McNallen v. McNallen

LINDA MICHELLE McNALLEN, Petitioner-Appellee, v. MICHAEL RICHARD McNALLEN, Defendant-Appellant.

NO. 29,670

COURT OF APPEALS OF THE STATE OF NEW MEXICO

Dated: September 28, 2012

This memorandum opinion was not selected for publication in the New Mexico Appellate Reports. Please see Rule 12-405 NMRA for restrictions on the citation of unpublished memorandum opinions. Please also note that this electronic memorandum opinion may contain computer-generated errors or other deviations from the official paper version filed by the Court of Appeals and does not include the filing date.

APPEAL FROM THE DISTRICT COURT OF CHAVES COUNTY

Freddie J. Romero, District Judge

Caren I. Friedman

Santa Fe, NM

Kraft & Hunter, LLP

Dustin K. Hunter

Roswell, NM

for Appellee

Michael R. McNallen

Midland, Tx

Pro se Appellant

MEMORANDUM OPINION

CASTILLO, Chief Judge.

Husband appeals from a final decree of dissolution of marriage, contending that his attorney did not have authority to agree to terms of settlement and that the district court erred in finding that a meeting of the minds had occurred between the parties. We affirm.

I. BACKGROUND

In 2007, after 19 years of marriage, wife filed a petition for dissolution of marriage. Because Wife home-schooled the couple's two children and did not work and because Husband controlled the couple's business that was started and incorporated during the marriage, Husband was ordered to pay support for Wife and for Children during the course of the divorce proceedings. In May 2008, the district court found Husband to be more than $26,000 in arrears in monthly payments. Husband was also refusing to pay the mortgage on the community residence. Both parties filed cross motions regarding the level of support and payments, and Wife filed a motion to compel discovery of documents related to the business. The district court set those motions aside in August 2008 when it was presented with a settlementagreement negotiated by the parties.

The key events center around the settlement conference on August 9, 2008, and a hearing before the district court two days later. Husband did not attend the settlement conference, though he was in contact with his attorney by phone. Husband contends that his attorney had authority only to discuss "avenues for possible compromise or resolution" but did not have authority to agree to a settlement. Wife points out that Husband's counsel announced his settlement authority in an e-mail that initiated the settlement conference and that Husband's counsel spoke to Husband by phone during the meeting and announced afterward to Wife and her counsel, "We have a deal." At the hearing in court two days later memorializing the agreement, Husband's attorney confirmed that a deal had been reached, despite minor modifications that were needed to the agreement. Husband sat by his attorney's side throughout the hearing, making no comments. The district court announced, "Well, it sounds like the parties do have an agreement," and ordered the parties to "prepare the appropriate paperwork" for the final decree.

Husband contends that after the hearing, Wife's attorney presented him with a form of the agreement that had been signed two days earlier by Wife and the parties' two attorneys, but Husband would not sign it. Wife argues that there is no evidence that this occurred. Regardless of whether this transpired, the court was unaware of it.Consequently, the court relied on the conduct of the parties, specifically on Husband's silence to the explanation of the terms.

Over the course of the next month, the parties exchanged e-mails and drafts of the final agreement. On September 8, 2008, Husband's attorney filed a motion to withdraw, which the district court granted. At a September 29, 2008 hearing on Wife's motion for presentment, Husband, appearing pro se, denied that a deal had been reached or that he had assented to the events of August 9 and 11. The district court gave Husband a few days to review the transcript of the August 11 hearing in order to attest to its accuracy. Husband agreed that the transcript was an accurate rendering of the hearing. On October 16, 2008, the district court ruled that Husband was bound by the terms of the settlement agreement, and a presentment hearing was set for November 10. At the November 10 hearing, Husband, again appearing pro se, continued to insist that he should not be bound by the settlement agreement, and the district court granted Husband's motion opposing the October 16 order. The court declared that "we go back to square one," ordered all community assets seized and placed in trust, and gave Husband 10 days to comply with Wife's discovery requests. However, two days later, the district court reversed itself and informed the parties that it had "acted improvidently." On Husband's motion, the judge recused a week later. With a new judge in place, the district court held a hearing March 4, 2009, on allpending motions in the case. On April 30, 2009, the district court issued a letter ruling affirming the October 16 order calling for a final decree. On May 21, 2009, the district court entered the final decree of dissolution of marriage that included the elements agreed to at the August settlement conference and also ordered Husband to pay child support that was in arrears.

