MONTGOMERY, Ala. (Legal Newsline) - An insurance company that paid out $15,000 to settle claims over the death of an Alabama man may have to relitigate the case after the Alabama Supreme Court ruled the lawyer who negotiated the deal may not have been authorized to do so.
A further evidentiary hearing is required to determine whether the lawyer who negotiated the settlement could sign a release from all claims on behalf of the dead man’s estate, the Supreme Court ruled. A dissenting justice said the decision will make it harder to settle cases because insurers now have to double-check with plaintiffs to make sure their lawyers are authorized to sign an agreement on their behalf.
Charles Evans was riding in a car with his brother and sister-in-law in 2016 when they were in an accident with a car driven by Terry Short. Charles was taken to Shelby Baptist Medical Center and discharged that night, but he collapsed the next morning and was taken to UAB Hospital. Later that day, Nicholas Vocino with the Slocumb Law Firm filed a medical malpractice lawsuit on his behalf against Shelby Baptist, and at 8 p.m. that night Evans died.
Vocino later negotiated a settlement for the $50,000 limit of Short’s policy with National General Insurance Co. on behalf of the three occupants of the car in exchange for a release of all claims stemming from the accident. Meanwhile, the county probate court appointed Robert Bowers to represent Evans’ estate.
The insurance company sent a $15,000 check made out to Evans’s estate, along with a release of all claims, and it was endorsed by someone who signed the name Robert Bowers. But Bowers denied he signed the check and said none of the money went into the estate. Evans’ brother also signed a release on behalf of the estate along with his own in exchange for another $15,000 check and $20,000 for his wife.
Things grew more complicated when attorney James R. Monus filed a wrongful-death suit against Shelby Baptist and others and claims for personal injuries suffered by Evans in the accident. Short’s insurer moved to dismiss the wrongful-death claim, citing the release Evans’s brother had signed.
Bowers argued Alabama law required all four of Evans’s heirs to sign the release. Either way, Bowers said, as court-appointed representative of the estate only he was authorized to release the claims. He also submitted an affidavit stating he hadn’t signed the settlement check with his name on the back.
A trial judge dismissed the case against Short anyway, as well as the wrongful-death suits against the hospital and others. But the Alabama Supreme Court reversed those decisions, ruling the hospitals weren’t included in any release and it wasn’t clear whether the release of claims against Short was legitimate.
Bowers argued only he could sign a release of claims against Short, although he didn’t specifically deny granting that authority to Vocino, the lawyer who initially represented Evans. With no evidence to prove the question either way, the court ruled, it must go back to trial court for an evidentiary hearing.
Justice William Sellers partially dissented, joined by Justice Alissa Wise. The decision places insurance companies “in the awkward position of intruding into the attorney-client relationship and thus needlessly convoluting the settlement process,” he wrote.
“We should be careful not to place an unnecessary burden on third parties to double-check, if not triple-check, that the lawyer who sent them a demand letter is truly the lawyer for the client and has authority to bind the client to a settlement,” he wrote.