Serna v. Pergament Distributors, Inc.

• Decision Date: 09 April 1992
• Parties: Maria L. SERNA et al., Respondents, v. PERGAMENT DISTRIBUTORS INC., Appellant, et al., Defendants. (And a Third-Party Action.)
• Court: New York Supreme Court — Appellate Division

Page 550

582 N.Y.S.2d 550

182 A.D.2d 985

Maria L. SERNA et al., Respondents, v. PERGAMENT DISTRIBUTORS INC., Appellant, et al., Defendants (And a Third-Party Action.)

Supreme Court, Appellate Division Third Department.

April 9, 1992.

Jessel Rothman, P.C. (Jessel Rothman, of counsel), Mineola, for appellant.

Hood & Stein (William M. Stein, of counsel), Haverstraw, for respondents.

Before MIKOLL, J.P., and YESAWICH, MERCURE, CREW and CASEY, JJ.

MIKOLL, Justice Presiding.

Appeal (transferred to this court by order of the Appellate Division, Second Department) from an order of the Supreme Court (Weiner, J.), entered December 12, 1990 in Rockland County, which granted plaintiffs' motion for judgment against defendant Pergament Distributors Inc. for failure to comply with a stipulation of settlement.

Plaintiffs and defendant Pergament Distributors Inc. (hereinafter defendant) entered into a stipulated agreement of settlement whereby a negligence action commenced by plaintiffs was to be settled for the sum of $30,000. Forty percent of the settlement, i.e., $12,000, was to be paid immediately by defendant's insurer, Ambassador Insurance Company, upon the receipt of a release and a stipulation of discontinuance executed by plaintiffs. As to the remaining $18,000, there was a guarantee by defendant that in the event there was no payment by Ambassador within three years from November 20, 1985, defendant would pay $9,000 directly to plaintiffs. As to the remaining $9,000, it was stipulated that the sum would be paid out of the assets of Ambassador. There was no fixed date set for the final $9,000 payment but defendant stipulated that it was guaranteed amount.

Defendant stated that the stipulation was founded upon the understanding that plaintiffs were general creditors to the assets of Ambassador and, as such, they would be paid out of the remainder of the portion of the settlement coming from Ambassador's assets as soon as the administrator of Ambassador's assets fixed the payment schedule. ¹ Plaintiffs' counsel inquired, "The payment itself is not speculative, that will definitely be paid. It is only a question of when, correct?" Defendant replied, "By Ambassador out of Ambassador's assets, yes."

Defense counsel also indicated that the settlement was made with the agreement of the New Jersey Property-Liability Insurance Guarantee Association (hereinafter the Association) and personal counsel to defendant and that it was understood that if defendant should have to pay out any portion of the settlement dollars directly to plaintiffs, it would become a general creditor to the assets of Ambassador for that sum.

Sometime thereafter defendant and the Association litigated the matter of who was to pay the remaining $9,000. A judgment was entered in New Jersey holding that defendant, and not the Association, was responsible for payment of all of these claims directly. Plaintiffs demanded the payment of the final $9,000 from defendant and, upon defendant's failure to pay, plaintiffs sought summary judgment. Supreme Court found that defendant failed to comply with the stipulation agreement and granted plaintiffs' motion. Defendant appeals, contending that Supreme Court erroneously granted judgment in favor of plaintiffs on the stipulation agreement, that defendant was responsible at most for $9,000 and that there are issues of fact which preclude summary judgment.

Settlements in open court of negligence actions terminate all claims of the parties and the agreement becomes enforceable as a contract binding on all parties thereto (see, Furgang v. Epstein, 106 A.D.2d 609, 483 N.Y.S.2d 103). Stipulations of settlement are essentially contracts and will be construed in accordance with contract principles and the parties' intent (see, Davis v. Sapa, 107 A.D.2d 1005, 1006, 484 N.Y.S.2d 568). It is a fundamental premise of contract law that contracts should be enforced in accordance with their terms (W.W.W. Assocs. v. Giancontieri, 77 N.Y.2d 157, 162, 565 N.Y.S.2d 440, 566 N.E.2d 639; Hudson-Port Ewen Assocs. v. Chien Kuo, 78 N.Y.2d 944, 945, 573 N.Y.S.2d 637, 578 N.E.2d 435). A stipulation of settlement may be set aside or modified only upon such grounds as would permit such relief to be granted in a contract matter (see, Zioncheck v. Zioncheck, 99 A.D.2d 563, 470 N.Y.S.2d 950). When parties set down their...