United States District Court, S.D. New York
June 8, 2004.
GLORIA P. THOMPSON, Plaintiff, -against- MICHAEL ROCCO and an unidentified man wearing the uniform of the New York City Police Department Defendants GLORIA P. THOMPSON, Plaintiff, -against- THE CITY OF NEW YORK and its unidentified employees wearing the uniform of the New York City Police Department, individually, Defendants
The opinion of the court was delivered by: JAMES FRANCIS, Magistrate Judge
MEMORANDUM OPINION AND ORDER
In these consolidated cases, the plaintiff, Gloria P. Thompson, brought
claims of false arrest and imprisonment, malicious prosecution, and use
of excessive force against the City of New York and a lieutenant in the
New York City Police Department. The parties consented to my exercising
full jurisdiction over the litigation pursuant to 28 U.S.C. § 636(c).
When Ms. Thompson's attorney, S. Jean Smith, entered into a settlement
agreement with defendants' counsel, Ms. Thompson objected and refused to
execute the settlement documents. The defendants now move to enforce the
settlement agreement, and for the reasons discussed below, their motion
is granted. Background
According to her pleadings, Ms. Thompson was driving eastbound on East
16th Street in Manhattan on December 1, 2001 when she encountered a
traffic jam. (Complaint in 02 Civ. 0635 ("Compl."), ¶¶ 9, 12, 13).
When a man in a U-Haul truck tried to get her to back up into Third
Avenue, she refused. (Compl., ¶¶ 13, 14). Police Lieutenant Michael
Rocco*fn1 then approached Ms. Thompson's car and told her that he was
arresting her for obstructing traffic. (Compl., ¶ 15). Ms. Thompson
remained in her car gripping the steering wheel and a scuffle ensued.
During the altercation, Lieutenant Rocco allegedly pried the plaintiff's
hand from the wheel, injuring her thumb. (Compl., ¶ 16).
Ms. Thompson engaged Ms. Smith, a long-time acquaintance (Tr. 16),*fn2
as her attorney. Ms. Smith proceeded to file a notice of claim against
the City of New York on Ms. Thompson's behalf seeking $1,005,030.00 in
damages. (Tr. 4-5). She then commenced the federal court action against
Lieutenant Rocco, again seeking damages in excess of $1 million. (Compl.
at 7). Thereafter, she filed a related case against the City of New York,
and the two actions were consolidated.
In about May of 2002, Ms. Thompson's physician recommended that she have surgery on the hand that was injured during the altercation
with Lieutenant Rocco. (Tr. 10, 22). The plaintiff delayed having the
procedure, however, and did not undergo surgery until February 2004. (Tr.
27, 29-30, 33-34).
In December 2003, Ms. Smith advised the Court that the litigation had
been settled. On January 5, 2004, I issued an order of dismissal,
providing that the cases could be restored to the calendar within thirty
days if the settlement had not been consummated. Ms. Smith then filed a
motion dated January 12, 2004 to be relieved as counsel and to restore
the actions to the Court's calendar. She based her application on the
fact that communication with her client had "broken down to the extent
that plaintiff has chosen to reject earlier instructions given by her."
(Affirmation of S. Jean Smith dated Jan. 13, 2004, ¶ 2). I granted
Ms. Smith's request and relieved her as counsel.
Defendants' counsel then moved for an order enforcing the settlement
agreement. A hearing was held on April 22, 2004, at which Ms. Thompson
was represented by new counsel, James J. Feretic. Unfortunately, at that
hearing, Ms. Thompson and Ms. Smith presented sharply different versions
of their communications relating to settlement of these actions.
According to Ms. Smith, she and Ms. Thompson began discussing the
prospect of settlement in April and May of 2003 and agreed to offer to
settle the litigation for $65,000.00. (Tr. 25-26). Accordingly, on May
13, 2003, Ms. Smith sent a letter to defendants' counsel making that
proposal. (Tr. 21, 25). She states that she sent a copy of the letter to Ms. Thompson. (Tr. 16, 26).
Thereafter, Ms. Thompson never voiced an objection to the $65,000.00
demand, although she spent time socially with Ms. Smith, including
sharing a room during a religious retreat. (Tr. 21, 26). The defendants
countered with an offer of $5,000.00. (Tr. 14). No settlement was reached
at that time, but negotiations resumed in about October of 2003. (Tr.
