Geneva Laboratories Limited v. Nike West African Import And Export Inc.

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF NEW YORK

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GENEVA LABORATORIES LIMITED and

UNION-SWISS (PROPRIETARY) LIMITED,

Plaintiffs, MEMORANDUM & ORDER

19-CV-04419(EK)(RER)

-against-

NIKE WEST AFRICAN IMPORT AND

EXPORT, INC., et al.,

Defendants.

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ERIC KOMITEE, United States District Judge:

This case is before me on the plaintiffs’ motion to

enforce an oral settlement agreement. In October 2020, the

parties reported to Magistrate Judge Steven Gold that they had

agreed to settle the matter, but they now dispute whether that

agreement included certain provisions targeted to the risk of

Defendants’ non-payment. The disputed provisions include, most

prominently, one that would accord Plaintiffs a security

interest in the personal residence of Elfreda Akintewe, the

individual defendant and sole owner of Nike West. In a Report

and Recommendation (“R&R”) dated August 16, 2021, Magistrate

Judge Reyes recommended that I enforce the oral settlement

agreement. R&R, ECF No. 30. Defendants filed a timely

objection. Objs. to R&R 2, ECF No. 31. After an exhaustive

review of the R&R, Defendants’ objections, and the fuller

record, I adopt the recommendation and grant Plaintiffs’ motion

to enforce the settlement.

I. Background

Plaintiffs Geneva Laboratories Limited and Union-Swiss

(Proprietary) Limited filed suit in 2019 against Nike West

African Import and Export Inc. and Ms. Akintewe, among others

since dismissed. Geneva Labs, a foreign corporation, owns the

rights to market and sell skincare oil products under the “BIO-

OIL” brand. Compl. ¶ 13, ECF No. 1. Geneva Labs licenses

distribution rights to Union-Swiss. Id. at ¶ 14. Plaintiffs

allege that Defendants imported, sold, distributed, and promoted

skincare products that infringed Geneva’s registered trademarks.

Id. at ¶ 1.

The path to the purported oral settlement in October

2020 was long and difficult. After the parties engaged in

discovery and early settlement discussions, Plaintiffs’ counsel

sent a draft settlement proposal — styled as a “Stipulated

Consent Judgment & Permanent Injunctive Order” — to Defendants’

counsel in March 2020 for his and his clients’ consideration.

This draft agreement, which I will refer to as the “March

Draft,” called for the Defendants to pay Plaintiffs $30,000 to

settle the case. Draft Consent J. and Permanent Inj. dated

March 13, 2020 (“Mar. Draft”), Ex. 3 to ECF No. 28-2. The March

Draft did not provide for a security interest, either in Ms.

Akintewe’s residence or otherwise. This draft sat for a few

months until September 18, 2020, when Defendants’ counsel

informed Plaintiffs that he had finally spoken with his client

about the settlement.1

The parties participated in a telephone conference

with Judge Gold on September 22, 2020. In the minute entry

following that conference, the Court stated:

The parties will continue their efforts to reach a

settlement, and in particular to find a means by which

defendants might provide security for payments they

seek to make over time. THE COURT WILL HOLD A

TELEPHONE CONFERENCE AT 11:30 AM ON OCTOBER 27, 2020,

at which time counsel will be expected to report on

the status of the parties’ settlement discussions and

whether a settlement conference might be productive.

Minute Entry of September 22, 2020 Conference, ECF No. 20.

The parties reconvened on October 27. The parties

discussed settlement; as is standard in settlement conferences

in this district, the discussion was not recorded.

Nevertheless, the parties agree that Judge Gold proposed a

trade-off by which the settlement payment would be reduced to

$15,000 and in return, the Defendants would agree to a lien on

Defendant Akintewe’s Brooklyn residence. Nov. 20 Conference

1 During this period, Plaintiffs’ counsel sent a series of emails to

defense counsel. Defense counsel reported some difficulties contacting his

clients, among other things, in response. See Defs.’ Opp. to Mot. to Enforce

Settlement 3, ECF No. 27.

Transcript 6:13-19, ECF No. 26; see also Letter from Pls.’

Counsel on Behalf of all Parties 4, 7, ECF No. 23.2

Plaintiffs have asserted — and Defendants have not

explicitly denied — that Judge Gold was proposing to insert

these new terms into the March Draft. Specifically, Plaintiffs’

counsel “sought, and received, clarification from the Court that

the proposal would not be in lieu of Defendants’ entry into” the

March Draft of the Consent Judgment — that is, that the other

terms in the March Draft would continue to form a part of the

proposal.3 Pls.’ Position Statement in Nov. 11, 2020 Letter on

Behalf of Both Parties 4, ECF No. 23. The minute entry

following the October 27th conference states: “The Parties will

consider the settlement recommendation proposed by the Court.

