Opinion
D051424
10-29-2008
THC-ORANGE COUNTY, INC., Plaintiff and Respondent, v. ARNOLD SCHIMSKY, as Trustee, etc., Defendant and Appellant; JUDY LOPRIENO, Movant and Appellant.
Not to be Published
Arnold Schimsky, as trustee of the Ann P. Shimsky Trust and individually, and Judy Loprieno appeal an order denying their motion to vacate a judgment on a stipulated settlement agreement in favor of plaintiff THC-Orange County, Inc., doing business as Kindred Hospital, San Diego (Kindred). Arnold and Judy contend the ruling constitutes abuse of discretion because the uncontested evidence shows that although they signed settlement documents, they recalled their acceptance while the documents were still in their possession and notified his attorney thereof, and consequently the attorney had no authority to settle the matter and his purported delivery to Kindred was ineffective. We agree and reverse the judgment with directions.
Arnold Schimsky and Judy Loprieno are Ann Shimskys children. Anns husband reportedly changed the spelling of his last name from Schimsky to Shimsky, but Arnold later reverted to the original spelling. To avoid confusion, we refer to the family members by their first names.
FACTUAL AND PROCEDURAL BACKGROUND
In 1998 Ann executed the Ann P. Shimsky Trust. She designated herself trustee and Arnold as the sole successor trustee, named her children as equal beneficiaries under the trust, and transferred her home on Essex Street in Imperial Beach, California, to the trust. The trust precluded a sale or transfer of the home without the written approval of each beneficiary.
In July 2002 Ann was hospitalized at Kindred after receiving treatment for pneumonia at another hospital. While at Kindred Ann gave Arnold a durable power of attorney for health care and a general power of attorney. In 1998 she had signed a declaration under the former Natural Death Act that she did not want life-sustaining treatment if she was terminally ill. (Health & Saf. Code, former § 7185 et seq.; currently Prob. Code, § 4600 et seq. [Health Care Decisions Law].)
Anns primary coverage was through Medicare, and it was exhausted in late October 2002. Her secondary coverage was under a Blue Cross and Blue Shield (hereafter Blue Cross) policy, which covered an unlimited number of hospital days, but only for acute care. The policy excluded coverage for non-acute long-term care.
In June 2003 Blue Cross notified Kindred and Ann that it had determined she no longer needed acute care, and it expected her to be transferred to another facility or her "financial responsibility may increase." Kindred notified Arnold, and entered into an agreement with Blue Cross to accept a decreased rate on a month-to-month basis.
Arnold researched several alternative facilities, but they would not accept Ann because of her medical condition. In September Arnold advised Blue Cross of this development and asked it to continue to cover Anns care at Kindred. Asserting his durable power of attorney, Arnold forbade Kindred from discharging or transferring Ann to another facility without obtaining his prior approval.
In June 2004 Blue Cross offered to provide for one month an "alternative benefit" "through case management services" in lieu of existing contract benefits. Arnold refused the offer.
The last payment Kindred received from Blue Cross for Ann was in late July 2004, and after that it denied coverage. The following December Kindred sent Ann a letter stating that because Blue Cross denied further coverage she was responsible for her balance of $212,823.46 and future charges. Arnold received the letter and asked Kindred to furnish him with written proof of Blue Crosss coverage denial. Kindred supplied Arnold with a letter from Blue Cross denying coverage for some period, and explained it had only "[p]hone [d]enials for the remaining [d]ates of [s]ervices." Kindred repeated that Ann was responsible for paying Kindred.
In addition to payment disputes, Kindred and Arnold had other unpleasant dealings. Arnold filed a petition in probate court in May 2005 to compel Kindred to honor his authority under the durable power of attorney to make Anns health care decisions. He complained that Kindred limited his visitation and access to her medical information, and ignored his order that a certain employee not care for Ann because of abuse.
The same month, Kindred filed a superior court action and obtained a temporary restraining order (TRO) prohibiting Arnold from harassing Kindred staff. He was allowed to visit his mother during regular visiting hours, but he was required to first check in at the front desk for an escort to her room. He was not allowed to touch medical equipment, wander the halls or follow employees. The parties later entered into a stipulated permanent restraining order along the same lines.
