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Without Clear Proof of Authorization, California Woman Isn’t Bound by Settlement and is Free to Pursue Injury Lawsuit

There are many vital decisions that you must make in an auto accident case. Are you willing to settle, and, if so, for what amount? If you are willing to settle, what degree of authority do you want to hand off to your legal team, and what do you want to hold onto yourself? Sometimes, the success or failure of a case may depend on these strategic decisions. In one case, recently decided by the Fourth District Court of Appeal, the appeals court ruled in favor of an injured woman, deciding that she was not bound by a settlement agreement and was free to litigate the case against the driver who injured her. The injured woman won because the law required proof that the injured woman specifically authorized her law firm to settle the case on her behalf, and the at-fault driver lacked that evidence.

The injured woman, M.C., was standing on the side of a road when she was struck by a vehicle driven by C.S. The collision inflicted serious harm upon M.C., including damage to her brain, body, and nervous system. In the fall of 2011, an attorney representing M.C. wrote to C.S.’s insurance company, Safeco Insurance, indicating that the injured woman would settle all claims for the policy limit of C.S.’s auto insurance policy, which was $15,000.

While both the law firm and the insurance company mutually expressed a desire and an intention to settle the case for the $15,000 sum, the deal was never completely finalized. By November 2012, with the two sides still discussing the specifics of the arrangement, M.C.’s law firm informed Safeco that the settlement offer had expired. Shortly thereafter, M.C. sued C.S. C.S. asked the court to enter summary judgment in her favor. M.C., C.S. argued, had entered into a binding agreement to settle the case for the $15,000 policy limit sum. The trial court agreed and issued the judgment in C.S.’s favor.

After the ruling, M.C. appealed, and the appeals court ruled in favor of the injured woman. The law treats settlement agreements in auto accident cases just like any other contractual agreement. In any dispute over the existence of a contract, one of the key questions is whether both sides knowingly and voluntarily agreed to enter into the contract. This was one of M.C.’s points in her appeal, and it was a successful one. The only proof that C.S. had tending to show that M.C. had agreed to the proposed settlement was correspondence between the law firm and Safeco. The appeals court stated that this was not enough. California law is clear that, when a substantial right is involved, such as the settlement of a legal claim, an attorney or law firm does not automatically have authority simply by virtue of the client’s having retained their services in the litigation of that case. A client must specifically authorize her counsel to settle a claim before that attorney obtains that power.

In M.C.’s case, C.S. had no proof that the injured woman ever expressly gave the law firm the authority to settle the case on her behalf. In fact, C.S. lacked any evidence that M.C. knew about the settlement correspondence between the law firm and Safeco at all. Even though, as C.S. argued, the likelihood that the law firm had gone “rogue” and went around trying to hijack claims and settle them without any input from clients was highly improbable, that was not the decisive point under the law. The law required C.S. to prove that M.C. authorized the law firm to settle, which C.S. did not do.

There are numerous decisions that you, as the injured person, must make in the pursuit of your auto accident case. Experienced legal counsel can help you at each step along the way. The diligent San Mateo pedestrian accident attorneys at the Law Offices of Galine, Frye, Fitting & Frangos have the dedication and experience to help you as you seek to obtain the compensation you deserve. To set up a free consultation with one of our experienced attorneys, contact us at 650-345-8484 or through our website.

More Blog Posts:

California Court Rules that Injured Victims May Sue City After Pedestrian Accident, San Mateo Injury Lawyers Blog, Published March 8, 2016

California Appeals Court Allows Survivors of Pedestrian Victim to Sue Passenger for Encouraging Driver to Speed, San Mateo Injury Lawyers Blog, Published Dec. 15, 2015

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