Aivaliotis v Continental Broker-Dealer Corp.
Annotate this CaseDecided on June 24, 2005
Supreme Court, Nassau County
DIMITRIOS AIVALIOTIS, JOHN BERGEN, JAMES BYRNS, JOSEPH DAMSKER, WAYNE FORD, MARTIN FLORIO and ERVIN PIERREPHILIPPE, Plaintiffs,
against
CONTINENTAL BROKER-DEALER CORP., Defendant,
4156-04
COUNSEL FOR PLAINTIFFS
David V. Suarez, PLLC
37-10 30th Street
Long Island City
New York, New York 11101
COUNSEL FOR DEFENDANT
Wexler & Burkhart, P.C.
50 Charles Lindbergh Boulevard
Mitchel Field, New York 11553
Leonard B. Austin, J.
BACKGROUND
Plaintiffs are former employees of Continental Broker-Dealer Corp. ("Continental"). This action arose from Continental's claim that it was due the sum of $300,000 resulting from loans made to the Plaintiffs. A total of $118,000 of this sum was secured by confessions of judgment executed by the Plaintiffs running to the Continental.
In March 2004, Continental demanded payment of the loans and advised the Plaintiff's that it intended to enter judgment by confession.
Upon receipt of this notice, Plaintiffs commenced this action seeking, inter alia, to void the promissory notes and confessions of judgment. Plaintiffs also moved for a preliminary injunction enjoining Continental from entering any judgments on confession pending a final determination of Plaintiffs' claims.
On March 30, 2004, Continental consented to the issuance of a preliminary injunction enjoining it from entering any judgment on confession during the pendency of this action provided that Plaintiffs post an undertaking in the aggregate amount of the confessions of judgment. The preliminary injunction was to remain in effect until the action was resolved by trial, arbitration or settlement.
The action was thereafter settled via the December 14, 2004 Stipulation. Pursuant to the terms of the Stipulation, the action was settled in the sum of $120,000 to be paid by Plaintiffs to Continental in three installments of $40,000 on each of January 14, 2005, February 14, 2005 and March 14, 2005.
Since Continental is in bankruptcy, the settlement was subject to the approval of the Bankruptcy Court. The Stipulation provided that the settlement amount was to be held in escrow pending approval of the settlement by the Bankruptcy Court. Neither Plaintiff nor Continental submitted any evidence indicating that the Bankruptcy Court addressed or approved the settlement although Defendant's claim herein is being prosecuted with the approval and on behalf of the Trustee in Bankruptcy.
Plaintiffs have not made any of the settlement payments. As a result, Defendant seeks to enter judgment for the settlement amount, $120,000.
In opposing the motion, Plaintiffs rely upon the following sentence contained in the Stipulation, "In the event the Plaintiff defaults in making the aforesaid payments, this [*2]stipulation is without prejudice and the parties may pursue their claims and counterclaims." Plaintiffs assert that based upon this language that if they did not make the payments required by the settlement, the parties would return to the status quo and would proceed with the litigation as if the parties had never entered into the Stipulation.
DISCUSSION
A stipulation is a contract which is subject to the rules of contract interpretation.
Ross v. Ross, 16 AD3d 713 (3rd Dept. 2005); McKenzie v. Vintage Hallmark, PLC, 302 AD2d 503 (2nd Dept. 2003); and Charter Realty & Development Corp. V. New Roc Assocs., L.P., 293 AD2d 438 (2nd Dept. 2002).
A stipulation will be enforced in accordance with its terms unless there is proof of fraud, duress, overreaching or unconscionability. Shuler v. Dupree, 14 AD3d 548 (2nd Dept. 2005); and Maury v. Maury, 7 AD3d 585 (2nd Dept. 2004).
An agreement that is clear and unambiguous will be enforced in accordance with its terms. South Road Assocs., LLC v. International Business Machines Corp., 4 NY3d 272 (2005); Greenfield v. Philles Records, Inc., 98 NY2d 562 (2002); and W.W.W. Assocs. v. Giancontieri, 77 NY2d 157 (1990). The court will determine the intent of the parties from the language of the agreement. Greenfield v. Philles Records, Inc., supra.
Terms of a contract are to be interpreted in accordance with their plain meaning.
Computer Associates International, Inc. v. U.S. Balloon Manufacturing Co., Inc., 10 AD3d 699 (2nd Dept. 2004); and Tikotzky v. New York City Transit Auth., 286 AD2d 493 (2nd Dept. 2001).
The court is to give "...practical interpretation to the language employed and the parties reasonable expectations." Slamow v. Del Col, 174 AD2d 725, 726 (2nd Dept. 1991), aff'd. 79 NY2d 1016 (1992). See also, AFBT-II, LLC v. Country Village on
Mooney Pond, Inc., 305 AD2d 340 (2nd Dept. 2003); and Del Vecchio v. Cohen, 299 AD2d 426 (2nd Dept. 2001).