THE COURT WILL HOLD A FURTHER TELEPHONE CONFERENCE AT 2:30 PM ON

OCTOBER 30, 2020, at which time counsel will report on their

position with respect to settlement.” ECF No. 21.

The October 30 conference, too, went unrecorded, given

the continuation of settlement discussions. The parties agree,

however, that they reported to Judge Gold that they had reached

agreement. (They now dispute what the scope of the agreement

2 Page numbers in citations to record documents (excluding deposition

transcripts) refer to ECF pagination rather than the documents’ native page

numbers.

3 As discussed below, Judge Gold would later confirm that this assertion

comported with his recollection of the discussion on October 27.

was, but not that they reported having reached one.) The minute

entry following this conference states: “The parties report that

they have reached a settlement. Counsel will submit a

stipulation discontinuing the action, or a status report

indicating why the parties have not done so, by NOVEMBER 20,

2020.” Minute Entry of October 30, 2020 Conference, ECF. No.

22.

On November 4, Plaintiffs’ counsel sent a revised

draft of the “Stipulated Consent Judgment” (the “November

Draft”) to defense counsel. As expected, the November draft

differed from the March Draft in that it called for Defendants

to pay $15,000 rather than $30,000, and to do so in five

installments rather than up front. See Draft Stipulated Consent

J. & Permanent Inj. Order dated November 4, 2020 (“November

Draft”) ¶ 7 (blacklined to show changes from the March 2020

Draft), Ex. 14 to ECF No. 28-2. In addition, the November draft

called for a lien on defendant Akintewe’s residence to

“guarantee Defendants’ compliance with the foregoing payment

amount and schedule.” See id. ¶ 7(b).

The November Draft also set forth two additional

provisions responsive to the perceived credit risk: first, a

provision that if the Defendants missed any scheduled payment,

the unpaid balance of the settlement amount would be trebled and

become due immediately; and second, that in the event of a non-

payment, Plaintiffs would “automatically” be granted a lien on

all of Defendants’ property, including bank accounts, vehicles,

inventory, and wages. Id. ¶ 7(d).

On receipt of the November Draft, defense counsel

balked. He returned comments challenging not only the new

provisions, but several provisions that were entirely unchanged

from the March Draft — despite the record revealing no

indication that he had objected to any provision of the March

Draft at the October 27th or 30th conferences. Plaintiffs

agreed to accept certain minor line-editing from Defendants.

Given the larger impasse, however, the parties jointly filed a

one-page letter indicating that settlement discussions had

broken down. November 11, 2020 Letter on Behalf of Both

Parties, ECF 23. The letter attached both parties’ statements

of position on the settlement negotiation and a blackline of the

November Draft.

Plaintiffs’ position statement painstakingly recited

their recollection of the October 27th and 30th conferences over

four pages in an effort to demonstrate that all material terms

in the November Draft had been agreed to before Judge Gold and,

in particular, that the lien on defendant Akintewe’s house was

to take effect upon execution of the settlement. Plaintiffs

asked Judge Gold to enforce the oral agreement that the parties

had acknowledged on the record and cited case law in support of

that contention. Pls.’ Position Statement 5-6.

Defendants submitted a much briefer position

statement. They contended that they understood from the

settlement conferences that the security interest would attach

to Akintewe’s home only if and when Defendants failed to pay the

settlement on the agreed schedule. See id. at 7 (expressing

defendants’ position that “contrary to the agreement made at the

October 30, 2020 conference, plaintiffs now insist that they

must be granted a lien on defendant Elfreda Akintewe’s home,

whether the defendants default in the payments or not”).

Defendants also disputed several provisions that were unchanged

from the March Draft.

