Court Opinion

ID: 2811248
Source: CourtListenerOpinion
Date Created: 2015-06-24 17:02:24.100224+00
Date Added: 2024-06-11T12:08:21.943527
License: Public Domain

IN THE

   SUPREME COURT OF THE STATE OF ARIZONA
 DON C. ROBERTSON, AS SUCCESSOR TRUSTEE OF THE VIOLA I. ROBERTSON
  TRUST DATED OCTOBER 1, 2009; CHARLOTTE G. HARDY AS SUCCESSOR
  TRUSTEE OF THE VIOLA I. ROBERTSON TRUST DATED OCTOBER 1, 2009;
JAMES H. HARDY AND CHARLOTTE G. HARDY, HUSBAND AND WIFE; BONITA
 SUE ESCOBEDO AND JAMES D. SUMPTER, AS SUCCESSOR TRUSTEES OF THE
  SUMPTER TRUST; W. MICHAEL ADDINGTON AND CHERYL ADDINGTON,
   HUSBAND AND WIFE AND TRUSTEES OF THE W. MICHAEL AND CHERYL
                        ADDINGTON TRUST,
                          Plaintiffs/Appellees,

                                v.

 ROBERT E. ALLING AND JACQUELINE R. ALLING, INDIVIDUALLY AND AS
   HUSBAND AND WIFE; MELISSA L. MOORE, INDIVIDUALLY; DOYLE K.
WARNER AND DEANNA K. WARNER, INDIVIDUALLY AND AS HUSBAND AND
WIFE; HARRY L. VIEZENS AND MARCIA L. VIEZENS, INDIVIDUALLY AND AS
HUSBAND AND WIFE AND AS TRUSTEES OF THE VIEZENS TRUST; FREDERICK
  AND CALISTA WASHBURN, INDIVIDUALLY AND AS HUSBAND AND WIFE;
MGF FUNDING, INC., AN ARIZONA CORPORATION; BRIAN A. MORTENSEN
  AND OXANA MORTENSEN, INDIVIDUALLY AND AS HUSBAND AND WIFE;
 ROBERT R. HICKS AND NICOLE HICKS, INDIVIDUALLY AND AS HUSBAND
 AND WIFE; KARL F. KOHLHOFF AND JOAN M. KOHLHOFF, INDIVIDUALLY
AND AS HUSBAND AND WIFE AND AS TRUSTEES OF THE KOHLHOFF FAMILY
TRUST; WILLIAM D. LAWRENCE, INDIVIDUALLY; LAWRENCE PROPERTIES, A
       GENERAL PARTNERSHIP; WILLIAM GLAUNSINGER AND LORNA
   GLAUNSINGER, INDIVIDUALLY AND AS HUSBAND AND WIFE; THOMAS
 GRAHAM AND REGINA GRAHAM, INDIVIDUALLY AND AS HUSBAND AND
 WIFE; GRAHAM HOMES, LLC, AN ARIZONA LIMITED LIABILITY COMPANY;
 GERALD L. GRAHAM, INDIVIDUALLY AND AS TRUSTEE OF THE GRAHAM
            FAMILY TRUST, AND VELMA GRAHAM, HIS WIFE,
                        Defendants/Appellants.

                        No. CV-14-0246-PR
                        Filed June 24, 2015

           Appeal from the Superior Court in Gila County
               The Honorable Peter J. Cahill, Judge
                        No. CV2011-00165
                           AFFIRMED
                         ROBERTSON V. ALLING
                          Opinion of the Court

             Opinion of the Court of Appeals, Division Two
                 235 Ariz. 329, 332 P.3d 76 (App. 2014)
                              VACATED

COUNSEL:

Noel Fidel (argued), Law Office of Noel Fidel, Phoenix; Robert Grasso, Jr.,
and Jenny J. Winkler, Grasso Law Firm, P.C., Chandler, Attorneys for Don
C. Robertson, et al.

Russell A. Kolsrud (argued) and Mark S. Sifferman, Clark Hill PLC,
Scottsdale, Attorneys for Robert E. Alling, et al.

Stanley G. Feldman, Haralson, Miller, Pitt, Feldman & McAnally, P.L.C.,
Tucson, and David L. Abney, Knapp & Roberts, P.C., Scottsdale, for Amici
Curiae Arizona Association for Justice/Arizona Trial Lawyers Association

JUSTICE TIMMER authored the opinion of the Court, in which CHIEF
JUSTICE BALES, VICE CHIEF JUSTICE PELANDER and JUSTICES
BERCH and BRUTINEL joined.

