* This order and judgment is not binding precedent, except under the

doctrines of law of the case, res judicata, and collateral estoppel. The court generally disfavors the citation of orders and judgments; nevertheless, an order and judgment may be cited under the terms and conditions of 10th Cir. R. 36.3. 

## F I L E D United States Court of Appeals Tenth Circuit 

### OCT 15 1997 

### PATRICK FISHER Clerk UNITED STATES COURT OF APPEALS

TENTH CIRCUIT

MANUEL M. CHAVEZ,

Plaintiff--CounterDefendant--Appellant,

v. PRIMUS AUTOMOTIVE FINANCIAL SERVICES,

Defendant--CounterClaimant--Appellee. Case No. 97-2142 (D.C. CIV-96-1348-JC) (District of New Mexico)

ORDER AND JUDGMENT *

Before ANDERSON, HENRY, and BRISCOE, Circuit Judges

.

After examining the briefs and appellate record, th is panel has determined unanimously that oral argument would not materially assist the determination of this appeal. See Fed. R. App. P. 34(a); 10th Cir. R. 34.1.9. The c ase is therefore ordered submitted without oral argument. Manuel M. Chavez, a pro se plaintiff and counter-de fendant, appeals the1 It is a general rule that this court will not consider an issue on appeal that

was not raised in the district court. SeeRademacher v. Colorado Ass’n of Soil Conservation Dists. Med. Benefits Plan , 11 F.3d 1567, 1571 (10th Cir. 1993). However, one of Mr. Chavez’s claims is that the district court was biased in enforcing its final order, a claim which, by its terms, did not arise until the order was issued. Additionally, his concern about Primus’s attorney ripened when the attorney was subpoenaed, which was after the district court had issued its final order. Therefore, we will consider these issues on appeal. 2 district court’s enforcement of a settlement agreem ent entered into by Mr. Chavez’s former attorney and the defendant, Primus Automotive Financial Services (“Primus”). Mr. Chavez claims (1) that hi s attorney did not have authority to bind him to the settlement, (2) that t he district judge did not have the power to settle the case, (3) that the district jud ge was biased against him, and (4), as a peripheral matter, that Primus’s attorney should be disqualified because Mr. Chavez subpoenaed him to appear in a criminal t rial. Because we find that the district court’s determination that Mr. Chavez’ s attorney acted with apparent authority was clearly erroneous, we vacate the orde r enforcing the settlement and remand for further proceedings. Because we find al l of Mr. Chavez’s other claims to be untimely or without merit, 1 we dismiss those claims and deny Mr. Chavez’s petition to disqualify Primus’s attorney.3 I. BACKGROUND Primus, a corporation with citizenship in New York and Tennessee, see Rec. doc. 1 ¶ 3, repossessed a van Mr. Chavez had f inanced through Primus. See id. Ex. A ¶ 1; Rec. doc. 2 ¶ 1. In response, Mr. Chavez, a citizen of New Mexico, s ee Rec. doc. 1 ¶ 3, filed a “Complaint for Repossession” inthe District Court of San Miguel County, New Mexico, seeking roughly $12,500 in comp ensatory and $300,000 in punitive damages. See id. Ex. A, at 3. Mr. Chavez then retook the van (it is not clear what means were used, only that self-help was the m ethod) from where Primus had stored it. See Rec. doc. 2, at 8. Primus tried to take the van b ack from Mr. Chavez, but the men it hired to repossess the van were dissuade d by Mr. Chavez’s persuasive use of a firearm. See id. at 8-9; Rec doc. 19, Victim Statement ¶¶ 9-10. Mr . Chavez filed a criminal assault complaint against the repossessionagents soon thereafter. See Rec. doc. 19, Uniform Incident Report. In the meantime, Primus had received Mr. Chavez’s c omplaint, and filed a timely notice of removal to the United States District Court for the District of New Mexico.
See Rec. doc. 1. Primus also filed an answer in whichit counterclaimed against Mr. Chavez for amounts it asserted were due on the van and another car and asked for replevin of the van, which remained in Mr. Chavez’s possession. See Rec. doc. 2. Mr. Chavez’s complaint originally asserted a 42 U.S .C. § 1983 claim. See Rec. doc. 1, Ex. A ¶ 7. However, the district court not ed that there was no state actor or action alleged in the pleadings and, construing the pro se complaint liberally, instead found Mr. Chavez’s factual allegations to state cla ims for breach of contract and4

