Makins v. District of Columbia
Makins v. District of Columbia
Concurring Opinion
concurring in part:
I am fully in agreement with the essential holding of the en banc court’s opinion that the enforceability of settlement agreements is governed by principles of contract and agency law, including the doctrine that a principal (the client) will be bound by the acts of an agent (the attorney) where the facts support a finding of apparent authority. See Makins v. District of Columbia, 838 A.2d 300, 306 (D.C. 2003) (Ruiz, J.,
The certified question, however, presented the factual situation as one where the client, beyond merely retaining counsel, “has authorized the attorney to attend the settlement conference before a magistrate judge and to negotiate on her behalf and ... the attorney leads the opposing party to believe that the client has agreed to th[e] terms.” The majority takes the position that no inference of apparent authority should be permitted from the client’s authorization because she “had little choice, short of discharging Harrison, except to allow him to continue to represent her in the negotiations at the ordered conference.” See ante at 597. But viewed through the eyes of a third party, Ms. Makins did have a choice, for the magistrate’s order provided that the District be represented by a person with settlement authority and that Ms. Makins “either attend the settlement conference or be available by telephone for the duration of the settlement conference.” The import of the magistrate’s order was evident, that the purpose of the conference was to have a negotiation with those who could come to a final settlement. Thus, Ms. Makins had the choice of attending personally, but appeared to have chosen, instead, to be available by telephone to her lawyer, whom, according to the certified question, she authorized to attend the conference to negotiate on her behalf.
There are additional facts in the record of this case, moreover, that make the question of apparent authority intensely factual and a much closer issue. In particular, the attorney had been representing the client for several years throughout the adminis
In Feltman, the court held there was apparent authority binding the client when the principal held out his retained counsel as the person to negotiate a lease. 366 A.2d at 140. Similarly in this case, the certified question posits that Ms. Makins held Mr. Harrison out as the person with whom the District should negotiate a settlement of her claims by “authorizing] the attorney to attend the settlement conference before a magistrate judge and to negotiate on her behalf.” Although not stressed in our opinion in Feltman, the attorney in that case had conducted a previous negotiation for the lease of the same premises on behalf of the client, see id. at 138, 140, from which course of conduct the third party could reasonably draw the conclusion that the attorney spoke for his client on the occasion of the lease renewal as well. Likewise, in this case, there was longstanding representation by Mr. Harrison of Ms. Makins, beginning -with the adverse action in the agency, continuing through a complaint before the EEOC, and culminating in the initiation and prosecution of a lawsuit in federal court. And, beyond this prior course of conduct similar to that present in Feltman, in this case there were several conversations between Mr. Harrison and Ms. Makins during the negotiations — conversations a fact finder could think the client knew or should have known would come to the attention of the court and the District’s counsel.
I also disagree with the majority opinion’s additional and, in my view, unnecessary discussion that the third party (in this case, the District of Columbia attorneys) unreasonably relied on counsel’s representation that his client had agreed to the settlement. The majority opinion places key emphasis on the ethical principle that it is the client who decides when, and on what terms, to settle. See D.C. Rule of Prof. Conduct 1.2(a). This rule guides not only the attorney vis a, vis the client, but also the reasonable expectations of other lawyers. With respect to the latter, the majority argues that because lawyers understand that the ultimate settlement decision is for the client, opposing counsel could not reasonably expect that their counterpart would have final settlement authority without some further client manifestation to that effect. This analysis is fine as far as it goes, but it does not go far enough, because it does not take into account all of the applicable ethical rules. According to the certified question, the attorney “led the opposing party to believe that the client had agreed.” That opposing counsel relied on that representation is not unusual: when lawyers are involved, lawyers deal with lawyers. This not only is common practice, but also is mandated by the ethical prohibition on direct contact with a represented party. See Rule of Prof. Conduct 4.2(a). In this context, it is imperative that lawyers be able to rely upon the facially reasonable representations of opposing counsel. That expectation is particularly sound when a representation is made in the course of a judicial proceeding, as here, not only to opposing counsel but to the presiding judicial officer. See Rule 3.3(a)(1) (“A lawyer shall not knowingly: (1) make a false statement of material fact or law to a tribunal.”). A lawyer’s operating assumption must be to expect — and our opinions place decisive significance upon — candor from counsel in their dealings with each other and with the court consistent with the rules of professional conduct we have promulgated. See Miranda v. Contreras, 754 A.2d 277, 281
On this limited basis, I concur in the full court’s negative answer to the certified question.
