Fernandez v. HR Parking Inc
- Gabriel Gorenstein
- 1:16-cv-02762
- U.S. District Court · Southern District of New York
- 11
In Fernandez v. HR Parking, Judge Gorenstein denied defendants’ motion to enforce a proposed settlement because the parties intended to be bound only by a signed writing.
The ruling affected the defendants’ effort to enforce the proposed settlement and the plaintiffs, including Bryan Fernandez and Julio Diaz, who had not signed or agreed to all of its terms.
What happened
Fernandez v. HR Parking involved current and former HR Parking employees’ claims that defendants failed to pay overtime under federal and New York law. Before trial, the parties reported a settlement “in principle,” but two plaintiffs—Bryan Fernandez and Julio Diaz—did not sign the later proposed agreement.
The court applied New York contract law and examined whether the parties intended to be bound before signing a written agreement. It found that all four factors weighed against enforcement: the agreement and correspondence indicated that signatures were required, no settlement terms had been performed, the parties had not agreed on the release provision, and this type of settlement is ordinarily put in writing.
Judge Gorenstein denied defendants’ motion to enforce the “Final Version” of the settlement agreement. The opinion does not state that the motion was denied with or without prejudice.
The detailed version
- Fernandez v. HR Parking Inc · No. 1:16-cv-02762
- Gabriel Gorenstein
- Dec. 28, 2021
Background
The plaintiffs were current and former employees of HR Parking Inc. They sued HR Parking Inc., Nelson Rodriguez, Open Road Audi of Manhattan, Michael Morais, and Rodman Ryan, claiming that the defendants failed to pay overtime required by the Fair Labor Standards Act and the New York Labor Law.
Trial was scheduled for June 21, 2021. Shortly before trial, plaintiffs’ attorney, John M. Gurrieri, told the court that the parties had reached a settlement “in principle” and needed time to prepare, sign, and submit a written settlement agreement and a fairness letter for court approval. The court canceled the trial and set deadlines for those materials.
The parties exchanged several drafts. All defendants signed the version circulated on July 8, 2021, but not all plaintiffs did so. Gurrieri later told the court that Bryan Fernandez objected to the payment provisions and Julio Diaz objected to the release provision. Gurrieri stated that he had actual authority to settle for the monetary amounts agreed to, but his statement did not say that he had authority to agree to particular non-monetary terms.
Legal standard
Under New York law, parties can sometimes form a contract before signing a final written document. The question is whether they intended to be legally bound before signing. Courts consider four factors from Winston v. Mediafare Entertainment Corp.:
- Whether either side expressly reserved the right not to be bound without a written agreement.
- Whether either side partly performed the agreement.
- Whether the parties agreed on all terms.
- Whether the type of agreement is usually put in writing.
The court explained that the first factor is the most important. It also treated the payment terms and release provisions as material terms of the proposed settlement.
Court’s analysis
Express reservation. The draft agreement used language indicating that the parties would be bound by the written agreement itself. It included provisions referring to the parties’ execution of the agreement, requiring signatures for changes, and stating that the parties had reviewed and agreed to its terms. The correspondence also referred to the document as a proposed agreement and discussed sending it to the clients for execution. The June 17 letter described the settlement as being “in principle” and said that the parties needed to draft and execute a settlement agreement. The court concluded that these facts showed the parties did not intend to be bound before execution.
Partial performance. No settlement payments had been made and no releases had been signed. The parties had sought an adjournment of the trial based on their representation that the matter was settled “in principle,” which could support finding partial performance of that preliminary arrangement. But the court found that the adjournment did not establish performance of the later “Final Version” of the settlement agreement.
Agreement on all terms. The court found that the attorneys had reached agreement on the monetary terms, including the amounts payable to Fernandez, because Gurrieri had stated that he had authority to settle for those amounts. The court found no agreement, however, on the release provision. Gurrieri’s statement did not establish authority to settle the non-monetary terms, and the defendants said they would not accept a settlement without the release provision and all parties included. Because a material term remained unresolved, this factor weighed against enforcement.
Type of agreement usually put in writing. The court found that settlements of Fair Labor Standards Act claims are ordinarily written and submitted for court approval. The parties’ efforts to draft and execute an agreement also showed that they contemplated a written document.
Disposition
All four factors weighed against enforcing the proposed settlement. The court concluded that the parties intended to be bound only by a written agreement. Judge Gabriel W. Gorenstein therefore denied defendants’ motion to enforce the “Final Version” of the settlement agreement, docket number 192. The opinion does not state that the denial was with or without prejudice.
Read the full 11-page opinion on CourtListener, the free public archive maintained by the Free Law Project.