Fernandez et al v. HR Parking Inc et al

Filing 215

OPINION AND ORDER: re: 192 MOTION for Settlement filed by Open Road of Manhattan, LLC, Rodman Ryan, Michael Morais. All four Winston factors weigh against enforcement, and thus it is clear that the parties intended to be bound only by a written agreement. Accordingly, defendants' motion to enforce the "Final Version" of the settlement agreement (Docket # 192) is denied. SO ORDERED. (Signed by Magistrate Judge Gabriel W. Gorenstein on 12/28/2021) (ama)

Case 1:16-cv-02762-GWG Document 215 Filed 12/28/21 Page 1 of 11
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
---------------------------------------------------------------X
BRYAN FERNANDEZ, et al.,
:
Plaintiffs,
-v.HR PARKING INC., et al.,

:

16 Civ. 2762 (GWG)

:

OPINION & ORDER

:

Defendants.
:
---------------------------------------------------------------X
GABRIEL W. GORENSTEIN, United States Magistrate Judge
I.

BACKGROUND
Before the Court is defendants’ motion to enforce a purported settlement of this action. 1

The complaint in this case was filed by current and former employees of HR Parking Inc., (“HR
Parking”), naming HR Parking and its owner, Nelson Rodriguez (collectively, the “HR Parking
Defendants”), and three other defendants: Open Road Audi of Manhattan, Michael Morais, and
Rodman Ryan (collectively, the “Open Road Defendants”). Plaintiffs claim that defendants
failed to pay them overtime as required by the Fair Labor Standards Act, 29 U.S.C. §§ 201 et
seq. (“FLSA”), and the New York Labor Law, §§ 190 et seq. See Complaint, filed Apr. 13, 2016
(Docket # 1).
Trial was scheduled to begin on Monday, June 21, 2021. See Order of May 28, 2021
(Docket # 157). On the Thursday beforehand, plaintiffs’ attorney, John M. Gurrieri, filed a letter

1

Motion to Enforce Settlement Agreement, filed Sept. 21, 2021 (Docket # 192) (“Def.
Mot.”); Affirmation of Eric Harrison in Support, filed Sept. 21, 2021 (Docket # 193) (“Harrison
Aff.”); Memorandum of Law in Support, filed Sept. 21, 2021 (Docket # 194) (“Def. Mem.”);
Proposed Order, filed Sept. 21, 2021 (Docket # 195); Affirmation of John M. Gurrieri in
Opposition, filed Sept. 24, 2021 (Docket # 196) (“Gurrieri Aff.”); Memorandum of Law in
Opposition, filed Sept. 24, 2021 (Docket # 197) (“Pl. Mem.”).

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to the Court which stated: “The plaintiffs have settled in principle with all defendants. The
plaintiffs, with defendants’ consent, therefore move to adjourn the June 21, 2021 trial. The
parties also seek three weeks to submit a written settlement agreement and a fairness letter to the
Court seeking approval of the agreement. The parties require time to draft the settlement
agreement, execute it, and draft a fairness letter.” Letter from John M. Gurrieri, filed June 17,
2021 (Docket # 176) (“June 17 Letter”). Based on this representation, the Court cancelled the
June 21 trial and directed the parties to submit a fairness letter pursuant to Cheeks v. Freeport
Pancake House, Inc., 796 F.3d 199 (2d Cir. 2015), by July 8, 2021, see Order of June 18, 2021
(Docket # 177), a deadline the Court later extended to July 30, 2021, see Order of July 23, 2021
(Docket # 181).
On the issue of whether the parties had actually reached an agreement on the terms of a
settlement, the record presented in the defendants’ motion contains no information regarding
what discussions took place before the June 17 Letter was sent. In the period after the letter was
sent, several draft settlement agreements were circulated among the parties. Gurrieri emailed a
draft settlement agreement to defendants’ counsel on June 22, 2021. See Harrison Aff. ¶ 4; id.,
Ex. A at *2. The draft agreement delineated the defendants’ payment obligations and included a
clause under which plaintiffs would release the defendants for any claims relating to wages.
Harrison Aff., Ex. A at *4-17. The parties then exchanged various drafts with minor changes.
See Harrison Aff., Ex. B at 1; id., Ex. C at 9-10. On June 30, a change was incorporated into
what all attorneys called the “Final Version” of the settlement agreement. See id., Ex. C at 9-10.
On July 3, counsel for the Open Road Defendants confirmed that the “Final Version” was
“acceptable.” Id. at 9. On July 5, counsel for the HR Parking Defendants wrote Gurrieri:
“please advise if [the ‘Final Version’ is] acceptable to you, and we will send to our client for

