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358 Liberation LLC v. Country Mutual Insurance Co.

United States District Court, D. Colorado

March 1, 2018

358 LIBERATION LLC, Plaintiff,
v.
COUNTRY MUTUAL INSURANCE COMPANY, Defendant.

          OPINION AND ORDER

          RAYMOND P MOORE, United States District Judge

         Pending before the Court is defendant Country Mutual Insurance Company's (“defendant”) motion to enforce settlement agreement and motion for fees and costs associated with enforcing settlement agreement (“the motion to enforce”) (ECF No. 84). Plaintiff 358 Liberation LLC (“plaintiff”) has filed a response in opposition (ECF No. 96), as well as an affidavit from Diana Haggar (“Haggar affidavit”) (ECF No. 96-6). Defendant has filed a reply (ECF No. 97). The Court makes the following findings.

         I. Legal Standard

         “A trial court has the power to summarily enforce a settlement agreement entered into by the litigants while the litigation is pending before it.” Shoels v. Klebold, 375 F.3d 1054, 1060 (10th Cir. 2004) (quotation omitted). “Issues involving the formation and construction of a purported settlement agreement are resolved by applying state contract law.” Id.

         In Colorado, “[a]n attorney does not have the authority to compromise and settle the claim of a client without his or her knowledge and consent. Thus, generally, a client is not bound by a settlement agreement made by an attorney when the lawyer has not been granted either express or implied authority.” Siener v. Zeff, 194 P.3d 467, 471 (Colo.App. 2008) (citation omitted). That being said, in this Circuit, a presumption exists “that an attorney has express authority to settle unless there is evidence to the contrary in the record.” Shoels, 375 F.3d at 1060.

         Also, in Colorado, “when a client discovers that an attorney has settled his claim without authority, the client must either timely repudiate the settlement and proceed with the lawsuit or ratify the settlement as an acceptable bargain.” Siener, 194 P.3d at 471 (quotation omitted). “The focal point of ratification is an observable indication that the principal has exercised choice and has consented to having his or her legal relations affected.” Id. “To exercise choice and consent, a principal must have full knowledge of all material facts of the transaction prior to the ratification, or at least knowledge of facts that would lead a reasonable person to investigate further.” Id. at 472.

         II. Discussion

         In the motion to enforce, defendant argues that the parties' proposed settlement agreement should be enforced because (A) plaintiff's attorney, Brandee Bower (“Bower”), had express or implied authority to settle this matter, and (B) plaintiff's representative, Diana Haggar (“Haggar”), ratified the settlement agreement. (ECF No. 84 at 6-11.) The Court addresses each argument below.

         A. Authority

         Defendant argues that plaintiff has failed to make any showing that Bower lacked authority to bind plaintiff. (ECF No. 84 at 8.) Defendant argues that, instead, the record reflects that Bower had authority, pointing to Bower's representation of plaintiff at all hearings, depositions, and a mediation. (Id. at 6.) In response, plaintiff asserts that Haggar has expressly disavowed that Bower had authority to settle plaintiff's claims. (ECF No. 96 at 6.) Plaintiff also points to events purportedly occurring prior to June 9, 2017-the date that this case was allegedly settled. (Id. at 6-7.) More specifically, plaintiff asserts that, in the days before June 9, plaintiff's lawyers had decided to move for reconsideration of a prior Order excluding an expert's testimony on the ground that Bower had disclosed an incorrect and incomplete version of the expert's report. (Id. at 2.) On June 9, though, Bower emailed defendant's counsel to say that she had authority from her client to accept $50, 000-which had been offered at mediation. (Id. at 3.) Defendant's counsel replied that he could only offer $25, 000, and, within 45 minutes, Bower responded that there was a deal. (Id.)

         The Court finds that, on the present record, there is no evidence to rebut the presumption that Bower had authority to settle plaintiff's claims. The Court's principal reason for so finding is that the only evidence against the presumption is Haggar's affidavit. Therein, Haggar offers just one sentence with respect to Bower's authority. Specifically, Bower states: “I never authorized Ms. Bower to accept a $25, 000 settlement and I have never signed any settlement documents accepting a $25, 000 settlement.” (ECF No. 96-6 at ¶ 8.) In essence, therefore, Haggar states that she did not authorize Bower to accept $25, 000. What Haggar does not say is that Bower did not have authority to settle plaintiff's claims or that Bower was told that she did not have authority to settle plaintiff's claims for $25, 000. As such, the Court rejects plaintiff's contention that Haggar's affidavit shows that Bower did not have authority to settle plaintiff's claims. (See ECF No. 96 at 6.) No. such thing is said.

         Haggar's affidavit, instead, reflects that Bower did have authority to settle plaintiff's claims, given that Haggar acknowledges that Bower and Haggar participated in mediation for the purpose of settlement (see ECF No. 96-6 at ¶ 6), and there is no assertion that this authority was ever removed. Although the mediation did not result in a settlement, this does not mean that Bower could not settle plaintiff's claims. See Shoels, 375 F.3d at 1061 (“Parties often relax their supposedly non-negotiable demands over the course of negotiations, and the mere fact that a party does so through counsel does not suggest that counsel has exceeded the scope of his express authority.”). Moreover, Bower's initial email to defense counsel on June 9, offering $50, 000 to settle plaintiff's claims, expressly states that Bower made the offer with the authority of her client. (ECF No. 84-1 at 2.) Cf. id. (explaining that a letter, stating that the clients had “approved settlement, ” indicated, at face value, that the clients had approved the settlement themselves or authorized their attorney to do so). There is nothing in the record to suggest that Bower's authority to settle had changed when she accepted $25, 000 on behalf of plaintiff a few hours later.

         As for the events that preceded June 9, which plaintiff contends show that Bower had an “incentive” to avoid admitting a mistake (ECF No. 96 at 6-7), although the Court can see the argument that plaintiff is trying to make, the Court cannot find that Bower's conduct, even if true, negates her authority to settle plaintiff's claims, at least when, here, there is no statement from Haggar that Bower did not have authority to settle plaintiff's claims or that Bower was told that she did not have authority to settle for $25, 000.

         In this light, the Court finds that plaintiff has failed to rebut the presumption in this Circuit that Bower had authority to settle plaintiff's claims.[1] As a result, ...


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