Moore et al v. State Farm Insurance Company
Filing
42
ORDER denying 20 Defendant's Motion For Summary Enforcement of Parties' Settlement Agreement. Signed by Magistrate Judge Dennis Howell on 03/12/13. (Pro se litigant served by US Mail.)(emw)
IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF NORTH CAROLINA
ASHEVILLE DIVISION
1:11cv201
BARBARA P. MOORE and MELVIN
J. MOORE, JR.,
)
)
)
Plaintiffs,
)
)
v.
)
)
STATE FARM INSURANCE
)
COMPANY T/D/B/A STATE FARM
)
FIRE AND CASUALTY COMPANY,
)
)
Defendant.
)
___________________________________ )
ORDER
Pending before the Court is Defendant’s Motion Summary Enforcement of
Parties’ Settlement Agreement [# 20]. Defendant moves this Court to enforce a
settlement agreement that it contends the parties reached during mediation.
Plaintiff Melvin Moore (“Plaintiff”) contends that no settlement was ever reached
between the parties and, thus, there is no agreement to enforce. On March 8, 2013,
the Court conducted an evidentiary hearing and heard evidence regarding whether
the parties reached a settlement in this matter. Upon a review of the record, the
parties’ briefs, and after considering the evidence presented at the evidentiary
hearing, the Court DENIES the motion [# 20].
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I.
Analysis
District Courts have the inherent authority to enforce settlement agreements.
Williams v. Prof’l Transp., Inc., 388 F.3d 127, 131 (4th Cir. 2004); Hensley v.
Alcon Labs., Inc., 277 F.3d 535, 540 (4th Cir. 2002); see also Lopez v. Xtel
Constr. Grp., LLC, 796 F. Supp. 2d 693, 698 (D. Md. 2011). The Court, however,
cannot enforce a settlement agreement until it determines that the parties reached a
complete agreement and determines each of the terms and conditions of the
settlement agreement. Hensley, 277 F.3d at 540. “Thus, to exercise its inherent
power to enforce a settlement agreement, a district court (1) must find that the
parties reached a complete agreement and (2) must be able to determine its terms
and conditions.” Id. at 540-41.
In ruling on a motion to enforce a settlement, the Court draws upon standard
contract principles. Bradley v. Am. Household, Inc., 378 F.3d 373, 380 (4th Cir.
2004); Hensley, 277 F.3d at 540; see also Lopez, 796 F. Supp. 2d at 699. One such
principle is that the formation of a contract requires offer, acceptance, and
consideration. Kinesis Adver., Inc. v. Hill, 652 S.E.2d 284, 292 (N.C. Ct. App.
2007). “It is essential to the formation of any contract that there be mutual assent
of both parties to the terms of the agreement so as to establish a meeting of the
minds.” Creech v. Melnik, 495 S.E.2d 907, 911-12 (N.C. 1988) (internal
quotations and citations omitted). Typically, mutual assent to an agreement is
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“established by an offer by one party and an acceptance by the other . . . .” Id. at
912.
Where a factual dispute over the terms of the agreement or over the
existence of the settlement agreement is present, the district court may not
summarily enforce the settlement agreement. Hensley, 277 F.3d at 541; see
also Lopez, 796 F. Supp. 2d at 699; Martin v. Senn Dunn LLC, No. 1:05cv63, No.
1:05cv462, 2005 WL 2994424, at *3 (M.D.N.C. Nov. 7, 2005). Rather, the Court
must conduct a plenary hearing and make findings on the issue in dispute.
Williams, 388 F.3d at 131-32; Hensley, 277 F.3d 541. “If a district court
concludes that no settlement agreement was reached or that agreement was not
reached on all the material terms, then it must deny enforcement.” Hensley, 277
F.3d at 541. Moreover, where the Court finds after such a hearing that the parties
did not reach complete agreement on all the terms of the settlement, then the
parties must be placed in the exact position they were in prior to the defective
settlement agreement, even where this means that a party will be required to return
proceeds it previously received from another party as part of the settlement. See
Wood v. Va. Hauling Co., 528 F.2d 423, 425 (4th Cir. 1975); see also Wright v.
Liberty Med. Supply, Inc., No. 7:09cv2490, 2011 WL 3235762, at *1 (D.S.C. Jul.
25, 2011); Martin, 2005 WL 2994424, at * 3. In such a situation, the case will also
be restored to the trial calendar so that the case can proceed as if no settlement had
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occurred. Wood, 528 F.2d at 425.