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execution.” Id. at 8. On July 6, Gurrieri replied, “Looks good. I will start getting signatures as
well.” Id. at 7. On July 7, Gurrieri added, “My clients are all scheduled to come in today and
tomorrow to sign the agreement.” Id. at 6. On July 7, Gurrieri made some other changes and on
July 8, Gurrieri emailed a new version of the settlement agreement reflecting these changes. See
id. at 1-4. All defendants signed this document. See id., Ex. D at 13-14. All plaintiffs, however,
did not. See Letter from John M. Gurrieri, filed July 29, 2021 (Docket # 182).
On July 29, 2021, Gurrieri filed a letter to the Court in which he stated that “the parties
cannot submit the settlement agreement and fairness letter . . . because two plaintiffs are refusing
to sign the settlement agreement.” Id. Gurrieri has since explained that those two plaintiffs are
Bryan Fernandez and Julio Diaz. See Gurrieri Aff. ¶ 3. According to Gurrieri, “Mr. Fernandez
is unwilling to sign because he does not agree with paragraphs 1-2, which outline[] payment”
and “Mr. Diaz is unwilling to sign because he is not willing to agree to the release because he
believes he has a retaliation claim against . . . defendant Nelson Rodriguez.” Id.
On July 30, 2021, the Court ordered Gurrieri to submit a sworn statement to defendants
and the Court addressing whether he had actual authority to settle on his clients’ behalf. See
Order of July 30, 2021 (Docket # 183). 2 On August 3, 2021, Gurrieri filed an affirmation in
which he stated: “On June 17, 2021, when I agreed to settle this action with defendants, and then
reported the settlement in principle to the Court, I had actual authority granted from all five
plaintiffs to settle this action for the amounts agreed to and currently memorialized in the

2

Whether an attorney was given actual authority to settle a case is a discoverable fact
not subject to privilege since the giving of settlement authority is not for the purpose of rendering
legal advice and “is never intended to be confidential.” Polk v. Sherwin-Williams, Co., 2018
WL 2538967, at *3 (D. Conn. June 4, 2018) (citation omitted); accord Rankin v. City of Niagara
Falls, 2012 WL 2847633, at *1 n.3 (W.D.N.Y. June 13, 2012) (attorney-client privilege is
“waived in the context of a dispute over settlement authority” (quotation omitted)).

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partially executed settlement agreement.” Affirmation of John M. Gurrieri, filed Aug. 3, 2021
(Docket # 184) (“Aug. 3 Aff.”). The affidavit did not indicate that counsel had actual authority
to agree to a settlement that had any particular non- monetary terms. See id. 3
II.

DISCUSSION
Under New York law, a contract may be formed absent memorialization in a fully

executed document because “the mere intention to commit the agreement to writing will not
prevent contract formation prior to execution.” Winston v. Mediafare Ent. Corp., 777 F.2d 78,
80 (2d Cir. 1985) (citations omitted). “On the other hand, if either party 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.” Id. (citing R.G.
Grp., Inc. v. Horn & Hardart Co., 751 F.2d 69, 74 (2d Cir. 1984)). Ultimately, “it is the intent of
the parties that will determine the time of contract formation.” Id.
To “determine whether the parties intended to be bound in the absence of a document
executed by both sides,” a court considers four factors: “(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

