1. Attorneys--attorney-client relationship--settlement agreement--actual authority
The trial court did not err by concluding that plaintiff's attorney had actual authority to
enter into a settlement agreement on his client's behalf for $2000 for injuries arising out of an
automobile accident, because the attorney reasonably believed at the time of negotiation that he
could settle the case for this gross amount, and only in hindsight did it become clear that the
attorney and his client had not reached a clear agreement as to the proper amount based on a
difference between the net and gross amount.
2. Compromise and Settlement--oral acceptance by plaintiff's attorney--binding on all
parties
The trial court did not err by concluding that plaintiff was bound by her attorney's oral
acceptance of a settlement agreement for injuries arising out of an automobile accident and that a
binding agreement was reached as to all parties, because plaintiff's claim was premised on joint
and several liability seeking to recover for a single indivisible injury, which necessarily operated to
terminate the controversy as to both defendants.
Brenton D. Adams for the plaintiff-appellant.
Cranfill, Sumner & Hartzog, L.L.P., by H. Lee Evans and F.
Marshall Wall, for the defendant-appellee Ray Johnson
Construction Co., Inc.
LEWIS, Judge.
On 2 March 1998, plaintiff filed a lawsuit seeking to hold
defendants jointly and severally liable for injuries arising out of
an automobile accident in which defendant Marshall Avon McNeill was
the named negligent driver. Defendant McNeill was an employee of
defendant Ray Johnson Construction Co. Inc. (“Construction
Company”). On 6 November 1998, Brenton Adams, plaintiff's counsel, and
defendant Construction Company's insurance carrier entered into
negotiations regarding a settlement of plaintiff's claim. The
insurance carrier offered to settle plaintiff's claim for $2000,
which Mr. Adams accepted on behalf of his client. Defendants
believed this transaction created an oral agreement to settle
plaintiff's claim. However, in a letter to the insurance carrier
dated 2 December 1998, Mr. Adams attempted to repudiate the
purported settlement agreement. The insurance carrier received the
letter on 28 December 1998. At this time, counsel for defendant
Construction Company and its insurance carrier responded to Mr.
Adams, asserting that a binding oral agreement had been reached on
16 November 1998. Having received no response from Mr. Adams, on
15 March 1999 defendants filed a Motion to Enforce Settlement in
superior court. On 14 May 1999, after reviewing the evidence
submitted by both parties, the judge entered an order enforcing the
16 November 1998 oral settlement agreement between plaintiff and
defendants. Plaintiff appeals from this order.
Plaintiff's arguments on appeal question the validity of the
purported agreement. A compromise and settlement agreement
terminating or purporting to terminate a controversy is a contract,
to be interpreted and tested by established rules relating tocontracts. Casualty Co. v. Teer Co., 250 N.C. 547, 550, 109 S.E.2d
171, 173 (1959). Here, the issue is a matter of contract
interpretation, and hence, a question of law. Davison v. Duke
University, 282 N.C. 676, 712, 194 S.E.2d 761, 783 (1973). Our
standard of review here is de novo. Staton v. Brame, 136 N.C. App.
170, 174, 523 S.E.2d 424, 427 (1999).
[1]Plaintiff first contends her attorney, Mr. Adams, had noactual authority to enter into this settlement agreemen
t on her
behalf so that she was not bound by the agreement entered on 16
November 1998. Although plaintiff concedes she expressly
authorized Mr. Adams to negotiate a settlement on her behalf, she
contends there was a misunderstanding as to the amount of that
settlement. Specifically, plaintiff claims she intended to net
$2000 from the settlement, while her attorney settled for a gross
amount of $2000, contemplating that medical bills and attorney's
fees would be deducted from that amount, resulting in a net
settlement amount less than $2000 for his client.
We recognize that there is a presumption in North Carolina in
favor of an attorney's authority to act for the client he professes
to represent. Gillikin v. Pearce, 98 N.C. App. 484, 488, 391
S.E.2d 198, 200, disc. review denied, 327 N.C. 427, 395 S.E.2d 677
(1990). This presumption applies to both procedural and
substantive aspects of a case. Greenhill v. Crabtree, 45 N.C. App.
