Lockette v. Greyhound Lines, Inc.

• Decision Date: 29 May 1987
• Docket Number: No. 86-4650,86-4650
• Parties: Lisa LOCKETTE, et al., Plaintiffs, Pamela Lockette, Plaintiff-Appellant, v. GREYHOUND LINES, INC., Defendant-Appellee.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 1182

817 F.2d 1182

Lisa LOCKETTE, et al., Plaintiffs, Pamela Lockette Plaintiff-Appellant, v. GREYHOUND LINES, INC., Defendant-Appellee.

No. 86-4650.

United States Court of Appeals Fifth Circuit.

May 29, 1987.

Daniel G. Guidry, Glenda M. August, Guidry & Guidry, Martinville, La., for plaintiff-appellant.

Lisa J. Miley, New Orleans, La., George A. Wheat, Phoenix, Ariz., McGlinchey, Stafford, Mintz, Cellini & Lang, Frederick R. Campbell, New Orleans, La., for defendant-appellee.

Appeal from the United States District Court for the Western District of Louisiana.

Before RANDALL, GARWOOD and DAVIS, Circuit Judges.

PER CURIAM:

Pamela Lockette appeals the district court's enforcement of a settlement agreement between Lockette and Greyhound Lines, Inc. Because we conclude that whatever authority Lockette's attorney had to enter into a binding settlement agreement was revoked by Lockette prior to the consumation of settlement, we reverse.

I.

On October 28, 1984, Pamela Lockette and her sister, Lisa Lockette, were passengers on a Greyhound Bus that was involved in a collision near Mobile, Alabama. Initially, Lockette hired Ted Haik and Leon Minvielle to prosecute her claims against Greyhound. Lockette later discharged Messrs. Haik and Minvielle and retained Walter J. Rippas as her counsel. Rippas, in turn, retained Kenneth DeJean to handle the case in an arrangement by which DeJean would not communicate directly with Lockette, but instead would deal with Lockette only through Rippas.

Rippas testified that Lockette had given him general authority to settle her case, and had told him simply to "use his best judgment" in arriving at an appropriate settlement with Greyhound. Rippas also testified that he never communicated the specific settlement offers made by Greyhound to Lockette. Rippas told DeJean that he, Rippas, had general authority to settle Lockette's case, and DeJean began settlement negotiations with Greyhound. DeJean testified that he never communicated any specific settlement offers to Lockette.

The case was set for trial on May 19, 1986, and a pretrial conference was scheduled for May 7, 1986. On May 5, 1986, DeJean and Greyhound reached an agreement to settle Lockette's claims against Greyhound for $347,500. On that same evening, Rippas advised Lockette that the case had been settled. Both Lockette and Rippas testified that, after being advised by Rippas that he had settled her case, Lockette told Rippas that she would have to "talk to somebody" before accepting the settlement. ¹ Despite Lockette's express reservations concerning the settlement, it is undisputed that Rippas did not in any way communicate Lockette's reservations to DeJean. On May 6, 1986, Lockette made an appointment to see Daniel Guidry, her present attorney, on May 7, 1986. Lockette met with Guidry in his office on the morning of May 7, and explained to him that she was not happy with the settlement offer accepted by DeJean and Rippas.

At the same time that Lockette was consulting with Guidry, DeJean and Greyhound's counsel advised the district court at the pretrial conference that Lockette's case was settled. The court noted the settlement on the pretrial order and DeJean and counsel for Greyhound signed the pretrial order. Later that day, Guidry called DeJean and informed him that the settlement offer was unacceptable to Lockette.

After Greyhound's counsel was apprised of Lockette's rejection of the settlement, Greyhound filed a motion to enforce the settlement. With the consent of the parties, the case was referred to a federal magistrate for decision. On May 19, 1986, the magistrate held a hearing and subsequently denied Greyhound's motion to enforce the settlement. Greyhound filed a motion for a new trial, citing new evidence. The new evidence consisted of the testimony of Walter Rippas which contradicted an affidavit executed by Lockette stating that Rippas had not discussed Greyhound's settlement offer with Lockette prior to May 7, 1986. At a second hearing, the magistrate reconsidered her prior ruling on Greyhound's motion to enforce that settlement, and ordered its enforcement.

In her memorandum ruling enforcing the settlement, the magistrate held that (1) the contract between Lockette and Rippas which required written consent before the case was settled was not binding on Greyhound, as a third party, because the contract was not filed with the clerk of the district court; (2) the signed notation on the pretrial order that the case was settled met the writing requirement of Article 3071 of the Louisiana Civil Code; and (3) DeJean had authority to settle Lockette's case.

