Fortson v. Quality Restaurant Concepts (MAG+)

Filing 42

MEMORANDUM OPINION AND ORDER that Defendant's 31 Motion to Enforce Settlement Agreement is DENIED as further set out in the order. The parties are DIRECTED to proceed to arbitration as previously ordered. It is further ORDERED that the 13 Motion to Lift Stay is DENIED as further set out in the order. Signed by Chief Judge William Keith Watkins on 7/17/2015. (dmn, )

IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF ALABAMA
NORTHERN DIVISION
LORRAINE FORTSON,
Plaintiff,
v.
QUALITY RESTAURANT
CONCEPTS, dba APPLEBEE’S,
Defendant.

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CASE NO. 2:13-CV-426-WKW
[WO]

MEMORANDUM OPINION AND ORDER
The parties are under a court order to arbitrate Plaintiff’s dispute with
Defendant about the termination of her employment, and a stay of this lawsuit has
been in place since January 21, 2014. (Doc. # 25.) This action is back before the
court on Defendant’s contention that the parties reached an enforceable settlement
agreement through an email exchange culminating in Defendant’s acceptance on
August 1, 2014, of an alleged non-monetary settlement offer by Plaintiff. Before
the court is Defendant’s motion to enforce the settlement agreement. (Doc. # 31.)
A prior Order, entered after briefing, establishes that jurisdiction over the
pending motion is proper in this court. (Doc. # 38.) The parties have submitted
briefs and evidence on the motion to enforce the settlement agreement, and a
hearing was held on July 1, 2015. Because counsel for Plaintiff did not have
express or apparent authority to bind Plaintiff to the alleged non-monetary

settlement agreement and because there was no meeting of the minds as to all
essential terms, there is no agreement. Defendant’s novation theory also fails on
this record. The motion to enforce the settlement agreement is, therefore, due to be
denied.
A.

Burden of Proof
“The burden of proof is on the parties seeking to enforce the settlement

agreement.” Godwin v. Kelley, No. 12cv614, 2013 WL 1789376, at *5 n.2 (M.D.
Ala. Apr. 26, 2013).
B.

Express or Apparent Authority to Settle
Defendant contends that Plaintiff’s attorney, Christopher Worshek, had

express or apparent authority to enter into a settlement agreement and that the
parties consummated just such an agreement through an exchange of emails. The
terms of the settlement agreement, according to Defendant, are that Defendant
agreed to modify Plaintiff’s personnel file to reflect that her separation from
Defendant’s employment was the result of a voluntary resignation, not a
termination, and that, in exchange, Plaintiff would sign a release of all claims. At
the July 1, 2015 hearing, the issue of Mr. Worshek’s authority was explored
further, and Mr. Worshek represented that he had neither express nor apparent
authority to settle Plaintiff’s lawsuit solely on non-monetary terms.

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Under Alabama law, a settlement agreement negotiated by an attorney binds
the client only where the attorney acts with “express, special authorization from the
client” or with apparent authority. Bailey v. Mead S. Wood Prods., 295 F. Supp.
2d 1286, 1288 (M.D. Ala. 2003). “An agent’s apparent authority must be founded
upon the conduct of the principal, not the agent.” Id. In other words, “[t]he
doctrine of apparent authority does not rest upon what one thinks an agent’s
authority may be, or what the agent holds out his authority to be; rather, the
doctrine of apparent authority is based on the principal’s holding the agent out to a
third person as having the authority under which he acts.” Johnson v. Shenandoah
Life Ins. Co., 281 So. 2d 636, 640 (Ala. 1973). Accordingly, “[a] person dealing
with an attorney must ascertain the extent of the attorney’s authority to
compromise the client’s claim.” Daniel v. Scott, 455 So. 2d 30, 32–33 (Ala. Civ.
App. 1984).
Defendant has not met its burden of proving that Mr. Worshek had authority
– either express or apparent – to settle this lawsuit on non-monetary terms. First, at
the hearing, Mr. Worshek represented that his client did not give him authority to
settle the case “without any monetary supplement” and that the retainer agreement
with his client provides that only the client has authority to settle this lawsuit. The
letters of August 28, 2013, and February 13, 2014, from Plaintiff’s counsel to
Defendant’s counsel, on which Plaintiff was copied, support Mr. Worshek’s
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position. These letters, which incidentally are the only communications in the
record upon which Plaintiff was copied, each contain settlement demands for
specified monetary amounts, which chronologically increased in amounts, and
expressly state that Plaintiff authorized the monetary demands.1 On the record,
there is no evidence that establishes that Mr. Worshek had express authority to
settle the case on non-monetary terms.
Second, the evidence establishes that Mr. Worshek did not have apparent
authority to settle the case solely for non-monetary terms. It is not enough that
counsel for Defendant, Michael Thompson, believed that Mr. Worshek had his
client’s authority to settle solely for non-monetary terms. Defendant must submit
evidence that Plaintiff, not Mr. Worshek, led Mr. Thompson to believe that Mr.
Worshek had that authority. See Johnson, 281 So. 2d at 640. Defendant points to
no such evidence. Defendant is correct that Mr. Worshek’s August 28, 2013 and
February 13, 2014 letters to Mr. Thompson containing monetary settlement offers
indicated that copies were sent to Plaintiff; however, importantly, Plaintiff is not
cc’d on the email exchanges upon which Defendant relies to solidify a settlement
agreement based upon non-monetary terms. Even if it is assumed that Plaintiff
held out Mr. Worshek as having authority to settle the case for a monetary sum,

