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Another Reason to Exercise Care With E-Mail

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Dojang from KoreaAn appellate court in New York recently decided a case that serves as yet another reminder to be careful when sending an email.  In Forcelli v. Gelco Corp., 109 A.D.3d 244 (2d Dep’t 2013), the Appellate Division, Second Department, held that an email message satisfied the statutory criteria for a binding and enforceable stipulation of settlement.  While it is not surprising that parties can form a contract by email, it is somewhat surprising that the court here held that, under the facts of this case, an email constituted a stipulation of settlement in the absence of a handwritten signature.

In Forcelli, a personal injury action arising out of a multi-party automobile accident, the plaintiff’s attorney and the insurance adjuster reached an agreement regarding settlement following an unsuccessful mediation involving all the parties.  After agreeing on the amount of the settlement, the adjuster sent an email to plaintiff’s attorney, confirming that the plaintiff’s attorney accepted the adjuster’s offer of $230,000 during their telephone conversation, and further noting that the parties agreed that the plaintiff’s attorney would have his client sign the medicaid form and a general release and stipulation of discontinuance.

The next day, the plaintiff signed the release, but before it was forwarded to the insurance adjuster, the trial court granted the defendants’ motion for summary judgment, which resulted in the dismissal of the plaintiff’s complaint.  When the defense attorney learned that the settlement papers had been received by the insurance adjuster, the defense attorney sent a letter to the plaintiff’s attorney rejecting the settlement papers, claiming that there was no settlement consummated between the parties in accordance with the statutory requirements for stipulations of settlement.  Thereafter, the plaintiff’s attorney filed a motion, seeking to vacate the summary judgment order of dismissal.  That motion was granted, resulting in this appeal.

Where a settlement is not made in open court, the civil practice law and rules provide that a settlement agreement will not be binding “unless it is in a writing subscribed by [the party] or his attorney.”  Also, since settlement agreements are subject to the principles of contract law, all material terms must be set forth and there must be a manifestation of mutual assent in order for the agreement to be enforceable.

After noting that courts have “long recognized that traditional correspondence can qualify as an enforceable stipulation of settlement”, the Appellate Division discussed the issue of whether an email could be “subscribed” because it cannot be “signed in the traditional sense.”  In analyzing this issue, the court first noted that two other departments have held that emails could constitute signed writings satisfying the requirements of a stipulation of settlement.  The court then observed that “given the now widespread use of email as a form of written communication in both personal and business affairs, it would be unreasonable to conclude that email messages are incapable of conforming to the criteria of [the civil practice law and rules] simply because they cannot be physically signed in a traditional fashion.”  Finally, after noting that this conclusion is buttressed by reference to the New York State Technology Law, the court held:

[W]here, as here, an email message contains all material terms of a settlement and a 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 he meaning of [the civil practice law and rules] so as to constitute an enforceable agreement.

However, one factor that the court considered here was the fact that the insurance adjuster ended with the expression “Thanks,” followed by the insurance adjuster’s full type-written name.  The court noted that, “This indicates that the author purposefully added her name to this particular email message, rather than a situation where the sender’s email software has been programmed to automatically generate the name of the email sender, along with other identifying information, every time an email message is sent.”  Thus, whether or not there is a subscribed writing in a future case may very well depend on whether the author actually typed his or her name, or simply used an automatically-generated email “signature.”

As I read about this case, I couldn’t help but wonder how far we’ve come from the days of wax seals.  Now, you do not even need an actual hand-written signature for a subscribed writing.  But, I still like the custom-made dojang that my wife brought me back from her trip to Korea last summer.  These are “seals” often affixed to official documents in Korea.  If you look closely in the picture above, you can see my name carved in the seal, along with what I believe to be my name written in Hangul.  Too bad I won’t need it to confirm any stipulations of settlement.


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