The court may not add or delete provisions of an agreement under the guise of interpretation nor may the court interpret the language of an agreement in such a way as would be contrary to the intent of the parties. Petracca v. Petracca, 302 AD2d 576 (2nd Dept. 2003); and Tikotzky v. New York City Transit Auth., supra.
The court should interpret an agreement so as to give meaning to each provision. Hudson Iron Works, Inc. v. Beys Specialty Contracting, Inc., 262 AD2d 360 (2nd Dept. 1999). The court should avoid interpreting a contract in such a way as would render any provisions of a contract meaningless. Helmsley-Spear, Inc. v. New York Blood Center, Inc., 257 AD2d 64 (1st Dept. 1999); and Snug Harbor Square Venture v. Never Home Laundry, Inc., 252 AD2d 520 (2nd Dept. 1998).
The clear and unambiguous language of the Stipulation provides that the action was being settled for the sum of $120,000 to be paid in three equal installments of $40,000 due on January 14, 2005, February 14, 2005 and March 14, 2005. There are no contingencies or conditions precedent to Plaintiffs' obligation to make the settlement payments.
The interpretation of the settlement payment provision suggested by Plaintiffs [*3]would render the provisions of the Stipulation obligating Plaintiffs to pay the settlement sums illusory and meaningless. Plaintiffs' interpretation of the Stipulation would result in this action being settled if and only if the Plaintiffs voluntarily made the settlement payments. If the Plaintiffs chose not to make the settlement payments, then Continental's sole remedy would be to have this matter reinstated to active status and resume with the litigation. Such an interpretation would be contrary to the intent of the parties and contrary to the purposes of the settlement of an action.
Continental settled this action in which it could have recovered in excess of $300,000 from the Plaintiffs for $120,000. The provision of the Stipulation which gives parties the right to continue with the prosecution action should Plaintiffs default in the payment of the settlement sum was designed to provide the Continental with the opportunity to continue the action and recover the full amount claimed to be due from Plaintiffs to Continental should the Plaintiffs default in payment of the settlement and to assure the Plaintiffs that they could assert any defenses available to the action for those sums. It was not the intent of the parties to provide Plaintiff with the unilateral ability to void the settlement.
The public policy of New York favors enforcing settlements. Booth v. 3669 Delaware, Inc., 92 NY2d 934 (1992); and Hallock v. State of New York, 64 NY2d 224 (1984). Since Plaintiffs have failed to establish that the Stipulation was void or invalid for reasons of fraud, collusion, mistake, accident or any other reasons sufficient to void a contract, the Stipulation is valid and will be enforced. Continental should be permitted to enter a judgment for the settlement sum. See, Lucadamo v. Bridge To Life, Inc., 12 AD3d 422 (2nd Dept. 2004).
Defendant also seeks sanctions. The basis of the sanctions is that Plaintiffs' interpretation of the settlement agreement is without merit in law and fact.
Sanctions may be awarded against and attorney or a party who engages in frivolous conduct. 22 NYCRR §130-1.1. The decision as to whether sanctions should be imposed is one addressed to the discretion of the Court. Wagner v. Goldberg, 293 AD2d 527 (2nd Dept. 2002). Under these circumstances, awarding sanctions to Continental would be inappropriate. While the Court chose not to accept Plaintiffs' argument, the argument had at least some colorable basis in the language of the Stipulation.
Additionally, as a result of Plaintiffs' failure to pay the stipulated settlement sum, they have exposed themselves to significant additional liability should Continental chose to proceed and be successful on its claims. The Court finds this to be a sufficient potential penalty for Plaintiffs' failure to pay the settlement sum.
Accordingly, it is,
ORDERED, that Defendant's motion for leave to enter a judgment based upon the provision of the "So Ordered" Stipulation dated December 14, 2005 is granted; and it is further,
ORDERED, that the County Clerk, Nassau County is directed to enter a judgment in favor of the Defendant, Continental Broker-Dealer Corp. and against the Plaintiffs Dimitrios Aivaliotis, John Bergen, James Byrns Joseph Damsker, Wayne Ford, Martin Florio and Ervin PierrePhilippe in the sum of $120,000 together with interest at [*4]the statutory rate from March 14, 2005 and costs and disbursements as taxed by the Clerk; and it is further
ORDERED, that Defendant's motion for sanctions is denied: and it is further,
ORDERED, that Defendant's counterclaims to recover the amount over and above the settlement amount and any causes of action of Plaintiff to recover damages or void any obligations over and above the settlement amount are hereby severed and continued; and it is further,
ORDERED, that counsel for the parties are directed to appear for a status conference on July 22, 2005 at 9:30 a.m.
This constitutes the decision and Order of the Court.
Dated: Mineola, NY _____________________________
June 24, 2005 Hon. LEONARD B. AUSTIN, J.S.C.
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