Physical fitness, academic achievement and brain in preadolescent children

A lawyer’s authority can be actual or apparent. The general rule with respect to actual authority is set forth in 1 Restatement (Third) of the Law Governing Lawyers § 26 (2000), which states that the lawyer’s act is that of the client in proceedings before a tribunal or in dealings with a third party if

(1) the client has expressly or impliedly authorized the act;

(2) authority concerning the act is reserved to the lawyer as stated in § 23 [see section 1.2:330]; or

(3) the client ratifies the act.

When one turns to the lawyer’s apparent authority, the Restatement rule is as follows:

A lawyer’s act is considered to be that of the client in

proceedings before a tribunal or in dealings with a third person if the tribunal or third person reasonably assumes that the lawyer is

authorized to do the act on the basis of the client’s (and not the lawyer’s) manifestations of such authorization.

1 Restatement (Third) of the Law Governing Lawyers § 27 (2000). In general, “the lawyer has apparent authority to do acts that reasonably appear to be calculated to advance the client’s objectives in the representation, except for matters reserved to the client under § 22.” Id. at cmt. c. See section 1.2:320. As stated by Guttenberg and Snyder, “[a] lawyer’s general retainer authorizes, explicitly or implicitly, conduct by the attorney that is necessary to effectuate the objectives of the representation.”

Jack A. Guttenberg & Lloyd B. Snyder, The Law of Professional Responsibility in Ohio § 6.4(C), at 150 (1992). While this apparent authority is broad, such authority arising from retention alone does not extend to matters reserved for client decision, such as approval of settlements.

Restatement § 27, at cmt. a.

Apparent authority can extend beyond actual authority when the client has limited the lawyer’s actual authority but that limitation has not been disclosed to a third party, and instead the client has indicated to the third party that the lawyer is authorized to act. Id. at cmt. b.

Most of the case law in Ohio dealing with the lawyer’s authority to act for the client has arisen in the context of whether the lawyer had authority to settle a case and the consequences if he or she did not.

This subject is addressed in the remaining paragraphs of this section.

Unauthorized settlements - Disciplinary violations: Ohio Rule 1.2(a) specifies that the lawyer “shall abide” the client’s decision on settlement issues. Obviously, the failure to do so is a disciplinary violation, as it was under the former OHCPR (OH DR 6-101(A)(3), 7-101(A)(3), or both, were typically invoked). E.g., Cleveland Bar Ass’n v. Mishler, 118 Ohio St.3d 109, 2008 Ohio 1810, 886 N.E.2d 818 (settling two cases for amount that client had expressly rejected violated DR

7-101(A)(3)); Toledo Bar Ass’n v. Slack, 88 Ohio St.3d 274, 725 N.E.2d 631 (2000) (settling case without client’s knowledge; for this and numerous other violations, respondent disbarred); Bar Ass’n of Greater Cleveland v. Kless, 17 Ohio St.3d 21, 476 N.E.2d 1035 (1976) (respondent suspended for one year for entering into settlements in excess of settlement authority).

In Cuyahoga Bar Ass’n v. Rockman, 94 Ohio St.3d 12, 759 N.E.2d 773 (2001), the respondent took the unauthorized settlement violation to the next level and falsely represented to the insurance company for the defendant in a drunk-driving accident case that he represented Hernandez, the plaintiff (which he did in other matters, but not this one). Respondent then negotiated and settled his

“client’s” claim against the insurance company without Hernandez’s permission. For this and other violations of his ethical obligations to Hernandez, Rockman was permanently disbarred.

Unauthorized settlements - Malpractice liability: Settling a case without authority to do so may subject the lawyer to malpractice liability as well. Caine v. Steele, No. 39656, 1979 Ohio App.

LEXIS 10477 (Cuyahoga Nov. 1, 1979) (alleging that lawyer settled without client’s authority states claim in malpractice upon which relief can be granted). See also Susan J. Becker, Jack A.

Guttenberg & Lloyd B. Snyder, The Law of Professional Conduct in Ohio § 8.21[1], at 8-43 n.

183 (2009-10 ed.) (noting that such unauthorized conduct can subject the lawyer to malpractice claims or disciplinary action).

Enforcing unauthorized settlements - General rule: With one important exception discussed below, Ohio law is that unauthorized settlements are generally not binding on the client. The Restatement rule to that effect is as follows:

Generally a client is not bound by a settlement that the client has not authorized a lawyer to make by express, implied, or apparent

authority . . . . When a lawyer purports to enter into a settlement binding on the client but lacks authority to do so, the burden of inconvenience resulting if the client repudiates the settlement is properly left with the opposing party, who should know that

settlements are normally subject to approval by the client and who has no manifested contrary indication from the client. The opposing party can protect itself by obtaining clarification of the lawyer’s authority.

