L. F. S. Corp. v. Kennedy
1985 S.C. LEXIS 544, 337 S.E.2d 209, 287 S.C. 162 (1985)
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Rule of Law:
A client who accepts financial benefits under an unauthorized settlement agreement and subsequently seeks to enforce that agreement is deemed to have ratified the attorney's actions, thereby precluding a subsequent malpractice claim against the attorney for entering into the agreement.
Facts:
- In 1964, L. F. S. Corporation began planning a subdivision called Havenwood.
- In the early 1970s, a dispute arose between L. F. S. Corporation and the Town of Kershaw regarding an alleged oral contract for the town to supply water to the subdivision.
- L. F. S. Corporation retained the respondents, a law firm, to represent it in the dispute with the town.
- The respondents entered into an agreement to settle the dispute, which L. F. S. Corporation later alleged was unauthorized.
- Pursuant to a 1976 court order based on the settlement, the Town of Kershaw remitted $900 in tap fees to L. F. S. Corporation.
- L. F. S. Corporation accepted the $900 check and endorsed it over to the respondents to be applied to its legal fees.
- Subsequently, a director of L. F. S. Corporation wrote to the respondents seeking legal advice on how to enforce the 1976 order.
Procedural Posture:
- L. F. S. Corporation filed a legal malpractice action against its former attorneys (respondents) in a South Carolina trial court.
- During the trial, the respondents made a motion for non-suit.
- The trial court granted the respondents' motion for non-suit, ruling in their favor.
- L. F. S. Corporation, as the appellant, appealed the trial court's grant of non-suit to the Supreme Court of South Carolina.
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Issue:
Does a client ratify an attorney's unauthorized settlement agreement, thus barring a subsequent malpractice claim, by accepting financial benefits under the agreement and seeking to enforce its terms?
Opinions:
Majority - Gregory, Justice
Yes, a client ratifies an attorney's unauthorized actions by accepting the benefits of those actions and seeking to enforce the resulting agreement. The court reasoned that L. F. S. Corporation's actions following the allegedly unauthorized settlement demonstrated a clear and unequivocal ratification. By accepting the $900 check from the town—a direct financial benefit of the settlement order—and then seeking advice on how to enforce that same order, the corporation treated the order as valid and binding. These subsequent acts are inconsistent with the claim that the attorneys' actions were unauthorized and therefore bar the malpractice suit.
Analysis:
This case applies the well-established agency principle of ratification to the attorney-client relationship. The decision clarifies that a client cannot repudiate an attorney's actions as unauthorized while simultaneously enjoying the benefits derived from those actions. This sets a precedent that a client's conduct after a settlement can be more determinative than their initial objections, providing a significant defense for attorneys accused of settling a case without authority. It forces clients to make a clear choice: either completely reject an unauthorized settlement and its fruits or be bound by its terms through ratification.
