You agreed to settle and now, before signing the paperwork, have second thoughts because you are not happy about the terms of the settlement. Can you change your mind about settling your New York debt collection case?
During a legal case, all parties may agree the case should be settled. If the parties settle on an amount one must pay the other, all claims and counterclaims get discontinued and general releases provided pending the clearance of the payment(s).
Alternatively, the parties may decide upon a mutual “walkaway” where neither party receives any money. In this scenario, both parties discontinue their actions and general releases provided. In order to have a binding settlement agreement, the attorneys will draft and negotiate settlement terms in accordance with their client’s authorization.
Settling a Debt Collection Case in New York
To enforce a settlement in New York, agreements must be signed by the party or their attorney. All material terms must be set forth and there must be manifestation of mutual assent as well. An exchange of email may constitute a binding stipulation pursuant to the New York Civil Rules.
A client can be bound by the acts of his attorney if your attorney has agreed to settle your case. In a recent decision by the Appellate Division, Forcelli v. Gelco Corp., the court found that where an email message contained all material terms of a settlement and a “manifestation of mutual accord, and the party to be charged, or his agent (in this case, his attorney), typed his or her name under circumstances manifesting an intent that the name be treated as a signature, such an email message could be deemed a subscribed writing within the meaning of CPLR 2104,” making it an enforceable agreement.
The Plaintiff signed the release pursuant to the terms. When the Defendant later failed to pay the $230,000.00 and declared there “was no settlement consummated,” the court found and the Appellate Division upheld that Ms. Greene’s email constituted a binding written settlement agreement. In this particular instance, you are bound by the terms and not permitted to change your mind.
Adding Additional Terms to the Settlement
But, what if during the course of memorializing the settlement, one of the parties’ attorneys adds an additional term or two to the agreement that the parties had not discussed? The addition may or not be minor but may change the tone or intention of the settlement.
For instance, say during litigation the plaintiff filed a complaint in New York County Supreme Court for $100,000 and the defendant a counterclaim for $50,000. The defendant’s attorney calls the plaintiff’s attorney and proposes that the defendant pays $50,000 to settle the case. The defendant’s attorney further states that on clearance of the payment, both sides will discontinue the pending causes of action and counterclaims. Then, both can provide general releases to each other.
The plaintiff’s attorney contacts his client after receiving the defendant’s offer and the plaintiff’s president advises the plaintiff will accept the settlement pursuant to the terms. The plaintiff’s attorney then advises the defendant’s attorney that his client accepts the offer. The two attorneys begin drafting the settlement agreement.
During the course of finalizing the settlement, the plaintiff advises the defendant’s counsel that the general release should include other parties who were not named as parties in the litigation.
The defendant’s attorney forwards the agreement to her client for signature and requests the plaintiff’s attorney do the same. However, upon seeing the additional entities added to the terms of the agreement, the defendant puts the breaks on and refuses to sign the documents. The settlement is consequently never signed by the defendant.
Can the Defendant Change Their Mind?
An exception to the rule of being bound is when a settlement is conditioned on a further occurrence, such as the execution of a release and stipulation of discontinuance. In Williams v. Bushman, the Appellate Division found that although a settlement was apparently reached in principle, it was never finalized by the execution of the documents. The Forcelli case makes this distinction, in finding that a valid settlement did exist because the settlement was not conditioned on any further occurrence, such as the execution of the release and stipulation of dismissal.
For an assessment of your debt collection needs, contact Frank, Frank, Goldstein and Nager for a consultation.