Opinion ID: 1607226
Heading Depth: 1
Heading Rank: 3

Heading: Enforceability of Settlement Agreement

Text: J.K. and P.K. also argue that the trial court erred in finding that the settlement agreement was enforceable, because, they say, J.K. and P.K.'s attorney did not have express authority to bind them and their minor children to a settlement agreement. Section 34-3-21, Ala.Code 1975, provides: An attorney has authority to bind his client, in any action or proceeding, by any agreement in relation to such case, made in writing, or by an entry to be made on the minutes of the court. In applying § 34-3-21, Alabama courts have recognized that `[a]n attorney may not consent to a final disposition of his client's case without express authority. Although an attorney of record is presumed to have his client's authority to compromise and settle litigation, a judgment entered upon an agreement by the attorney may be set aside on affirmative proof that the attorney had no right to consent to its entry.' Roberson v. State ex rel. Smith, 842 So.2d 709, 712 (Ala.Civ.App.2002) (quoting Warner v. Pony Express Courier Corp., 675 So.2d 1317, 1320 (Ala.Civ.App.1996), quoting in turn Blackwell v. Adams, 467 So.2d 680, 684-85 (Ala.1985)). `[W]hether an attorney has authority to bind his client by an agreement to settle the case by consent is a question of fact.' Alexander v. Burch, 968 So.2d 992, 996 (Ala.2006) (quoting Warner, 675 So.2d at 1320, quoting in turn Blackwell, 467 So.2d at 684). Where a trial court does not make an express finding of a particular fact, this court will assume that it found the fact necessary to support its judgment unless the finding of fact would be clearly erroneous and against the great weight of the evidence. Benitez v. Beck, 872 So.2d 844, 847 (Ala. Civ.App.2003) (citing Jones v. Stedman, 595 So.2d 1355 (Ala.1992)). J.K. and P.K. also contend that the trial court erred in finding that the settlement agreement was enforceable because, they argue, the trial court never held a hearing to determine whether J.K. and P.K.'s attorney in fact had express authority to settle the case. J.K. and P.K. cite Alexander v. Burch for the proposition that [a]n express finding of fact that the attorney had the authority to bind his client is a condition precedent to a conclusion that a settlement exists. J.K. and P.K.'s brief at 23. They maintain that [t]he only way, therefore, to have determined the presence or absence of `express, special authority' would have been to conduct an evidentiary hearing for the purpose of considering the testimony of [J.K.] and Mr. Galanos, since they were the only two persons who participated in the conversation. J.K. and P.K.'s reply brief at 10-11. In Alexander, the plaintiff contested the enforceability of a proposed settlement agreement because the plaintiff insisted that she never authorized her attorney to settle her personal-injury claim for the particular amount in the settlement offer. At a hearing to determine the enforceability of the settlement agreement, the trial judge heard conflicting testimony from the plaintiff and her attorney concerning whether the attorney had authority to settle the plaintiff's claim. Alexander, 968 So.2d at 995. The trial judge found that the settlement agreement was enforceable. However, we reversed the judgment of the trial court, concluding that [i]f the judge had actually made a finding accepting [the attorney's] version of the disputed facts, or if the state of the record was such that a finding to that effect could be deemed implicit in the trial court's order, we would affirm. 968 So.2d at 997-98. We remanded the case with instructions for the trial court to explain on return to remand whether it had made a finding of fact regarding the settlement authority of the plaintiff's attorney. Relying on Alexander, J.K. and P.K. argue that the trial court erred by failing to conduct a hearing to make an explicit finding of fact regarding whether their attorney was authorized to accept the proposed settlement agreement. In Alexander, the trial court had not made an explicit finding that the plaintiff's attorney was authorized to settle the plaintiff's claim. Further, the conflicting evidence in the record in Alexander, including a statement by the trial judge that he was forgoing making a finding on the authority issue, did not allow this Court to assume that the trial judge had found that the attorney was authorized to settle the plaintiff's claim. In this case, as in Alexander, the trial court did not make a finding of fact that J.K. and P.K.'s attorney was authorized to settle the case. Moreover, J.K. and P.K.'s attorney's refusal to sign the settlement agreement and to approve the letter, J.K.'s rejection of the proposed apology letter and his statement to the attorney that his authority to settle was subject to J.K.'s approval of the apology letter, the ongoing telephone conversations between counsel for UMS-Wright and J.K. and P.K.'s attorney after the settlement meeting, and the later scheduled-but-canceled meeting between J.K. and Dr. Havard indicate that no settlement had been reached because the attorneys were awaiting J.K. and P.K.'s approval of the settlement agreement. This Court will not assume that the trial court made the finding that J.K. authorized J.K. and P.K.'s attorney to settle the case because that would appear to be against the great weight of the evidence. See Benitez, 872 So.2d at 847 (Where a trial court does not make an express finding of a particular fact, this court will assume that it found the