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HARRIS

v.

RAY JOHNSON CONSTRUCTION CO., INC., et al.

NO. COA99-1049

Filed: 29 August 2000

MALLIE HARRIS,
Plaintiff,

v .

RAY JOHNSON CONSTRUCTION CO., INC., and MARSHALL AVON McNEILL,
Defendants.

Appeal by plaintiff from order entered 14 May 1999 by Judge Henry V.
Barnette in Harnett County Superior Court. Heard in the Court of Appeals 15 May
2000.

Brenton D. Adams for the plaintiff-appellant.

Cranfill, Sumner & Hartzog, L.L.P., by H. Lee Evans and F. Marshall Wall,
for the defendant-appellee Ray Johnson Construction Co., Inc.

LEWIS, Judge.

On 2 March 1998, plaintiff filed a lawsuit seeking to hold defendants
jointly and severally liable for injuries arising out of an automobile accident
in which defendant Marshall Avon McNeill was the named negligent driver.
Defendant McNeill was an employee of defendant Ray Johnson Construction Co. Inc.
(“Construction Company”).
On 6 November 1998, Brenton Adams, plaintiff's counsel, and defendant
Construction Company's insurance carrier entered into negotiations regarding a
settlement of plaintiff's claim. The insurance carrier offered to settle
plaintiff's claim for $2000, which Mr. Adams accepted on behalf of his client.
Defendants believed this transaction created an oral agreement to
settleplaintiff's claim. However, in a letter to the insurance carrier dated 2
December 1998, Mr. Adams attempted to repudiate the purported settlement
agreement. The insurance carrier received the letter on 28 December 1998. At
this time, counsel for defendant Construction Company and its insurance carrier
responded to Mr. Adams, asserting that a binding oral agreement had been reached
on 16 November 1998. Having received no response from Mr. Adams, on 15 March
1999 defendants filed a Motion to Enforce Settlement in superior court. On 14
May 1999, after reviewing the evidence submitted by both parties, the judge
entered an order enforcing the 16 November 1998 oral settlement agreement
between plaintiff and defendants. Plaintiff appeals from this order.
Plaintiff's arguments on appeal question the validity of the purported
agreement. A compromise and settlement agreement terminating or purporting to
terminate a controversy is a contract, to be interpreted and tested by
established rules relating to contracts. Casualty Co. v. Teer Co., 250 N.C. 547,
550, 109 S.E.2d 171, 173 (1959). Here, the issue is a matter of contract
interpretation, and hence, a question of law. Davison v. Duke University, 282
N.C. 676, 712, 194 S.E.2d 761, 783 (1973). Our standard of review here is de
novo. Staton v. Brame, __ N.C. App. __, __, 523 S.E.2d 424, 427 (1999).
Plaintiff first contends her attorney, Mr. Adams, had no actual authority to
enter into this settlement agreement on her behalf so that she was not bound by
the agreement entered on 16 November 1998. Although plaintiff concedes she
expresslyauthorized Mr. Adams to negotiate a settlement on her behalf, she
contends there was a misunderstanding as to the amount of that settlement.
Specifically, plaintiff claims she intended to net $2000 from the settlement,
while her attorney settled for a gross amount of $2000, contemplating that
medical bills and attorney's fees would be deducted from that amount, resulting
in a net settlement amount less than $2000 for his client.
We recognize that there is a presumption in North Carolina in favor of an
attorney's authority to act for the client he professes to represent. Gillikin
v. Pearce, 98 N.C. App. 484, 488, 391 S.E.2d 198, 200, disc. review denied, 327
N.C. 427, 395 S.E.2d 677 (1990). This presumption applies to both procedural and
substantive aspects of a case. Greenhill v. Crabtree, 45 N.C. App. 49, 51, 262
S.E.2d 315, 317, aff'd per curiam, 301 N.C. 520, 271 S.E.2d 908 (1980). Special
authorization from the client is required before an attorney may enter into an
agreement discharging or terminating a cause of action on the client's behalf.
Greenhill, 45 N.C. App. at 52, 262 S.E.2d at 317. "Where special authorization
is necessary in order to make a dismissal or other termination of an action by
