When is a Settlement Not a Settlement?

November 12, 2008

Case:          Architectural Network, Inc. v. Gulf Bay Land Holdings II, Ltd., Nos. 2D07-2137, 2D07-2224, 2008 Fla. App. LEXIS 10907 (Fla. Dist. Ct. App. 2d Dist. July 18, 2008).
Status: Ready, Aim, Fire

Facts

On appeal from a district court order enforcing a settlement agreement and entering judgment for Gulf Bay, a Florida appeals court held that Gulf Bay failed to prove that Architectural Network's attorney, Corso, had clear and unequivocal authority to settle.  The court of appeals noted that the only evidence presented to the district court was testimony from Gulf Bay's attorneys that Corso had stated he had authority to settle the case.  Neither Gulf Bay nor its attorneys, however, had any personal knowledge of such settlement authority outside of Corso's alleged statements.  Meanwhile, Architectural Network testified at the hearing that Corso was not actually authorized to settle.  Gulf Bay, therefore, was unable to meet its burden to enforce the settlement agreement and the enforcement order was reversed.   

BuLITS Points

• Like any duel, litigation is an adversarial process and your adversary may not always act truthfully.  Avoid the pitfalls of attorney settlement authority by having the respective parties sign off on settlement agreements themselves.
• How do you know that opposing counsel is authorized to settle her client's case?  Get the authority in writing and avoid a costly "he said, she said" battle in court.
• Don't let an unscrupulous attorney dupe you into an invalid settlement.  If you have questions as to opposing counsel's authority to settle, have all "authorized" attorneys sign affidavits of authority as part of your agreement.  A refusal by an attorney to sign may answer any of your lingering questions.

And Remember

Don't jump the gun by assuming that an opposing counsel who claims to be authorized to settle is actually authorized to settle.  Require up front and in writing that individuals with settlement authority are engaged in settlement discussions and confirm the authority of any attorney who is signing a settlement agreement on behalf of  their client.  In this way, you can ensure that the settlement agreement is, in fact, binding.