In early December 2005 the probate court appointed James Boyd to represent Ann. The court also issued temporary letters of conservatorship over her person and estate and appointed a public guardian as temporary conservator. The court suspended Arnold as Anns agent because "he was aggressively interfering with her care to the extent that physicians became unwilling to treat her."
In March 2006 the public guardian petitioned to be appointed permanent conservator of Anns person and estate. The petition stated Ann was in a "near-comatose state," her hospital bill remained unpaid despite Kindreds repeated demands, and Arnold was living in Anns home rent free.
In April 2006 Boyd issued a report. Ann was then over 90 years of age and since 2002 she had been dependent on a ventilator and a gastrointestinal feeding tube. Her doctors advised that continued care was futile and she would die within days if ventilation was withdrawn. Arnold, however, had not notified Kindred of Anns 1998 health care directive. Further, Boyd reported that Arnold appeared to have commingled his and Anns funds and converted her funds to his own purposes, and he exposed her estate to Kindreds claim in excess of $1 million that may have been avoided with proper handling. Boyd recommended that the court grant the public guardians petition for appointment of probate conservator of the person.
The probate court ordered mediation. Under an April 2006 stipulated agreement, Arnold retained his power of attorney over Anns estate, but the public guardian became the permanent conservator of her person. Arnold was to ensure the payment of Kindreds bills, which then totaled $1,885,669.84, by using his best efforts to obtain benefits from third party sources.
In August 2006 Boyd obtained a TRO in the probate case prohibiting Arnold from coming within 1,000 yards of Kindred or its staff, because staff saw him having inappropriate physical contact with Ann that constituted elder abuse, and he repeatedly threatened staff and they were afraid of him.
The same month, the public guardian notified Arnold that it intended to honor Anns wishes and remove her from the ventilator. Arnold applied ex parte in the probate matter to enjoin the removal of the ventilator, and he was reportedly successful. During the night of October 5, 2006, or early the next morning, Ann suffered a heart attack. She was resuscitated, but was in grave condition.
Kindred had already commenced this action for breach of contract and fraud. On October 6, 2006, Arnold and counsel for Kindred met at the office of Arnolds counsel, John Garcia, and executed the stipulated settlement agreement that is the subject of this appeal. The agreement provided that as of September 15 Anns balance with Kindred was $2,484.981.86, but Kindred would forego payment in exchange for a grant deed to her home and 50 percent of her social security payments between July 2002 and the date of the settlement. Further, Kindred was to receive an appraisal on the property at Arnolds expense, showing the property had a fair market value of at least $450,000.
It appears that Anns social security benefits are exempt from creditor claims. (Code Civ. Proc., § 704.080; In re Dalaimo (Bankr. S.D.Cal. 1988) 88 B.R. 268, 270-271.)
At the meeting, the signed agreement was not given to Kindred. Rather, Garcia told Arnold to take the agreement to Judy for her signature, since her approval was required before the family home could be transferred. Further her signature was required on a written form approving the transfer by beneficiaries of the trust.
After the meeting, Kindred allowed Garcia to accompany Arnold to visit his mother. That evening, Arnold obtained Judys signature on the settlement documents. Ann died two days later, on October 8.
In late October 2006 Kindred moved under Code of Civil Procedure section 664.6 to enforce the settlement agreement. The court granted the motion and entered judgment on December 18.
All further statutory references are to the Code of Civil Procedure unless otherwise specified.
Section 664.6 provides in part: "If parties to pending litigation stipulate, in a writing signed by the parties outside the presence of the court or orally before the court, for settlement of the case, or part thereof, the court, upon motion, may enter judgment pursuant to the terms of the settlement."
With new counsel, in February 2007 Arnold and Judy, as proposed intervener, moved under section 473, subdivision (d), which pertains to void judgments, and equitable principles to set aside the judgment. In support, Arnold filed a declaration that stated he never intended to settle the case, but on October 6, 2006, Garcia pressured him into signing the settlement agreement when he was anxious to see his dying mother. When he and Judy met at her home that evening, they agreed after she signed the settlement documents that they should not give up the family home since Ann had Blue Cross coverage and had been approved for Medicaid. Thus, Arnold did not return the documents to Garcia.
