STATE OF MAINE SUPERIOR COURT Cumberland, ss. STATEOFhWNE Cumberland. ss. Ckwk'aOflce
RONALD RIDEOUT OCT 26 2015 Plaintiff RECEIVED v. Docket No. PORSC-CV-12-0481
JACKRABBIT LIMITED LIABILITY COMPANY
Defendant
and
CNA/SMRT, INC.
Intervenor
ORDER ON MOTIONS TO ENFORCE SETTLEMENT
This case is before the court on (i) the Motion to Intervene and to Enforce a Settlement
by CNA/SMRT, Inc. dated December 1, 2014, and (ii) Defendant's Motion to Enforce a
Settlement filed by Defendant Jackrabbit Limited Liability Company ("Jackrabbit") dated
August 26, 2015.
This is a personal injury case commenced after Plaintiff Ronald Rideout, a professional
engineer employed by the SMRT architectural firm, sustained injuries by slipping on ice and
falling in his employer's parking lot, which is alleged to be owned and maintained by Defendant
Jackrabbit. In addition to filing this case, Mr. Rideout filed a workers compensation claim for
his injuries and has been receiving benefits from CAN/SMRT.
Both motions seek specific enforcement of what Jackrabbit and CNA/SMRT contend
was a legally binding agreement to settle this reached as a result of discussions among the
attorneys for Mr. Rideout, Jackrabbit and CNA/SMRT. Mr. Rideout contends that the
agreement reached among the attorneys is not binding on him because it was not fully
1 (
integrated, because he did not actually authorize it, and because he lacked sufficient mental
capacity to understand and be bound by it.
CNA/SMRT was granted leave to intervene in order to enforce the alleged settlement
agreement by means of its motion to enforce. Jackrabbit thereafter filed its own motion to
enforce.
The motions were consolidated for an evidentiary hearing commenced on August 20,
2015 and completed October 7, 2015. All parties presented evidence in the form of sworn
testimony and exhibits. Following the hearing, the parties submitted proposed findings offact
and conclusions oflaw, at which point the court took the motions under advisement.
The issues raised are:
1. Was the settlement agreement developed among counsel an integrated and
enforceable contract?
2. Did Mr. Rideout have the mental capacity to enter into an enforceable
settlement agreement with Jackrabbit?
3. Did Mr. Rideout actually authorize attorney Peter Attorney Clifford to enter
into a binding settlement agreement?
Based on the entire record, the court hereby adopts the following findings offact and
conclusions oflaw, and denies both motions, on the ground that Mr. Rideout did not actually
authorize attorney Clifford to enter into a binding settlement agreement on Mr. Rideout's
behalf
Findings ofFact
1. PlaintiffRonald Mr. Rideout ("Mr. Rideout") filed this civil action against
defendant Jackrabbit, seeking damages from injuries he received as the result offalling in the
parking lot ofhis employer, SMRT, Inc. As a result of the same injuries, Mr. Rideout was also
2 (
receiving workers compensation benefits from SMRT's workers' compensation insurer, CNA.
Attorney Peter Attorney Clifford represented Mr. Rideout in this case. Attorney Peter Del
Bianco represented Jackrabbit in the defense of this case. Attorney Thomas Quartararo
represented the workers compensation carrier, CNA/SMRT.
2. Pursuant to Rule 16B ofthe Maine Rules of Civil Procedure, the parties engaged
in alternative dispute resolution (ADR) in July 201.3, with attorney Christopher Dinan serving
as the ADR neutral. The case was not resolved through ADR.
S. After the failed ADR effort, Attorney Clifford told Mr. Rideout he was unwilling
to take this case forward to trial, and would be seeking leave to withdraw as Mr. Rideout's
attorney in this case. They agreed that, notwithstanding his withdrawal, Attorney Clifford
would continue to negotiate towards a settlement on Mr. Rideout's behalf Attorney Clifford
thereafter filed a motion to withdraw as counsel for Mr. Rideout, which the court granted on
October 11, 201.3. Attorney Clifford nonetheless continued to represent Mr. Rideout during
settlement negotiations, and he continued to file motions with this court on Mr. Rideout's
behalf Attorney Clifford considered his continued services to Mr. Rideout following his
withdrawal from this case to constitute limited representation as permitted by the Maine Rules
of Professional Conduct.
4. On August 26, 201.3, Attorney Del Bianco counsel for Jackrabbit, sent an email
to Attorney Clifford conveying an offer to settle Mr. Rideout's claims for $40,000.
