Offers of Compromise and Acceptance in New York

What Are Offers of Compromise and Acceptance?

Background

The purpose of CPLR § 3221 is to encourage settlements. (Zeitlin v. N.Y. Islanders Hockey Club, L.P. (2015) 49 Misc. 3d 511, 514.)

How to Structure the Motion

CPLR § 3221 states in part:

[A]t any time not later than ten days before trial, any party against whom a claim is asserted, and against whom a separate judgment may be taken, may serve upon the claimant a written offer to allow judgment to be taken against him for a sum or property or to the effect therein specified, with costs then accrued. If within ten days thereafter the claimant serves a written notice that he accepts the offer, either party may file the summons, complaint and offer, with proof of acceptance, and thereupon the clerk shall enter judgment accordingly. If the offer is not accepted and the claimant fails to obtain a more favorable judgment, he shall not recover costs from the time of the offer, but shall pay costs from that time. An offer of judgment shall not be made known to the jury. (Adone v. Paletto (2005) N.Y. Slip Op. 50196 citing CPLR § 3221.)

Role of The Court

Although the purpose of CPLR § 3221 is to encourage settlements, there is nothing in the statute suggesting that an unstated dismissal sanction was contemplated or intended. Neither does the statute permit a Court to affirmatively compel a claimant to accept a statutory offer of compromise. (Zeitlin v. N.Y. Islanders Hockey Club, L.P. (2015) 49 Misc. 3d 511, 514 citing Margulis v. Solomon & Berck Co. (1928) 223 A.D. 634, 635.)

Remedy for Non-Acceptance

“CPLR § 3221 provides its own remedy for a party's nonacceptance of such offer by rendering said party liable for any costs accrued subsequent to the time of the offer if the party ultimately fails to obtain a more favorable judgment.” (Show Lain Cheng v. Young (2008) 25 Misc.3d 1227, 2008 WL 7108505,1, 7 [aff'd,60 A.D.3d 989, 878 N.Y.S.2d 367.]) CPLR § 3221 is ostensibly applicable, by its terms, to all offers of compromise, without reference to specific monetary amounts, and expressly limits the consequences of non-acceptance to the payment of costs. If the legislature intended to confer upon a Court the power to unilaterally compel acceptance of a compromise offer, or to permit it to dismiss an action based on a claimant's rejection of an offer, it could, and presumably would, have stated as much. (Zeitlin, supra, 49 Misc. 3d at 515.)

Offers Inadmissible as Proof Of Wrongdoing

CPLR § 4547 provides generally that evidence of any conduct or statement made during compromise negotiations shall be inadmissible in court.

CPLR § 4547 codifies the long-established common-law rule in New York that “the settlement of a disputed claim or an offer to settle . . . is inadmissible to prove . . . the liability of the alleged wrongdoer.” (Andresen v Kirschner (2001) 190 Misc 2d 779, 781 [quoting Alexander, Practice Commentaries, McKinney's Cons Laws of NY, Book 7B, CPLR 4547, 2001-2002 Interim Pocket Part, at 105.)

Before CPLR § 4547 was passed in 1998, “[t]he traditional rule in New York was that unqualified statements of fact made during settlement negotiations were admissible against the party who made the statements.” (Miller v. Sanchez (2004) 6 Misc. 3d 479, 484 citing Alexander, Practice Commentaries, McKinney's Cons Laws of NY, Book 7B, CPLR 4547, 2004 Pocket Part, at 141; see also Reid & Priest L.L.P. v Realty Asset Group, Ltd. (1998) 250 A.D.2d 380, 380; Bellino v Bellino Constr. Co. (1980) 75 A.D.2d 630, 630-631.)

“This rule is founded upon public policy, and with a view of encouraging and facilitating the settlement of legal controversies by compromise, which object is supposed to be obstructed by the fear entertained by litigants that such a negotiation may be converted into a trap to inveigle the unwary into hazardous admissions. The law, therefore, excludes such admissions as appear to have been made tentatively or hypothetically, but admits those only which concede the existence of a fact.” (Bigelow-Sanford, Inc. v. Specialized Commercial Floors of Rochester, Inc. (1980) 77 A.D.2d 464, 465-66.)

The Court’s Decision

Here are a few examples of how courts have ruled:

“If [a] court were to enforce a previously rejected offer of compromise three months after it was rejected it would breach the provisions of CPLR § 3221 by extending the ten day rule contained within it without any consent of both parties. Disregarding the provisions of CPLR § 3221 would constitute a usurpation of the legislative role in rewriting the statute. But more importantly, it would create chaos within the court system where after a settlement on a case was reached, counsel for the plaintiff would be allowed to add terms such as costs and disbursements and perhaps even interest.” (Adone v. Paletto, 2005 N.Y. Slip Op. 50196 [holding that “the plaintiffs' motion for a judgment to enforce the offer to compromise is denied.”)

In Alternatives Federal Credit Union v. Olbios the court held that letters in which the defendant openly acknowledged its responsibility for indemnifying plaintiff for the cost of the remediation effort to be outside the scope of CPLR § 4547. The letters were not offers to settle or compromise any claim with respect to the issue of liability but rather were written to explain defendant's delay in accepting responsibility for the cost of clean up and only disputed the cost. (Alternatives Federal Credit Union v. Olbios, LLC (2005) 14 A.D.3d 779, 787.)

Documents for Offers of Compromise and Acceptance in New York

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Jason Leone as Parent and Natural Guardian of B.L., an Infant v. Heritage Christian Services Child Care Llc document preview

AFFIRMATION Attorney's Affirmation - Infant Compromise - Attorney's Affirm…

4 pages

FILED: MONROE COUNTY CLERK 04/30/2024 10:56 AM INDEX NO. E2024007202 NYSCEF DOC. NO. 5 RECEIVED NYSCEF: 04/30/2024 MONROE COUNTY CLERK’S OFFICE THIS IS NOT A BILL. THIS IS YOUR RECEIPT. Receipt # 3846291 Book Page CIVIL Re…

Case Name Jason Leone as Parent and Natural Guardian of B.L., an Infant v. Heritage …