Gromulat v. Wynn

Background

Martin A. Gromulat sued Cynthia Wynn, Kelly Darrow, Kathy Pandekakes, and Human Development Services of Westchester (HDSW). He alleged that HDSW subjected him to disability discrimination and unlawfully terminated him on November 26, 2018, in violation of the Rehabilitation Act, the Americans with Disabilities Act, the Family and Medical Leave Act, and the New York State Human Rights Law.

Gromulat and HDSW participated in mediation conducted by the Equal Employment Opportunity Commission on December 5, 2019. Gromulat was represented by attorney V. Jonas Urba. During the mediation, Gromulat and HDSW signed a confidential negotiated term sheet. It stated that the matter was settled and that Gromulat would not file a lawsuit concerning the discrimination charge. HDSW agreed to pay $27,500, including attorney’s fees and costs, and to provide a neutral employment reference. Gromulat agreed to keep the settlement confidential.

The term sheet provided for a later, more detailed settlement agreement. HDSW sent a draft, and the parties negotiated its language. Gromulat later emailed that he was revoking his acceptance and would take no further action until he heard from the mediator about his concerns. The parties gave differing accounts of whether Gromulat had signed a later agreement, whether the parties had agreed about his continued access to HDSW’s offices, and what happened to the settlement payment after Gromulat ended his relationship with Mr. Urba.

Legal standard

The court explained that a settlement agreement is a contract governed by general contract principles. A preliminary agreement that anticipates a later formal document may nevertheless be binding. The court applied four factors: whether the parties expressly reserved the right not to be bound without a final writing; whether there was partial performance; whether the parties agreed to all material terms; and whether the type of agreement is usually put in writing.

Analysis

The court held that the term sheet was a binding preliminary agreement. First, and most importantly, the term sheet did not expressly reserve a right not to be bound until a final signed writing. Instead, it stated that the parties agreed the matter was settled. Second, HDSW partly performed by sending a draft settlement agreement to Gromulat and his attorney, although the court gave this factor only slight weight because no other part of the term sheet had been performed.

Third, the court found that the parties had agreed on all material settlement terms. It rejected Gromulat’s argument that the parties’ disagreement about his access to HDSW’s offices prevented enforcement. The court stated that his allegations and emails showed that he understood the term sheet to be binding and that his changing positions suggested a change of heart after signing it. A later change of heart did not alter the term sheet’s binding nature.

Fourth, the court found that the fact that settlement agreements are typically put into formal writings weighed slightly against enforcement. The court nevertheless concluded that three of the four factors favored enforcement, including the most important factor.

Ruling

The court granted the defendants’ motion to enforce the settlement agreement and dismiss the second amended complaint. It dismissed Gromulat’s claims with prejudice and directed the parties to perform the agreement. The Clerk was instructed to terminate the motion and close the case.

The defendants also asked the court to rule that they could make the settlement payment to Gromulat and his former attorney as described in the term sheet. The court denied that request. It stated that, if the parties could not resolve where the payment should be sent and how to address Mr. Urba’s lien, they could seek relief in an appropriate venue, but not in this court.