II. DISCUSSION

Husband makes three arguments on appeal, all somewhat intertwined. First, he argues that his attorney did not have settlement authority at the August 9, 2008 meeting, and thus was not authorized to sign the document and present it to the district court two days later. Second, he argues that the district court erred in finding that the parties had reached a meeting of the minds and that the agreement was a binding contract. Third, Husband contends that the second judge in the case, appointed after the first judge's recusal, abused his discretion by (1) adopting the findings and conclusions of the first judge, (2) ruling that Husband was bound by the terms of the settlement agreement, and (3) entering the final decree of dissolution of marriage. We address those arguments in turn. We also address Wife's request for attorney's fees for this appeal.

A. The District Court's Finding of an Agreement Between the Parties

1. Husband's Attorney Was Held Out as Having the Authority to Represent Husband

Husband argues that the district court incorrectly ruled that his attorney had the authority to enter into a settlement agreement that Husband had not signed off on. Wife presented evidence below that Husband cloaked his attorney with the authority to execute the settlement agreement.

In New Mexico, an attorney representing a client has authority "to bind his client to any agreement in respect to any proceeding within the scope of his proper duties and power." NMSA 1978, § 36-2-11(B) (1909). "Certain courts have recognized a public policy argument for enforcing settlement agreements entered into by attorneys clothed with apparent authority to settle an action." Navajo Tribe of Indians v. Hanosh Chevrolet-Buick, Inc., 106 N.M. 705, 707, 749 P.2d 90, 92 (1988). "While an attorney's authority to settle must be expressly conferred, it is presumed that an attorney of record who settles his client's claim in open court has authority to do so unless rebutted by affirmative evidence to the contrary." Id. (citation omitted). For such a factual determination, we review the district court's finding that Husband's attorney had settlement authority under a substantial evidence standard. See Augustus v. John Williams & Assocs., Inc., 92 N.M. 437, 440, 589 P.2d 1028, 1031 (1979) (using the substantial evidence standard to determine whether an attorney had the authority to enter into an enforceable settlement agreement). "Substantial evidence is such relevant evidence that a reasonable mind would find adequate to support aconclusion." Landavazo v. Sanchez, 111 N.M. 137, 138, 802 P.2d 1283, 1284 (1990). In reviewing a claim for substantial evidence, "[t]he question is not whether substantial evidence exists to support the opposite result, but rather whether such evidence supports the result reached." Las Cruces Prof'l Fire Fighters v. City of Las Cruces, 1997-NMCA-044, ¶ 12, 123 N.M. 329, 940 P.2d 177. "Unless clearly erroneous or deficient, findings of the trial court will be construed so as to uphold a judgment rather than to reverse it." Bishop v. Evangelical Good Samaritan Soc'y, 2009-NMSC-036, ¶ 25, 146 N.M. 473, 212 P.3d 361.

Our Supreme Court has set forth the "basic principles of law applicable to the authority of attorneys to settle cases": (1) the party seeking judgment has the burden of establishing the assent of the other party, (2) merely employing an attorney does not give that attorney implied or apparent authority to settle a cause of action, (3) an attorney may act without consulting the client in an emergency situation when the client's interests are at stake, (4) a client must be "clear and unequivocal" in giving the attorney authority, and (5) any unauthorized settlement by an attorney may be repudiated by the client. Augustus, 92 N.M. at 438-39, 589 P.2d at 1029-30 (internal quotation marks and citation omitted). Clothing an attorney with settlement authority need not be express. See Diversified Dev. & Inv., Inc. v. Heil, 119 N.M. 290, 296, 889 P.2d 1212, 1218 (1995) (stating that "[a]pparent authority arises from manifestationsby the principal to the third party"). It is true, as Husband points out, that "the mere employment of an attorney does not of itself give the attorney the implied or apparent authority to compromise his client's cause of action." Augustus, 92 N.M. at 439, 589 P.2d at 1030. Husband also notes that an attorney "does not, merely by representing his client in settlement negotiations, become vested with apparent or implied authority to settle the client's case." Husband characterizes the situation by arguing that he was out of town when the "impromptu" settlement meeting took...