Last-minute
Stipulations
By Jeffrey A.
Helewitz
January/February 2004 Issue
The overwhelming
majority of cases filed in court each year never reach judicial
resolution. Rather, most of the cases are settled by the parties long
before the matter is placed in the hands of the judge or jury. Because
most lawsuits and motions incident to those suits are determined by
agreement of the parties, it behooves every member of the legal team to
become proficient in drafting stipulations of settlement.
Unfortunately, most
law and paralegal schools rarely teach students how to draft
stipulations (generally referred to by lawyers and court personnel as “stips”).
Also, it’s fairly common practice for a stipulation to be drafted in
court at the exact moment the parties are forced to face each other
during discovery, motion practice or on the eve of trial. In many
instances, the litigation legal assistant who accompanies the attorney
to the courthouse will be the one called on to draft the initial version
of the stipulation on the spot for the attorney’s review. For this
reason, every paralegal must be familiar with the standard format used
by a majority of attorneys in settling cases.
The stipulation itself
might take one of two forms: Either it’s signed off only by the parties
or their attorneys and has the effect of an accord and satisfaction, or
it’s “so ordered” by the presiding judge, giving the agreement the force
of a court order. In either instance, the stipulation must be drafted in
a sufficiently detailed manner in order to cover all points raised by
the parties and provide remedies in the case of default. This article
provides a basic stipulation format and standard clauses you can use as
a guideline in drafting stipulations of settlement.
Caption
The top of the stipulation must contain the caption of the
case that follows the exact wording as the caption appears on the
official court documents. In certain instances, the caption might be
amended during the litigation process, but unless the court itself has
changed the caption on its official records, the stipulation must
conform to the caption as it first appeared. Also, be sure to include
the correct index number of the case.
Statement of Settlement
The opening statement of the stipulation should indicate the
nature of the document and the reason for its existence. A standard
opening might appear as follows:
The
parties understand that each party has the right to a trial, the right
to see a judge at any time, and the right not to enter into a
stipulation of settlement. However, after a review of all the issues,
the parties agree that they do not want to go to trial and instead agree
to the following stipulation in settlement of the issues in this matter.
Note the above wording
would be changed if the stipulation concerns a non-dispositive motion.
In those instances, the stipulation could simply read:
It
is agreed that the above matter is settled as follows:
Submission to Jurisdiction
To avoid a later challenge that the defendant was not
properly served or the court lacks personal jurisdiction over the
defendant, the stipulation should include a statement that the parties
voluntarily agree to submit to the jurisdiction of the court. Without
this agreement, the stipulation could prove to be worthless. For
example:
Defendant(s) appear(s) in this action and consent(s) to the jurisdiction
of the court, or waive(s) service of the summons and complaint and
consent(s) to the jurisdiction of this court.
Statement of Claim
If the stipulation is intended to terminate the lawsuit, the
parties must include a statement indicating that intention and
specifying the manner in which the claims will be settled. Any matter
not included in this statement will not be deemed part of the settlement
agreement. Take careful note that the parties might agree to settle only
a portion of the lawsuit by stipulation, leaving the unresolved issues
for determination at a later date by the parties themselves or the trier
of fact. A simple statement of the claim might be:
Defendant(s) acknowledge(s) the claim of plaintiff(s) as set forth in
plaintiff’s complaint, and plaintiff(s) acknowledge(s) the counterclaims
of defendant(s) as set for in defendant’s answer. The above action is
hereby settled for the principal sum of ________, plus disbursements in
the sum of ____________, and attorney’s fees in the amount of
_______________, which [defendant(s), plaintiff(s)] agree(s) to make
payments as follows:
Once the parties have
agreed on the amount of the settlement, be sure to specify: 1) the
amount of the payment; 2) the date and time of payment; and 3) the last
payment date. Also, to avoid confusion, be sure to write out all
numbers.
Specify if the payment
should be made by personal check, money order, bank check or cash. If
the payment will not be in cash, specify the payee of the check.
Further, indicate the address to which the check is to be sent, and
whether personal delivery is acceptable. Often payment will be made to
the attorney rather than to the parties themselves.
Although most claims
will be settled by monetary payments, in certain situations the parties
require non-monetary actions, such as specific repairs to be made,
transfer of documents or relinquishment of possession. In these
instances, the drafter must be sure to detail each equitable remedy to
which the parties have agreed, including all dates and times of
performance and notice for completion of the contemplated action in
question.
Default and Notice
Every time an agreement is created, the drafter should review
the document to determine what would happen if one of the parties failed
to fulfill his or her obligations. The agreement should provide for
remedies in the case of a default.
The following is a
representative clause that can be included in settlement stipulations,
directed to the fact that the stipulation has come about incident to a
lawsuit having been filed.
In
the event of a default of any payment, [plaintiff, defendant] is
authorized to enter judgment in [his, her, its] favor, if such default
continues after ten (10) days written notice to the defaulting party by
regular mail for the amount due as demanded in the [summons and
complaint, answer], less any sum paid on account, together with
interest, costs, disbursements and attorney’s fees.
Discontinuance
Include a sentence indicating if the obligations under the
stipulation are fulfilled, the performing party will receive a
stipulation of discontinuance. This is a separate stipulation, filed
with the court, which has the effect of having the action removed from
the court records.
In this fashion the
performing party will not have any adverse information appear in a court
file, which could be used to influence his or her credit rating in the
future.
Upon final payment, in accordance with the terms of this agreement, [defendant(s),
plaintiff(s)] will receive a stipulation of discontinuance of this
action.
Miscellaneous Provisions
The stipulation might have come about when a defendant
appears for the first time after the plaintiff obtained a default
judgment against him or her. As a result of that default judgment, the
plaintiff was able to have the defendant’s bank account attached. In
this instance, the stipulation should contain a clause for having the
plaintiff release the defendant’s bank account either before or after
the provisions of the stipulation have been fulfilled.
Also, the agreement
might call for a vacatur of any earlier judgment, if so agreed to by the
parties, or the parties might decide to keep that earlier judgment
intact until the obligations under the stipulation are discharged.
Date and Signatures
It is very important to have the correct date indicated on
every stipulation. This becomes especially important if the parties end
up entering into multiple stipulations, which can happen when a party
defaults. Rather than enter judgment, many times the parties will
renegotiate a new stipulation. If the court is eventually called upon to
determine whether or not there has in fact been a default, the court
must know which specific stipulation’s provisions are being called into
question.
Once completed, the
stipulation must be signed by the parties’ attorneys and sometimes by
the parties themselves. Make sure the signature lines indicate the
capacity in which the person is signing, such as “Plaintiff’s Attorney”
or “Defendant as President of Acme Corporation.”
Also, as stated at the
outset of this article, if the parties wish to have the court’s
imprimatur placed on the stipulation so it has the force of a judgment,
it must be “so ordered” by a judge of the court. The stipulation then
should have a line for the judge’s signature.
One last note: Always
review and analyze the stipulation before submitting it to the attorney
to make sure all points are covered and all potential problems have
remedies indicated.
A stipulation of
settlement is really no different from any other contract, except for
the fact that many times it must be drafted at a moment’s notice in the
hallways of a courthouse with a judge waiting to review the document.
You should become familiar with the stipulations entered into by your
attorney, and accompany him or her to court with a sample stipulation
format (see “Sample Stipulation” on Page 67) that can be used to create
a settlement agreement. This article can provide a useful tickler for
those of you who must draft a stipulation with little or no warning. |
