Opinion
113231/2002.
October 9, 2009.
Sona Shah, pro se, Monlclair, NJ, for Plaintiff Shah
At the time the motion was originally made, plaintiff was represented by McCallion Associates LLP (Kenneth McCallion), but she has since then become self-represented.
Fox Rothschild LLP, By: Shea Hutchins Lukagsko, Esq, Jonathan Meyers, Esq., Roseland, NJ, for the Defendant.
DECISION AND ORDER
Papers considered in review of this motion to enforce and cross-motion seeking santion
Papers Numbered
Notice of Motion, Affirmation, Memo of Law 1,2,3 Notice of Cross-Motion, Memo of Lw, Exhibits 4, 5, 0, 7, 8 Reply Affirmation dated October 23, 2007 Memo of Law 9, 10 Reply Affirmation dated June 17, 2008 Memo of Law 11, 12 Cross-Reply Affidavit, Memo of Law, Exhibits 13, 14, 15The motion and cross-motion are consolidated for purposes of decision.
Defendant Wilco Systems, Inc. moves to enforce the parties' settlement agreement dated October 26, 2006, for an order disbursing the settlement funds, and for sanctions. Plaintiff Sona Shah, self-represented, opposes and cross-moves for sanctions. For the reasons which follow, the motion is granted in part and otherwise denied, and the cross-motion is denied.
Plaintiff Shah, represented by counsel, brought this action alleging employment discrimination based on citizenship and alienage status. The note of issue was filed on August 11, 2006, although apparently there was still outstanding discovery sought be defendant. As mandated by New York County Supreme Court, Civil Branch, the parties were then required to attempt mediation, which they chose to conduct with a private mediator rather than through the Court's Neutral Evaluation Program. With the aid of the mediator, a retired New York State Supreme Court Justice, the parties came to an agreement on October 26, 2006, which was signed by the attorneys for plaintiff and defendant (Meyers Aff. Ex. A).
See the link for Supreme Court Civil Term, New York County at www.ny.courts.gov.
The one-page agreement states in its first paragraph that the parties "fully and completely resolved the dispute." The issues resolved are described in the second, third, and fourth paragraphs. According to the agreement, defendant is to pay Shah and her attorneys $100,000 inclusive of all costs, within 21 days of receipt of closing documents; the Release tendered would name the parties, insurers, and "all subsidiaries, partners, limited partners, affiliates, and agents"; a stipulation of discontinuance with prejudice would be filed as to the litigation; plaintiff would satisfy any liens; no party would institute a lawsuit against the other concerning any issue derived from the matter that resulted in this settlement, and the agreement would be final and binding upon all parties to the matter and enforceable in any court of law. A handwritten clause further states that plaintiff agrees to execute a confidentiality agreement and an agreement not to seek future employment with "Wilco and its affiliated companies," and that each party is to bear their own costs.
In the succeeding months, plaintiff's attorney and defendant's attorney worked to perfect a mutually agreeable "addendum" to the October 26, 2006 agreement, as documented by a series of emails between Kenneth McCallion, Esq. and Jonathan Meyers, Esq. (Meyers Reply Aff. of Oct. 23, 2007, Ex. D-X). According to defense counsel Meyers, "no less than 25 e-mails and . . . approximately a dozen phone conversations" were had (Meyers Aff. in Supp. of Def. Mot. ¶ 7). Ultimately at issue was the identification of Wilco's "affiliates" to which plaintiff would be barred from seeking employment (Meyers Reply Aff, of Oct. 23, 2007, Ex. C, "Reply Aff. of Kenneth F. McCallion ¶ 6). The email correspondence shows that plaintiff sought a clear definition of what companies were at issue, as demonstrated by this partial listing:
— email McCallion to Meyers, 12/5/06: "The problem with the description of `releasees' in paragraph 3 is that it includes all `affiliated companies.' We do not know what that includes." (Meyers Reply Aff. Ex. I).
