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EVANS v. SKINNER

August 13, 1990

YVONNE EVANS, Plaintiff,
v.
SAMUEL SKINNER, Secretary of Transportation, et al., Defendants



The opinion of the court was delivered by: RICHEY

 CHARLES R. RICHEY, UNITED STATES DISTRICT JUDGE

 In February 1989 the plaintiff instituted this action, alleging, inter alia, violations of Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e et seq. She retained J. Thomas Giunta, Esquire to represent her in this lawsuit. In the summer of 1989, Mr. Giunta asked the plaintiff if she would be willing to enter into settlement negotiations with the defendants. Plaintiff's Affidavit para. 2. She agreed provided she could participate in the negotiations. Id. Unbeknownst to the plaintiff, settlement negotiations took place from May through August of 1989, and counsel for the parties drafted a settlement agreement in September 1989. *fn1" The plaintiff saw the proposed settlement agreement for the first time in February 1990 and has firmly rejected it ever since. After an obvious breakdown in the attorney-client relationship, Mr. Giunta withdrew, and the plaintiff retained another attorney to represent her for the balance of these proceedings.

 The defendants have filed a motion to enforce the settlement agreement, claiming that, although the plaintiff has not accepted the terms of this agreement, her attorney has bound her by acting within the scope of his authority and accepting it himself. The plaintiff opposes the enforcement of the settlement agreement by asserting that no agreement exists to be enforced because her attorney did not have authority, either actual or apparent, to enter into the agreement without her approval. Upon consideration of the defendants' motion, the plaintiff's opposition, the underlying law, and the entire record herein, the Court holds that the parties never entered into a binding, enforceable settlement agreement.

 It is well-settled that an attorney may not settle a client's claim without specific authority to do so. See, e.g., United States v. Beebe, 180 U.S. 343, 351-52, 45 L. Ed. 563, 21 S. Ct. 371 (1901) (attorney does not receive an implied power to settle a client's claim simply because his or her services have been retained); Golden Panagia S.S., Inc. v. Panama Canal Comm'n, 791 F.2d 1191, 1198 n. 5 (5th Cir. 1986) (unauthorized settlement agreement is void and unenforceable); Ashley v. Atlas Mfg. Co., 7 F.R.D. 77, 77 (D.D.C. 1946) ("an attorney has no right, without special authority, to make a compromise for his client"), aff'd, 82 U.S. App. D.C. 399, 166 F.2d 209 (D.C. Cir. 1947); see generally Annotation, "Authority of Attorney to Compromise Action," 30 A.L.R.2d 944 (1953 & Supps. 1981 & 1990) (rule is almost universal that attorney may not settle action without special authority from client).

 I. Actual Authority

 Because the attorneys for both parties appeared for a settlement conference with "full authority to discuss settlement," the defendants claim that this indicates the authority of plaintiff's counsel to settle the case. See Defendants' Reply to Plaintiff's Opposition at 3. However, even if the plaintiff had given her former attorney authority to discuss settlement without her participation, "discussing" settlement and "entering" into a binding, enforceable final agreement are two distinct actions. Cf. Millner v. Norfolk & W. Ry. Co., 643 F.2d 1005, 1010 (4th Cir. 1981).

 Further claiming that the plaintiff's former attorney was authorized to settle her claim, the defendants point out that at a subsequent status conference, he stated, "And I thought, to the best of my knowledge, that I had authority and that I acted within that authority." Defendants' Motion to Enforce Settlement Agreement at 4. However, even if an attorney genuinely believes in his or her own authority to negotiate a settlement, the client retains the right to reject it provided the settlement was not authorized. Matzo v. Postmaster General, 685 F. Supp. 260, 262 (D.D.C. 1987), aff'd, 274 U.S. App. D.C. 95, 861 F.2d 1290 (D.C. Cir. 1988). The attorney's "belief" must be "reasonable" based on the client's communications and in light of the totality of the attorney-client relationship. See Edwards, 792 F.2d at 391. Here, the plaintiff never authorized her attorney to enter into a settlement agreement. To the contrary, she authorized him to enter into "negotiations." *fn2" Under these circumstances, the Court holds that it was unreasonable for plaintiff's counsel to conclude that the plaintiff had given him full authority to settle this case.

 Nor does the totality of the attorney-client relationship support a finding of implied actual authority. The relationship between the plaintiff and her former attorney was less than harmonious with little communication from either side regarding settlement. For example, the plaintiff's former attorney rarely returned the plaintiff's calls. In fact, they only spoke about settlement on two occasions: when she informed him in the summer of 1989 that she wanted to participate in any negotiations and in June 1989 when she inquired about her case and he simply stated that he was waiting to hear from the Justice Department. Having been unable to speak with her counsel to confirm rumors that her case had settled, the plaintiff eventually threatened to report her former attorney to the Bar. He finally returned her calls after approximately three months of apparently avoiding her. Ultimately Mr. Giunta's co-counsel began handling the case. See Plaintiff's Affidavit paras. 3, 5, 7, 8, 9. Having examined the totality of the attorney-client relationship, the Court holds that the plaintiff's conduct should not have led her former attorney to reasonably believe he had actual authority to enter into a binding settlement agreement without her prior approval. See Restatement (Second) of Agency § 26.

 II. Apparent Authority

 Because it is clear that the plaintiff's former attorney did not have actual authority to settle her claim, the issue becomes whether her attorney was acting pursuant to his apparent authority when he attempted to settle the claim. Apparent authority has been described as:

 
"the power to affect the legal relations of another person by transactions with third persons, professedly as agent for the other, arising from and in accordance with the other's manifestations to such third persons." Restatement (Second) of Agency § 8 (1958). Further, in order to create apparent authority, the principal must manifest to the third party that he "consents to have the act done on his behalf by the person purporting to act for him." Id. at § 27.

 Fennell v. TLB Kent Co., 865 F.2d 498, 502 (2d Cir. 1989) (emphasis in original). Moreover, the United States Court of Appeals for this Circuit has recognized that "as a matter of law, for apparent authority to exist, there must be some conduct on the part of the principal to give rise to the inference of the agent's authority." Drexel Burnham Lambert v. Commodity Futures Trading Comm'n, 271 U.S. App. D.C. 49, 850 F.2d 742, 753 (D.C. Cir. 1988) (Starr, J., concurring in part and dissenting in part) (emphasis in original); see also Williams v. Washington Metro. Area Transit Authority, 232 U.S. App. D.C. 251, 721 F.2d 1412, 1416, 1417 (D.C. Cir. 1983) (per curiam) ...


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