court prepared a consolidated decision addressing all three motions. The decision granted summary judgment to DASNY, Sea Crest, and Turner dismissing plaintiffs’ claims against each of them. This decision was completed at the beginning of March 2020. This action was then a non-efiled case, commonly known as a paper case. As a result, issuance of the court's decision entailed physical delivery of a copy of the decision to the office of the County Clerk and then its entry by staff in that office. Due first to an ongoing jury trial, and then, more significantly, to the onset of remote operations in light of the COVID-19 pandemic, this court's completed decision was not promptly delivered to the County Clerk's office for entry.
The action has since been converted to electronic filing by the consent of the parties. ( See NYSCEF No. 2.)
Instead, court staff was not able to deliver a copy of this decision to the County Clerk until the end of April 2020. Once the decision was delivered to the County Clerk, this court also transmitted a copy of the decision to the state Law Reporting Bureau. The decision was posted on the Law Reporting Bureau website and on Westlaw on Friday, May 1, 2020. But owing to pandemic-related staffing limitations in the office of the County Clerk, it was not entered by that office until the following Thursday, May 7.
Separately (and unbeknownst to this court), counsel for Sea Crest had reached out to counsel for plaintiffs on April 28, 2020, by email to propose a potential settlement of plaintiffs’ claims as against Sea Crest. ( See NYSCEF No. 9 at 4.) Over the next several days, counsel for plaintiffs and for Sea Crest had several telephone conversations to discuss the terms of a settlement. ( See NYSCEF No. 6 at ¶ 9 [affirmation of plaintiffs’ counsel]; NYSCEF No. 16 at ¶¶ 13-15 [affirmation of Sea Crest's counsel].) Based on these discussions, plaintiffs and Sea Crest converged on May 5 and 6 on a settlement amount of $275,000. ( See NYSCEF No. 6 at ¶ 9-10; NYSCEF No. 16 at ¶¶ 14-16.)
On the morning of May 6, plaintiffs’ counsel wrote the following email to Sea Crest's counsel:
This is to confirm settlement in the sum of $275,000. Please send release language and parties to be released. Thanks,
CHRISTOPHER DOWNES, Esq. O'DWYER & BERNSTIEN, LLP 45 BROADWAY, SUITE 2430 NEW YORK, NEW YORK 10006 Direct: (212) xxx-xxxx Fax: (212) xxx-xxxx
(NYSCEF No. 9 at 2. ) In the late afternoon of May 6, plaintiffs’ counsel wrote a follow-up email, which, in full, asked counsel for Sea Crest to "Please confirm we are settled." ( Id. ) Counsel for Sea Crest responded a few minutes later, stating, in full, "Confirmed. I'll have release information to you ASAP."
Counsel's telephone and fax numbers appeared in the original email but have been omitted here.
The email also included an automatically generated footer stating that it had been sent from an iPhone. ( See NYSCEF No. 9 at 2.)
The following day, May 7, 2020, DASNY served notice of entry of this court's summary-judgment decision on all other parties in the case. The following week, Sea Crest formally withdrew its offer to pay a settlement amount of $275,000. ( See NYSCEF No. 9 at 1.)
This notice of entry used the Westlaw version of the decision ( see NYSCEF No. 10 at 4-14), because the County Clerk had not posted an electronic copy of the decision as entered. (The record does not reflect why no as-entered copy of the decision was posted, though likely that resulted again from pandemic-related staffing limitations.) During briefing on the current motion, the parties made this court aware that they did not have an as-entered version of the decision. For the parties’ convenience, the court later obtained an as-entered copy from the County Clerk's office and uploaded it to NYSCEF. ( See NYSCEF No. 28.)
Plaintiffs now move under CPLR 2104 to enforce a settlement between plaintiffs and Sea Crest. Plaintiffs contend that the May 6 email exchange between counsel for plaintiffs and counsel for Sea Crest constitutes a binding settlement agreement. They seek payment of the $275,000 that Sea Crest would owe plaintiffs under that putative agreement.
