Robertson v. Alling – 6/24/2015

June 29, 2015

Arizona Supreme Court holds that a settlement agreement reached without the clients’ consent and without the clients’ signatures is binding when the clients’ attorney had apparent authority to settle the case.

In a dispute between the Robertsons and the Allings, the Allings proposed a settlement offer at a mediation.  After the offer expired, the lawyer for the Allings suggested extending the deadline for accepting the offer.  Two members of the Allings group told him by email not to do so.  He apparently did not read the email, and then extended the offer and settled the case contrary to the wishes of some of his clients. 

The Robertsons sought to enforce the settlement agreement, arguing that the attorney had apparent authority to settle.  The superior court granted the request to enforce the settlement agreement, but the Court of Appeals, Division Two, reversed.  (See earlier coverage on AzAPP here.)  The Court of Appeals reasoned that the settlement agreement is not enforceable because the clients did not assent to it in writing, and Arizona Rule of Civil Procedure 80(d) requires settlement agreements to be in writing.  (That rule says, “No agreement or consent between parties or attorneys in any matter is binding if disputed, unless it is in writing, or made orally in open court, and entered in the minutes.”)

The Arizona Supreme Court granted review and reversed.  It held that Rule 80(d) applies only when a party disputes the existence or the terms of an agreement.  It does not apply when the parties admit the existence and terms and instead dispute whether it is binding and enforceable.  In addition, and of perhaps greater importance, the court held that the clients do not need to consent in writing when the attorneys have apparent authority to settle the case.  When cloaked with apparent authority, the exchange of emails between counsel satisfies the requirements of Rule 80(d).

Justice Timmer authored the opinion for a unanimous court.