Further, the declaration stated that on October 9 Arnold notified Garcia he was unwilling to settle, and he directed Garcia to defend him against Kindreds suit and file a cross-complaint. Garcia became angry and requested a copy of the settlement documents for his files. Arnold did not provide Garcia with the original documents, but faxed him copies. The declaration stated Garcias presumed forwarding of a copy to Kindred was without Arnolds knowledge or consent. It is also undisputed that the only copy of the settlement documents before the trial court was the copy Arnold faxed to Garcia on October 11, as evidenced by the fax stamp.
Judy also filed a declaration that stated Garcia told her she may need to sign documents relinquishing her interest in the family home, and when she said she did not intend to do so, he became agitated and accused her of being stingy and unhelpful to her brother. She admitted signing the settlement documents, but stated she and Arnold then talked and agreed not to go through with the transfer of Anns home or settlement.
Kindreds counsel, Karen Bocker, filed a declaration, which stated that in August 2006 Garcia indicated his clients wanted to settle the matter and offered to give Kindred a grant deed to Anns home. Bocker and Garcia negotiated the agreement, and she attended the meeting with Garcia and Arnold on October 6 during which he signed the agreement. The meeting lasted more than an hour, and Garcia asked her to excuse herself so he could speak privately with Arnold. Bocker did not hear Arnold object to the settlement, although the parties changed and initialed some terms. Kindred also relied on a declaration Garcia filed in opposition to Kindreds motion for judgment on the stipulated settlement, which stated he discussed the settlement agreement with both Arnold and Judy before they signed it.
Kindred adduced no evidence to contradict the above statements from Arnolds and Judys declarations pertaining to their withdrawal of acceptance after signing the documents, and notice to Garcia of the same.
The court denied the motion to vacate, explaining the judgment was not void within the meaning of subdivision (d) of section 473, and also denied Judys motion to intervene as moot. The court determined Arnolds and Judys declarations "lack credibility when compared to the evidence presented by [Kindred]." The court found sufficient evidence that Arnold "was involved in the abundant negotiations that resulted in the settlement agreement, and the agreement was not a surprise foisted on him during his grief over the impending death of his mother."
DISCUSSION
Arnold and Judy contend that under contract principles and the undisputed evidence, they withdrew their initial acceptance of the settlement agreement and there was no delivery to Kindred. Further, because an attorney may not settle an action without his or her clients consent, they are entitled to relief under Code of Civil Procedure section 473 and equitable principles. We agree with their assessment.
I
Contract Principles
"A settlement agreement is a contract, and the legal principles which apply to contracts generally apply to settlement contracts." (Weddington Productions, Inc. v. Flick (1998) 60 Cal.App.4th 793, 810.)
Formation of a contract requires the parties mutual consent. (Civ. Code, §§ 1550, 1565.) "The manifestation of mutual consent is usually accomplished through the medium of an offer [citation] communicated to the offeree and an acceptance [citation] communicated to the offeror." (1 Witkin, Summary of Cal. Law (10th ed. 2005) Contracts, § 117, p. 156.)
An acceptance must be absolute and unqualified. (Civ. Code, § 1585.) "Ordinarily, the acceptance must be expressed or communicated by the offeree to the offeror, in order to manifest mutual assent." (1 Witkin, Summary of Cal. Law, supra, § 187, p. 221.) When the offer is silent as to the means of acceptance, "any reasonable and usual mode may be accepted." (Civ. Code, § 1582.)