. Although not explained in the opinion, the majority’s view that all Ms. Makins did was to retain her attorney is presumably based on the fact that because the magistrate had ordered the parties to attend the settlement conference, Mr. Harrison’s attendance could not be interpreted as anything more than routine compliance in the course of litigation. See Makins, 838 A.2d at 305 ("Because Harrison was ordered to attend the conference by the magistrate, however, we find such an "authorization” of limited value in evaluating a conveyance of authority.”) Notwithstanding the majority’s premise that Ms. Makins had made no manifestation beyond retaining Harrison as her counsel, the majority ”take[s] as a given that a third party in the shoes of the District of Columbia would reasonably assume that Makins had authorized attorney Harrison (1) to attend the settlement conference, and (2) to negotiate on her behalf.” See ante at 594.
. In her testimony, Ms. Makins conceded that she knew principals were at the conference, "I asked Mr. Harrison, when he made mention to me that Mr. Henderson [the warden who was a defendant in the lawsuit] was here [at the settlement conference], I said to him, I said, Mr. Harrison, why is Mr. Henderson there and I'm not there?”
. Mr. Harrison testified that immediately before settlement was concluded, he spoke to Ms. Makins for about 30 minutes:
I was on the phone and they came out and they wanted me to go back in while I was doing that, and I said, no, that Ms. Makins wanted to go over some things and since I had no authority I couldn’t— there was no reason for me to go back until I had authority from my client.
So I would not go back in, and I believe that was the next to last thing before we settled at $99,000. We had one more discussion before we settled at $99,000.
Although she disagreed with Mr. Harrison about the content and length of their conversations, Ms. Makins testified that she had three conversations with her attorney the day of the settlement conference.
Michael Stern, the District’s attorney with settlement authority who attended the conference, testified about the impact of the telephone conversations:
[Question] Mr. Stern, did Mr. Harrison, plaintiff’s counsel, explain to Judge Kay whether or not he would be in contact with his client during the mediation session?
[Answer] Judge Kay, in fact, asked him why the plaintiff wasn’t there, and he said, oh, she is at home, and I have contact with her on the telephone, and I will call her if there are any discussions that — any offers that I have to make.
Plaintiff's counsel stepped back in. I explained to him — I said, there was no way we were going to be able to settle this for over $100,000. If he was able to speak to his client and then come back to us with an offer of under $100,000, that I thought that there was a chance of settling it.*600 And he said, do you think it would go for $100,000? And I said, it has to be under $100,000. He went out with the phone in hand, came back a little while — not very long. Maybe it was ten minutes later, five minutes later, with the phone still in hand, and said, would $99,000 do it? And I said, $99,000 is fin[e]. We can settle this case.
. The majority recognizes the importance of the prior course of conduct in Feltman, see ante at n. 4, but does not take into account the extensive prior course of conduct in this case, presumably, because, unlike Judge Kessler, the district court judge who heard all the evidence presented, the majority limits its consideration to the facts in the certified question.
Opinion of the Court
Pursuant to D.C.Code § 11-723 (1995), the United States Court of Appeals for the District of Columbia Circuit (“Circuit”) has certified the following question to this court:
*592 Under District of Columbia law, is a client bound by a settlement agreement negotiated by her attorney when the client has not given the attorney actual authority to settle the case on those terms but has authorized the attorney to attend a settlement conference before a magistrate judge and to negotiate on her behalf and when the attorney leads the opposing party to believe that the client has agreed to those terms.
Makins v. District of Columbia, 349 U.S.App. D.C. 303, 312, 277 F.3d 544, 553 (2002).
For reasons set forth below, we answer the question in the negative. In so doing, we confine our analysis to the undisputed facts and those recited in the certified question.
I.