49, 51, 262 S.E.2d 315, 317, aff'd per curiam, 301 N.C. 520, 271
S.E.2d 908 (1980). Special authorization from the client is
required before an attorney may enter into an agreement discharging
or terminating a cause of action on the client's behalf.
Greenhill, 45 N.C. App. at 52, 262 S.E.2d at 317. "Where special
authorization is necessary in order to make a dismissal or other
termination of an action by an attorney binding on the client . .
. it [is also] presumed . . . that the attorney acted under and
pursuant to such authorization." Id. One who challenges the
actions of an attorney as being unauthorized has the burden ofrebutting this presumption and proving lack of authority to the
satisfaction of the court. Chemical Co. v. Bass, 175 N.C. 453,
456, 95 S.E. 766, 767-78 (1918).
The attorney-client relationship is based upon principles of
agency. Dunkley v. Shoemate, 350 N.C. 573, 577, 515 S.E.2d 442,
444 (1999). A principal is liable on a contract duly made when the
agent acts within the scope of his actual authority. Foote &
Davies, Inc. v. Arnold Craven, Inc., 72 N.C. App. 591, 595, 324
S.E.2d 889, 892 (1985). Actual authority is that authority which
the agent reasonably thinks he possesses, conferred either
intentionally or by want of ordinary care by the principal. Heath
v. Craighill, Rendleman, Ingle & Blythe, 97 N.C. App. 236, 241, 388
S.E.2d 178, 181 (1990); 3 Am Jur. 2d Agency § 73 (1976). Actual
authority may be implied from the words and conduct of the parties
and the facts and circumstances attending the transaction in
question. 3 Am Jur. 2d Agency § 75 (1976).
Plaintiff's evidence here establishes Mr. Adams had actual
authority to settle her claim for an amount of $2000. Plaintiff
retained Mr. Adams as her counsel in this matter and expressly
authorized him to settle the claim for an amount in which plaintiff
and her counsel thought they had agreed on at the time. According
to plaintiff's evidence, plaintiff and her attorney had previously
discussed the difference between the net and gross amount, and at
the time of the 16 November 1998 negotiation, Mr. Adams
"understood" that he was to settle the claim for $2000. Only in
hindsight did it become clear that Mr. Adams and his client had notreached a clear agreement as to the proper amount. From this
evidence we conclude that Mr. Adams reasonably believed at the time
of negotiation that he could settle the case for $2000. Thus, he
possessed actual authority to settle in that amount, though it was
unfortunately conferred by want of ordinary care. Plaintiff has
failed to meet her burden of proving Mr. Adams lacked authority and
she is bound by his acceptance of defendant's settlement offer on
16 November 1998.
[2]Plaintiff next contends even if plaintiff was bound by Mr.
Adams' acceptance of the settlement agreement, all essential terms
were not established before plaintiff's initial acceptance and
thus, no binding agreement was reached upon Mr. Adams' acceptance.
Specifically, plaintiff argues that the general release of claims
form, releasing "all other persons," was not negotiated as part of
the offer of settlement. Plaintiff contends that at best,
settlement could have been enforced only with respect to defendant
Ray Johnson Construction Co., Inc., and not as to defendant
Marshall Avon McNeill. Although we agree that a valid contract
exists only where there has been a meeting of the minds as to all
essential terms of the agreement, Northington v. Michelotti, 121
N.C. App. 180, 184, 464 S.E.2d 711, 714 (1995), our review
indicates the oral agreement made between the parties in this case
was not incomplete.
The evidence here establishes the 16 November 1998 offer was
made to settle plaintiff's entire case. Plaintiff's counsel
accepted the offer to settle the entire pending claim onplaintiff's behalf. This acceptance necessarily contained the
implied promise to execute some instrument terminating the
controversy as to that settling defendant, namely, the stipulation
to dismiss the case with prejudice and release of claims form.
Because plaintiff's claim was premised on joint and several
liability seeking to recover for a single indivisible injury, this
implied promise necessarily operated to terminate the controversy
as to both defendants. Consequently, after the initial offer and
acceptance, there remained nothing to negotiate in terms of the
forms necessary to effectuate the settlement.
Affirmed.
Chief Judge EAGLES and Judge EDMUNDS concur.
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