"A contract in writing, signed by the parties, takes effect only upon delivery." (Helperin v. Guzzardi (1951) 108 Cal.App.2d 125, 128, italics added; Civ. Code, § 1626.) "Consent is deemed to be fully communicated between the parties as soon as the party accepting a proposal has put his acceptance in the course of transmission to the proposer," in conformance with Civil Code section 1582. (Civ. Code, § 1583.) "This rule has long been interpreted to require that the acceptance be placed out of the control of the accepting party in order to be considered `in the course of transmission. " (Gibbs v. American Savings & Loan Assn. (1990) 217 Cal.App.3d 1372, 1376, italics added.) The Restatement similarly provides: "Unless the offer provides otherwise, (a) an acceptance made in any manner and by a medium invited by an offer is operative and completes the manifestation of mutual assent as soon as put out of the offerees possession. . . ." (Rest.2d Contracts, § 63, italics added.) "An instrument placed in the hands of a third party is not delivered as long as the signer retains control over it. [Citations.] Whether a deed or other instrument, the intention of the depositor to part with or retain control is the deciding factor." (Helperin v. Guzzardi, supra, 108 Cal.App.2d at pp. 128-129, italics added; Williams v. Kidd (1915) 170 Cal. 631, 638.)
Although McKelley v. Turner (1929) 96 Cal.App. 292 (McKelley) does not concern a settlement agreement, it is instructive on the delivery issue. In McKelley, the question was whether a sheriff had delivered his resignation to the countys board of supervisors. On May 17, 1928, the board demanded his resignation, but he refused and engaged an attorney. The attorney went to the sheriffs home that day and persuaded him to sign a resignation. The attorney then went to the courthouse and filed the resignation. The sheriff argued it was filed without his consent and contrary to his express direction. The sheriff testified that he instructed the attorney, " `Dont turn it over until tomorrow, " because he wanted to sleep on it. (Id. at p. 293.) Later on May 17, the sheriff notified the attorney that he withdrew and canceled the resignation. (Id. at p. 294.) The attorney produced no competent evidence to dispute the sheriffs evidence. The attorney testified he concluded it would be better to file the resignation immediately. (Id. at pp. 293-294.)
The McKelley court explained the resignation "could have become effective as a resignation only upon its delivery to the clerk of the board of supervisors. [Citations.] The mere manual transmission of the writing to the clerk, without authority and contrary to the express direction of the [sheriff], was of no effect. The authority of an agent, not coupled with an interest, to do a particular thing can be terminated by the principal at any time before the authorized act is performed. [Citation.] In this case the attorney was not authorized to file the [sheriffs] resignation until May 18th, and, prior to that time, his authority to file it was terminated." (McKelley, supra, 96 Cal.App. 292, 294-295, italics added.)
Here, the trial court found Kindreds evidence raised an inference Arnold was involved in settlement negotiations, and thus was not surprised at the October 6, 2006 meeting in which he signed settlement documents. That point, however, is immaterial because Arnold was free to withdraw his initial acceptance while the documents were under his control. Further, the evidence showed that Arnold advised Garcia he did not intend to settle, and directed Garcia to defend him against Kindreds lawsuit and file a cross-complaint against it. It is well established that an attorney may not settle a lawsuit without the clients consent, even when the attorney believes the client is difficult or is unreasonably withholding settlement. (Blanton v. Womancare, Inc. (1985) 38 Cal.3d 396, 404 (Blanton); In re Dombrowski (1978) 71 Ill.2d 445, 450.)
Additionally, Kindred concedes that Judys signature was required on the settlement documents for them to be effective. "[I]f the evidence shows that the signatures of other parties were required as one of the conditions of the completed agreement, it is incomplete and not binding upon those who sign until the others sign." (1 Witkin, Summary of Cal. Law, supra, § 135, p. 175.) "When an agreement is signed and handed over with the understanding that it will not be used or become operative until it is signed by another who is expected to join therein, it does not become a contract until the additional signature is obtained." (Helperin v. Guzzardi, supra, 108 Cal.App.2d at p. 128.) Had Garcia not violated his clients direction by supplying Kindred with a copy of the settlement documents, Kindred would not even have known she signed them.
As Williston explains: "The application of the dispatch rule to acceptances which are subsequently recalled is of largely theoretical concern; `as a practical matter the offeror cannot assert his rights unless he learns of them, and if the offeree successfully recalls its acceptance from the post office or other medium, the offeror is unlikely ever to learn of the initial dispatch." (2 Williston on Contracts (4th ed. 2007) Acceptance of Offers, § 6:38, p. 491, fn. omitted.)
