Is It Binding? (Part Two)

By: Katryna L. Kristoferson and David Paul Horowitz | June 18, 2024

Introduction

In our last column, we discussed CPLR 2104, and two of the three ways in which an enforceable stipulation can be entered into (as well as how an otherwise valid stipulation can be found void for mutual mistake).

This month, dive into the third, frankly mysterious formula set forth in CPLR 2104 to create an enforceable stipulation: “An agreement between parties or their attorneys relating to any matter in an action…reduced to the form of an order and entered.”

In addition, we discuss the requirement to file stipulations of settlement with the Court and whether binding stipulations of settlement can be formed through e-mail exchange.

Reduced to the Form of an Order and Entered

For some insight into this sub-provision of CPLR 2104, we took to New York Civil Practice: CPLR (Weinstein Korn & Miller). That insight is brief (and, ultimately, unhelpful):

The third type of stipulation requires the signature of a judge on an agreement in the form of an order. Once the order is entered, all parties will be bound by it. See CPLR 2219(a) (form of order).

4 New York Civil Practice: CPLR (Weinstein Korn & Miller) P 2104.00 (2024).

Unfortunately, Weinstein Korn & Miller offers no additional commentary, nor any case citations relating to this particular subsection.

The authors’ reference to CPLR 2219(a) is a bit confusing. Yes, CPLR 2219(a) discusses the form of an order, but the language in the statute suggests it relates only to an order deciding a motion:

An order determining a motion relating to a provisional remedy shall be made within twenty days, and an order determining any other motion shall be made within sixty days, after the motion is submitted for decision…Except in a town or village court or where otherwise provided by law, upon the request of any party, an order or ruling made by a judge, whether upon written or oral application or sua sponte, shall be reduced to writing or otherwise recorded.

Yet CPLR 2104 is applicable to “relating to any matter in an action.” So, not just motions.

“[A]n order or ruling made by a judge” . . . “shall be reduced to writing . . .” By whom? Presumably by the judge, but we suppose anyone could perform the ministerial act of writing it up for the judge. When? Since this is not a situation where a stenographic record is being made (otherwise the stipulation would fall under the “open court” method), and there is no requirement that the order be written contemporaneously, the order presumably can be written up at any time. Where? Again, since there is no “open court” requirement, and since CPLR 2219(a) specifies an order “made by a court or a judge out of court,” the order can presumably be written up at any location. How? The only requirement it “reduced to writing,” so presumably a cocktail napkin would suffice. Okay, maybe not a cocktail napkin, but what is actually required? CPLR 2219(a) specifies:

An order determining a motion made upon supporting papers shall be signed with the judge’s signature or initials by the judge who made it, state the court of which he or she is a judge and the place and date of the signature, recite the papers used on the motion, and give the determination or direction in such detail as the judge deems proper.

But we are talking about a stipulation between parties, not an order deciding a motion, so the only non-motion related requirement would appear to be the judge’s signature or initials, identifying the court, and the place and date of the signature.

And this is not what we in the biz refer to as “so ordered” stipulations, which are written stipulations drafted and signed by the parties and/or their attorneys which are then given to the court for dating and signing following the written directive “so ordered.” A “so ordered” stipulation is certainly necessary where there is an agreement among the parties to amend or otherwise change a prior court order, which the parties are not free to do without the consent of the court, and is necessary protection so that the court does not later take the position the change was in violation of the court’s prior order. Other stipulations can be “so ordered,” but if properly drafted and executed pursuant to CPLR 2104 they are already enforceable, and being “so ordered” does not make them more enforceable.

Having so many questions, and finding so few answers, we reached out to a number of fellow CPLR Geeks (including one or more jurists) to get their take on what this third method of creating an enforceable stipulation actually means, and the mechanics for effectuating it.

We were met with a fair amount of head scratching, “huhs?” and, most commonly, “I never really thought about that.” And this is in no way meant to criticize our fellow travelers, since we were equally stumped (though being in such good company made us feel a little less foolish).