After receipt of this correspondence, Judge Gold held

a conference on November 20 — this time on the record. Minute

Entry, ECF No. 25; Tr. of Proceedings on November 20, 2020, ECF

No. 26. He opened by stating that he “recall[ed] things as

plaintiffs described” in their position statement, see id. at

2:18-22 — specifically, “that the parties had agreed on all

material terms of the settlement, including the consent decree

that . . . plaintiffs had forwarded to the defendants.” Id. at

3:2-5.4 Nevertheless, Judge Gold said that he would afford the

4 Judge Gold seemed taken aback by the defense position. He noted, for

emphasis, that it was “totally my understanding” that the reported agreement

subsumed the terms in the March Draft. Nov. 20 Conference Tr. 2:25-3:1.

parties an opportunity to brief the question of whether he

should enforce the oral agreement. He subsequently construed

the Plaintiffs’ November 11 letter as a motion to enforce the

oral settlement agreement. See ECF No. 25. After Judge Gold’s

retirement from the bench, I referred the motion to enforce to

Magistrate Judge Reyes for report and recommendation. See Order

Dated January 19, 2021.

Judge Reyes submitted his R&R on August 16, 2021. The

R&R recommends that the settlement be enforced, concluding that

the parties orally agreed to a binding contract at the October

30 conference before Judge Gold. Defendants objected.

II. Legal Standard on Review of Report & Recommendation

A district court “may accept, reject, or modify, in

whole or in part, the findings or recommendations made by the

magistrate judge.” 28 U.S.C. § 636(b)(1). Within fourteen days

after a party has been served with a copy of a magistrate

judge’s R&R, the party “may serve and file specific, written

objections to the proposed findings and recommendations.” Fed.

R. Civ. P. 72(b)(2). When a party submits a timely objection, a

court “shall make a de novo determination of those portions of

the report or specified proposed findings or recommendations to

which objection is made.” 28 U.S.C. § 636(b)(1)(C).

III. Discussion

This dispute requires the Court to evaluate two

related — but distinct — questions. First, whether the parties

reached an agreement: in other words, when the parties advised

Judge Gold that they had reached an oral agreement, had they

actually formed a meeting of the minds, and on what terms? “A

court cannot enforce a contract unless it can determine to what

the parties agreed.” 28 Glen Banks, New York Contract Law

2:25, at 81 (2d ed. 2017) (citing 166 Mamaroneck Ave. Corp. v.

151 E. Post Rd. Corp., 78 N.Y.2d 88, 91 (1991)).°

The second question is whether, assuming the parties

reached an oral agreement, they nevertheless manifested an

intent to be bound only by a Signed writing, such that the court

should not enforce the oral agreement even though the

requirements for a binding contract were otherwise satisfied.

It is well-settled that when a party to a contract negotiation

“communicates an intent not to be bound until he achieves a

fully executed document, no amount of negotiation or oral

agreement to specific terms will result in the formation of a

binding contract.” Winston v. Mediafare Ent. Corp., 77/7 F.2d

78, 80 (2d Cir. 1985).

□ Suniess otherwise noted, when quoting judicial decisions this order

omits all alterations, citations, footnotes, and internal quotation marks.

The R&R deals primarily with the second of these two

questions, thoroughly analyzing whether the parties intended to

be bound by the oral agreement they reported. The R&R applies

the familiar four-factor test laid out in Winston v. Mediafare

Entertainment Corp., 777 F.2d 78 (2d Cir. 1985). Like the R&R,

Winston began and ended with the second of the two questions

above, perhaps because it was immediately apparent in that case

that one party had manifested an intent only to be bound by a

written and executed agreement. Among other clear indications,

the Winston court pointed to a promise by the attorney for the

plaintiff (the party seeking to enforce the oral agreement) that

he would hold the settlement check in escrow “pending execution

by my client and delivery to you of two fully executed copies of

the agreement.” Id. at 81. This language, the court held,

“confirmed the obvious understanding that the settlement

contract would not be effective until executed by both sides,”

contrary to the plaintiff’s new position. Id.

Here, unlike in Winston, I find below that the parties

did not manifest an intent only to be bound by a signed writing

(as Judge Reyes also held). For that reason, I must answer the

prior question (whether the parties reached a meeting of the

minds, and on what terms) before reaching the second (whether a

signed writing was required).6

A. The parties reached a valid oral agreement on all material

terms in the November Draft of the Stipulated Consent

Judgment.

A “settlement is a contract . . . [and] once entered

into . . . is binding and conclusive.” Powell v. Omnicom, 497

F.3d 124, 128 (2d Cir. 2007). Settlement agreements are

“interpreted according to general principles of contract law.”

Velazquez v. Yoh Servs., LLC, No. 17-CV-842, 2017 WL 4404470, at

*2 (S.D.N.Y. Sept. 25, 2017). “The party seeking to enforce a

purported settlement agreement bears the burden of proving that

such a binding and enforceable agreement exists.” Grgurev v.