Kindreds assertion that delivery occurred the moment Arnold and Judy signed the settlement agreement is incorrect. Kindreds sole authority for that proposition is Estate of Coleman (2005) 129 Cal.App.4th 380, 387, which states: "The marital settlement agreement was signed by both Jean Coleman and the conservators for the decedent. Since it was signed by both, delivery occurred." The opinion neither discusses contract principles nor concerns facts remotely similar to those here. "`It is axiomatic that cases are not authority for propositions not considered. " (In re Marriage of Cornejo (1996) 13 Cal.4th 381, 388.) Kindred offers no analysis of contract law.
Further, Kindred cites no authority for its assertion that Arnold must have authorized the settlement since he did not destroy the original settlement agreement. If anything, Arnolds retention of the original document created a presumption there was no delivery. (Lample v. McDougall (1930) 103 Cal.App. 779, 781-782 [" `Where a deed which has been duly executed and acknowledged is subsequently found in the possession of the grantor, a presumption arises that it was never delivered "].)
The undisputed evidence shows Arnold and Judy effectively withdrew their consent to settle, Garcia lacked any settlement authority, and neither Arnolds fax of a copy of the signed settlement documents to Garcia nor Garcias forwarding of a copy of the documents to Kindred constituted delivery. Arnold and Judy never relinquished control of the settlement documents or intended to settle. The trial court focused on Arnolds knowledge before signing the documents rather than ensuing events. The "uncontradicted testimony of a witness to a particular fact may not be disregarded, but should be accepted as truth of the fact. " (Joseph v. Drew (1950) 36 Cal.2d 575, 579; Am-Cal Inv. Co. v. Sharlyn Estates, Inc. (1967) 255 Cal.App.2d 526, 543.)
We also reject Kindreds argument that Arnold accepted the settlement agreement by performing under it by obtaining and paying for an appraisal. (See 1 Witkin, Summary of Cal. Law, supra, § 198, p. 232.) It is undisputed that Arnold noted on his check, " `payment . . . does not represent approval to transfer this property or agreement to any stipulation and settlement agreement."
II
Remedy
At the trial court, Arnold and Judy argued they were entitled to relief under subdivision (d) of Code of Civil Procedure section 473, which "empowers a trial court to set aside any judgment or order that is void as a matter of law, for example, because the court lacked subject matter jurisdiction, or because the summons and complaint were not properly served, so that the court lacked personal jurisdiction over a defendant, or otherwise because the judgment or order violated a partys due process rights to notice and an opportunity to be heard." (Brown v. Williams (2000) 78 Cal.App.4th 182, 186, fn. 4.)
On appeal, however, they rely on subdivision (b) of section 473, which allows the court to, "upon any terms as may be just, relieve a party . . . from a judgment, dismissal, order, or other proceeding taken against him or her through his or her mistake, inadvertence, surprise, or excusable neglect." "A grant of relief under this provision is a matter of trial court discretion." (State Farm Fire & Casualty Co. v. Pietak (2001) 90 Cal.App.4th 600, 608.) The courts discretion, however "`"is not a capricious or arbitrary discretion, but an impartial discretion, guided and controlled in its exercise by fixed legal principles. It is not a mental discretion, to be exercised ex gratia, but a legal discretion, to be exercised in conformity with the spirit of the law and in a manner to subserve and not to impede or defeat the ends of substantial justice." " (Carroll v. Abbott Laboratories, Inc. (1982) 32 Cal.3d 892, 898.)
Kindred objects that Arnold and Judy have changed their theory on appeal. Ordinarily, a party may not change theories on appeal. (Eisenberg et al., Cal. Practice Guide: Civil Appeals and Writs (The Rutter Group 2007) ¶ 8:229, p. 8-135.) However, "the appellate court has the discretion to consider a new issue on appeal where it involves a pure question of the application of law to undisputed facts." (Yeap v. Leake (1997) 60 Cal.App.4th 591, 599, fn. 6, disapproved of on another ground in Hossain v. Hossain (2007) 157 Cal.App.4th 454, 458.) That is the situation here. Further, at the trial court and on appeal Arnold and Judy cited many of the same cases in support of their section 473 argument, and thus Kindred is not prejudiced.