5. On November 7, 201.3 Attorney Clifford sent an email to Attorney Del Bianco,
copying Christopher C. Dinan, Esq., stating Mr. Rideout was willing to settle this case case for
$60,000, but the portion of the settlement to be withheld to satisfy the statutory workers
compensation lien was not yet resolved. Later that day Attorney Clifford sent a second email
3 to Attorney Del Bianco, again copying Christopher C. Dinan, Esq., this time stating he would
be working with Mr. Rideout to wrap up the settlement documents.
6. Counsel for one or more of the parties advised the court that the case was
settling, and the court responded by issuing an Order To File Docket Entries dated November
7, 201S, setting a SO-day deadline to complete the filings associated with settlement.
7. On November 15, 201S, Attorney Clifford replied to an email from Attorney Del
Bianco regarding a workers' compensation and MaineCare lien, advising Attorney Del Bianco
the deal- which in this context is clearly the settlement of the Mr. Rideout claim against
Jackrabbit- called for $5,000 to be paid to a workers' compensation carrier. He identified
Attorney Quartararo as counsel for that carrier. Attorney Clifford also advised he would be
getting Attorney Del Bianco the MaineCare lien.
8. On November 19, 201S Attorney Clifford forwarded an email to Attorney Del
Bianco, stating "Here is the WC lien agreement." Intervenor Exhibit 2A, at PDB0004 to
PDB0005. That forwarded email included (i) an email from Attorney Quartararo dated
October S 1, 20 IS setting forth certain terms relating to the separate but associated workers'
compensation action, and (ii) an email from Attorney Clifford to Attorney Quartararo dated
November 7, 201S in which Attorney Clifford represented Mr. Rideout had agreed to those
terms presented by Attorney Quartararo. Those terms included $5,000 of the $60,000
settlement proceeds would be paid to the workers' compensation carrier to satisfY its lien on
that settlement.
9. Also on November 19, 201S, Attorney Clifford sent Attorney Del Bianco another
email advising Attorney Del Bianco that Bruce Coffin ofMaineCare had confirmed MaineCare
had no lien in this case. Jackrabbit Exhibit 12.
4 10. That same day Attorney Del Bianco sent an email back to Attorney Clifford
attaching two documents, which he identified as (i) "our Settlement and Indemnity Agreement"
(Intervenor Exhibit 2A, at PDB0006 to PDB0007) and (ii) "the Medicare Addendum"
(Intervenor Exhibit 2A, at PDB0008 to PDB0011). In that email, Attorney Del Bianco stated
he understood Attorney Clifford had confirmed with MaineCare there was no MaineCare lien.
Attorney Del Bianco further explained he was including the Medicare Addendum because he
recalled Mr. Rideout had applied for and obtained SSDI and would therefore have been
Medicare eligible. Attorney Del Bianco completed that email by stating he would have
Middlesex issue two checks, one for $55,000 payable to Mr. Rideout and Attorney Clifford's
firm, and the other for $5,000 payable to Mr. Rideout and CNA Insurance Company, the
workers' compensation carrier. Intervenor Exhibit 2A, at PD0004. This Settlement and
Indemnity Agreement set forth the terms of a settlement of Mr. Rideout's civil action against
Jackrabbit, and that settlement included a total payment of $60,000 to or on behalf of Mr.
Rideout. See also, Jackrabbit Exhibit 11.
11. On November 20, 2013 Attorney Del Bianco sent Attorney Clifford a revised
Medicare Addendum (Intervenor Exhibit 2A, at PDB0013 to PDB0015) that differed from the
earlier Medicare Addendum only in including Attorney Clifford as a signatory. Jackrabbit
Exhibit 17, p. 3.
12. Attorney Clifford sent the Settlement and Indemnity Agreement, and the
Medicare Addendum, to Mr. Rideout for his consideration. Testimony of Attorney Clifford,
October 7, 2015.
13. On December 4, 2013 Attorney Clifford advised Attorney Del Bianco he needed
more time to manage a lump sum hearing for the associated workers' compensation action.
Attorney Del Bianco agreed to that extension. Jackrabbit Exhibit 13.
5 14. On December 12, 2015, Attorney Clifford sent an email to Attorney Del Bianco
seeking a further postponement of the lump sum hearing and Jackrabbit settlement until Mr.
Rideout received confirmation from Social Security and Medicare that there would be no liens
or offsets. Jackrabbit Exhibit 14.
15. Mr. Clifford thereby made it clear to Jackrabbit's counsel that the settlement
under discussion could not be consummated until it was clear how much of the $60,000
settlement would actually redound to Mr. Rideout's benefit instead of go to reimbursing payors
of various benefits.
