Joseph v City of New York

[*1] Joseph v City of New York 2007 NY Slip Op 51008(U) [15 Misc 3d 1136(A)] Decided on May 17, 2007 Supreme Court, Kings County Battaglia, J. Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. This opinion is uncorrected and will not be published in the printed Official Reports.

Decided on May 17, 2007
Supreme Court, Kings County

John Joseph and Debra Cetta, His Wife, Plaintiffs,

against

The City of New York, the City of New York Board of Education and Richmond Elevator Company, Defendants.



5206/99



Plaintiffs were represented by Alan R. Sirlin, Esq. Plaintiff John Joseph also appeared pro se. Defendant City of New York was represented by Joseph Salvo, Esq. of the Corporation Counsel. Defendant Richmond Elevator Company was represented by Jeanne A. Cygan, Esq. of the Law Offices of Edward Garfinkel.

Jack M. Battaglia, J.

Before the Court are two rather unusual motions. Plaintiffs' counsel, Alan R. Sirlin, Esq., moves "for an Order providing for the proceeds of the settlement of this matter be placed in escrow and that Plaintiffs' attorney fee and expenses and the Plaintiff's workers compensation lien be paid from said escrow account." (See Notice of Motion.) Defendant Richmond Elevator Company moves for "[a]n Order pursuant to CPLR 2104 compelling plaintiff to execute a [*2]general release and a structured settlement agreement pursuant to a stipulation entered in to (sic) an (sic) open Court on September 7, 2006." (See Notice of Cross-Motion.) The problem is that the injured plaintiff, John Joseph, has refused to sign the release and structured settlement agreement presented by Defendant, maintaining that the agreement does not accurately reflect the agreed-to settlement, and his counsel agrees with him.

Plaintiff John Joseph was allegedly injured on November 17, 1997 when, while making a food delivery at Bushwick High School, he was struck in the head by a part of a freight elevator maintained by defendant Richmond. The City of New York and the Board of Education are also defendants.

In February 2006, Richmond moved for summary judgement dismissing the Complaint. The motion was adjourned several times until December 20, 2006 when, as will appear, it was denied as moot because of intervening events. In the Spring of 2006, Plaintiffs and Richmond negotiated toward reaching a settlement of Plaintiffs' claims, and apparently believed they had succeeded. Because, however, of outstanding cross-claims asserted against Richmond by the City Defendants, the discussions between Plaintiffs and Richmond stalled. Both Plaintiffs and Richmond moved against the City Defendants with respect to the cross-claims, and those motions were adjourned to September 7, 2006 to be heard by Justice Allen Hurkin-Torres, who was presiding in the trial assignment part for City cases.

On September 7, 2006, in the trial assignment part, a "stipulation on consent" was executed, which reads in its entirety as follows:

"It is hereby stipulated and agreed by the parties by their respective attorneys:

1.The entire case is settled in the amount of $125,000 to be paid by Richmond Elevator as follows $75,000 up front and $50,000 in a structured settlement over ten years.

2.Plaintiff (sic) shall provide proper closing papers including a stipulation of discontinuance and a general release releasing the City of New York, Board of Education, Richmond Elevator and AIG Claim Services.

3.The City of New York and Board of Education hereby discontinue all cross-claims against Richmond for contribution and indemnification.

4.Richmond also discontinues all cross claims against City and Bd of Ed."

The stipulation was signed by counsel for Plaintiffs, Richmond, and the City Defendants, and by plaintiff John Joseph. It is undisputed that the September 7, 2006 stipulation was the first writing that purports to reflect the settlement negotiations between Plaintiffs and Richmond either during the previous months or on that day. The stipulation is not "so ordered" or otherwise signed by Justice Hurkin-Torres, which would not affect its enforceability. (See [*3]CPLR 2104.) It is worth noting, however, that the parties left the courtroom with copies of the writing showing Justice Hurkin-Torres's stamped name under a signature line and "enter", and showing the heading "so-ordered stipulation." Before the stipulation was sent to the file, the words "enter" and "so ordered stipulation" were crossed out, and Justice Hurkin-Torres's stamped name was deleted.

