Email is great, isn’t it? You can save paper and tons of time. But did you know that a simple click of the “send” button may bind you to a settlement?  Litigants and their counsel learned the hard way this month when the First Department reversed the lower court’s decision in Matter of Phila. Ins. Indem. Co. v. Kendall.

In Matter of Phila. Ins. Indem. Co. (Sup. Ct. N.Y. Cty., Index No. 657200/19), an individual plaintiff brought a claim under the Supplemental Underinsured Motorist (SUM) benefit provision in her employer’s automobile policy with Philadelphia Insurance Indemnity Company. The claim went to arbitration and, after a hearing, the arbitrator found in the individual’s favor to the tune of $975,000. However, neither counsel received the arbitrator’s decision. So, they continued to negotiate.

A few days later, the insurance company offered $400,000 to settle. The individual’s counsel responded, and that email ended with a salutation, followed by his name and contact information. But it was unclear whether this information was typed purposefully or generated by a prepopulated block.

Before the individual signed the settlement documents, her counsel received the arbitrator’s decision. The parties then proceeded to court. In determining that the email acceptance of the lesser amount was not enforceable, the lower court held that: (i) it was unclear whether her attorney retyped his name on his email agreement to the settlement in satisfaction of “subscription” under CPLR 2104; and (ii) the email correspondence did not contain all of the material terms of the settlement.  This blog focuses on the “subscription” issue.

What is CPLR 2104?

CPLR 2104 provides in pertinent part that “[a]n 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 . . . .”

 Why Did the First Department Reverse the Decision?

In reversing the lower court, the First Department drew an important distinction between typed signatures and prepopulated signature blocks. Specifically, they held that the “distinction between prepopulated and retyped signatures in emails reflects a needless formality that does not reflect how law is commonly practiced today.  It is not the signoff that indicates whether the parties intended to reach a settlement via email, but rather the fact that the email was sent.” Matter of Phila. Ins. Indem. Co. v. Kendall, ___AD3d___, 2021 NY Slip Op 04284, *3 (2021).

This finding, the First Department held, was in line with relevant precedent, including  Forcelli v. Gelco Corp. (109 A.D.3d 244, 972 N.Y.S.2d 570 (2d Dep’t 2013)), which stands for the proposition that the retyping of a name is required for an email to be “subscribed” and therefore a binding stipulation under CPLR 2104.

By issuing this latest decision, the First Department then effectively clarified and updated this precedent to conform with the times. It found that the settlement at issue was valid because the transmission of the email, not whether the sender’s email signature was retyped above the sender’s prepopulated block containing contact information at the end of the email, was what determined that the settlement stipulation was subscribed for purposes of CPLR 2104.

The Court mentioned the concern raised by other courts (including the Second Department) about the casual nature of email, and how emails are sometimes sent by accident or with regret after transmission.  However, it left that issue for another day, since the Court was not faced with an attorney who inadvertently sent an email. (They did note that “[c]ertainly, a part of that showing will be prompt action to rectify the error, just as prompt action strengthens an assertion of inadvertent disclosure.”)

To that same end, the Court was sure to qualify its decision, stating that,“[w]hile we jettison the requirement that a party or a lawyer retype their name in email to show subscription, that does not mean that every email purporting to settle a dispute will be unassailable evidence of a binding settlement.”  Matter of Phila. Ins. Indem. Co., 2021 NY Slip Op 04284, *4.  First, an email from an attorney’s account is presumed to be authentic, but that is a rebuttable presumption.  Id.  Second, an email settlement must, like all enforceable settlements, set forth all material terms. Id.

What are the Takeaways?

According to the First Department, the Court of Appeals has not opined on whether emails can satisfy CPLR 2104.  Matter of Phila. Ins. Indem. Co., 2021 NY Slip Op 04284, *2.  Until such time it does, make sure you type (or retype) your name at the end of the settlement stipulation email even if you have a prepopulated contact block; remember that intentionally transmitting an email containing the material terms of the agreement will likely determine that the settlement was subscribed for purposes of CPLR 2104; and be sure to update the arbitrator (or the court) when you are continuing settlement negotiations while a decision is pending.