Email Can Constitute Binding Enforceable Stipulation of SettlementAugust 20, 2013 | | |
Plus ça change, plus c’est la même chose.
It is a lesson that lawyers should take to heart when incorporating technology in their every day best practices. Technology may have changed the speed, immediacy, and even the formality of communication, but the effect of the communication will be determined by its content as interpreted by the same old rules.
The recent decision by the Appellate Division, Second Department, in Forcelli v. Gelco Corp., enforcing a settlement set forth in an email, should serve as a reminder to lawyers and parties alike about the need to be just as careful when using email to communicate with adversaries as they would be in traditional communications.
The Forcelli case concerned a three-car accident that allegedly resulted in personal injuries to the plaintiff, John T. Forcelli, and derivative damages to his wife. Mr. Forcelli and his wife sued the owners and operators of the other two vehicles. Following the completion of discovery, a motion for summary judgment dismissing all claims and cross-claims was made by defendants Gelco Corporation and Mitchell G. Maller, the owner and operator, respectively, of one of the cars that had been involved in the accident.
The same day that the summary judgment motion was submitted to the court, the parties participated in mediation in an attempt to settle the claim. The Forcellis, their counsel, and Gelco’s and Maller’s defense counsel participated. Notably, also in attendance at the mediation were Brenda Greene, a claims adjuster with Sedgwick CMS, the insurance carrier for Gelco and Maller, and a representative of Xerox Corporation, which had leased the Gelco vehicle and employed Maller. The Forcellis’ counsel later asserted that Greene and the Xerox representative had informed him that they had authority to settle the case. The parties, however, did not reach a settlement at the mediation.
About one month later, Greene contacted the Forcellis’ counsel by telephone to revive settlement negotiations. Further discussions ensued. Eventually, Greene offered $230,000 to settle the case, and the Forcellis’ counsel orally accepted the offer on behalf of the Forcellis. That same day, Greene sent an email message to the Forcellis’ counsel, with a copy to the Xerox representative, stating the following:
Per our phone conversation today …, you accepted my offer of $230,000 to settle this case. Please have your client executed [sic] the attached Medicare form as no settlement check can be issued without this form.
You also agreed to prepare the release, please included [sic] the following names: Xerox Corporation, Gelco Corporation, Mitchell G. Maller and Sedgwick CMS. Please forward the release and dismissal for my review. Thanks Brenda Greene.
The next day, Forcelli signed a release, notarized by his counsel, stating that he was releasing Xerox, Gelco, Maller, and Sedgwick from all actions involving the accident in exchange for receiving $230,000 from Sedgwick.
Nearly one week later, the trial court issued an order granting summary judgment and dismissing the claims and cross-claims against Gelco and Maller. After defense counsel received an email alert informing him of the court’s order granting the summary judgment motion, he served the order with a notice of entry on the Forcellis’ counsel and on counsel for the co-defendants by overnight mail.
Meanwhile, on the same day, the Forcellis’ counsel sent to Greene, by fax and by certified mail, the release signed by Forcelli, and a stipulation of discontinuance against Gelco and Maller. In response, defense counsel for Gelco and Maller sent a letter to the Forcellis’ counsel declaring that the release and stipulation of discontinuance “is hereby rejected.” The letter further stated that, because “there was no settlement consummated” under New York CPLR 2104 between the parties, they considered the matter “dismissed by the court’s decision.”
The Forcellis moved to vacate the trial court’s order and to enforce the settlement agreement as set forth in Greene’s email message, arguing that Greene’s email message constituted a binding written settlement agreement pursuant to CPLR 2104. In opposition, Gelco and Maller argued, among other things, that the email message did not constitute a binding written settlement agreement.
The trial court granted the Forcellis’ motion, vacated its order granting summary judgment in favor of Gelco and Maller, enforced the settlement agreement, and entered judgment in favor of the Forcellis and against Gelco and Maller for $230,000. Gelco and Maller appealed.
The Appellate Division’s Decision
The Appellate Division affirmed. In its decision, it explained that, under CPLR 2104, a settlement agreement not made in open court must be in writing and signed by the party (or the party’s attorney) to be binding. In addition, the court added, because settlement agreements are subject to the principles of contract law, for an enforceable agreement to exist, all material terms must be set forth and there must be a manifestation of mutual assent.
In analyzing Greene’s email message to determine if it met that standard, the Second Department first found that the message set forth the material terms of the agreement. The court observed that the email message referenced the acceptance by the Forcellis’ counsel of an offer of $230,000 to settle the case in exchange for a release in favor of Gelco, Maller, and the others noted therein, and it contained an expression of assent from Greene. The court also found it significant that the settlement was not conditioned on any further occurrence, such as the outcome of the motion for summary judgment or the formal execution of the release and stipulation of dismissal by Gelco and Maller.