Refusing to uphold a settlement reached without the client’s authority means that the case remains open, while upholding such a settlement deprives the client of the right to have the claim resolved on other terms.

1 Restatement (Third) of the Law Governing Lawyers § 27 cmt. d, at 204-05 (2000). (A brief review of the varying approaches taken by courts nationally can be found in Thomas Spahn, Settlement Agreements: When “A Deal Is Not a Deal,” 20 Experience No. 2 (2010), at 46.)

In Ohio, the general rule is that express authority (more often phrased in Ohio as “special” or “specific”

authorization) is required, particularly with respect to settlements involving the client’s real estate interests. The following cases (all nondisciplinary) reach this result in the real estate context.

The leading case is Morr v. Crouch, 19 Ohio St. 2d 24, 249 N.E.2d 780 (1969), where the Court held that the trial court erred in denying a motion to vacate a journal entry of settlement involving sale of the client’s real estate by the client’s lawyer, who admitted he had not been given authority to sell or settle. In doing so, the Court stated that the rule in Ohio is as follows:

An attorney who is without special authorization has no implied or apparent authority, solely by virtue of his general retainer, to

compromise and settle his client’s claim or cause of action.

Id. at 24, 249 N.E.2d at 781 (syllabus two). (In the body of the opinion, the words “specific authorization” were used; cases following Morr have used both formulations, seemingly interchangeably.) Moreover,

[w]here the power claimed for an attorney is to sell real estate, the agent’s authority must be expressly given before a contract for the sale of land will bind the client.

Id. at 25, 249 N.E.2d at 781 (syllabus three).

The other major precedent in the Morr line of cases involving settlement with respect to real estate interests is Ottawa County Comm’rs v. Mitchell, 17 Ohio App.3d 208, 478 N.E. 2d 1024 (Ottawa 1984), in which the court, in addition to following Morr syllabus two with respect to settlement authority (and citing numerous additional cases in accord), spelled out further details concerning the rule. Thus,

 In representation concerning the client’s real estate, “the existence of the attorney’s express authority to act on his client’s behalf is absolutely crucial to the efficacy of his dealings with other parties.”

 Express authority may be oral, but the better practice is to reduce the authority to writing; to establish that such authority was verbally conferred, clear and convincing evidence is required.

 “Parties dealing with a known agent have a duty to ascertain the scope and limitations of his authority in matters concerning [settlement] agreements to sell or convey his principal’s real estate or an interest therein.”

Id. at 208; 478 N.E.2d at 1025-26 (syllabi 1-4, 6).

Applying these principles, Ottawa v. Mitchell rejected the effort by county commissioners to enforce a settlement reached in a real estate appropriation case, where the evidence failed to show that the client had given his lawyer the express authority to bind him to a settlement without the client’s

“final, written approval of the terms thereof.” Id. at 214, 478 N.E.2d at 1031.

Other unauthorized settlement cases involving the client’s real-estate interests include: City of West Carrollton v. Bruns, No. CA 17054, 1998 Ohio App. LEXIS 6045 (Montgomery Dec. 18, 1998) (law director had no express or implied authority to settle appropriation case without authorization from city council; denial of motion by landowner to compel city to comply with settlement affirmed;

quoting Morr rule that absent specific authorization attorney has no implied or apparent authority to settle client’s claims); Sleepy Hollows, Inc. v. Ottawa County Bd. of Comm’rs, No. 89- OT-50, 1991 Ohio App. LEXIS 2270 (Ottawa May 17, 1991) (reversing order enforcing settlement and compelling appellants to grant easements; unrebutted evidence that lawyer had no authority to settle;

Morr “general rule” of no implied or apparent authority without special authorization quoted, which rule “applies regardless of the nature of the underlying claim or cause of action” but “has special force in matters of real estate,” Id. at *3); see Helman v. Thomas, 2001 Ohio 1637; 2001 Ohio App.

LEXIS 4755 (Summit Oct. 24, 2001) (quoting Morr rule requiring specific authorization, but affirming enforcement of settlement involving claimed real estate interest of client where client offered no evidence to dispute lawyer’s testimony that he had client’s express authority to settle on terms agreed upon); Tinlin v. White, No. 653, 1996 Ohio App. LEXIS 1917 (Carroll May 15, 1996) (reversing, for abuse of discretion, trial court’s failure to grant appellants’ motion for relief from judgment under OH Civ R 60(B)(5) based on unauthorized settlement involving appellant’s real estate interests; stringent requirements stated in Morr and Ottawa County for real estate settlements emphasized). Citing Ottawa County, Tinlin found the lawyers’ affidavits -- the only evidence supporting authorization, which evidence was disputed -- to be “unacceptable.” Compare Helman supra, which allowed such evidence where it was undisputed.

