Be Careful With That “Reply All” Button . . . First Department Finds That A Series Of Emails Can Constitute An Enforceable Settlement Agreement
In Matter of Philadelphia Ins. Indem. Co. v. Kendall, 197 A.D.3d 75 (1st Dep’t 2021), the First Department found that an email exchange constituted a valid settlement agreement.
In Kendall, the parties had presented their cases to an arbitrator. After the arbitration, but before the arbitrator rendered his decision, the parties settled the case for $400,000. The arbitrator then informed the parties that he awarded $975,000 to the respondent, who then refused to execute the settlement agreement for $400,000. The petitioner requested that the court enforce the settlement agreement for $400,000.
Ultimately, the court upheld the agreement for $400,000. The court found that the email exchange constituted a valid offer and acceptance. The court disagreed with the respondent’s claim that there was an issue of authentication because the email lacked a formal signature. The court found that informal email signatures have become common practice, and paper or written correspondence is subject to the same pitfalls of inauthenticity such as forgery. Further, the emails in Kendall demonstrated not only valid offer and acceptance, but clearly stated the material terms of the settlement, and indicated a mutual assent to be bound. The court cautioned, however, that each case should be decided on a fact specific basis. Its ruling was not a bright-line rule whereby all email exchanges could be considered valid settlement agreements.
Thanks to John Lang for his contribution to this post. Should you wish to discuss, please feel free to contact Tom Bracken.