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Cyan Contracting Corp. v. National Grange Mutual Insurance Co.

June 16, 2009


The opinion of the court was delivered by: Lewis A. Kaplan, District Judge.


This matter is before the Court on defendant's motion to vacate the judgment pursuant to Fed. R. Civ. P. 60(b). The pertinent facts may be stated briefly notwithstanding the roughly 1,000 pages of papers unnecessarily submitted on this motion.


On July 8, 2008, following the expiration of the discovery period, plaintiff Cyan Contracting Corporation ("Cyan") advised the Court that "the parties have reached a settlement in principle and have been exchanging drafts of their settlement documents to finalize the terms." On the following day, the Court endorsed Cyan's letter with an order stating that the case was "dismissed with prejudice and without costs subject to the right to reinstate by serving and filing a notice to that effect, on or before 9/8/08, if the settlement is not executed by then."

Defendant National Grange Mutual Insurance Company ("National") took no issue with Cyan's letter and raised no objection to the Court's endorsed order. The parties continued their efforts to finalize settlement documents. Indeed, on September 9, 2008, and again on September 23, 2008, counsel for National, in each case with Cyan's consent, sought extensions of the period for reinstatement, ultimately to and including October 1, 2008, which the Court granted. It perhaps bears mention that each request was made after expiration of the reinstatement period.

Following the final extension of the reinstatement deadline, the parties continued their discussions, but no agreement was reached by the October 1 deadline. Counsel for National again allowed the deadline to pass, but this time sought no further extension. Accordingly, the judgment of dismissal became final on October 1, 2008.

The parties continued to talk. But on November 10, 2008, counsel for Cyan advised the Court by letter, with a copy to National's counsel, that no settlement had been reached, and he accused National of having failed to negotiate in good faith. He asked that the Court dismiss the action with prejudice (which of course already had occurred).*fn1 The record discloses no response from National.

The parties continued intensive negotiations for some time. In late December 2008, however, Cyan ultimately refused to go forward. But National remained silent for weeks. It was not until January 27, 2009, that it filed the present motion.


National now seeks vacatur of the judgment which it knowingly allowed to become final, essentially on the ground that it was too trusting in allowing the reinstatement period to expire without seeking an extension or reinstating the action. In the circumstances, several things are abundantly clear.

First, while the parties apparently believed that they had reached a settlement in principle, there is no evidence that either labored under the impression that a legally enforceable contract to settle existed. To the contrary, the evidence demonstrates the parties' mutual intention that the settlement was contingent upon the execution by both sides of a definitive written agreement, the terms of which had not all been agreed.

Second, National has no one but itself to blame for its present predicament. A careful practitioner would not have allowed the reinstatement period to expire without having a signed settlement agreement, no matter how sure the practitioner was that such agreement would be signed. This is all the more so because the parties well knew that there was no deal unless and until a written agreement was finalized -- a fact evidenced by National's counsel twice seeking and obtaining extensions of the period in order to protect National against the risk that the agreement in principle would not produce a signed agreement.

Third, all recognize that errors sometimes are made, some of which are excusable. But National's counsel here was acutely aware of the deadline for reinstating the action. He twice sought its extension. He knowingly allowed it to lapse. He then received the November 10, 2008 letter from Cyan's counsel in which Cyan advised that no settlement had been reached, (unnecessarily) sought the entry of final judgment, and stated that he would oppose any attempt to reinstate the action. Yet National's counsel sought no relief with respect to the judgment that became final upon the expiration on October 1, 2008 of the extended reinstatement period until January 27, 2009.

In these circumstances, it well may be doubted that the Court has the power to vacate the judgment of dismissal. Attorney error rarely is a ground for relief under Rule 60(b)(1) and is a ground under Rule 60(b)(6) only where the attorney's conduct is grossly negligent and extraordinary circumstances are present.*fn2 ...

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