Even where real estate interests are not involved, the majority of Ohio cases refuse to enforce settlement by lawyers entered into without authority from their clients; these cases typically cite the Morr “special authorization” rule as well. See, e.g., Schalmo Builders, Inc. v. Zama, 2008 Ohio 5879, 2008 Ohio App. LEXIS 4924 (Cuyahoga) (“specific authorization” required; order granting motion to enforce settlement reversed); Walker v. Sombol, No. 18478, 2001 Ohio App. LEXIS 1518 (Montgomery Mar. 30, 2001) (client’s lawyer found not to have had authority to settle case;

refusal to enforce settlement affirmed; Morr specific authorization rule quoted with approval);

Watral v. Tree Preservation Co., No. 76853, 2000 Ohio App. LEXIS 1857 (Cuyahoga Apr. 27, 2000) (reversal of enforcement of settlement; undisputed facts showed that no settlement authorized or accepted; Morr rule quoted); Seitz v. Plummer, No. 99 AP-350, 1999 Ohio App. LEXIS 6462 (Franklin Dec. 30, 1999) (reversing grant of motion to enforce settlement agreement; hearing needed to resolve disputed issue whether counsel had “special authorization” to settle as required by Morr rule). Compare Garrison v. Daytonian Hotel, Inc., 105 Ohio App.3d 322, 663 N.E.2d 1316 (Montgomery 1995) (enforcement of settlement affirmed where evidence supported finding that lawyer’s specific authorization from client to settle had not been withdrawn; Morr rule cited with approval). See also Columbus Bar Ass’n v. DeVillers, 116 Ohio St.3d 33, 2007 Ohio 5552, 876 N.E.2d 530 (DeVillers is somewhat janus-faced on the unauthorized settlement issue: in one of the counts against respondent a “settled” case (not involving real estate interests) was restored to the calendar based on respondent’s lack of authorization from his client, but the case was later dismissed, based on a second settlement that apparently had also not been authorized.)

Enforcing unauthorized settlements - Exception to general rule - Argo: The exception to the

foregoing general rule comes into play when the client’s attempt to avoid the unauthorized settlement is premised upon a motion for relief from judgment under OH Civ R 60(B)(1). The leading case is

Argo Plastic Prods. Co. v. City of Cleveland, 15 Ohio St.3d 389, 474 N.E.2d 328 (1984), pursuant to which the Supreme Court held that the judgment entered on the unauthorized settlement could not be set aside under OH Civ R 60(B)(1). In Argo, Kless, an assistant law director for the City of Cleveland, whose lawyers did not have authority to settle a case for the city for an amount in excess of

$2,500 without the approval of the city’s law director (absent here), settled a case for more than

$550,000. When the city discovered the amount of the settlement, upon which judgment had been entered, it sought relief from the judgment under OH Civ R 60(B)(1) on the ground of “surprise.”

The trial court denied the motion; the court of appeals reversed; but the Supreme Court, reversing the court of appeals, held that the city was bound by the action of its assistant law director. The Court did not make any reference to its earlier decision in Morr v. Crouch; instead, it applied a general OH Civ R 60(B)(1) analysis (not limited to the “surprise” aspect), for purposes of which

the conduct of counsel is imputed to his client. It follows that the city may not now obtain relief from judgment under Civ. R. 60(B)(1) solely on the ground of misconduct by its own attorney. Thus, under our holding in GTE [GTE Automatic Elec., Inc. v. ARC Indus., Inc., 47 Ohio St.2d 146, 351 N.E.2d 113 (1976)], supra, any “mistake,

inadvertence, surprise or excusable neglect,” as set forth in Civ. R.

60(B)(1), by counsel for a party does not entitle that party to relief from judgment under the rule.

. . . [W]e therefore impute Kless’ actions to the city in considering whether the city may obtain relief from judgment under Civ. R. 60(B)(1). That being the case, the city’s contention that Civ. R.

60(B) relief is warranted where its attorney exceeds his settlement authority is without merit. The city’s remedy, if any, lies elsewhere.

While we have sympathy for the city’s situation, we feel it would be manifestly unjust to appellants herein to vacate the judgment entered below pursuant to the settlement on the amount of damages.