It did not take long for a problem to develop. On September 18, 2006, a representative of EPS Settlements Group, acting for Richmond's insurer, sent an e-mail communication to Plaintiffs' counsel, advising that "[t]he annuity policy, which will be purchased from American International Life Assurance Company of New York, will be owned by American Home Assurance Company." (See Communication dated September 18, 2006 from Elaine Schlageter, EPS Settlements Group, to Alan Sirlin, Esq., Exhibit D to Supplemental Affirmation in Support of Motion With Exhibits.) Included was a Confirmation of Settlement that showed an up front cash payment of $75,000 and a guaranteed monthly income of $510 per month for 10 years, at a cost of $50,000 and benefits totaling $61,200. (See id.) Mr. Sirlin is uncontradicted that this communication was the first writing that set forth the details of the annuity, the amount of future payments, and the total benefits of the structure, as stated in the communication.

Plaintiffs through their counsel rejected the details of the purported settlement as set forth in the September 18, 2006 communication, as well as certain provisions of a Settlement Agreement and Release delivered to them at some point. By Order to Show Cause dated November 10, 2006, Richmond moved for "an Order . . . [e]nforcing a settlement in this matter reached by the parties in open court on September 7, 2006." On December 11, 2006, Justice Hurkin-Torres recused himself from any further proceedings in this action, and Richmond's latest motion, together with its adjourned motion for summary judgment, were referred for decision on the Part 22 calendar.

The two motions were heard on December 20, 2006 by the Hon. Martin M. Solomon. The order issued by Justice Solomon on that date reads in its entirety as follows:

"Defendant Richmond Elevator's (sic) Company's motion to dismiss &/or be granted summary judgement is denied as moot. This matter was settled pursuant to stipulation of settlement on 9/7/06 in Court. However, Section 3.0 of the Settlement Agreement & release is modified by the Court as follows: that language nor shall the plaintiff or any payee have the power to sell, mortgage, encumber, or anticipate the Periodic Payments or any part thereof, by assignment or otherwise is deleted. Plaintiff's (sic) attorney's fees to be deducted from up front $75,000 in full on $125,000 settlement."

The order reflects Plaintiffs' objection to the non-assignability of the periodic payments, as well as Plaintiffs' contention that their attorney's fees were to be paid in part from the structured portion of the settlement. Specifically, according to Plaintiffs and their counsel, "[t]he legal fees associated with the $50,000 structured settlement would be paid separately by the insurance company." (See Affirmation in Opposition, Exhibit D to Supplemental Affirmation in Support of Motion With Exhibits, ¶ 3.) It is important to note, however, what the December 20 [*4]order does not address - - namely, the enforceability of the September 7 stipulation as a settlement, or the amount or time of the periodic payments, or the total benefits to be paid on the structured portion of the purported settlement.

What is clear, in any event, is that neither Mr. Joseph, nor his wife who is also a plaintiff, has signed the Settlement Agreement and Release, revised by Defendant to delete the non-assignibility provision that appeared in the earlier document. (No one contends that neither Mr. Joseph nor Mr. Sirlin had the authority to act for Mr. Joseph's wife in signing the September 7 stipulation or otherwise in connection with the matter.) The pending motions followed, and they first appeared on the Part 22 calendar on March 11, 2007, now with this judge presiding.

Mr. Joseph appeared on that date, and indicated to the Court that he opposed both Defendant's and his counsel's respective motions. Because at that point Mr. Joseph's interest and his counsel's had diverged, at least in part, the motions were adjourned to allow Mr. Joseph to retain additional or substitute counsel. Also, since Defendant's counsel and Plaintiffs' counsel suggested that the motions should be determined by Justice Solomon, the adjournment would allow this judge to consult Justice Solomon on counsel's suggestion.

On April 11, 2007, Mr. Joseph appeared without counsel, and the Court proceeded to argument on the record, having determined since the last appearance that Justice Solomon did not consider referral required by either rule or collegial courtesy. Mr. Joseph made a statement, and answered questions from his attorney of record, concerning the stipulation, including his reasons for not proceeding with the settlement. He summarized his position with "what we agreed upon was not carried out." (See Transcript, April 11, 2007, at 62.) The Court allowed counsel time to make supplemental submissions addressing any issues they wished, and invited argument on two concerns - - that the September 7, 2006 stipulation was not an enforceable settlement, and that, in any event, the Court would not have the power to require Plaintiffs to execute the Settlement Agreement and Release presented by Defendant. Both counsel did make supplemental submissions.