replevin. See Rec. doc. 3, at 2. Based on these findings, the d istrict court dismissed the § 1983 claim with prejudice and ordered that the cl aim proceed on the contract and replevin grounds. See id. After filing his complaint but before responding to Primus’s counterclaims, Mr. Chavez retained an attorney, John Aragon. See Rec. doc. 7, at 5. Mr. Aragon answered Primus’s counterclaims and appeared in fro nt of the magistrate and district court on Mr. Chavez’s behalf. See Rec. doc. 7; Rec. doc. 21, at 1. Mr. Aragon also negotiated informally with Primus’s cou nsel in an effort to reach a settlement and attended a formal settlement confere nce with Mr. Chavez before the magistrate judge. See Rec. doc. 21. On February 4, 1997, Mr. Aragon agr eed to a settlement of the case and, during a status co nference, informed the district court of the settlement. See id. On February 11, Primus’s counsel, Andrew Simons, fo rwarded a copy of the proposed settlement agreement to Mr. Aragon and requested that Mr. Aragon review the documents and have Mr. Chavez sign them. See Rec. doc. 15, at 1. For approximately two months, Mr. Simons continued his efforts to have Mr. Chavez sign the settlement documents. See Rec. doc. 14 ¶¶ 4-9. Finally, Mr. Simons filed a motion to enforce the settlement. S ee Rec. doc. 15, at 1. In response to the motion to enforce the settlement , Mr. Aragon filed a motion to withdraw as counsel. See Rec. doc. 16. In his motion, he agreed that5

he had accepted the proposed settlement offer of Fe bruary 4. See id. ¶ 1. However, Mr. Aragon’s motion added that Mr. Chavez subsequently contacted him and told him that “[Mr. Chavez] felt pressured when he approved the settlement” and “that [Mr. Chavez] wished to termin ate [Mr. Aragon’s] services.”
See id. ¶ 2. According to Mr. Aragon, “Mr. Chavez now wis hes to avoid the settlement.” See id. Mr. Chavez submitted his own response to the defend ant’s motion to enforce the proposed settlement. See Rec. doc. 19. Mr. Chavez stated that he “never authorized or accepted” the settlement of Fe bruary 4. See id. ¶ 2. With his response, he submitted a letter addressed to Mr . Aragon which reads: Th[is] letter is in regards to your telephone call to me on Fedruary [sic] 4, 1997 at Grants New Mexico. . . . If you c an recall, you gave me an ultimatum to either accept a $9,000.00 negoti ated settlement with PRIMUS or you would withdraw from representing me. Because you called me at a public area . . . I was not able to talk privately. A day after your phone call I attempted to call you . . . and left you a message on your answering machine but yo u never returned my call. Please be advised that I have de cided to take your ultamatum [sic] and ask that you withdraw from my c ase with any attempts by you to settle my claim hereby denied.
See id. at 4. After considering the motions, briefs, and document s submitted by the parties--but without holding any type of evidentiary hearing--the court granted Mr. Aragon’s motion to withdraw and granted Primus’ s motion to enforce the proposed settlement. See Rec. doc. 22, at 1. The district court assumed, w ithout6

finding, that Mr. Aragon acted outside the scope of his express authority in accepting the settlement agreement. See Rec. doc. 21, at 2 (“[Mr. Chavez] argues in his response that he should not be bound by his counsel’s settlement of his case because he had not given his attorney authority to settle the case. Although [Mr. Chavez] has presented no evidence that his counsel acted outside the scope of his authority, I will assume that he did so for the purposes of this motion.”). However, the district court found that Mr. Chavez h ad given Mr. Aragon apparent authority to settle the case and thus was bound by the proposed settlement. See id. at 3. The district court found apparent authority in the following facts: Mr. Aragon conducted informal settlement negotiations w ith Primus’s attorneys; Mr. Aragon and Mr. Chavez appeared together to conduct formal settlement negotiations at a settlement conference before the magistrate judge; and Mr. Aragon appeared for Mr. Chavez at the February 4 st atus conference at which Mr. Aragon agreed that the case was settled. See id. at 3. Mr. Chavez appealed the district court’s decision t o enforce the proposed settlement claiming that he never agreed to settle. See Aplt’s Br. ¶ 1. Also, Mr. Chavez raised two new issues for consideration on appeal: (1) that the district judge did not have the power to enforce the judgmen t because the case had been assigned to the magistrate judge under Rule 73.1 of the Rules of the United States District Court for the District of New Mexico and ( 2) that the district court was7

motivated to rule against Mr. Chavez by malice, ret ribution, and discrimination.
See id. ¶¶ 3-7. Finally, while this appeal was pending, M r. Chavez requested that we remove Mr. Simons from this case because Mr. Sim ons is, according to Mr. Chavez, a material witness in the criminal assault trial involving the repossession agents. See Compl. for Disqualification of Def.’s Att’y (dated July 15, 1997).

