Court Opinion

ID: 9650064
Source: CourtListenerOpinion
Date Created: 2023-08-23 15:22:21.987678+00
Date Added: 2024-06-11T18:12:17.731819
License: Public Domain

POPOVICH, Judge,
concurring and dissenting:
While I wholeheartedly agree with the majority’s learned holding that a lawsuit for damages based on a loss of consortium claim may continue despite the settlement of the underlying personal injury claim, I respectfully dissent from the majority’s application of Rothman v. Fillette, 503 Pa. 259, 469 A.2d 543 (1983) to enforce the settlement agreement.
*470In Rothman, supra, our Supreme Court unequivocally stated:
At the outset, it must be understood that under the facts of this case there is no question of an implied or an apparent agency. The law in this jurisdiction is quite clear that an attorney must have express authority to settle a cause of action of the client, (emphasis added) International Organization Masters, Mates and Pilots of America, Local No. 2 v. International Organization Masters, Mates and Pilots of America, Inc., 456 Pa. 436, 318 A.2d 918 (1974); Archbishop v. Karlak, 450 Pa. 535, 299 A.2d 294 (1973); McLaughlin v. Monaghan, 290 Pa. 74, 138 A. 79 (1927); Lipschutz v. Lipschutz, 124 Pa.Super. 380, 188 A. 556 (1936). Rothman, 503 Pa. at 264, 469 A.2d at 545.
However, the Court continued, stating:
Under these circumstances, we believe applicable here the long recognized principle that where one of two innocent persons must suffer because of the fraud of a third, the one who has accredited him must bear the loss. Keller v. N.J. Fidelity and Plate Glass Insurance Co., 306 Pa. 124, 159 A. 40 (1932); Mundorff v. Wickersham, 63 Pa. 876, (1869). As we stated in Rykaczewski v. Kerry Homes, Inc., 192 Pa.Super. 461, 465, 161 A.2d 924, 926 (1960):
Where one of two innocent persons must suffer, the loss should be borne by him who put the wrongdoer in a position of trust and confidence and thus enabled him to perpetrate the wrong.
Our case law has expressed that a principal acting through an agent in dealing with an innocent third party must bear the consequences of the agent’s fraud. Keller v. N.J. Fidelity and Glass Insurance Co., supra; Williams v. Cook, 289 Pa. 207, 137 A. 232 (1927); Mundorff v. Wickersham, supra; Rykaczewski v. Kerry Homes, Inc., supra. In such instances the lack of authority of the agent has been rejected as a basis for shifting the principal’s losses onto the innocent third *471party. See Keller v. N.J. Fidelity Glass Insurance Co., supra; Williams v. Cook, supra; Mundorff v. Wickersham, supra; Rykaczewski v. Kerry Homes, Inc., supra; Himes v. Herr, 3 Pa.Super. 124 (1896). The fact that the agent has wronged his principal through the agent’s unlawful act does not provide a predicate for insulating the principal against the harm caused by the agent at the expense of the innocent third party who had no responsibility for the conduct of the agent. Keller v. N.J. Fidelity and Glass Insurance Co., supra; Williams v. Cook, supra; Mundorff v. Wickersham, supra, Rykaczewski v. Kerry Homes, Inc., supra. We believe that this view is consistent with fundamentally sound principals of agency and equity and that there were no other additional factors here present to justify ignoring its applicability. Rothman, 503 Pa. at 265, 469 A.2d at 545-546.
Applying this rationale, the Supreme Court reversed our affirmance of the lower court’s decision.1 Clearly, the two passages from the Supreme Court’s decision quoted above are inconsistent, and, consequently, the legal effect of the Rothman opinion is vitiated by that inconsistency.
I am bemused by the Supreme Court’s application of agency by estoppel in the context of an attorney-client relationship. Normally, “[ajuthority by estoppel occurs when a principal by his culpable negligence, permits an agent to exercise powers not granted to him, even though the principal did not know or have notice of the agent’s conduct.” Apex Financial Corp. v. Decker, 245 Pa.Super. 439, 369 A.2d 483, 486 (1976); Reifsnyder v. Dougherty, 301 Pa. 328, 152 A. 98 (1930). Obviously, the logical consequence of applying that principal of “agency law” to the Rothman facts is to overrule prior Pennsylvania case law and to establish, as Pennsylvania law, the rule that settle*472ment of a client’s cause of action by his attorney is enforceable against the client where the attorney had either express, apparent or implied authority to settle. I, however, do not believe our Supreme Court intended such a result, since prior Pennsylvania case law regarding the need for express authority to create an enforceable settlement was not expressly overruled, and, in fact, precisely that case law was cited in support of the court’s decision.