DISCUSSION
Settlement agreements "are judicially favored, will not lightly be set aside," and will be enforced "with rigor and without a searching examination into their substance." ( Forcelli v Gelco Corp. , 109 AD3d 244, 247-248 [2d Dept 2013] [internal quotation marks omitted].) A court called upon to enforce a given settlement must therefore be satisfied that the agreement is "clear, final and the product of mutual accord." ( Id. ) Thus, an out-of-court agreement settling an action is binding on each party to the agreement only if "it is in a writing subscribed by him or his attorney." ( CPLR 2104.) "In addition, since settlement agreements are subject to the principles of contract law, for an enforceable agreement to exist, all material terms must be set forth" in that writing, "and there must be a manifestation of mutual assent." ( Forcelli , 109 AD3d at 248 [internal quotation marks omitted].)
Correspondence between the parties or counsel "can qualify as an enforceable stipulation of settlement under CPLR 2104," so long as that correspondence "set[s] forth the material terms of the stipulation" and is a properly subscribed ( i.e. , signed) writing. ( Id. at 249.) This principle also holds true where, as here, the correspondence is by email rather than traditional physical means. To meet CPLR 2104 ’s requirement of a subscribed writing in the context of email, "the party to be charged, or his or her agent," must "type[ ] his or her name" at the end of the email "under circumstances manifesting an intent that the name be treated as a signature." ( Id. at 251 ; accord Jimenez v Yanne , 152 AD3d 434, 434 [1st Dept 2017] ; Williamson v Delsener , 59 AD3d 291, 291 [1st Dept 2009].)
Here, the May 6, 2020, exchange of emails between plaintiffs’ counsel and counsel for Sea Crest neither contained all of the material terms of a settlement between the parties nor qualified as a "subscribed" writing within the meaning of CPLR 2104. Therefore, this court concludes, that exchange of emails did not constitute a binding, enforceable settlement agreement. Plaintiffs’ motion to enforce is denied.
Whether the Parties’ Correspondence Set Forth the Material Terms of a Settlement Between Them
It is clear from the emails between the parties’ respective attorneys on May 6, 2020, that the parties had reached agreement on an amount that Sea Crest would pay plaintiffs to settle the claims against it. Plaintiffs contend that this concurrence on a bottom-line settlement figure was alone sufficient to create a binding agreement. This court is not persuaded.
Plaintiffs are correct that, in appropriate circumstances, an agreement to settle at a particular figure can be "sufficiently clear and concrete," without more, "to constitute an enforceable contract." ( Williamson , 59 AD3d at 291.) But, unlike Williamson , this is (i) a complex personal-injury action involving several defendants who (ii) were asserting contractual and common-law indemnification claims against one another. In these circumstances, numerous terms beyond the settlement amount alone would be material. The May 6 emails between counsel left those terms unaddressed. Thus, notwithstanding Sea Crest's counsel's statement that the settlement between plaintiffs and Sea Crest was "confirmed" (NYSCEF No. 9 at 2), that settlement was not binding and enforceable as of May 6. ( See Teixeira v Woodhaven Ctr. of Care , 173 AD3d 1108, 1109 [2d Dept 2019] [holding that no binding settlement agreement existed, when email language from plaintiff's counsel stating that defendant could "consider it settled" was "followed by a discussion of further occurrences necessary to finalize the agreement"].)
For example, the terms on which plaintiffs released their claims against Sea Crest—including whether the releases would include a refusal by Sea Crest to admit that it had acted negligently—could have important implications for Sea Crest's potential indemnity obligations to other defendants. ( Cf. Stolworthy v Lonner , 2021 NY Slip Op 30357[U], at *5 [Sup Ct, NY County Feb. 3, 2021] [holding a settlement agreement binding when plaintiffs’ counsel had expressly agreed to numerous settlement terms beyond the settlement amount, including "the settling defendants’ refusal to admit liability"].) The earlier of plaintiffs’ counsel's May 6 emails, though, itself acknowledged that Sea Crest still needed to provide plaintiffs with "release language and parties to be released." (NYSCEF No. 9 at 2.) This case is materially different from a case like Forcelli , in which plaintiff had seen, agreed to, and executed and returned the requested releases by the time the parties became aware of the court's decision on defendants’ pending summary-judgment motion. ( See 109 AD3d at 246-247.)