II. DISCUSSION A. Standard of Review We review a district court’s order enforcing a sett lement agreement for abuse of discretion. See United States v. Hardage , 982 F.2d 1491, 1495 (10th Cir. 1993). A misapplication of the law is an abus e of discretion. See Cooter & Gell v. Hartmarx Corp. , 496 U.S. 384, 405 (1990) (“A district court would necessarily abuse its discretion if it based its ru ling on an erroneous view of the law. . . .”); Wang v. Hsu , 919 F.2d 130, 130 (10th Cir. 1990) (“An abuse of discretion occurs only when the trial court based i ts decision on an erroneous conclusion of law or where there is no rational bas is in the evidence for the ruling.”) (internal quotations omitted).

B. Mr. Aragon’s Authority to Bind Mr. Chavez to the Se ttlement Order2 Mr. Aragon’s response to the motion to enforce the settlement indicates that

he did have express authority to settle: “[Mr. Chavez] felt pressured when he approved the settlement .” SeeRec. doc. 16 ¶ 2. However, Mr. Chavez directly contradicts Mr. Aragon by expressly denying that he agreed to settle. SeeRec. doc. 19 ¶¶ 2-4. Regrettably, neither the district court nor Primus pursued Mr. Aragon’s contention that Mr. Chavez had approved the settlement. Thus, the only actual evidencewe have in the record relating to Mr. Aragon’s express authority is Mr. Chavez’s letter denying that he ever granted such authority. Based on that evidence, we cannot find express authority and have no alternate ground for upholding the district court’s enforcement of the settlement agreement. 8 Primus maintains that Mr. Chavez presented no argum ents on appeal regarding the settlement order and thus has abandon ed his challenge to the order. Primus is mistaken. Mr. Chavez reiterates in his o pening brief before this court that “no settlement had been reached.” Aplt’s Br., at 2. Therefore, we will consider the settlement order on appeal. As stated above, the district court’s ruling assumed, without deciding, that Mr. Aragon h ad no express authority to settle the case. Therefore, for our purposes, wheth er or not Mr. Aragon bound Mr. Chavez to the settlement order depends entirely on whether Mr. Aragon had apparent authority to settle Mr. Chavez’s case. 2 “[A]pparent authority arises from the principal’s m anifestations to third parties . . . .” Romero v. Mervyn’s , 784 P.2d 992, 996 (N.M. 1989); see also Comstock v. Mitchell , 793 P.2d 261, 264 (N.M. 1990) (Ransom, J., specia lly concurring) (“I wish to emphasize that apparent au thority must emanate from the conduct of the person to be charged as principal.”) ; Restatement (Second) of9

Agency§ 8 cmt. 3, § 27 cmt. a (1958). “The information received by the third person may come directly from the principal by lett er or word of mouth, from authorized statements of the agent, from documents or other indicia of authority given by the principal to the agent . . . .” Restatement (Second) of Agency§ 27 cmt. a. We can find no indicia of authority emanat ing from Mr. Chavez to Primus or the court which would create the necessary appar ent authority in Mr. Aragon to bind Mr. Chavez to the settlement agreement. The district court found Mr. Aragon’s apparent auth ority to settle in the basic facts of his representation of Mr. Chavez:

Plaintiff clothed his attorney with apparent author ity to settle his case. Plaintiff’s attorney conducted informal settlement negotiations with Defendant’s attorneys and appeare d with Plaintiff and conducted formal settlement negotiations at a s ettlement conference before Magistrate Judge Puglisi. Plaint iff’s attorney also appeared for Plaintiff at the February 4, 1997 stat us conference. It is at this conference that Plaintiff’s attorney acknow ledged to the Court that the case had been settled. I find that, becau se Plaintiff allowed his attorney to represent him in these matters relating to settlement and the status of the case , Plaintiff “held [his] attorney out to opposing counsel and to the court as having authori ty to settle.” Therefore, Plaintiff is bound by his attorney’s settlement of his case, and I will enforce that settlement. Rec. doc. 21, at 3 (citation omitted) (emphasis add ed). This statement of Mr. Aragon’s apparent authority is erroneous because itrelies entirely upon Mr. Aragon’s negotiations with Primus and appearances b efore the court. Admittedly, Mr. Chavez was with Mr. Aragon at one of the appear ances before the magistrate10

