358 Liberation LLC v. Country Mutual Insurance Company

Filing 99

OPINION AND ORDER granting in part and denying in part 84 Motion to Enforce. the Court GRANTS the motion to enforce to the extent that the parties' $25,000 settlement shall be enforced. Accordingly, the Court finds that plaintiff 358 Liberation LLC is bound by the parties' $25,000 settlement. The motion to enforce is DENIED with respect to defendant's request for attorney fees and costs. ORDERED by Judge Raymond P. Moore on 3/1/2018. (cthom, )

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Judge Raymond P. Moore

Case No. 15-cv-01758-RM-STV
358 LIBERATION LLC,
Plaintiff,
v.
COUNTRY MUTUAL INSURANCE COMPANY,
Defendant.
______________________________________________________________________________
OPINION AND ORDER
______________________________________________________________________________
Pending before the Court is defendant Country Mutual Insurance Company’s (“defendant”)
motion to enforce settlement agreement and motion for fees and costs associated with enforcing
settlement agreement (“the motion to enforce”) (ECF No. 84). Plaintiff 358 Liberation LLC
(“plaintiff”) has filed a response in opposition (ECF No. 96), as well as an affidavit from Diana
Haggar (“Haggar affidavit”) (ECF No. 96-6). Defendant has filed a reply (ECF No. 97). The Court
makes the following findings.
I.

Legal Standard
“A trial court has the power to summarily enforce a settlement agreement entered into by the

litigants while the litigation is pending before it.” Shoels v. Klebold, 375 F.3d 1054, 1060 (10th Cir.
2004) (quotation omitted). “Issues involving the formation and construction of a purported
settlement agreement are resolved by applying state contract law.” Id.

In Colorado, “[a]n attorney does not have the authority to compromise and settle the claim
of a client without his or her knowledge and consent. Thus, generally, a client is not bound by a
settlement agreement made by an attorney when the lawyer has not been granted either express or
implied authority.” Siener v. Zeff, 194 P.3d 467, 471 (Colo. App. 2008) (citation omitted). That
being said, in this Circuit, a presumption exists “that an attorney has express authority to settle unless
there is evidence to the contrary in the record.” Shoels, 375 F.3d at 1060.
Also, in Colorado, “when a client discovers that an attorney has settled his claim without
authority, the client must either timely repudiate the settlement and proceed with the lawsuit or ratify
the settlement as an acceptable bargain.” Siener, 194 P.3d at 471 (quotation omitted). “The focal
point of ratification is an observable indication that the principal has exercised choice and has
consented to having his or her legal relations affected.” Id. “To exercise choice and consent, a
principal must have full knowledge of all material facts of the transaction prior to the ratification,
or at least knowledge of facts that would lead a reasonable person to investigate further.” Id. at 472.
II.

Discussion
In the motion to enforce, defendant argues that the parties’ proposed settlement agreement

should be enforced because (A) plaintiff’s attorney, Brandee Bower (“Bower”), had express or
implied authority to settle this matter, and (B) plaintiff’s representative, Diana Haggar (“Haggar”),
ratified the settlement agreement. (ECF No. 84 at 6-11.) The Court addresses each argument below.
A.

Authority

Defendant argues that plaintiff has failed to make any showing that Bower lacked authority
to bind plaintiff. (ECF No. 84 at 8.) Defendant argues that, instead, the record reflects that Bower
had authority, pointing to Bower’s representation of plaintiff at all hearings, depositions, and a
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mediation. (Id. at 6.) In response, plaintiff asserts that Haggar has expressly disavowed that Bower
had authority to settle plaintiff’s claims. (ECF No. 96 at 6.) Plaintiff also points to events
purportedly occurring prior to June 9, 2017—the date that this case was allegedly settled. (Id.
at 6-7.) More specifically, plaintiff asserts that, in the days before June 9, plaintiff’s lawyers had
decided to move for reconsideration of a prior Order excluding an expert’s testimony on the ground
that Bower had disclosed an incorrect and incomplete version of the expert’s report. (Id. at 2.) On
June 9, though, Bower emailed defendant’s counsel to say that she had authority from her client to
accept $50,000—which had been offered at mediation. (Id. at 3.) Defendant’s counsel replied that
he could only offer $25,000, and, within 45 minutes, Bower responded that there was a deal. (Id.)
The Court finds that, on the present record, there is no evidence to rebut the presumption that
Bower had authority to settle plaintiff’s claims. The Court’s principal reason for so finding is that
the only evidence against the presumption is Haggar’s affidavit. Therein, Haggar offers just one
sentence with respect to Bower’s authority. Specifically, Bower states: “I never authorized Ms.
Bower to accept a $25,000 settlement and I have never signed any settlement documents accepting
a $25,000 settlement.” (ECF No. 96-6 at ¶ 8.) In essence, therefore, Haggar states that she did not
authorize Bower to accept $25,000. What Haggar does not say is that Bower did not have authority
to settle plaintiff’s claims or that Bower was told that she did not have authority to settle plaintiff’s
claims for $25,000. As such, the Court rejects plaintiff’s contention that Haggar’s affidavit shows
that Bower did not have authority to settle plaintiff’s claims. (See ECF No. 96 at 6.) No such thing
is said.
Haggar’s affidavit, instead, reflects that Bower did have authority to settle plaintiff’s claims,
given that Haggar acknowledges that Bower and Haggar participated in mediation for the purpose
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of settlement (see ECF No. 96-6 at ¶ 6), and there is no assertion that this authority was ever
removed. Although the mediation did not result in a settlement, this does not mean that Bower could
not settle plaintiff’s claims. See Shoels, 375 F.3d at 1061 (“Parties often relax their supposedly nonnegotiable demands over the course of negotiations, and the mere fact that a party does so through
counsel does not suggest that counsel has exceeded the scope of his express authority.”). Moreover,
Bower’s initial email to defense counsel on June 9, offering $50,000 to settle plaintiff’s claims,
expressly states that Bower made the offer with the authority of her client. (ECF No. 84-1 at 2.) Cf.
id. (explaining that a letter, stating that the clients had “approved settlement,” indicated, at face
value, that the clients had approved the settlement themselves or authorized their attorney to do so).
There is nothing in the record to suggest that Bower’s authority to settle had changed when she
accepted $25,000 on behalf of plaintiff a few hours later.
As for the events that preceded June 9, which plaintiff contends show that Bower had an
“incentive” to avoid admitting a mistake (ECF No. 96 at 6-7), although the Court can see the
argument that plaintiff is trying to make, the Court cannot find that Bower’s conduct, even if true,
negates her authority to settle plaintiff’s claims, at least when, here, there is no statement from
Haggar that Bower did not have authority to settle plaintiff’s claims or that Bower was told that she
did not have authority to settle for $25,000.