"Stipulations of settlement are favored by the courts and not lightly cast aside." (Hallock v State of New York, 64 NY2d 224, 230 [1984].) "Only where there is cause sufficient to invalidate a contract, such as fraud, collusion, mistake or accident, will a party be relieved from the consequences of a stipulation made during litigation." (Id.) Duress, overreaching, or unconscionability would also justify a refusal to enforce a settlement stipulation (see Chan v Barry, 36 AD3d 579, 579 [2d Dept 2007]), but "[g]eneral contentions that a party felt pressured by the court are insufficient to establish such a claim" (see Shuler v Dupree, 14 AD3d 548, 549 [2d Dept 2005].) There is no contention by Mr. Joseph that "at the time of the stipulation of settlement he was suffering from a mental disease or defect which rendered him incapable of comprehending the nature of the transaction or making a rational judgment concerning the transaction, or that by reason of mental illness he was unable to control his conduct." (See Lukaszuk v Lukaszuk, 304 AD2d 625, 625 [2d Dept 2003].)

Even so, a stipulation is a contract, and a party may show that "no contract ever came [*5]into being." (See Hallock v State of New York, 64 NY2d at 230.) In order for a writing to be enforceable as a settlement agreement under CPLR 2104, it must "incorporate all the material terms of the purported settlement." (See Bonnette v Long Is. Coll. Hosp., 3 NY3d 281, 285 [2004]; see Barrett v Carela, 33 AD3d 830, 831 [2d Dept 2006].) "If an agreement is not reasonably certain in its material terms, there can be no legally enforceable contract." (Orange & Rockland Utils., Inc. v Assessor of Haverstraw, 304 AD2d 668, 670 [2d Dept 2003] [quoting Cobble Hill Nursing Home v Henry & Warren Corp., 74 NY2d 475, 482 (1989)]; see also Galasso v Galasso, 35 NY2d 319, 321 [1974] ["definite and complete"] [quoting Matter of Dolgin Eldert Corp., 31 NY2d 1, 10 (1972)]; Curcio v Waterlviet Sch. Dist., 21 AD3d 666, 667 [3d Dept 2005] ["final, complete agreement with definite terms"]; Sterling Fifth Assocs. v Carpentille Corp., 10 AD3d 282, 283-84 [1st Dept 2004] ["definite and concrete terms"].)

The September 7, 2006 stipulation fails in several important ways to qualify as an enforceable settlement agreement. The stipulation does not state whether Defendant or an insurer will be obligated to make the periodic payments called for by the structured portion of the settlement, and, if the latter, who that will be; and, in any event, whether the payments will be guaranteed and, if so, by whom. Most importantly, the stipulation does not specify the time and amount of the periodic payments, or the total benefits to be paid pursuant to the structure, or provide some rate of accretion from which these aspects of the settlement might be derived.

In short, the September 7 stipulation does not expressly or by implication tell Plaintiffs how much they are assured to receive in exchange for release of their claims, nor who will be obligated to pay it and when. Neither Plaintiffs' counsel nor Defendant have contended, on either the pending motions or Defendant's prior motion to enforce the purported settlement, that these matters were agreed upon on September 7 or before; indeed, Plaintiffs' counsel disputes it. On the prior motion, Defendant submitted the affidavits of Wiliam M. Devito, Esq., the attorney representing Defendant on September 7, and Nicholas M. Satriano, the "claims professional" who negotiated with Plaintiffs' counsel on Defendant's behalf. Both supported Defendant's assertion that the agreement was for $125,000, to be paid $75,000 up front and $50,000 over 10 years, but neither suggests that monthly payments of $510.00 and total benefits of $61,200 were ever agreed upon, or even offered, on September 7 or before.

As to the prior motion, the absence of evidence of agreement on such material terms of the settlement might be understandable, because the prior motion, and Justice Solomon's December 20 order, did not address the enforceability of the September 7 stipulation notwithstanding the absence of material terms, assuming, of course, that such evidence could save the stipulation from unenforceability. It also explains why Justice Solomon's order does not constitute the law of the case on that question.

"The doctrine of the law of the case . . . applies only to legal determinations that were necessarily resolved on the merits in a prior decision." (Brownrigg v New York City Housing Authority, 29 AD3d 721, 722 [2d Dept 2006]; see also Oyster Bay Assocs. Ltd. Partnership v Town Bd. of Town of Oyster Bay, 21 AD3d 964, 966 [2d Dept 2005].) It applies "to the same questions in the same case" (see id.), and does not apply when the prior decision "did not [*6]consider or determine [an] issue" (see D'Amato v Access Mfg., 305 AD2d 447, 448 [2d Dept 2003]), and "did not address the precise question" (see Itamari v Giordan Development Corp., 298 AD2d 559, 559-60 [2d Dept 2002].)

