Email Can Seal a Settlement (NY)

Although most of us aspire to be “men [and women] of our word,” New York requires more than a handshake or oral agreement to constitute a binding settlement. CPLR 2104 insists on “a writing subscribed by [a party] or his attorney.” In this age of emails, text messages, posts and tweats, the vexing question is what constitutes such a writing.

In Forcelli v. Gelco Corporation, the defendants filed a motion for summary judgment in this motor vehicle accident case. While the motion was pending, the parties participated in an unsuccessful mediation but continued their negotiations thereafter. After the usual back and forth, the third party administrator for the defendants wrote a email to plaintiff’s counsel confirming that her settlement offer of $230,000 had been accepted, conditioned on the tender of the customary settlement documents. She also ended her correspondence, “Thanks Brenda Greene.”  As bad luck would have it, the motion judge issued a favorable decision granting the defendants’ summary judgment motion about 3 weeks later  but before the plaintiff sent the requested settlement documents to the adjuster. It appears that the defense attorney had not been advised of the settlement and rejected the papers once received because “no settlement had been consummated…”    A dispute then arose about whether an actual enforceable settlement had been reached.

Adopting a common sense approach and embracing email as a ubiquitous method of communication, the Appellate Division, Second Department held that the email confirmation meet New York’s statutory requirement that a settlement be confirmed in “a writing subscribed by [a party] or his attorney.”  The third party administrator was deemed an agent of the defendants’ insurer.  As important, the adjuster’s type written insertion of the simple phrase, “Thanks Brenda Greene,” satisfied the requirement that the settlement be subscribed in writing.   Of note,  the court hinted that an automatic return address may not be sufficient but that is for another day.

Emails are here to stay and it is encouraging to observe the court’s embrace of newer methods of doing business. The lesson for both sides of the bar is simple:  insist that your adversaries add their type written names at the end of an email if you want a binding agreement.

If you have any questions about this post, please email Paul at pclark@wcmlaw.com.