an attorney binding on the client . . . it [is also] presumed . . . that the
attorney acted under and pursuant to such authorization." Id. One who challenges
the actions of an attorney as being unauthorized has the burden of rebutting
this presumption and proving lack of authority to the satisfaction of the court.
Chemical Co. v. Bass, 175 N.C. 453, 456, 95 S.E. 766, 767-78 (1918). The
attorney-client relationship is based upon principles of agency. Dunkley v.
Shoemate, 350 N.C. 573, 577, 515 S.E.2d 442, 444 (1999). A principal is liable
on a contract duly made when the agent acts within the scope of his actual
authority. Foote & Davies, Inc. v. Arnold Craven, Inc., 72 N.C. App. 591, 595,
324 S.E.2d 889, 892 (1985). Actual authority is that authority which the agent
reasonably thinks he possesses, conferred either intentionally or by want of
ordinary care by the principal. Heath v. Craighill, Rendleman, Ingle & Blythe,
97 N.C. App. 236, 241, 388 S.E.2d 178, 181 (1990); 3 Am Jur. 2d Agency § 73
(1976). Actual authority may be implied from the words and conduct of the
parties and the facts and circumstances attending the transaction in question. 3
Am Jur. 2d Agency § 75 (1976).
Plaintiff's evidence here establishes Mr. Adams had actual authority to
settle her claim for an amount of $2000. Plaintiff retained Mr. Adams as her
counsel in this matter and expressly authorized him to settle the claim for an
amount in which plaintiff and her counsel thought they had agreed on at the
time. According to plaintiff's evidence, plaintiff and her attorney had
previously discussed the difference between the net and gross amount, and at the
time of the 16 November 1998 negotiation, Mr. Adams "understood" that he was to
settle the claim for $2000. Only in hindsight did it become clear that Mr. Adams
and his client had notreached a clear agreement as to the proper amount. From
this evidence we conclude that Mr. Adams reasonably believed at the time of
negotiation that he could settle the case for $2000. Thus, he possessed actual
authority to settle in that amount, though it was unfortunately conferred by
want of ordinary care. Plaintiff has failed to meet her burden of proving Mr.
Adams lacked authority and she is bound by his acceptance of defendant's
settlement offer on 16 November 1998.
Plaintiff next contends even if plaintiff was bound by Mr. Adams' acceptance
of the settlement agreement, all essential terms were not established before
plaintiff's initial acceptance and thus, no binding agreement was reached upon
Mr. Adams' acceptance. Specifically, plaintiff argues that the general release
of claims form, releasing "all other persons," was not negotiated as part of the
offer of settlement. Plaintiff contends that at best, settlement could have been
enforced only with respect to defendant Ray Johnson Construction Co., Inc., and
not as to defendant Marshall Avon McNeill. Although we agree that a valid
contract exists only where there has been a meeting of the minds as to all
essential terms of the agreement, Northington v. Michelotti, 121 N.C. App. 180,
184, 464 S.E.2d 711, 714 (1995), our review indicates the oral agreement made
between the parties in this case was not incomplete.
The evidence here establishes the 16 November 1998 offer was made to settle
plaintiff's entire case. Plaintiff's counsel accepted the offer to settle the
entire pending claim onplaintiff's behalf. This acceptance necessarily contained
the implied promise to execute some instrument terminating the controversy as to
that settling defendant, namely, the stipulation to dismiss the case with
prejudice and release of claims form. Because plaintiff's claim was premised on
joint and several liability seeking to recover for a single indivisible injury,
this implied promise necessarily operated to terminate the controversy as to
both defendants. Consequently, after the initial offer and acceptance, there
remained nothing to negotiate in terms of the forms necessary to effectuate the
settlement.
Affirmed.
Chief Judge EAGLES and Judge EDMUNDS concur.