United States District Court, N.D. New York
Office of David R. Sheridan DAVID R. SHERIDAN, ESQ., Delmar, NY, for the Plaintiffs.
Cozen, O'Connor Law Firm MELISSA F. BRILL, ESQ., New York, NY, for the Defendant.
MEMORANDUM-DECISION AND ORDER
GARY L. SHARPE, Chief District Judge.
Pending before the court is a motion by defendant Executive Risk Indemnity, Inc. (ERII), to enforce a settlement agreement allegedly entered into with plaintiffs Judy Balaban-Krauss, Robert Callaghan, Ronald Field, and Laura Donaldson. (Dkt. No. 15.) In a Report-Recommendation and Order (R&R) dated February 6, 2014, Magistrate Judge Christian F. Hummel recommended that the motion be denied. (Dkt. No. 22 at 9.) ERII has filed objections to the R&R. (Dkt. No. 23.) For the reasons that follow, the R&R is adopted in its entirety and ERII's motion is denied.
This declaratory judgment action arose when plaintiffs sought insurance coverage by ERII for legal defense in an underlying state court action brought against them, in which they were accused of breaching their duties as trustees of an insurance trust. (Compl., Dkt. No. 1, Attach. 1 at 3-8.) When ERII disclaimed coverage, plaintiffs commenced this action seeking a declaration that ERII must cover the costs of their defense in that underlying state court action. ( Id. )
While this action remained pending, the parties engaged in settlement negotiations by way of various emails between their respective attorneys: David Sheridan, for the plaintiffs, and Melissa Brill, for ERII. On July 22, 2013, Sheridan, via email, notified Brill that his clients "will settle this case today for $17, 621.26." (Dkt. No. 15, Attach. 4 at 2.) Brill responded, "I got the $17, 621.26. Done." ( Id. ) The next day, Sheridan responded by sending a one-page form release, and asking that Brill inform him "promptly" if she had "any proposed revisions." (Dkt. No. 17, Attach. 1 at 2-3.) Brill responded the following day, on July 24, and indicated that she "w[ould] have proposed revisions" once she heard back from her client. (Dkt. No. 17, Attach. 2 at 2.) On July 25, Brill emailed Sheridan, requesting proposed changes, and attaching a five-page "Settlement Agreement and Release." (Dkt. No. 17, Attach. 3 at 2-7.) That same day, Sheridan responded, attaching a "revised version" of the agreement, and noting a potential issue regarding the release of a possible indemnification claim. (Dkt. No. 17, Attach. 5 at 2, 4-8.)
The next communication between the parties is an August 2 email from Brill to Sheridan, indicating that the prior deal was "still on the table"; Sheridan replied that his clients "will take the $17, 621.26 in settlement of both defense and indemnity, " attached a "slightly revised version of the agreement, " and requested that Brill insert any additional language she wanted in the agreement, so that Sheridan could "send one copy to each client for signature." (Dkt. No. 15, Attach. 5 at 2.) Brill responded, attaching what she "hope[d] is the final version of the settlement agreement and release, " and asking that plaintiffs sign the attached agreement. (Dkt. No. 15, Attach. 6 at 1.) Sheridan replied to that email, noting a concern about the scope of the release, and proposing additional changes to the agreement. ( Id. ) The parties exchanged additional proposed changes and revisions. (Dkt. No. 15, Attach. 7 at 2-9; Dkt. No. 15, Attach. 8 at 2.) Finally, on August 22, Brill sent Sheridan a "new version, with [his] changes accepted, and no other changes made, " and asking Sheridan to "let [her] know if this will do." (Dkt. No. 15, Attach. 9 at 2.)
This final version provided that ERII would make a settlement payment of $17, 631.26 to plaintiffs "within twenty[-]one business days of ERII's receipt of th[e] Agreement, duly executed by [p]laintiffs." ( Id. at 5.) Then, within five days of receipt of the payment, Sheridan would be required to execute and file a stipulation of discontinuance with the Clerk of the court. ( Id. at 7-8.) Additionally, the agreement contained a merger clause which stated that the agreement "contains the entire understanding of the [p]arties with respect to the subject matter hereof and supersedes all prior agreements and understandings, whether written or oral, " and indicated that "[t]he [p]arties have executed this [s]ettlement [a]greement without reliance upon any promise, representation or warranty other than those expressly set forth herein, " and "they have executed this [s]ettlement [a]greement of their own free will." ( Id. at 7.) Plaintiffs never signed the agreement.
There were no further communications between the parties regarding settlement. Ultimately, on October 10, ERII filed the instant motion, seeking to have the court enforce the allegedly binding settlement agreement reached by the parties. (Dkt. No. 15.)
III. Standard of Review
Before entering final judgment, this court reviews report and recommendation orders in cases it has referred to a magistrate judge. If a party properly objects to a specific element of the magistrate judge's findings and recommendations, this court reviews those findings and recommendations de novo. See Almonte v. N.Y. State Div. of Parole, No. Civ. 904CV484GLS, 2006 WL 149049, at *3, *5 (N.D.N.Y. Jan. 18, 2006). In those cases where no party has filed an objection, only vague or general objections are made, or a party resubmits the same papers and arguments already ...