NY Appeals Court Rules Email Signature Can Bind Settlement Agreement

Jersey City real estate attorneyNew York attorneys and their clients should think twice before hitting “send.” A New York appeals court recently held that typing your name at the end of an email is sufficient to create a binding and enforceable stipulation of the settlement under CPLR 2104.

The Facts of the Case

Forcelli v. Gelco Corporation involved an email sent by a claims adjuster authorized to settle a motor vehicle accident case on behalf of the insured. The email memorialized a conversation in which the plaintiffs’ attorney orally accepted the insurance company’s settlement offer. The email stated:

Per our phone conversation today, May 3, 2011, you accepted my offer of $230,000 to settle this case. Please have your client executed [sic] the attached Medicare form as no settlement check can be issued without this form.

You also agreed to prepare the release, please included [sic] the following names: Xerox Corporation, Gelco Corporation, Mitchell G. Maller and Sedgwick CMS. Please forward the release and dismissal for my review. Thanks Brenda Greene.

The plaintiff appealed the lower court’s dismissal of the claims against the defendants, arguing on appeal that Greene’s email message constituted a binding written settlement agreement pursuant to CPLR 2104. The statute provides: “An agreement between parties or their attorneys relating to any matter in an action . . . is not binding upon a party unless it is in a writing subscribed by him or his attorney.”

The Appellate Court’s Decision

The Appellate Division, Second Department, ultimately agreed that the email constituted an enforceable agreement. While the panel acknowledged that email messages cannot be “signed in the traditional sense,” it further noted the lack of a handwritten signature has not prevented other New York courts from concluding that an email message can be enforced as a binding agreement  pursuant to CPLR 2104. For example, in Williamson v Delsener (59 AD3d 291, 291), the Appellate Division, First Department, stated that “emails 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 this case, the court held that “where an email message contains all material terms of a settlement and a manifestation of mutual accord, and the party to be charged, or his or her agent, types his or her name under circumstances manifesting an intent that the name be treated as a signature, such an email message may be deemed a subscribed writing within the meaning of CPLR 2104 so as to constitute an enforceable agreement.”

"Given the widespread use of email as a form of written communication in both personal and business affairs, it would be unreasonable to conclude that email messages are incapable of conforming to the criteria of CPLR 2104 simply because they cannot be physically signed in a traditional fashion," Justice Sandra Sgroi further explained on behalf of the Forcelli panel.

In weighing the enforceability of the agreement, the court placed great weight on the fact that the adjuster typed her name at the end of the email, rather than relying on an automatic signature. "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," Sgroi wrote.

As this case highlights, email exchanges can lead to a legally binding contract. Moreover, courts across the country have found that a series of messages can still meet the requirements of an enforceable contract.

With this in mind, business professionals should consider using a disclaimer when negotiating through e-mail. The disclaimer should make it clear that a separate written contract must be executed in order for the agreement to be enforceable.

If you have any questions about this case or would like to discuss the legal issues involved, please contact me, Eleanor Grinshteyn, or the Scarinci Hollenbeck attorney with whom you work.

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