New York Law Journal “Pitfalls of an Executed Settlement Agreement and a Party With Second Thoughts” by Thomas E.L. Dewey

April 22, 2020

In his NYLJ Settlement and Compromise column, Thomas E.L. Dewey discusses a recent EDNY case that provides an interesting example of a party seeking a court’s assistance to set aside a settlement agreement based on Federal Rule of Civil Procedure 60(b).

 

One of the goals of virtually any settlement agreement is to provide the parties with clarity concerning their respective rights and obligations, as well as any relevant assumptions that form the basis of the agreement. The obvious benefit is to make clear what a party must do to honor its end of the bargain. The flip side of that benefit is to make it difficult for other parties to the agreement to revise the terms of the agreement or simply renege on their responsibilities because they have cold feet after signing on the dotted line. To that end, integration clauses are a standard settlement agreement term designed to prohibit a party from relying on any agreements, assumptions or representations outside the four walls of the agreement.

 

Although clear settlement agreements with integration clauses are designed to avoid burdensome challenges, a recent case in the Eastern District of New York provides an interesting example of a party seeking a court’s assistance to set aside a settlement agreement based on Federal Rule of Civil Procedure 60(b). The standard for a court to set aside a settlement agreement pursuant to this provision is understandably high, requiring clear and convincing evidence. Plaintiff in that case nevertheless made sufficient allegations to defeat a summary application to enforce a settlement agreement and to obtain limited discovery. While defendants ultimately succeeded in enforcing the settlement agreement, they were nevertheless forced to expend time and resources to repel the effort to set it aside.

Read more.

 

This article first appeared in the New York Law Journal on April 22, 2020.  Daniel Shternfeld, an associate of the firm, assisted in the preparation of the article.

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