Licul, No. 15-CV-9805, 2016 WL 6652741, at *3 (S.D.N.Y. Nov. 10,

2016); see also Fleming v. Ponziani, 24 N.Y.2d 105, 111 (1969)

(“[P]laintiff, in undertaking to prove the contract upon which

his action is based, had cast upon him the burden of

6 The R&R relies on additional cases that go straight to the application

of the Winston factors, without a prior analysis of whether a meeting of the

minds occurred. R&R 4-5, ECF No. 30. Several of those cases, too, are

distinguishable, in that the parties had stated their agreement and the terms

thereof on the record. See, e.g., Pure Love Music v. JMC Ent., Inc., No. 09-

CV-1980, 2010 WL 550114, at *1 (E.D.N.Y. Feb. 12, 2010) (enforcing oral

agreement read into the record before magistrate judge); Francis v. Home Box

Office, Inc., No. 04-CV-7430, 2005 WL 1020863, at *3 (S.D.N.Y. Apr. 28, 2005)

(same), Brum v. Paragon Design Corp., No. 18-CV-5399, 2019 WL 3222969, at *4

(S.D.N.Y. May 16, 2019), adopted by 2019 WL 3219345 (July 17, 2019)

(recommending enforcement of oral settlement agreement read into the record

before magistrate judge). Given the on-the-record recitation, there was no

dispute about the material terms. Here, in contrast, there is no transcript

or audio recording of Judge Gold or the parties describing the material terms

of the oral agreement they reported.

establishing, by a preponderance of the evidence, that it was a

good and valid contract . . . .”).7

“To form a valid contract under New York law, there

must be an offer, acceptance, consideration, mutual assent and

intent to be bound.” Register.com, Inc. v. Verio, Inc., 356

F.3d 393, 427 (2d Cir. 2004). The offer, acceptance, and

manifestation of intent do not need to extend to every potential

contract term — only the material terms. “If an agreement is

not reasonably certain in its material terms, there can be no

legally enforceable contract.” Cobble Hill Nursing Home, Inc.

v. Henry & Warren Corp., 74 N.Y.2d 475, 482 (1989); see also In

re Express Indus. & Terminal Corp. v. N.Y. State Dep't of

Transp., 93 N.Y.2d 584, 589 (1999) (“To create a binding

contract, there must be a manifestation of mutual assent

sufficiently definite to assure that the parties are truly in

agreement with respect to all material terms.”). “[A]t some

point virtually every agreement can be said to have a degree of

indefiniteness,” but “parties ... should be held to their

promises.” Cobble Hill, 74 N.Y.2d at 483. “In contract law,

‘essential terms’ are those terms that are necessary in order to

7 As Judge Reyes pointed out, the Second Circuit has not decided whether

federal common law or New York law applies when determining the

enforceability of oral settlement agreements in federal court, but it has

concluded that there is no material difference between the two. See

Ciaramella v. Reader’s Dig. Ass’n, 131 F.3d 320, 322 (2d Cir. 1997).

lend an agreement sufficient detail to be enforceable by a

court.” Reyes v. Lincoln Auto. Fin. Svcs., 861 F.3d 51, 58 (2d

Cir. 2017). The standard is “necessarily flexible,” and courts

should try not to apply it with “a heavy hand.” Cobble Hill, 74

N.Y.2d at 482-83.

There must be “an objective meeting of the minds

sufficient to give rise to a binding and enforceable contract.”

Starke v. SquareTrade, Inc., 913 F.3d 279, 289 (2d Cir. 2019).

“In determining whether the parties intended to enter a

contract, and the nature of the contract’s material terms, we

look to the objective manifestations of the intent of the

parties as gathered by their expressed words and deeds.”

Stonehill Cap. Mgmt., LLC v. Bank of the West, 28 N.Y.3d 439,

448-449 (2016) (emphasis added). “[D]isproportionate emphasis

is not to be put on any single act, phrase or other expression,

but, instead, on the totality of all of these, given the

attendant circumstances, the situation of the parties, and the

objectives they were striving to attain.” Brown Bros., 41 N.Y.2d

at 399–400.

Here, Plaintiffs have carried their burden of

demonstrating that the parties manifested a meeting of the minds

on the oral agreement and all its material terms. As discussed

below, those agreed-upon terms are: all terms contained in the

March Draft, plus a small number of material terms added in the

November Draft — namely, the new (lower) dollar amount of the

settlement payment and the new payment schedule; the lien on

defendant Akintewe’s residence on East 103rd Street in Brooklyn;

the provision for treble damages in the event of a payment

default; and a few minor edits by defense counsel, listed below.