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In this light, the Court finds that plaintiff has failed to rebut the presumption in this Circuit
that Bower had authority to settle plaintiff’s claims.1 As a result, the Court GRANTS the motion to
enforce on that basis.
B.

Ratification

Although not necessary in light of the Court’s finding supra, so the record is complete, the
Court also addresses defendant’s argument that Haggar ratified the parties’ settlement. Defendant

1

In making this finding, the Court feels it necessary to make a few observations about the
presumption set forth in Shoels. In Shoels, the Tenth Circuit stated that issues involving the formation and
construction of settlement agreements are resolved by applying state contract law. 375 F.3d at 1060. The
Circuit then explained that, in Colorado, it was settled law that an attorney cannot settle a claim unless the
client expressly authorizes him to do so. Id. Then, the Circuit stated that, in another of its decisions, it had
found a presumption that an attorney has express authority to settle unless there is evidence to the contrary
in the record. Id. The problem this Court has with that presumption is that, as far as this Court can tell, it is
not based upon Colorado law. The decision cited in Shoels is Thomas v. Colorado Trust Deed Funds, Inc.,
366 F.2d 136, 139 (10th Cir. 1966). Shoels, 375 F.3d at 1060. As support for the presumption, Thomas
cites to a decision from the U.S. Supreme Court, which is not premised upon Colorado law, and two other
Tenth Circuit decisions. See Thomas, 366 F.2d at 139. The first Circuit decision, Feldman Inv. Co. v.
Connecticut Gen. Life Ins. Co., 78 F.2d 838 (10th Cir. 1935), discusses a presumption, but in the context of
the authority to act for a client by filing legal papers, not the authority to settle claims. See Feldman, 78
F.2d at 840. The second Circuit decision, Hot Springs Coal Co. v. Miller, 107 F.2d 677 (10th Cir. 1939),
does discuss a presumption to settle cases, but, in support, cites the same U.S. Supreme Court decision, as
well as decisions from West Virginia and Texas. See Hot Springs, 107 F.2d at 680. In other words, as far
as the Court can tell, the provenance of the presumption does not arise from Colorado law. Colorado cases
suggest there is a reason why no Colorado case is cited to support the existence of the
presumption—because there is no such presumption under Colorado law. For example, in Siener, the court
begins with the settled proposition that an attorney does not have authority to settle a claim without the
client’s knowledge and consent. 194 P.3d at 471. Then, rather than explaining that a presumption of
authority absent contrary evidence exists, the court precedes straight to whether the challenged settlement
had been ratified. See id. In other words, there was no middle step of considering whether authority was
presumed. Instead, the court stated that, when a client discovers that an attorney has settled his or her claim
without authority, he or she must timely repudiate or ratify. Id. Thus, rather than providing affirmative
evidence that an attorney did not have authority to settle, it appears that all a client need allege is that he or
she discovered that his or her attorney had settled without authority. There is even support for such a light
means to rebut the presumption (to the extent it exists) in Tenth Circuit law. In Hayes v. Eagle-Picher
Indus., Inc., 513 F.2d 892, 893 (10th Cir. 1975), the Circuit concluded that, if a presumption of having
authority to settle claims exists, “it is rebutted easily ….”
The Court sets forth the preceding commentary so that, should this matter find itself in the
incoming mail of the Tenth Circuit, the Circuit can hopefully provide some guidance as to whether a
presumption—that an attorney has authority to settle a client’s claims—exists under Colorado law, and, if
so, how easy or not it is to overcome such a presumption.

