## Facts

- Mal de Mer Fisheries, Inc. owned the fishing vessel F/V SHANNON III, which sank off the Massachusetts coast on January 31, 1994, during fishing operations.
- Two crewmembers (Wayne Costa and Robert DeJesus) were lost and presumed drowned; a third (Victor Pereira) survived.
- Mal de Mer filed a federal admiralty petition for exoneration from or limitation of liability.
- Cheryl S. Costa (widow of Wayne Costa) and Susan DeJesus (widow of Robert DeJesus) asserted wrongful-death claims and were represented by the same attorney, Edward J. White; Pereira asserted a claim represented by separate counsel.
- Shortly before a scheduled nonjury trial, Mal de Mer authorized an aggregate settlement of both death claims for $485,000 and communicated an allocation that included $115,000 for Costa.
- White told Costa the insurer offered $115,000 to settle her claim but did not disclose the offer’s aggregate nature or the allocation to the other claimant; Costa reluctantly told White to proceed.
- White reported to opposing counsel and the court that the matter had settled, but Costa later refused to sign releases, discharged White, and retained new counsel.
- Mal de Mer moved to enforce the settlement against Costa in the limitation proceeding.

## Issues

1. Whether a settlement negotiated by claimant’s counsel and announced to the court was a binding, enforceable contract despite the claimant’s later refusal to sign written releases.
2. Whether an alleged ethical violation involving an undisclosed aggregate settlement rendered the settlement unenforceable against an opposing party not involved in the misconduct.
3. Whether claimant’s counsel had actual or apparent authority to bind the claimant to the settlement.

## Decision

- The court granted Mal de Mer’s motion to enforce the settlement.
- The court found a binding agreement had been formed when Costa authorized her counsel to proceed and counsel communicated acceptance and reported settlement.
- The absence of a signed release did not defeat enforcement because the material terms were agreed upon.
- Any ethical breach by Costa’s former counsel concerning aggregate settlement disclosures did not void the agreement as against Mal de Mer, which reasonably relied on counsel’s authority and was not complicit in the alleged misconduct.
- The settlement allocating $115,000 to Costa’s claim was enforced.

## Legal Principles

- A settlement agreement is a contract and is enforceable when the parties agree on material terms, even if formal documents have not yet been executed.
- An attorney of record is generally presumed to have authority to settle; a client may be bound under principles of actual authority or apparent authority.
- Apparent authority exists where the opposing party reasonably relies on counsel’s representations of authority in the course of litigation.
- Ethical restrictions on aggregate settlements require full disclosure and informed consent among jointly represented clients, but a lawyer’s ethical violation does not necessarily invalidate a settlement against an innocent opposing party absent fraud, overreaching, or lack of authority.
- A client’s primary remedies for counsel’s ethical breach are typically against the lawyer (e.g., disciplinary complaint or civil claim), not rescission against a good-faith opposing party.

## Conclusion

The court enforced a settlement reached through claimant’s counsel and reported to the court, holding that alleged nondisclosure of an aggregate settlement allocation may create attorney-client ethical and remedial consequences but does not, without opposing-party misconduct or lack of authority, permit repudiation of an otherwise valid settlement.


In re Mal de Mer Fisheries, Inc., 884 F. Supp. 635 (D. Mass. 1995)