It’s Not Over Til It’s Over – Then it’s Really Over

By: Jonathan H. Freiberger

Frequently, litigation is resolved consensually. Most often in such cases, the parties execute a settlement agreement, and their attorneys execute and file a stipulation of discontinuance. It is not uncommon for settlement agreements to contain various terms and conditions of the settlement – some of which will be satisfied after the dismissal of the action. For example, if the settlement involves the payment of money from one litigant to another, the settlement agreement may call for numerous payments to be made over time. In other cases, a settlement may require one party to perform remedial work for, or otherwise deliver goods and/or services to, the other party in the future.

Today’s article addresses whether a party that settles an action that is discontinued can revive same by motion in the discontinued action, or is required to commence a new plenary action. This situation was addressed by the Court of Appeals long ago in Yonkers Fur Dressing Co. v. Royal Ins. Co., 247 N.Y. 435 (1928). The Plaintiff in Yonkers[1] owned a fur plant that was destroyed by fire. Yonkers commenced litigation against its insurance carrier because it refused to pay the claims related to the fire. While the carrier believed the fire to be suspicious, it did not have proof of wrongdoing.

Shortly before the action was scheduled for trial, the parties reached a settlement. “When the case[] appeared on the day calendar for trial …, [it], in accordance with the agreement of settlement, [was] marked "settled and discontinued" in open court by counsel for all parties.” Yonkers, 247 N.Y. at 442. One month later, the insurance company’s lawyer filed a motion to vacate the settlement agreement, arguing that new evidence suggests that the fire was caused by arson started at the request of Yonkers’ president and, in anticipation of the fire, Yonkers’ president arranged to have machinery, customers’ furs and other valuables (for which insurance claims were made) removed from the plant. Yonkers argued, among other things, that “the settlement agreement should not be set aside on a motion in the action; that an equitable action to set aside the settlement was the proper remedy.” Yonkers, 247 N.Y. at 443.

The court granted the carrier’s motion, and the Appellate Division affirmed. The Court of Appeals reversed. The Court explained:

The settlement of the original controversies involved in [this] action[] resulted in a new agreement to the effect "that the above entitled litigation is settled and terminated, the insurance companies in interest having agreed to pay the sum of $92,500 in full settlement of all claims." This is not a mere arrangement between counsel made during the pendency of the case from which a party might be relieved when both parties could be restored substantially to their former position in court and when it would be inequitable to hold the parties to it. It is the settlement and termination of the litigations, marking a fresh start by the plaintiff from a new coign of vantage. The compromise was wholly foreign and extrinsic to the litigation and to any action by the court. The signing of stipulations and entry of orders of discontinuance were not conditioned upon the payment of the money. They would be evidence merely, not the fruit of the settlement. When the case[] [was] marked "settled and discontinued" in open court by the parties, it was as if [it] had never been begun.

Yonkers, 247 N.Y. at 444 (internal quotation marks and ellipses omitted). The Court noted that a “contract of settlement, if valid in itself, is final and is to be sustained by the court without regard to the validity of the original claim.” Id. at 445 (citation omitted). The Court further noted that the case being decided was distinguishable from prior cases because here, the litigation “was terminated,” and a new liability was “substituted” for, and “superseded,” the old. Id. at 446.

The Court concluded that the carrier may be able to bring a new suit to unwind the settlement “for reasons that may invalidate a contract,” but “when a compromise results in the termination of an action and the execution of a new agreement giving effect to the settlement, it cannot be undone in the discretion of the court, on motion in the action and on conflicting affidavits raising anew the same dispute once settled, merely to bring about a final disposition of the original action on its merits.” Id. (citation omitted).

Against this backdrop, we discuss HSBC Bank USA, N.A. v. Rini, a foreclosure action decided by the Second Department on August 5, 2026. Just prior to a traverse hearing, the parties “entered into a conditional agreement to settle the action, which included a term for a loan modification for the defendant.” The conditional agreement was placed on the record and the court “stated that it would retain jurisdiction over the action.” Thereafter, the parties executed and filed a stipulation of discontinuance pursuant to which “the plaintiff withdrew the complaint and discontinued the action, the defendant withdrew her answer and counterclaims, and all claims interposed in the action were discontinued.” The stipulation, however, failed to address whether the court retained jurisdiction for any purpose.

Nine months later, the plaintiff moved to vacate the stipulation of discontinuance and to restore the action because the defendant failed to complete the contemplated loan modification papers. The motion court granted the motion and scheduled a hearing to determine if the conditional agreement was breached. On the defendant’s appeal, the Court reversed, explaining:

A motion must be addressed to a pending action. A court lacks jurisdiction to entertain a motion after the action has been unequivocally terminated by the execution of an express, unconditional stipulation of discontinuance or actual entry of judgment in accordance with the terms of the settlement.

Here, the Supreme Court lacked jurisdiction to entertain the plaintiff's motion, among other things, to vacate the stipulation of discontinuance and to restore the action to the court's active calendar. The action was unconditionally discontinued by the stipulation of discontinuance executed by the plaintiff and the defendant and filed with the court, in which the plaintiff withdrew the complaint and discontinued all claims interposed in the action, and the stipulation was silent as to the court's retention of jurisdiction for any. Accordingly, under the circumstances, the plaintiff's requested relief was not available by way of a motion and could only be obtained by commencing a plenary action.

Citations and internal quotation marks omitted.

Jonathan H. Freiberger is a partner and co-founder of Freiberger Haber LLP.

This article is for informational purposes and is not intended to be and should not be taken as legal advice.

[1] The facts recited for the Yonkers case are greatly simplified for editorial purposes.