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Early in 2019, we discussed the binding effect and enforcement of an unsigned agreement. This case again addresses this idea, although in a different setting, but also stands for the proposition that because the agreement did not “positively state that the parties could assent only by signing,” the unsigned (but agreed to) agreement in these circumstances could stand.

Here, a real estate broker in the midst of a two-year employment agreement reached an agreement with his employer to leave. The parties’ termination agreement was not signed by either party. Despite their agreement in principle, the employer refused to pay the employee certain commissions to which he claimed to be entitled post-departure. The court determined that the employer’s failure to pay breached the signed employment agreement and the unsigned termination agreement, both of which addressed the post-termination commission payments.

That the termination agreement was not signed did not sway the court. Initially, while the employment agreement specified that absent the parties’ execution it would not be effective, the termination agreement included no such provision. The court found this to be noteworthy as it demonstrated the employer’s understanding of this concept. The failure to include this same language in the termination agreement, as noted above, precluded the employer’s claims that it was not enforceable. Finally, the email chain between the parties evidenced their intention to be bound, even absent the signatures.

Although this took place in a setting of a personal injury action, the court’s decision with these facts is broad enough to include other settings.

In this case, the plaintiff was injured in a car accident and accepted a settlement from the driver’s insurance company for a nominal sum. In connection with that payment, she executed a release of all claims against the driver. Three days later, she underwent further x-rays and learned that she had a fractured fibula. The plaintiff thereafter sued the driver prompting the insurance company to seek dismissal based on her release. The plaintiff opposed arguing that her release was the product of a mistake, and was unfair and fraudulently obtained. The lower court granted the insurance company’s motion and dismissed the case.

Upon appeal, however, the Third Department reversed. After recognizing the well-settled rules governing a release, including that it may be set aside if it was the product of fraud or mutual mistake, the court distinguished between unknown injuries and “‘mistakes as to the consequences of known injuries.” The first element can be the basis for a mistake which could invalidate a release, while the latter could not. In this case, where the plaintiff claimed to have not known of her broken leg, she should be permitted to pursue her case. The court noted that when the plaintiff presented at the hospital she was told that her leg was not broken despite the fact that plaintiff, while on pain medication, complained of leg pain, including to the insurance adjuster. The adjuster told her that it was probably a bruise and talked her into settling.

In an interesting recent case, the First Department affirmed the viability of a broker’s claim for a commission despite the fact that there were questions as to the broker’s actual role in procuring a buyer.

After Waterbridge Capital, LLC sold a property, it refused to pay its broker, Eastern Consolidated Properties, Inc., claiming that another broker was also seeking a commission payment. Waterbridge asked Eastern to accept a lower amount, which Eastern agreed to do. In the end, Waterbridge refused to pay anything and Eastern sued. Waterbridge argued that Eastern was not entitled to any commission because it was not the broker that sold the property. In viewing the parties’ agreement as a settlement agreement and not a brokerage agreement, the court rejected Waterbridge’s claim finding that once the parties settled, Eastern was entitled to payment regardless of its work as a broker. Specifically, the court held that “[c]ontrary to defendants’ arguments, plaintiff is not required to plead or prove that it was a ‘procuring cause’ of the purchase in order to recover on this agreement, which was in the nature of a settlement agreement. Plaintiff’s relinquishment of its claim for a full commission provides adequate consideration for the agreement, even if its claim was doubtful or would ultimately prove to be unenforceable” (citations omitted).

In affirming the dismissal of an insurance company’s breach of contract claim which alleged that the insured’s failure to cooperate and obtain consent to settle breached the policy, the First Department held that despite reservation of rights language, an insurance company’s unreasonable delay in dealing with the insured’s claims and trying to disavow coverage amounted to a denial of liability, relieving the insured from its obligation to seek the carrier’s consent before settling.

J.P. Morgan Securities Inc., v. Vigilant Insurance Co.

While we don’t have a criminal practice, this recently decided case is interesting in how science can change, impacting prior court decisions.  This same concept was found regarding fire science, in prior posts found here and here.

From the New York State Bar Association:

The Fourth Department affirmed the grant of defendant’s motion to vacate her conviction based on newly discovered evidence. Defendant, a daycare provider, was convicted in the death of a toddler. Medical testimony at trial attributed the death to shaken baby syndrome. In the motion to vacate her conviction, defendant argued that advances in medicine and science have called into question the prior opinions about shaken baby syndrome, and indicate a short-distance fall can mimic shaken baby symptom.

Parties fighting about the proceeds of a life insurance policy agreed to proceed before a beth din. Although the Second Department’s decision which reversed the lower court does not provide details, it seems that the losing party before the beth din was unhappy with that decision and sued the beth din and one of the rabbis involved. Because the lower court had earlier found that the beth din had exceeded its authority and vacated its decision, that court denied the beth din’s motion for summary judgment dismissing the case.

The Second Department held that unless the rabbinical beth din arbitrators “acted in the clear absence of all jurisdiction,” they were immune from being sued in their roles as arbitrators. The fact that the lower court had previously found that the rabbinical court acted in excess of its authority did not alter their arbitral immunity.

This outcome is unsurprising which leaves the question as to the real motivation behind this lawsuit.

In preparing to purchase a condo unit, the buyer informed the condo board that she was not going to conduct any business in that unit. After she closed, the buyer sought board approval to renovate the unit to accommodate a children’s play group. The condo board filed an action seeking to rescind the contract based on fraud and breach of contract.

The buyer claimed that because State law allows a day care facility in a condo unit, which was to be the actual use of the unit, the board could not point to damages as a result of the buyer’s fraud which was required to recover the unit. The First Department rejected that argument, finding that equitable rescission based on fraud requires no damages, only a misrepresentation that induces the other party to enter into a contract “resulting in some detriment.” Even intent to defraud is unnecessary for rescission.

With that, the Court granted the board’s request to rescind the contract.

A dispute involving the distribution of an estate was submitted to arbitration. The parties proceeded to court where one party sought to have the arbitration decision confirmed, while the other requested that it be vacated.

One of the grounds for vacatur was the claim that one of the arbitration hearings took place on a Sunday, something prohibited under Judiciary Law §5. While that law addresses court business, the court in this case extended that rule to arbitration, because “arbitrators perform a judicial function.” With that, the court refused to enforce the arbitration proceeding.

The court also found that the arbitrators exceeded their authority on a number of grounds. One of those grounds dealt with the arbitrators’ direction to transfer a property free and clear of liens or mortgages. Because the party holding the lien or mortgage was not party to the arbitration, such directive could not be enforced.

In interpreting deal documents, an issue arose as to the definition of the word “control” when used in an attempt to obtain “control” over a board of directors. For that reason, and others, the law firm that drafted those documents was found liable to its client to the tune of $17.2 million. The details are a bit complex, but worth a read. Have a look here. Read the comments too.

Bottom line: Write what you mean. As simply as possible.

We have written and counseled on an employer’s right to access an employee’s personal email account from a work computer. Here is an article that goes beyond email, to an employer’s ability to access an employee’s social media account, for a host of reasons, even if accessed from a personal computer.

Its a bit technical, so please let us know if you have any questions.

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