By Joe Forward, Legal Writer, State Bar of Wisconsin
Aug. 19, 2010 – An attorney violates the attorney-client relationship if that attorney agrees to arbitration and forgoes a jury trial without the client’s consent, the appeals court recently held.
In D & D Carpentry, Inc. v. Edler, 2009AP1264 (Aug. 18, 2010), the District 2 Court of Appeals reversed a circuit court ruling that a client waived the right to object to arbitration because her former attorney agreed to arbitrate on the record.
Robin Edler (Edler) entered into a contact with D & D Carpentry (D & D) for construction of a residence. The contract included an arbitration clause. But when D & D sued Edler for breach of contract in 2007, neither Edler nor D & D invoked the arbitration clause.
In 2009, the court set a jury trial. Subsequently, D & D requested arbitration, but with a different tribunal than the one stated in the contract. Edler’s attorney agreed to arbitration on the record, so long as the parties could mutually agree on an arbitration tribunal. The attorney stated that he was authorized by his client to enter the new arbitration agreement.
The court ordered arbitration pursuant to the terms, stating that “arbitration remained the best [and] fairest option.”
Edler then retained new counsel and filed a motion to reconsider the arbitration order, arguing that she never authorized her former attorney to enter the arbitration terms.
The circuit court rejected the motion, concluding that Edler waived her right to contest the matter. Edler appealed.
The appeals court recognized that an attorney has the power to waive a client’s rights, presuming the attorney has the authority to do so.
“The general rule is that an attorney has no authority to enter into a binding settlement agreement without his or her client’s consent,” the court wrote. “An agreement to arbitrate rather than use court resources is a settlement tool.”
A client has the burden of proving that an attorney has acted without the client’s consent, the court explained. Because the attorney-client relationship is an agency relationship, authority is grounded in the law of agency.
The court invoked Balzer v. Weisensel, 258 Wis. 566, 46 N.W.2d 763 (1951), a case in which the client gave his attorney apparent authority to settle the case. It also discussed Fosha v. Prosser, 120 Wis. 336, 97 N.W. 924 (1904), a case in which the supreme court ruled that a client presented sufficient evidence to show her attorneys actions were unauthorized.
Noting that Edler produced a prima facie case, the appeals court remanded to determine whether Edler authorized her former attorney to enter into the arbitration agreement.
The appeals court also noted that a circuit court is without authority to determine the best way to resolve a case. “[T]o the extent that the trial court ordered arbitration without deciding whether Edler agreed to submit the dispute to arbitration because it thought it best – the court was without authority to do so.”