3

After the parties filed their motion papers, the Court held a conference to obtain “a
clear[er] factual narrative of what took place between the parties before the filing of the [June 17
Letter] on which the Court relied when adjourning the jury trial.” Order of October 18, 2021
(Docket # 198); Order of October 21, 2021 (Docket # 211). Gurrieri was present for the
conference, along with counsel for the Open Road Defendants and counsel for the HR Parking
Defendants. At the conference, the Court explained that defendants had failed to come forward
with evidence from which the Court could justify a conclusion that an enforceable agreement had
been reached and indicated it would schedule the case for trial. See Minute Entry of October 22,
2021.

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committed to writing.” Id. (citing R.G. Grp., 751 F.2d at 75-77; Restatement (Second) of
Contracts § 27 cmt. c (1981)).
We begin by noting that if the dollar amounts of the settlement were the only material
terms, the Court would have no trouble concluding that there had been an agreement as to those
amounts in light of Gurrieri’s actual authority to agree to the amounts. It is undisputed, however,
that the non-monetary terms of the contract, including the release provisions, are material terms.
Thus, the only question before us is whether the entirety of the proposed “Final Version” of the
settlement agreement, as agreed to by the attorneys, is enforceable.
A.

Express Reservation

“The first factor is the most important.” Scheinmann v. Dykstra, 2017 WL 1422972, at
*4 (S.D.N.Y. Apr. 21, 2017) (internal quotation omitted) (collecting cases). “‘[I]ndications in
the proposed settlement agreement that the parties did not intend to bind themselves until the
settlement had been signed’ must be given ‘considerable weight.’” Attestor Value Master Fund
v. Republic of Argentina, 940 F.3d 825, 830 (2d Cir. 2019) (quoting Ciaramella v. Reader’s
Digest Ass’n, 131 F.3d 320, 324 (2d Cir. 1997)). Such indications include (but are not limited
to) merger clauses, provisions tying the effectiveness of the agreement or obligations under it to
the date of the document’s execution, and clauses wherein a party represents that he has
consulted with counsel prior to signing. See, e.g., Ciaramella, 131 F.3d at 324-25; Attestor
Value Master Fund, 940 F.3d at 831.
Such an intent can also be illustrated by “the [parties’] correspondence.” Winston, 777
F.2d at 81; see also Pretzel Time, Inc. v. Pretzel Int’l, Inc., 2000 WL 1510077, at *3 (S.D.N.Y.
Oct. 10, 2000) (“Courts look both to the oral agreement itself and to the parties’ subsequent
communications to determine whether there was an express reservation of the right not to be

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bound.”); Lion-Aire Corp. v. Lion Air Installation, Inc., 2020 WL 3868755, at *3-4 (E.D.N.Y.
July 8, 2020) (“While there is nothing in the Final Draft indicating that either ‘party expressly
reserved the right not to be bound in the absence of a writing’ and formal execution, the Court
finds that ‘the words and conduct of the parties indicate that there was an implied reservation of
such a right.’” (quoting Sprint Commc’ns Co. L.P. v. Jasco Trading, Inc., 5 F. Supp. 3d 323, 332
(E.D.N.Y. 2014))).
Courts have repeatedly found express reservations when parties refer to agreements “in
principle,” as was true here. Marett v. Metro. Trans. Auth., 2021 WL 961760, at *3 (S.D.N.Y.
Mar. 15, 2021); Neris v. R.J.D. Constr., Inc., 2021 WL 4443896, at *4 (E.D.N.Y. Sept. 28,
2021). This is because “[i]t is a convention (although not a firm rule) in contract negotiation to
use the words ‘agreement in principle’ to describe the circumstance wherein the negotiations
have reached a common understanding on fundamental terms of a proposed contract, but have
not resolved all details and have not made a legally binding commitment.” Henchman’s Leasing
Corp. v. Condren, 1989 WL 11440, at *4 (S.D.N.Y. Feb. 8, 1989). In contrast, where parties
indicate “that the settlement’s reduction to writing [is] only a formality,” this factor favors
enforcement. Powell v. Omnicom, 497 F.3d 124, 130 (2d Cir. 2007).
Here, the parties’ draft agreement includes several provisions indicating that the parties
did not intend to be bound prior to the document’s execution. First, the documents states:
“NOW, THEREFORE, in consideration of the mutual covenants and promises herein contained
and other good and valuable consideration, receipt of which is hereby acknowledged, it is hereby
agreed as follows.” Harrison Aff., Ex. D at 1 (emphasis added). As explained in Ciaramella, use
of language such as “hereby” shows that “only the terms of the settlement agreement, and not
any preexisting pact, would legally bind the parties.” 131 F.3d at 324. Second, like in