A line of cases shows relief under section 473 on the ground of mistake is warranted in a situation such as this. For instance, in Romadka v. Hoge (1991) 232 Cal.App.3d 1231, 1237 (Romadka ), the court reversed judgments that resulted from an attorneys dismissal of an action with prejudice without his clients authority. The court explained, "Clearly a dismissal with prejudice disposes of the clients substantive rights and therefore requires for its validity the authorization of the client." (Id. at p. 1236.)
In Romadka, the court cited the provision in section 473 regarding the setting aside of a void judgment or order. (Romadka, supra, 232 Cal.App.3d at p. 1235.) It appears, however, that the court actually granted relief under section 473 on the ground of mistake. As the court explains in Brown v. Williams, supra, 78 Cal.App.4th at page 187: "Romadka, supra, 232 Cal.App.3d 1231, involved the question of the fundamental limitations on an attorneys authority to act on behalf of a client. In Romadka, the attorney voluntarily dismissed the plaintiffs action with prejudice instead of without prejudice. The attorney, who had no authority to dismiss the action with prejudice, mistakenly marked the dismissal-with-prejudice box on the dismissal form. The plaintiff in Romadka was able to obtain relief under section 473 because the voluntary dismissal was entered by mistake." Additionally, respected commentators note Romadka involved relief under section 473 for mistake. (8 Witkin, Cal. Procedure (4th ed. 1997) Attack on Judgment in Trial Court, § 160, p. 662; Wegner et al., Cal. Practice Guide: Civil Trials and Evidence (The Rutter Group 2007) ¶ 18:510, p. 18-108.2.)
The Romadka court relied on Bowden v. Green (1982) 128 Cal.App.3d 65, in which the defendants attorney agreed to dismiss their cross-complaint without their consent. The appellate court reversed the trial courts denial of the defendants motion to correct the judgment, explaining: "Because counsels dismissal stipulation was wholly unauthorized and was made without the knowledge or consent of his clients, it could not form the basis of a valid judgment." (Id. at pp. 73-74, italics added.) The court concluded, "It is undeniable here that counsels agreement to dismiss the cross-complaint `impaired that cause of action and, in the absence of consent, ratification or estoppel, was invalid." (Id. at p. 73.)
The court observed in Whittier Union High School Dist. v. Superior Court (1977) 66 Cal.App.3d 504, 507 (Whittier): "In recent years courts of equity have struggled with the problem of incompetency or dishonesty [of] a partys own counsel and have attempted to reconcile relief based on these grounds with the principle of finality of judgment. These attempts have not been uniformly successful, nor have they produced any consistent and uniform body of doctrine that can be disinterestedly and impartially applied."
The Romadka court also cited Blanton, supra, 38 Cal.3d 396, in which an attorney stipulated to binding arbitration in violation of his clients express direction that she would agree only to nonbinding arbitration. The California Supreme Court reversed a resulting judgment for the defendants because under agency principles the attorney had no authority to bind his client. (Id. at p. 403.) The court held that a litigation attorney has the authority to bind his or her client in certain matters, such as procedural and tactical matters, but the attorney "is not authorized . . . to `impair the clients substantial rights or the cause of action itself. " (Id. at p. 404.)
In Whittier, supra, 66 Cal.App.3d 504, 508, on which the Romadka court also relied, the plaintiffs attorney forged their signatures and purported to settle the action without their consent, and then dismissed the action with prejudice. The appellate court affirmed the vacation of the judgment, explaining that although equitable relief based on extrinsic fraud or extrinsic mistake was unavailable, and the six-month limitation period of section 473 had expired, the lower courts ruling was proper. (Whittier, supra, at p. 509.)
