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Posted: March 31, 2018

Court Vacates Stipulation of Discontinuance Without Prejudice and Reinstates Claim Against Former Defendant

On March 14, 2018, Justice Scarpulla of the New York County Commercial Division issued a decision in Oriali SRL v. Domenico Vaca, 2018 NY Slip Op. 30435(U), vacating a stipulation of discontinuance without prejudice and reinstating a claim against a former defendant, explaining:

Stipulations of settlement are favored by the courts and not lightly cast aside only where there is cause sufficient to invalidate a contract, such as fraud, collusion, mistake or accident, will a party be relieved from the consequences of a stipulation made during litigation.

Here, I find that Oriali SRL has sufficiently demonstrated that the stipulation of discontinuance without prejudice should be vacated. Oriali SRL has demonstrated that when it signed the stipulation, it understood that Vaca, as an officer of the corporate defendants, could not be subject to any personal liability for the contractual obligation of Chicissimo. However, based upon Vaca’s examination before trial testimony, Oriali SRL discovered that it could pursue a claim for individual liability sounding in fraud against Vaca. Further, Vaca will suffer no prejudice by the reinstatement of the action against him, as he has been and is a participant in the defense of the corporate defendant.

(Internal quotations and citations omitted).

The courts favor voluntary settlements of disputes; indeed, most complex commercial litigations settle before trial. Here, however, the claims against the defendant were discontinued “without prejudice,” meaning that the plaintiff retained the right to reassert them, which it did. Contact Schlam Stone & Dolan partner John Lundin at jlundin@schlamstone.com if you or a client need help settling an action or have questions regarding whether it is possible to reassert claims that were the subject of an earlier settlement.

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