Reported / Citable
Background
Demond Houston sued Wal-Mart for personal injuries sustained when struck by a pole at a Wal-Mart store. His attorneys, John Daspit and Robert Morse of the Daspit Law Firm, represented him in the lawsuit. After mediation failed on December 16, 2025, Houston instructed his attorneys to set the case for trial, stating he believed it was worth $10 million and wanted a jury to decide. On January 12, 2026, without notifying Houston, Daspit and Morse told Wal-Mart’s counsel that Houston would accept a $400,000 settlement. The attorneys did not inform Houston of the settlement until three days later, on January 15, when he requested a case update. Houston immediately protested via text message that “nothing was resolved” and that he wanted the case to “go to trial” and let “a jury decide.” Despite this explicit rejection, on January 16 the attorneys filed an agreed take-nothing judgment, which the court entered on January 20.
The Court’s Holding
The court granted Houston’s motion for relief from judgment and vacated the settlement. The court found that Daspit and Morse did not have actual authority to settle the case. Although the attorneys claimed they had received Houston’s authorization during two phone conversations—one at the conclusion of mediation and another on December 30—the court determined that any such authority had terminated by January 2026 under Agency law principles. The Restatement (Second) of Agency §105 provides that when no time is specified for authority, it terminates after a reasonable period, determined by the nature of the authorized act, formality of authorization, and likelihood of changes in the principal’s intentions.
The court found it unreasonable for the attorneys to settle without contemporaneous communication and confirmation. The first alleged authorization occurred at the end of failed mediation when settlement appeared remote; the second December 30 conversation lasted only 15 seconds to one minute with little substantive discussion. Critically, the attorneys settled without notifying Houston beforehand and ignored his explicit text-message protest after learning of the settlement. The court concluded that the attorneys’ own conduct—failing to communicate with Houston and filing the judgment despite his clear rejection—evidenced they did not reasonably believe he still intended them to act. The fact that Daspit and Morse obtained what they considered a realistic settlement, rather than following Houston’s instructions to go to trial, appeared to override their client’s explicit wishes.
Key Takeaways
- Attorneys lack actual authority to settle without client authorization, and authority to settle terminates after a reasonable period absent ongoing communication and reaffirmation.
- When circumstances suggest a principal’s intentions may have changed—particularly after the principal has explicitly rejected a settlement—an agent cannot reasonably rely on outdated authorization from earlier conversations.
- Attorneys’ failure to inform a client of a settlement before accepting it, and their decision to file dismissal paperwork despite the client’s express protest, demonstrates lack of authority and supports vacatur.
- An agent’s substitution of its judgment about what is “realistic” for the principal’s explicit instructions can vitiate claimed authority and subject settlement agreements to challenge.
Why It Matters
This decision reinforces critical boundaries on attorney settlement authority. While attorneys have broad discretion in litigation tactics, they cannot override a client’s clear directive to proceed to trial or accept settlement without affirmative authorization contemporaneous with the settlement offer. For practitioners, the ruling underscores the necessity of documented, real-time communication with clients before accepting settlement proposals—particularly where prior authority is old, informal, or conditional on circumstances that have changed. The court’s emphasis on the attorneys’ failure to loop Houston back in after the mediator’s proposal issued suggests that passage of time alone, combined with changed circumstances, can extinguish settlement authority even where oral authorization once existed.
For clients, the decision vindicates the right to have cases tried when settlement authority has not been clearly reaffirmed. The court’s holding that the attorneys’ good-faith belief in the settlement’s reasonableness did not overcome their lack of actual authority may also carry implications for whether malpractice liability can follow from unauthorized settlements, though the opinion does not address that issue.