Gibbons v. Mony Life Insurance Company et al

Filing 160

MEMORANDUM OPINION AND ORDER signed by the Honorable Matthew F. Kennelly on 10/25/2017: For the reasons stated in the accompanying Memorandum Opinion and Order, the Court denies the remainder of Gibbons's Rule 60(b) motion for relief from the March 2017 order enforcing the settlement [dkt. no. 128]. (mk)

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION

CLIFFORD SAM GIBBONS,
Plaintiff,
vs.
MONY LIFE INSURANCE COMPANY and
DISABILITY MANAGEMENT SERVICES,
INC.,
Defendants.

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Case No. 15 C 5352

MEMORANDUM OPINION AND ORDER
MATTHEW F. KENNELLY, District Judge:
In June 2015, Clifford Sam Gibbons sued MONY Life Insurance Company and
Disability Management Services, Inc. (DMS) after being denied benefits under his
disability insurance policy. By October 2016, the Court had either dismissed as timebarred or granted summary judgment for the defendants on four of Gibbons's five
claims, leaving only a claim for intentional infliction of emotional distress (IIED). In
March 2017, the Court granted the defendants' motion to enforce a subsequent oral
settlement agreement between the parties and dismissed the remaining claim with
prejudice, over Gibbons's objection that he did not authorize his then-attorney, Joseph
Pellis, to enter into a settlement. Gibbons then moved for relief from judgment under
Federal Rule of Civil Procedure 60(b). The Court denied the motion in part and ordered
an evidentiary hearing on the remaining issues. The hearing took place on September
8, 2017. For the reasons stated below, the Court denies the remainder of Gibbons's

motion for relief from judgment.
Background

The factual background of this case is discussed in a number of prior opinions.
See Gibbons v. MONY Life Ins. Co., No. 15 C 5352, 2017 WL 3421475 (N.D. Ill. Aug. 9,
2017); Gibbons v. MONY Life Ins. Co., 208 F. Supp. 3d 925, 927 (N.D. Ill. 2016). The
Court briefly summarizes the facts and procedural history relevant to the remaining
issues in Gibbons's Rule 60(b) motion below and as necessary throughout this opinion.
After the Court disposed of all of Gibbons's claims with the exception of his IIED
claim, defense counsel and Pellis engaged in settlement discussions. In a January 15,
2017 e-mail to Gibbons, on which his wife, Terri Gibbons (Terri), was copied, Pellis
informed Gibbons that defense counsel "has offered us their max settlement of $40K
and they will waive pursuing any costs to dismiss" the remaining claim. 1 Defs.' PostHr'g Br., Ex. 2 at 5. Pellis recommended to Gibbons that he accept the proposed
settlement. Id. Gibbons responded to Pellis the same evening via e-mail, again
copying Terri. Gibbons told Pellis that "[t]his is a bitter pill to swallow," and that he
needed 24 hours "to reflect on [Pellis's] sound judgment." Id. at 4-5. Gibbons asked to
set up a brief call between Pellis, Terri, and himself the following day. He stated, "I am
not sure whether Terri and I will be in the same place and she definitely wants to be on
the phone." Id. at 5. Gibbons closed the e-mail by asking, "I guess the bottom line with
this insulting settlement offer is it enough to cover your fees?" Id.
In a January 16 e-mail to Pellis, on which Gibbons does not appear to be copied,
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The Court previously ruled that Gibbons waived his attorney-client privilege with
respect to this e-mail and the other e-mails discussed in this opinion. Gibbons, 2017
WL 3421475, at *5.
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Terri told Pellis that she did not think there was a need to waste his time with another
conference call. Id. at 3. On January 18, Pellis e-mailed Terri and asked "[c]an you
confirm whether you and Cliff are willing to accept the settlement offer?" Id. at 2. Pellis
told Terri in that e-mail that "[c]ounsel for MONY has indicated we have until Friday the
20th to accept the offer." Id. On January 19, at approximately 1:00 PM, 2 Terri
responded, "It appears we have no other choice." Id. She instructed Pellis to "[s]end us
the necessary paperwork to sign and enable both parties to move on and officially end
the relationship." Id. Terri appears to have forwarded that portion of her
correspondence with Pellis to Gibbons at 3:00 PM that same day. Id. at 1-2. At 6:09
PM on January 19, Pellis informed defense counsel via e-mail that Gibbons would
accept the settlement offer. Defs.' Post-Hr'g Brief, Ex. 1 at 1.
Later that evening, at 11:49 PM, Gibbons e-mailed Pellis, again copying Terri. In
that e-mail, Gibbons told Pellis "[t]his settlement offer is all in your court at this stage."
Defs.' Post-Hr'g Brief, Ex. 2, at 1. Gibbons further stated, "I would suggest you give it all
you can with this ----- representing MONY/DMS. Whatever you can best negotiate is it."
Id. He went on, "I would like only one thing at this stage and it cost [sic] no money. I
want as a part of any settlement a certified letter from a C-level MONY executive that
the four life insurance policies I have with MONY do not have the same spring trap of
fraudulence that had [sic] been revealed in this case." Id. Finally, Gibbons stated, "So
the bottom line is Joe – negotiate your best deal with these [redacted]. Because this is

