Settlement in Chambers

There must still be some form of official writing documenting the agreement for it to be enforceable. See 19A N.Y. Jur. 2d Compromise, Accord, and Release ' 44 (“There can be no open court settlement agreement where the purported agreement is never transcribed or entered into any court record.”).

Proving the Agreement

In Diarasouba v. Urban, 71 AD3d 51 (2d Dept. 2009), the parties reached a settlement and informed the judge that they had settled. The court, however, refused to let the parties place the settlement on the record because the jury reached a verdict. The judge told the parties they could put the settlement on the record after the verdict was read. The Second Department held that merely stating, on the record, that there was a settlement was insufficient. The terms of the settlement were not placed on the record and, therefore, section 2104 was inapplicable. The fact that the court refused to permit the parties to place the terms on the record was irrelevant.

The Second Department explained that extending the open court exception beyond its intended purpose would create issues of fact and credibility among the parties, judge and court clerk. This would not only make it more difficult to ascertain the facts, but would also be detrimental to the integrity of the court. Id. at 56. The decision also explains that “some form of written documentation is required if a settlement is made in open court.” Id. at 57. Because the settlement in Diarasouba v. Urban was never reduced to writing or entered onto the stenographic record, it was not enforceable.

Similarly, in Kolodziej v. Kolodziej, 54 AD2d 228 (4th Dept. 1976), the parties to a divorce action met in a judge's chamber and orally agreed upon the disposition of the marital residence. The wife subsequently refused to convey the home as agreed. The court explained that, pursuant to the Statute of Frauds, agreements to convey real property must be in writing unless the agreement satisfies CPLR section 2104. The court, in citing Dolgin, explained that “the exception is based on the underlying consideration that the stipulations are memorialized by an authentic writing in the form of a court record.” Id. at 229.

The court noted that an agreement in the judge's chambers can be enforceable if there is a court reporter. In Kolodziej , however, the court reporter was not in the judge's chambers and therefore there “was no record to establish the terms of the transfer or the parties' acquiescence in it and the exception does not apply to make the agreement enforceable.” Id . at 230.

The decision, however, did note that if the formalities of court were brought into a judge's chambers, such as having a stenographer in chambers, the addition of the stenographer may comply with CPLR section 2104. See id. at 229 (“When the exception [has] been extended to permit enforcement of oral agreements reached in a judge's chambers ' the result was tolerable because a stenographic transcript gave proof of the substance and fact of the parties' agreement.”).

In Berkeley Realty, LLC v. Hicks, 7 Misc3d 130(A), 2005 WL 856940 (App. Term 2005), the parties reached an agreement in court. The only record of the agreement was the court's handwritten notes. The agreement was not transcribed in the record or recorded in the court's minute book. The Appellate Term held that the judge's notes were insufficient to serve as adequate memorialization of an agreement entered into in “open court” pursuant to CPLR 2104.

Indeed, the cases routinely hold that there can be “no open court settlement agreement within the meaning of CPLR 2104 where the purported agreement was never transcribed or entered into any court record.” Barbato v. Bowden, 63 AD3d 1580, 1582 (4th Dept. 2009) (holding “stipulation does not appear in the record and thus does not bind defendant.”); see Narsu v. Polsinelli, 74 AD2d 952, 953 (3d Dept. 1980) (“The alleged stipulation submitted to petition for signature was not read into the record in a court convened 'to do judicial business' and was, therefore, not imbued with the 'formality, publicity and solemnity of any open court proceeding' and was, therefore, not binding on petitioner.” (citations omitted)).

Although courts will recognize official entries in a court's minute book so long as they include all of the terms of the settlement, “[n]otations made on, or taken from, sources other than formal records of proceedings kept in the course of a court's business have been consistently disfavored under the CPLR 2104 'open court' exception.” Berkeley Realty LLC v. Hicks, 7 Misc3d 130(A) (App. Term 2005) (judge's handwritten notes insufficient). See also Errico v. Davidoff, 178 Misc2d 378, 382 (Sup. Ct., Kings Cty. 1998) (notation on index card used to communicate between part and clerk's office insufficient); Zambrana v. Memnon, 181 AD2d 730 (2d Dept. 1992) (notation in court's personal file insufficient).

Moreover, notations in a court's file, even when considered in conjunction with a subsequent computer entry, are still insufficient. See Gustaf v. Fink, 285 AD2d 625, 626 (2d Dept. 2001) (notation made by trial judge on court file that was subsequently entered into computer system insufficient to memorialize agreement pursuant to open court exception).