16. Meanwhile, on December 7, 2014, Attorney Clifford filed the first of a series of
motions to extend the deadline for completing the settlement. The court granted this initial
motion to extend in December, and during 2014 granted the subsequent motions in the series,
extending the deadline into late 2014.
17. On April 5, 2014, Attorney Clifford sent an email to Attorney Del Bianco and
Attorney Quartararo advising them "Medicare has finally issued a letter indicating there is no
lien and the file is closed." He stated they needed to set up a lump sum settlement hearing, at
which time all releases would be exchanged, funds disbursed, and a Stipulation of Dismissal
would be filed in the Superior Court case. Jackrabbit Exhibit 15.
18. On April 14, 2014 Attorney Clifford wrote to the Workers' Compensation
Board, requesting he attend a May 6, 2014 Lump Sum Settlement hearing by telephone, and
stating the settlement primarily deals with a reduction in the lien repayment relating to the
associated third party liability case. Jackrabbit Exhibit 16.
19. On April 29, 2014 Attorney Del Bianco again sent Attorney Clifford a
Settlement and Indemnity Agreement, and Addendum to Release, for signatures, and he also
demanded a letter from Attorney Clifford stating Medicare would be fully reimbursed before he
6 distributes the settlement proceeds to his client. Jackrabbit Exhibit 17. That same day,
Attorney Clifford responded to Attorney Del Bianco, copying Attorney Quartararo, stating he
would momentarily send him a revised Medicare letter dated s/S1/14 indicating a zero balance
with Medicare. Attorney Clifford further pointed out that zero Medicare balance was no
surprise because Mr. Rideout's workers' compensation insurance was obliged to cover all the
medical bills caused by his accident. Id.
20. On May 5, 2014 Attorney Clifford sent an email to a Shari Leveille, copying
both Attorney Quartararo and Attorney Del Bianco, advising them Mr. Rideout was leaning
toward rejecting the proposed workers' compensation lump sum settlement that was set for a
hearing for the following day. Jackrabbit Exhibit 18. Shortly after sending that email, he sent
another to Attorney Del Bianco and Attorney Quartararo advising them "I believe Ron is set to
accept the liability settlement and payback the comp lien w/o a lump sum discount/reduction."
Id. Attorney Del Bianco replied by stating they will need to redo the settlement documents
and the checks in light ofthe workers' compensation lien. Id.
21. Later that day Attorney Del Bianco advised Attorney Clifford and Attorney
Quartararo that the settlement checks he had, including a $5,000 check for the workers'
compensation lien, would have to be reissued, noting the repayment to CNA (the workers'
compensation carrier) would now be much higher without a lump sum settlement of that claim.
Jackrabbit Exhibit 19. Attorney Clifford acknowledged that email, stating he thought they had
that larger number somewhere, and he then sent another email to Attorney Quartararo asking
ifhe received Attorney Del Bianco's email. Id.
22. On May 15, 2014 Attorney Quartararo, as counsel for CNA/SMRT, Inc. in the
claim asserted by Ronald Mr. Rideout before the Maine Workers' Compensation Board (WCB
File No. 09034487), sent an email to counsel stating the workers' compensation claim was not
7 (
settling, and also stating he would provide the updated workers' compensation lien information
ifthe Mr. Rideout/ Jackrabbit case settled. Jackrabbit Exhibit 20. Attorney Clifford responded
by stating they would have to review the attorney's fees and costs to calculate the adjusted
statutory lien. Id. Attorney Del Bianco responded that same day stating Attorney Clifford and
Attorney Quartararo should determine the workers' compensation lien and then let him know
that number so he could obtain the appropriate checks for settling the civil case. Id.
23. On May 27, 2014, Attorney Quartararo sent email correspondence to Attorney
Clifford and Attorney Del Bianco identifying a total of$34,140.57 in indemnity and medical bill
payments that had been made by CNA on Mr. Mr. Rideout's workers' compensation claim. In
that email correspondence, Attorney Quartararo offered to settle a workers' compensation lien
that would be created by any settlement of Mr. Rideout's civil action for that amount less 1/srd
for attorney fees plus documented costs. Intervenor Exhibit 1A, at TQ0001 to TQ0002 and
TQ0006 to TQ0007.
24. That same day, Attorney Quartararo had a further email exchange with
Attorney Del Bianco, in which Attorney Clifford was copied, after which Attorney Quartararo
concurred the lien amount was $22,760.S8less a pro rata share ofthe litigation costs.
