The Empire co-creator's attorneys filed a letter in federal court Tuesday withdrawing a previous attempt to move the case up the ranks, Deadline reported.
"Having considered the arguments and authorities raisedin Penn's Oct. 22, 2015, pre-motion letter requesting a demand and having diligently met and conferred, Daniels has agreed to withdraw his notice of removal, and to have this matter remanded to the Supreme Court of the State of New York," read a letter from his attorneys.
"Further, the parties' resolution includes Daniels' payment of a confidential monetary amount to Penn consistent with the guiding principles [of the U.S. Code]," it said.
Late last month, Deadline reported Daniels requested to have Penn's suit moved from New York State court to federal court, citing the Gunman actor's California residency. Penn's attorneys rejected the motion, calling it "meritless."
In September, Penn, 55, filed a multi-million dollar defamation lawsuit against Daniels for insinuating the Gunman actor was abusive toward women in a magazine interview. Speaking of Terrance Howard's alleged reputation of domestic violence, Daniels compared his actions to that of Penn -- who has never been arrested or convicted of such crimes.
"[Howard] ain't done nothing different than Marlon Brando or Sean Penn, and all of a sudden he's some [expletive] demon," Daniels told the Hollywood Reporter in September. "That's a sign of the time, of race, of where we are right now in America."