Notations made by a clerk, or on the court's calendar, are similarly insufficient. See Andrew-Long v. Verizon Corp., 31 AD3d 353, 354 (2d Dept. 2006) (holding since there was “no proof in record” that enforceable settlement was reached, it was error to remove matter from trial calendar; notation in trial judge's court calendar that the case was “settled” does not constitute a sufficient memorialization for the terms of the alleged settlement to satisfy CPLR 2104); Johnson v. Four G's Truck Rental, 244 AD2d 319 (2d Dept. 1997) (“notation allegedly appearing on the trial judge's trial calendar, 'SBT 15,000,' does not constitute a sufficient memorialization of the terms of the alleged settlement so as to satisfy the open-court requirement of CPLR 2104.” (Citations omitted)); Gordon v. Shafiq, No. 10259/10, 2013 WL 1896992 (Sup. Ct., Kings Cty. May 7, 2013) (“clerk's notation of 'settled before trial' does not constitute a sufficient memorialization of the terms of the alleged settlement so as to satisfy the 'open court' requirement.”).

These cases make clear that an oral agreement is enforceable if the writing takes a different form, such as detailed court minutes or a transcript, but that an informal court record that does not fully set forth the agreement is insufficient to act as a substitute for a writing. Further, courts cannot cure such a defect by either reading the judge's notes into the record or by having the parties testify as to what they recollect.

Indeed, in Dolgin, the parties did just that; six days after the settlement they went on the record and were asked what they recalled about the agreement. The Court of Appeals held that this was insufficient. See also Narsu, 74 AD2d at 953 (it is improper to determine terms of stipulation based on the discussion in chambers and the court's personal recollection of settlement negotiations). Indeed, “the exception of oral agreements in open court from the operation of the Statute of Frauds is based upon the underlying consideration that such agreements are memorialized in an authentic writing in the form of a court record.” Narsu, 74 AD2d at 953. When there is no written record from which the exact terms of the alleged settlement can be gleaned, that exception is inapplicable.

When Equity Allows a Different Outcome

Despite the inability to cure, all is not lost for a party who genuinely believes a binding settlement was reached. A party who acts in reliance on an agreement can invoke equity to enforce the oral agreement based on the doctrine of part performance. Part performance, however, only applies when the party seeking to enforce the agreement acted in reliance on the otherwise unenforceable agreement and the conduct is “unequivocally referable” to the oral agreement. Anostario v. Vicinanzo, 59 NY2d 662, 664 (1983). It is not sufficient that the oral agreement give significance to the party's actions. Id. The acts of performance relied on must be so definitely and exclusively referable to the agreement as to be unintelligible, or at least extraordinary, unless incident to the contract. Id. If they are reasonably explicable on some other ground, they are insufficient to take the case out of the statute. The determination whether part-performance will be applicable is highly fact-specific.

Conclusion

Counsel should think carefully about whether an agreement should be placed on the record or if it should be subsequently memorialized in a writing. There are inherent dangers in both. When placing an agreement on the record, there is a greater chance of negligently omitting a term or terms. At the same time, placing the agreement on the record prevents a party from subsequently backing out of the agreement. The advantages and disadvantages of each approach should be considered by counsel with due regard to the particular circumstances, without reflexively choosing one particular method of documenting a settlement.

Adam W. Schneid is an attorney with Carol W. Most & Associates, P.C., whose practice is devoted primarily to family and matrimonial law. Mr. Schneid is a member of the New York State, American, Westchester and White Plains Bar Associations and is admitted to practice in the Southern District of New York, the Eastern District of New York, and the District of New Jersey.

Part Two of a Two-Part Article

In the first part of this article, we began discussion of the “open court” exception (Civil Practice Law & Rules (CPLR) ' 2104) to the Equitable Distribution Law's requirement that, to be enforceable, matrimonial agreements made before or during a marriage must be reduced to writing, subscribed by the parties and acknowledged or proven in the manner required to entitle a deed to be recorded. See Domestic Relations Law (DRL) ' 236(B)(3). (DRL ' 170(6) sets forth a similar requirement for separation agreements used for a conversion divorce.) The open court exception allows recognition of such agreements even though not in writing, etc., so long as they are the subject of court proceedings and certain other requirements are met.

