BEAM v. WAL-MART STORES, INC.
Filing
53
ORDER ON DEFENDANT'S MOTION TO ENFORCE SETTLEMENT AGREEMENT - Defendant's Motion to Enforce Settlement Agreement 41 is denied. This matter remains set for a settlement conference on 1/20/2012, at 3:00 p.m. (EST), in Room 228, U.S. Courthouse, New Albany, Indiana. Signed by Magistrate Judge William G. Hussmann, Jr on 11/7/2011. (JLM)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF INDIANA
NEW ALBANY DIVISION
RHONDA BEAM,
Plaintiff,
v.
WAL-MART STORES, INC.
D/B/A WAL-MART STORE #1157,
Defendant.
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4:10-cv-10-WGH-SEB
ORDER ON DEFENDANT’S MOTION TO
ENFORCE SETTLEMENT AGREEMENT
This matter is before the Honorable William G. Hussmann, Jr., United
States Magistrate Judge, on Defendant’s Motion to Enforce Settlement
Agreement filed July 11, 2011.1 (Docket Nos. 41-42). Plaintiff filed her response
on August 30, 2011. (Docket No. 45). Defendant filed its reply brief on
September 6, 2011. (Docket No. 47). The court conducted a hearing on
Defendant’s Motion on October 7, 2011. Appearing on behalf of Plaintiff was
Anthony J. Castor. Defendant was represented at the hearing by Brian R.
Bouggy. The Court heard testimony from Plaintiff, as well as one of her
attorneys, James Funke. After considering the testimony of the witnesses, as
well as the evidence presented and the parties’ post-hearing briefs (Docket Nos.
On April 13, 2010, the parties consented to Magistrate Judge jurisdiction in this
case. (Docket No. 15). District Judge Sarah Evans Barker entered an Order of Reference
on April 16, 2010. (Docket No. 16).
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49, 52), the Court concludes that Defendant’s Motion to Enforce Settlement
Agreement must be DENIED.
I. Findings of Fact
1. Plaintiff retained James Funke as her attorney prior to filing suit in
Jennings Circuit Court. Mr. Funke filed suit and entered his appearance for her
on September 14, 2009. (See Docket No. 1 at Ex. B).
2. When this case was removed to federal court, Mr. Funke – who only
practices infrequently in federal court – sought out and received the assistance
of Matthew Schad and William Stone in this matter as attorneys for Plaintiff.
3. Mr. Schad entered an appearance on April 5, 2010 (Docket No. 14), and
Mr. Stone entered his appearance on April 22, 2010 (Docket No. 18).
4. At the time of removal, Plaintiff refused to agree that her damages were
less than $75,000, and her prior offers to settle this case substantially exceeded
$6,000.
5. At some point in time prior to January 21, 2011, Defendant tendered to
Mr. Stone an offer to settle the case for $6,000.
6. At some point in time, Plaintiff and Mr. Stone discussed Defendant’s
offer.
7. Plaintiff testified that she did not agree to accept the Defendant’s offer.
8. Notwithstanding Plaintiff’s refusal to accept $6,000 to settle the claim,
Mr. Stone sent an email to counsel for Defendant, Eric Reigner, stating: “Well, I
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finally got a call from Ms. Beam. She has agreed to accept the offer of six
thousand dollars. Can you confirm and advise the Court?” (Brief in Support of
Motion to Enforce Settlement Agreement at Ex. A).
9. Mr. Reigner responded to Mr. Stone’s email with his own email that
said:
Thanks. Settlement confirmed. We will need your tax ID and how
to make the check payable. Due to the new Medicare reporting rules
I will need her signature on the release before I can get the check. I
will forward you the release next week. I will call the court Monday.
(Id.).
10. Mr. Reigner called the court to report settlement on or before January
28, 2011. (Docket No. 30).
11. No settlement communications between the parties occurred during a
settlement conference or court-ordered mediation; Mr. Stone’s correspondence to
Mr. Reigner, therefore, did not occur in a court proceeding.
12. Plaintiff had no direct communications with Defendant indicating that
Mr. Stone had the authority to settle this dispute.
II. Discussion
In Indiana, an attorney’s authority to enter into a settlement agreement on
behalf of his client may be derived from two distinct sources: (1) the conduct of
the client either toward third parties or toward the attorney; and (2) the nature of
the proceedings where the settlement agreement was entered into. Koval v.
Simon Telelect, Inc., 693 N.E.2d 1299, 1301 (Ind. 1998). First, the conduct of the
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client can confer either express, implied, or apparent authority upon the
attorney. Second, the attorney may have the authority to settle a case, during a
procedure in court, through the attorney’s inherent agency power. Id. However,
“[t]he law is clear that retention of an attorney by a client does not constitute
implied authority to settle a claim nor does it constitute a manifestation to third
parties that the attorney has apparent authority to do so in an out-of-court
proceeding.” Bay v. Pulliam, 872 N.E.2d 666, 668 (Ind. Ct. App. 2007)(citing
Koval, 693 N.E.2d at 1301).