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Gibbons and Pellis were not in the same time zone on January 19, 2017. Not all of
the e-mail timestamps specify a time zone, and it appears that some refer to Mountain
Standard Time (MST) and some refer to Central Time (CT), which is an hour ahead of
MST. The Court need not engage in speculation as to what time zone corresponds to
each e-mail because the hour difference between MST and CT is not material.
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all you are getting . . . ." Id.
In February 2017, Pellis informed defense counsel that Gibbons had changed his
mind after reviewing the settlement agreement. Defendants then filed a motion to
enforce the parties' agreement. During a March 2017 hearing on the motion, Gibbons
appeared along with Pellis, and he stated that he never agreed to settle the case. The
Court found that the January 2017 exchange of e-mails between defense counsel and
Pellis, acting as Gibbons's agent, constituted an enforceable agreement. The Court
granted defendants' motion to enforce and dismissed the case with prejudice in late
March 2017 upon defendants' tender of the agreed-upon payment to Gibbons.
In May 2017, Gibbons filed a motion for relief from judgment requesting relief not
only from the Court's order enforcing the settlement agreement, but also from the partial
grant of summary judgment in favor of defendants on two of his claims. The Court
denied the motion with respect to the summary judgment ruling. With respect to the
order enforcing settlement, the Court denied Gibbons's motion to the extent that it was
based on a claim of fraud or misconduct by defendants, but it ordered an evidentiary
hearing on three issues relevant to the question of whether Pellis erred or acted with
excusable neglect when he accepted the proposed settlement on Gibbons's behalf:
(1) whether Pellis had authority from Gibbons to accept the proposed
settlement before Pellis communicated that acceptance to defense
counsel;
(2) whether Gibbons's wife Terri gave Pellis authority to accept the
proposed settlement; and
(3) whether Gibbons subsequently ratified the acceptance.

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Gibbons contends that he did not give Pellis express authorization to accept the
proposed settlement on his behalf and that he never gave Terri authority to tell Pellis to
accept. Gibbons further contends that he did not ratify the acceptance of the proposed
settlement but instead asked Pellis to make a counteroffer. Gibbons argues that Pellis's
acceptance of the settlement without his consent constituted mistake or excusable
neglect warranting relief under Rule 60(b)(1).
Discussion
Rule 60(b)(1) provides that a court may relieve a party from a final judgment,
order, or proceeding based on "mistake, inadvertence, surprise, or excusable neglect."
Fed. R. Civ. P. 60(b)(1). Relief under Rule 60(b) is an "extraordinary remedy" that is
granted "only in exceptional circumstances." Eskridge v. Cook County, 577 F.3d 806,
809 (7th Cir. 2009) (citation omitted).
An attorney may not settle a case on behalf of a client without the express
authority of the client. See, e.g., Bradford Exch. v. Trein's Exch., 600 F.2d 99, 102 (7th
Cir. 1979) (per curiam) ("An attorney may not consent to a final disposition of his client's
case without express authority."); City of Des Plaines v. Sci. Mach. Movers, Inc., 9 Ill.
App. 3d 438, 444, 292 N.E.2d 154, 158 (1972) (it is an "established rule of law that an
attorney . . . has no authority to compromise, to give up any right of his client, or to
consent to judgment against his client without the express consent or authorization of
that client").
Gibbons appears to argue in his post-hearing brief that, because he did not
expressly authorize Pellis to accept the proposed settlement, Pellis could not
appropriately accept the settlement, and that is the end of the matter. Defendants