But, as we saw in Dolgin Eldert Corp. v. Dolgin , 31 NY2d 1 (1972), oral agreements referred to by a court will not be deemed sufficient to overcome the requirements of DRL ' 236(B)(3). In fact, Dolgin and its progeny, make clear that the “open-court” exception applies only where an agreement, despite being oral, is nonetheless recorded in an official manner. See 105 N.Y. Jur. 2d Trials ' 234 (“The exception of oral agreements in open court is based on the underlying consideration that such agreements are memorialized by an authentic writing in the form of a court record, and when the exception is extended to oral agreements reached in a judge's chambers, it is permitted only when a stenographic record is made of the agreement, giving proof of the substance and fact of the parties' agreement; in the absence of a stenographic record of the stipulation, it is not binding.”).

There must still be some form of official writing documenting the agreement for it to be enforceable. See 19A N.Y. Jur. 2d Compromise, Accord, and Release ' 44 (“There can be no open court settlement agreement where the purported agreement is never transcribed or entered into any court record.”).

Proving the Agreement

In Diarasouba v. Urban , 71 AD3d 51 (2d Dept. 2009), the parties reached a settlement and informed the judge that they had settled. The court, however, refused to let the parties place the settlement on the record because the jury reached a verdict. The judge told the parties they could put the settlement on the record after the verdict was read. The Second Department held that merely stating, on the record, that there was a settlement was insufficient. The terms of the settlement were not placed on the record and, therefore, section 2104 was inapplicable. The fact that the court refused to permit the parties to place the terms on the record was irrelevant.

The Second Department explained that extending the open court exception beyond its intended purpose would create issues of fact and credibility among the parties, judge and court clerk. This would not only make it more difficult to ascertain the facts, but would also be detrimental to the integrity of the court. Id. at 56. The decision also explains that “some form of written documentation is required if a settlement is made in open court.” Id. at 57. Because the settlement in Diarasouba v. Urban was never reduced to writing or entered onto the stenographic record, it was not enforceable.

Similarly, in Kolodziej v. Kolodziej , 54 AD2d 228 (4th Dept. 1976), the parties to a divorce action met in a judge's chamber and orally agreed upon the disposition of the marital residence. The wife subsequently refused to convey the home as agreed. The court explained that, pursuant to the Statute of Frauds, agreements to convey real property must be in writing unless the agreement satisfies CPLR section 2104. The court, in citing Dolgin, explained that “the exception is based on the underlying consideration that the stipulations are memorialized by an authentic writing in the form of a court record.” Id. at 229.

The court noted that an agreement in the judge's chambers can be enforceable if there is a court reporter. In Kolodziej , however, the court reporter was not in the judge's chambers and therefore there “was no record to establish the terms of the transfer or the parties' acquiescence in it and the exception does not apply to make the agreement enforceable.” Id . at 230.

The decision, however, did note that if the formalities of court were brought into a judge's chambers, such as having a stenographer in chambers, the addition of the stenographer may comply with CPLR section 2104. See id. at 229 (“When the exception [has] been extended to permit enforcement of oral agreements reached in a judge's chambers ' the result was tolerable because a stenographic transcript gave proof of the substance and fact of the parties' agreement.”).

In Berkeley Realty, LLC v. Hicks , 7 Misc3d 130(A), 2005 WL 856940 (App. Term 2005), the parties reached an agreement in court. The only record of the agreement was the court's handwritten notes. The agreement was not transcribed in the record or recorded in the court's minute book. The Appellate Term held that the judge's notes were insufficient to serve as adequate memorialization of an agreement entered into in “open court” pursuant to CPLR 2104.

Indeed, the cases routinely hold that there can be “no open court settlement agreement within the meaning of CPLR 2104 where the purported agreement was never transcribed or entered into any court record.” Barbato v. Bowden , 63 AD3d 1580, 1582 (4th Dept. 2009) (holding “stipulation does not appear in the record and thus does not bind defendant.”); see Narsu v. Polsinelli , 74 AD2d 952, 953 (3d Dept. 1980) (“The alleged stipulation submitted to petition for signature was not read into the record in a court convened 'to do judicial business' and was, therefore, not imbued with the 'formality, publicity and solemnity of any open court proceeding' and was, therefore, not binding on petitioner.” (citations omitted)).