Nor is this a case in which a party simply refused to execute a stipulation of settlement or set of releases after they had been fully negotiated and agreed to by counsel acting with actual or apparent authority to do so. ( See e.g. Lalli v Hudson River Trust , 2020 WL 759838, at *1 [Sup Ct, NY County Feb. 7, 2020] [holding that a plaintiff's refusal to execute a settlement agreement reached by counsel for both parties did not invalidate the settlement]; E & O Tax Lien Fund LLC v AAD Partners, Inc. , 2020 NY Slip Op 30318[U], at *4-*5 [Sup Ct, NY County Jan. 17, 2020] [same].)
Additionally, to the extent that Rawald had received Medicare or Medicaid payments, the federal government would have a lien on settlement payments made by Sea Crest to Rawald. Crucially, the government could collect on that lien from Sea Crest absent contrary provision in the releases or the stipulation of settlement. ( See Kumar v Demasi , 170 AD3d 986, 987, 989 [2d Dept 2019] ; Liss v Brigham Park Cooperative Apts. Sec. No. 3, Inc. , 264 AD2d 717, 718 [3d Dept 1999].) Resolving this issue is thus extremely important to personal-injury settlements generally. Indeed, settlement releases that do not make a settling plaintiff (rather than settling defendant) responsible for a Medicare/Medicaid lien will not suffice to trigger the defendant's prompt-payment obligations under CPLR 5003-a. ( See Liss , 264 AD2d at 718.) Plaintiff's counsel's May 6 emails nonetheless did not address any Medicare/Medicaid lien—either to consent to release of such a lien or to represent that Rawald had not received any Medicare or Medicaid payments that would give rise to a lien.
On reply, plaintiffs suggest that "the issues relating to Medicare/Medicaid ... are plaintiffs’ concerns and not that of the settling defendants." (NYSCEF No. 25 at ¶ 11.) Plaintiffs do not, however, explain this assertion or provide supporting authority.
The May 6 emails also do not discuss whether plaintiffs had obtained consent to the settlement from Rawald's employer's workers’ compensation carrier. To be sure, as plaintiffs argue on this motion, the effect of a failure to obtain settlement consent would be limited to potentially foreclosing Rawald's entitlement to future workers’ compensation benefits. ( See NYSCEF No. 25 at ¶¶ 9-10; see also Workers’ Compensation Law § 29 [5].) The carrier's consent, therefore, was largely a concern for plaintiffs, rather than for Sea Crest or both parties. For that very reason, though, one would expect plaintiffs already to have obtained consent from the workers’ compensation carrier to the terms of the settlement with Sea Crest before committing themselves to those terms. Yet the written communications between the parties in May 2020—or, for that matter, plaintiffs’ motion papers now—do not reflect whether plaintiffs had obtained the carrier's approval of a settlement with Sea Crest for the amount agreed to by the parties. The absence of information on that point is, in tension with plaintiffs’ contention that a final and binding settlement between plaintiffs and Sea Crest existed on May 6, 2020.
Ultimately, these issues highlight a fundamental and untenable anomaly of plaintiffs’ position. Settlement agreements are bilateral contracts, imposing obligations on each side of the agreement. The record establishes that Sea Crest was willing to commit to pay plaintiffs $275,000 as part of a settlement. But plaintiffs do not say at any point—and the record does not disclose—what they were committing to provide Sea Crest in return for the $275,000 payment. This court declines to treat plaintiffs and Sea Crest as having reached a binding and enforceable agreement when one side's obligations under that agreement remain undefined even now.
Whether the Parties’ Correspondence was "Subscribed" Within the Meaning of CPLR 2104
Even if one were to overlook the absence of defined, material terms in the supposed settlement agreement between the parties, this court would still deny the motion to enforce for an additional, independent reason: the May 6, 2020, emails between counsel on which plaintiffs rely were not "subscribed," as required by CPLR 2104.