Intervenor Exhibit 1A, at TQ0006.
25. Attorney Del Bianco then sent Attorney Clifford an email asking if he had the
signed release from PlaintiffMr. Rideout, indicating Attorney Del Bianco and his carrier
wanted to close this file. Intervenor Exhibit lA, at TQ0006.
26. Over May 29 and SO, 2014, Attorney Quartararo, Attorney Del Bianco and
Attorney Clifford participated in email exchanges through which they collectively reached an
agreement that the amount of the CNA lien would be set at $21,125.00. Intervenor Exhibit 1A,
8 (
at TQ0005. However, Mr. Clifford had not discussed with Mr. Rideout the amount of the
CNA lien, and did not have authority to settle the case on the basis of that lien amount.
27. Attorney Del Bianco then, on May SO, 2014, sent Attorney Clifford an email
asking Attorney Clifford to let him know when he had a signed release, and telling Attorney
Clifford he would then request two settlement checks: (i) a two party check for $21,125.00 to
Attorney Quartararo's client and Plaintiff Mr. Rideout, and (ii) a two party check for
$S8,87 5.00 to Plaintiff Mr. Rideout and Attorney Clifford. Intervenor Exhibit 1A, at TQ0004
-TQ005.
28. Following that email, and still on May SO, 2014, Attorney Quartararo sent an
email to Attorney Clifford advising him to remind Plaintiff Mr. Rideout of the "holiday" his
client would receive on any further workers' compensation expenses and payments for the
balance of the settlement funds minus fees. Intervenor Exhibit 1A, at TQ0004.
29. On June 2, 2014, Attorney Clifford sent a reply email to Attorney Quartararo,
stating "Yes that's been done" and adding Attorney Quartararo should also understand that
Attorney Clifford and Mr. Rideout would expect Attorney Quartararo's client to reimburse
ss% of all medical and/ or indemnity benefits to reflect attorney's fees going forward until such
"holiday" is used up. Intervenor Exhibit 1A, at TQ0004.
so. By June 2, 2014 Attorneys Attorney Clifford, Attorney Quartararo and Attorney
Del Bianco had therefore engaged in further discussions aimed at reaching an agreement over
the workers' compensation lien that would be created by the $60,000 settlement of Mr.
Rideout's claim against Jackrabbit. In these additional discussions Attorney Clifford had
advised counsel there was no MaineCare lien and no Medicare lien. Attorney Clifford informed
Attorney Quartararo he had advised Mr. Rideout the workers' compensation carrier would
receive a "holiday" for any further workers' compensation expenses and payments for the
9 {
balance of the settlement funds minus fees. However, based on Mr. Rideout's testimony at the
hearing that he did not understand the payment holiday concept or its effect on the settlement,
the court is unable to find that he had a clear understanding of this material provision of the
pending settlement.
3 1. During the course of these additional discussions Attorney Del Bianco had sent
Attorney Clifford revised versions of his Settlement and Indemnity Agreement and Addendum
to Release, but all counsel acknowledged those would have to be further revised to reflect the
new workers' compensation lien amount.
32. However, at no time during these discussions during the spring of2014 had Mr.
Rideout actually authorized Attorney Clifford to settle the case on the terms discussed among
the three attorneys. In fact, during the spring and summer of2014, Mr. Rideout underwent
two extended periods of in-patient treatment for severe mental illness at two psychiatric
hospitals. He has bipolar disorder, and, at various times during the spring and summer of2014
was experiencing delusional and psychotic thoughts that significantly affected his perception of
reality, and did in fact render him incapable, at least at different points in 2014, of making
complex personal or financial decisions, such as settling a lawsuit.
33. Mr. Rideout's second psychiatric hospitalization in 2014 began August 10 and
lasted seventeen days. From the fact that Mr. Rideout was hospitalized for so long, the court
infers his mental state was such as to render him incompetent to make a knowing, voluntary
and intelligent decision regarding settlement, at least during the seventeen-day period. After
his release from the psychiatric facility on August 27, 2014, Mr. Rideout was able to resume
contact with Attorney Clifford about settlement. However, his mental health needs continued,
and his medical records reflect that he had seven appointments for mental health treatment
during the eight weeks after leaving hospital August 27.
10 (
34. During October 2014, Mr. Rideout and Attorney Clifford resumed their
communications about settlement by email and by telephone. Jackrabbit Exhibit 28; Intervenor
Exhibit 3; Jackrabbit Exhibit 31; testimony of Attorney Clifford, October 7, 2015; testimony of
Mr. Rideout, October 7, 2015. Attorney Clifford contacted Mr. Rideout on October 2, 2014
because he was hoping to effectuate a liability settlement before a deadline set by the Court for
completing such a settlement expired the following month. Jackrabbit Exhibit 27 and
testimony of Attorney Clifford, October 7, 2015.
