Wade Clark Mulcahy LLP

In <a href="https://www.wcmlaw.com/wp-content/uploads/2019/03/Amerally-v.-Liberty-King-Produce-Inc..pdf">Amerally v. Liberty King Produce, Inc.</a> the Appellate Division reversed the lower court’s order, granting defendant’s motion to enforce a settlement agreement and denying plaintiff’s motion to vacate the settlement agreement.

The plaintiff tripped and fell over a hose outside of a store owned by the defendant. The plaintiff then commenced this action and while the action was pending, the attorneys for both parties participated in a mediation and signed an agreement resolving the matter for the sum of $150,000. However, when the defendant sent the plaintiff the settlement agreement, the plaintiff refused to execute, and the defendant moved to enforce it. The plaintiff then obtained a new attorney and cross-moved to vacate the settlement agreement on the ground that she never provided her former attorney with the authority to settle the action for the sum of $150,000 and that she was unaware that a settlement had been reached until several weeks after the mediation. The Supreme Court denied the defendant’s motion and granted the plaintiff’s cross motion. The defendant appealed.

The court affirmed, holding that stipulations of settlements are favored by the court and further stating that when a settlement agreement is in writing and signed by a client or attorney, it should be considered binding on both parties. In addition, the court held that a stipulation may bind a party even where it exceeds the attorney’s actual authority, if the attorney had apparent authority to enter into the stipulation. Here, it was demonstrated that the plaintiff knew that her former attorney was participating in the mediation. Moreover, even if the attorney lacked the actual authority to enter into the settlement agreement, a finding could still be made of apparent authority. In addition, the party seeking to set aside the stipulation must prove that it was unfair or one sided.

Thus, the case reveals that it is important to keep open communication to avoid unnecessary headaches and motion practice.

Thanks to Nicole Lyalin for her contribution to this post. Please email <a href="mailto:VPinto@wcmlaw.com">Vito A. Pinto</a> with any questions.