— email McCallion to Meyers, 12/13/06: ". . . paragraph 2 requires plaintiff to generally release the defendant all `affiliated companies of any kind.' We do not know what that means, so we sought to define it. You have now adopted a proposed definition for `affiliates' and renamed it as `related companies.' Now we have the issue of whether `related companies' and `affiliates' means the same thing or they are different." (Meyers Reply Aff. Ex. M).
— email McCallion to Meyers, 1/23/07: `When you revise the release to list the specific companies being release[d], also please include the same list for the companies to which she cannot apply. It has been brought to my attention that there are many companies (and indeed a law firm) who have Wilco as part of their name, and I am sure the same is true for ADP. If we use the same list for both the release and the `no application' clause, then we will eliminate all ambiguity, everyone will be happy, and we can get this finalized." (Meyers Reply Aff. Ex. P.
— email McCallion to Meyers, 1/24/07: "My client has a change of view on the settlement. She would now like to leave the general release language `Wilco and related companies' to remain fairly general and vague without specifically listing the companies to be released. . . . we can use the specific list of companies you are coming up with as the list of companies to which she cannot apply. Sorry for the change of course but I am just following orders." (Meyers Reply App. Ex. Q).
— email Meyers to McCallion, 1/24/07: "attached is a draft of the settlement agreement that I have prepared with (a), leaves the releasees somewhat open-ended as per your e-mail of earlier today; and (b) incorporates a list of specific companies that are the ones where Ms. Shah cannot seek future employment." (Meyers Reply Aff. Ex, Q).
— email McCallion to Meyers, 2/21/07: "could you please explain the relationship of the companies listed in paragraph 5 to Wilco and/or ADP. For example, what is the reason for including Broadridge financial Solutions, Inc . . . whose relationship to Wilco and/or ADP is not readily apparent." (Meyers Reply Aff. Ex. V).
— email McCallion to Meyers, 3/09/07: "Technically, no additional release language was required. Bit we understand that you want her signature on a release as opposed to just the signature of counsel. I am reminding you that the settlement agreement had limited release language . . . while the [proposed] Addendum contains much broader release language for plaintiff to sign. All I am asking for is some reciprocity in paragraph 3." (Meyers Reply Aff. Ex. X).
The draft of the addendum which was rejected by plaintiff at the court conference on March 19, 2007, included a paragraph stating that plaintiff agreed not to apply for or accept employment from Wilco and 18 other specifically named "related companies," many of them with "ADP" in their names, as well as an unnamed spin-off from defendant or one of the related companies which was soon to take place, and for which plaintiff would be notified as well as to any name changes thereafter (Meyers Aff. in Supp, of Def. Mot. Ex. B, Addendum ¶ 6]). Plaintiff refused to sign the addendum on the ground that she had not agreed to such an extensive listing of businesses.
No "addendum" was ever signed by the parties, and the instant matter has never been discontinued. Plaintiff contends that she intended to abide by the agreement not to seek or accept employment from Wilco "affiliates," but never agreed to the "mutated" list of related companies that was set forth by defendant in the months after the signing of the October 26, 2006 agreement (Shah Cross-Reply Affidavit ¶ 121). She posits that the issue of Wilco's affiliates was determined in 2004 in a decision issued by another justice of the court which addressed discovery issues, but which in fact stated only that "[r]elated Wilco entities include Wilco Hong Kong, London, Japan and India (Myderabad)," and not that this was an entire list.
Order, March 8, 2004, p. 1 [Mot. Seq. 009], Shafer, J, emphasis added.
Defendant counters that the intent was that plaintiff not seek employment or be hired by ADP, of which defendant Wilco is a subsidiary, or any company "related" to them, and that plaintiff was well aware of the connection between ADP and Wilco. It argues her objection is at best disingenuous as she knows of and had made repeated references to ADP and its relationship with Wilco in complaints in other litigations and proceedings (Meyers Aff. ¶¶ 15-16).
This contractual term is, according to defendant's counsel, essential to any stipulation of settlement to which defendant agrees (Meyers Aff. ¶ 11 n 1).
