NYLJ “Oral Agreement to Settle at Mediation and Follow-Up Email Insufficient for Enforcement”

By Thomas E.L. Dewey

New York practitioners are likely aware that not all enforceable settlements are reduced to a formal settlement agreement executed by all parties; courts may in some circumstances enforce a settlement agreement even if the parties failed to execute a formal written agreement. See HVN Clothing v. Lomeway E-Commerce (Luxembourg) Limited, No. 22-CV-27, 2022 WL 13816538, at *2 (S.D.N.Y. Oct. 21, 2022) (“The mere fact that the parties contemplate memorializing their agreement in a formal document does not prevent their informal agreement from taking effect prior to that event.”). Similarly, “a preliminary settlement agreement may be binding where it is designated by the parties only a settlement ‘in principle.’” (citing Krauth v. Executive Telecard, 890 F. Supp. 269, 293 (S.D.N.Y. 1995).

Though CPLR 2104 provides that “an agreement between parties of the attorneys’ relating to any matter in an action is not binding upon a party unless it is in a writing subscribed by him or his attorney,” courts have nonetheless enforced settlement agreements substantiated by emails exchanged between attorneys which identify the attorneys’ email account in the text of the communication. See, e.g., Philadelphia Insurance Indemnity v. Kendall, 197 A.D. 3d 75, 80 (1st Dep’t 2021); Jiminez v. Yanne, 152 A.D.3d 434, 434 (1st Dep’t 2015).

A recent case in the Third Department, however, provides circumstances where such an email exchange following mediation was not enforceable.