## Facts

- L.E.K. Consulting LLC (LEK), a consulting firm, provided consulting services to Amicus Capital Partners, LLC (Amicus) under a written contract.
- In November 2019, LEK sued Amicus in the Southern District of New York asserting breach-of-contract and quasi-contract claims for unpaid consulting fees.
- Amicus did not respond to the complaint, and LEK sought an entry of default.
- While the case was pending, the parties entered settlement negotiations.
- In April 2020, the parties advised the court they had reached a settlement agreement requiring Amicus to pay LEK a lump-sum amount by July 15, 2020.
- The settlement agreement included a complete release of claims arising from the underlying consulting-fee dispute and set out a defined remedy if Amicus failed to pay the settlement amount.
- The settlement agreement did not state that LEK’s original claims would remain pending until Amicus performed, or that those claims could be revived if Amicus did not pay.
- Amicus failed to make the settlement payment by the July 15, 2020 deadline.
- LEK pursued default judgment. Amicus did not object to default judgment as such, but the parties disputed the proper measure of damages: the amount claimed under the original consulting contract or the amount due under the settlement agreement.

## Issues

1. Under New York law, did the April 2020 settlement agreement operate as an executory accord (leaving LEK’s original claims available upon nonpayment) or as a substitute agreement (limiting LEK to remedies under the settlement)?
2. If the settlement was a substitute agreement, must the court calculate default-judgment damages using the settlement amount rather than damages claimed under the original consulting contract?

## Decision

- The court held that the April 2020 settlement agreement was a substitute agreement (a substituted contract), not an executory accord.
- Because the settlement superseded the parties’ prior payment dispute, the court determined that the settlement agreement supplied the measure of damages on default judgment.
- The court therefore limited LEK’s monetary recovery to the amount owed under the settlement agreement (including any contractually authorized additions such as interest), rather than using the larger or different measure sought under the original consulting contract and related theories.

## Legal Principles

- Under New York law, whether a later agreement is an executory accord or a substitute agreement turns on the parties’ intent.
- Although New York recognizes a presumption against giving up an existing obligation in exchange for a promise of future performance, courts may find a substituted contract where a settlement is memorialized in formal written papers using clear, unequivocal terms.
- When the settlement’s text shows an intent to replace and resolve the earlier dispute—such as by providing a specified lump-sum payment and a complete release—courts may treat the settlement as superseding the prior claims as a matter of law.
- If a settlement agreement does not state that the original claims remain live pending performance, a plaintiff generally cannot revive those earlier claims after nonpayment and is confined to enforcing the settlement’s payment obligation.
- In default-judgment proceedings, default may establish liability, but the court must still award damages according to the controlling contract and the legally proper measure of recovery.

## Conclusion

In L.E.K. Consulting LLC v. Amicus Capital Partners, LLC, the court concluded that the parties’ April 2020 settlement—requiring a lump-sum payment by a date certain and containing a complete release, without language keeping the original claims pending—was a substituted contract under New York law. As a result, even though Amicus defaulted and failed to pay, LEK’s recovery on default judgment was limited to the settlement agreement’s amount (and any authorized additions), not the damages claimed under the original consulting contract or related quasi-contract theories.


L.E.K. Consulting LLC v. Amicus Capital Partners, LLC, 2020 WL 5535191 (2020)