According to defense counsel, plaintiff initially sued ADP in her federal litigation but later withdrew it, and has frequently referenced both companies and that Wilco is a subsidiary of ADP (Meyers Aff. ¶¶ 15-16). Indeed, plaintiff offers as an exhibit a copy of her testimony concerning improper employment procedures before the U.S. House of Representatives in 2004, which includes as its first footnote that she "will use `Wilco' and `ADPWilco' to refer to the company I worked for. In the relevant time period of my experience they have used both names." (Shah Ex. 25, Testimony to the Committee on International Relations, Feb. 4, 2004, at 4).
To resolve this issue, the question of what is an "affiliate" was referred by order of the previously-assigned justice dated May 2, 2007, to a special referee to hear and report, or determine if the parties agreed (Shah Ex. 22, Dec. Ord., May 2, 2007, Ling-Cohan J.). However, the reference was marked off by the referee on September 24, 2007, with the notation that the "court has retained motions which need to be decided before issues may be referred out for hearing." Since that time, and even prior, negotiations had broken down and a multitude of motions were filed, all of which have been decided except for the instant motion and cross-motion. This fully submitted set of motion and cross-motion papers was reassigned to this court in about March 2009.
Decision filed 9/24/07 [Dershowitz, S.R.]; see, www.NYCourts.gov, for Supreme Court Records On Line Library [SCROLL], Mot. Seq. No. 026.
Plaintiffs papers are voluminous in nature and include many copies of the same documents interspersed throughout the exhibits. Part of the delay in rendering this decision was due to the time needed to read both parties' voluminous submissions which measure 11 inches thick (see Shah Memorandum of Law in Support of Cross-Motion, p. 65).
Defendant's Motion 1. Enforcing the Settlement Agreement
Wilco moves to enforce the October 26, 2006 agreement. It argues that months went into crafting the ultimate version of the addendum presented at the court conference in March 2007, and that by the end of the conference, there was agreement reached on all aspects of the addendum except for the list of Wilco-related companies. It contends that the list was provided as an aid to plaintiff in her future job search. It argues that the court should declare the settlement agreement and the addendum to be in full force and effect, even without plaintiff's signature. It argues that plaintiff may not legally back out of the agreement which her attorney signed on her behalf following a mediation at which she, her attorney, and a relative who said he had gone to law school, were all present (Meyers Aff. ¶ 2). It contends that it was well understood that plaintiff would not be allowed to seek employment from Wilco affiliates which include ADP (Meyers Aff. ¶¶ 11-14).
Plaintiff argues that the October 2006 document was only an agreement to agree and left many of the terms unresolved, as shown by the parties' actions, in particular that no stipulation of discontinuance was filed and that motions concerning discovery were not withdrawn (Shah Cross-Reply Affidavit ¶¶ 4-7). She states that she did not give her then-attorney the authority to finally settle the case and would not have given him authority to sign the mediation document if he had told her it was binding (Shah Cross-Reply Affidavit ¶ 108).
Plaintiffs affidavit contains a notarization that is without commission number, state, or county where commissioned.
A court will not enforce a contract unless it can determine what in fact the parties agreed to ( 166 Mamaroneck Ave. Corp. v 151 East Post Rd. Corp., 78 NY2d 88, 92, citation omitted). A mere agreement to agree, in which a material term is left for future negotiations, will be unenforceable ( 166 Mamaroneck Ave., at 92, [citation omitted]). However, the court recognizes that contracting parties arc often imprecise in their language, and therefore, where it is clear from the language of an agreement that the parties intended to be bound, and there exists an objective method for supplying a missing term, the court will endeavor to hold the parties to their bargain ( 166 Mamaroneck Ave., at 92 [citation omitted]). Pursuant to 166 Mamaroneck Ave., there are two methods to satisfy the requirement of definiteness in the absence of an explicit contract term. One is where the agreement contains a "methodology for determining" the missing term within the four corners of the [contract], and the other is where the agreement `"invites recourse to an objective extrinsic event, condition or standard on which the amount was made to depend.'" ( Id., quoting Joseph Martin, Jr. Delicatessen, Inc. v Schumacher, 52 NY2d 105, 110). Here, the contract provides a "methodology" for determining the "missing" term, that is to say the names of the actual affiliates of Wilco, as established by law.
