Kalnen v Kalnen, 162 NC App 180 (02-1691) 01/06/2004

Appeal by defendant from order entered 2 July 2002 by Judge Ernest B. Fullwood in New Hanover County Superior Court. Heard in the Court of Appeals 15 October 2003.

H. Kenneth Stephens, II for plaintiff-appellee.

Brannon Law Firm, P.L.L.C., by Anthony M. Brannon, for defendant-appellant.

    MARTIN, Judge.

    Defendant appeals from an order entered 2 July 2002 by Judge Ernest B. Fullwood enforcing a settlement agreement between plaintiff and defendant. Plaintiff, defendant, and the decedent, Margaret Rose Damke, are sisters. Defendant lived with and cared for Ms. Damke during the last years of her life. In Ms. Damke's last will and testament, defendant was designated the beneficiary of the estate's residuary clause, and plaintiff was appointed executrix of the estate. Plaintiff, acting in her capacity as executrix of the estate of Margaret Rose Damke, filed a complaint in May 1998 alleging, inter alia, breach of fiduciary duty,constructive fraud, conversion, and undue influence by defendant during the time she cared for and lived with Ms. Damke. Defendant answered on 27 July 1998, denying all pertinent allegations. Thereafter, the parties engaged in discovery and lengthy negotiations.
    By letter dated 18 September 1998, plaintiff's attorney, H. Kenneth Stephens, II, conveyed to defendant's attorney, John Poisson, an offer to settle the dispute for the sum of sixty-six thousand dollars ($66,000). By letter dated 22 October 1998, attorney L. Gleason Allen replied to Mr. Stephens' letter, stating that defendant had consulted with him to get a second opinion concerning plaintiff's settlement offer and that, with the consent of defendant and Mr. Poisson, he was authorized to make a proposal. The counterproposal included, inter alia, an agreement by defendant to pay an amount “which will equal $66,000 when added to the amount already held by the Estate,” an agreement by plaintiff to pay the defendant the full amount of her claim filed with the estate, an agreement by both parties that the lawsuit would be dismissed with prejudice, and an agreement by plaintiff that defendant would be afforded an opportunity to attend any conference determining the amount of executrix fees and attorney fees collected from the estate. Notwithstanding the above language, Mr. Allen made the following statement at the end of the letter:
        Since Ms. Kalnen is accepting the offer of settlement contained in your letter to Jack Poisson of September 18, 1998, it would appear to me that the matter is now resolved, as the items set out above are no more thanreasonable “fleshing out” of the basic agreement.

