Hays v. Fischer, 1

• Decision Date: 13 July 1989
• Docket Number: No. 1,CA-CV,1
• Citation: 161 Ariz. 159,777 P.2d 222
• Parties: Dusty HAYS, a single person, Plaintiff-Appellant, v. Michael Joseph FISCHER, Defendant-Appellee. 88-090.
• Court: Arizona Court of Appeals

Page 222

777 P.2d 222

161 Ariz. 159

Dusty HAYS, a single person, Plaintiff-Appellant, v. Michael Joseph FISCHER, Defendant-Appellee.

No. 1 CA-CV 88-090.

Court of Appeals of Arizona, Division 1 Department B.

July 13, 1989.

Law Offices of Gilcrease & Martin by Glynn W. Gilcrease, Jr. and James C. Martin, Tempe, for plaintiff-appellant.

Harris & Palumbo, P.C. by Kevin W. Keenan and Anthony J. Palumbo, Phoenix, for defendant-appellee.

OPINION

CONTRERAS, Presiding Judge.

This is an appeal from an order enforcing an agreement between counsel by which appellant's personal injury claim was settled for the sum of $10,500. Appellant presents the following issues for our consideration:

(1) whether a settlement of a nineteen-year-old plaintiff's personal injury claim can be enforced when she learns of a material change in her physical condition and other facts before she has received payment or executed release documents and chooses to reject the settlement documents despite her attorney's previous acceptance of the settlement offer from defense counsel;

(2) assuming an agreement settling an action is reached, whether a party may rescind it before performance when there is no prejudice to the other party;

(3) whether failure to comply with Rule 80(d), Ariz.R.Civ.P., is fatal to an informal settlement of a personal injury case between counsel;

(4) may attorney's fees be awarded under A.R.S. § 12-341.01(A) upon enforcement of an agreement settling a personal injury action.

After reviewing the record presented in this appeal, we conclude that appellant's attorney had the express authority to settle appellant's claim, that the negotiated settlement agreement is binding, and that no basis was presented which would relieve appellant from the settlement agreement. We also conclude that the trial court properly awarded attorneys' fees. We therefore affirm the trial court's order.

FACTS AND PROCEDURE

The appellant (Hays) filed a complaint alleging that at about 8:50 p.m. on June 17, 1986, she was a passenger in an automobile being driven by appellee Michael J. Fischer. It was further alleged that Fischer was intoxicated and drove in such a grossly negligent and reckless manner so as to cause the automobile to go over a curb and strike a light pole, thereby causing injuries to her. The complaint asked for both compensatory and punitive damages.

Two days after the accident, Hays engaged Attorney Larry G. Ruch to represent her. At Ruch's recommendation, Hays received treatment from a chiropractor, Dr. Kirsten, for about three weeks. In the first or second week of July 1986, she went to Montana to visit an aunt. While in Montana, she saw a Dr. Elbert. At the end of August or the beginning of September 1986, she returned to her mother's home in Colorado Springs, Colorado, where she saw a Dr. Adler. She later saw Dr. Buettner. When Hays' deposition was taken on November 24, 1986, she stated that she had not consulted a medical doctor because she believed her injuries needed only chiropractic attention.

In November and December of 1986 and January of 1987, the parties' counsel engaged in discovery and settlement discussions. On January 12, 1987, Ruch wrote to Fischer's counsel requesting that Fischer's insurer, Nationwide Insurance Company, pay Hays' chiropractic and hospital bills of $3,413.25 under the $5,000 medical payments coverage of Fischer's policy. Ruch's letter also stated:

I have conveyed your offer of judgment in the sum of $7,500 to my client and she does not wish to accept that offer, but I have authority to settle her claim for the sum of $15,000 together with the funds due her under the medical pay provisions making a total settlement offer of $18,413.25 and this offer will remain open only for two weeks until January 26, 1987.

On January 27, 1987, Fischer's counsel, Kevin Keenan, wrote to Ruch informing him that Nationwide would pay the amount requested under the medical payments provision of Fischer's policy. Keenan's letter also stated:

As to your demand to settle the liability claim under the present lawsuit, please be advised that I have been given the necessary authority to reject your demand of $15,000. I have been given the necessary authority to make a counter-offer to you of $10,000. Our offer to settle the liability portion of this case is obviously contingent upon receiving a full release from your client, along with a dismissal of the present lawsuit, with prejudice. This offer to settle the liability portion of this claim will only be open until Friday, February 6, 1987, after which time it will automatically be revoked without further notice.