A stipulation is subject to the general rules of contract interpretation and will be construed in accordance with its terms and the intent of the parties ( Sharp v Stavisky, 221 AD2d 216, 217 [1st Dept. 1995], rearg denied 242 AD2d 447 [1st Dept. 1997]; lv denied 91 NY2d 956; see also, Hallock v State of N.Y., 64 NY2d 224, 230). Only where there is cause sufficient to invalidate a contract, such as fraud, collusion, mistake or accident, will a party be relieved form the consequences of a stipulation made during litigation ( Hallock at 230). Plaintiff contends that her then-attorney coerced her into agreeing to mediation and to the agreement, threatened to withdraw as her counsel, was incompetent throughout his representation, compromised her rights, and shut down her case, all of which nullifies the October 2006 settlement (Shah Cross-Reply Affidavit ¶¶ 72-73). She maintains that her then-attorney told her that there was no legal effect to his signing the agreement until a more formalized agreement was worked out, and that his signing was a first, reversible step (Shah Ex. 25, Shah Aff. in Op. to McCallion's Mot. to Withdraw ¶ 34). She also makes allegations of ethical violations of her former counsel, including that he committed fraud and perjury (Shah Ex. 31, Shah Aff. in Supp. of Mot. for Recusal p. 34). Her counsel strongly disputes many of her allegations, although constrained by attorney-client privilege in what he can reveal (Meyers Reply Aff. Ex. C, Reply Aff. of Kenneth F. McCallion). Despite plaintiff's protestations, the court is not persuaded that her attorney, Mr. McCullian, acted unethically or committed fraud or other malfeasance such that would void the October 26, 2006 settlement agreement.
Nonetheless, the evidence is sufficient to show that the term "affiliates" needs clarification (compare Capricorn Investors III, L.P. v Coolbrands Intl., Inc., 2009 NY Slip Op 51608U [Sup. Ct., NY County 2009] [definition of "affiliates was in Partnership Agreement"]). According to Black's Law Dictionary, an "affiliate company" is "company effectively controlled by another company." Under the Investment Company Act ( 15 U.S.C.A. § 80a-2), an "affiliated company" is a company which is "an affiliated person," and which is defined as one owning 5 percent or more of the voting stock of the other, directly or indirectly. Although defendant contends plaintiff knew what companies were those which the settlement was intended to cover, in particular ADP, it is proper to require defendant to provide a list of legal affiliates. It is obvious from the documentation provided to the court that plaintiff was most definitely aware that ADP and Wilco are affiliated. However, plaintiff understandably seeks a list of the actual "affiliates" to be included as part of the addendum's terms. Defendant has produced a list of approximately "related" 18 companies, most of which do not have the name "Wilco" in them, and some of which do not have the name "ADP" in them (Meyers Aff. Ex, I, Addendum ¶ 5]). The parties hotly dispute what was intended and not intended at the signing of the October 2006 settlement, although it is clear that plaintiff agreed to be precluded from seeking employment from "affiliates." However, it is not apparent that the "related companies" is a synonym for "affiliates." and this must be clarified.