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contend, on the other hand, that an agent of the client can provide the express consent
necessary to authorize an attorney to accept a proposed settlement if the client's agent
has the actual or apparent authority to do so. Specifically, Defendants contend that
Terri expressly authorized Pellis to accept the settlement and that she had both actual
and apparent authority to instruct Pellis to do so on Gibbons's behalf. Gibbons
maintains that he never gave Terri express or other implied authority to tell Pellis to
accept the proposed settlement and that Terri's e-mail to Pellis did not give him express
authority to accept.
An agent has express authority when the principal explicitly grants him the
authority to perform a particular act. Lydon v. Eagle Food Ctrs., Inc., 297 Ill. App. 3d 90,
94, 696 N.E.2d 1211, 1215 (1998). Because there is no evidence that Gibbons himself
expressly authorized Pellis to accept the proposed settlement prior to Pellis doing so,
the first question the Court must address is whether Terri's January 19 e-mail to Pellis
expressly authorized him to agree to the settlement. In response to a direct question
from Pellis (by e-mail) asking whether she and Gibbons were willing to accept the soonto-expire settlement offer, Terri stated "[i]t appears we have no other choice," and she
instructed Pellis to send them the necessary paperwork. Defs.' Post-Hr'g Br., Ex. 2 at 2.
The Court finds that Terri's January 19 e-mail to Pellis, as described above, expressly
authorized him to accept the proposed settlement.
The next question is whether Terri had the authority to act as Gibbons's agent in
this context such that her grant of express authority to Pellis to settle the case is binding
on Gibbons himself. Illinois courts have recognized that a client's spouse may act as
the client's agent in interactions with an attorney and have applied traditional principles

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of agency law in that context. In Lama v. Preskill, 353 Ill. App. 3d 300, 305-06, 818
N.E.2d 443, 449 (2004), the appellate court observed that, for purposes of an attorneyclient privilege determination, the trial court implicitly found that the plaintiff's husband
had acted as her agent in a particular meeting with an attorney. Although the issue of
agency was not before the court because the plaintiff did not dispute it on appeal, the
court explained that "[w]hen an agent communicates with the principal's attorney, the
agent speaks as the client, or principal, and his or her communications are protected to
the same extent as though the principal was speaking." Id. at 306, 818 N.E.2d at 449.
The court further noted that the record supported the conclusion that the plaintiff's
husband had acted as her agent during the relevant meeting with the attorney. Id.
There is no presumption that one spouse has the authority to act for the other.
Curto v. Illini Manors, Inc., 405 Ill. App. 3d 888, 891-92, 940 N.E.2d 229, 232 (2010).
The agency of a spouse is a question of fact, and the party claiming an agency
relationship must prove the existence of such a relationship by a preponderance of the
evidence. Id. An agent's authority to act on behalf of the principal may be either actual
or apparent. Patrick Eng'g, Inc. v. City of Naperville, 2012 IL 113148, ¶ 34, 976 N.E.2d
318, 329. Actual authority may be either express or implied; implied authority is proven
circumstantially by evidence of the agent's position. Id. Apparent authority exists "when
the principal, through words or conduct, creates a reasonable impression that the agent
has authority to perform a certain act.” Lydon, 297 Ill. App. 3d at 95, 696 N.E.2d at
1216 (internal quotation marks and citations omitted); see also Patrick Eng'g, 2012 IL
113148, ¶ 34, 976 N.E.2d at 329 (apparent authority "is the authority which a
reasonably prudent person, exercising diligence and discretion, in view of the principal's

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conduct, would naturally suppose the agent to possess”). An agent's authority may be
presumed from the alleged principal's silence when he knowingly allows another to act
for him as his agent. Mateyka v. Schroeder, 152 Ill. App. 3d 854, 864, 504 N.E.2d
1289, 1295 (1987). The scope of an agent's authority is what "persons of reasonable
prudence, ordinarily familiar with business practices, in dealing with the agent might
rightfully believe him to possess, based on the principal['s] conduct." Id.
Although Terri is not a party to the lawsuit, the evidence shows that from the
outset, she was an active participant in the suit and, in particular, in dealings with
counsel about the suit, and that Gibbons was aware of this. The September 2014
engagement letter, which is titled "Legal Services Engagement Agreement between Cliff
and Terri Gibbons and Pellis Law Group, LLP," is signed by both Gibbons and Terri.
Defs.' Post-Hr'g Br., Ex. 5. The first sentence of the letter states, "Per our telephone
conversation today with me and my law partner Daniel Lavoie, we are pleased that you
have given Pellis Law Group . . . the opportunity to represent you and your husband in
pursuing Mutual of New York ("MONY") for insurance coverage under Cliff's disability
policy with MONY." Id. at 1 (emphasis added). Gibbons nonetheless testified at the
evidentiary hearing that Terri was not Pellis's client, that it was his case and his life
insurance policy at issue, and that Terri merely assisted him when he was too
"physically impaired and psychologically impaired to handle" the volume of
correspondence he received from defendants. Evid. Hr'g Tr. 32:20-24. Pellis, by
contrast, testified that he understood both Gibbons and Terri to be his clients. Id. 59:22.
Although no clause in the engagement letter so states, Pellis also testified that he
understood the engagement letter to authorize Terri to act for Gibbons in connection