35. On October 15, 2014 Attorney Clifford and Mr. Rideout had a lengthy telephone
conversation that Attorney Clifford summarized just afterward in a memorandum written for
the file. Attorney Clifford was aware Mr. Rideout had experienced mental health issues, so he
made a point of noting in his memorandum that Mr. Rideout seemed very lucid and intelligent
during the telephone call. Testimony of Attorney Clifford, October 7, 2015.
36. He also documented Mr. Rideout was having trouble paying his bills and that he
would like the money from the liability case. Attorney Clifford also recorded Mr. Rideout did
not want to give up his workers' compensation rights, and that he wanted to place the workers'
compensation lien amount from the liability settlement in escrow.
37. Mr. Rideout was, at this time, going through what he termed a "temporary
financial problem." Although he was receiving roughly $1,800/month in social security
disability benefits, he was spending all his money and that was causing his financial problem.
Testimony ofMr. Rideout, October 7, 2015.
38. At some point during 2014, Mr. Rideout had begun working with Chelsea Suvlu,
one of the workers compensation advocates who provide no-cost legal services to assist injured
workers with their claims before the Maine Workers Compensation Board.
11 39. On October 16; 2014 Attorney Clifford sent an email to Attorney Del Bianco,
copying Attorney Quartararo, stating Mr. Rideout had suggested he would be able to settle his
liability case against Jackrabbit if the workers' compensation lien was placed in escrow in
Attorney Clifford's IOLTA account pending resolution ofhis workers' compensation claim.
Jackrabbit Exhibit 22.
40. Between October 17 and October 20, 2014, Attorney Clifford and Attorney
Quartararo exchanged additional emails regarding this new proposal from Mr. Rideout of
having the workers' compensation lien placed in escrow, pending settlement of the workers'
compensation case, in order to facilitate Mr. Rideout's settlement of his civil action against
Jackrabbit. Jackrabbit Exhibit 23 and Jackrabbit Exhibit 24.
41. On October 22, 2014, Attorney Clifford sent an email to Attorney Del Bianco
and Attorney Quartararo in which he first confirmed recent discussions on this case and stating
(a) the $60,000 settlement of the liability case had been pending for some time, and (b) the
workers' compensation case was proceeding forward. He then stated in that email that his
client, Mr. Rideout, had recently instructed him to settle that liability case and to put the
workers' compensation lien in his escrow account pending resolution of the workers'
compensation case. Attorney Clifford also stated Attorney Quartararo had agreed to this
arrangement on that day, and that Attorney Quartararo's client had waived its right to
subrogation against Attorney Del Bianco's client so that the Mr. Rideout/ Jackrabbit LLC case
can resolve. Attorney Clifford concluded that email by stating he would have Mr. Rideout sign
the release documents that had been prepared by Attorney Del Bianco. Intervenor Exhibit 1A,
at TQ0012.
42. Immediately after Attorney Clifford sent his October 22, 2014 email to Attorney
Del Bianco and Attorney Clifford, advising them Mr. Rideout had recently instructed him to
12 settle that liability case and to put the workers' compensation lien in his escrow account
pending resolution of the workers' compensation case, he forwarded that email to Mr. Rideout
with the following message: "Ron - Per your recent instructions. fyi ... release to follow by
mail and email today." Jackrabbit Exhibit 29.
4S. The following day, on October 2S, 2014, Attorney Del Bianco sent an email to
Attorney Clifford with the revised settlement documents. In so doing, he pointed out to
Attorney Clifford that (i) he had removed the language regarding the allocation of settlement
proceeds that was in lines 2 and s on page one of the earlier Settlement and Indemnity
Agreement, and that he had re-dated that document; and (ii) for the Addendum, he had only re-
dated it. Attorney Del Bianco also advised Attorney Clifford he had dictated a separate release
for Attorney Quartararo's client that he would be sending to Attorney Quartararo later that
day. Attorney Del Bianco finished that email by asking Attorney Clifford when he thought he
could get his documents signed by Plaintiff Mr. Rideout. Intervenor Exhibit 1A, at TQ0011
and Intervenor Exhibit 2A, at PDB0017 to PDB0018.
