Letters Exchanged Between Developer and Architectural Review Board Insufficient to Constitute Enforceable Settlement Agreement

May 11, 2020

In Matter of Pittsford Canalside Props., LLC v Village of Pittsford Zoning Bd. of Appeals, et al., the Fourth Department held that settlement correspondence between a development firm, Pittsford Canalside Properties, LLC (“PCP” or “Petitioner”), and the Village of Pittsford Architectural Preservation and Review Board (the “ARB”), was not an enforceable settlement agreement.

PCP owned property located within the Village of Pittsford (the “Village”), on which it sought “to construct a multiple-dwelling building community.”  In 2014, PCP unsuccessfully applied to the ARB for a certificate of approval for its proposed construction.  After the ARB issued its denial, the parties engaged in settlement discussions concerning various issues, including the project’s compliance with certain provisions of the Village Code.  These settlement discussions were evidenced by “correspondences and enclosures” exchanged between the parties (the “letters”).  However, the agreed upon terms were never memorialized into a formal settlement document.  When the ARB subsequently refused to issue a certificate of approval, PCP brought an Article 78 proceeding seeking to annul the ARB’s denial.  In support of its petition, PCP argued that the terms of the letters constituted an enforceable settlement agreement.

Following the lower court’s first order directing the ARB to reconsider Petitioner’s application in accordance with the terms of the letters, the ARB again refused to issue a certificate of approval.  Thereafter, the lower court issued a second order directing the ARB to issue Petitioner a certificate of approval, “subject to” the ARB’s normal review process.  The ARB and other interested parties appealed.

Upon appeal, the Fourth Department reversed, holding that the letters did not constitute an enforceable settlement agreement.  Citing cases from the Second and Third Departments, the Court stated that “‘settlement-related writings . . . will not be found to have created a binding agreement if they expressly anticipate a subsequent writing that is to officially memorialize the existence of a settlement agreement and set forth all of its material terms’ (Matter of George W. & Dacie Clements Agric. Research Inst., Inc. v Green, 130 AD3d 1422, 1423-1424 [3d Dept 2015]; see Little v County of Nassau, 148 AD3d 797, 798 [2d Dept 2017][; see also CPLR § 2104]).”  Because the letters exchanged between the parties here “did not contain all the material terms of the settlement,” they were nothing more than “an agreement to agree.”  Any formal settlement was still conditioned upon the ARB’s review of newly submitted documents by Petitioner.  Further, the Court held that the lower court’s directives to the ARB as to what it could or could not consider in rendering its determination were “impermissible intrusions into [the ARB’s] administrative domain,” which should be afforded a broad degree of deference.

When engaging in settlement discussions with administrative agencies (or with any adversary), be aware that no settlement agreement is enforceable unless it contains all material terms in a memorialized writing.  Informal discussions or communications will not suffice.