There is one new provision in the November Draft for which the

record reveals no evidence of mutual assent (namely, the

provision for a springing judgment lien on bank accounts,

vehicles, and the like), but that provision is not material to

the parties’ meeting of the minds, for the reasons discussed

below.

The Terms in the March Draft. Judge Gold specifically

stated his recollection that the parties’ oral agreement

extended to the terms in the March Draft. At the November 20

conference, Judge Gold stated:

I made a settlement recommendation [on October 27th].

Then on October 30th, I was told that the parties

reached a settlement and it was totally my

understanding, and I’m saying this for the record so

that we can refer back to it later, that the parties

had agreed on all material terms of the settlement,

including the consent decree that . . . plaintiffs had

forwarded to the defendants.

Nov. 20, 2020 Conf. Tr. 2:24-3:5 (emphasis added). Plaintiffs

have produced evidence to support this conclusion as well, in

the form of attorney Richard Straussman’s comprehensive

declaration (made under penalty of perjury). See Dec. of

Richard Straussman, Esq. (“Straussman Decl.”) ¶¶ 15-16, ECF No.

28-1. Defendants have submitted no evidence to contest Judge

Gold’s and plaintiffs’ counsel’s recollection that the oral

agreement subsumed the March Draft in its entirety (subject to

the changes discussed below). Defense counsel has argued that

certain terms dating back to the March Draft — including a

statutory damages provision — were not agreed to. But counsel

participated in the October 27 and 30 settlement conferences

with authority to settle the case.8 He agreed on October 30 to

the adjustments proposed by Judge Gold to the Consent Decree.

And it is “an elementary principle of contract law that a

party’s subsequent change of heart will not unmake a bargain

already made.” Omega Eng’g, Inc. v. Omega, S.A., 432 F.3d 437,

445 (2d Cir. 2005).

The New Dollar Amount and Payment Schedule. Neither

side disputes that the oral agreement included these terms,

which appear in Paragraph 7 of the November Draft. See November

Draft ¶ 7. Given the passage of time, the dates in the payment

schedule need updating. The Court sets the following dates, in

line with the same timeframe agreed to by the parties: May 4,

2022; June 6, 2022; July 5, 2022; August 4, 2022, and September

6, 2022.

8 Defense counsel does not contend that he lacked actual and apparent

authority to enter into a binding settlement.

The Lien on Defendant Akintewe’s Residence.

Defendants do not dispute that they agreed to a lien on

defendant Akintewe’s Brooklyn residence. Defs.’ Opp. to Mot. to

Enforce Settlement 2, ECF No. 27. They dispute, however, the

conditions under which the lien would attach. Plaintiffs argue

that the oral agreement contemplated the lien attaching at the

moment the Court so-ordered the consent decree, whereas

Defendants insist that it would attach only upon a default. See

Defs.’ Position Statement in Nov. 11, 2020 Letter on Behalf of

Both Parties 7, ECF No. 23 (“Moreover, contrary to the agreement

made at the October 30, 2020 conference, plaintiffs now insist

that they must be granted a lien on defendant Elfreda Akintewe’s

home, whether the defendants default in the payments or not.”).

The evidence overwhelmingly establishes that the oral

agreement called for the lien to go into effect as soon as the

judgment was entered. This conclusion emerges, first and

foremost, from Judge Gold’s recollection of the settlement

discussion: he recalled making “a proposal to resolve those

financial terms pursuant to which the plaintiffs would settle

for a smaller amount of money but have it secured against a

piece of real property.” Nov. 20, 2020 Conf. Tr. 3:9-12. Two

things stand out in Judge Gold’s phrasing: first, he uses the

same verb tense to describe the payment as the security

interest, suggesting that they would occur simultaneously; and

second, he conspicuously omits any suggestion that the security

interest was to be conditional. Judge Gold recalled, further,

that this proposal was accepted. Id. 2:24-25. Plaintiffs’

counsel’s sworn declaration is consistent. Straussman Decl. ¶

18. And once again, Defendants have offered no evidence,

besides a lawyer’s letters, to contest this, and even those

lawyer’s letters do not suggest that defense counsel actually

raised any different timing at the settlement conferences.

Defs.’ Position Letter; Defs.’ Opp. to Mot. to Enforce

Settlement 2–4; Objs. to R&R 2.