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The demand in the first letter includes an explanatory that Plaintiff would “not consider
a settlement anywhere near this range at future stages of litigation,” and, in accord with that
caution, the demand in the second letter is 160 percent higher than the first.
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there is no evidence that the scope of Mr. Worshek’s apparent authority permitted
him to settle his client’s case on terms that included no monetary payment. See
Smith-Perry Elec. Co. v. Trans. Clearing of Los Angeles, 243 F.2d 819, 821 (5th
Cir. 1957) (“It is, of course, . . . elementary that a transaction outside the scope of
the agent’s authority, actual or apparent, is incapable of subjecting the principal to
liability.”); see also Godwin, 2013 WL 1789376, at *5 (finding that an attorney
acted outside the scope of his authority in settling a case on a condition that
permitted the plaintiff to apply for a business license, but that did not guarantee
that the plaintiff would receive the business license).
Because the terms of the purported settlement agreement upon which
Defendant relies do not include a monetary payment, any settlement agreement on
those terms would have been outside the scope of Mr. Worshek’s authority – either
express or apparent.2
C.

Meeting of the Minds
Defendant also has not met its burden of proving that a meeting of the minds

occurred between the parties on August 1, 2014, for a non-monetary settlement.
“It is fundamental that in order for a contract to be binding and enforceable, there
must be a meeting of the minds on all essential terms and obligations of the
contract.” Equip. Rental & Contractors Corp. v. The N. River Ins. Co., No. 072

These findings also negate Defendant’s arguments of estoppel. (See Doc. # 31, at 9–

10.)
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0158, 2007 WL 4335494, at *2 (S.D. Ala. Dec. 6, 2007); see also Sunnyland
Mobile Homes, Inc. v. Thompson, 384 So. 2d 1111, 1112 (Ala. 1980) (“No binding
contract can come into being until there is a meeting of minds.”). “An acceptance
is required to be identical with the offer; otherwise, there is no meeting of the
minds and no agreement.” Ex parte Wright, 443 So. 2d 40, 42 (Ala. 1983); see
also Hogan v. Allstate Beverage Co., 821 F. Supp. 2d 1274, 1281 (M.D. Ala. 2011)
(“Given the lack of evidence of any oral agreement, the court can find no meeting
of the minds on this essential term.”).
The email that Mr. Worshek sent Mr. Thompson on February 5, 2014,
contemplated a settlement for a “reasonable and modest amount,” and, on May 23,
2014, having received no response from Mr. Thompson, Mr. Worshek sent a
second email conditioning a “limited monetary figure” on Defendant’s agreement
to provide Plaintiff with a general letter of reference acknowledging her years of
service. The court finds that Plaintiff’s subsequent email of July 22, 2014, is a
continuation of negotiations as to the non-monetary component of a settlement
agreement (i.e., an expunging of Plaintiff’s personnel record of notations that she
was terminated), rather than an abandonment of the monetary component Plaintiff
commanded as part of any settlement agreement.

Accordingly, there was no

meeting of the minds as to the essential terms of a settlement agreement on August

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1, 2014, the date Defendant says it agreed to the non-monetary terms of a
settlement.
Furthermore, even if it could be argued that Mr. Worshek and Mr.
Thompson agreed on the terms Defendant urges, the release form Defendant
mailed after Defendant’s alleged acceptance of an offer on August 1 casts further
doubt on the finality of the settlement terms. While the court acknowledges that
federal law does not require a settlement agreement to be in writing or signed by
the parties, Defendant’s form required Plaintiff’s signature by September 10, 2014,
in exchange for her receipt of settlement terms beneficial to her. (See Release
(“This letter, upon your signature and the signature of your attorney, will constitute
the Agreement between you and Quality Restaurant Concepts, LLC (“QRC”) and
its related companies regarding certain aspects of your separation from
employment from QRC and any legal proceedings between you and QRC.” (Doc.
# 31-2).) It is undisputed that Plaintiff never signed the form. In sum, the parties’
correspondence reveals different intentions as to the essential terms of a settlement
agreement and that there was no meeting of the minds.
D.

Novation
Finally, the evidence does not support Defendant’s novation theory raised at

the hearing. “[A] substituted contract is one that is accepted in satisfaction of the
original contract and thereby discharges it, while a novation is a substituted
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contract that includes a party who was not part of the original contract.” Safeco
Ins. Co. of Am. v. Graybar Elec. Co., 59 So. 3d 649, 656 (Ala. 2010) (citation and
internal quotation marks omitted). The absence of evidence or argument that a
third party entered the settlement negotiations renders the law of novation
inapposite. Defendant also cannot establish the elements under Alabama law for
substituted contracts as there is no evidence of either an old or new valid contract.
E.

Conclusion
For the foregoing reasons, it is ORDERED that Defendant’s motion to

enforce the settlement agreement (Doc. # 31) is DENIED.

The parties are

DIRECTED to proceed to arbitration as previously ordered.
It is further ORDERED that the motion to lift stay (Doc. # 31) is DENIED.
DONE this 17th day of July, 2015.
/s/ W. Keith Watkins
CHIEF UNITED STATES DISTRICT JUDGE

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