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argues that Haggar ratified the parties’ settlement through her silence in failing to raise any objection
for nearly two months. (ECF No. 84 at 9.) In response, defendant asserts that it is not true that
plaintiff was silent, as defendant has been on notice of a division between plaintiff and plaintiff’s
former counsel since at least July 10, 2017. (ECF No. 96 at 7-8.) In reply, defendant asserts that,
Haggar’s affidavit reflects that she was aware of the settlement since mid June 2017, and this notice
required Haggar to inquire about the settlement. (ECF No. 97 at 6.)
The Court agrees with the latter argument from defendant. To repeat, “[t]he focal point of
ratification is an observable indication that the principal has exercised choice and has consented to
having his or her legal relations affected.” Siener, 194 P.3d at 471. And, “[t]o exercise choice and
consent, a principal must have full knowledge of all material facts of the transaction prior to the
ratification, or at least knowledge of facts that would lead a reasonable person to investigate further.”
Id. at 472. Here, the undisputed fact is that Haggar, plaintiff’s representative, was aware of the
settlement between the parties in mid June 2017. (ECF No. 96-6 at ¶ 7.) Irrespective of when
exactly mid June is,2 even if the Court accepts plaintiff’s assertion that there was “division” between
Haggar and plaintiff’s former counsel as of July 10, 2017 (see ECF No. 96 at 7), that still gave
Haggar, as plaintiff’s representative, nearly one month to do something about the settlement. There
is simply no evidence in the record, including in Haggar’s affidavit, that she did anything.3
Put in the context of the decision in Siener, Haggar was aware of a fact—the parties’
settlement of this case for $25,000—and this fact would have led a reasonable person to investigate

2

The Court will assume for present purposes that mid June means June 15, 2017.

3

To the extent that plaintiff relies on a letter that Haggar submitted to the Court to show that
Haggar may have acted in some fashion (see ECF No. 96 at 8), that letter was stricken by the Court (ECF
No. 87 at 1), and is not part of the record.

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further for the very reason that plaintiff now contests the settlement—because plaintiff did not
consent to the $25,000 settlement. If plaintiff truly did not consent to the settlement then a
reasonable person in Haggar’s shoes would have done something to alert her attorneys to that fact
or, at least, inquire from her attorneys about the settlement.
In Siener, the court explained that for a failure to timely repudiate to be a knowledgeable
ratification, the party must be aware that he could obtain relief by timely repudiating. 194 P.3d
at 473. However, the Colorado Supreme Court has also explained that “the law presumes whatever
reasonable diligence would disclose,” as “[a] litigant will not be heard to say he was ignorant of facts
which it was to his interest to know, and which, if awake, he would have known.” Gordon v.
Pettingill, 96 P.2d 416, 418 (Colo. 1939). Here, reasonable diligence would have disclosed to
Haggar that, having not consented to the settlement, she could have repudiated it, just as she has
attempted to repudiate it since at least July 10, 2017.4
Put simply, in doing nothing about the $25,000 settlement from the time she knew of it in
mid June 2017, Haggar exercised a choice, and thus, consented to the settlement. Therefore, as an
alternative ground, the Court GRANTS the motion to enforce because plaintiff ratified the settlement
by failing to timely repudiate.
III.

Request for Fees and Costs
In the motion to enforce, defendant also moves for attorney fees and costs incurred in

litigating the motion to enforce. The Court declines to award defendant attorney fees and costs for

4

Thus, this case is different to the one in Siener, where the litigant accepted payment from the
Colorado Attorneys’ Fund for Client Protection for the same amount that his attorney had absconded with
after the attorney had agreed without consent to a settlement with another party. See Siener, 194 P.3d
at 469. In that situation, the court could not find on the record evidence that the litigant was aware that, in
accepting payment from the Client Protection Fund, he could repudiate the settlement that his attorney had
made. Id. at 473.

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this matter. As far as the Court is concerned, the decision it reached herein was not straightforward.
The Court, thus, rejects any suggestion that plaintiff has offered “unfounded resistance” to the
settlement or wasted judicial resources. (See ECF No. 84 at 10.) As a result, with respect to attorney
fees and costs, the motion to enforce is DENIED.
IV.

Conclusion
For the reasons discussed herein, the Court GRANTS IN PART and DENIES IN PART

defendant’s motion to enforce (ECF No. 84). More specifically, the Court GRANTS the motion to
enforce to the extent that the parties’ $25,000 settlement shall be enforced. Accordingly, the Court
finds that plaintiff 358 Liberation LLC is bound by the parties’ $25,000 settlement. The motion to
enforce is DENIED with respect to defendant’s request for attorney fees and costs.

SO ORDERED.
DATED this 1st day of March, 2018.

BY THE COURT:

____________________________________
RAYMOND P. MOORE
United States District Judge

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