    The trial court found as facts that the letter dated 18 September 1998 from Mr. Stephens to Mr. Poisson was an offer to settle, that the letter dated 22 October 1998 from Mr. Allen to Mr. Stephens was an acceptance of that offer, and that Mr. Allen had actual, express, and full authority from defendant to accept the offer and was acting within the scope of his authority as defendant's attorney. Based on these findings of fact, the trial court concluded that a valid settlement agreement existed between the parties, and entered an order enforcing the agreement according to the terms set forth in the two letters. Defendant appeals.
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    Defendant's primary argument on appeal is that the trial court erred when it concluded, as a matter of law, that an enforceable settlement agreement existed between the parties. “[W]hen the trial court sits without a jury, the standard of review on appeal is whether there was competent evidence to support the trial court's findings of fact and whether its conclusions of law were proper in light of such facts.” Shear v. Stevens Bldg. Co., 107 N.C. App. 154, 160, 418 S.E.2d 841, 845 (1992).
    Defendant first challenges the trial court's finding of fact that Mr. Allen had actual, express, and full authority to accept plaintiff's offer to settle. We hold there was competent evidence to support the trial court's finding.
    “Special authorization from the client is required before an attorney may enter into an agreement discharging or terminating acause of action on the client's behalf.” Harris v. Ray Johnson Constr. Co., 139 N.C. App. 827, 829, 534 S.E.2d 653, 655 (2000). In North Carolina, it is presumed that an attorney has such special authorization when he or she is professing to be authorized to negotiate a settlement on behalf of a client. Id. In order to set aside a settlement negotiated by an attorney purporting to act on a client's behalf, the client has the burden of both rebutting the presumption of authority and proving by a preponderance of the evidence that the attorney lacked authority to enter into the settlement. Id.
    There is evidence showing that, after receiving Mr. Stephens' letter concerning settlement, defendant and her then attorney, Mr. Poisson, sought Mr. Allen's opinion regarding the plaintiff's offer. Mr. Allen undertook defendant's representation and was authorized by her to respond to Mr. Stephens regarding the settlement offer. Though defendant contends by affidavit that she never authorized Mr. Allen to actually settle the case, there is evidence to the contrary in the record, showing that defendant was under the impression that she had agreed to a settlement, but believed that plaintiff had “called the deal off” at a later point in time. We find that defendant did not meet her burden to show by a preponderance of the evidence that Mr. Allen was not authorized to accept the settlement offer on her behalf, and thus, there is competent evidence to support the trial court's finding that Mr. Allen had actual, express, and full authority to make the proposalcontained in his 22 October 1998 letter in response to plaintiff's offer of settlement.
    Defendant next challenges the trial court's finding of fact that Mr. Allen's 22 October 1998 letter constituted an acceptance of the settlement offer contained in Mr. Stephens' 18 September 1998 letter. We agree with defendant that there was not competent evidence to support such a finding.
    “A compromise and settlement agreement terminating or purporting to terminate a controversy is a contract, to be interpreted and tested by established rules relating to contracts.” Harris, 139 N.C. App. at 829, 534 S.E.2d at 654. A valid contract is formed when parties “assent to the same thing in the same sense, and their minds meet as to all terms.” Normile v. Miller, 313 N.C. 98, 103, 326 S.E.2d 11, 15 (1985) (citation omitted). “In the construction of a contract, the parties' intentions control . . . .” Walker v. Goodson Farms, Inc., 90 N.C. App. 478, 486, 369 S.E.2d 122, 126, disc. review denied, 323 N.C. 370, 373 S.E.2d 556 (1988).
    Though Mr. Allen's 22 October 1998 letter expressly purported to accept plaintiff's offer, the use of such express language, while relevant, is not conclusive when determining whether a contract has been formed. See Piedmont Bank & Trust Co. v. Stevenson, 79 N.C. App. 236, 240, 339 S.E.2d 49, 52, aff'd, 317 N.C. 330, 344 S.E.2d 788 (1986). We must also look to the terms of the agreement itself, the purpose and subject matter of thecontract, and the situation of the parties to make the final determination. See id.
    The common law requires that a valid acceptance be a “mirror image” of the offer. Normile, 313 N.C. at 103, 326 S.E.2d at 15. “If the terms of the offer are changed or any new ones added by the acceptance, there is no meeting of the minds and, consequently, no contract.” Id. (internal quotation omitted).
    In this case, Mr. Allen's 22 October 1998 letter proposed additional material terms which had not been contained in Mr. Stephens' 18 September 1998 settlement offer. Thus, it was not a “mirror image” acceptance of the plaintiff's settlement offer, but rather a counteroffer of settlement. The trial court's finding that Mr. Allen, by his letter of 22 October 1998, accepted plaintiff's settlement offer is, therefore, not supported by competent evidence and must be vacated.
    Plaintiff argues that the subsequent actions of both the plaintiff and the defendant demonstrate that a meeting of the minds had been achieved between the parties as to a settlement agreement. It is true that writings alone are not dispositive in a contract dispute, and that the parties' intentions may be discerned from both their writings and their actions. Walker, 90 N.C. App. at 486, 369 S.E.2d at 126 (affirmatively acting upon the terms of an agreement was sufficient to show an acceptance of a written counteroffer). However, the trial court made no findings of fact regarding the parties' subsequent actions in this case and the evidence with respect thereto may be subject to differinginterpretations, depending on the weight and credibility accorded it by the fact finder.
    Without a valid acceptance, no valid settlement agreement can exist. The trial court's conclusion of law that a valid settlement agreement existed was based solely on the writings. Since the writings alone were not sufficient to support the existence of a valid settlement agreement, the findings of fact did not adequately support the trial court's conclusion of law and as such, the conclusion must be vacated. See Shear, 107 N.C. App. at 160, 418 S.E.2d at 845 (1992) (conclusions of law must be adequately supported by findings of fact). We must therefore remand this case back to the trial court for such further proceedings as may be required to resolve the issues involved in this dispute. In view of our holding, we need not address the defendant's remaining assignments of error.
    Reversed and remanded.
    Judges STEELMAN and LEVINSON concur.
    Report per Rule 30(e).

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