The December 20 order did not consider or determine the enforceability of the September 7 stipulation as a settlement of the action. Justice Solomon's statement that "[t]his matter was settled pursuant to stipulation of settlement on 9/7/06 in Court" is no more then a factual explanation for his ruling that Defendant's summary judgment motion was moot. Defendant's assertion that "the December 20, 2006 Order . . . clarifies and so-orders the stipulation of September 7, 2006" (see Affirmation in Support,¶ 15), is incorrect on both counts. Likewise, Plaintiffs' counsel's assertion that "[t]he Court did rule in its Order of December 20, 2006 that Richmond could place $50,000.00 in the structure with a payout of $61,200.00 to the Plaintiff John Joseph over a ten year period ($510.00) per month," is inaccurate as a statement of fact and an unreasonable understanding of the order. As noted above, there was no evidence on the motion from Defendant that the parties had agreed to those terms, and, given Plaintiffs' counsel's insistence that there was no such agreement, the issue could not have been determined on the papers.

There is a serious question, moreover, as to whether the September 7 stipulation is rendered unenforceable by the Structured Settlement Protection Act (General Obligations Law

§ 5-1701 et seq.) The statute provides in Section 5-1702:

§ 5-1702. Initial disclosure of structured settlement terms

In negotiating a structured settlement of claims brought by or on behalf of a claimant who is domiciled in this state, the defendant or defendant's legal representative shall disclose in writing to the claimant or the claimant's legal representative all of the following information that is not otherwise specified in the structured settlement agreement:

(a) the amounts and due dates of the periodic payments to be made under the structured settlement agreement. In the case of payments that will be subject to periodic percentage increases, the amounts of future payments may be disclosed by identifying the base payment amount, the amount and timing of scheduled increases, and the manner in which increases will be compounded;

(b) the amount of the premium payable to the annuity issuer;

(c) the nature and amount of any cost that may be deducted from any of the periodic payments;

(d) where applicable, that any transfer of the periodic payments is prohibited by the terms of the structured settlement and may otherwise be prohibited or restricted under applicable law; and [*7]

(e) a statement that the claimant is advised to obtain independent professional advice relating to the legal, tax and financial implications of the settlement, including any adverse consequences and that the defendant or defendant's legal representative may not refer any advisor, attorney or firm for such purpose.

There is nothing in the record on these motions or the prior motion that shows Defendant's full compliance with the statute. To the extent that there was written disclosure of certain items, such as "the amounts and due dates of the periodic payments to be made under the structured settlement agreement" (see GOL § 5-702 [a]), the disclosure came after the September 7 stipulation was signed.

The Court will not, however, place its holding on violation of the statute, because the question has not been briefed and is important enough to require full deliberation. The Court does find, nonetheless, based in part on the required disclosures, that the subjects of disclosure are material terms of any structured settlement agreement. Assuming, moreover, that Defendant's counsel will be presumed to both know the law and intend to follow it, they could not have understood the September 7 stipulation to be anything more than "an agreement to agree to the amplified terms of a future writing." (See Matter of Dolgin Eldert Corp., 31 NY2d 1, 11 [1972]; see also Galasso v Galasso, 35 NY2d at 321; Sterling Fifth Assocs. v Carpentille Corp., Inc., 10 AD3d at 283.)

Structured settlements can be beneficial to both plaintiffs and defendants. But they are complex, and create significant difficulties warranting legislative intervention. It is becoming increasingly common, when the numbers are large, for plaintiffs to retain their own structured settlement experts to assist in the review and negotiation of proposals made by defendants and their representatives. (See, for example, Roman v Bermudes, 15 Misc 3d 321, __ [Sup Ct, Bronx County 2007].) Even when a court reviews a proposed settlement of an infant's claim, where "the infant's best interests" will govern (see Edionwe v Hussain, 7 AD3d 751, 753 [2d Dept 2004]; see also Barretta v NBKL Corp., 298 AD2d 539, 539-40 [2d Dept 2002]), the court cannot dictate the terms of the settlement over the guardian's objection (see Matter of Palmiere, 284 AD2d 965, 966 [4th Dept 2001]; Stahl v Rhee, 220 AD2d 39, 44-45 [2d Dept 1996].) Here, the Court will not require a plaintiff to proceed with a settlement on terms that he and his counsel say were never agreed to, and there is no evidence to contradict them.

Because the September 7, 2006 stipulation is ineffective as a settlement of the action, Defendant's and Plaintiffs' counsel's respective motions are denied. Any party may restore the action to the trial calendar by serving the appropriate clerk with a copy of this order with notice of entry, and the clerk is directed to restore the action without further order.

May 17, 2007_________________

Jack M. Battaglia

Justice, Supreme Court [*8]