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with the lawsuit and that this is why he had both of them sign it. Id. 50:10-15. Pellis
stated that when he first met with the Gibbonses, Terri represented that Gibbons "had
some diminished capacity and also severe agitation caused by Mony [sic] in this whole
process and that she wanted to, just as she had intervened with Mony, sort of take the
point on [sic] taking it off of [Gibbons's] plate." Id. 50:15-20. Pellis also testified to the
following "pattern" of communication that emerged during his relationship with the
Gibbonses:
[W]e'd start a conversation, and then Terry [sic] would just email me, cut
Cliff off, and then she would forward that communication afterwards at
what point she felt was okay, you know, based on how he felt at that time.
. . . So that was not uncommon that she would drop him off of the email
flow.
Id. 52:12-21.
A December 2016 e-mail exchange between Pellis and Terri provides additional
support for Pellis's testimony. On December 1, 2016, Pellis sent an e-mail to Terri that
stated, in relevant part, "I understand and agree. Do I have your approval and consent
to continue the negations [sic] on settling with MONY?" Defs.' Post-Hr'g Br., Ex. 7. The
e-mail, which Pellis appears to have written in response to a previous e-mail from Terri,
is addressed solely to her. Terri's December 5 response, which is addressed only to
Pellis, states the following: "Absolutely you have our approval and consent to continue
negotiations on settling with MONY. I totally agree with your goal. Let me know if there
is anything I need to provide to assist you and keep me posted." Id.
At the very least, the evidence supports defendants' contention that Terri had
apparent authority to authorize Pellis to accept the proposed settlement on Gibbons's
behalf. First, Gibbons, along with Terri, signed an engagement letter that repeatedly

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refers to Terri and Gibbons together, as if they were both considered clients of the firm.
Additionally, in his January 15, 2017 e-mail to Pellis, Gibbons himself acknowledged
and appeared to affirm Terri's ongoing involvement in the case (and, specifically, the
settlement negotiations) by asking to use a call-in conference number to speak to Pellis
about the settlement proposal; he was not sure whether he and Terri would be in the
same place, and he knew that Terri "definitely wants to be on the phone." Defs.' PostHr'g Br., Ex 2 at 5. Gibbons does not appear to have objected at any point to Pellis
copying Terri on their communications, and, indeed, he also copied Terri on his e-mails
to Pellis. See id. at 1, 4. Nor does Gibbons appear to have objected to the course of
conduct described by Pellis, in which Terri would respond to Pellis's e-mails without
copying Gibbons and forward the communications to Gibbons at a later date.
Gibbons testified that Terri did not share with him many of the e-mails between
Terri and Pellis and that he was "shocked" when he first saw them. Evid. Hr'g Tr. 21:1418. As previously noted, however, Terri did forward the January 19, 2017 e-mail in
which she expressly authorized Pellis to accept the proposed settlement, sending the email to Gibbons that same afternoon. Defs.' Post-Hr'g Br., Ex 2 at 1-2. The Court also
notes that if Terri somehow went behind Gibbons's back in communicating with Pellis at
any point, it stands to reason that Gibbons could have elicited that fact had he called
Terri to testify under oath at the evidentiary hearing as the Court suggested. Because,
however, Gibbons declined to call Terri as a witness on the ground that she is not a
party to the case, the only testimony to that effect is Gibbons's own, and the Court finds
it lacks credibility in light of the other available evidence.
Lastly, in the e-mail Gibbons sent to Pellis on the evening of January 19, 2017

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(several hours after Terri had forwarded Gibbons a copy of her own January 19 e-mail
to Pellis), Gibbons in no way objected to Pellis's and Terri's prior communication, nor
did he indicate that Terri was not authorized to tell Pellis to accept the settlement
proposal. Id. at 1. Furthermore, when Gibbons was asked at the evidentiary hearing
whether he ever told Pellis via phone or e-mail between January 19, 2017 and
approximately January 25, 2017, when he saw the settlement agreement, that Terri did
not have authority to approve the settlement, Gibbons could say only that he did not
remember. Evid. Hr'g Tr. 40:5-14.
Despite Gibbons's testimony to the contrary, the circumstantial evidence in this
case supports a finding that Terri had implied actual authority to tell Pellis to accept the
proposed settlement on Gibbons's behalf. When viewed in its entirety, the evidence
also shows that Gibbons's own words and conduct created a reasonable impression
that, as Gibbons's agent, Terri had the authority to expressly authorize Pellis to accept
the proposed settlement. Pellis reasonably relied on Terri's authority when he accepted
the settlement.
For these reasons, the Court concludes that Pellis did not err or commit
excusable neglect in accepting the proposed settlement agreement with MONY. Relief
from the order enforcing settlement is therefore unwarranted under Rule 60(b)(1).
Conclusion
For the foregoing reasons, the Court denies the remainder of Gibbons's Rule
60(b) motion for relief from the March 2017 order enforcing the settlement [dkt. no. 128].

________________________________
MATTHEW F. KENNELLY
United States District Judge

October 25, 2017

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