Complaint May Include Allegations of Facts Disclosed in Settlement Discussions

On January 9, 2018, Justice Bransten of the New York County Commercial Division issued a decision in Ambase Corp. v. 111 W. 57th Sponsor LLC, 2018 NY Slip Op. 30049(U), holding that a complaint may include allegations of facts disclosed in settlement discussions, explaining:

To the extent that defendants contend that this allegation is improperly based upon a document that was disclosed for settlement purposes only, plaintiffs' allegation in the complaint stands alone and may be supported by other information. While the CPLR prohibits evidence of settlement negotiations, it specifically does not require the exclusion of any evidence, which is otherwise discoverable, solely because such evidence was presented during the course of compromise negotiations. Moreover, the exact amount spent on construction of the sales office will be discoverable in litigation. Whether the relied-upon document here is ultimately discoverable and admissible is not an issue that needs to be decided at this juncture.

(Internal quotations and citations omitted).

This decision illustrates a collision between the pleading rule requiring the liberal interpretation of a plaintiff's complaint and the evidence rule limiting the use of evidence of settlement discussions at trial. Contact Schlam Stone & Dolan partner John Lundin at jlundin@schlamstone.com if you or a client have questions regarding what limits--if any--can be placed on how an opponent can use what is said during settlement discussions.