fact necessary to support its judgment unless the finding of fact would be clearly erroneous and against the great weight of the evidence.). This case, however, differs from Alexander in that J.K. and P.K. have argued only that the agreement was unenforceable because it was not reduced to writing or entered on the minutes of the court and because there was no meeting of the minds as to the terms of the agreement. J.K. and P.K. raised the argument that their attorney lacked the authority to settle the case in their postjudgment motion after the trial court had already found that the settlement agreement was enforceable and dismissed the claims against UMS-Wright. The trial court conducted a hearing, on September 27, 2006, to decide whether the settlement agreement was enforceable. Nothing in J.K. and P.K.'s response to UMS-Wright's motion to enforce the settlement, or in the record, indicates whether J.K. and P.K.'s attorney argued at that hearing that Galanos was not authorized to settle the case. As UMS-Wright points out, it was not until after the trial court decided that the settlement agreement was enforceable that J.K. and P.K. first argued that their attorney did not have the authority to settle the case. Because the issue of Galanos's authority to settle was not before the trial court at the enforceability hearing, the trial judge was not required to make a finding of fact on that issue, and Alexander is inapposite. Therefore, we must determine whether a challenge to an attorney's authority to settle a case raised in a postjudgment motion, requires the trial court to conduct a hearing and make a finding of fact as to whether the attorney was authorized to settle the claim. We hold that it does. In Warner v. Pony Express Courier Corp., supra, the attorneys met in the trial judge's chambers to discuss the possibility of settling Warner's claim. During the settlement negotiations, Warner's attorney represented that Warner would accept $7,500 as a settlement for all demands. That settlement offer was ultimately accepted, and the trial court dismissed Warner's action with prejudice. Warner moved the trial court to set aside the dismissal, arguing that he was unaware of the settlement and that he would not have agreed to its terms. Warner, 675 So.2d at 1319. The Court of Civil Appeals cited Jones v. Blanton, 644 So.2d 882 (Ala.1994), and Jones v. Stedman, 595 So.2d 1355 (Ala.1992), for the rule that if a party is present when a settlement agreement is announced by counsel in open court and the party fails to object to the settlement, the trial court is warranted in concluding that counsel has the apparent authority to settle the dispute. Warner, 675 So.2d at 1320. The Court of Civil Appeals concluded, however, that there was insufficient evidence that Warner's attorney had settlement authority because the trial court relied on an agreement between the attorneys when it dismissed the claims, and there was no indication in the record ... that Warner was present during the settlement discussion in chambers. Warner, 675 So.2d at 1321. The Court of Civil Appeals, therefore, reversed the trial court's order denying the motion to vacate its dismissal and remanded the case to the trial court with instructions to conduct a hearing to determine whether, at the time the settlement was stated to the court and the dismissal was entered, Warner's attorney was authorized to settle Warner's claims for $7500. Warner, 675 So.2d at 1321. In this case, neither J.K. nor P.K. was present at the settlement negotiations or at the enforceability hearing. Instead, the trial court relied on an agreement between counsel when it found that the settlement agreement was enforceable. Although the trial court was apparently not faced with the question whether J.K. had authorized J.K. and P.K.'s attorney to settle the case, the trial court was presented with that precise question when J.K. and P.K. moved the trial court to set aside or to vacate the dismissal of their claims against UMS-Wright. At that point, the trial court should have held a hearing to determine whether J.K. had authorized J.K. and P.K.'s attorney to settle the case. See Roberson, 842 So.2d at 713 (holding that the trial court [exceeded] its discretion in failing to hold a hearing on the issue whether [counsel] had the authority to enter into the stipulation agreement on behalf of Roberson when Roberson raised the issue of his attorney's authority to settle in a motion for a new trial); see also, Garabedian v. Allstates Eng'g Co., 811 F.2d 802, 804 (3d Cir.1987) (stating that the district court erred in denying the motion to vacate because [t]he district court should have held a hearing to determine whether Garabedian had indeed authorized Di Pietro to settle on the terms set forth in the proposed settlement agreement.); Greater Kansas City Laborers Pension Fund v. Paramount Indus., Inc., 829 F.2d 644, 646 (8th Cir.1987) (holding that the trial court erred in summarily denying the motion [to vacate the judgment] without any type of evidentiary hearing after the plaintiffs argued that the attorney had agreed to the settlement without their consent). Because we hold that the trial court erred in denying the motion to set aside or to vacate its dismissal of J.K. and P.K.'s claims without first holding a hearing to make a finding of fact as to whether J.K. had authorized J.K. and P.K.'s attorney to settle the case, we reverse that aspect of the trial court's judgment and remand this case with instructions that it conduct such a hearing and make an express finding.