JUSTICE TIMMER, opinion of the Court:

¶1            Agreements between parties or attorneys in civil lawsuits are
not binding if disputed unless they are evidenced by a writing or made
orally in court. Ariz. R. Civ. P. 80(d). We here consider whether Rule 80(d)
makes a written settlement agreement unenforceable because it lacked the
written assent of clients who dispute their attorney’s authority to make the
agreement. Holding that no such written assent is required and that the
agreement here satisfied Rule 80(d), we also conclude that it is enforceable
because the attorney acted within the apparent authority given by his
clients.

                           I. BACKGROUND

¶2            Petitioners (“the Robertson Group”) sued neighboring
property owners (“the Alling Group”) concerning a water line. On January
29, 2013, the parties and their attorneys attended a mediation but did not
reach an agreement. At the end of the mediation, the Alling Group,

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                         ROBERTSON V. ALLING
                          Opinion of the Court

represented by attorney Mark Sifferman, made a settlement offer requiring
acceptance within forty-eight hours. 1 Hours before the offer expired,
Robert Grasso, the Robertson Group’s attorney, told Sifferman that the
Robertson Group needed more time to respond to the offer because one
group member had a family emergency. Grasso proposed that the
attorneys discuss the offer the next week. Sifferman did not extend the
January 31 deadline, and the offer expired.

¶3           Sifferman advised his clients of Grasso’s request and
recommended they “leave the door open” for settlement. Two of the Alling
Group members emailed Sifferman on February 4 stating that they and
others favored “removing the settlement offer proposed in the mediation.”
But Sifferman did not read the email and mistakenly thought all his clients
were willing to settle on the terms previously conveyed to the Robertson
Group.

¶4             On February 6, after talking with another attorney at Grasso’s
law firm, Sifferman sent that attorney an email extending a new settlement
offer with terms that mirrored the prior offer but would expire at 5:00 p.m.
on February 8. Grasso timely accepted the offer via email. Later, after
Grasso’s law firm had informed the trial court of the settlement (the
“February 8 settlement”) and circulated draft settlement documents,
Sifferman discovered he had lacked authority to extend the settlement offer.
After conferring with his clients, Sifferman made a new settlement offer,
which materially varied from the February 8 settlement.

¶5           The Robertson Group moved to enforce the February 8
settlement. Without an evidentiary hearing, the trial court granted the
motion, ruling that Sifferman had actual and apparent authority to extend
the settlement offer and, alternatively, that the Alling Group was equitably
estopped from disputing that authority. The court also ruled that Arizona
Rule of Civil Procedure 80(d) did not apply but, if it did, the emails
exchanged between counsel satisfied the rule.

¶6           The court of appeals reversed. Robertson v. Alling, 235 Ariz.
329, 339 ¶ 38, 332 P.3d 76, 86 (App. 2014). After finding that a dispute

1      Another attorney represented one member of the Alling Group.
That member is not a party here, and the acts of that member and her
attorney are not at issue.
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                         ROBERTSON V. ALLING
                          Opinion of the Court

existed concerning Sifferman’s authority to enter into the February 8
settlement, the court concluded that this dispute triggered Rule 80(d). Id.
at 333 ¶ 10, 332 P.3d at 80. “Because the [Alling Group’s] assent to the
contract is not in writing,” the court reasoned, “the requirements of Rule
80(d) were not met, and the agreement is unenforceable as a matter of law.”
Id. The court remanded for the trial court to determine whether the Alling
Group is equitably estopped from opposing enforcement of the February 8
settlement. Id. at 339 ¶ 37, 332 P.3d at 86.

¶7          We granted review to decide whether Rule 80(d) applies
when an attorney’s authority to settle is challenged and to provide
guidance on apparent authority, both recurring issues of statewide
importance. We have jurisdiction pursuant to Article 6, Section 5 of the
Arizona Constitution.

                             II. DISCUSSION

¶8            Because the trial court effectively granted summary judgment
regarding the existence, terms, and enforceability of the parties’ settlement
agreement, we employ the summary judgment standard of review. See
Perry v. Ronan, 225 Ariz. 49, 52 ¶ 7, 234 P.3d 617, 620 (App. 2010).
Accordingly, we determine de novo whether any genuine disputes of
material fact exist and whether the trial court correctly applied the law,
viewing the facts in the light most favorable to the Alling Group as the non-
prevailing party. See Ariz. R. Civ. P. 56(a); BMO Harris Bank, N.A. v.
Wildwood Creek Ranch, LLC, 236 Ariz. 363, 365 ¶ 7, 340 P.3d 1071, 1073 (2015).

                               A. Rule 80(d)

¶9            Rule 80(d) provides that “[n]o agreement or consent between
parties or attorneys in any matter is binding if disputed, unless it is in
writing, or made orally in open court, and entered in the minutes.” The
issue before us is whether the rule requires a writing reflecting a client’s
assent to a written agreement when the client disputes its attorney’s
authority to make the agreement.

