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To establish the existence of an enforceable agreement, a plaintiff must establish an offer, acceptance of the offer, consideration, mutual assent, and an intent to be bound. That meeting of the minds must include agreement on all essential terms.
Plaintiff Evelyn Kowalchuk, an 88-year-old widow, and her son, plaintiff Peter Kowalchuk, had invested in brokerage accounts managed by defendant Matthew Stroup. In December 2005, they commenced an arbitration proceeding before the National Association of Securities Dealers (NASD) asserting that defendant had fraudulently or negligently handled their accounts, and seeking judgment for losses of $832,000. After the arbitration hearing was completed, but before a decision was rendered, the parties agreed on a settlement. Thereafter, when the arbitrator entered an order that was far less that the agreed-upon settlement, defendant withdrew the offer of settlement. Subsequently, plaintiffs’ counsel sent defendant’s counsel a copy of the settlement agreement signed by plaintiffs. The cover letter acknowledged having been advised that defendant did not intend to honor the settlement agreement, and asserted that defendant had clearly approved its terms, and reserved plaintiffs' rights to "enforce the agreement as written." Plaintiff’s counsel advised defendant’s counsel that defendant was in default of the first payment of $125,000 due under the terms of the settlement agreement, and offered an opportunity to cure the default. When defendant did not pay, plaintiffs commenced the present action for breach of contract. Defendant moved to dismiss pursuant to CPLR 3211 (a) (1), (2) and (5) and for summary judgment dismissing the complaint, arguing, essentially, that there was no binding settlement agreement. The motion court, upon converting the dismissal motion to one for summary judgment, searched the record and granted summary judgment to plaintiffs. Defendant appealed.
Under the circumstances, did the parties enter into a valid and enforceable settlement agreement?
The court affirmed the judgment and found, inter alia, that the parties had entered into a binding and enforceable settlement agreement prior to the manager's purported revocation. An e-mail sent by the plaintiffs' counsel established that the defendant made an offer, including all the essential material terms of that offer, and that the plaintiffs accepted the offer. None of the defendant's correspondence indicated an intent not to be bound until an agreement was executed by both parties. The plaintiffs' agreement to withdraw their claim and the defendant's agreement to pay the money constituted fair consideration. The plaintiffs were properly awarded attorneys' fees pursuant to the terms of the settlement agreement.