Using the language employed in GTE, supra, we would be “‘visiting the sins of * * * [the city’s] lawyer upon the * * * [appellants].’”

15 Ohio St.3d at 392-93, 474 N.E.2d at 331-32 (emphasis, ellipses, and bracketed material (except full GTE cite) by the Court; inner quotation from Link v. Wabash R.R., 370 U.S. 626, 634 n.10 (1962)). It is worthy of note that Argo not only fails to mention the fact that counsel’s conduct was expressly characterized in GTE as “not excusable” (“This is not excusable neglect,” 47 Ohio St.2d at 153, 351 N.E.2d at 117), but also leaves the distinct impression that GTE was an excusable neglect case (e.g., “the principle expressed in GTE, supra, with respect to excusable neglect . . .”, 15 Ohio St.3d at 392, 474 N.E.2d at 331; “under our holding in GTE, supra, any ‘… excusable neglect,’ as set forth in Civ. R. 60(B)(1), by counsel for a party does not entitle that party to relief from judgment under the rule.” Id. at 393, 474 N.E.2d at 331.). Indeed, the Argo Court’s reliance on Link likewise fails to note that the lawyer’s conduct in Link was “unexcused,” 370 U.S. at 633.

While the city in Argo was unable to set aside the unauthorized settlement, its lawyer was disciplined for exceeding his authority. See Bar Ass’n of Greater Cleveland v. Kless, 17 Ohio St.3d 21, 476 N.E.2d 1035 (1985) (one-year suspension imposed; the three dissenters would have imposed

indefinite suspension). See also Columbus Bar Ass’n v. DeVillers, 116 Ohio St.3d 33, 2007 Ohio 5552, 876 N.E.2d 530 (discipline imposed for, inter alia, entering into unauthorized settlement).

Argo was followed in Weir v. Needham, 26 Ohio App.3d 36, 498 N.E.2d 175 (Medina 1985) (refusing to vacate under OH Civ R 60(B)(1) unauthorized settlement involving transfer of client’s interest in real estate); see Louden v. Cooper, 2004 Ohio 5127, 2004 Ohio App. LEXIS 4760 (Mahoning) (alternative holding; enforcing unauthorized settlement of dispute involving outstanding water bill constituting lien on client-purchaser’s penalty); Maumee Equip., Inc. v. Smith, No.

L-85-168, 1985 Ohio App. LEXIS 9378 (Lucas Nov. 22, 1985) (alternative holding; enforcing unauthorized settlement in non-real estate case); cf. Poe v. Ferguson, 2008 Ohio 1442, 2008 Ohio App. LEXIS 1250 (Hamilton) (following Argo in negligent-dismissal-with-prejudice case; court concludes that lawyer’s neglect was not excusable).

As an OH Civ R 60(B)(1) matter, the Argo result would appear to be the correct one, since the act of unauthorized settlement is typically not the product of mistake, inadvertence, surprise, or excusable neglect. Indeed, in the disciplinary case against the Argo lawyer, the respondent “admitted to

knowingly entering into these settlements [there were two others in addition to that in Argo] without authorization.” Bar Ass’n of Greater Cleveland v. Kless, 17 Ohio St.3d at 21, 476 N.E.2d at 1036 (bracketed material added). A subsequent Supreme Court decision, in distinguishing Argo, stated that

“the attorney’s conduct in Argo” in effecting an unauthorized settlement “constituted active

misconduct between a client and his counsel.” Moore v. Emmanuel Family Training Ctr., Inc., 18 Ohio St.3d 64, 68, 479 N.E.2d 879, 883 (1985) (i.e., active misconduct by the lawyer toward his client). See also the characterization in the Argo dissent of Kless’s conduct as “acts of spite, malice, or incompetence.” 15 Ohio St.3d at 394, 474 N.E.2d at 332. (Cf. the reference in another

disciplinary decision to the lawyer’s having successfully moved the trial court under OH Civ R 60(B)(1) to vacate the judgment entered on an unauthorized settlement, based on the argument that

“the trial court had been to blame for erroneously filing the entry.” Cuyahoga County Bar Ass’n v.

Josselson, 43 Ohio St.3d 154, 155, 539 N.E.2d 625, 626 (1989).)

