NY’s First Department Rules that Attorney’s Email Signature Block is Sufficient to Create Binding Settlement Agreement in Matter of Philadelphia Ins. Indem. Co. v. Kendall

Written by: Jeffrey T. Wolber, Esq.

In a decision from New York’s Appellate Division, First Department, the court held that an email containing an attorney’s automatically-populated signature block was sufficient to constitute a “subscribed” writing within the meaning of CPLR 2104 for purposes of enforcing a settlement agreement.

CPLR 2104 reads in pertinent part:

An agreement between parties or their attorneys relating to any matter in an action, other than one made between counsel in open court, is not binding upon a party unless it is in a writing subscribed by him or his attorney or reduced to the form of an order and entered (emphasis added).

The First Department held that the transmission of the email itself, not the act of typing (or re-typing) an attorney’s name as a “signature,” was what constituted subscription for purposes of CPLR 2104. This holding reversed the decision of the lower court, which declined to enforce the settlement because it was not clear whether the attorney had physically re-typed his name at the end of the email prior to sending it.

The case involved a claim for supplementary underinsured motorist benefits following a motor vehicle accident. It was submitted to arbitration and an award was granted for $975,000. However, because neither attorney was aware of the award, they continued to negotiate and arrived at a settlement for $400,000 three days later. The claimant’s attorney sent an email stating: “Confirmed – we are settled for 400K,” which concluded with “Sincerely,” followed by a standard signature block including the attorney’s name and contact information. Opposing counsel responded with a set of closing papers to be executed, writing: “Get it signed quickly before any decision comes in, wouldn’t want your client reneging.” The claimant’s attorney responded: “Thank you. Will try to get her in asap.” However, once the claimant’s attorney learned of the arbitration award, he refused to proceed with the settlement for a lesser amount. A motion to enforce the settlement and vacate the arbitration award ensued.

The First Department surveyed the case law and noted that the closest precedent from the Court of Appeals was Parma Tile Mosaic & Marble Co. v Estate of Short, 87 N.Y.2d 524 (1996), where the court held that a preprogrammed name on a fax transmission did not constitute subscription under CPLR 2104. The court reasoned that this decision was outdated, finding that emails and electronic records having since “become the norm,” and concluding that the decision was not controlling.

The First Department then turned to precedent from the First and Second Departments supporting a distinction between an auto-populated signature block (not binding) and a re-typed name at the conclusion of an email (binding) for purposes of the subscription requirement of CPLR 2104.  It reversed this earlier position and held instead that it was the act of sending the email that constituted subscription, not the act of re-typing your name at the bottom of it. The court reasoned: “[T]his distinction between prepopulated and retyped signatures in emails reflects a needless formality that does not reflect how law is commonly practiced today.  It is not the signoff that indicates whether the parties intended to reach a settlement via email, but rather the fact that the email was sent.” The court further noted that New York has accepted electronic signatures in lieu of “wet ink” signatures since 1999, and as per the Electronic Signatures and Records Act, the term “signature” was broadly defined to include any “electronic sound, symbol, or process, attached to or logically associated with an electronic record and executed or adopted by a person with the intent to sign the record.” NY State Tech. Law § 302(a). The court also dismissed concerns that emails were too easy to send because, at least in the context of settlement, the attorney already has an ethical obligation to confer with the client ahead of time.

However, the court did provide caveats in relation to its decision. First, it noted that emails may have authentication issues because accounts can be hacked. Thus, the presumption that an email coming from an attorney’s account is authentic is a rebuttable one. Second, the email must set forth all material terms in order to form a binding agreement. Additionally, the court explained that whether the email was a draft settlement proposal or an inadvertent dispatch of a draft email was not an issue in the instant matter and, thus, it did not need to decide when an accidental email is considered to be “clawed back” (although it offered that “prompt action to rectify the error” would be part of any such showing).

With respect to the second caveat, the court noted that “all material terms” were contained in the email because the sole issue was how much the claimant would accept to settle. Although the claimant’s attorney argued that the settlement was actually conditional upon the signing of the release, the court responded that the execution of the release agreement was only a “ministerial condition precedent to payment.” The court further noted that the email exchange surrounding the release demonstrated an “offer and acceptance” and rejected the defense of “mutual mistake,” because the existence of the arbitration award was easily ascertainable at the time.

This decision recognizes an importance in email that is consistent with trends elsewhere in the law. Although it remains to be seen whether this holding will carry over to the other departments (as the court observed, there is existing Second Department authority to the contrary), counsel and clients should be aware of the potential that it will.  It is also likely that this holding will be applied to other contexts outside of a settlement agreements (e.g., stipulations regarding litigation deadlines).

Case Cite: Matter of Philadelphia Ins. Indem. Co. v. Kendall, 2021 NY Slip Op 04284 (1st Dep’t Jul. 8, 2021)