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Carr v. Runyan

July 8, 1996






Appeal from the United States District Court for the Northern District of Indiana, Fort Wayne Division. No. 94 C 137 William C. Lee, Judge.

Before LAY, *fn* CUDAHY, and KANNE, Circuit Judges.

KANNE, Circuit Judge.



Velma Carr contracted to sell a parcel of land, but before the buyer could make all the payments, he ran up a sizeable tax debt, and the county foreclosed on the property and sold it in a tax sale. When Carr filed a diversity action in federal district court to quiet title in the land and to recover damages under sec. 1983, the judge ordered a mediation so that the parties might discuss a settlement. Carr did not attend the mediation, but she arranged for her daughter to attend on her behalf. At the mediation, Carr's daughter and the defendants reached an accord as to settlement, but when Carr learned of the agreement, she refused to go along with its terms. After a hearing, the district court ruled that the settlement was enforceable because Carr's daughter possessed apparent authority to enter into a binding agreement, and we affirm.


On May 7, 1987, Carr, a resident of Georgia, sold a plot of land located in Fort Wayne, Indiana, to Elbert Starks, Jr., for $45,000. The sale was on contract, meaning that Carr would retain title to the land until Starks satisfactorily completed all of his payments under the sale agreement. By the time Starks had made payments totaling roughly $22,000, however, he had accumulated a sizable property tax debt. Accordingly, the county auditor initiated a tax sale and sold the property to James Runyan in September of 1992. After Starks did not exercise his right of redemption within the required period, the county auditor issued a final tax deed to Runyan for the property.

When Carr later learned of the sale, she brought a diversity action in federal district court, seeking to void Runyan's tax deed and quiet title in her name because, she claimed, she had not been properly notified of the tax sale. Additionally, she sought damages under 42 U.S.C. sec. 1983, arguing that by depriving her of her property without proper notice, the county auditor and treasurer had violated her constitutional rights to procedural due process, substantive due process, and the privileges and immunities of her Georgia citizenship.

At a preliminary pretrial conference on September 8, 1994, the district judge ordered the matter to be mediated in an attempt to encourage a voluntary settlement between the parties. The parties agreed on the appointment of John Theisen, a labor law attorney from Fort Wayne, to act as the mediator. The district court's order to mediate instructed:

At the time so arranged, counsel, the parties, and the appropriate officers or representatives of the parties . . . who have full settlement authority shall be present in person at the [mediation] unless their personal presence is excused by leave of court in which event they shall be continuously and immediately available for consultation by telephone with their respective counsel, or the mediator(s).

Additionally, the district court's order required that "[t]he representatives in attendance should have the same level of responsibility and authority as one who would ordinarily be sent to a settlement conference conducted by the court."

The mediation was held at Theisen's office on October 25, 1994, and Carr was represented by her attorney, Mike Harmeyer. Carr did not attend the mediation personally, and there is no explanation in the record for her absence. Although Carr never obtained leave of court excusing her failure to attend, she arranged instead for her daughter, Vivian Sarver, to attend the mediation with Harmeyer. According to Sarver's own testimony, Sarver went to the mediation to act on her mother's behalf. Immediately prior to the beginning of the mediation, Harmeyer spoke with Carr on the telephone, but neither Harmeyer nor Sarver spoke with Carr again until after the mediation had ended.

The mediation began at 1:00 P.M. and lasted six and a half hours, and during that time Harmeyer, Sarver, and the defendants and their counsel discussed various offers and counteroffers. Theisen testified that Sarver was active in these discussions. Near the end of the negotiation, the defendants proposed a settlement under which they would pay Carr $28,000 in exchange for her agreement to release her claim by transferring any and all interest she had in the property to Runyan. When Harmeyer discussed this offer with Sarver, she rejected it and asked him what he recommended. He recommended, and they subsequently proposed to the defendants, a settlement wherein Carr would receive $29,000 in exchange for her entire interest in the property. The defendants collectively agreed to this settlement counteroffer.

At that point, believing a settlement to have been reached, Theisen dictated the settlement agreement onto a cassette tape in the presence of the parties. Theisen began the dictation by noting that a settlement had been reached, and he outlined the terms of the agreement. Theisen then went around the table and individually asked each attorney, including Harmeyer, whether the dictated settlement terms accurately reflected the agreement approved by their clients, and the attorneys each responded in the affirmative. Neither Sarver nor any of the defendants present voiced opposition or disagreement to their attorney's ...

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