July 14th, 2021

What is a Signature? (Does your unsigned email count?)

We lawyers love, love, love our formality, oft times filling pages with pretentious legalese. I’m sure that wax seals and red ribbons were invented by lawyers, to make doubly, triply sure that everything was authentic. And redundant.

And when seals and ribbons went by the wayside, wet ink signatures became the standard-bearer of authenticity.

Last week the Appellate Division (First Department) confronted the formality of signatures regarding a settlement. The court sought to answer a question: If lawyers agree to a settlement via our now ubiquitous email, but use a standard signature block instead of retyping their names, is a settlement valid?

In other words, what kind of seals and red ribbons do we now need?

While at first blush this looks like a small esoteric question of law regarding the informality of email and the courts’ respect for stipulations, it has the potential to carry over to a thousand different aspects of law as now practiced.

The fact pattern of The Matter of Philidelphia Insurance v. Kendall is not too complicated (if you practice personal injury law here in New York), but for the others a short background: The liability insurance you buy for your car is not for your injuries, but for the injuries of others in a collision. Thus, if the other person has only a $25,000 policy, you might be shit out of luck — a technical legal term — if you lost your leg. That’s why you buy Supplementary Uninsured/Underinsured Motorist (SUM) insurance. That part is for you. If the other driver has only $25K in insurance, and you have $1M, you can turn to your own insurer for the $975K difference.

And that’s what happened here. Kendall was clobbered in a collision. The motorcycle that hit her had only the 25K minimum but she had $1M in SUM. She collected the $25K from the other driver and proceeded to arbitration against her own insurer.

According to the decision, this funky fact-pattern popped up regarding the arbitrator’s decision and settlement with the arbitrator awarding the maximum 975K. But Kendall’s lawyer settled for only 400K because he hadn’t see the decision yet:

The arbitrator rendered her decision on September 16, 2019, awarding Kendall $975,000. The same day, the decision was emailed to Kendall’s counsel and faxed to Philadelphia’s counsel. However, neither counsel received the decision and they continued to negotiate. On September 19, 2019, the parties reached an agreement to settle the dispute for $400,000.

How did they shake hands on this deal? Via email:

On that day [Kendall’s] counsel emailed [Philadelphia’s] counsel: “Confirmed -we are settled for 400K.” Below this appeared “Sincerely,” followed by counsel’s name and contact information. Shortly thereafter, [Philadelphia’s] counsel emailed in reply, attaching a general release, styled a “Release and Trust Agreement,” and saying, “Get it signed quickly before any decision comes in, wouldn’t want your client reneging.” [Kendall’s] counsel answered, “Thank you. Will try to get her in asap.” This email concluded with the same valediction, name, and contact information as had [Kendall’s] counsel’s earlier email.

The lawyer for the injured Kendall then learned of the $975K decision and wanted to go back on the $400K agreement, arguing that it was’t “subscribed” as per CPLR 2104 by retyping his name in the email in addition to his prepopulated contact information block.

So, is the email agreement “in writing” as required by statute? If it sounds like a boring one-off kinda issue, you are not thinking of all those emails you send on a daily basis and how those might be viewed by a court.

Now previously, our Court of Appeals had held that a preprogrammed name on a fax transmission did not fulfill the subscription requirement. So email should be the same, right? (Parma Tile Mosaic & Marble Co. v Estate of Short)

The times, they are a changin’. A mid-level appeals court has now held that the old fax decision from New York’s top court is not controlling as the practice of law has changed:

The Parma court wrote in a different era, when paper records were still an important modality, maybe the most important modality, of recording information in law and business. Since that time, the electronic storage of records has become the norm, email has become ubiquitous, and statutes allowing for electronic signatures have become widespread. For these reasons, and those that follow, we find that Parma is not controlling.

While this very same court held in 2013 that “an email in which a party’s or its attorney’s name is prepopulated in the email is not sufficiently subscribed for purposes of CPLR 2104” it has now reversed itself and said “wet ink” signatures are not needed, nor is any retyped signature:

We now hold that this distinction between prepopulated and retyped signatures in emails reflects a needless formality that does not reflect how law is commonly practiced today. It is not the signoff that indicates whether the parties intended to reach a settlement via email, but rather the fact that the email was sent.