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Ciaramella, the draft agreement includes a provision wherein plaintiffs represent that they were
provided an opportunity to discuss the agreement with counsel and that they “fully understand
and agree to all of its terms.” Harrison Aff., Ex. D at 10. Plaintiffs’ signatures, therefore, were
“meant to signify [their] voluntary and informed consent to the terms and obligations of the
agreement. By not signing[, they] demonstrated that [they] withheld such consent.” Ciaramella,
131 F.3d at 325. Third, the contract contains a provision prohibiting modifications except those
in a signed writing. See Harrison Aff., Ex. D at 9. While less compelling than a merger clause, a
prohibition on oral modifications indicates that a signed writing was contemplated for the
underlying contract of which it is a part. See Nieves v. Cmty. Choice Health Plan of
Westchester, Inc., 2011 WL 5533328, at *5 (S.D.N.Y. Aug 31, 2011). Finally, the
“counterparts” provision in the draft agreement states that “[t]o signify their agreement to the
terms of this Agreement and Release, the parties have executed this Agreement on the date set
forth opposite their signatures, which appear below.” Harrison Aff., Ex. D at 10 (emphasis
added). This clause’s explicit reference to the agreement’s execution strongly indicates that the
parties did not intend to be bound in the absence of such execution. See Nieves, 2011 WL
5533328, at *5.
The parties’ correspondence only bolsters this conclusion. The parties referred to the
document as a “proposed” settlement agreement. Harrison Aff., Ex. B at 1. More significantly,
both Gurrieri and counsel for the HR Parking Defendants referred to the need to send the
document to their clients for execution, see id., Ex. C at 6-8, which indicates that the parties
treated execution as a requirement rather than a formality. The parties’ correspondence with the
Court supports this inference. In the June 17 Letter, Gurrieri described the agreement as a
settlement “in principle” and explicitly referred to the need to “draft the settlement agreement

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[and] execute it.” June 17 Letter at 1. As explained in Henchman’s Leasing, the phrase
“agreement in principle” does not typically refer to “a legally binding commitment.” 1989 WL
11440, at *4. And the June 17 Letter’s explicit reference not merely to drafting a writing
memorializing the agreed-upon terms but to executing that document further reinforces the
conclusion that the parties did not intend to be bound prior to and in the absence of such
execution. Accordingly, the first Winston factor favors non-enforcement.
B.

Partial Performance

None of the terms of the contract, such as making payments or signing releases, were
performed. However, the parties’ joint letter to this Court representing that the matter was
settled “in principle” did seek an adjournment of the trial, which was granted by the Court. See
June 17 Letter at 1; Order of June 18, 2021 (Docket # 177). At least one court has held that
seeking to adjourn a trial constitutes partial performance. See Junjiang Ji v. Jling Inc., 2019 WL
1441130, at *12 (E.D.N.Y. Mar. 31, 2019). We agree that seeking an adjournment could support
the notion that the parties thought they had reached an enforceable agreement. However, any
such adjournment would be relevant only to the agreement “in principle” described in the June
17 Letter. It has no bearing on whether an enforceable agreement was reached on or around July
8, with respect to the “Final Version” of the settlement agreement. Therefore, this factor also
favors non-enforcement.
C.

