Many counterparties have reached settlement terms and closed the conversation by stating the need to "paper" the agreement later. But does this caveat preclude enforcement of the oral agreement? A recent decision by the Judge Hurley in the Eastern District of New York, Westside Winery v. SMT Acquisitions, No. 2;19-cv-4371, 2021 WL 21668 (E.D.N.Y. Jan. 4, 2021), provides a good warning to counsel that such statements may be insufficient to preclude an action to enforce a settlement agreement.

Background

Plaintiff Westside Winery, a California wine producer, and defendant SMT (a wine merchant), were parties to a series of agreements that Westside claimed SMT had breached, and Westside ultimately filed suit. (Another defendant, Palm Bay International, guaranteed some of SMT's obligations to Westside. See Westside Winery v. SMT Acquisitions, No. 19-CV-4371, 2020 WL 8413554, at *2 (E.D.N.Y. Nov. 5, 2020) (Report & Recommendation).) The parties resolved that lawsuit in a May 2019 settlement agreement, which required, among other things, that SMT take delivery of certain of Westside's wine products. Just two months later, SMT allegedly breached the settlement agreement by failing to take possession of some of the wine, which SMT claimed were "smoke tainted" from California wildfires. Thus, Westside commenced another action in July 2019, seeking damages for breach of the May 2019 agreement. See Report & Recommendation, at *2.