A recent case in which one party sought to enforce a purported settlement demonstrates the difficulties that arise when there is no signed agreement. In the unreported ( non-precedential) case of Galdo v. Hagarty, the parties were both represented by counsel during a dispute about the payment of child support and college expenses for one of their children. The father had filed an appeal of an order which required him to pay a percentage of college expenses and the mother filed an application for enforcement of the order. Thereafter, the parties agreed to explore a settlement and proceeded to negotiate through their counsel. Over a course of months the attorneys exchanged correspondence as well as emails. The mother received copies of many of the communications. 

Subsequently, the mother’s attorney faxed to the father’s attorney a proposed settlement. Father’s attorney then emailed a revised agreement  the next day. Twelve minutes later, mother’s attorney sent an email agreeing to the proposal and asking that Father’s attorney confirm that there was a settlement. Approximately an hour later, Father’s attorney sent a confirming email.    Father then took no further action on the appeal and it was later dismissed. Father then made an application to terminate child support for one of the children, which was not opposed by the mother.

 

Several months later,  the mother made an application to vacate the order terminating the child support, and enforcing the college expenses order which was the subject of the earlier appeal and settlement. She argued that there had been no settlement agreement that was reached. The father replied that there was in fact a settlement which was evidenced by the communications between the lawyers as well as the conduct of the parties after those communications. The father made a cross application for enforcement of the settlement agreement. The trial judge denied the father’s application for enforcement of a settlement and enforced the earlier order which required the father to pay a percentage of the college expenses.

In its decision in which it reversed the trial court for failure to hold an evidentiary hearing, the Appellate Division discussed what types of communications between counsel can give rise to a settlement. There does not always need to be a comprehensive signed agreement to constitute a settlement, and in fact there are circumstances in which oral negotiations can evolve into a settlement. In this case, the primary question was whether mother’s attorney had the authority to bind her. Mother said he did not. The court noted that there was no question that she understood that their communications were made with the intent to resolve their matter and moreover, that she was aware of and understood that her attorney was communicating with father’s attorney. The court also noted that stipulations that are made by attorneys when acting within their scope of authority are enforceable against clients.

 

This case emphasizes the importance of clear attorney client communication and the need to take extreme care when in settlement negotiations. While email communications have certainly made life easier in many respects, it is critical for lawyers and their client to have a clear understanding of what is acceptable to the client for purposes of settlement and to obtain clear authority prior to representing that a settlement has been reached. Clients have an obligation to make sure that they clearly confer their position to the attorney. Similarly, attorneys have to make sure that they are communicating only what their clients have authorized.

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