The court explained: "[D]ismissal of a cause of action by an attorney acting without any authority from his client is an act beyond the scope of his authority which, on proper proof, may be vacated at any time. Obviously, such action requires strong and convincing proof, and the longer the delay in the application for relief the stronger and more convincing the factual proof should be. When nothing more than client misunderstanding or client change of heart is involved, the propriety of such relief is doubtful. [Citation.] Yet while proof of lack of authority may often be difficult, when, as at bench, proof is solid and strong, a court can, should, and will act." (Whittier, supra, 66 Cal.App.3d at p. 509.)
In Robinson v. Hiles (1953) 119 Cal.App.2d 666, 673, the plaintiffs attorney caused a dismissal with prejudice to be entered, and the court affirmed the vacation of the dismissal under section 473 on the ground of mistake. Correspondingly, in Bice v. Stevens (1958) 160 Cal.App.2d 222, 232-234, the court held the lower court abused its discretion under section 473s mistake provision by denying the plaintiffs motion to vacate a dismissal with prejudice their attorney caused to be entered without their authority.
Kindred attempts to distinguish the Romadka line of cases on the ground the settlement agreement here was delivered the moment Arnold and Judy signed it. As discussed, however, that is not the law. Moreover, contrary to Kindreds position, Garcias declaration for an earlier motion did not show Arnold and Judy authorized the settlement, it merely stated he discussed the settlement agreement with them before they signed it. It said nothing about events after they signed it. Garcia may disagree with Arnolds and Judys declarations and believe they merely had a change of heart after delivery, but there is no evidence thereof in this record.
Additionally, Kindred asserts that since Garcias conduct does not constitute excusable neglect within the meaning of section 473, subdivision (b), relief under the statute is unavailable. "As a general rule, the accident or mistake authorizing relief may not be predicated upon the neglect of the partys attorney unless shown to be excusable [citations], because the negligence of the attorney in the premises is imputed to his client and may not be offered by the latter as a basis for relief." (Buckert v. Briggs (1971) 15 Cal.App.3d 296, 301.) "The clients redress for inexcusable neglect by counsel is, of course, an action for malpractice." (Carroll v. Abbott Laboratories, Inc., supra, 32 Cal.3d at p. 898.)
It appears, however, that the general rule of imputation is inapplicable when, as here, a client seeks relief under section 473, or equitable principles, based on his or her attorneys lack of authority to settle or otherwise impair the clients substantive rights. Certainly, the forging of settlement documents or disregard of a clients instructions cannot be deemed excusable neglect, yet it is established that relief is available based on the attorneys lack of authority to bind the client and invalidity of the resulting judgment or order. This narrow exception is analogous to the exception for cases in which an attorneys positive misconduct constituted an abandonment of the client. (See Carroll v. Abbott Laboratories, supra, 32 Cal.3d at pp. 898-900.)
Based on Romadka and the other cases discussed above and the uncontradicted evidence, we conclude Arnold and Judy are entitled to relief under section 473, subdivision (b) and the courts inherent equitable power. There is no suggestion the doctrine of ratification or estoppel applies. Although Garcia did not forge the settlement documents, undisputed evidence shows he disregarded his clients direction by forwarding a copy of them to Kindred and purporting to settle the case. When an attorney impairs a clients substantive rights without authority, the attorneys specific conduct is immaterial. Such a situation "justifies setting aside a stipulation at the expense of an opposing party with no knowledge and/or reason to know of the lawyers lack of authority." (In re Marriage of Helsel (1988) 198 Cal.App.3d 332, 337.)
Ordinarily, the requirement that a settlement agreement may be entered as a judgment only if the parties agree orally in court or in a writing they sign, " `tends to ensure that the settlement is the result of their mature reflection and deliberate assent, " and " `protects the parties from impairment of their substantial rights without their knowledge and consent. " (Weddington Productions, Inc. v. Flick, supra, 60 Cal.App.4th at p. 810.) Under the unusual circumstances here, that was not the case.
DISPOSITION
The judgment is reversed. We direct the trial court to vacate the order denying Arnold and Judys motion to vacate the judgment and to enter a new order granting the motion. We also direct the court to reconsider Judys motion to intervene on the merits. Arnold and Judy are entitled to costs on appeal.
WE CONCUR:
MCDONALD, J.
AARON, J.