Don’t Count Your Stips Until They’ve Hatched (CPLR R. 2104)

While I've been out in beautiful sunny Ohio, this case has been making the rounds.  It was first noticed by John Hochfelder and followed up by the Turk.  Oh, right, the case.

Diarassouba v Urban, 2009 NY Slip Op 09420 (App. Div., 2nd, 2009)

While the court was in recess and the jury was deliberating, Conrad Jordan, counsel for the plaintiff, communicated to the defendants' counsel, Barry M. Viuker, that his client had authorized him to accept a settlement offer in the sum of $150,000. Viuker provided no confirmation of the settlement, but rather asked, "Do we have a settlement?" Jordan responded that [*2]he accepted the settlement offer. Viuker proceeded to leave the room for several minutes, without having responded in any way to Jordan's statement. The defense counsel's question, "Do we have a settlement?" was his only and final mention of the settlement agreement until after the court took the jury's verdict.

During Viuker's absence from the courtroom, Jordan informed the court clerk that the parties had reached a settlement, although he did not provide a specific settlement amount. The clerk did not record this information, but said that he would inform the Judge, who was already on her way to the courtroom to read a new jury note. Viuker then returned to the courtroom. When the judge arrived at the courtroom, Viuker inquired, off the record, as to the contents of the jury note. The Judge responded that the jury had reached a verdict. Once again, Viuker left the room for a short while.

When Viuker returned, Jordan asked the court to memorialize the settlement on the record prior to taking the verdict, but the court refused Jordan's requests.

"Mr. Jordan: Could I put my request on the record?

"The Court: Once I have a verdict, I take the verdict, and then the parties are free to do what they agreed to. An agreement is an agreement, counsel.

"Mr. Jordan: Why can't we put the agreement to settle the case for $150,000 on the record?

"The Court: Because I said what I have to say. Let's proceed."


Viuker was silent throughout this whole exchange.

The verdict was then taken in the plaintiff's favor, finding that Dr. Lubin and Dr. Horiuchi were each 35% at fault for the plaintiff's injury. The jury awarded the plaintiff the sum of $800,000 for past pain and suffering and the sum of $650,000 for future pain and suffering over 30 years.

After hearing the jury verdict, Jordan asserted that the purported stipulation of settlement was invalid on the ground that the court never permitted the settlement terms to go on the record. Jordan further posited that the settlement was invalid on the ground that the defense never consented to the settlement, but rather, was completely silent throughout Jordan's requests to put the settlement on the record.

"The Court: Now [that the verdict has been taken], Mr. Jordan, what is it that you would like to say?

"Mr. Jordan: Now, your Honor, what I will report for the record is that I attempted to talk to the Court about settlement and I watched the defense attorney, while he heard that there was a quick verdict, go outside twice. I heard him come in, and while he was in this courtroom he did nothing to second my application to this Court to put a settlement on the record and the Court did nothing to ask the parties whether there's a settlement on the record. As far as I know, the caselaw is there has to be a settlement on the record to be binding. So, at this point, the position of the plaintiff is that there is not [a] settlement, and there was no settlement."

Thereafter, by order dated March 28, 2008, the Supreme Court granted the defendants' motion to enforce the purported stipulation of settlement. The court determined that the settlement had been made in open court, with the judge on the bench and the court reporter and court clerk in attendance. As such, the court found that it was not necessary for the stipulation to have been placed on the record. The plaintiff appeals. We reverse.

CPLR 2104, the law governing settlements, sets forth that,

"An agreement between parties or their attorneys relating to any matter in an [*3]action other than one made between counsel in open court, is not binding upon a party unless it is in writing subscribed to 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."

Thus, a settlement agreement is valid only if both parties stipulate to the settlement in a written agreement or it is made in open court and placed on the record.

Make no mistake about it, this decision is important.  Read the entire decision, then read it again.  Then, go ahead and take a look at Velazquez v St. Barnabas Hosp., 2009 NY Slip Op 09315 (Ct. App. 2009), where the Court of Appeals held:

The parties do not dispute that they agreed to settle the action for a specific amount; however, details regarding conditions of the settlement, including a disputed [*2]confidentiality agreement, were never recorded or memorialized. No agreement was made in open court or filed with the county clerk. Accordingly, it is not binding upon the parties (see CPLR 2104; Matter of Dolgin Eldert Corp., 31 NY2d 1, 9-11 [1972]; Andre-Long v Verizon Corp., 31 AD3d 353, 354 [2d Dept 2006]).

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