Delyanis v. Dyna-Empire, Inc.

• Decision Date: 30 November 2006
• Docket Number: No. CV 05-5505(ADS)(ETB).,CV 05-5505(ADS)(ETB).
• Citation: 465 F.Supp.2d 170
• Parties: Diane F. DELYANIS, Plaintiff, v. DYNA-EMPIRE, INC., Jim Spagnolo, Pat McCarthy, Regina B. Weller, Officially and Individually, John Does 1 through 100, Individuals Whose Identities are Currently Unknown, Defendants.
• Court: U.S. District Court — Eastern District of New York

465 F.Supp.2d 170

Diane F. DELYANIS, Plaintiff, v. DYNA-EMPIRE, INC., Jim Spagnolo, Pat McCarthy, Regina B. Weller, Officially and Individually, John Does 1 through 100, Individuals Whose Identities are Currently Unknown, Defendants.

No. CV 05-5505(ADS)(ETB).

United States District Court, E.D. New York.

November 30, 2006.

Weitz & Luxenberg, P.C. New York, NY (Hannah S. Lim, of counsel), for Plaintiff.

Klein, Zelman, Rothermel & Dichter, L.L.P. New York NY (Jane B. Jacobs, Khristan A. Heagle, of counsel), for Defendants.

SPATT, District Judge.

Diane F. Delyanis ("Delyanis" or the "Plaintiff) commenced this action alleging that Dyna-Empire, Inc. ("Dyna"), Jim Spagnolo, Pat McCarthy, Regina B. Weller and John Does 1 through 100 (collectively, the "Defendants") discriminated against her on the basis of her age and alleged disability and retaliated against her in violation of federal and state law. Presently before the Court is a motion by the Defendants to enforce an alleged settlement agreement between the parties.

I. BACKGROUND

In November 2005, the Plaintiff filed the complaint in this action alleging that the Defendants, her employer and various supervisory employees, discriminated against her on the basis of her age and disability. In April 2006, the case was referred to mediation. The parties selected A. Jonathan Trafimow, Esq. from the Court's panel of mediators.

On May 19, 2006, the parties attended a mediation session with Mr. Trafimow. By the end of the day, the parties reached an agreement to settle the case. The mediator, in a handwritten note, recorded the parties' agreement and titled the document "Agreement to Settle." However, the mediator noted that "[w]hile not intended to be a legally enforceable settlement agreement, the parties have agreed to resolve the case of Delyanis v. Dyna-Empire, Inc. et al. pursuant to the following terms." The mediator documented the essential settlement terms that the parties had agreed to during mediation.

The handwritten settlement agreement was signed by the mediator; Hannah S. Lim, the attorney for the Plaintiff; the Plaintiff Diane F. Delyanis; Jane B. Jacobs, the attorney for the Defendants; and Patrick McCarthy, the Chief Executive Officer of the Defendant Dyna-Empire, Inc. A copy of the handwritten agreement is attached to this Memorandum of Decision and Order and marked appendix A.^* Pursuant to the Agreement to Settle, the Defendants agreed to pay a total of $67,500, as follows: $5,000 as back pay; $42,500 as compensatory damages; and $20,000 to the Plaintiffs counsel as attorneys' fees. The Agreement to Settle further provided "Plaintiff agrees to execute a settlement agreement, drafted by Defendants ..." In the Agreement to Settle, the Plaintiff specifically agreed to indemnify the Defendants for tax liability and to release all claims against named and unnamed Defendants.

On May 22, 2006, the mediator e-mailed counsel for all parties inquiring as to whether he could report to the Court that the case had settled. That same day, the Plaintiffs attorney, Hannah S. Lim, responded to the mediator's e-mail, stating that the mediator could represent to the Court that the case had settled. Specifically Ms. Lim stated "[y]es, thank you so much for your assistance. I sent [the defendants' counsel] an e-mail earlier today and am waiting for a proposed copy of the settlement agreement." Ms. Lim also sent this e-mail to the Defendants' counsel.

Thereafter, the Defendants forwarded a Settlement Agreement and Release to the Plaintiffs counsel, incorporating the terms set forth in the Agreement to Settle. By telephone call, the Plaintiffs counsel requested the following changes to the Settlement Agreement and Release: (1) that the $42,500 payment to the Plaintiff be designated as compensation for emotional distress; (2) deletion of any provision regarding the Plaintiffs responsibility to indemnify the Defendants for tax liability; (3) revision of the release language so that the Plaintiff would only release known claims; and (4) deletion of the language providing that the Plaintiff would return the settlement sum if she breached the agreement.

On May 25, 2006, via letter, the Defendants agreed to designate the payment as compensation for emotional distress. The Defendants further agreed to alter the language regarding the release of known and unknown claims to instead provide for the release of the Defendants, as specified in the Agreement to Settle. The Defendants further agreed to delete the language regarding return of the settlement sum. However, the Defendants refused to delete the indemnification provision because the Plaintiff had agreed to that provision during mediation and in the Agreement to Settle.

