Binding Settlements Through Email?

Publication Source: New York Law Journal

As e-mail continues to impact the modern landscape of litigation, this month's topic addresses the effect of common e-mail communications between counsel on the enforceability of settlement agreements. Once again, the apparent informality of e-mail is a potential trap for the unwary. Two recent decisions with opposite results, one from the Appellate Division, Second Department, and one from the U.S. District Court for the Eastern District in Central Islip, are instructive.

In both cases, the party seeking to enforce an alleged settlement agreement claimed that e-mail sent by counsel represented a binding settlement. The cases are not only enlightening for counsel communicating by e-mail, but highlight the distinctly different manner in which the state and federal courts in New York analyze whether an enforceable settlement has been consummated.

In state court, CPLR 2104 governs whether a binding settlement agreement has been achieved. See Bonnette v. Long Is. Coll. Hosp., 3 N.Y.3d 281, 785 N.Y.S.2d 738 (2004). CPLR 2104 provides: "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 a form of an order and entered."

The Court of Appeals in Bonnette demonstrated just how strict the state courts can be in determining whether an enforceable settlement has been entered. In Bonnette, plaintiff's counsel orally agreed to settle the claims of an infant in a medical malpractice action for $3 million. Defense counsel thereafter sent plaintiff's attorney stipulations of discontinuance and a general release, stating: "enclosed are copies of closing documents required to effectuate [the] settlement."

Plaintiff's counsel delayed returning those documents while deciding on an annuity plan for the infant plaintiff and while negotiating a Medicaid lien. After those issues were resolved, the infant plaintiff died before plaintiff's attorney forwarded the executed documents to defense counsel. As the value of plaintiff's case diminished substantially in view of the infant's death, defendant then asserted that there was no settlement because it was not reduced to writing pursuant to CPLR 2104.

Read the full article in the attached PDF.

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Kevin Schlosser is a Shareholder at Meyer, Suozzi, English & Klein, P.C., where he is Chair of the Litigation and Alternative Dispute Resolution Department which has a full roster of available private judges from virtually all disciplines of law. Mr. Schlosser also authors the popular blog, “New York Fraud Claims,” which analyzes the latest developments concerning civil fraud claims under New York law.

Reprinted with permission by the New York Law Journal.