In fact, even the signature block doesn’t appear to be needed — it must only be sent from the lawyer’s account, forming a rebuttable presumption that the lawyer sent it:

We find that if an attorney hits “send” with the intent of relaying a settlement offer or acceptance, and their email account is identified in some way as their own, then it is unnecessary for them to type their own signature.

But wait, there’s more: It has been customary over the years for defendants and insurance companies to create ever more complex general releases and settlement agreements. Back in the day, the simple Blumberg form was the gold standard, until those that bill by the hour figured out there may be a bit more gold to be mined by creating ever more complex forms.

The First Department, however, found that the simple email was binding when the sole issue was the amount of the settlement. The digital handshake was good enough, and the formal release wasn’t particularly relevant as it is merely a ministerial condition:

The Release and Trust Agreement was to be further documentation of the binding agreement constituted by the parties’ counsel’s emails agreeing to settle respondent’s claim for $400,000, rather than something on which that binding agreement was contingent. The material term of the parties’ agreement to settle respondent’s claim being the sum of money that petitioner would pay respondent, respondent’s execution of a general release was essentially a ministerial condition precedent to payment (see CPLR 5003-a[a].

So, your emailed agreements will be held up the same as if they had a fancy wax seal and a red ribbon. And probably so too with any other assertion that you make. And those complex general releases that defendants like to waste time with may well be meaningless to a court.

Don’t think twice before hitting send. Think it though three times. Because “send” is your signature.

June 18th, 2019

Geico Asks for Immunity

New York’s annual legislative session ends Wednesday. And that means, predictably, a mad rush to get legislation enacted without having to wait another year. Or, conversely, a mad rush to stop legislation.

And that’s where we are today, with Geico attempting to halt legislation that would hold it (and other insurance companies) accountable for bad faith in settlement negotiations. Yes, out-of-state-readers, it’s true, New York currently has very limited ways to stop insurance companies from trying to screw you over in your time of distress.

This legislation was first proposed in the wind-swept wake of Hurricane Sandy in 2013, when insurance companies thought it would be a really cool idea to deny coverage for damaged homes. If a policy excluded wind damage, the insurers would claim water was to blame. If it excluded water damage, they would claim wind was to blame.

The denials had a common background – they were dealing with people who had their homes destroyed and were, therefore, in great economic distress. Because everyone needs a roof over their heads. So the denials gave the insurance companies some, let’s call it, leverage.

Delay and delay and force the homeowners to hire lawyers to sue. Then, when the pain is deep enough and the homeowners desperate enough, maybe settle for 50 cents on the dollar. Or 70. But even if the insurers had to cough up 100 cents on the dollar on some claims, so what? That was merely what they had to do anyway. Every cent saved was profit.

And that is part of the base model of the insurance company: Take in as much as you can in premiums and pay out as little as possible and invest the money in the interim.

The legislation that is proposed, that Geico is afraid of, would put a stop to that as well as bad faith tactics in auto policies and elsewhere.

Right now, in an auto case, if an insurance policy is only the bare minimum $25,000 or maybe $100,000, and the damages are $500,000, the insurance company has a vested interest in offering only a portion of the policy. Sure, it’s possible that someone will spend $20,000 and try the case to verdict. But that often makes little economic sense, and all the lawyers know it. You can win but still lose. So why offer the whole policy even if you would, in good faith, owe it?

The only avenue for relief currently is to take an excess verdict against the insured when the insurance company has elected to put its own interests ahead of those customers, because you can’t sue the insurance company directly.

And then, and only then, if the insured is smacked for a big, fat verdict in excess of the insurance policy, there might be some relief. But that relief only comes if the defendants — who you just sued and perhaps, inflicted a bit of anxiety on — then assign their own rights to sue the insurance company for bad faith back to the people that had sued them. And if those people are gone? Or say “screw you, we don’t feel like helping you as we got nothing to take anyway so it doesn’t matter to us?” Well, sorry Charlie.

The bad faith legislation that is now pending would fix this problem, a problem created by the fact they are currently required to act in good faith but there is only one very poor method of enforcement.

