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Pruss v. Infiniti of Manhattan, Inc.

Supreme Court of New York, First Department

January 9, 2020

Eita (Itty) Pruss, Plaintiff-Appellant-Respondent,
Infiniti of Manhattan, Inc., et al., Defendants-Respondents-Appellants, Infiniti Financial Services, et al., Defendants.

          The Edelsteins, Faegenbury & Brown, LLP, New York (Paul J. Edelstein, Daniel A. Thomas and Judah Z. Cohen of counsel), for appellant-respondent.

          Lester Schwab Katz & Dwyer, LLP, New York (Paul M. Tarr of counsel), for respondents-appellants.

          Rolando T. Acosta, Presiding Justice, Dianne T. Renwick, Sallie Manzanet-Daniels, Anil C. Singh, Justices.


          ACOSTA, P.J.

         Plaintiff appeals from the judgment of the Supreme Court, New York County (George J. Silver, J.), entered February 9, 2018, awarding her $5 million as against defendants Infiniti of Manhattan, Inc. and Massamba Seck, and defendants Infiniti of Manhattan, Inc. and Massamba Seck appeal from the order of the same court (Adam Silvera, J.), entered June 5, 2018, which denied their motion to vacate the judgment, and from the amended judgment of the same court (Adam Silver, J.), entered June 14, 2018, awarding plaintiff $4 million as against them.

         I write to highlight the fundamental principle that parties are bound by stipulations signed in open court by their attorneys. The issue arose in the context of a negligence case, where plaintiff was seriously injured when she was struck by a motor vehicle while standing on a sidewalk median in Brooklyn. The vehicle was owned by defendant Infiniti of Manhattan, Inc. and driven by defendant Massamba Seck [1] (the Infiniti defendants). Plaintiff suffered serious injuries and required extensive hospitalization and multiple surgeries. At issue in this case is whether the Infiniti defendants are bound by a settlement agreement entered into by their attorneys. We find that the Infiniti defendants are bound, because their attorneys had apparent authority to bind them to the $8, 875, 000 judgment. Significantly, there is no affidavit or testimony by Infiniti stating that Infiniti, or any of its employees, was unaware of the settlement or that Infiniti did not authorize the settlement. The only ones making this claim are the lawyers from the firm that was hired by the insurance companies to defend the Infiniti defendants. The fact that one of the insurers is now unable to pay its intended $5 million portion does not inure to the Infiniti defendants' benefit. Rather, the Infiniti defendants are responsible for the portion of the agreed-upon amounts that the insurers do not pay. To accept their position would alter the way litigation is conducted in New York State. Courts would have to conduct colloquies in every case to make sure that the parties, notwithstanding their attorneys' actions in appearing for them on numerous occasions and signing stipulations, acquiesced in the terms of the stipulations. That is unacceptable, especially here, where the Infiniti defendants never objected to the stipulation until the filing of the instant order to show cause more than a year and six months after the stipulation was signed in open court.

         The facts herein are largely undisputed. On December 5, 2013, plaintiff commenced this action in Supreme Court, New York County, against, inter alia, Infiniti of Manhattan, Inc., Massamba Seck, Dennis Blanchette, and Jon-Paul Rorech, sounding in negligence.

         Tower Insurance Company of New York was the Infiniti defendants' primary insurer, and Great American Insurance Company was their excess insurance carrier. Tower retained Lester, Schwab, Katz & Dwyer, LLP as trial counsel for the Infiniti defendants. On April 20, 2016, the parties' counsel and representatives of the insurers appeared in Supreme Court, New York County (George J. Silver, J.), to attempt settlement. This included an offer of $9, 000, 000, to be apportioned $5, 000, 000 from Tower, $3, 875, 000 from Great American, and the balance from GEICO on behalf of the remaining individual defendants, Blanchette and Rorech. The matter did not settle at that time, and was adjourned to August 10, 2016.

         On July 28, 2016, a conservator was appointed for Tower in an action in California.

         Two weeks later, on August 10, 2016, counsel for the parties entered into a stipulation of settlement for $9, 000, 000, so ordered by Justice Silver, that stated, "Infini[ti] & Seck - $8, 875, 000." In parentheses, the stipulation noted "Tower - $5 mil; Great American $3.875 mil." The stipulation also stated that defendant Blanchette would pay $100, 000 and defendant Rorech would pay $25, 000.

         Blanchette, Rorech, and Great American paid their portions of the settlement, leaving $5, 000, 000 owed by the Infiniti defendants to be paid by Tower.

         On August 24, 2016, after certain negotiations regarding the form of the release, plaintiff's counsel sent the executed general release to Lester Schwab Katz & Dwyer LLP and Fabiani Cohen & Hall, the Infiniti defendants' trial cocounsel, which were retained by Great American. Plaintiff's counsel provided a CPLR 5003-a notice stating that if payment was not received in 21 days, judgment would be entered against the Infiniti defendants, including interest, costs, and disbursements.

         On September 13, 2016, the court in the California action approved a proposed conservation and liquidation plan for Tower, which by merger became CastlePoint National Insurance Company.

         On October 30, 2016, plaintiff's counsel received an email from a senior claim analyst for AmTrust North America (Tower's third-party administrator), stating that CastlePoint's conservator had analyzed the claim settlement and advised that they would not honor the settlement because it occurred after the conservancy order. The analyst stated that the conservator offered to ...

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