Commercial Division Blog

Posted: September 18, 2017 / Categories Commercial, Law Firms and Professional Ethics

Client Bound by Counsel's Agreements, Even if Counsel Lacked Authority to Agree

On September 12, 2017, Justice Kornreich of the New York County Commercial Division issued a decision in Samuel Realty LLC v. Richardson, 2017 NY Slip Op. 31936(U), holding that a party was bound by a stipulation agreed to by counsel, even if counsel lacked authority to enter into the stipulation, explaining:

As noted by Judge Kaye in Hallock v State, 64 NY2d 224, 228 (1984), a stipulation of settlement made by counsel in open court may bind his clients even where it exceeds his actual authority. This seminal case observed that stipulations are favored by the courts and, particularly when made in open court, are not lightly set aside. This is so because stipulations are essential to efficient court management and the integrity of the litigation process. Moreover, even if the attorney lacks actual authority to enter into a stipulation, apparent authority may bind the litigant.

Here, Mr. Ostwald appeared for his client, and more than once represented to the court and other party that he had his client's consent to enter into the stipulation. In keeping with these representations, he produced some of the documents. It was reasonable on these facts for the other party and the court to rely on his claim of authority to enter into and act upon the stipulation. He and his client cannot now, in contravention of the stipulation, fail to abide by the stipulation by deciding which of the subject documents they wish to produce. Consequently, the remainder of the documents on the logs must be produced. Mr. Ostwald does not contend the stipulation was procured by any circumstance that would permit it to be set aside (e.g., fraud).

(Internal quotations and citations omitted).