Enter, stage right, Geico to oppose this common-sense legislation. In a mass email yesterday from Rick Hoagland, a Geico senior vice president, to its policy holders, it urges people to call their legislators to stop the legislation and protect the insurance company profits.

OK, maybe Hoagland didn’t word it quite that way. He claimed, instead, that legislation protecting both policy holders and the people they may injure would somehow be bad for them. George Orwell would have been proud.

He writes, instead that:

I am the senior vice president of GEICO, your insurance company in New York, and I am writing to ask for your help. The New York State Senate and Assembly are considering multiple pieces of legislation in the next few days that, should they pass, will likely increase insurance premiums for YOU and all New Yorkers, even if you’ve never had an accident.

He doesn’t say it would increase premiums but rather, he speculates. He provides no empirical data. More importantly, he doesn’t tell his insured that the legislation protects them from the bad faith practices of Geico, the company that they paid money to in order to protect them in the event something goes awry. And it is those bad faith practices that could put their own homes at risk in the event of a verdict in excess of their insurance policies.

And, of course he doesn’t tell his readers that the bills are designed to protect them. No, he claims that they “make it easier for trial lawyers to sue insurance companies.”

Here’s an idea, why not just put us personal injury lawyers out of business by dealing in good faith to begin with? Look, Geico I solved your problem! (You’re welcome. No charge.)

Here’s the Geico pitch, compete with links to the bills, which I urge people to read so the they know they are consumer protection bills. The reason he provided links is because he knew, no doubt, that few people would actually click them or get an explanation as to their true purpose:

Assembly Bill 5629-B and its companion bill, Senate Bill 3634-B, along with Assembly Bill 5623 and its companion bill, Senate Bill 6216 , are going to make it easier for trial lawyers to sue insurance companies and will have negative, long-lasting impacts on New York policyholders and taxpayers. (Simply click on the appropriate bill number to link to the text of the legislation.)

The legislation would allow a direct case against the insurance company for bad faith, so that the victims don’t have to rely upon the people they just sued to tender their rights against the insurers.

Geico, of course, would like to make enforcement of good faith laws difficult, thereby giving it a certain level of immunity. Why not offer 20K on a 25K policy when you know it will cost the injured plaintiff that much just to try the case? There’s almost no downside for them for acting in bad faith.

It’s time New York finally put a stop, once and for all, to the bad faith of insurance companies. The law requires good faith dealing and the Legislature should give consumes the tools to enforce it.

The email is here:

December 19th, 2017

Cuomo Signs NY’s New Auto Insurance Law

Last night, New York’s Gov. Andrew Cuomo signed legislation that alters New York’s auto insurance law, and it’s a win-win deal for everybody.

While the law sounds uber-wonky, it’s quite important due to a fundamental misunderstanding of how auto insurance works by the general public.

Most folks think that the insurance coverage they choose — let’s say a 250K limit — will protect them if they’re involved in a collision. But it doesn’t. That insurance only covers other people.

You, the injured driver, must pursue the guy that plowed into you at the intersection because he was checking his texts, through the limits of his insurance policy. And if his insurance policy is only, let’s say, the bare minimum 25K because his job is flipping burgers and he doesn’t really have a pot to piss in, then you with your fractured pelvis are, as we say in the law, shit out of luck.

But wait! There is one small hope for you, and that hope lies in your own policy provisions for getting involved in a collision with an uninsured or underinsured driver. That provision is known here in New York as Supplementary Uninsured/Underinsured Motorist (SUM) insurance.

The problem? The default on your policy was the state minimum, just 25K. And you can’t even collect that if have received the 25K from the guy that plowed into you.

Only a savvy person — or one with a conscientious insurance broker that informed him — would know that you could elect more SUM coverage. Most don’t, because most don’t know. My own legislator wasn’t aware of this whenI discussed this bill with her a few years ago, and found out only when her daughter was injured in a collision and got caught in this trap.

That law is the one that has now changed. Now the default choice is your SUM insurance matches the underlying coverage that you picked. So if you have a 250K policy you will have 250K SUM, and get as much protection for yourself as you are giving to others.

