Siener v. Zeff, No. 07CA1929.

• Decision Date: 21 August 2008
• Docket Number: No. 07CA1929.
• Citation: 194 P.3d 467
• Parties: George J. SIENER, Plaintiff-Appellant, v. Joyce ZEFF, as personal representative of the Estate of Kalman Zeff, and Carmel Companies, Inc., Defendants-Appellees.
• Court: Colorado Court of Appeals

194 P.3d 467

George J. SIENER, Plaintiff-Appellant, v. Joyce ZEFF, as personal representative of the Estate of Kalman Zeff, and Carmel Companies, Inc., Defendants-Appellees.

No. 07CA1929.

Colorado Court of Appeals, Div. VII.

August 21, 2008.

McReynolds Law, LLC, Gregg McReynolds, Greenwood Village, Colorado, for Plaintiff-Appellant.

Senter Goldfarb & Rice, L.L.C., Arthur J. Kutzer, Jason L. Walker, Denver, Colorado, for Defendants-Appellees.

Opinion by Chief Judge DAVIDSON.

In this personal injury action, plaintiff, George J. Siener, appeals from the summary judgment dismissing with prejudice his complaint against defendants, Joyce Zeff, as Personal Representative of the Estate of Kalman Zeff, and Carmel Companies, Inc. We reverse and remand with directions.

I. Background

This case arises out of an automobile accident between plaintiff and Kalman Zeff, now deceased. Siener retained an attorney, who filed a complaint on his behalf. Soon after, the attorney settled the claim with Zeff's insurer, The Hartford, for $25,000. The attorney did so without Siener's knowledge or consent, and, when the settlement check was subsequently sent to the attorney's office, the attorney cashed it and absconded with the proceeds.

When Siener later learned from The Hartford that the attorney had settled the action and stolen the proceeds, Siener filed a pro se claim under C.R.C.P. 252 with the Colorado Attorneys' Fund for Client Protection (Fund) for $25,000. The Fund paid the claim in full. Siener acknowledged the payment, cashed the check, and kept its proceeds.

Approximately a year later, Siener hired a new attorney who filed a motion to reinstate Siener's personal injury case against defendants, which the trial court granted. Defendants then moved to dismiss the complaint on the grounds, inter alia, that Siener had subrogated his rights to claims against third parties to the Fund and, furthermore, that by accepting the $25,000, Siener had ratified the unauthorized settlement with The Hartford.

The trial court, considering the pleadings and exhibits submitted by the parties, treated the motion as one for summary judgment, granted it, and dismissed the case. The court determined that Siener had "[a]ssigned [his] rights against any third party" by filing his $25,000 claim for reimbursement with the Fund. It further agreed with defendants that Siener had ratified the unauthorized settlement when he accepted the $25,000. This appeal followed.

Summary judgment is a "drastic remedy," only appropriate if the pleadings, affidavits, depositions, or admissions show there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. Civil Serv. Comm'n v. Pinder, 812 P.2d 645, 649 (Colo.1991); Kellum v. RE Servs., LLC, 30 P.3d 875, 876 (Colo.App.2001). In the court's determination whether summary judgment is proper, the nonmoving party is entitled to the benefit of all favorable inferences that may reasonably be drawn from the undisputed facts, and all doubts must be resolved against the moving party. Bebo Constr. Co. v. Mattox & O'Brien, P.C., 990 P.2d 78, 83 (Colo.1999).

We review a grant of summary judgment de novo. BRW, Inc. v. Dufficy & Sons, Inc., 99 P.3d 66, 71 (Colo.2004).

II. Other Than the $25,000, and Related Costs, Siener's Personal Injury Damages Claim Was Not Transferred, Subrogated, or Assigned to the Fund

C.R.C.P. 252.14(b), which governs a claimant's transfer, subrogation, and assignment of a claim to the Fund, states:

As a condition of payment, a claimant shall be required to provide the [F]und with a transfer of the claimant's rights up to the amount paid by the Fund against the attorney, the attorney's legal representative, estate or assigns; and of the claimant's rights against any third party or entity who may be liable for the claimant's loss.

The language is mirrored in the subrogation agreement signed by Siener when he submitted his claim to the Fund.

Interpreting C.R.C.P. 252.14(b), and the corresponding language in the subrogation agreement, the trial court determined that, by accepting compensation from the Fund, Siener "[a]ssigned [his] rights against any third party," and that "[t]he `third party' was The Hartford, vis-á-vis Defendant in the present case." Siener contends the trial court erred in reaching that determination. We agree.

