McGee v. Cartoon Network, Inc.

Not for Publication in West's Federal Reporter
United States Court of Appeals
For the First Circuit
No. 10-1070
TIMOTHY MCGEE,
Plaintiff, Appellant,
v.
CARTOON NETWORK, INC. AND TURNER BROADCASTING SYSTEM, INC.,
Defendants, Appellees,
_____________________
ANDRE BENJAMIN 3000; MOXIE TURTLE, INC.,
Defendants.
____________________
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. Edward F. Harrington, Senior U.S. District Judge]
Before
Lipez, Howard and Thompson,
Circuit Judges.
Timothy McGee on brief pro se.
Gordon P. Katz, Benjamin M. McGovern and Holland & Knight
LLP, on brief for appellees.
July 8, 2010
Per Curiam. Appellant-plaintiff Timothy McGee
appeals pro se from the district court's order summarily
granting defendant's motion to enforce an agreement to settle
an action claiming that defendants misappropriated and
infringed his copyrights and other intellectual property in
connection with their production and broadcast of an animated
television series. The district court, following a non-
evidentiary hearing at which neither McGee nor his counsel
(whose motion to withdraw had been granted several weeks
earlier) appeared, determined that an agreement had been
reached in an e-mail exchange between plaintiff's counsel and
defendants' counsel and entered an order enforcing "the
following three essential elements of the June 10, 2009
settlement agreement: 1) payment of $12,000 to the plaintiff;
2) a general release of all of the defendants and their
affiliates; and 3) dismissal with prejudice of this action in
its entirety."
On appeal, McGee disputes that a binding agreement
was ever reached on all material terms, conceding that he had
agreed to the dollar figure for settlement, but that non-
pecuniary terms of equal importance to him (concerning his
rights to royalties, credits, and continuing rights in his
copyrighted material) were never agreed upon. He further
disputes the court's finding that his attorney had actual or
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apparent authority to enter into any settlement agreement
evidenced by the exchange of e-mails between counsel on June
10, 2009.
We need not resolve whether the June 10, 2009 e-mail
exchange relied upon by appellees evinces a final agreement on
all material terms because we conclude that the district court
erred in summarily determining that McGee's attorney had actual
or apparent authority to enter into that agreement. Because a
genuinely disputed question of material fact existed regarding
such authority, the court erred in deciding the question
without an evidentiary hearing. See Fidelity and Guaranty Ins.
Co. v. Star Equipment Corp., 541 F.3d 1, 5 (1st Cir. 2008).
The evidence before the district court did not compel
a finding that McGee's attorney had authority to enter a
binding settlement agreement on his behalf. See Malave v.
Carney Hospital, 170 F.3d 217, 221 (1st Cir. 1999). The
district court's reliance upon the fact that McGee's attorney
was the attorney-of-record on this matter is misplaced. "[A]
general retainer, standing alone, does not permit an
unauthorized attorney to settle claims on his client's behalf."
Malave, 170 F.3d at 221. That principle placed defendants on
notice that McGee's attorney's statements about his authority
"did not suffice, without more to bind [McGee] to a settlement
agreement." Id. at 221 n.6; see also United States v.
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International Bhd. of Teamsters, 986 F.2d 15, 20 (2d Cir. 1993)
("customarily only the representation of the principal to the
third party can create apparent authority, not the
representation of the agent alone").
The district court relied upon McGee's attorney's
representation to the magistrate judge that he had actual
authority to settle the case on the terms communicated in the
June 10 e-mail exchange. But, at the same hearing, McGee
represented that his attorney did not possess authority to
enter a final settlement agreement on those terms. He
maintained that "the only thing we had agreed on that's in that
email was a dollar amount of $12,000." "We cannot conceive of
a more fundamental dispute concerning the existence vel non of
a settlement agreement than occurs when a litigant and her
lawyer wrangle over whether the former imbued the latter with
authority to settle." Malave, 170 F.3d at 221; see also Michaud
v. Michaud, 932 F.2d 77, 81 (1st Cir. 1991) ("In circumstances
where a former attorney and his client dispute the giving of
authority, courts generally require the holding of an
evidentiary hearing on the question of authorization").
The district court relied upon McGee's affidavit as
evidence that his attorney had actual authority to enter into
the settlement agreement. Specifically, it relied upon McGee's
statement that he was represented by his counsel, and that he
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had "had settlement discussions with [him] about settling the
case for twelve thousand dollars ($12,000)." As discussed
above, "the retainer alone does not suffice to vest a lawyer
with settlement authority." Malave, 170 F.3d at 221 n. 6. And
the fact that McGee and his attorney may have discussed and
agreed upon one of the material terms of a preliminary
settlement offer is not sufficient to establish that McGee
authorized him to enter a final settlement agreement where
other material terms had not been agreed upon.
Finally, in concluding that McGee's attorney had
apparent authority to enter the settlement agreement on June
10, the district court stated that it was adopting the
reasoning in Bistany v. PNC Bank, NA, 585 F.Supp.2d 179, 183-84
(D Mass. 2008). Reliance upon that district court case appears
to be misplaced. Bistany refers to the following definition of
"apparent authority" under Massachusetts law:
Apparent authority "results from conduct
by the principal which causes a third
person reasonably to believe that a
particular person . . . has authority to
enter into negotiations or make
representations as his agent."
Id. at 182 (quoting Hudson v. Mass. Property Ins. Underwriting
Ass'n, 386 Mass. 450, 436 (1982)). However, neither the
defendants, in their memorandum in support of their motion to
enforce settlement, nor the district court identified any
"conduct by the principal [McGee]" which caused the defendants
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to believe that his attorney had authority to enter a binding
settlement agreement on his client's behalf.
The legal authority cited in Bistany is inapposite.
In In re the Petition of Mal de Mer Fisheries, Inc., 884
F.Supp. 635, 639 (D. Mass. 1995), the court specifically found
that the attorney acted with his client's authorization when he
informed defendant's counsel that his client accepted its offer
and that "this is not a case where a former attorney and client
dispute the giving of authority thereby necessitating an
evidentiary hearing." And in Petty v. Timken Corp., 849 F.2d
130, 132-33 (4th Cir. 1988) the court stated that it was
"undisputed that [the defendant] made an offer of settlement,
that the offer was communicated to [the plaintiff] by his
counsel, that [the plaintiff] agreed to accept the settlement
after conference with his attorney, and that [the plaintiff]
reaffirmed his acceptance in open court." Therefore, Bistany
does not identify any legal support for the proposition that an
attorney's representation that (as an agent) he has authority
to settle a case on behalf of his client (the principal) is
alone sufficient to establish apparent authority.
The evidence before the district court did not compel
the conclusion that McGee's attorney possessed actual or
apparent authority to enter into a binding settlement agreement
with defendants on the terms that they now seek to enforce.
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Therefore, the district court erred in summarily granting the
motion to enforce the settlement agreement without taking
evidence and resolving the disputed issues of material fact.
See Malave, 170 F.3d at 222-223.
The district court's judgment is vacated and the case
is remanded for proceedings consistent with this opinion.
Appellant's motion to file an appendix to his reply brief is
denied as moot. His other pending motions are denied without
prejudice to his filing them in district court on remand.
So ordered.
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