On May 30, 2006 the Plaintiffs counsel informed the Defendants that the Plaintiff was no longer interested in settling the case for the amount discussed because the Plaintiff had discovered that the settlement sum was taxable. The Plaintiffs counsel further informed the Defendants that the Plaintiff refused to indemnify the Defendants for tax liability. The Plaintiffs counsel stated that she did not consider the matter settled.

On June 13, 2006, the Plaintiffs counsel demanded a higher settlement sum and informed the Defendants that the Plaintiff would not settle with an indemnification provision. The Plaintiffs attorney renewed efforts to obtain discovery from the Defendants, and on June 22, 2006, the Plaintiffs counsel filed a motion to compel discovery, which is pending before Magistrate Judge Boyle.

Presently before the Court is the Defendants' motion to compel enforcement of the settlement. The Defendants argue that the parties clearly intended to settle the case, as is evident from the mediator's Agreement to Settle, as well as the Plaintiffs counsel's e-mail to the mediator confirming the settlement. In opposition to the motion, the Plaintiff argues that the only written agreement clearly states that it was not intended to be a legally enforceable document, and as a result, the parties are not bound by the agreement.

II. DISCUSSION

Settlement agreements to end litigation are strongly favored by courts and are not lightly cast aside. Willgerodt, on Behalf of Majority Peoples' Fund for 21st Century, Inc. v. Hohri, 953 F.Supp. 557, 560 (S.D.N.Y.1997). Once reached by the parties, settlement agreements are binding and enforceable. Janneh v. GAF Corp., 887 F.2d 432, 436 (2d Cir.1989) rev'd on other grounds by Digital Equip. Corp. v. Desktop Direct, Inc., 511 U.S. 863, 114 S.Ct. 1992, 128 L.Ed.2d 842 (1994); Reich v. Best Built Homes, Inc., 895 F.Supp. 47, 49 (W.D.N.Y.1995).

"A district court has the power to enforce summarily, on motion, a settlement agreement reached in a case that was pending before it." Comm'n Express Nat'l, Inc. v. Rikhy, No. 03 cv 4050, 2006 WL 385323, at *2, 2006 U.S. Dist. LEXIS 8716, at *6 (E.D.N.Y. Feb. 17, 2006) (citing Meetings & Expositions Inc. v. Tandy Corp., 490 F.2d 714, 717 (2d Cir.1974))(internal citations omitted).

"A settlement is a contract, and once entered into is binding and conclusive." Little v. Greyhound Lines, Inc., No 04 cv 6735, 2005 WL 2429437, at *1, 2005 U.S. Dist. LEXIS 22247, at *3 (S.D.N.Y. Sept. 30, 2005) (citing Janneh v. GAF Corp., 887 F.2d at 436). See also Red Ball Interior Demolition Corp. v. Palmadessa, 173 F.3d 481, 484 (2d Cir.1999) ("settlement agreements are contracts and must therefore be construed according to general principles of contract law"); Goldman v. Commissioner of Internal Revenue, 39 F.3d 402 (2d Cir.1994) ("As the settlement agreement constituted a contract, general principles of contract law must govern its interpretation"). Pursuant to New York law, to have a binding settlement agreement, there must be an offer, acceptance, consideration, mutual assent and intent to be bound. Hostcentric Techs., Inc. v. Republic Thunderbolt, LLC, No. 04 cv 1621, 2005 WL 1377853, at *4, 2005 U.S. Dist. LEXIS 11130, at *12 (S.D.N.Y. June 9, 2005) (citing Register.Com, Inc. v. Verio, Inc., 356 F.3d 393, 427 (2d Cir.2004)).

[A] `preliminary agreement' is binding, despite the desire for a later formal document, `when the parties have reached complete agreement (including the agreement to be bound) on all the issues perceived to require negotiation. Such an agreement is preliminary only in form-only in the sense that the parties desire a more elaborate formalization of the agreement. The second stage is not necessary; it is merely considered desirable.'" Hostcentric, 2005 WL at *5, 2005 U.S. Dist. LEXIS at *17 (quoting Teachers Ins. & Annuity Ass'n v. Tribune Co., 670 F.Supp. 491, 498 (S.D.N.Y.1987)). In particular, the parties' intent to record an agreement in the future does not prevent contract formation before execution. N. Fork Country, LLC v. Baker Publ'ns, Inc., 436 F.Supp.2d 441, 445 (E.D.N.Y.2006) (citing Winston v. Mediafare Entm't Corp., Ill F.2d 78, 80 (2d Cir.1985)). "The only essential prerequisite for a valid settlement agreement is that the parties assent to the terms and conditions of the settlement, and, where there is an oral settlement agreement, that the parties intend to be bound by it." Id.

In the present case, the Defendants argue that the Agreement to Settle, drafted by the mediator, as well as the e-mail from the Plaintiffs counsel to the mediator confirming the settlement, demonstrate that the parties reached a binding agreement to settle this litigation. The Plaintiff claims that the parties did not reach a binding settlement because the Agreement to Settle specified that it was not intended to be a legally enforceable contract.

In the Agreement to Settle the parties agreed to the basic terms of the settlement and further agreed to execute a formal agreement containing those terms. This agreement was signed by both sides and by their attorneys. Although that agreement demonstrates the parties' intent to settle the case, the Agreement to Settle...