Although courts will recognize official entries in a court's minute book so long as they include all of the terms of the settlement, “[n]otations made on, or taken from, sources other than formal records of proceedings kept in the course of a court's business have been consistently disfavored under the CPLR 2104 'open court' exception.” Berkeley Realty LLC v. Hicks , 7 Misc3d 130(A) (App. Term 2005) (judge's handwritten notes insufficient). See also Errico v. Davidoff , 178 Misc2d 378, 382 (Sup. Ct., Kings Cty. 1998) (notation on index card used to communicate between part and clerk's office insufficient); Zambrana v. Memnon , 181 AD2d 730 (2d Dept. 1992) (notation in court's personal file insufficient).

Moreover, notations in a court's file, even when considered in conjunction with a subsequent computer entry, are still insufficient. See Gustaf v. Fink , 285 AD2d 625, 626 (2d Dept. 2001) (notation made by trial judge on court file that was subsequently entered into computer system insufficient to memorialize agreement pursuant to open court exception).

Notations made by a clerk, or on the court's calendar, are similarly insufficient. See Andrew-Long v. Verizon Corp. , 31 AD3d 353, 354 (2d Dept. 2006) (holding since there was “no proof in record” that enforceable settlement was reached, it was error to remove matter from trial calendar; notation in trial judge's court calendar that the case was “settled” does not constitute a sufficient memorialization for the terms of the alleged settlement to satisfy CPLR 2104); Johnson v. Four G's Truck Rental , 244 AD2d 319 (2d Dept. 1997) (“notation allegedly appearing on the trial judge's trial calendar, 'SBT 15,000,' does not constitute a sufficient memorialization of the terms of the alleged settlement so as to satisfy the open-court requirement of CPLR 2104.” (Citations omitted)); Gordon v. Shafiq, No. 10259/10, 2013 WL 1896992 (Sup. Ct., Kings Cty. May 7, 2013) (“clerk's notation of 'settled before trial' does not constitute a sufficient memorialization of the terms of the alleged settlement so as to satisfy the 'open court' requirement.”).

These cases make clear that an oral agreement is enforceable if the writing takes a different form, such as detailed court minutes or a transcript, but that an informal court record that does not fully set forth the agreement is insufficient to act as a substitute for a writing. Further, courts cannot cure such a defect by either reading the judge's notes into the record or by having the parties testify as to what they recollect.

Indeed, in Dolgin, the parties did just that; six days after the settlement they went on the record and were asked what they recalled about the agreement. The Court of Appeals held that this was insufficient. See also Narsu, 74 AD2d at 953 (it is improper to determine terms of stipulation based on the discussion in chambers and the court's personal recollection of settlement negotiations). Indeed, “the exception of oral agreements in open court from the operation of the Statute of Frauds is based upon the underlying consideration that such agreements are memorialized in an authentic writing in the form of a court record.” Narsu, 74 AD2d at 953. When there is no written record from which the exact terms of the alleged settlement can be gleaned, that exception is inapplicable.

When Equity Allows a Different Outcome

Despite the inability to cure, all is not lost for a party who genuinely believes a binding settlement was reached. A party who acts in reliance on an agreement can invoke equity to enforce the oral agreement based on the doctrine of part performance. Part performance, however, only applies when the party seeking to enforce the agreement acted in reliance on the otherwise unenforceable agreement and the conduct is “unequivocally referable” to the oral agreement. Anostario v. Vicinanzo , 59 NY2d 662, 664 (1983). It is not sufficient that the oral agreement give significance to the party's actions. Id. The acts of performance relied on must be so definitely and exclusively referable to the agreement as to be unintelligible, or at least extraordinary, unless incident to the contract. Id. If they are reasonably explicable on some other ground, they are insufficient to take the case out of the statute. The determination whether part-performance will be applicable is highly fact-specific.

Conclusion

Counsel should think carefully about whether an agreement should be placed on the record or if it should be subsequently memorialized in a writing. There are inherent dangers in both. When placing an agreement on the record, there is a greater chance of negligently omitting a term or terms. At the same time, placing the agreement on the record prevents a party from subsequently backing out of the agreement. The advantages and disadvantages of each approach should be considered by counsel with due regard to the particular circumstances, without reflexively choosing one particular method of documenting a settlement.

Adam W. Schneid is an attorney with Carol W. Most & Associates, P.C., whose practice is devoted primarily to family and matrimonial law. Mr. Schneid is a member of the New York State, American, Westchester and White Plains Bar Associations and is admitted to practice in the Southern District of New York, the Eastern District of New York, and the District of New Jersey.