The Second Department next rejected the contention put forth by Gelco and Maller that the fact that neither they nor their counsel had entered into the agreement invalidated it, observing that a party can be bound by its agent’s acts in settlement negotiations and that an agreement can be binding where the agent had either actual or apparent authority. Here, the court found, Greene, as a representative of the insurance carrier representing Gelco and Maller, “was clothed with apparent authority to settle the case.” Accordingly, the court decided that Greene’s email message satisfied the criteria of CPLR 2104 insofar as it was a writing made by an individual with authority to bind the party to be bound.
Finally, the court examined whether the email message could be considered “subscribed” under CPLR 2104 and, thus, capable of enforcement. It found that it could be, even though it acknowledged that email messages cannot be signed in the traditional sense. The Second Department reasoned that, given the “now widespread use of email as a form of written communication in both personal and business affairs,” it would be “unreasonable” to conclude that email messages were incapable of conforming to the criteria of CPLR 2104 simply because they cannot be physically signed in a traditional fashion.
The court also decided that although Greene’s email message contained her printed name at the end of it, rather than an “electronic signature” as defined by the Electronic Signatures and Records Act, she had “in effect, signed the email message.” In reaching that conclusion, the court explained that the email ended with “Thanks Brenda Greene,” and ruled that that indicated that the author had “purposefully added her name to this particular email message.” In addition, the court found, the circumstances that preceded Greene’s email message, and in particular, the face-to-face mediation at which settlement was attempted and the subsequent follow-up telephone calls between Greene and the Forcellis’ counsel, supported the conclusion that Greene had intended to “subscribe” the email settlement for purposes of CPLR 2104.
Thus, the Second Department held that where, as in this case, an email message contained all material terms of a settlement and a manifestation of mutual accord, and the party to be charged, or his or her agent, typed his or her name under circumstances manifesting an intent that the name be treated as a signature, such an email message could be deemed a subscribed writing within the meaning of CPLR 2104 so as to constitute an enforceable agreement. Therefore, it affirmed the trial court’s decision.
Courts, of course, have long recognized that traditional correspondence can qualify as an enforceable stipulation of settlement under CPLR 2104, and, in fact, there have been other instances in which courts have found that an email message that is otherwise valid as a stipulation between the parties can be enforced pursuant to CPLR 2104.
As the Forcelli decision and these other cases make clear, whether communicating with an adversary through email or “snail mail,” care must be taken when settlements are discussed. Because courts favor settlements and enforce them when they are “clear, final and the product of mutual accord,” there is no reason to distinguish emails from other forms of written communications. If a document is not intended as a complete statement of settlement terms, phrases such as that it is not “intended as a final resolution of all issues in the case” or that settlement “shall be subject to a more formal written Stipulation of Settlement” can be helpful.
Emails, and other forms of twenty-first century technology communications such as texts, tweets, and instant communications, often are written in a more informal voice and dispatched with less forethought than traditional communications – but that does not mean that they will be found not to be binding under traditional contract rules. Care should be taken so that an unwary professional does not unwittingly commit his or her client or impair the client’s position.
 The more things change, the more things are the same.
 2013 N.Y. Slip Op. 5437 (2d Dep’t July 24, 2013).
 CPLR 2104 provides: “Stipulations. 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 the form of an order and entered. With respect to stipulations of settlement and notwithstanding the form of the stipulation of settlement, the terms of such stipulation shall be filed by the defendant with the county clerk.”
 State Technology Law §302(3) (“Electronic signature” means “an electronic sound, symbol, or process, attached to or logically associated with an electronic record and executed or adopted by a person with the intent to sign the record.”).
 See, e.g., Williamson v. Delsener, 59 A.D.3d 291 (1st Dep’t 2009); Wronka v. GEM Community Mgt., 49 A.D.3d 869 (2d Dep’t 2008); Palmo v. Straub,45 A.D.3d 1090 (3d Dep’t 2007); Roberts v. Stracick, 13 A.D.3d 1208 (4th Dept2004).
 See, e.g., Brighton Inv., Ltd. v. Har-Zvi,88 A.D.3d 1220 (3d Dep’t 2011); Williamson v. Delsener,59 A.D.3d 291 (1st Dep’t 2009).
 Bonnette v. Long Island College Hospital, 3 N.Y.3d 281 (2004).
 See Williams v. Bushman, 70 A.D.3d 679 (2d Dep’t 2010).
Reprinted with permission from the August 20, 2013 issue of the New York Law Journal. All rights reserved.