Defendant has the burden of proof of demonstrating that Mr. Stone had
the express authority to settle this dispute for $6,000. In this case, the court
concludes that Defendant has not conclusively carried its burden and, therefore,
Plaintiff did not provide one of her attorneys at the time, Mr. Stone, with the
express or actual authority to settle this suit for $6,000. Therefore, we must
determine if Plaintiff’s attorney had the implied or apparent authority to settle or
if his inherent agency powers provided him with such authority.
(a)
Implied Authority
Implied authority can be obtained from words used, from customs, or from
the relations of the parties involved. RESTATEMENT (SECOND) OF AGENCY § 7 cmt. c
(1958). But, as the Indiana Supreme Court explained in Koval, the general rule
in Indiana is that an attorney does not have the implied authority to settle a
claim merely by being retained by the client. Koval, 693 N.E.2d at 1303. In this
case, Plaintiff has invoked the attorney-client privilege with respect to her
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communications with Mr. Stone, and the court is unable to discern that her
actions toward Mr. Stone and Wal-Mart implied that she would accept the offer.
Plaintiff’s prior settlement demands had greatly exceeded the $6,000 amount
that Defendant offered. Plaintiff acquiesced in the removal of this action to
federal court and would not stipulate that her damages were less than the
$75,000 necessary to allow the case to be remanded to state court. From these
facts, the court is unable to determine that actions by Plaintiff, herself, directed
toward Defendant or Mr. Stone created the implied authority that she would
accept the $6,000 offer. Consequently, there was no implied authority to settle
this case.
(b)
Apparent Authority
Apparent authority exists when a third party reasonably believes an agent
possesses authority because of some manifestation from the principal.
Pepkowski v. Life of Indiana Ins. Co., 535 N.E.2d 1164, 1166 (Ind.1989). As is
the case with implied authority, apparent authority to settle is not conferred
simply by the retention of an attorney. Koval, 693 N.E.2d at 1304. There must
be some form of communication, either direct or indirect, from the principal that
instills a reasonable belief in the mind of the third party. Pepkowski, 535 N.E.2d
at 1167. As the Indiana Supreme Court has explained, apparent authority can
only come from the direct or indirect manifestations of the principal, but does
not arise “from the representations or acts of the agent.” Menard, Inc. v. DageMTI, Inc., 726 N.E.2d 1206, 1210 (Ind. 2000). Therefore, an attorney cannot
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simply inform the opposing party that he has the authority to settle. See Jarvis
Drilling, Inc. v. Midwest Oil Producing Co., 626 N.E.2d 821, 826 (Ind. Ct.
App.1993); see also Bay v. Pulliam, 872 N.E.2d at 668 (“the Nunn Law Office
could not gain apparent authority to settle the claim with Zurich by merely
representing that the attorney had such authority. The manifestation must have
come from the [principal].”).
In this case, the only evidence that has been presented to the court is an
email in which Mr. Stone merely represents that he has been given the authority
to settle the case by Plaintiff. (Brief in Support of Motion to Enforce Settlement
Agreement at Ex. A). There is no other manifestation by Plaintiff, either directly
or indirectly, that indicated that Mr. Stone had the authority to settle for $6,000.
Therefore, under Indiana law, Mr. Stone did not have the apparent authority to
settle this case.
(c)
Inherent Agency Power
In Indiana, an individual may be bound by his attorney’s actions even if
the attorney lacked express, implied, or apparent authority. Through an
attorney’s inherent power as a special agent for his client, an attorney may bind
his client during court proceedings. Koval, 693 N.E.2d at 1306. “In contrast to
court proceedings, when an attorney represents a client out of court, custom
does not create an expectation of settlement or compromise without the client’s
signing off.” Id.
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In this case, because the settlement discussions did not occur during
court proceedings, Mr. Stone’s communications to Mr. Reigner cannot be held to
bind Plaintiff under principles of inherent agency authority.
III. Conclusion
For the reasons discussed above, Defendant’s Motion to Enforce
Settlement Agreement is DENIED. This case is admittedly a very close question
as to the issue of whether Mr. Stone’s email was at least an “indirect” form of
communication from Plaintiff that created apparent authority to settle the case.
However, the court believes that the public is better served by the resolution of
the underlying dispute on its merits, rather than on a disputed issue of whether
settlement should be enforced where there was apparently some failure of
communication between attorney and client.
This matter remains set for a settlement conference on January 20, 2012,
at 3:00 p.m. (EST), in Room 228, U.S. Courthouse, New Albany, Indiana.
Client(s) or client representative(s) with full authority to settle this matter must
be present in person at this conference.
SO ORDERED.
Dated: November 7, 2011
__________________________
William G. Hussmann, Jr.
United States Magistrate Judge
Southern District of Indiana
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Electronic copies to:
Brian R. Bouggy
FROST BROWN TODD LLC
bbouggy@fbtlaw.com
Anthony J. Castor
ANTHONY J. CASTOR
ajcastor@madisonindianalawyer.com
James Funke
3135 W. County Road 150 N
North Vernon, IN 47265
Matthew Reed King
FROST BROWN TODD LLC
mking@fbtlaw.com
Eric A. Riegner
FROST BROWN TODD LLC
eriegner@fbtlaw.com
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