Luis C. Forteza e Hijos, Inc. v. Mills

• Decision Date: 23 April 1976
• Docket Number: No. 75-1224,75-1224
• Parties: LUIS C. FORTEZA e HIJOS, INC., Plaintiff-Appellee, v. Tom MILLS et al., Defendants-Appellants.
• Court: U.S. Court of Appeals — First Circuit

Page 415

534 F.2d 415

LUIS C. FORTEZA e HIJOS, INC., Plaintiff-Appellee, v. Tom MILLS et al., Defendants-Appellants.

No. 75-1224.

United States Court of Appeals, First Circuit.

Argued Feb. 6, 1976.

Decided April 23, 1976.

Ivan M. Rittenberg, for defendants-appellants.

Roberto J. Matos, Hato Rey, P. R., for plaintiff-appellee.

Before McENTEE, CAMPBELL and MATTHES ^*, Circuit Judges.

LEVIN H. CAMPBELL, Circuit Judge.

Tom Mills & Tom Mills Brokerage Co., Inc. (hereinafter collectively "Tom Mills") appeal from a judgment entered without trial after Tom Mills refused to compromise this action in accordance with terms worked out by his attorney. The judgment is for substantially the same amounts as called for in the repudiated settlement, and Mills challenges the district court's power to enter such a judgment. As the events leading up to this rather unusual disposition are important to our view of the case, we shall state them in detail.

Plaintiff, a Puerto Rico firm, brought this contract action in April, 1969, against several defendants including Tom Mills, all of whom were residents of the continental United States. After a short delay, Tom Mills retained counsel in the District of Puerto Rico where the case was brought, who filed motions to dismiss and quash service of process. After the court denied these motions, Mills' attorneys withdrew, to be replaced by others. Except for completion of pleadings and filing of interrogatories and responses, little else happened until May, 1974, when the case was called "for some disposition" before the United States Magistrate. Although neither side appeared at the time appointed, there seems to have been a pretrial conference in September, 1974, and in early December, 1974, the court entered a pretrial order prepared jointly and signed by counsel. The order recited, inter alia, that "the jurisdiction of the court is not disputed." ¹ Contemporaneous with the order, counsel filed an apology for "the delay incurred in submitting said order." Counsel stated therein that their efforts to stipulate as to facts and documents had been hindered by events beyond their control, "among others a lack of cooperation of the defendants with their attorney to the extent that said attorney is considering filing a motion requesting that he be permitted to withdraw. . . ."

In late December, 1974, the court set the case for trial on March 24, 1975, at 9:00 a. m., and it also ordered the holding of a further pretrial conference on February 26, 1975. The order setting the pretrial conference instructed that each party be represented "by the attorney who expects to conduct the actual trial." Counsel were directed to meet informally at least seven days prior to the date of pretrial to discuss settlement. Parties were advised that failure to comply might result in "imposition of any sanctions the court may deem appropriate, including dismissal of the case."

On January 16, 1975, Mills' then attorney moved to withdraw, alleging that he had received, "no cooperation from the defendants in the preparation for the pretrial conference held on September 27, 1974, and for trial, which is scheduled for March 24, 1975; that the said defendants refuse to allow his advices as to the conduct of this case; they do not answer his letters; and have refused to compensate him for the services rendered in this case since he assumed their representation." The motion went on to state that the withdrawal of counsel should not cause the continuance of the further pretrial conference and of the trial, scheduled for February 26 and March 24, so long as defendants retained a new attorney within 30 days. The attorney certified that he had mailed a copy of his motion to Tom Mills in Chicago, Illinois. On January 20, 1975, the court allowed counsel's motion to withdraw, and ordered defendants to "designate new representation within twenty days from entry of this order." Defendants were "reminded of the pretrial and trial settings."

Notwithstanding the court's express directions to secure an attorney within 20 days from January 20, 1975, and its earlier order requiring the attorney who expected to conduct the actual trial to be present at the February 26 pretrial conference, and to discuss settlement with opposing counsel at least seven days prior thereto, Mills did not engage new trial counsel until well after the pretrial conference. At the time of that conference, ² Ivan M. Rittenberg, an Illinois attorney not admitted to practice before the District Court of Puerto Rico, presented himself and moved to appear for Tom Mills "for the purpose of addressing the court on the pretrial matter set only." The Magistrate, before whom the conference was held, noted that he advised Mr. Rittenberg that defendants were in default of the court's order requiring them to get local counsel; also that "if stateside counsel is going to participate in this case, permission from the court must be requested." A request by Mr. Rittenberg for 30 days postponement was denied as "untimely and in violation of the spirit of Judge Pesquera's prior order and the crash program for the prompt disposition of cases." Counsel were advised that the case was set down for a general calendar call before Judge Grant, a visiting judge, on March 3, 1975. ³

Neither side appeared, however, on March 3, and it was not until March 20, 1975, that newly retained local counsel filed an appearance for Tom Mills.

Five days later, on March 25, 1975, the case came on for trial before Judge Grant, both counsel appearing. From the courtroom deputy's minutes and Judge Grant's Order it appears that counsel for both parties informed the court at 9:30 a. m. that a stipulation for settlement ⁴ had been reached, and this was tendered, without having been executed, to the court and was examined by it in chambers. The court thereupon dismissed the jury, and, on motion of Tom Mills' counsel, the meeting was continued until 2:00 p. m. When counsel again assembled at 2:00 p. m., Tom Mills' counsel advised the court that the settlement agreement previously reached and tendered had been rejected by defendant Tom Mills. Thereupon the court, reciting that it had dismissed the jury solely in reliance upon counsel's tendered stipulation of settlement, and that the event was yet another of many efforts of defendants to delay the prosecution of the cause and to frustrate the processes of the court, ordered judgment to enter for $15,000, $3,000 to be paid within 10 days, and the balance to be paid in four installments as in the stipulation. While the court's judgment was stated to be in accordance with the stipulation, it also provided that a penalty of an additional sum of $3,000 was to be paid to plaintiff within ten days, this sum to be credited, if all went well, against the final (July 25th) installment. If the penalty was not paid, "the pleadings of defendants will be ordered stricken and the case will proceed to trial and final judgment as on default." Thus while the judgment embodied the same ultimate figures as the stipulation of settlement, the consequences of nonperformance were different and the terms somewhat more strict.

If this case had gone to judgment over defendants' protests merely on the theory that defendants had given their binding voluntary assent to the settlement, we would be obliged to reverse. The stipulation of settlement was never executed, and even had Mills' attorney represented in the morning to Judge Grant that he had final authority to settle then and there, an attorney's assertion of authority to compromise is not conclusive if later challenged by his client. The question would be one of his actual authority, on which the client would be entitled to be heard, it being well-established that an attorney, merely by virtue of his employment, lacks authority to compromise. United States v. Beebe, 180 U.S. 343, 352, 21 S.Ct. 371, 374, 45 L.Ed. 563, 569 (1901); Holker v. Parker, 7 Cranch 436, 11 U.S. 436, 3 L.Ed. 396 (1813); Barber-Colman Co. v. Magnano Corp., 299 F. 401 (1st Cir. 1924); Milewski v. Roflan Co., 195 F.Supp. 68 (D.Mass.1961). ⁵

But while a client is not bound by his attorney's unauthorized agreement to compromise, he may have to suffer the consequences of his attorney's conduct in the course of litigation, particularly if, as here, it is traceable to the...