Court Opinion

ID: 768804
Source: CourtListenerOpinion
Date Created: 2012-04-18 09:14:18+00
Date Added: 2024-06-11T17:55:38.409976
License: Public Domain

213 F.3d 336 (7th Cir. 2000)
MICHAEL G. POHL,    Plaintiff-Appellant,v.UNITED AIRLINES, INCORPORATED,    Defendant-Appellee.
No. 99-4007
In the  United States Court of Appeals  For the Seventh Circuit
Argued April 7, 2000
Decided May 10, 2000

Appeal from the United States District Court  for the Southern District of Indiana, Indianapolis Division.  No. 97 C 1246--Sarah Evans Barker, Chief Judge.
Before BAUER, EASTERBROOK, and ROVNER, Circuit  Judges.
ROVNER, Circuit Judge.

1
Some litigants in  pursuing settlement of their claims hold the  belief that they can change their mind at any  time before they actually sign the settlement  agreement. As this case illustrates, that  perception is often unfounded in the law.

2
The genesis of this case was a lawsuit by  Michael Pohl, an aircraft inspector for United  Airlines, against United alleging violations of  the Uniformed Services Employment and  Reemployment Rights Act (USERRA). The complaint  included three counts, alleging discrimination  based on his military status (Count 1),  retaliation (Count 2), and failure to properly  credit Pohl's employee stock ownership ("ESOP")  account for time spent fulfilling his duties in  the Reserves (Count 3). Eventually, the parties  began to discuss settlement, although there is a  wide divergence between Pohl's perception of the  discussions and that portrayed by his attorney  and opposing counsel. What is undisputed is that  the attorneys engaged in a number of settlement  discussions by telephone between December 15,  1998, and March 8, 1999, and eventually informed the court that they had reached a settlement of  the entire case. Shortly thereafter, Pohl called  the court himself, and expressed surprise when  informed of the news of a full settlement. The  judge convened a status conference, at which time  Pohl reviewed the written settlement proposal for  the first time and refused to sign it. United  then brought a motion to enforce the settlement,  which Pohl opposed on the ground that his  attorney did not have the authority to negotiate  the settlement.

3
After holding an evidentiary hearing on the  issue, the district court entered an opinion  which granted enforcement of the settlement.  Unfortunately, the court did not enter a separate  judgment in the case as is required under Fed. R.  Civ. P. 58. At oral argument, however, the  parties both agreed that the opinion by the  district court disposed of all issues, and that  a separate judgment would merely have reflected  the language in the opinion. Specifically, they  agreed that enforcement of the settlement  required dismissal of the case with prejudice,  and that the settlement agreement itself would  not have been incorporated into the judgment.  Accordingly, under Bankers Trust v. Mallis, 435 U.S. 381 (1978) we may proceed to consider the  appeal despite the technical violation of R. 58.

4
Pohl asserts that his attorney lacked the  authority to negotiate a settlement of his case.  Issues regarding the formation, construction, and  enforceability of a settlement agreement are  governed by local contract law, Carr v. Runyan,  89 F.3d 327 (7th Cir. 1996), and therefore we  must look to the law of Indiana in deciding this  claim. As the Indiana Supreme Court held in Koval  v. Simon Telelect, 693 N.E.2d 1299, 1301 (Ind.  1998), in order to bind a client to a settlement,  an attorney must have either express, implied, or  apparent authority, or must act according to the  attorney's inherent agency power. The Koval court  further held, however, that retention of an  attorney does not, in itself, confer implied or  apparent authority to settle. Id. The authority  to settle, therefore, derives from other actions  of the client with respect to the attorney or  third parties, including but not limited to  express grants of actual authority. For instance,

5
[t]he client may not intend for the attorney to  settle a claim but may nonetheless imply that  intention to the attorney. If so, the client is  bound by a resulting settlement. Further, both  apparent authority and inherent agency power may  be created by actions of the client in its  dealings with third parties even if the attorney  knows there is no actual authority. Under these  circumstances, the client is bound even if it is  a breach of the attorney's professional  obligations to make the commitment.

6
Id. at 1303 n.6. The district court determined  that Pohl's attorney had actual authority to  settle, and we review that decision only for  abuse of discretion. Carr, 89 F.3d at 331; Wilson  v. Wilson, 46 F.3d 660, 664 (7th Cir. 1995). The  court reached that conclusion after conducting an  evidentiary hearing, and the history of the  negotiations and of the communications between  Pohl and his attorney establishes that the  court's determination is well-supported by the  record.

7
The relevant history begins at a December 15,  1998, settlement conference with Magistrate Judge  Shields. The discussions turned to Count 3, and  United agreed to look into whether the ESOP  account had been properly credited. The other  counts were not discussed at any length. Pohl  claims that was because they could not reach a  consensus on those counts, but the attorneys  maintain that the talks centered on Count 3  because the other counts had turned out to have  little merit. It is of little import who is  right. The parties left the settlement conference  with the understanding that United would contact  Pohl's attorney with the ESOP calculations.  United did so, and agreed that the ESOP account  had not been properly credited. The attorneys  then discussed language for a settlement  agreement. Among other provisions, the settlement  required United to: agree to credit Pohl's ESOP  account and provide documentation regarding the  credits; promise not to retaliate against Pohl  for filing the litigation; and pay Pohl's  reasonable attorneys' fees. In return, Pohl would  dismiss the entire complaint, release United from  any liability for claims arising from the facts  in the complaint except to the extent that those  facts formed the basis for a claim under the  Americans With Disabilities Act, 42 U.S.C.  sec.sec. 12101 et seq., and maintain the  confidentiality of the agreement.