However, a consensus did crystalize. Parties appear before a judge. They reach an agreement on “any matter.” They so inform the judge. The judge, at some time, somewhere, in some form, reduces the agreement to the form of an order. That order get entered. Voila! An enforceable stipulation. Just as enforceable as one made in open court or in a writing subscribed by the party or the parties attorney.

But what if the judge makes a mistake when writing the order so that it does not reflect the agreement of the parties? Unlike “open court,” there is no stenographic record made by someone whose sole job it is to accurately transcribe, word for word, what was said. Nor is the stipulation a writing drafted, reviewed, and executed by the parties and/or their attorneys. Now, there is an order which, once entered, “all parties will be bound by.”

Why would a judge undertake the responsibility to do this (and have you seen some of their handwriting)? Why would the parties and/or their attorneys want to be bound by a writing written by someone else which they might not have the opportunity to review (and there is no requirement that they be given that opportunity)?

Our recommendation? Draft your own stipulation, whether on red-lined paper (anyone remember what that is?), negotiated via a series of emails, or scrawled on a carbonless, multi-copy stipulation form in court. Or, ask for a reporter and make a record. Or, offer to write up the order for the court to be signed by the court and then entered.

Maybe, just maybe, we are missing something here. And we just overlooked it. We hit send to on this column to our editor terrified that the answer to our conundrum is patent, right under our noses, and we just overlooked it. So, dear readers, feel free to help us! As we were reminded in every episode of the “X-Files,” “the truth is out there.” Damned if we can find it.

Requirement to File Stipulations of Settlement (Added 2003)

While on the topic of CPLR 2104, and the Weinstein commentary, it is worth noting that the Weinstein commentary continues:

The second sentence in CPLR 2104 was added in 2003 and requires that the terms of all stipulations of settlement be filed by the defendant with the county clerk. The filing requires the payment of a fee. CPLR 8020(d). Parties frequently enter into confidential stipulations of settlement and refuse to release the terms of the agreement. The question of whether the second sentence of CPLR 2104 prohibits this practice must ultimately be determined by the courts.

4 New York Civil Practice: CPLR (Weinstein Korn & Miller) P 2104.00 (2024) (emphasis added).

Both CPLR 2104 and 8020 were amended in 2003, as “part of a budget measure.” Siegel’s New York Practice, Chapter 8, § 204 Stipulations, p. 351 (CPLR 8020 was also amended to provide for a $45 fee for each motion or cross-motion. CPLR 8020(a)).

The amendment to CPLR 2104, and the “second sentence” referenced above, is as follows:

With respect to stipulations of settlement and notwithstanding the form of the stipulation of settlement, the terms of such stipulation shall be filed by the defendant with the county clerk.

CPLR 2104.

CPLR 8020, in relevant part, was amended as follows:

(d) Filing a stipulation of settlement or a voluntary discontinuance. For filing a stipulation of settlement pursuant to rule twenty-one hundred four of this chapter or a notice, stipulation, or certificate pursuant to subdivision (d) of rule thirty-two hundred seventeen of this chapter, the defendant shall file and pay:

• in the counties within the city of New York, $35 in the Supreme Court.

• in all other counties, $35 in the Supreme Court and county court.

Provided, however, that only one such fee shall be charged for each notice, stipulation or certificate filed pursuant to this subdivision.

CPLR 8020(d).

Perhaps Siegel’s explanation for the amendments, “the legislature wanted the state treasury to collect an extra $35,” also explains why stipulations of settlement and a voluntary discontinuance are seemingly interchangeable under CPLR 8020(d) (CPLR 3217 provides, in relevant part: (d) All notices, stipulations, or certificates pursuant to this rule shall be filed with the county clerk by the defendant).

Those in practice more than a decade may recall Siegel’s Practice Review, issued from April 1993 through March 2014, which was a concise four-page monthly summary of developments in New York civil practice (full texts are available on Westlaw). For those wanting a deeper dive into the basis behind the amendments, Siegel’s Practice Review covered the 2003 amendment to CPLR 2104 and 8020 in his July, September and October 2003 issues.