The Colorado Rules of Civil Procedure are subject to the rules of statutory construction. Crawford v. Melby, 89 P.3d 451 (Colo.App.2003); see also Watson v. Fenney, 800 P.2d 1373, 1375 (Colo.App.1990). We give the words of a rule their plain meaning, construing them as a whole to give consistent, harmonious effect to all its parts. Anheuser Busch, Inc. v. Indus. Claim Appeals Office, 28 P.3d 969, 970 (Colo.App. 2001); see also Int'l Paper Co. v. Cohen, 126 P.3d 222, 226 (Colo.App.2005). To ascertain the intent of the supreme court in promulgating its rules, we also must consider the language in proper context, as well as the reason and necessity of the rule and the objective that it seeks to accomplish. In re Marriage of Eisenhuth, 976 P.2d 896, 899 (Colo.App.1999); see also Klinger v. Adams County School Dist. No. 50, 130 P.3d 1027, 1031 (Colo.2006) (regarding statutory interpretation, "[w]e read words and phrases in context and construe them literally according to common usage unless they have acquired a technical meaning by legislative definition"); cf. Carl's Italian Restaurant v. Truck Ins. Exchange, 183 P.3d 636, 639 (Colo.App.2007) ("In determining whether a term is ambiguous, we must consider the term in the context of the [insurance] policy as a whole.").

Contrary to the trial court's reading of the rule, C.R.C.P. 252.14(b) refers to transfer, subrogation, and assignment of a claimant's rights, not against "any third party," but against third parties "who may be liable for the claimant's loss." Furthermore, C.R.C.P. 252.10(a) provides, in turn, that in order to constitute an eligible claim, a loss "must be caused by the dishonest conduct of the attorney." Under the rule, "dishonest conduct" is then limited to wrongful acts committed by attorneys "in the nature of theft or embezzlement of money or the wrongful taking or conversion of money, property or other things of value." See C.R.C.P. 252.10(c).

Thus, while settling a client's claim without authority may be dishonest behavior, in the context of C.R.C.P. 252 regarding the Fund, a recoverable "loss" is exclusively a claimant's pecuniary harm resulting from his or her attorney's wrongful taking of the claimant's money, property, or other thing of value. And C.R.C.P. 252.14(b) requires a claimant to provide the Fund with a transfer of any rights against third parties arising from that statutorily defined and limited loss, not from a loss arising from other circumstances.

Here, Siener's "loss" under Rule 252 was the $25,000 stolen by his attorney. To the extent Siener is also attempting to recover the "true value" of his personal injury claim arising out of his car accident with defendants contrary to the trial court, we conclude that claim was not transferred, subrogated, or assigned to the Fund under C.R.C.P. 252.14(b), or, for the same reasons, under the terms of the corresponding subrogation agreement.

III. Ratification of the Unauthorized Settlement

The trial court also granted summary judgment in favor of defendants on the basis that Siener, through his acceptance of the $25,000 from the Fund as reimbursement for the stolen settlement proceeds, ratified the settlement agreement entered into by his former attorney and The Hartford.

Siener contends summary judgment was improper, arguing that the evidence did not show he knowingly adopted and confirmed the act of his attorney and, thereby, ratified the unauthorized settlement. We agree and conclude that there is a genuine issue of fact as to whether Siener knew that, by taking the $25,000 from the Fund, he was agreeing to be bound by the unauthorized settlement.

A. Unauthorized Settlements Must Either be Timely Repudiated or Ratified

A settlement is effectively a contract to end judicial proceedings. In order for it to be binding and enforceable, there must be a "meeting of the minds" as to the terms and conditions of the settlement. See Cross v. Dist. Court., 643 P.2d 39, 41 (Colo.1982) (quoting H.W. Houston Constr. Co. v. Dist. Court, 632 P.2d 563, 565 (Colo.1981)).

An attorney does not have the authority to compromise and settle the claim of a client without his or her knowledge and consent. See Cross, 643 P.2d at 41. Thus, generally, a client is not bound by a settlement agreement made by an attorney when the lawyer has not been granted either express or implied authority. Radosevich v. Pegues, 133 Colo. 148, 152, 292 P.2d 741, 743 (1956).

However, because there is at least one other party involved in a settlement (who, in the absence of further action or proceedings on the claim against it, is entitled to rely on the fact that the case has been resolved), when a client discovers that an attorney has "settled" his claim without authority, the client must either timely repudiate the settlement and proceed with the lawsuit or ratify the settlement as an acceptable bargain. See Gordon v. Pettingill, 105 Colo. 214, 217, 96 P.2d 416, 417 (1939) (failure to repudiate agent's acts or delay in repudiating may result in ratification); Thomas v. Mahin, 76 Colo. 200, 205, 230 P. 793, 794 (1924) (act of plaintiff's attorney in filing a suit without authority was ratified when plaintiff subsequently conveyed his interests in property at issue in suit to another for payment and did not take steps to dismiss the case).

B. Requirements for Ratification of an Unauthorized Settlement

The attorney-client relationship is that of principal and agent. Weigel v. Hardesty, 37 Colo.App. 541, 543, 549 P.2d 1335, 1337 (1976) ("an attorney is the agent of his client"). Ratification by a principal of an unauthorized...