The following day, Ruch telephoned Hays and informed her of the defense's offer. Hays told Ruch she really needed the money and asked how long it would take to litigate the action if the offer were turned down. Ruch told her litigation would take at least six months, depending on whether or not it was arbitrated. Ruch testified at his deposition:

And so I told her that I could probably get her a few dollars more, that why didn't she give me authority to try that, and she said that would be fine, and I told her that, "What if I can't get you one dollar more? Do you want me to accept the 13,413.25?"

She said, "Yes, go ahead and accept that, but try to get as much more as you can."

I then suggested that I try for at least a total of 15,000, which would include the med pay, which would raise the offer approximately fifteen hundred.

Q. Okay.

A. So she said, "Go ahead and do that," and so then I--that was my conversation with her.

On January 28, 1987, Ruch wrote Keenan:

I conveyed your offer of $10,000 together with the medical pay of $3,413.25 making a total of $13,413.25 to my client and she does not want to accept it, but in an effort to settle her claim we would reduce our demand of $18,413.25 to a total of $15,000 including the medical pay. I think that this is a fair settlement for both sides and if such is acceptable would you please go ahead and order the settlement draft and the release as I promised my client that if we could arrive at a settlement we would do so promptly.

On February 4, 1987, Keenan responded in a letter to Hay's attorney:

As I told you last week, Nationwide has agreed to pay the $3,413.25 that you previously demanded under the Med-Pay provision of their policy. Enclosed find the original of Nationwide's check No. 72-060603 in the amount of $3,413.25, representing full payment under the Med-Pay portion of Nationwide's policy.

Please be advised that I am now in receipt of your January 28th letter which rejects our offer to settle the liability portion of this claim for $10,000. Your letter makes a counteroffer of $15,000, but that sum includes the $3,413.25 of Med-Pay. Given the fact that we have now made full payment under the Med-Pay, I see your January 28th letter as making a counteroffer of $11,586.75. We are rejecting your counteroffer.

Enclosed find our Offer of Judgment in the amount of $10,500. You should advise your client that this is the most that we are willing to pay to settle the liability portion of this claim.

Pursuant to Rule 68, Ariz.R.Civ.P., Fischer on February 4, 1987, filed an offer of judgment in the amount of $10,500.

Ruch received Keenan's February 4th letter, together with a copy of the offer of judgment, on February 5, 1987. Ruch, at his deposition, testified that before he responded to Keenan's letter of February 4th, he checked with Hays' various doctors. He found there was an additional bill for $270 that he did not know about which had not been included in the $3,413.25 figure previously demanded under Nationwide's medical payments coverage. Because Ruch already had authority to accept an offer of $10,500 plus medical payments, he did not again attempt to talk to Hays.

On February 5, 1987, Ruch again wrote Keenan:

I have conferred with my client and she wishes to accept your offer of judgment in the sum of $10,500 subject only to the additional $270 in medical expenses that she has with the Buettner Chiropractic Clinic in Colorado. I have advised them to send me their bill for the last three medical treatments which I did not have at the time I gave you her previous medical bills which totaled the sum of $3,413.25 which you have sent me the medical payment check. I should have this bill in the next couple of days and will send it to you.

Ruch further testified at his deposition that, in his view, the February 5th letter had settled all aspects of the case "subject only to my client approving the release and signing the drafts and sending them back to me."

On February 18, 1987, Keenan responded in writing to Ruch as follows:

Please be advised that I have informed Nationwide that you have accepted our offer to settle this case for $10,500. I have further forwarded to Nationwide the additional bills that you sent me from Buettner Chiropractic Clinic in the amount of $270. As soon as I receive the appropriate draft(s) from Nationwide, I will forward same on to you.

This letter will also serve to confirm the fact that you and I have agreed that the lawsuit in this case will be disposed of by way of a Stipulation and Order for Dismissal with Prejudice. I will forward this Stipulation over to you just as soon as I receive the drafts from Nationwide. You and I have also agreed that as soon as Nationwide pays the $270 that is still outstanding on the medical payment policy, that your client's medical payment file can be closed, and Nationwide will have no further obligation to your client.

At the time his deposition was taken, Ruch stated that, as far as he was concerned, as of February 18, 1987, he and Keenan had agreed to settle all aspects of the liability claim against Fischer on behalf of their clients, along with all aspects of the medical payments claim against Nationwide. He further stated that, based on his conversations with Hays, he had authority at that time to enter...