As already discussed, an email counts as "subscribed" for purposes of CPLR 2104 only when the email's author has purposefully added her name to the message (ordinarily at the end) in a manner that "manifest[s] an intent that the name be treated as a signature." ( Forcelli , 109 AD3d at 251 ; accord Jimenez , 152 AD3d at 434.) Here, plaintiffs’ counsel's first email on May 6 (reproduced above) qualified: it joined a typed closing to an automatically generated signature block in a way that made clear the author intended to incorporate the signature block into his message. But neither plaintiffs’ counsel's second May 6 email ("Please confirm we are settled.") or Sea Crest's counsel's responsive May 6 email ("Confirmed. I'll have release information to you ASAP.") were subscribed in any form. Nor, indeed, do plaintiffs’ papers on this motion contend otherwise.
Beyond being reproduced in this decision, these emails appear in their full original context in NYSCEF No. 9 at 2. This court does not regard the autogenerated "Sent from my iPhone" footer in Sea Crest's counsel's email as constituting a subscription for purposes of CPLR 2104.
This formal subscription requirement is significant. "[T]he prevalent informality and brevity of e-mail style and the speed of transmission," in particular, means that courts must take additional pains to ensure that email-based settlements will be enforced only when it is clear that parties meant to be bound, and on what terms. ( Weldon v 210 E. 73rd Owners Corp. , 2007 NY Slip Op 50838[U], at *1 [Sup Ct, NY County Apr. 19, 2007].) Put differently, parties should not be bound to pay hundreds of thousands of dollars—or, for that matter, forced to relinquish potentially meritorious claims—based on dashed-off unsigned emails sent from a smartphone. This is particularly true because the requirement merely that an email author type her name at the end of the message is so easy to satisfy. Given this requirement's simplicity, an email author's failure to meet it should alone suggest that the author did not intend to bind herself or her client to an enforceable settlement.
New York courts have thus repeatedly held that in the context of email correspondence regarding settlement, CPLR 2104 means what it says. Emails regarding a settlement agreement must be signed. If—as here—they are not signed, there is no agreement. ( See Jimenez , 152 AD3d at 434 ; Forcelli , 109 AD3d at 251 ; Williamson , 59 AD3d at 291 ; Paloger v Cohen , 2012 NY Slip Op 52098[U], at *6-*7 [Sup Ct, Nassau County, Sept. 7, 2012] [holding that an email exchange did not satisfy CPLR 2104 because none of the emails at issue were subscribed in any form]; see also Leist v Tugendhaft , 64 AD3d 687, 688 [2d Dept 2009] [holding that an unsubscribed email did not satisfy the statute of frauds].)
This court concludes that given the absence of a subscription on the second May 6 email from plaintiffs’ counsel, or on the May 6 email from Sea Crest's counsel, plaintiffs and Sea Crest did not enter into a binding settlement that may be enforced by this court.
Given this court's holding that the putative settlement did not constitute a binding agreement, this court does not reach Sea Crest's alternative argument that it should be relieved of any settlement obligations on the ground of mistake. The court notes, though, that Sea Crest has not identified any fraudulent misrepresentation by plaintiffs’ counsel that might have induced a unilateral mistake by Sea Crest. And establishing such a misrepresentation here would entail a particularly demanding showing, given that in reaching any arms-length agreement in this case, Sea Crest and plaintiffs had equal access to the Law Reporting Bureau website on which this court's decision appeared prior to the May 6, 2020, exchange of emails. ( See Mooney v Manhattan Occupational, Physical & Speech Therapies, PLLC , 166 AD3d 957, 960 [2d Dept 2018] ; Elghanian v Harvey , 249 AD2d 206, 206 [1st Dept 1998].)
Accordingly, for the foregoing reasons, it is hereby
ORDERED that plaintiffs’ motion to enforce a putative settlement agreement between plaintiffs and Sea Crest entered into on May 6, 2020, is denied.