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Attorneys cannot agree to settlements for clients

Jennifer Nelson
January 1, 2007
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The fact a party authorizes an attorney to enter settlement negotiations and knows the negotiations are occurring does not mean that the attorney has authority to approve a settlement, according to a ruling today by the Indiana Court of Appeals.

In Carol and David Bay v. Michael Pulliam and Cardinal Transportation, LLC, 49A05-0612-CV-704, the Court of Appeals reversed a Marion Superior Court decision that granted a motion to enforce settlement agreement in favor of Pulliam and Cardinal Transportation. At issue was whether a settlement between an attorney for the Bays and Pulliam's insurance company could be binding if the Bays did not agree to it.

Carol Bay was injured during a vehicle accident involving a Cardinal truck driven by Pulliam. The company and Pulliam were insured by Zurich Insurance, North America. The Bays hired the Nunn Law Office to represent them. The settlement negotiations were between the Nunn office and Zurich, which through correspondence disclosed various settlement demands and offers of settlement from Zurich. Attorney Ken Nunn signed each demand letter, and Zurich was told to contact Claims Manager Jeff Pryor to discuss settlement. On Jan. 3, 2006, Pryor communicated with Zurich advising, "Our client has accepted your offer in the amount of $16,700." A release form was then forwarded from Zurich to the Nunn office.

Carol Bay testified in court that on Jan. 2, 2006, she told Dean Arnold, another attorney in the Nunn office, that she needed to consult with her husband before accepting the settlement offer. When the Bays received the settlement offer on Jan. 17, 2006, they rejected it in writing by noting the rejection of the settlement in two separate locations.

The Bays appealed the motion to enforce settlement agreement, arguing that the "attorney for the Bays" did not have actual or apparent authority to make the settlement agreement. They conceded the law office could enter into settlement negotiations and also that the Bays knew of such negotiations, but not that Nunn's office could agree to any settlement. The Court of Appeals agreed with the Bays argument, stating there was no evidence that Carol Bay told Arnold to accept the Zurich offer.

Pulliam maintained that Arnold had authority to enter the binding agreement per the conversation between himself and Bay on Jan. 2, in which she said she wanted to "settle the case." That is not evidence that she accepted the offer or gave Arnold authority to do so, the court ruled.

Senior Judge Sullivan wrote in the opinion, "The law is clear that retention of an attorney by a client does not constitute implied authority to settle a claim nor does it constitute a manifestation to third parties that the attorney has apparent authority to do so in an out-of-court proceeding."

Citing Gravens v. Auto-Owners Ind. Co., 666 N.E. 2d 964 (Ind. Ct. App. 1996), the court wrote, an attorney may not settle a claim without the client's consent.

In this case, Zurich assumed the Nunn office had the authority to approve the settlement, when it in fact did not, the court ruled. The acceptance of the settlement by the claims manager in the Nunn office was not binding upon the Bays. The Court of Appeals reversed the order of the Marion Superior Court and remanded for further proceedings.
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  1. If real money was spent on this study, what a shame. And if some air-head professor tries to use this to advance a career, pity the poor student. I am approaching a time that i (and others around me) should be vigilant. I don't think I'm anywhere near there yet, but seeing the subject I was looking forward to something I might use to look for some benchmarks. When finally finding my way to the hidden questionnaire all I could say to myself was...what a joke. Those are open and obvious signs of any impaired lawyer (or non-lawyer, for that matter), And if one needs a checklist to discern those tell-tale signs of impairment at any age, one shouldn't be practicing law. Another reason I don't regret dropping my ABA membership some number of years ago.

  2. The case should have been spiked. Give the kid a break. He can serve and maybe die for Uncle Sam and can't have a drink? Wow. And they won't even let him defend himself. What a gross lack of prosecutorial oversight and judgment. WOW

  3. I work with some older lawyers in the 70s, 80s, and they are sharp as tacks compared to the foggy minded, undisciplined, inexperienced, listless & aimless "youths" being churned out by the diploma mill law schools by the tens of thousands. A client is generally lucky to land a lawyer who has decided to stay in practice a long time. Young people shouldn't kid themselves. Experience is golden especially in something like law. When you start out as a new lawyer you are about as powerful as a babe in the cradle. Whereas the silver halo of age usually crowns someone who can strike like thunder.

  4. YES I WENT THROUGH THIS BEFORE IN A DIFFERENT SITUATION WITH MY YOUNGEST SON PEOPLE NEED TO LEAVE US ALONE WITH DCS IF WE ARE NOT HURTING OR NEGLECT OUR CHILDREN WHY ARE THEY EVEN CALLED OUT AND THE PEOPLE MAKING FALSE REPORTS NEED TO GO TO JAIL AND HAVE A CLASS D FELONY ON THERE RECORD TO SEE HOW IT FEELS. I WENT THREW ALOT WHEN HE WAS TAKEN WHAT ELSE DOES THESE SCHOOL WANT ME TO SERVE 25 YEARS TO LIFE ON LIES THERE TELLING OR EVEN LE SAME THING LIED TO THE COUNTY PROSECUTOR JUST SO I WOULD GET ARRESTED AND GET TIME HE THOUGHT AND IT TURNED OUT I DID WHAT I HAD TO DO NOT PROUD OF WHAT HAPPEN AND SHOULD KNOW ABOUT SEEKING MEDICAL ATTENTION FOR MY CHILD I AM DISABLED AND SICK OF GETTING TREATED BADLY HOW WOULD THEY LIKE IT IF I CALLED APS ON THEM FOR A CHANGE THEN THEY CAN COME AND ARREST THEM RIGHT OUT OF THE SCHOOL. NOW WE ARE HOMELESS AND THE CHILDREN ARE STAYING WITH A RELATIVE AND GUARDIAN AND THE SCHOOL WON'T LET THEM GO TO SCHOOL THERE BUT WANT THEM TO GO TO SCHOOL WHERE BULLYING IS ALLOWED REAL SMART THINKING ON A SCHOOL STAFF.

  5. Family court judges never fail to surprise me with their irrational thinking. First of all any man who abuses his wife is not fit to be a parent. A man who can't control his anger should not be allowed around his child unsupervised period. Just because he's never been convicted of abusing his child doesn't mean he won't and maybe he hasn't but a man that has such poor judgement and control is not fit to parent without oversight - only a moron would think otherwise. Secondly, why should the mother have to pay? He's the one who made the poor decisions to abuse and he should be the one to pay the price - monetarily and otherwise. Yes it's sad that the little girl may be deprived of her father, but really what kind of father is he - the one that abuses her mother the one that can't even step up and do what's necessary on his own instead the abused mother is to pay for him???? What is this Judge thinking? Another example of how this world rewards bad behavior and punishes those who do right. Way to go Judge - NOT.

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