26). The defendants offered to resolve the actions for $30,000.00, and
Ms. Smith suggested that Ms. Thompson lower her demand in response. They
agreed that $50,000.000 would be reasonable, and Ms. Smith conveyed that
proposal. (Tr. 23). When the defendants asked if the plaintiff would lower
her demand further, Ms. Smith spoke with Ms. Thompson who instructed her
to hold firm. (Tr. 14). After some additional discussions, defendants'
counsel advised Ms. Smith on December 29, 2004 that defendants would
accept a resolution at $50,000.00. (Tr. 14).
Ms. Thompson's testimony is quite different. She denies ever
authorizing Ms. Smith to settle for $50,000.00 or for $65,000.00. (Tr.
32). The plaintiff maintains that Ms. Smith told her that the case was
worth $350,000.00 and that she instructed Ms. Smith to "go for" that
amount. (Tr. 33). Ms. Thompson says she neverreceived any copy of Ms.
Smith's letter to defendants' counsel demanding $65,000.00, nor did she
discuss settlement again with Ms. Smith until December 2003 when her
attorney told her the case had been resolved for $50,000.00. (Tr. 34,
36, 37). Discussion
In a federal question case such as this, federal law governs the issue
of an attorney's authority to settle. See In re Artha Management, Inc.,
91 F.3d 326, 328 (2d Cir. 1996); Fennell v. TLB Kent Co., 865 F.2d 498,
501 (2d Cir. 1989); Foster v. City of New York, No. 96 Civ. 9271, 2000 WL
145927, at *3 (S.D.N.Y. Feb. 7, 2000). Of course, the ultimate decision
whether to settle rests with the client. See Artha, 91 F.3d at 329;
Conway v. Brooklyn Union Gas Co., 236 F. Supp.2d 241, 247 (E.D.N.Y.
2002). Nevertheless, "due to the unique nature of the attorney-client
relationship and the longstanding policy favoring settlement, courts
presume that an attorney who enters into a settlement agreement has
authority to do so." Foster, 2000 WL 145927, at *3 (citing Artha, 91 F.3d
at 329). Accordingly, the burden is on the party challenging the
settlement agreement to demonstrate that the attorney lacked authority.
See Artha, 91 F.3d at 329; Conway, 236 F. Supp.2d at 247; Foster, 2000 WL
145927, at *3. That burden is "not insubstantial." United States v.
International Brotherhood of Teamsters, 986 F.2d 15, 20 (2d Cir. 1993).
Here, the plaintiff has not carried her burden because Ms. Smith's
testimony is the more credible. She provided a relatively detailed
description of discussions with her client that dovetailed with her
communications with defendants' counsel. Given the fact that Ms. Smith
had a longstanding personal relationship with Ms. Thompson, it is not
surprising that she did not memorialize their discussions or include a
"cc" notation each time she sent a copy of a letter to her client. Nor is it significant that Ms. Smith would draft
a complaint with an ad damnum clause in excess of $1 million and argue at
an inquest for an award of $350,000.00 and then recommend a settlement of
$50,000.00 The first two figures represent advocacy positions, the third
reflects a pragmatic analysis that takes into account not only the
seriousness of any injury but also the risk of proving liability.
Finally, it is understandable that Ms. Smith proceeded with settlement
negotiations notwithstanding the possibility that Ms. Thompson might have
surgery, since surgery had been suggested long before but the plaintiff
had not gone through with it.
Compared to Ms. Smith's testimony, Ms. Thompson's is less plausible.
She contends that prior to December 2003, the only valuation of the case
that Ms. Smith had discussed with her was the figure of $350,000.00. (Tr.
33). Yet, when Ms. Smith informed her client that she had settled the
case for $50,000.00, Ms. Thompsons response was: "I told her the surgery
was coming up, so I don't think at this time we should settle the case,
we should wait until after the surgery." (Tr. 32). If Ms. Thompson was
truly hearing for the first time that her attorney had just discounted
her case by a factor of seven, her natural reaction would be one of shock
and outrage. Instead, her mild response is more consistent with her
having previously authorized a $50,000.00 settlement, but now, on the eve
of surgery, deciding that she had undervalued the case. Unfortunately,
having authorized settlement at $50,000.00 and never having revoked those
instructions before the offer was accepted, the plaintiff's change-of-heart comes too late.
A client is bound by an attorney who enters into a settlement agreement
with either actual or apparent authority. See Foster, 2000 WL 145927, at
*3. Here, Ms. Smith had actual authority, and therefore it need not be
determined whether she also had apparent authority. See id. at *3 n.5.
For the reasons set forth above, the defendants' motion to enforce the
settlement agreement is granted, and the consolidated cases are dismissed
with prejudice and without costs.