Email Acknowledgment of Settlement By Adjuster
Binds Insurance Carrier
As part of our continuing commitment to provide outstanding representation and to serve as an information resource, we wish to inform you of a decision concerning the validity of settlements. Technology and the law can often seemingly contradict each other, and it is often left to the Courts to somehow navigate the two. A recent case from the Second Department illustrates how email technology was found to bind a carrier and thus, enforce a settlement.
In Forcelli v. Gelco Corporation, the plaintiff Forcelli was injured as a result of a multi-vehicle accident. Plaintiff commenced a suit against various parties including the car which had collided with his, owned by the Gelco Corporation ("Gelco") and leased by Xerox Corp. ("Xerox"). After discovery had been completed, Gelco moved for summary judgment, and plaintiff cross-moved for summary judgment. While the motions were pending, plaintiffs and their attorney, along with the attorneys for Gelco, a representative of Xerox and Brenda Greene, a claims adjuster from Sedgwick ("Sedgwick") CMS, the insurer for the Gelco vehicle, attended a mediation. The parties did not reach a settlement at the mediation.
Some weeks later, the claims adjuster for Sedgwick resumed settlement negotiations with the plaintiff, and offered $200,000 to settle the case. After further negotiations, on May 3, 2011 the Sedgwick adjuster offered $230,000 to settle the case, and the plaintiff's attorney orally accepted the offer on behalf of his clients. That same day, the Sedgwick adjuster sent an email to plaintiff's attorney which confirmed the terms of the settlement and included information required to be included on the release. The email concluded "Please forward the release and dismissal for my review. Thanks Brenda Greene". The next day plaintiff signed the release, which was notarized, settling the action for $230,000. On May 10th the Supreme Court granted Gelco's motion for summary judgment dismissing the complaint and the cross-claims and granted plaintiffs' cross-motion against other defendants as to liability.
On May 11th the attorney for Gelco received an email alert informing him of the Court's order and that same day, he served an order with notice of entry on counsel for the plaintiff by overnight mail. Also on that same day, plaintiff's attorney sent to the Sedgwick adjuster by fax and certified mail, the release and the stipulation of discontinuance against Gelco. The settlement papers were received by Sedgewick on May 16th. On May 12th, the attorney for Gelco was advised of the settlement documents which had been faxed to the adjuster the previous day. On May 12th the attorney for Gelco then faxed and mailed to plaintiff's counsel advising him that the stipulation of discontinuance and release were rejected. The letter stated that "since there was no settlement consummated under New York Law CPLR 2104, [defendant's] attorney considered the matter dismissed by the court's decision". Thereafter, plaintiffs moved to vacate the order for summary judgment and enforce the settlement agreement as set forth in the email message between plaintiff's counsel and the Sedgwick adjuster.
The Supreme Court granted plaintiff's motion to vacate the order for summary judgment and granted the plaintiff's motion to enforce the settlement agreement. The defendants appealed to the Second Department. The Appellate Division affirmed.
The Appellate Division first noted that pursuant to CPLR 2104, "an agreement between parties or their attorneys relating to any matter in an action...is not binding upon a party unless it is writing subscribed by him or his attorney." The Second Department found that the email message written by the Sedgwick adjuster set forth the material terms of the agreement and an acceptance by plaintiff's attorney of the offer in exchange for a release in favor of the defendants, and contained an expression of mutual assent.
The Second Department found that the record demonstrated that the Sedgwick adjuster, as a representative of the defendants insurer, was clothed with apparent authority to settle the case on behalf of the insured. The Appellate Division found that "the adjuster's email message also satisfied the criteria of CPLR 2104 insofar as it was a writing made by an individual with authority to bind the party to be bound". The Appellate Division found that the email message could be considered subscribed under CPLR 2104 and capable of enforcement. The Court noted that Greene's email message contained her printed name at the end thereof, as opposed to an electronic signature. The Second Department noted that the record supported the conclusion that the adjuster "signed" the email message. The Court wrote that "in particular we note that the subject email message ended with the simple expression, "Thanks Brenda Greene", which appears at the end of the email text. This indicated that the author purposely added her name to this particular email message" rather than if the email had been automatically programmed to generate the name. The Court found that "where, as here, an email message contains all material terms of a settlement and the manifestation of mutual accord, and the party to be charged, or his or her agent, types his or her name under circumstances manifesting an intent that the name be treated as a signature, such an email message may be deemed a subscribed writing within the meaning of CPLR 2104 so as to constitute an enforceable agreement".
The Appellate Division reached the correct result as the use of email is so widespread that most people simply type their name to acknowledge having written the email. The Second Department was also probably taken aback by the gamesmanship of the defense attorney who attempted to revoke the settlement after having won summary judgment, apparently unaware that his adjuster had settled the case without informing him. Adjusters should not be surprised to be held to a settlement when they send an email they have "signed".
Should you have any questions, please call.
Thomas M. Bona
