Voiding a Stipulation of Settlement – Not as Simple as Changing Your Mind

April 29, 2020

Stipulations of settlement often serve as the objective in Surrogate’s Court litigation, ending disputes and the ongoing expense of controversy. Towards that end, stipulations of settlement, while sometimes the subject of 20-20 hindsight by a party, are generally found enforceable. Indeed, the Court of Appeals has recognized that “[s]tipulations of settlement are favored by the courts and not lightly cast aside…Only where there is cause sufficient to invalidate a contract, such as fraud, collusion, mistake or accident, will a party be relieved from the consequences of a stipulation made during litigation.” Hallock v. State of New York, 64 NY2d 224 (1984), citing Matter Dolgin Eldert Corp., 31 NY2d 1, 10; Matter of Frutiger, 29 NY2d 143, 149-150.

Within this context, the New York County, Surrogate’s Court, in In re Hassine, addressed a motion to vacate two pre-trial stipulations — a Joint Stipulation of Undisputed Facts and a Joint Statement of Issues (the “Stipulations”) — entered into by the movants’ prior counsel. The motion was made by the sole residuary beneficiaries of the estate during the course of contested consolidated proceedings for the settlement of the executor’s account, and to remove the executor and appoint the residuary beneficiaries as successor co-executors of the decedent’s estate.

In support of their applications, the movants asserted that the subject Stipulations should be vacated on the grounds that (1) they were the result of a mistake by prior counsel; and (2) prior counsel lacked the authority to enter the agreements. Specifically, the movants claimed that when the executor’s counsel first circulated drafts of the Stipulations, they had expressed their disagreement with some of the terms to their prior attorney, who had long represented them, and they believed that he was editing the agreements accordingly. They further asserted that after their lawyer unexpectedly left his firm, movants were not aware that the attorneys who took over the case had submitted the unedited versions of the Stipulations to the Court.

Citing the opinion in Matter of Frutiger, supra, the Court observed that a stipulation will not be set aside without a showing of good cause therefor, such as fraud, collusion or mistake. Within this context, and based on the record, the Court concluded that the movants had failed to demonstrate that any mistake had been made by prior counsel, no less identify what mistakes they claim were made. Rather, they essentially asserted that there was a miscommunication between them and the attorneys at prior counsel’s office, which, according to the Court, could have been remedied or avoided.

Further, the Court held that the movants had failed to establish that the prior firm was without authority to enter into the Stipulations. The Court noted that in executing the Stipulations, the prior firm was exercising its judgment as to the content of the agreements, which counsel was expectedly required to do in managing the pending proceedings. In view thereof, the Court held that no basis existed to vacate the Stipulations.