In November 1998, Brenda Makins, represented by John Harrison, Esquire, brought an action against the District of Columbia in the United States District Court for the District of Columbia claiming sex discrimination and retaliatory firing, in violation of Title VII (42 U.S.C. §§ 2000e et seq.). Makins had been employed in the District’s Department of Corrections from 1995 until her discharge in 1997. Her complaint sought reinstatement, compensatory damages, and attorney’s fees.
In the summer of 2000, at a pre-trial conference, the district judge referred Ma-kins’ case to a magistrate judge “for settlement purposes only” and ordered the District to “have present at all settlement meetings ... an individual with full settlement authority.” A similar admonition was absent as to Ms. Makins. A few days later, the magistrate ordered the “lead attorney(s) for the parties” to appear before him for a settlement conference; the order required that the “parties shall either attend the settlement conference or be available by telephone for the duration of the settlement conference.”
When the conference took place, Makins was not present. After two and a half hours of negotiations, Harrison and the attorneys for the District reached an agreement. Makins would receive $99,000 and have her personnel records amended from “discharged” to “resigned” (to preserve her retirement benefits if she were able to obtain other creditable employment). In return, Makins would dismiss her claims against the District. Mr. Harrison left the hearing room with cell phone in hand, apparently to call Ms. Makins. When he returned, the attorneys “shook hands” on the deal and later reduced it to writing. A few days later, when Harrison presented Makins with a copy for her signature, she refused to sign it. The District then filed a Motion to Enforce Settlement. Makins retained another attorney, and the court held an evidentiary hearing in which Harrison, Makins, and the lead attorney for the District testified.
The testimony of Makins and Harrison was at odds respecting whether Harrison had been given authority to settle absent a provision for her reinstatement to her job. The District Court, observing this “sharp conflict” in testimony, declined to resolve it. Instead, the court assumed arguendo
II.
There is arguably some inconsistency as to the extent of authority required of an attorney in settlement negotiations.
This dissonance may in part be seen as a result of the intersection of ethical guidelines and rules governing the client-lawyer relationship and the relationship of a principal to her agent in the context of settlement agreements. On the one hand, the District of Columbia Code of Professional Responsibility Ethical Consideration 7-7 provides that it is the exclusive authority of “the client to decide whether [s]he will accept a settlement offer Similarly, District of Columbia Rule of Professional Conduct 1.2(a) (2001) provides that a “lawyer shall abide by a client’s decision whether to accept an offer of settlement of a matter.”
The Restatement (Seoond) of Agenoy § 8 (1958) defines apparent authority as “the power to affect the legal relations of another person by transactions with third persons, professedly as an agent for the other, arising from and in accordance with the other’s manifestations to such third persons.” Thus, unlike actual authority, apparent authority does not depend upon any manifestation from the principal to her agent, but rather from the principal to the third party. Restatement (Seoond), supra, § 27, cmt. a. This court
We reiterate that apparent authority is an established doctrine in this court’s jurisprudence, and that settlement agreements are enforceable under general contract principles. But because apparent authority depends upon the principal’s manifestations to the third party, the issue before us is what conduct by a client in the settlement context is sufficient reasonably to cause a third person to believe that the attorney representing the client has full, final settlement authority, rather than something short of that. Whether an agent had apparent authority is a question of fact and the party asserting the existence of apparent authority must prove it. Feltman, supra, 366 A.2d at 140 (citing Rustler’s Steak House v. Environmental Assoc., Inc., 327 A.2d 536 (D.C. 1974); McDonald v. Stone, 86 A.2d 624 (D.C. 1952)). In determining whether the agent had apparent authority to bind the principal, “[c]onsideration should be given, inter alia, to the actual authority of the agent, the usual or normal conduct of the agent in the performance of his or her duties, previous dealings between the agent and the party asserting apparent authority, any declarations or representations allegedly made by the agent, and lastly, the customary practice of other agents similarly situated.” Management Partnership, Inc. v. Crumlin, 423 A.2d 939, 941 (D.C. 1980). We take as a given that a third party in the shoes of the District of Columbia would reasonably assume that Makins had authorized attorney Harrison (1) to attend the settlement conference, and (2) to negotiate on her behalf; neither Makins nor amicus contends otherwise. We hold, however, that absent further manifestations by Makins- — not Harrison- — -which are not contained in the certified question, there was insufficient conduct by the client to support a reasonable belief by the District that Harrison had full and final authority to agree to the settlement terms.
