Arizona Court of Appeals Division Two Holds That When Parties Dispute Whether an Attorney Had Apparent Authority to Enter Into a Settlement Agreement, a Question of Fact Exists and Arizona Rule of Civil Procedure 80(d) Applies.

The Robertson Plaintiffs sued the Alling Defendants to quiet title, for a prescriptive easement, and for a permanent injunction regarding a diversion ditch and water pipe on the Allings’ property.  In January 2013, the parties attended a settlement conference, and although they did not reach a settlement agreement, the Allings agreed to leave their last conveyed offer open for another 48 hours.  The offer expired on January 31, 2013, without acceptance.

On February 2, the Allings’ counsel emailed the Allings and recommended leaving the offer open for an additional period of time.  On February 4, several members of the Alling Plaintiffs emailed their attorney and said they did not want to settle with the terms offered at the settlement conference.  The Allings’ counsel received but did not read the February 4 email, and on February 6, when asked by the Robertsons’ counsel, the Allings’ counsel confirmed that “the offer was still open for acceptance.”  The Allings counsel later emailed the Robertsons’ counsel and confirmed that the settlement terms were still available.  The Robertsons accepted the Allings’ offer. 

Several weeks later, the Allings’ counsel informed the Robertsons’ counsel that some of the Allings disputed his settlement authority.  The Robertsons moved to enforce the settlement agreement, and the trial court granted the motion, and based on the February 6 email exchange between counsel, concluded that the Allings’ counsel had actual and apparent authority to settle the matter.  The Allings appealed and the Court of Appeals vacated in part and reversed the trial court’s order enforcing the settlement.

The Court of Appeals first explained that the standard for a motion to enforce a settlement agreement is the same as a motion for summary judgment.  The Court then explained that because Rule 80(d) provides that “[n]o agreement or consent between parties or attorneys in any matter is binding if disputed, unless it is in writing.”  If a question of fact exists regarding counsel’s authority, then the agreement is disputed and therefore non-binding.  As to actual authority, the Court held that the February 4 email unequivocally terminated the counsel’s authority to settle the dispute.  As to apparent authority, relying on its decision in Canyon Contracting Co. v. Tohono O’Odham Hous. Auth.¸172 Ariz. 389, 390, 837 P.2d 750, 751 (App. 1992), the Court explained that while an attorney may settle a dispute under apparent authority, in this case, no apparent authority existed.  The Court noted that the Robertsons requested that all the Allings attend the settlement conference, that once the 48-hour period ended, the Allings were “not present” anymore, and that one could reasonably conclude that an additional manifestation from the Allings is necessary to provide counsel with authority to settle.

Finding that a question of fact existed, and therefore the agreement was “disputed” under Rule 80(d), the Court held that the agreement is non-binding.  The Court rejected the Robertsons’ argument that the February 6 emails constitute a writing, and explained that when the agreement is disputed, the client must provide affirmation in writing.  The Court also rejected the Robertsons’ estoppel argument because it hinged on the conclusion that the Allings’ counsel had apparent authority.    

Judge Howard authored the opinion; Judges Vásquez and Miller concurred.