The cost is minimal and people can easily opt out. The thing is, those that are picking more than the minimum amount of coverage are the ones who understand that they likely have the most to lose. That’s why they bought the higher coverage in the first place.

When a bill becomes a law that has no losers attached to it, it’s a win-win all the way around.

I wrote about this back in June when it passed in the closing hours of the legislative session. The vote was 62-1 in the Senate and 104-6 in the Assembly.

People complain often about dysfunctional governments. But when they get it right we should take notice with a little golf clap in their direction.

June 23rd, 2017

NY Leg Advances Change to “SUM” Legislation (Updated!)

The last two days I covered action in the New York Legislature to change the medical malpractice statute of limitations and make a modest change in where lawsuits can be brought (both of which still need the signature of the Governor).

Today, I cover a third piece of legislation, which while exceptionally important is virtually unknown to most. These posts come in a flurry because that’s how our Legislature works, passing bills in a frenzy in the closing days of the annual January-June session.

This particular legislation refers to Supplementary Uninsured/Underinsured Motorist (SUM) insurance.

Stop!!! Don’t leave!!! Trust me, while the issue sounds boring, it could be the difference between bankruptcy or not to anyone seriously injured.

In New York, we have particularly crappy minimum levels of insurance, known as 25/50 on non-commercial vehicles. That means that, if you are injured by someone with such minimal insurance, no matter how badly, the most you can obtain from that insurance policy is $25,000. (The 50 refers to the aggregate of all claims from the collision.)

And if badly injured, you can’t work and pay your bills. Which is why bankruptcy is not uncommon amongst those victimized. Unless you protect yourself.

Unbeknownst to most folks, there may be a second policy at play — your own — if you own a car. This is the SUM insurance if the car that plowed into you and broke your back has that minimal insurance.

Now here’s the catch, and the reason I write: The default on the SUM policies is a mere 25K. So even if you are a high earner, bringing home the family bacon, and have a $500K bodily injury policy of your own, it won’t matter if you don’t read the fine print. Because that $500K is only to protect the person that you injure. It isn’t for yourself.

Yeah, it’s in the fine print. Most don’t know about it. Even one legislator I spoke to a couple of years ago was so unaware of it that, when her child was injured, was stuck with that minimal policy. She had no idea.

And, before I get to the legislative fix, one more point. That SUM policy only comes into play if your own policy is larger than the car that hit you. So, in other words, if the car that ran the light and clobbered you had a 25K policy, and you have a 25K SUM policy, you don’t get an extra 25K, because you would only be entitled to the difference between the two.

OK, now on to the fix. The New York Senate passed a bill (S5644A) in the waning hours of the legislative session to change the default from 25K SUM insurance for yourself to be the same as the amount of bodily injury coverage you have selected to protect others.

So if you have a 500K bodily injury policy, your default would be 500K SUM. You can, of course, decline it if you want. But most people who feel the need to buy insurance at higher levels aren’t the types of people who generally would decline.

This bill passed, as had the medical malpractice bill and the venue bill, with wide bipartisan support. And by wide I mean 62 out of 63 votes.

Unfortunately, the legislature adjourned for the session as the Senate passage came too late for the Assembly to vote. It will only come to the Assembly floor if they are called back into session, a possibility given that there is a large, unresolved issue of mayoral control of NYC schools.

Otherwise, it is wait till next year.

In the meantime, if you are renewing your auto policy, look for that part about SUM coverage and make sure you get as much as you can. It is, relatively speaking, dirt cheap, which is why your broker may not even bother to mention it to you. But it can make all the difference in your life if some underinsured car clobbers you.

And one day I’ll come back to discuss our ridiculously low 25/50 auto insurance policies.

Update (6/29/17) – Gov. Cuomo called the Legislature back to Albany for a special session, to deal with the issue of mayoral schools. And any other lingering issues.

So late last night, by a vote of 104-6, the Assembly joined the Senate in passing the SUM bill. It goes now to the Governor for signature.

This is a very big deal, as all too often we see cases of people with decent insurance getting hit by cars with little insurance, and the victims then find out to their own dismay that they could have easily and cheaply covered themselves for this event, but didn’t. Now that coverage will be the default.