As pointed out, in the District of Columbia the decision to settle belongs to the client, see D.C. Rule of Prof. Conduct 1.2(a) (2004), a fact confirmed by our decisions. In Bronson, supra note 3, 404 A.2d at 960, for example, an attorney brought a declaratory judgment action to enforce a purported settlement agreement against the client. This court refused to bind the client to the agreement, because the decision to accept the agreement was the client’s and not the attorney’s. “[Regardless of the good faith of the attorney,” we stated, “absent specific authority, an attor
The Restatement (Third) further confirms the generally accepted distinction between the power to conduct negotiations and the power to end the dispute. See id. Conducting settlement negotiations is properly in the attorney’s domain: “[i]n the absence of a contrary agreement or instruction, a lawyer normally has authority to initiate or engage in settlement discussions, although not to conclude them ....” Id. § 22 cmt. C. Concluding those settlement negotiations, however, is strictly the client’s prerogative: “[tjhe decision to settle is reserved to the client ... because a settlement definitively disposes of client rights.” Id. § 22 cmt. D; see also Auvil v. Grafton Homes, Inc., 92 F.3d 226, 227-28 (4th Cir. 1996) (“While the record facts support the conclusion that Auvil manifested his attorney’s authority to negotiate a settlement, we do not agree that they support the conclusion that Auvil manifested his attorney’s authority to execute a settlement agreement.”) (emphasis in original).
These ethical principles are key to the issue before us, because they not only govern the attorney-client relationship, they inform the reasonable beliefs of any opposing party involved in litigation in the District of Columbia, as well as the reasonable beliefs of the opposing party’s counsel, whose practice is itself subject to those ethical constraints. It is the knowledge of these ethical precepts that makes it unreasonable for the opposing party and its counsel to believe that, absent some further client manifestation, the client has delegated final settlement authority as a necessary condition of giving the attorney authority to conduct negotiations. And it is for this reason that opposing parties— especially when represented by counsel, as here — must bear the risk of unreasonable expectations about an attorney’s ability to settle a case on the client’s behalf. ‘When a lawyer purports to enter a settlement binding on the client but lacks authority to do so, the burden of inconvenience resulting if the client repudiates the [unauthorized] settlement is properly left with the
Applying these principles, we conclude that the two client manifestations contained in the certified question — sending the attorney to the court-ordered settlement conference and permitting the attorney to negotiate on the client’s behalf— were insufficient to permit a reasonable belief by the District that Harrison had been delegated authority to conclude the settlement. Some additional manifestation by Makins was necessary to establish that she had given her attorney final settlement authority, a power that goes beyond the authority an attorney is generally understood to have. The District, in its briefs, points only to actions and representation of record by Harrison, not Makins, as support for the reasonableness of its belief. Thus, it asserts that “Mr. Harrison represented that Ms. Makins was available by telephone and that he would consult with her when appropriate”; that “Mr. Harrison spoke on his cell phone with plaintiff at least three times during the conference”; and that “[a]t one point, Mr. Harrison left the room to phone plaintiff about the defendant’s latest settlement proposal, and returned, phone in hand, to accept the proposal with one new condition regarding amendment of personnel forms.” All of this information (including information purportedly about the client, Makins) was known to the District of Columbia only through representations made by Harrison, the attorney.
At the en banc argument, counsel for the District characterized the record as showing that Makins “sent” Harrison to the settlement conference, thus manifesting to the court and the District his apparent authority to settle her claim. But Makins had little choice, short of discharging Harrison, except to allow him to continue to represent her in the negotiations at the ordered conference. To execute a settlement agreement then and there is quite another matter.
