Email Exchange Creates Binding Settlement Agreement Per UETA–Forcelli v. Gelco

September 6, 2013 · by John Ottaviani · in Licensing/Contracts

Forcelli v. Gelco Corp., 2013 NY Slip Op 05437 (N.Y. App. Div. July 24, 2013)

E-Sign and UETA cases have been few and far between to date. Perhaps it is because the laws still are relatively new, having been passed only about fifteen years ago. I like to think it is because the laws are so clear. Either way, it is nice to see a court apply the logic of UETA in a straight-forward manner–such as a recent case where the court confirmed that an email message where the sending attorney “purposefully” added her name, rather than having the program automatically generate a signature, constituted a binding settlement agreement under New York CPLR 2104.

The facts in this case were not really in dispute, and they reflect a common settlement scenario. Both parties in a personal injury suit filed motions for summary judgment, and at the same time entered into settlement discussions. After some back and forth, the attorney for the defendants offered $230,000 to settle the case, and the plaintiffs’ counsel orally accepted the offer on behalf of the plaintiffs. The attorney for the defendants followed up with an email to the plaintiff’s counsel, stating the following:

Per our phone conversation today, May 3, 2011, you accepted my offer of $230,000 to settle this case. Please have your client executed [sic] the attached Medicare form as no settlement check can be issued without this form. You also agreed to prepare the release, please included [sic] the following names: Xerox Corporation, Gelco Corporation, Mitchell G. Maller and Sedgwick CMS. Please forward the release and dismissal for my review. Thanks Brenda Greene.

A few days later, the New York Supreme Court issued an order granting one defendants’ motion for summary judgment and granted the plaintiff’s motion for summary judgment against other defendants. Even though the signed release had been faxed to the attorney for the defendants, the attorney for the defendants whose motion was granted faxed and mailed a letter to the plaintiff’s counsel rejecting the release and stipulation of discontinuance, asserting that there was no binding settlement consummated under New York CPLR 2104, which states that “An agreement between parties or their attorneys relating to any matter in an action . . . is not binding upon a party unless it is in a writing subscribed by him or his attorney.” The Court granted the plaintiff’s motion to enforce the settlement agreement, and the defendant appealed.

The appellate court used a traditional contract analysis, finding that all material terms of the settlement were set forth in the email message and that there was manifestation of mutual assent. This left the court to analyze whether the email message could be considered “subscribed” under the New York statute and, thus, capable of enforcement. The court first discussed several other New York appellate decisions that concluded that email messages can be enforced as settlement agreements under CPLR 2104. Next, the appellate court looked to the legislative intent of the New York State Technology Law (the New York equivalent of UETA), which says

[This act] is intended to support and encourage electronic commerce and electronic government by allowing people to use electronic signatures and electronic records in lieu of handwritten signatures and paper documents

The court concluded that, given the widespread use of email as a form of written communication, it would be unreasonable to conclude that e-mail messages do not qualify under CPLR 2104 simply because they cannot be signed in the traditional pen and ink fashion.

Finally, the appellate court looked to Section 302(3) of the New York State Technology Law, which sets forth the familiar UETA definition that a “‘electronic signature’ shall mean an electronic sound, symbol or process, attached to or logically associated with an electronic record and executed or adopted by a person with the intent to sign the record.” The court concluded that the defendant’s attorney “purposefully” added her name to this particular email message, such that the e-mail message could be deemed a “subscribed” writing within the meaning of CPLR 2104 and thereby constitute an enforceable agreement.

Some additional thoughts:

• The practice point here is clear: If you do not want to be bound by email messages and negotiations, it is simple enough to add a disclaimer to your emails that negate any intent.

• More and more courts are accepting that electronic communications are analogous to physical communications, and that, given the ubiquity of electronic documentations, these should be no difference in legal effect. This was the original purpose of E-Sign and UETA, and the courts seems to be getting it.

* Can A Copyright Be Assigned By Email?–Hermosilla v. Coca-Cola

* Court Rules That Instant Message Conversation Modified the Terms of a Written Contract — CX Digital v. Smoking Everywhere

* Email That Says “Done .. thanks!” Doesn’t Transfer Copyrights – MVP Entertainment v. Frost

* Online Insurance Application Constitutes “Writing” for Purposes of Waiving Insurance Coverage for Medical Benefits–Barwick v. GEICO

* E-SIGN Prevents Enforcement of Emailed Contract Terms–Buckles v. Investordigs

* Campbell v General Dynamics (II)

[Photo credit: A hand comes right out of the laptop screen to shake hands // ShutterStock]