Lemley v. Lemley
221 Or. App. 172, 188 P.3d 468, 2008 Ore. App. LEXIS 949 (2008)
Premium Feature
Subscribe to Lexplug to listen to the Case Podcast.
Rule of Law:
A principal ratifies an agent's unauthorized agreement when, with knowledge of the material facts, the principal accepts the benefits of the other party's performance under the agreement, thereby making the agreement enforceable.
Facts:
- Following a divorce, Plaintiff appealed the dissolution judgment. Plaintiff was represented by attorney Taylor, and Defendant was represented by attorney Strange.
- During the appeal, Plaintiff obtained a contempt judgment against Defendant and filed notices of 'lis pendens' on her real properties, preventing her from completing pending sales.
- Strange, on behalf of Defendant, and Taylor, on behalf of Plaintiff, negotiated a settlement agreement to resolve all outstanding issues.
- The agreement required Plaintiff to release the lis pendens, satisfy the contempt judgment, forgo his appeal, and pay Defendant $168,000. In return, Defendant would convey a commercial property to Plaintiff and waive her claim for attorney fees.
- On January 19, 2006, the attorneys signed the agreement. Strange indicated he had faxed a copy to his client, the Defendant.
- Plaintiff fully performed his obligations: he filed a satisfaction of the contempt judgment, released the lis pendens, and allowed his time to appeal to the Oregon Supreme Court to expire.
- Knowing of the agreement, Defendant accepted the benefits of Plaintiff’s performance by selling the properties previously subject to the lis pendens, profiting over $70,000.
- After Plaintiff paid the $168,000 into Strange's trust account, Defendant refused to convey the commercial property, claiming Strange had entered the agreement without her authority.
Procedural Posture:
- Plaintiff filed a complaint for specific performance of the settlement agreement in an Oregon trial court.
- The trial court found that Plaintiff acted in good faith but ruled for Defendant, concluding that her attorney lacked actual or apparent authority to bind her to the settlement agreement.
- The trial court entered a general judgment denying Plaintiff's claims.
- Plaintiff, as appellant, appealed the trial court's judgment to the Court of Appeals of Oregon.
Premium Content
Subscribe to Lexplug to view the complete brief
You're viewing a preview with Rule of Law, Facts, and Procedural Posture
Issue:
Does a party ratify a settlement agreement entered into by her attorney, purportedly without authority, if she knows its material terms and accepts the benefits of the other party's performance under that agreement?
Opinions:
Majority - Rosenblum, J.
Yes. A party ratifies a settlement agreement made by her attorney, even if initially unauthorized, by knowingly accepting the benefits of the other party's performance. The court found it unnecessary to determine whether the attorney had actual or apparent authority because the defendant's subsequent conduct constituted ratification. Ratification occurs when a principal, with knowledge of the material facts, engages in conduct indicating consent. Here, Defendant had knowledge of the agreement's terms, as evidenced by her directing that the lis pendens releases be sent directly to the title company. She then accepted the substantial benefits of Plaintiff's performance—the release of the lis pendens which enabled her to sell property for a significant profit, and the expiration of his appellate rights. By knowingly accepting these benefits without promptly repudiating the agreement, she ratified it. Furthermore, the agreement is enforceable despite the statute of frauds because Plaintiff's part performance—actions clearly and unequivocally referable to the agreement—provides equitable grounds for enforcement.
Analysis:
This decision reinforces the principle of ratification by conduct in agency law, preventing a principal from selectively benefiting from an unauthorized agreement. It demonstrates that a party cannot accept the fruits of a contract and then repudiate its obligations by claiming their agent lacked authority. The court's application of the part performance doctrine also highlights an important exception to the statute of frauds, ensuring that a party who relies on an agreement and performs their duties to their detriment can obtain equitable relief. This precedent serves as a caution to principals that their actions, or inaction, after learning of an agent's unauthorized deal can be legally binding.
Unlock the full brief for Lemley v. Lemley