The events leading to the settlement conferences, too,

establish that the lien was to be effective upon the Court’s

acceptance of the Consent Decree. Defense counsel had initially

reported that his client wanted six months to pay the settlement

amount. See Straussman Decl. ¶ 13; Def. Counsel Email of Sept.

18, 2020, Ex. 10 to ECF 28-2. Plaintiffs’ counsel responded

decisively: “Any settlement that does not require payment at the

time of settlement is not acceptable.” Straussman Decl. ¶ 14;

Pls.’ Counsel Email of Sept. 18, 2020, Ex. 11 to ECF No. 28-2.

Logically speaking, the only way this impasse could have been

solved through a security interest would be if the security

interest was obtained “at the time of settlement” — the time

that plaintiffs otherwise were expecting to be paid.

Finally, the nature and purpose of a security interest

support this conclusion. A security interest is designed to

provide recourse in the event of a debtor’s default. An

indebted party’s commitment to negotiate and implement a

security interest only after it has defaulted provides little

comfort, as Judge Gold observed. See Nov. 20 Conf. Tr. 10:10-14.

Thus, this term — as reflected in the November Draft at

Paragraph 7(b) — will be enforced.

Treble Damages on Default. Plaintiffs’ attorney’s

sworn declaration attested that Judge Gold proposed the treble-

damages-on-default provision at the October 27 conference, see

Straussman Decl. ¶ 17, and that the parties later accepted this

proposal. The provision was consonant with the March Draft,

which had already provided for treble damages in the event of

other types of breaches (such as further infringement). See

Mar. Draft ¶ 12(e). As noted above, Defendants never challenged

this provision and agreed to the preexisting terms of the March

Draft (including this one) at the October 30 conference. This

provision was clearly among the agreed-upon terms of the

parties’ oral agreement, as reported on October 30. It, too,

will be enforced as written in the November Draft (at ¶ 7(d)).

The After-Added Lien on Bank Accounts, Vehicles, and

Other Assets. The November Draft contains the following new

provision, not included in the March Draft: “Upon such failure

[to make a payment when due], Plaintiffs shall automatically

thereafter also have a lien on any and all assets held by or on

behalf of defendants, including, but not limited to, bank

accounts, personalty, vehicles, inventory, wages, etc., in the

amount of treble the entire then-remaining unpaid balance.”

Plaintiffs say they believe this provision — establishing a

“judgment lien” in defendants’ property after a default, if not

a perfected security interest — would apply by operation of New

York law, whether or not it was included in the November Draft.

It would be immaterial for that reason, if true, and it is also

immaterial because the Plaintiffs already have sufficient

security (via the lien on Akintewe’s residence) to collect on

the payment default in full (even if that full amount is

trebled). The incremental security, if any, provided by this

provision is therefore immaterial. The Court will direct the

Plaintiffs to remove this language from Paragraph 7(d) of the

November Draft — beginning with “Upon such failure, Plaintiffs

shall automatically have” and extending through the end of

Paragraph 7(d).

November Changes Proposed by Defendants and Agreed to

by Plaintiffs. Plaintiffs agreed to a few minor changes

proposed by Defense Counsel in November after the parties

reported their agreement to Judge Gold.9 See Pls.’ Position

Statement 5.10 Those agreed-to changes are, accordingly, now

part of the consent judgment and permanent injunction. They

are: changing the tense of the word “agreed” in Paragraph 7 to

“agree”; adding in Paragraph 7(a) the phrase “or by check from

Defendants’ attorney’s escrow account”; and in Paragraph 16

changing the word “Defendants” to “the parties hereto,” the word

“Plaintiffs” to “any other party,” and the final use of the word

“Defendants” to “the Parties.”

* * * *

For the reasons set out above, I conclude that the

parties had — at the time they reported agreement to Judge Gold

— actually agreed to all material terms of the settlement. All

that was left was for the parties to reduce the oral agreement

into writing. Therefore, I proceed now consider whether to

enforce that settlement despite the absence of a written

agreement.

9 Defendants’ Counsel’s proposed changes may be found at ECF No. 28-2,

at 71.

10 Plaintiffs’ counsel wrote: “In response to Defendants’ counsel’s

proposed revisions, Plaintiffs’ counsel assented to, and incorporated, three

requested changes that were within the scope of the agreement or, in one

case, made mutual, a non-material provision regarding consultation with

counsel and non-inducement/reliance on representations and promises not

embodied in the document.”

B. The parties intended to be bound in the absence of a

written agreement.

