Defendant appeals from a judgment of the Supreme Court, New York County (Ira Gammerman, J.H.O.), entered October 26, 2007, awarding plaintiffs damages, and bringing up for review an order, same court and J.H.O., entered October 17, 2007, which, inter alia, granted plaintiffs summary judgment and directed a reference as to attorneys' fees.
The opinion of the court was delivered by: Saxe, J.
Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431.
This opinion is uncorrected and subject to revision before publication in the Official Reports.
Richard T. Andrias, J.P., David B. Saxe, Luis A. Gonzalez, James M. Catterson and Rolando T. Acosta, JJ.
This appeal, concerning a dispute regarding the time at which a negotiated settlement becomes an enforceable contract, requires consideration of some of the most fundamental aspects of the law of contracts: offers, acceptance, and consideration.
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 NASD asserting that Stroup 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. On February 6, 2007, plaintiffs' counsel e-mailed defendant's counsel:
"As discussed, my clients have agreed to accept Mr. Stroup's settlement offer. The terms of the offer are as follows:
"Total settlement amount of $285,000 with $125,000 payable upon execution of the settlement paperwork but no later than 20 days. The remainder to be paid in nine equal monthly installments on the 15th of each month beginning on March 15, 2007. Confession of judgment and security interest sufficient to cover the outstanding amounts.
"We have also agreed to provide you with a letter that you may use in negotiations with Mr. Stroup's insurance carrier.
"ps. Let me know if you would like me to contact the NASD and inform them that we have reached a settlement and will advise them as soon as the settlement is finalized."
Plaintiffs' counsel then sent defendant's counsel a draft settlement agreement. Defendant's counsel responded on February 12 with his own draft, and later that day advised plaintiffs' counsel:
"The insurance company is considering making a dollar contribution to the settlement agreed upon... However they want to know the dollar amount of your settlement...and I have advised that you have agreed on confidentiality. I would appreciate your waiving this confidentiality... I would appreciate your consideration in order to facilitate the settlement..."
Plaintiffs' counsel declined to waive confidentiality, but indicated that he had reviewed his adversary's changes, and would respond the next morning with his own. ...