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BOARD OF TRUSTEES v. VIC CONSTR. CORP.

June 23, 1993

BOARD OF TRUSTEES OF THE SHEET METAL WORKERS LOCAL UNION NO. 137 INSURANCE ANNUITY AND APPRENTICESHIP TRAINING FUNDS and THE EXECUTIVE BOARD OF SHEET METAL WORKERS LOCAL UNION NO. 137, Plaintiffs,
v.
VIC CONSTRUCTION CORPORATION and CHARLES NALBONE, Defendants.


Nickerson


The opinion of the court was delivered by: EUGENE H. NICKERSON

NICKERSON, District Judge:

 Plaintiffs, the Board of Trustees of the Sheet Metal Workers Local Union No. 137 Insurance, Annuity and Apprenticeship Training Funds (the Funds) and the Executive Board of Sheet Metal Workers Local Union No. 137 (the Union), brought this action alleging that (i) defendant Vic Construction Corporation (Vic Construction) failed to make payments to the Funds in violation of a collective bargaining agreement and section 515 of the Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. §§ 1001 et seq. and 1145, and (ii) defendant Charles Nalbone operated Vic Construction as his alter ego and is jointly and severally liable.

 Plaintiffs move for an order enforcing an oral settlement agreement.

 I

 The undisputed facts are these.

 On July 2, 1993 the court granted summary judgment to plaintiffs against Vic Construction alone in the amount of $ 17,813.42, plus reasonable attorneys' fee and costs.

 To settle this dispute, Nalbone, the sole shareholder and acting with authority to represent Vic Construction, stipulated at a deposition on January 6, 1993 that plaintiffs are owed $ 26,935.26, that "the indebtedness is due by Vic Construction Corporation and Charles Nalbone individually, and that Charles Nalbone individually guarantees the payment." The deposition was recorded and transcribed by a certified shorthand reporter.

 A stipulation memorializing the agreement of the parties was drafted and provided to counsel for defendants. Defendants refused to sign the agreement, citing the Second Circuit's subsequent decision in Sasso v. Cervoni, 985 F.2d 49 (2d Cir. 1993) (decided January 25, 1993). That court, reversing a court in this district, held that an individual is not liable for corporate ERISA obligations solely by virtue of his role as the only officer, director, and shareholder.

 Plaintiffs moved for an order enforcing the oral settlement agreement, as expressed in the deposition on January 6, 1993.

 II

 The parties assume that the oral settlement agreement, if intended to be final, would be binding. The question is not immediately clear. It turns on whether New York or federal common law should govern the validity of an oral settlement agreement resolving ERISA disputes.

 A

 If New York law were to govern, the court would deny the motion. Rule 2104 of the New York Civil Practice Law and Rules provides that:

 
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.

 New York courts have at times mitigated the potentially harsh effect of this rule by finding a "writing" subscribed by a party or attorney contained in correspondence confirming a prior oral agreement. See, e.g., Morrison v. Bethlehem Steel Corp., 75 A.D.2d 1001, 429 N.Y.S.2d 123 (4th Dep't 1980).

 New York courts have also estopped parties from Invoking the rule when satisfied that the stipulation was made and relied upon, to the detriment of an adverse party. See Smith v. Lefrak Org., Inc., 142 A.D.2d 725, 531 N.Y.S.2d 305 (2d Dep't 1988) (plaintiff discontinued action, consented to a warrant of eviction, and purchased limousine for his new business after defendant orally agreed to settle action for $ 95,000); A.J. Tenwood Assocs., Inc. v. United States Fire Ins. Co., 104 Misc. 2d 467, 470, 428 N.Y.S.2d 606, 607-08 (Sup. Ct. New York Co. 1980) (party accepted oral settlement on eve of trial and did not proceed with immediately available trial). See also In re Dolgin Eldert Corp. 31 N.Y.2d 1, 11, 334 N.Y.S.2d 833, 841, 286 ...


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