State Farm Mut. Auto. Ins. Co. v Classic Pontiac GMC Corp.
Annotate this CaseDecided on June 28, 2006
Nassau District Court
State Farm Mutual Automobile Insurance Company, a/s/o Andrew J. Cupolo, Jr., Plaintiff,
against
Classic Pontiac GMC Corp., Defendant.
20778/03
Nicolini, Paradise, Ferreti & Isabella, for plaintiff
114 Old Country Road
PO Box 9006
Mineola, NY 11501
The Rose Law Firm, PLLC, for defendant
501 New Karner Road
Albany, NY 12205
Gary F. Knobel, J.
Upon the foregoing papers, plaintiff's motion for an order entering a judgment against the defendant in the sum of $450.00, on the ground that it failed to pay that sum as part of the parties' stipulation of settlement, is denied. The cross-motion by the defendant for an order directing a hearing on whether monetary sanctions should be imposed on the plaintiff and plaintiff's attorney is denied.
The simple legal issue raised in this motion involves the execution of a document which brings finality everyday to litigation or potential litigation, is rarely litigated and appears to have never been specifically addressed in reported decisions: can an attorney execute a release on behalf of his client?
This is a property damage subrogation action to recover $642.22 for the damage sustained by plaintiff's insured's vehicle when it was left in the custody of the defendant on August 17, 2001.
The facts are not disputed. This case was settled by an oral stipulation on July 1, 2004, for $450.00. The stipulation was not made in open court. The parties' agreement, made through their respective attorneys, was reduced to writing by defendant's attorney on July 23, 2004. The agreement required "the parties to execute a stipulation of discontinue with prejudice," and that "State Farm Insurance Company a/s/o Andrew J. Cupolo shall execute a release agreement ..." The plaintiff's attorney signed a stipulation of discontinuance on July 30, 2004, and a release dated August 11, 2004. The defendant's attorney did not object to the plaintiff's attorney signing the stipulation of discontinuance; he did, however, refuse to have the defendant execute the release on the grounds that it misidentified the releasor and the releasee, and that it was not signed by "a member or proper representative of" the corporate plaintiff. The plaintiff's attorney never rectified the release to the satisfaction of defense counsel.
"It is well recognized that strong policy considerations favor the enforcement of settlement agreement" (Rocanova v Equitable Life Assur. Socy., 83 NY2d 603, 616; see, [*2]Bonnette v Long Island College Hosp., 3 NY2d 281, 286; Hallock v State of New York, 64 NY2d 224, 230).
A settlement is considered binding, even in instances when the client is not present and the attorney does not have actual authority, if the court concludes that counsel's actions indicate "apparent authority" to act on his or her clients' behalf (Matter of Silone Breast Implant Litigation v Bristol-Myers Squibb and Co., 306 AD2d 82, 84). "Essential to the creation of apparent authority are words or conduct of the principal, communicated to a third party, that give rise to the appearance or belief that the agent possess authority to enter into a transaction" ( Hallock v State of New York, supra at 231).
The procedural rule governing stipulations between parties or attorneys in an action is CPLR 2104, which states in relevant 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." The Court of Appeals has noted that "this rule is of somewhat ancient origin. It grew out of the frequent conflict between attorneys as to agreements
made with reference to proceedings in action, and was intended to relieve the Courts from the constant determination of controverted questions of fact with reference to such proceedings" (Bonnette v Long Island College Hosp., supra , quoting Mutual Life Ins. Co. Of NY v O'Donnell, 146 NY 275, 279 [1895[).
This does not mean, however, that attorneys have unlimited power to execute any agreement on behalf of their client. "An attorney cannot, by virtue of his general authority as an attorney, bind his client to what amounts to a surrender or waiver, in whole or in part, of any substantial right" (Bryan v State Wide Ins. Co., 144 AD2d 325, 327; see, Lake Anne Realty Corp. v Lake Anne at Monroe Associates, LLC, AD3d , 814 NYS2d 533 [2nd Dept. May 23, 2006]). This is in part why, as a practical and prudent practice, most attorneys have their clients execute general releases.
"[A] release may not be treated lightly since '[it] is a jural act of high significance without which the settlement of disputes would be rendered all but impossible. It should never be converted into a starting point for renewed litigation except under circumstances and under rules which would render any other result a grave injustice.' (Mangini v McClurg, 24 NY2d 556, 563)." (Calavano v New York City Health & Hosps. Corp., 246 AD2d 317, 318-319).
Here, the release in questions as most releases do, goes beyond a discontinuance of this action since it seeks to put to rest any possible claim or cause of action, now or in the future, that the plaintiff or its successors or assigns may have against the defendant pertaining to the property damage on the insured's vehicle. The plaintiff's attorney did not provide the Court (or opposing counsel) with any documentation indicating that he or the firm had the authority to sign the release on behalf of the plaintiff. If he had done so, this Court would have directed the defendant to execute the release (see, Calavano v New York City Health & Hosp. Corp., supra at 320; CPLR 2104).
Accordingly, the Court directs the plaintiff's attorneys, within 20 days after the service of a copy of this order on the law firm, to furnish to the defendant's attorney a release in proper form which either (1) has been executed by an officer or a person in the corporation given
authority to do so, or (2) has been executed by the plaintiff's attorney. If the latter option is chosen, the release must be accompanied by an affidavit from the plaintiff granting the plaintiff's attorney authority to sign the release (see, Lake Anne Realty Corp. v Lake Anne at Monroe Associates, LLC, supra ).
The defendant's cross motion has been denied since it appears that the plaintiff's attorney executed the various releases in good faith based upon his belief that he had the authority to do so (see, CPLR 2104).
The foregoing constitutes the Decision and Order of this Court.
So Ordered:
Hon. Gary F. Knobel
Dated: June 28, 2006 District Court Judge
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