Though I am unable to explain the conundrum that the Rothman, supra, creates, I assume that our Supreme Court did not intend to depart from the long established Pennsylvania tradition which mandates invalidation of the settlement or release of a claim by an attorney not expressly authorized by his client so to do. And indeed, the Supreme Court, in citing Archbishop v. Karlak, supra, and McLaughlin v. Monaghan, supra, inter alia, reinforced that very principle. Inexplicably, however, the Supreme Court proceeded to depart from its own statement of the law, applying “fundamentally sound principles of agency and equity,” to enforce a settlement where there was admittedly no express authority to settle. Clearly, Pennsylvania case law commands that “principle of agency and equity” do not apply when adjudicating an attorney’s unauthorized settlement of a client’s claim. Therefore, I would follow the mandate of prior case law as stated in McLaughlin v. Monaghan, supra:
An attorney as such cannot release a client’s cause of action ..., or surrender his substantial rights in whole or in part ..., or compromise or settle his client’s litigation, without special authority so to do. McLaughlin, 138 A. at 80.
See also Archbishop, supra, 299 A.2d 294 (1973); International Organization Masters, Mates and Pilots of America, Local No. 2 v. International Organization Masters, Mates and Pilots of America, Inc., supra, 456 Pa. 436, 318 A.2d 918 (1974); Tucker v. Tucker, 370 Pa. 8, 87 A.2d 650 (1952); Starling v. West Erie Avenue Building & Loan Association, 333 Pa. 124, 3 A.2d 387 (1939); Lipschutz v. *473Lipschutz, supra, 188 A. 556 (1936); Garnet v. D’Alonzo, 55 Pa.Cmwlth.Ct. 263, 422 A.2d 1241 (1980).
Moreover, the Court of Appeals for the Third Circuit, in Garabedian v. Allstates Engineering Co., 811 F.2d 802 (3rd Cir.1987), recently held:
In general, an attorney has no authority to settle his client’s case solely by virtue of his general power to handle the case. Holker v. Parker, 11 U.S. (7 Cranch) 436, 452, 3 L.Ed. 396 (1813). Instead, an attorney can only enter a binding compromise if the client has authorized him to do so. While there is a presumption that a settlement entered into by an attorney has been authorized by the client, rebuttal of the presumption renders any purported settlement ineffective. See generally, Annotation, Authority of Attorney to Compromise Action, 30 ALR2d 944 (1953). Garabedian, supra, 811 F.2d at 803.
See also Smith v. Delaware Valley Auto Spring Co., 642 F.Supp. 1112, 1115 (E.D.Pa.1986) (cited Rothman, supra, 469 A.2d 543 for the sole proposition that an attorney must have express authority to settle).
Instantly, the lower court concluded that paragraphs 11 and 12 of the appellants’ brief (quoted in the majority opinion) constituted judicial admissions of both appellants’ express authorization of settlement. However, even a cursory review of those “admissions” clearly reveals that neither statement was an admission by Mrs. Manzitti of her express authorization to settle. As the above discussion indicates, I would apply to the case sub judice only that portion of Rothman, supra, which states: “The law in this jurisdiction is quite clear that an attorney must have express authority to settle a cause of action of the client, (citations omitted).” Rothman, 503 Pa. at 264, 469 A.2d at 545. Therefore, I would find that, if Mrs. Manzitti did not expressly authorize Attorney Kocsis to settle her claim, then the settlement agreement is unenforceable as the appellees’ offer was to settle both appellants’ claims not merely that of Mr. Manzitti. Instantly, Mrs. Manzitti con*474tends that she did not authorize her attorney to settle her loss of consortium claim. Consequently, I would remand the case for an evidentiary hearing on the question of whether Patricia Manzitti gave Attorney Kocsis her express authority to settle her claim.

. In Rothman v. Fillette, 305 Pa.Super. 28, 451 A.2d 225 (1982), we held that, absent express authority from the client, an attorney cannot compromise his client’s claim, release his cause of action or settle litigation. Thus, we affirmed the lower court’s holding that the settlement agreement entered into by Mr. Rothman’s attorney without his express authority was unenforceable.