After considering the evidence presented during the hearing, including
weighing the testimony of the parties’ witnesses, the Court finds that the parties
did not reach an agreement in this case. Plaintiff Melvin Moore never accepted the
terms of the agreement. He neither signed the settlement agreement nor orally
expressed his consent to the terms of the agreement. And absent acceptance by
Plaintiff of the terms of the settlement agreement, there can be no contract. See
generally Creech, 495 S.E.2d at 911-12. At most, the attorneys in this case
reached a preliminary agreement as to the terms of a settlement, which required the
consent of the parties.1 Because no settlement agreement was ever reached
between the parties, the Court cannot enforce the agreement. See Hensley, 277
F.3d at 541.
Defendant, however, contends that the Court should enforce the settlement
agreement despite the fact that the evidence demonstrates that Plaintiff Moore
never expressly agreed to the terms of the settlement agreement because his
attorney had the apparent authority to bind him to the terms of the agreement and
specifically agreed to the terms of the agreement on Plaintiff’s behalf. “Apparent
authority results from a principal’s manifestations of an agent’s authority to a third
1
Although an attorney has the implied authority to negotiate a settlement, he or she does not possess the
implied authority to enter into a settlement on behalf of the client. Auvil v. Grafton Homes, Inc., 92 F.3d 226, 22930 (4th Cir. 1996); Ragsdale v. Potter, 227 F. App’x 271, 272 n.1 (4th Cir. 2007) (unpublished).
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party, regardless of the actual understanding between the principal and agent.”
Auvil, 92 F.3d at 230; see also Ward v. Durham Life Ins. Co., 381 S.E.2d 698, 703
(N.C. 1989); Manecke v. Kurtz, 731 S.E2d 217, 221 (N.C. Ct. App. 2012). In
support of its contention, Defendant relies on Purcell Int’l Textile Grp., Inc. v.
Algemene AFW N.V., 647 S.E.2d 667, 669 (N.C. Ct. App. 2007). In Purcell, the
North Carolina Court of Appeals held that the attorney for the defendants had the
apparent authority to bind his client to a settlement despite the fact that the attorney
offered a settlement amount that exceeded his actual authority.2 Id. at 671. As the
Court in Purcell explained:
Based on his actual authority, Hinnant engaged in negotiations
offering settlement figures of $400,000.00 and $500,000.00, and
plaintiff declined both offers. Each time plaintiff declined a
settlement offer Hinnant established a pattern of following up with a
new offer featuring a larger amount of money. Thus, when Hinnant
offered a settlement of $850,000.00 which exceeded his actual
authority, plaintiff could have reasonably assumed that offer was
within Hinnant’s authority and had no reason to know that Hinnant
had exceeded his limits. Zimmerman, 286 N.C. at 30, 209 S.E.2d at
799. Thus, the agreement negotiated by Hinnant bound defendants
despite the fact that Hinnant exceeded his authority and violated his
duty to defendants.
Id.
Unlike the situation in Purcell, counsel for Plaintiff Moore did not have the
apparent authority to enter into the settlement agreement at issue and, thus, he
2
The Court also notes that the Court in Purcell was applying a different standard than the one applicable to
whether a district court may enforce a settlement agreement in federal court.
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could not bind Plaintiff to its terms. Plaintiff, who was also at the mediation, did
not manifest his attorney’s authority to settle his claims. Moreover, unlike in
Purcell, this is not a case where an attorney had express authority to settle a case
for a specified amount but exceeded that amount during settlement negotiations.
The evidence presented at the hearing demonstrated that counsel for Plaintiff never
had the express authority to settle these claims for any amount; the authority to
accept a settlement of the claims always remained with the client. Based on the
facts presented to the Court at the hearing, and after considering the testimony of
the witnesses, the Court finds that counsel for Plaintiff Moore did not have the
actual, implied, or apparent authority to bind his client to the settlement agreement.
Finally, this is not a case where a party consented to a settlement and later
changed his mind. The evidence was clear that at no point did Plaintiff Moore ever
consent to the settlement agreement, and his attorney did not have the authority to
settle the claims on his behalf. Plaintiff Moore did not sign the agreement, he
vocalized at the mediation his refusal to consent to the terms of the agreement, and
the parties left the mediation without an executed agreement. Accordingly, the
Court finds that the settlement agreement is not enforceable. The Court DENIES
Defendant’s motion [# 20].
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II.
Conclusion
The Court DENIES Defendant’s Motion Summary Enforcement of Parties’
Settlement Agreement [# 20]. The Court will enter a separate order setting the
pretrial conference in this matter.
Signed: March 12, 2013
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