judge. However, we fail to see how one’s presence at a formal settlement conference is, in and of itself, a representation t o the court that one’s attorney has the authority to settle a case. Nor does the distr ict court suggest that Mr. Chavez made any oral or written representations to the mag istrate judge, the district court, or to Primus that Mr. Aragon had the authority to s ettle his case. By relying solely on Mr. Aragon’s normal course of representat ion of Mr. Chavez, the district court’s order ignores the fact that appare nt authority can onlyderive from the representations of the principal (Mr. Chavez) t o the third parties (Primus and the district court), and instead focuses on the aut hority Mr. Aragon implied by his position as Mr. Chavez’s attorney. However, an attorney in New Mexico does not, merelyby representing his client in settlement negotiations, become vested wi th apparent or implied authority to settle the client’s case. Certain basic principles of law applicable to the a uthority of attorneys to settle cases are well established. . .

. (1) A party seeking judgment on the basis of compro mise and settlement has the burden of establishing assent bythe opposing party. . . . (2) the mere employment of an attorney does not of itself give the attorney the implied or apparent authority to compr omise his client’s cause of action. . . . (5) An unauthorized compromise, executed by an atto rney, unless subsequently ratified by his client, is of no effec t and may be repudiated or ignored and treated as a nullity by t he client. . . .11

Augustus v. John Williams & Assocs. , 589 P.2d 1028, 1029-30 (N.M. 1979) (emphasis added) (citation omitted). “[T]he mere e mployment of an attorney does not give him the actual, implied, or apparent autho rity to compromise his client’s case. In other words, a principal must hold out hi s attorney as possessing authority to act on his behalf beyond procedural matters.” Navajo Tribe of Indians v. Hanosh Chevrolet-Buick, Inc. , 749 P.2d 90, 92 (N.M. 1988) (citations omitted). See also Diversified Dev. & Inv., Inc. v. Heil , 889 P.2d 1212, 1218 (N.M. 1995) (“attorney does not have implied author ity to compromise client’s cause of action”) (citing Augustus , 589 P.2d at 1029-30); Bolles v. Smith , 591 P.2d 278, 280 (N.M. 1979) (“In order for an attorne y to bind a client to a settlement agreement, he must have specific authori ty to do so, unless there is an emergency or some overriding reason for enforcing the settlement despite the attorney’s lack of specific authority.”); see generallyEunice A. Eichelberger, Authority of Attorney to Compromise Action--Modern Cases , 90 A.L.R. 4th 326 (1991) (discussing recent cases involving scope of attorneys’ actual and apparent authority to settle cases). Of the many New Mexico cases available to it, the o nly case Primus relies upon for the substance of its argument is Navajo Tr ibe . However, read in its entirety, that case actually bolsters Mr. Chavez’s claim that there was no apparent authority here. In Navajo Tribe , the New Mexico Supreme Court enforced a12

settlement agreement that it determined had been en tered into with apparent authority. Navajo Tribe , 749 P.2d at 92. The court stated that, “[i]n New Mexico an attorney, notwithstanding the lack of express au thority, can bind a client to a settlement agreement if there is some overriding re ason for enforcing it .” Id. (emphasis added). The overriding reason for enforc ement of the settlement in Navajo Tribe was that the client had been in court with his attorney on the day of trial when settlement was reached by the parties an d made representations to the court regarding the settlement. See id. The client listened to the settlement read into the record, identified himself as the client, said that he understood the settlement, and stated that he approved it. See id. at 93. The court noted: “at no time during the negotiation of the settlement or it s dictation into the record did [the client] voice an objection. Instead, the [cli ent] . . . acquiesced in, and consented to, the settlement.” Id. In essence, by observing while his attorney negotiated the settlement and then explicitly agree ing to the settlement upon questioning by the judge in open court, the client communicated to the court that his attorney had apparent authority to settle the a greement. See id. The court emphasized several times that the settlement was ap proved by the parties in open court through communications between the client and the judge and that such open-court settlements, entered into with apparent authority, should be enforced for overriding public policy reasons. See id. at 91-93.13