Argo’s dictum that “any” lawyer “mistake, inadvertence, surprise or excusable neglect” will always result in denial of OH Civ R 60(B)(1) relief to the moving party, however, is clearly wrong. The best evidence of this is Moore v. Emmanuel Family Training Ctr., Inc., 18 Ohio St.3d 64, 479 N.E.2d 879 (1985). Moore, a nonsettlement case, noted that, under both GTE and Argo, counsel’s conduct is imputed to the client. Id. at 68, 479 N.E.2d at 883. But the key issue is whether “such conduct is

‘excusable’ …” Id. at 68, 479 N.E.2d at 884.

In GTE at 152 [, 351 N.E.2d at 117,] we provided additional guidance as to when conduct is excusable: “‘[I]f an attorney’s conduct falls substantially below what is reasonable under the circumstances, the client’s remedy is against the attorney * * *.’” (Emphasis added.) We then concluded that the attorney’s conduct in GTE “* * * reveals a complete disregard for the judicial system and the right of the appellee.

This is not excusable neglect.” (Emphasis added.) Id. at 153 [, 351 N.E.2d at 117].

Id. (bracketed material added).

In other words, if the lawyer’s neglect is not excusable, the only remedy is a malpractice action against the lawyer; if it is, then 60(B)(1) provides an avenue for relief, despite the imputation of counsel’s conduct to the client. In Moore, “[a]lthough the negligence of counsel will be imputed to the moving party,” id. at 68, 479 N.E.2d at 884, that negligence was found excusable and 60(B)(1) relief was granted. Accord Kay v. Marc Glassman, Inc., 76 Ohio St.3d 18, 665 N.E.2d 1102 (1996) (defendant entitled to relief from judgment where, in nonsettlement context, its counsel timely prepared answer but it was inadvertently placed in file drawer rather than filed with court; upon learning of entry of default judgment, defendant’s attorney filed motion for relief from judgment, with affidavits, the next day; after denial of the motion, the court of appeals affirmed; reversing, the Supreme Court found that counsel’s motion and supporting evidence showed excusable neglect warranting relief under Rule 60(B)(1)); Bodnar v. Bodnar, 2006 Ohio 3300, 2006 Ohio App.

LEXIS 3214 (Richland) (conduct of counsel constituted mistake or inadvertence entitling client to relief under Rule 60(B)(1), as granted by trial court); Stewart v. Heard, 2005 Ohio 5241, Ohio App LEXIS 4745 (Montgomery) (even if conduct of counsel (filing dismissal entry with prejudice, instead of without prejudice, as intended) not excusable, it constituted mistake or inadvertence;

granting of Rule 60(B)(1) motion affirmed); Price Bros. Co. v. Atlas Sewer & Pipe Cleaning Co., No. 11035, 1988 Ohio App. LEXIS 5371 (Montgomery Dec. 28, 1988) (excusable neglect by counsel, affirming grant of Rule 60(B)(1) motion; Argo not followed: “we are persuaded by subsequent Ohio Supreme Court cases [Moore; Griffey] that attorney neglect, although clearly imputable to the client, is nevertheless a basis for relief if excusable,” id. at *5).

See also Office of Disciplinary Counsel v. Clavner, 77 Ohio St.3d 431, 674 N.E.2d 1369 (1997) (noting, in context of disciplinary case, that OH Civ R 60(B)(1) motion to vacate judgment, based on respondent’s mistake as to correct trial date, had been granted); Busacca v. MacGuire & Schneider, LLP, 162 Ohio App.3d 689, 2005 Ohio 4215, 834 N.E.2d 856 (stating that in prior stage of the litigation, trial court’s grant of summary judgment noted that no response had been filed when in fact plaintiffs had filed response earlier that day; plaintiffs’ motion for relief from judgment under Rule 60(B) [subsection unspecified] granted; trial court, at time of its entry, was not aware of filing).

Compare Griffey v. Rajan, 33 Ohio St.3d 75, 514 N.E.2d 1122 (applying GTE rule in affirming denial of Rule 60(B)(1) motion; conduct of medical-malpractice defendant and his insurance carrier in failing to answer and not filing motion for relief for 51 days after answer due and a month and a half after default judgment had been entered constituted inexcusable neglect, which exhibited “a disregard for the judicial system and the rights of the plaintiff.” Id. at syllabus.); Chapman v. Chapman,

Compare Griffey v. Rajan, 33 Ohio St.3d 75, 514 N.E.2d 1122 (applying GTE rule in affirming denial of Rule 60(B)(1) motion; conduct of medical-malpractice defendant and his insurance carrier in failing to answer and not filing motion for relief for 51 days after answer due and a month and a half after default judgment had been entered constituted inexcusable neglect, which exhibited “a disregard for the judicial system and the rights of the plaintiff.” Id. at syllabus.); Chapman v. Chapman,