¶10          We interpret court rules to effect the drafters’ intent. State v.
Salazar-Mercado, 234 Ariz. 590, 592 ¶ 4, 325 P.3d 996, 998 (2014). When a
rule’s language is unambiguous, we apply it as written. Id. If the language
is ambiguous, we apply secondary principles of construction, such as

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                          ROBERTSON V. ALLING
                           Opinion of the Court

examining the rule’s spirit and purpose as well as the effects and
consequences of differing interpretations. Id.

¶11           The Robertson Group relies on Hays v. Fischer as support for
its argument that Rule 80(d) applies only if “the existence of the settlement
agreement and its terms are . . . in dispute” and not when the client disputes
whether it is bound by the settlement agreement. 161 Ariz. 159, 166, 777
P.2d 222, 229 (App. 1989); see also Perry, 225 Ariz. at 54 ¶¶ 17–18, 234 P.3d
at 622 (holding that Rule 80(d) does not apply because the client “only
disputes whether he is bound to the settlement agreement; the agreement’s
existence and terms are not in dispute”). That group asserts that the Alling
Group does not dispute the existence or terms of the February 8 settlement,
but only contests whether it is bound by the agreement, and, therefore, Rule
80(d) does not apply.

¶12            Like the court of appeals, see Robertson, 235 Ariz. at 338 ¶¶ 31–
32, 332 P.3d at 85, the Alling Group relies on Canyon Contracting Co. v.
Tohono O’Odham Housing Authority, which held that if an attorney’s
settlement authority is disputed, Rule 80(d) requires a written
manifestation of the client’s assent to the agreement. 172 Ariz. 389, 393, 837
P.2d 750, 754 (App. 1992). In Canyon Contracting, the court reasoned that
this construction of Rule 80(d) furthers the rule’s “policy of avoiding
difficult issues of proof.” Id.

¶13           We agree with the Robertson Group. Rule 80(d) serves to
avoid collateral disputes between parties by requiring written evidence of
any stipulations and agreements. Cf. Hackin v. Rupp, 9 Ariz. App. 354, 355–
56, 452 P.2d 519, 520–21 (1969) (stating that most jurisdictions have adopted
similar rules to “prevent fraudulent claims of oral stipulations, and to
prevent disputes as to the existence and terms of agreements and to relieve
the court of the necessity of determining such disputes” (quoting 83 C.J.S.
Stipulations § 4 (1969)) (internal quotation marks omitted)). If parties do
not dispute the existence or terms of an agreement, no purpose is served by
applying Rule 80(d). Whether the agreement is in writing does not resolve
whether the lawyer was authorized to bind the client. Because the parties
here do not dispute the existence and terms of the February 8 settlement,
Rule 80(d) does not apply.

¶14           But even if Rule 80(d) applies, the attorneys’ exchange of
emails satisfied the rule. Nothing requires clients to separately assent in

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                          ROBERTSON V. ALLING
                           Opinion of the Court

writing to a written agreement brokered by their attorney. Construing Rule
80(d) to require the client’s assent when the client disputes its attorney’s
authority would abrogate the apparent authority doctrine in the attorney-
client context. Our courts have long recognized that attorneys can bind
clients who have cloaked them with apparent authority to act on their
behalf. See, e.g., Panzino v. City of Phoenix, 196 Ariz. 442, 447 ¶ 17, 999 P.2d
198, 203 (2000); Ariz. Title Ins. & Trust Co. v. Pace, 8 Ariz. App. 269, 271–72,
445 P.2d 471, 473–74 (1968). Because apparent authority is invoked in the
absence of an express written manifestation of client assent, and generally
turns on factual disputes, see Goodman v. Physical Res. Eng’g, Inc., 229 Ariz.
25, 29 ¶ 12, 270 P.3d 852, 856 (App. 2011), the Alling Group’s interpretation
would eliminate application of the apparent authority doctrine to an
attorney’s acts. And, because Rule 80(d) applies to numerous stipulations
and agreements, this interpretation could cast doubt on agreements
reached between attorneys to resolve discovery disputes and other routine
matters. Neither Rule 80(d)’s text nor purpose suggests that the drafters
intended this result. Cf. Mustang Equip., Inc. v. Welch, 115 Ariz. 206, 211, 564
P.2d 895, 900 (1977) (“It has always been the policy of the law to favor and
encourage the resolution of controversies through compromise and
settlement rather than through litigation.”).

¶15           We endorse the holding in Hays that Rule 80(d) applies only
when parties dispute the existence or terms of an agreement, as distinct
from other challenges to its enforceability. If such a dispute exists, the rule
can by satisfied by writings exchanged between counsel. Rule 80(d) does
not require the client’s written assent to the agreement. We disapprove
Canyon Contracting insofar as it reached a different conclusion. Because the
parties do not dispute the existence or terms of the February 8 settlement,
Rule 80(d) does not preclude its enforcement.