Parties may freely enter into binding contracts

without memorializing their agreement in a fully executed

document. Winston v. Mediafare Ent. Corp., 777 F.2d 78, 80 (2d

Cir. 1985). Four factors guide the determination of whether the

parties intended to be bound in the absence of a document

executed by both sides:

(1) whether there has been an express reservation of the

right not to be bound in the absence of a writing; (2)

whether there has been partial performance of the

contract; (3) whether all of the terms of the alleged

contract have been agreed upon; and (4) whether the

agreement at issue is the type of contract that is

usually committed to writing.

Id. “No single factor is decisive, but each provides

significant guidance.” Ciaramella v. Reader’s Digest Ass’n, 131

F.3d 320, 323 (2d Cir. 1997).

In contesting the R&R’s ultimate conclusion – that the

settlement should be enforced – Defendants argue that five of

the R&R’s findings are erroneous. These findings were: (1) that

the parties made no express or implied reservation not to be

bound in the absence of a signed writing; (2) that the second

Winston factor does not weigh in either direction; (3) that the

parties agreed on all material terms of settlement; (4) that

Defendants are not contesting the form of collateral; and,

(5) that fundamental fairness favors enforcement. See Objs. to

R&R, ECF No. 31. None of these arguments has merit.

1. Whether the parties expressly reserved the right not

to be bound by an oral agreement.

This first Winston factor “is frequently the most

important.” Brown v. Cara, 420 F.3d 148, 154 (2d Cir. 2005).

Here, it weighs heavily in favor of enforcing the oral

agreement. At no point did either party expressly reserve the

right not to be bound by an oral agreement. When such

reservation appears in in a draft settlement agreement, courts

hesitate to disrupt the expressed intentions of the parties.

See, e.g., Ciaramella, 131 F.3d at 324 (declining to enforce

settlement agreement where draft document included clause

stating: “This Settlement Agreement and General Release shall

not become effective . . . until it is signed by [the

parties]”).

Neither the March nor the November Draft of the

Stipulated Consent Judgment & Permanent Injunction Order

contains such a provision. On the contrary, they both speak as

though they will be executed after a binding agreement has

already been formed. The November Draft, for example, says that

“Defendants agreed” — past tense — to pay Plaintiffs the amount

of Fifteen Thousand U.S. Dollars . . . .” November Draft ¶ 7

(emphasis added). This language is inconsistent with the idea

that no binding agreement will come into effect until a written

contract is signed. So, too, is Judge Gold’s minute entry

following the October 30 conference: he wrote that the parties

“have reached a settlement” and that, as a next step, they would

“submit a stipulation discontinuing the action.” Minute Entry

of Oct. 30, 2020 Conference, ECF No. 22. Again, the record

reveals no reservation of the right to be bound only by a signed

writing.

Defendants view the draft settlement agreement at

issue here as on all fours with Ciaramella. Not so. The draft

language here states that “[b]y their signatures and

acknowledgements below, the parties agree to be bound by the

terms of this Consent Judgment.” November Draft ¶ 19. That

clause does not expressly reserve the right not to be bound by

oral agreement. The Ciaramella contract contained a

substantially more explicit statement that “[t]his Settlement

Agreement and General Release shall not become effective until

it is signed by [the parties].” 131 F.3d at 324 (declining to

enforce settlement agreement). “The mere intention to commit

the agreement to writing will not prevent contract formation

prior to execution.” Winston, 777 F.2d at 80.

In addition, the unsigned document in this case is

unlike the ones that courts declined to enforce in Ciaramella,

Winston, and other cases, for the novel reason that it is not

just a settlement agreement. It served two functions: to

memorialize the settlement agreement, and to serve as a

permanent injunction. This provides a reason to expect that the

parties would need to execute a writing, notwithstanding the

fact that they had already agreed orally, namely, that a judge

would not be able to enter the injunction without seeing it. In

other words, the impetus for the written document emanated from

the Court’s needs rather than from any reservation of rights by

the parties.

2. Whether there has been partial performance of the

contract.

The second factor is whether there has been partial

performance of the contract. Neither party here performed any

aspect of the oral agreement affirmatively. Some courts

construe the parties ceasing to actively litigate the case based

on an apparent settlement as partial performance. See, e.g.,

Alvarez v. City of New York, 146 F. Supp. 2d 327, 336 (S.D.N.Y.

2001). The parties here did not resume the litigation in the

ordinary course. I agree with Judge Reyes’s conclusion that

this factor weighs in neither direction. See R&R 12.

3. Whether all the terms of the agreement have been

agreed.