Lockette filed a timely notice of appeal to this court. On appeal, Lockette argues that (1) the magistrate erred in granting Greyhound's motion for a new trial on the basis of newly discovered evidence; (2) the alleged settlement agreement failed to meet the writing requirements of the Louisiana Civil Code; (3) neither DeJean nor Rippas possessed the authority to settle with Greyhound; and (4) to the extent that Rippas and DeJean had the authority to settle the case, such authority was revoked when Lockette informed Rippas at the time that Lockette learned of the settlement offer that she would have to speak with someone before accepting the settlement.

In response, Greyhound argues that (1) the magistrate properly treated Greyhound's motion for a new trial as a motion for rehearing, and the magistrate did not abuse her discretion in granting that motion; (2) the signed notation on the pretrial order satisfied the writing requirements of the Louisiana Civil Code; (3) Rippas and DeJean had express authority to settle Lockette's claims with Greyhound; and (4) Lockette is estopped from repudiating the settlement because she permitted Rippas to clothe DeJean with apparent authority to settle the case and cannot now claim that DeJean had no authority to accept a settlement offer made by Greyhound in good faith.

Because we agree with Lockette's contention that whatever authority DeJean and Rippas had to settle her case was revoked when Lockette refused on May 5, 1986, to accept the settlement, we need only address that argument. We do, however, address Greyhound's arguments that Lockette gave Rippas and DeJean express authority to settle the case and Greyhound's argument that Lockette is estopped from repudiating the settlement agreement. Before addressing these arguments, we will consider the choice of substantive law to be applied to the enforceability of the settlement agreement and set out the appropriate standard of judicial review.

II.

A. Choice of Law

Under well-settled principles of law in this circuit, we hold that Louisiana law governs the construction and validity of the settlement agreement in this case. As this court has stated, "[a]lthough federal courts possess the inherent power to enforce agreements entered into in settlement of litigation, the construction and enforcement of settlement agreements is governed by principles of state law applicable to contracts generally." Lee v. Hunt, 631 F.2d 1171, 1173-74 (5th Cir. Unit A 1980) (footnote omitted), cert. denied, 454 U.S. 834, 102 S.Ct. 133, 70 L.Ed.2d 112 (1981). In this case, where jurisdiction is based upon diversity of citizenship, we will apply the substantive law of Louisiana to determine whether the settlement agreement allegedly entered into between Lockette and Greyhound is enforceable.

B. Standard of Review

We next address the standard of review applicable to findings of fact and conclusions of law made by a federal magistrate trying a case with the consent of the parties pursuant to 28 U.S.C. Sec. 636. In such a situation, the magistrate is, in effect, acting as a district judge and is empowered by statute to direct the entry of judgment. Id. Sec. 636(c)(3). Appeal from a judgment entered by a magistrate with the consent of the parties is to the court of appeals, not to the district court. Hence, this court applies the same standard of review to the findings and conclusions of the magistrate that we would apply to a decision of the district court. Conclusions of law made by the magistrate are therefore subject to de novo review by this court while findings of fact made by the magistrate are upheld unless such findings are clearly erroneous. See Fritiofson v. Alexander, 772 F.2d 1225, 1239-40 (5th Cir.1985); Fed.R.Civ.P. 52(a). With these principles in mind, we turn to the questions presented.

III.

We turn first to the question of whether Rippas, and hence DeJean, had authority to settle Lockette's suit against Greyhound. The parties agree that under Louisiana law, "a party's counsel of record does not have authority to settle a client's claim without his client's 'clear and express consent.' " Fredric Hayes, Inc. v. Rollins, 435 So.2d 1151, 1152 (La.App. 3d Cir.1983). In her memorandum ruling, the magistrate found that Lockette gave express general authority to Rippas to settle her case, and that this authority was delegated with her knowledge and consent to DeJean. We will assume for the purposes of our analysis that this finding is not clearly erroneous, and that Lockette's statements to Rippas to the effect that he was authorized to use his best judgment in settling her case were sufficient under Louisiana law to constitute a grant of settlement authority.

We also stress for the purpose of our analysis that the parties are in agreement that no enforceable settlement was reached until DeJean and counsel for Greyhound announced at the pretrial conference that a settlement had been reached and signed the pretrial order containing the notation that the case had been settled. Indeed, Greyhound cannot allege that an enforceable settlement was reached before this time because of the requirement in Louisiana law that a settlement agreement, to be enforceable, must "be either reduced into writing or recited in open court and capable of being transcribed from the...