44. Those revised settlement documents were (i) the Settlement and Indemnity
Agreement (Intervenor Exhibit 2A, at PDB0019 to PDB0020) and the Addendum to Release
(Intervenor Exhibit 2A, at PDB0021 to PDB002S). In a separate October 2S, 2014letter,
Attorney Del Bianco sent Attorney Quartararo a Release and Waiver ofWorker's
Compensation Lien and of Subrogation to be completed by CNA. Intervenor Exhibit 2A, at
PDB0025 to PDB0027.
45. On October 2S, 2014, Mr. Rideout sent an email to Attorney Clifford, replying
to Attorney Clifford's "Per your instructions email" from the previous morning, stating the
following:
I'm sorry that you went forward with a settlement. I thought you were going to talk to Chelsea about it as she said there was no
13 way to do it. I am living hand to mouth and owed my landlord money so I had been inclined to have to settle. It looks like I'm going to be good financially so there is no need to settle. Besides after what you said yesterday about this being worth $1 Mil, I would be stupid to settle. If you want out then call Bornestein.
Jackrabbit Exhibit so.
From this email, it is crystal-clear that Mr. Rideout actually believed that Attorney
Clifford was going to confer with Mr. Rideout's workers compensation advocate before
continuing with the settlement dialogue. It is also clear that Mr. Rideout believed his
advocate's position to be that the settlement as contemplated was unworkable-"she said there
was no way to do it." Whether Mr. Rideout actually ever directed Mr. Clifford to confer with
the advocate before proceeding with settlement discussions is unclear, and exactly what his
advocate had told Mr. Rideout about the feasibility of settlement is also unclear. But what is
clear from Mr. Rideout's email is that he did not expect, nor had he in fact actually authorized,
attorney Clifford to complete the settlement without conferring with the workers compensation
advocate first, to determine whether the proposed settlement could be completed without
jeopardizing Mr. Rideout's objectives for his workers compensation claim.
46. On the other hand, there is also nothing to indicate that Attorney Clifford
understood, or should have understood, that he was not in fact authorized to proceed with the
settlement. His October 16 memorandum to the file makes no mention of Mr. Rideout having
directed him to confer with the advocate. It is therefore possible that Mr. Rideout never
specifically directed attorney Clifford to confer with the workers compensation advocate before
proceeding with settlement.
47. Attorney Clifford responded to Mr. Rideout's email the same afternoon with an
email to Mr. Rideout summarizing their recent communications and also pertinent historical
points. Jackrabbit ExhibitS 1. Among other things, Attorney Clifford wrote, "As you have
14 noted in today's emails, last week you were inclined to accept the pending $60,000 liability
settlement (to pay bills). This week, you have indicated you want to try the liability case, as
well as the workers comp case."
48. Later in the day of October 23, 2014, Attorney Clifford sent an email to
Attorney Del Bianco and Attorney Quartararo stating he had just learned Mr. Rideout was
"not interested in a settlement at this time." Intervenor Exhibit 1A, at TQOOIO.
49. There was then an exchange of emails between Attorney Del Bianco and
Attorney Clifford (i) in which they noted their mutual surprise in this assertion by Mr. Rideout,
and (ii) regarding Attorney Clifford's request to give Mr. Rideout additional time to secure new
counsel. Intervenor Exhibit IA, at TQ00010- TQ0009.
Application ofLaw to Fact
The parties largely agree on the framing of issues and on the applicable law, and also
agree on most of the underlying facts. Where they part company is on how the law applies to
the largely undisputed facts and what inferences are to be drawn.
The issues as this Order will address them are as follows:
( 1) Was the agreement that was developed as the result of discussion among the
attorneys sufficiently integrated as to material terms to constitute an enforceable contract?
(2) If so, did Mr. Rideout actually authorize Attorney Clifford to accept the terms of
the contract?
(s) If so, did Mr. Rideout suffer from a mental health condition that rendered his
authorization and therefore the contract voidable by him?
On the first two issues, the Defendant and Intervenor have the burden of persuasion. In
other words, they have burden to show that the settlement agreement constitutes an
integrated, enforceable contract, and that Mr. Rideout is bound by it because he actually
15 (
authorized it. The reason why the Defendant and Intervenor have the burden on the second
issue is simply that any party seeking to enforce a contract has to prove mutual assent by the
parties as an element of the claim. See Lane v. Maine Cent. R. Co., 572 A.2d 1084, 1085
(Me.1990) (party seeking to enforce settlement agreement negotiated by opposing party's
counsel had the burden to prove opposing counsel was "acting within his authority"). In this
case, Defendant and Intervenor claim Mr. Rideout assented to the terms of what they claim to
be a binding settlement agreement by actually authorizing Attorney Clifford to convey his
assent. Regarding the third issue, lack of competence to enter into contracts is in the nature of
an affirmative defense, so Mr. Rideout has the burden of persuasion.