The third factor looks to whether all terms of the

contract have been agreed. Put differently, this factor asks

whether there was “literally nothing left to negotiate.” R.G.

Grp., Inc. v. Horn & Hardart Co., 751 F.2d 69, 76 (2d Cir.

1984). I need not repeat my findings in Section A of this

order, explaining that the parties agreed on all material

terms — indeed, all material and immaterial terms save one (the

term about the after-acquired lien on bank accounts, vehicles,

and the like). Suffice to say that this factor, too, weighs

heavily in favor of enforcing the oral agreement.11

4. Whether the agreement is the type that would be

committed to writing.

The final factor, whether the agreement is the type

that is usually put into writing, weighs slightly against

enforcing the oral agreement. “Where, as here, the parties are

adversaries and the purpose of the agreement is to forestall

litigation, prudence strongly suggests that their agreement be

written in order to make it readily enforceable, and to avoid

still further litigation.” Winston, 777 F.2d at 83.

Under New York law, “settlements of any claim are

generally required to be in writing or, at a minimum, made on

the record in open court.” Ciaramella, 131 F.3d at 326. New

York Civil Practice Law and Rules § 2104 indicates that “[a]n

11 This factor obviously overlaps with, but is not identical to, my

“prior” question — i.e., prior to the Winston factor analysis — of whether

the parties agreed to all material terms and what those terms are. See

Section A, supra. The Winston factor recognizes that parties with “literally

nothing left to negotiate,” 777 F.2d at 82, have less incentive to expend the

effort to draw up a written agreement. (When Party A says “a haircut is

$20,” and Party B says “sounds good, let’s do it,” this factor recognizes the

unlikelihood that they mean to write up the agreement before being bound.)

This is conceptually distinct from the prior question of whether the parties

had a meeting of the minds and on what material terms.

agreement between parties or their attorneys relating to any

matter in an action, other than one made between counsel in open

court, is not binding upon a party unless it is in a writing

subscribed by him or his attorney or reduced to the form of an

order and entered.” The Second Circuit has observed that

“substantial compliance” with section 2104 was sufficient for

purposes of enforcing an oral agreement. See Monaghan v. SZS 33

Assocs., 73 F.3d 1276, 1283 (2d Cir. 1996).

“The complexity of the underlying agreement, however,

is an indication of whether the parties reasonably could have

expected to bind themselves orally.” In re Lehman Brothers

Holdings Inc., 739 F. App’x 55, 58 (2d Cir. 2018) . The

agreement here is relatively simple: The parties agreed to

terminate the litigation and settle for a modest amount to be

paid on a schedule of dates. There were certain added

complexities, as in the lien term, attorneys’ fees provisions,

and the like; ultimately, the Consent Judgment and Permanent

Injunction runs fourteen double-spaced pages. But these were

not so complicated that the parties couldn’t agree to them

orally in front of Judge Gold (as set forth above).

Defendants also argue that the Court should consider

an additional factor — fundamental fairness. To the extent the

notion of fundamental fairness forms part of the Winston test, I

conclude that fundamental fairness weighs in favor of enforcing

26

the oral agreement. The parties agreed in front of Judge Gold,

with no reservation. And Defendants’ argument that the lien

would attach only on default is both illogical and inconsistent

with the record here, for the reasons stated above.

On balance, then, the Winston factors and the totality

of the evidence leads to the conclusion that the oral agreement

should be enforced.

This case presents a useful reminder of why it is so

important for parties reaching an oral settlement agreement to

state the terms of that agreement clearly on the record before

departing a settlement conference. See Pierre v. Chase Inv.

Services Corp., 561 F. App’x 71, 72 (2d Cir. 2014) (“Announcing

the terms of a settlement agreement on the record in open court

memorializes critical litigation events, and serves a

“cautionary function” ensuring the parties' acceptance is

deliberate.”). Given the clarity of the record here, however,

the Court can divine the terms of the oral agreement that the

parties reached and intended to enforce. Those are the terms in

the written draft agreements, with the modest changes referred

to above. Accordingly, the defendants should be bound to their

agreement.

IV. Conclusion

For the foregoing reasons, the motion to enforce the

settlement is granted. The parties are ordered to sign and

submit a revised version of the Stipulated Consent Judgment and

Permanent Injunction Order, in both Microsoft Word and PDF

format, that conforms with this order by March 15, 2022.

SO ORDERED.

/s/ Eric Komitee

ERIC KOMITEE

United States District Judge

Dated: March 7, 2022

Brooklyn, New York