Absar v. Jones

• Decision Date: 29 January 1992
• Parties: Abu ABSAR and wife, Patricia Absar, Plaintiffs-Appellees, v. Frank E. JONES, M.D., Defendant-Appellant.
• Court: Tennessee Court of Appeals

Page 86

833 S.W.2d 86

Abu ABSAR and wife, Patricia Absar, Plaintiffs-Appellees, v. Frank E. JONES, M.D., Defendant-Appellant.

Court of Appeals of Tennessee Middle Section, at Nashville.

Jan. 29, 1992.

Application for Permission to Appeal,

Denied by Supreme Court

June 15, 1992.

William R. Willis, Jr., Marian F. Harrison, A. Russell Willis, Willis & Knight, Nashville, for plaintiffs-appellees.

John S. Hicks, William S. Walton, Dearborn & Ewing, Nashville, for defendant-appellant.

OPINION

LEWIS, Judge.

We granted this interlocutory appeal, filed pursuant to Rule 9 of the Tennessee Rules of Appellate Procedure, to address the question of whether the trial court erred in setting aside an order in compromise and settlement of plaintiffs' claim against defendant.

Plaintiff Abu Absar suffered serious injuries when his motorcycle collided with a car driven by defendant, Frank E. Jones. Plaintiffs retained the services of Noble E. Pepper, an attorney who was then licensed to practice law in the state of Tennessee and was a member of the Davidson County Tennessee Bar, to represent them in a lawsuit against the defendant, Frank E. Jones.

With full knowledge of the plaintiffs, Pepper began settlement negotiations prior to filing a lawsuit. After these initial settlement discussions proved unsuccessful, Pepper filed suit against defendant Jones in November 1985. Plaintiffs sued defendant seeking $5,000,000.00 in damages alleging that defendant was negligent in failing to yield the right of way. After filing suit, Pepper continued settlement discussions with defendant's attorney. The Absars knew that Pepper was conducting settlement discussions on their behalf, but they did not expressly authorize Pepper to settle the lawsuit.

Nonetheless, Pepper purported to enter into an agreement to settle the case with defendant and defendant's insurer, United Services Automobile Association (USAA). This settlement agreement provided for a $325,000.00 cash payment to the Absars and an annuity for Mr. Absar's benefit which would have paid him $15,000.00 a year for life. Pepper forged the Absars' signatures on the release and settlement agreement. Pursuant to this purported settlement, Dr. Jones and USAA delivered a settlement check for $325,000.00 to Pepper and purchased an annuity for the benefit of Mr. Absar. The check was made jointly payable to the Absars "and their Attorney Noble E. Pepper, Sr."

On 25 September 1987, the Circuit Court entered an order in compromise and settlement dismissing the action by agreement of the respective attorneys for the parties. Likewise, on 25 September 1987, Pepper and/or his wife forged the endorsement of the Absars to the settlement check and negotiated the check to Security Federal Savings and Loan by depositing the proceeds in Pepper's various trusts and personal accounts.

Pepper did not inform the Absars of the settlement or of the existence of the check. Instead, he told the Absars that the trial was set for early 1988. In February 1988, when the Absars became suspicious about the answers they were receiving from Pepper concerning a trial date, the Absars decided to contact the Circuit Court clerk's office. They were then informed that their lawsuit against Dr. Jones had been settled and that an order in compromise and settlement had been entered on 25 September 1987 dismissing the suit.

By this time, Pepper had absconded with the proceeds of the settlement check. However, the Absars later learned that Pepper had paid $50,000.00 of the settlement proceeds to Vanderbilt Hospital on behalf of Mr. Absar to pay medical bills incurred by Mr. Absar as a result of the accident. This payment occurred without the Absars' knowledge. However, since learning of the settlement with Vanderbilt, the Absars have not repudiated the $50,000.00 payment for the medical expenses.

In late February 1988, the Absars retained new counsel who was informed by defendant's counsel that Dr. Jones and his insurer USAA considered the matter settled. On 4 March 1988, the Absars' new counsel filed suit against Pepper and various banks in the Chancery Court for Davidson County seeking to recover the settlement proceeds. The March 4 complaint states in part as follows: "Plaintiffs respectfully show the court that defendant Noble E. Pepper, Sr. is justly indebted to them in the sum of $325,000.00, being the sum of the unauthorized settlement agreement negotiated and accepted by Mr. Pepper and held in trust for the plaintiffs' benefit." Pepper has since been prosecuted on various criminal charges and is no longer licensed to practice law.

Some six months later, on 26 August 1988, the Absars filed a motion in the Circuit Court seeking to have the 1987 order of compromise and settlement set aside. ¹ Following a hearing, the court found that the Absars had not ratified the settlement and granted the plaintiffs' motion to set aside the order of compromise and settlement. The court entered a "Memorandum and Order" and stated, in part, as follows:

In opposition to this motion, the defendant argued that by filing the action to attach Pepper's bank accounts and property, the plaintiffs ratified the settlement. This Court does not agree. From the beginning, the Absars repudiated the settlement, and their actions through counsel, particularly under the circumstances, did not suggest to the contrary. Simply because the Absars sought to "chase a thief" and stop his transference of any funds or property while simultaneously notifying the defendant and his insurer that the settlement was unacceptable does not constitute ratification. Indeed, defendant's insurer could have, and arguably should have, taken the same steps to protect the defendant and the status quo.

For all of the foregoing reasons, the court finds that the Absars did not accept the settlement and never ratified it. A client is not bound by his attorney's acceptance of a settlement or his dismissal of his action with prejudice unless the client has authorized it.

Accordingly, the judgment should be set aside, because the Absars did not know of, did not authorize, and never ratified the "Pepper" settlement.

We review the trial court's findings in this case pursuant to Tennessee Rule of Appellate Procedure 13(d), that is, with a presumption of correctness of the findings unless the evidence preponderates otherwise. Here, the evidence does not preponderate otherwise.

The defendant's first issue is: "The trial court erred when it set aside the 1987 dismissal because the Absars' actions in seeking collection of the proceeds of the settlement from Pepper, and the Absars' acceptance of the benefit of the payment of their medical bills ratified the settlement agreement."

Defendant insists that the plaintiffs' actions from the time they learned of the 1987 settlement by Pepper ratified the settlement and that the Absars are therefore precluded from disavowing the terms of the settlement and seeking any additional recovery from the defendant. The Absars vigorously insist that they never intended to ratify the settlement and that they conveyed their intention to defendant's former counsel.

The general rule in Tennessee is that an attorney cannot surrender substantial rights of a client, including agreeing to dismissal of litigation which permanently bars a client from pursuing his claim, without the express authority of the client. Davis v. Home Insurance Co., 127 Tenn. 330, 337, 155 S.W. 131, 133 (1913); Long v. Kirby-Smith, ...