Stipulation By Email

Continuing the discussion of how enforceable stipulations are entered, while previously, “an email in which a party’s or its attorney’s name is prepopulated in the email is not sufficiently subscribed for purposes of CPLR 2104,” in 2021, the First Department affirmatively “jettison[ed] the requirement that a party or a lawyer retype their name in email to show subscription.” Matter of Philadelphia Insurance Indemnity v. Kendall, 2021 NY Slip Op 04284, 197 A.D.3d 75, 151 N.Y.S.3d 392 (1st Dept. 2021) (See Bayerische Landesbank v. 45 John St., 102 AD3d 587, 587, 960 NYS2d 64 (1st Dept 2013), lv dismissed 22 NY3d 926, 998 NE2d 1065, 976 NYS2d 441 [2013]; LIF Industries v. George A. Fuller Company, 2015 NY Slip Op 32973[U] (Sup Ct, NY County 2015)).

The First Department noted that removing the requirement to retype the name in an email, “does not mean that every email purporting to settle a dispute will be unassailable evidence of a binding settlement.” Matter of Philadelphia Insurance Indemnity v. Kendall, supra.

The court further explained:

First, there may be issues of authentication. Email accounts can be hacked. An email from an attorney’s account is presumed to be authentic, but that is a rebuttable presumption. Just as a party may attack a hardcopy settlement offer or acceptance as a forgery, a party that claims an email was the product of a hacker (or of artificial intelligence, or of some other source) may rebut its authenticity. Second, an email settlement must, like all enforceable settlements, set forth all material terms.

When discussing the rationale for removing the requirement, the First Department discussed Forcelli v. Gelco, (109 AD3d 244, 972 NYS2d 570 (2d Dept 2013). Notably, the Forcelli court cited the First and Third Departments, when explaining why an enforceable agreement can be made via email.

It is, of course, axiomatic that a letter can be considered ‘subscribed,’ since letters are usually signed at the end by the author thereof. However, email messages cannot be signed in the traditional sense. Nevertheless, this lack of ‘subscription’ in the form of a handwritten signature has not prevented other courts from concluding that an email message, which is otherwise valid as a stipulation between parties, can be enforced pursuant to CPLR 2104. In the case of Williamson v. Delsener (59 AD3d 291, 291, 874 NYS2d 41 (2009), the Appellate Division, First Department, stated that ‘e-mails exchanged between counsel, which contained their printed names at the end, constitute signed writings (CPLR 2104) within the meaning of the statute of frauds.’ In the case of Brighton Inv. Ltd. v. Har-Zvi (88 AD3d 1220, 1222, 932 NYS2d 214 (2011), the Appellate Division, Third Department, stated that ‘an exchange of e-mails may constitute an enforceable contract, even if a party subsequently fails to sign implementing documents, when the communications are sufficiently clear and concrete to establish such an intent’ (internal quotation marks omitted).

It should be noted, that in Forcelli, supra, the Second Department drew a distinction between an auto-generated signature, and one that was typed in at the time of preparing the email. Forcelli, supra ([T]he record supports the conclusion that Greene, in effect, signed the email message. In particular, we note that the subject email message ended with the simple expression, ‘Thanks Brenda Greene,’ which appears at the end of the email text. 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).

Conclusion

While it was our intention to make this a two-part article, the trip down the rabbit-hole to address (note we don’t say “answer”) the question of what “reduced to the form of an order and entered” actually means, went way longer than expected.

Given the importance of stipulations in day to day practice, our column next month will continue to focus on CPLR 2104, and discuss, inter alia, the contents required for an enforceable stipulation, and whether stipulations setting forth an intent to settle and execute settlement documents, are enforceable.

Until then, unless you are clear on the meaning of “reduced to the form of an order and entered” and comfortable with its use, we recommend either making a record in open court or draft a written stipulation setting forth all of the material terms of the agreement between the parties and make certain it is executed by or on behalf of the parties to be charged.

Please see ALM.com for the full printed article.