Existence of an Integrated Enforceable Agreement
"Settlement agreements are analyzed as contracts, and the existence of a binding
settlement is a question offact. We have recognized a distinction between a preliminary
"agreement to agree" and a binding settlement agreement. In order to be binding, a settlement
agreement requires the mutual intent of the parties to be bound by terms sufficiently definite to
enforce." Muther v. Broad Cove Shore Ass'n, 2009 ME 37, ~6, 968 A.2d 539, 541, citing Marie v.
Renner, 2008 ME 73, ~7, 946 A.2d 418, 420; White v. Fleet Bank ofMe., 2005 ME 72, ~ 1S, 875
A.2d 680, 683; Forrest Assocs. v. Passamaquoddy Tribe, 2000 ME 195, ~9, 760 A.2d 1041, 1044.
The discussion among attorneys did not produce an integrated agreement until October
20, 2015, when the agreement regarding placing a portion of the settlement proceeds in escrow
was finalized. However, as of that date, the terms of settlement were documented in emails
among counsel and in the various settlement documents that Attorney Del Bianco had prepared
and provided to Attorney Clifford for review. A party will be bound to a contract even where
the necessary mutual assent was communicated by email. See McClare v. Rocha, 2014 ME 4, ~ 12,
86 A.3d 22, 26.
16 Accordingly, the Defendant and Intervenor have met their burden to establish that, by
October 22, 2014, the attorneys had developed a proposal to settle the case that was sufficiently
complete and integrated to constitute an enforceable contract upon being agreed to by the
parties. Whether Mr. Rideout agreed to it is the next question.
Whether Mr. Rideout Actually Authorized Attorney Clifford to Enter into a Binding Settlement Agreement
The analysis therefore turns to whether the Defendant and Intervenor have proved that
Mr. Rideout assented to the agreement that had been developed by the attorneys. The answer
to that question depends, in turn, on whether Mr. Rideout actually authorized Attorney
Clifford to enter into a binding agreement to settle this case. 1
Under Maine law, "there are two types of actual authority-- express authority or
implied authority; both are to be distinguished from apparent authority. Express authority is
that authority which is directly granted to or conferred upon the agent in express terms by the
principal. Implied authority, however, is actual authority circumstantially proven from the
facts and circumstances attending the transaction in question." Libby v. Concord Gen. Mut. Ins.
1 In this case, the Defendant and the Intervenor are not arguing their position on the basis of the apparent authority doctrine. Their proposed findings of fact and conclusions oflaw submitted after the hearing-as well as the case on which they primarily rely-rest on an actual authority analysis. See Michaud v. Nexxlinx if Maine, Inc., 2014 U.S. Dist. LEXIS 141522.
Moreover, it is by no means clear that an apparent authority would be legally sufficient in this context. Neither party has cited to any Maine decision in which a settlement agreement made by an attorney on behalf of a client was enforced without proof that the client had assented to the terms of the settlement. The case primarily relied on by the Defendant and Intervenor involved a specific finding by the court that the client against whom the settlement agreement was being enforced had authorized his attorney to accept it. See id., 2014 U.S. Dist. LEXIS 141522.
Further, the record here does not support an apparent authority argument, which would require some evidence that Rideout had held out Attorney Clifford to the Defendant and the Intervenor as having authority to settle the case without his express consent, and there is no evidence of such import.
17 Co., 452 A.2d 979, 981-82 (Me. 1982), quoting Stevens v. Frost, 140 Me. 1, 7, 32 A.2d 164, 167
(1943) (internal quotes, citations and ellipses omitted).
Although the issue is not entirely clear, the rule in Maine appears to be that an attorney
needs a client's express authorization in order to settle a case. It has been "a long established
principle in Maine and many other jurisdictions that 'an attorney clothed with no other
authority than that arising from his employment in that capacity has no power to compromise
and settle or release and discharge his client's claim.'" Perkins v. Philbrick, 443 A.2d 73, 74 (Me.