Agreement on All Terms

The third factor considers “whether there was ‘literally nothing left to negotiate.’”
Winston, 777 F.2d at 82 (quoting R.G. Grp., 751 F.2d at 76); accord Attestor Value Master Fund,
940 F.3d at 832. Non-agreement on material terms, of course, weighs against enforcement. See
Ciaramella, 131 F.3d at 325. But “even ‘minor’ or ‘technical’ changes arising from negotiations

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over the written language of an agreement can weigh against a conclusion that the parties
intended to be bound absent a formal writing.” Powell, 497 F.3d at 130 (quoting Winston, 777
F.2d at 82-83 (“It is not for the court to determine retrospectively that at some point in the
evolution of a formal document that the changes being discussed became so ‘minor’ or
‘technical’ that the contract was binding despite the parties’ unwillingness to have it executed
and delivered. For the court to do so would deprive the parties of their right to enter into only
the exact contract they desired.”)). “Such [‘minor’ or ‘technical’] changes are relevant, however,
only if they show that there were points remaining to be negotiated such that the parties would
not wish to be bound until they synthesized a writing ‘satisfactory to both sides in every
respect.’” Id. (quoting Winston, 777 F.2d at 83).
Here, the parties’ emails reflect that following the June 17 Letter, the parties continued to
make changes to the draft agreement. By July 8, agreement was reached between counsel on all
terms except two: (1) the payment provisions as to plaintiff Bryan Fernandez, to which
Fernandez objected; and (2) the release provision, to which plaintiff Julio Diaz objected. See
Harrison Aff., Ex. C at 1-10; Gurrieri Aff. ¶¶ 3-4. Gurrieri has affirmed that he had “actual
authority granted from all five plaintiffs to settle this action for the amounts agreed to.” Aug. 3
Aff. ¶ 2. Thus, we conclude that despite Fernandez having “the legal equivalent of buyer’s
remorse” with respect to the payment provisions, Powell, 497 F.3d at 127, agreement had been
reached as to the monetary terms. The release provision, however, is a different story. There is
nothing in Gurrieri’s affirmation indicating that he was given authority to settle with respect to
the non-monetary terms. See Aug. 3 Aff. Thus, there was no agreement as to the release
provision. The defendants made clear at the October 22 conference that no defendant will agree
to a settlement that does not include the release provision and that does not include all the parties

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in this case. Accordingly, we conclude that the release provision is of sufficient importance
“such that the parties would not wish to be bound” in the absence of a signed writing expressing
agreement as to that term. Powell, 497 F.3d at 130. Thus, the third factor weighs against
enforcement.
D.

Usually in Writing

The last factor considers “whether the agreement at issue . . . was the type of contract that
[is] usually put in writing.” Winston, 777 F.2d at 83. The Second Circuit has suggested that a
sufficiently simple settlement might not contemplate a later writing. See, e.g., id. But it is the
usual practice to either put complex settlements on the record or reduce them to a writing. Some
courts have noted that in FLSA cases such as this one, “the fourth factor weighs heavily against
enforcement because agreements to settle FLSA claims are virtually always memorialized in
writing.” Junjiang Ju, 2019 WL 1441130, at *12 (citing Cheeks, 796 F.3d 199); accord Neris,
2021 WL 4443896, at *7 (collecting cases). As one court noted, “[i]n light of the Cheeks
requirement that . . . the Court . . . approve any final settlement agreement, all
parties . . . necessarily contemplated that a written agreement would be drafted, executed and
approved by the Court.” Junjiang Ji, 2019 WL 1441130, at *12. That the parties believed this to
be the case is further demonstrated by the efforts all parties made to draft the settlement
agreement.
III.

CONCLUSION
All four Winston factors weigh against enforcement, and thus it is clear that the parties

intended to be bound only by a written agreement. Accordingly, defendants’ motion to enforce
the “Final Version” of the settlement agreement (Docket # 192) is denied.

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SO ORDERED.
Dated December 28, 2021
New York, New York