None of the client involvement and public policy re asons present in Navajo Tribe are in evidence in the case at bar. The record on ly reveals one instance, during the formal settlement conference with the ma gistrate judge, when Mr. Chavez appeared with Mr. Aragon, and the record doe s not reveal what representations were made at that conference regard ing Mr. Aragon’s authority to settle the case without approval from Mr. Chavez. Nor does Primus claim that Mr. Chavez represented to it that Mr. Aragon had th e authority to settle Mr. Chavez’s claim. More importantly, Mr. Chavez was n ot present when Mr. Aragon and Mr. Simons settled the case or at the status co nference where Mr. Aragon told the district judge that settlement had been reached . Moreover, the judge never questioned Mr. Chavez, before or after the settleme nt, in court or out, as to his understanding or consent to it. Accordingly, the p ublic policy justifications for enforcing an in court settlement knowingly entered into by a client who later simply balked at the agreement are simply not impli cated in the case at bar. Therefore, Navajo does not suggest a contradictory result when Mr. C havez made no representations to the district judge that Mr. A ragon had the authority to settle his case, and, as noted above, merely acting as Mr. Chavez’s attorney did not give Mr. Aragon implied authority to settle. Because the district court appears to have mistaken implied authority for apparent authority and because the law of New Mexic o is that attorneys do not14

have the implied authority to settle their client’s cases, the district court abused its discretion by misapplying the law in this case. “[T]he majority of our sister circuits agree that w here material facts concerning the existence or terms of an agreement t o settle are in dispute, the parties must be allowed an evidentiary hearing.” U nited States v. Hardage , 982 F.2d 1491, 1496 (10th Cir. 1993); see also Mid-South Towing Co. v. Har-Win,
Inc. , 733 F.2d 386 (5th Cir. 1984) (remanding for an ev identiary hearing under facts very similar to the case at bar). Therefore, we remand for an evidentiary hearing so the district court can elicit facts whic h show that Mr. Aragon had apparent authority to settle or can reconsider its earlier assumption that Mr. Aragon did not have express authority to settle thi s case.

C. Claim That District Court Did Not Have Power to Rule in this Case Mr. Chavez claims that the parties agreed to allow the magistrate judge to make all dispositive rulings in this case under Rul e 73.1 of the Rules of the United States District Court for the District of Ne w Mexico. Therefore, Mr. Chavez concludes, the district court was without po wer to enter any order affecting his case. We do not need to address the district court’s power in the face of a Rule 73.1 agreement because Mr. Chavez di d not raise this challenge below and has produced no evidence--and we can find none in the record--that the3 Apparently, Mr. Chavez is representing the State of New Mexico as a type

of private district attorney in the criminal action against the repossession agents. 15 parties ever agreed to proceed under Rule 73.1. Th is claim is dismissed with prejudice.

D. Claim That District Court Was Biased Mr. Chavez has presented no evidence whatsoever to support this claim other than vague allegations that the court was bia sed against him because it, rather than the magistrate judge, entered an order in his case. We find this claim to be wholly without proof or merit and decline to discuss it further. It is dismissed with prejudice.

E. Motion to Disqualify Mr. Simons as Defendant’s Attorney Mr. Chavez claims that Mr. Simons may not representPrimus in this case because Mr. Chavez has subpoenaed Mr. Simons as a m aterial witness in the criminal assault case involving the attempted repos session of the van. 3 In response to Mr. Chavez’s motion to disqualify him, Mr. Simons has submitted an affidavit explaining that he does not know why Mr. Chavez subpoenaed him to testify in the criminal case because he has no pers onal knowledge of the facts of the criminal case and has never met the criminal de fendants.16

Putting aside the fact that, based on his affidavit , Mr. Simons testimony would almost certainly be deemed irrelevant and thu s excluded from the criminal trial, we do not understand why Mr. Simons would no t be able to testify in the criminal suit against the repossession agents and s till be able to represent Primus in this civil action. We can find no New Mexico law which would suggest that Mr. Simons should be disqualified, and the only cas e Mr. Chavez has directed us to is an Alabama case involving character certification for a law student--it is completely irrelevant to his motion. Instead, we a re inclined to believe that the only reason Mr. Chavez subpoenaed Mr. Simons to app ear in the criminal action, an action in which Mr. Simons knows none of the fac ts and none of the parties (save Mr. Chavez), is to try to muddy the waters in this appeal. We are not so easily blinded and deny Mr. Chavez’s motion.

III. CONCLUSION For the aforementioned reasons, we vacate the orderof the trial court enforcing the settlement offer and remand for an ev identiary hearing, dismiss Mr. Chavez’s other claims with prejudice, and deny Mr. Chavez’s motion to disqualify Mr. Simons as Primus’s attorney in this case. The mandate shall issue forthwith. Entered for the Court, Robert H. Henry Circuit Judge17