1982), quoting PomerrYJ v. Prescott, 106 Me. 401,407, 76 A. 898 (1910). See also Lane v. Maine
Central Railroad, supra, 572 A.2d at 1084-85 (settlement negotiated by attorney not binding on
client who did not actually agree to it). The Maine Rules of Professional Conduct echo this
principle in requiring that the decision to settle a civil case be made only by the client, not by
the lawyer. See Me. R. Prof Con d. 1.2, Comment ( 1). 2
The Defendant and Intervenor argue that Mr. Rideout's express consent to the terms of
settlement was not necessary, as long as Attorney Clifford reasonably believed that express
consent had been given. Their post-hearing filing contends that "if the agent's understanding
is reasonable, he has actual authority to act in accordance with that understanding, even ifthe
principal later shows the agent was mistaken." Intervenor's And Defendant's Proposed Post-
Hearing Findings Of Fact And Conclusions Of Law On Motions To Enforce Settlement, at 18,
citing RESTATEMENT (THIRD) OF AGENCY§ 2.02, cmt. c.
This indeed is the law of principal-agent generally, but that law does not necessarily
transpose in its entirety into the attorney-client relationship. The Maine case of Lane v. Maine
Central Railroad Company plainly indicates that an out-of-court settlement agreement is not
~ This apparently was not always the rule in Maine. See Bonney v. Morril~ 57 Me 68, 74 (1869) ("[T]he employment of a counsellor and attorney at law to prosecute a suit ... carries with it an authority to such attorney, to compromise the claim ... if he deems it best for the interest of his client ... ")
18 (
binding on the client, regardless of what the attorney might believe, unless the client has
actually agreed to it. 572 A.2d 1084, 1085 (Me.l990).
Thus, the fact that Attorney Clifford was acting on behalf of Mr. Rideout for purposes
of settlement did not give him implied authority to settle this case in the course of negotiations
with opposing counsel, without Mr. Rideout's express consent. Thus, the precisely framed
issue is, have the Defendant and Intervenor proved that Mr. Rideout expressly consented to the
terms of settlement agreed to on his behalf by Attorney Clifford?
This court's answer is that they have not, based on a combination of several points in
the evidence. First, Mr. Rideout's email response to Mr. Clifford-" I'm sorry that you went
forward with a settlement. I thought you were going to talk to Chelsea about it as she said
there was no way to do it" -could hardly be plainer in indicating that Attorney Clifford was
not authorized to settle the case without conferring with the workers compensation advocate
about whether the settlement was workable. Second, Mr. Rideout's claim that he did not
understand-and thus had not agreed to-some aspects of the settlement, such as the payment
holiday concept and how it would work in this case-is credible and not refuted in the evidence.
Third, Mr. Rideout was recovering from mental illness sufficiently severe to require an in-
patient psychiatric hospitalization of seventeen days. While this may not have rendered him
legally incompetent as of October 22-23, 2014, it has a definite bearing on whether he gave a
knowing and intelligent assent to the settlement.
Because the Defendant and Intervenor have failed to meet their burden on proof of Mr.
Rideout's assent, the inquiry need not address the issue ofwhether Mr. Rideout's mental illness
meant that his mental health condition rendered him legally incapable of entering into a
binding contract. As just noted, his mental health condition is a relevant factor in the court's
determination that he did not assent to the settlement proposal developed by the attorneys, but
19 it is not the dispositive factor. The dispositive factor is that Mr. Rideout did not authorize
Attorney Clifford to assent to the settlement agreement on his behalf, without first consulting
with Mr. Rideout's workers compensation advocate.
The failure of Defendant and the Intervenor to prove assent by Mr. Rideout plainly
distinguishes this case from the case on which they rely, Michaud v. Nexxlinx cifMaine, Inc., 2014
U.S. Dist. LEXIS 141522.
Accordingly, it is hereby ORDERED: The Motion to Enforce a Settlement filed by
Intervenor CNA/SMRT, Inc. dated December 1, 2014, and Defendant Jackrabbit LLC's
Motion to Enforce a Settlement dated August 26, 2015 are hereby denied.
As far as the court is aware, the entry of this Order brings to an end the reason for
CNA/SMRT's intervention. Counsel for Plaintiff and Defendant are requested to confer and
submit a proposed schedule for the remainder of this case. For counsel's guidance in that
endeavor, the court is prepared to consider reopening discovery and resurrecting other
deadlines up to a point, but, given the length of time the case has been pending, the court
intends to bring it to trial as soon as the schedule permits.
Pursuant to M.R. Civ. P. 79(a), the Clerk is hereby directed to incorporate this Order by
reference in the docket.
Dated October 26, 2015 A.M. Horton Justice
STATE Of twilNE Ctlfnbflfland. • Cfertc'g Ofb OCT 26 2015 RECEIVED
20 Humphrey Johnson, Esq. lntevenor
David Van Dyke, Esq. Plaintiff
Peter Del Bianco, Esq. Defendant