## Facts

- Silver Street Partnership (Silver Street) was the record owner of a parcel of Vermont real property.
- New England Educational Training Service, Inc. (NEETS) claimed it held a mortgage on that property.
- When Silver Street purchased the property, it was unaware of NEETS’s mortgage.
- After learning of the mortgage shortly after the purchase, Silver Street attempted to negotiate a resolution to remove or discharge the encumbrance.
- Silver Street retained attorney Rhys Evans to address the mortgage dispute and communicate with NEETS, including through settlement discussions.
- Evans had authority to offer NEETS \$10,000 to settle the matter; he made that offer, and NEETS did not accept it.
- Silver Street did not give Evans specific authority after that point to settle the dispute for a higher amount.
- Evans later communicated with NEETS’s counsel and purportedly settled the dispute for \$60,000.
- Silver Street refused to carry out the alleged \$60,000 settlement.
- NEETS filed a foreclosure action and moved for summary judgment, arguing that the settlement reached by the attorneys was binding.
- The trial court granted summary judgment for NEETS, finding that the attorneys had authority to settle and that a settlement had been reached.

## Issues

1. Whether Silver Street’s attorney had actual authority to bind Silver Street to a \$60,000 settlement.
2. Whether Silver Street’s attorney had apparent authority, based on Silver Street’s conduct, such that NEETS could enforce the alleged settlement.
3. Whether summary judgment was proper where the record did not establish the attorney’s authority to agree to the alleged terms.

## Decision

- The Vermont Supreme Court reversed the summary judgment enforcing the alleged \$60,000 settlement.
- The court held that the record did not show that Evans had actual authority to commit Silver Street to the \$60,000 settlement.
- The court further held that the record did not support a finding of apparent authority sufficient to bind Silver Street to the alleged settlement.
- The case was remanded for further proceedings.

## Legal Principles

- Settlement agreements are favored, but a client retains the right to decide whether to settle and on what terms.
- An attorney’s general authority to handle litigation or negotiate does not automatically include authority to enter a binding settlement for a specific amount; settlement requires client authorization.
- Actual authority to settle may be express or implied, but it must be supported by the client’s instructions and the surrounding facts; prior authority to make a limited offer does not establish authority to accept materially different terms later.
- Apparent authority depends on the client’s manifestations to the opposing party; the opposing party must be able to point to conduct by the client (not merely the attorney) that reasonably indicated the attorney had authority to agree to the settlement terms.
- Summary judgment enforcing a settlement is improper if material facts remain disputed regarding whether the attorney was authorized to bind the client.

## Conclusion

The Vermont Supreme Court declined to enforce the claimed \$60,000 settlement because NEETS did not establish, on the summary-judgment record, that Silver Street authorized its attorney to agree to that amount or that Silver Street’s own conduct reasonably signaled such authority to NEETS; the judgment enforcing the settlement was therefore reversed and the matter returned for continued litigation.


New England Educational Training Service, Inc. v. Silver Street Partnership, 528 A.2d 1117 (1987)