When the intent must be gleaned from evidence that is disputed, or inferences outside the written words of the contract, a question of fact is presented ( Mallad Constr. Corp. v County Fed. Savings Loan Assn., 32 NY2d 285, 291 [finding summary judgment inappropriate]). Despite defendant's arguments to the contrary, it is not clear that "affiliates" and "related companies" in fact would mean the same thing in plaintiff's mind. Reformation of a writing is allowed in order to conform the writing to the actual agreement of the parties, although not to remake a bargain entered into because of mistake (Calamari Perillo, Contracts 3d ed., § 9-31). "[C]ourts give effect to the expressed wills of the parties; they will not second-guess what the parties would have agreed to if they had known the facts." (Id). Reformation is not granted for the purpose of alleviating a hard or oppressive bargain, but rather to restate the intended terms of an agreement when the writing that memorializes that agreement is at variance with the intent of both parties ( George Backer Management Corp. v Acme Quilting Co., 46 NY2d 211, 219, citing Ross Food Specialties, 6 NY2d 336, 341; 13 Williston, Contracts [3d ed], §§ 1548, 1549).
Accordingly, defendant's motion to enforce the settlement agreement is granted to the extent that the signed agreement is deemed to be a binding upon the parties and the defendant shall serve a list of companies affiliated with Wilco, using the legal definition of affiliates contained in the U.S. Code, as well as the confidentiality agreement, upon plaintiff with notice of entry of this order within 20 days of its entry, and plaintiff shall sign the agreement within 20 days thereafter. Should plaintiff failed to sign, it shall be deemed signed and defendant may proceed as though it were signed, with or without plaintiffs signature, upon proof of its adherence with this decision and order.
2. The Charging Lien
Wilco's attorney has been notified that one of plaintiff's prior attorneys claims to have a charging lien on the settlement, although there has been no corroboration of this claim (Def. Memo of Law 1). Wilco is also concerned that plaintiff's other prior attorneys may have or assert charging liens, and thus requests that the settlement funds be paid into the Court, which will disburse them as appropriate (Def. Memo of Law 1).
The court has traditional authority to regulate the charging of fees for legal services under its inherent and statutory power to regulate the practice of law ( Theroux v Theroux, 145 AD2d 625, 627 [2d Dept. 1988]). Under Judiciary Law 475, "From the commencement of an action . . . the attorney who appears for a party has a lien upon his [sic] client's cause of action, claim or counterclaim, which attaches to a verdict, . . . determination, . . . decision, judgment or final order in his client's favor, and the proceeds thereof in whatever hands they may come; and the lien cannot be affected by any settlement between the parties before or after judgment, final order or determination. The court upon the petition of the client or attorney may determine and enforce the lien." A charging lien "automatically" comes into existence upon the commencement of an action, and is measured by the reasonable value of the attorney's services in the action, unless fixed by agreement ( Resnick v Resnick, 24 AD3d 238, 239 [1st Dept. 2005]). It is a security interest in the favorable result of the litigation, giving the attorney equitable ownership interest in the client's cause of action and ensuring that the attorney can collect his fee from the fund he has created for that purpose on behalf of the client ( Chadbourne Parke, LLP v AB Recur Finans, 18 AD3d 222, 223 [1st Dept. 2005]). An attorney need not be the counsel of record at the time the judgment or settlement fund is created in order to be entitled to a charging lien ( Moody v Sorokina, 50 AD3d 1522, 1523 [4th Dept. 2008]).
Here, Wilco's attorney was informed by letter in February 2007 from one of plaintiff's former attorneys of a claim to a charging lien on the settlement (Meyers Aff Ex. F, Letter from Sanford R. Young to Meyers). As it notes, the liens must be quantified and satisfied before the balance of the settlement proceeds are paid out, in order that the defendant not become liable to the lien-holder (see Schneider, Kleinick, Weitz, Damashek Shoot v City of N.Y., 302 AD2d 183, 189-190 [1st Dept. 2002], lv denied 11 NY3d 713). Plaintiff has been represented by several attorneys over the course of this litigation conducted in both federal and State courts. There may be other liens. Accordingly, this branch of defendant's motion is granted to the extent that all settlement funds shall be deposited into court and shall not be released absent further court order.