8
The billing records from Pohl's attorney  document ten phone calls between Pohl's attorney  and either Pohl or his wife in the time period  from December 15, 1998, to March 8, 1999. The  records further reveal that before or after each  one of those calls, Pohl's counsel was in contact  with opposing counsel. On March 8, 1999, Pohl's  attorney sent Pohl a letter confirming "the  settlement of [Pohl's] current federal court case  against United Airlines." It further discusses  the recovery of attorneys' fees for the "military  discrimination suit," and mentions that it does  not include fees for a separate ADA claim that  was not part of that case. According to Pohl's  testimony at the evidentiary hearing, his  reaction to the letter was "I thought, okay,  great, they settled it, but what exactly is the  settlement? Show me the settlement and show me  the proof. . . ." He claims that he still did not  think that the settlement included all of the  counts. Although he spoke with his attorney a  number of times after receipt of the letter,  including a meeting with him, Pohl never  expressed any concerns regarding the possibility  of a settlement, other than to request it in  writing and to request the documentation  concerning his ESOP account. As mentioned  earlier, Pohl eventually refused to sign the  settlement when it was presented to him at the  status conference.

9
Based on that history, the district court  rejected Pohl's claim that the settlement was  reached without authority from him. The court  specifically relied on the objective evidence of  communications between Pohl and his counsel,  which supported the testimony of Pohl's counsel  that Pohl was informed of each aspect of the  settlement and approved of each one. During the  negotiation period from December 15 until March  8, there is an absolute correlation between phone  calls by Pohl's counsel to opposing counsel, and  calls by Pohl's counsel to Pohl on the same day.  That supports the testimony of Pohl's counsel  that he constantly communicated the proposed  settlement terms to Pohl. Moreover, Pohl failed  to register any objection with his counsel when  informed by letter that the "case" was settled,  even though he testified that when he first read  the March 8 letter confirming the settlement he  thought it might include the whole case. In fact,  his first reaction was "okay, great, they settled  it;" that is hardly the reaction one would expect  of someone who has not given his attorney the  authority to settle the case. Furthermore, as the  court in Koval recognized, Pohl may be bound by  the settlement if he implied an intention to  settle the claim to his attorney, regardless of  whether he actually intended to settle the claim.  Koval, 693 N.E.2d at 1303 n.6. The testimony of  Pohl's attorney, which the court credited, would  have been enough to establish implied authority  to settle, even if express authority had not been  found. In light of the record, the district court  certainly did not abuse its discretion in holding  that the settlement was obtained with actual  authority from Pohl and that Pohl was bound by  it.

10
Pohl counters, however, that he believed that  he had the ultimate authority to approve or  disapprove the settlement, and that he was not  bound until he signed off on it. Pohl points to  a clause in the retainer agreement with his  counsel, which he altered ostensibly to retain  that authority. In Part X, the retainer agreement  granted the Firm the "Power of Attorney to  execute all documents connected with the claim .  . . including . . . settlement agreements . . .  ." Pohl added the handwritten language "with my  authorization" in the margin next to that clause  because he and his wife "did not like the idea of  [the Firm] having total authority to settle this  matter without [their] intervention." That  provision, however, merely specifies that his  attorney may not settle the case without his  authority. It does not require written  authorization of a settlement. As we have already  noted, the district court did not err in holding  that Pohl authorized his attorney to settle the  case. That oral authorization satisfied the  handwritten clause, and provided his attorney  with the actual authority to settle the case.  Pohl's misplaced belief that he could back out of  the settlement at any time prior to signing it  does not entitle him to legal relief from a  settlement negotiated with actual authority by  his attorney.

11
Finally, Pohl attempts to raise a new argument  on appeal, that the June 2 settlement agreement  cannot be enforced because even if there was a  meeting of the minds regarding settlement on  February 24, the June 2 agreement did not  properly memorialize that agreement. Pohl  concedes that he never raised this issue in the  district court, but argues that he was then  arguing that there was no authority to enter into  the February 24 agreement, and he had no reason  at that time to argue that the June 2 agreement  failed to reflect the terms agreed to on February  24. That argument is nonsensical. The issue  before the district court was whether it should  enforce the June 2 agreement. Pohl should have  raised at that time any claims that he had that  would affect the enforceability of that  settlement agreement. It certainly should have  been foreseeable to Pohl that he could lose on  his argument regarding lack of authority, and  that he should present any alternative arguments  at that time. This circuit has held numerous  times that arguments against the enforceability  of settlement agreements are waived if not raised  in the district court. Carr, 89 F.3d at 333;  Wilson, 46 F.3d at 667; Laserage Technology Corp.  v. Laserage Laboratories, Inc., 972 F.2d 799, 804  (7th Cir. 1992). In fact, even arguments raised  in the district court may be waived if not  presented in a timely manner, such as those  raised for the first time in a motion for  reconsideration. Wilson, 46 F.3d at 667. Pohl did  not raise this argument at any time in the  district court, and in fact expressly limited the  issue before the court, stating: "I think we all  understand that the only issue today is whether  or not attorneys for Mr. Pohl had the authority  to enter into this deal." Transcript of  Evidentiary Hearing at 105. There are no  extraordinary circumstances present to avoid  waiver. Laserage, 972 F.2d at 804. Accordingly,  that argument is waived. We note, however, that  the uncontradicted testimony of both attorneys  was that the written agreement simply  memorialized the terms agreed upon orally in  February, and thus his claim would have been  meritless even if properly raised.

12
Accordingly, the decision of the district court  is    AFFIRMED.