Since Ms. Makins, as principal, did not make any manifestation of authority to the District’s attorneys, other than retaining Harrison, under the facts as certified in the question, a finding of apparent authority is precluded under the law of this jurisdiction. The District also presents several policy arguments supporting enforcement of settlement agreements on apparent authority grounds, none of which we find compelling. To be sure, settlement of disputes, both in trial courts and on appeal, is to be encouraged as sound public policy. Paul v. Bier, 758 A.2d 40, 56 (D.C. 2000) (Schwelb, J., dissenting) (citing Autera v. Robinson, 136 U.S.App.D.C. 216, 218, 419 F.2d 1197, 1199 (1969)). However, we are not persuaded that the settlement process will be impeded simply by requiring some manifestation of the client’s authorization to support a claim of apparent authority in these cases where the client challenges the authority of his attorney to settle the claim. In addition, “[a]pparent authority is an equitable doctrine that places the loss on one whose manifestations to another have misled the latter.” Edwards, supra, 792 F.2d at 391; see also Restatement (ThiRd), supra, § 27 cmt. D (As between the client and the third party, the third party should bear the risk of an unauthorized settlement because the third party “should know that settlements are normally subject to approval by the client.”). Our holding is consistent with this principle. Since Ma-kins manifested nothing by words or conduct on which reliance could be placed (she merely continued to retain Harrison), our answer to the certified question is not erosive to that policy.
We answer the certified question in the negative.
. The panel decision was filed on December 18, 2003, Judge Ruiz dissenting; Judge Terry and Senior Judge Nebeker were in the majority. It answered the question in the negative, but on different reasoning, arguably leaving no room for apparent authority in court ordered settlement conferences where a party did not attend. On the District’s petition, we vacated the panel opinions and granted en banc reconsideration, appointed the amici, and heard oral argument on June 29, 2004. Makins v. District of Columbia, 838 A.2d 300 (D.C. 2003), vacated and reh'g en banc granted, 2004 D.C.App. Lexis 198.
. See generally Jeffrey A. Parness & Austin W. Bartlett, Unsettling Questions Regarding Lawyer Civil Claim Settlement Authority, 78 Or. L. Rev. 1061 (1999); Grace M. Giesel, Enforcement of Settlement Contracts: The Problem of the Attorney Agent, 12 Geo. J. Legal Ethics 543 (1999).
. Placing emphasis on the client’s authority also finds some support in our case law. See Bronson v. Borst, 404 A.2d 960 (D.C. 1979); Ashley v. Atlas Mfg. Co., 7 F.R.D. 77 (D.D.C. 1946), affd, 82 U.S.App. D.C. 399, 166 F.2d 209 (1947).
. Some of the cases cited by the District in support of apparent authority are distinguishable on the facts. Although the courts in Ashley and Navajo Tribe found the attorneys had apparent authority to settle, the clients in those cases were present in the courtroom. Ashley, supra note 3; Navajo Tribe of Indians v. Hanosh Chevrolet-Buick, Inc., 106 N.M. 705, 749 P.2d 90 (1988). There is an important difference between a settlement reached where the client is present, and therefore has an opportunity to be heard on the matter by all parties, and the case at hand. Signal Construction, supra, based apparent authority in a uniform business custom that a construction project manager acts within the scope of his employment in giving an employment reference to another construction company. 586 A.2d at 1219. In Feltman, supra, the court determined that there was sufficient evidence to allow submission of the issue of apparent authority to the jury where there was evidence not only of the agent's authorization to the attorney to negotiate the lease but also a holding out by the client of his attorney as the person with whom the third party should deal and, significantly, a prior course of conduct between the parties with regard to previous negotiation and leasing of the same property. 366 A.2d at 140. Management Partnership, supra, 423 A.2d at 939, involved a determination of apparent authority of an employee with respect to a lease agreement. None of these cases addressed the special circumstances of a settlement conference and of the appropriate distinctions between manifestations of authority in employer/employee relationships and the conveyance of authority in the lawyer/client relationship (which, as noted, necessitates our consideration of ethical conduct and professional responsibility guidelines in addition to contract and agency principles). While the opinions may be somewhat cryptic as to their facts, we do not construe them as deviating from the rule that apparent authority in the agent depends on whether the principal conveyed the impression of such authority to the third party.
Reference
- Full Case Name
- Brenda Elaine MAKINS, Appellant, v. DISTRICT OF COLUMBIA, Et Al., Appellees
- Cited By
- 25 cases
- Status
- Published