3. Sanctions
a. Defendant's Motion for Sanctions
Defendant argues that plaintiff's refusal to execute the closing documents and finalize the resolution of the case, as agreed to in October 2006, represent a disregard for the agreement she entered into, and her attempts to vacate the agreement or renegotiate the terms is unsupported and frivolous and warrants sanctions pursuant to 22 NYCRR § 130-1.1. Plaintiff is incorrect that a non-lawyer cannot be sanctioned for frivolous conduct. Here, however, although the history of this case has been long and contentious, plaintiff properly seeks clarification of a term of the agreement, and in that regard, her stance cannot be termed frivolous at this juncture. Accordingly, the branch of defendant's motion which seeks sanctions is denied.
b. Plaintiffs Cross-Motion for Sanctions
Plaintiff cross-moves sanctions. Under § 130-1.1 of the New York Rules of Court, the court may award sanctions costs, in the form of reimbursement for actual expenses incurred and attorneys' fees, resulting from "frivolous conduct." Conduct is frivolous when it is "completely without merit in law or fact and cannot be supported by a reasonable extension, modification or reversal of existing law," or "undertaken primarily to delay or prolong the resolution of the litigation, or to harass or maliciously injure another," or "asserts material factual statements that are false." Plaintiff mischaracterizes the procedural posture of the case once the settlement agreement was signed. It is a "presumption" in a normal case, that an action is not automatically terminated simply because the parties have made an agreement to settle ( Nelson v Unicure, Inc., 72 AD2d 904, 905 [4th Dept. 1979]). Only where the parties have executed an express, unconditional stipulation of discontinuance, or have entered judgment in accordance with the terms of the settlement, is an action terminated ( Id.). In Nelson, the parties had not executed a stipulation of discontinuance nor entered judgment pursuant to the terms of the settlement, and thus enforcement of the settlement by motion was warranted. ( Id.). Here, with both parties' counsel continuing to refine the "addendum," it was proper to adjourn conferences and motion practice because of the mutual agreement that the matter of the addendum be settled rather than litigated. Although plaintiff includes copies of correspondence between one of her former attorneys and defendant's counsel that express frustration with that firm's last-minute canceling and rescheduling of depositions, it cannot be found that defendant's behavior ever rose to the level of frivolous conduct required by the statute. Accordingly, the cross-motion is denied. It is
ORDERED that the branch of motion to enforce the settlement agreement is granted to the extent that the signed agreement is deemed to be a binding upon the parties and the defendant shall serve a list of companies affiliated with Wilco using the legal definition the court as provided under the U.S. Code, as well as the confidentiality agreement, upon plaintiff with notice of entry of this order, within 20 days of entry of this order and plaintiff shall sign the agreement within 20 days thereafter. Should plaintiff fail to sign, it shall be deemed signed and defendant may proceed as though it were signed, with or without plaintiff's signature, upon proof of its adherence with this decision and order; and it is further
ORDERED that in the event that plaintiff fails to execute a stipulation of discontinuance in accordance with the parties' settlement agreement the defendant may submit a judgment setting forth the terms of the agreement as a final judgment and annex an affidavit of compliance with the terms of this order;
ORDERED that the branch of the motion which seeks permission to pay the settlement funds into court for distribution is granted and the Commissioner of Finance shall not distribute said funds absent further order of this court; and it is further
ORDERED that the branch of the defendant's motion which seeks sanctions is denied; and it is further
ORDERED that the cross-motion for sanctions is denied; and it is further
ORDERED that pursuant to 22 NYCRR 216, the Trial Courts Uniform Rule for Sealing, the court finds good cause for the sealing in that the decision, order and motion papers concern the settlement terms reached by the parties which include a confidentiality agreement because the issues involve private considerations of importance to them which they do not wish to disclose to non-parties, and the public interest in promoting final resolution of this action is served by permitting this sealing which promoted the free expression of those considerations, and therefore the Clerk of the Court is directed to seal the papers filed on this motion and cross-motion as well as this court's decision and order, absent further order of this court, except that the parties or their counsel and former counsel who may assert a charging lien may have access to the file for purposes of reviewing and copying without first obtaining a court order.
This constitutes the decision and order of the court.