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A settlement of a case requires the consent of the client. The rules of law which apply to a settlement involving an attorney have been set forth: (1) a party seeking judgment on the basis of compromise and settlement has the burden of establishing assent by the opposing party; (2) the mere employment of an attorney does not of itself give the attorney the implied or apparent authority to compromise his client's cause of action; (3) an exception to the general rule is a situation in which the attorney is confronted with an emergency which requires prompt action to protect his client's interest and consultation with the client is impossible; (4) a client may give his attorney special or express authority to compromise or settle his cause of action, but such authority must be clear and unequivocal; (5) an unauthorized compromise, executed by an attorney, unless subsequently ratified by his client, is of no effect and may be repudiated or ignored and treated as a nullity by the client. These rules also apply where an attorney files a proposal for settlement.
Plaintiff filed suit against defendant for a motor vehicle collision. Defendant carried bodily injury insurance with limits in the amount of $100,000. Plaintiff carried UM insurance limits in the amount of $10,000. Plaintiff’s attorney decided to send a proposal for settlement (PFS). He directed his paralegal to send one to each insurance company for their insurance policy limits. Unfortunately, the paralegal misconstrued the instructions and sent one to defendant for $10,000 when the policy limit was $100,000. Upon receiving the $10,000 PFS, defendant filed a notice of acceptance and issued a check for $10,000. The attorney filed a motion to withdraw the proposal because of the inadvertent error in preparing the offer. The trial court denied the motion. Plaintiff challenged the decision.
Did the trial court correctly deny the plaintiff attorney’s motion to withdraw the proposal for settlement?
The judgment was reversed. The court held that the trial court erred in denying the motion to withdraw the proposal for settlement (PFS) due to a unilateral mistake and because there was no authority to settle the claim for the erroneous amount set forth in the proposal for settlement because the statute and the rule implementing the statute applied only when there had been a rejection of a PFS and the case went to trial resulting in a judgment. While there appeared to be some negligence in the sending of the offer for only $10,000, it was simply the result of miscommunication between the paralegal and the attorney, not inexcusable negligence. The trial court abused its discretion by refusing to address the issue in the motion for reconsideration because plaintiff did not authorize his attorney to make an offer to settle his case for $10,000, and his attorney did not have authority to file the PFS for that amount.