                           B. Apparent Authority

¶16          The relationship between an attorney and client is governed
by agency law principles. See Panzino, 196 Ariz. at 447 ¶ 17, 999 P.2d at 203.
The Robertson Group concedes, contrary to the trial court’s ruling, that
Sifferman lacked actual authority to enter into the February 8 settlement. It
argues, however, that Sifferman had apparent authority to bind the Alling
Group to that agreement.

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                          ROBERTSON V. ALLING
                           Opinion of the Court

¶17           An attorney without actual authority to settle a dispute can
nevertheless do so if the other party to the agreement “reasonably assumes
that the lawyer is authorized to do the act on the basis of the client’s (and
not the lawyer’s) manifestation of such authorization.” Restatement (Third)
of Law Governing Lawyers § 27; Restatement (Third) of Agency § 3.03 (to
same effect). The client “manifests assent or intention through written or
spoken words or other conduct.” Restatement (Third) of Agency § 1.03.
That the client has retained an attorney does not establish apparent
authority to settle a dispute. See United Liquor Co. v. Stephenson, 84 Ariz. 1,
3, 322 P.2d 886, 887 (1968). The party seeking to enforce the settlement bears
the burden of showing that its reliance on the attorney’s apparent authority
was reasonable. See Miller v. Mason-McDuffie Co. of S. Cal., 153 Ariz. 585,
590, 739 P.2d 806, 811 (1987).

¶18            The undisputed facts establish Sifferman’s apparent authority
to bind the Alling Group to the February 8 settlement. At the end of the
mediation, all members of the Alling Group, after consulting with their
attorneys, offered, through the mediator, to settle the lawsuit on specified
terms. The attorneys for each side, at the mediator’s suggestion,
immediately met without their clients to “hash out” the settlement terms.
At Grasso’s request, Sifferman agreed to leave the offer open for forty-eight
hours to enable Grasso to expedite discussions with the Robertson Group’s
insurers concerning payment of the group’s attorney fees. Although the
deadline initially requested by Grasso expired, Sifferman confirmed days
later that the offer remained available on the same terms, and the Robertson
Group accepted it.

¶19             By extending a settlement offer and then leaving Sifferman to
finalize the timing and terms, the Alling Group manifested its intention that
Sifferman was empowered to conclude the settlement on the terms
approved by the Alling Group. The forty-eight-hour deadline was not part
of the offer extended by the Alling Group. Rather, Grasso requested the
deadline for the benefit of the Robertson Group, Sifferman agreed to it
without consulting the Alling Group, and nothing suggested that the
deadline was material to the Alling Group. Without a deadline, the offer
would have expired after a reasonable time period, unless revoked. 1
Williston on Contracts § 5:2 (4th ed.) (2015). By initially granting Grasso’s
request for a forty-eight-hour deadline and then effectively extending the
offer as “still open” days after the deadline expired, Sifferman acted within
his apparent authority to complete the settlement on the terms agreed to by

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                         ROBERTSON V. ALLING
                          Opinion of the Court

the Alling Group. Cf. Restatement (Third) of Law Governing Lawyers §
21(3) (stating that absent client instruction or agreement, “a lawyer may
take any lawful measure within the scope of representation that is
reasonably calculated to advance a client’s objectives as defined by the
client”).

¶20            In sum, we hold that the Alling Group’s actions allowed the
Robertson Group to reasonably assume that Sifferman had authority to
keep a settlement offer on the table or reoffer the same settlement terms
days after the agreement’s expiration, and the Robertson Group reasonably
relied on the attorney’s apparent authority. Therefore, we agree with the
trial court that the settlement agreement is binding on the Alling Group.

                             C. Attorney Fees

¶21          The Robertson Group requests attorney fees pursuant to
A.R.S. § 12-341.01, which gives courts discretion to award fees “[i]n any
contested action arising out of a contract.” Because enforcement of the
February 8 settlement is such an action, we award the Robertson Group its
reasonable attorney fees expended on appeal upon its compliance with
ARCAP 21(b).

                           III. CONCLUSION

¶22            Rule 80(d) applies only if a party disputes the existence or
terms of an agreement. If such a dispute exists, the rule can be satisfied by
writings exchanged by counsel. Rule 80(d) does not also require the written
assent of a client who disputes that it is bound by the agreement. Because
the parties here do not dispute the existence or terms of the February 8
settlement, Rule 80(d) does not apply. Finally, because the evidence shows
that Sifferman was cloaked with apparent authority to bind the Alling
Group to the February 8 settlement, the trial court correctly enforced the
agreement. We vacate the court of appeals’ opinion, affirm the trial court’s
judgment, and award the Robertson Group its reasonable attorney fees on
appeal.

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