Lexplug logoLexplug

Oral Roberts University v. Anderson

District Court, N.D. Oklahoma
11 F. Supp. 2d 1336 (1997)
ELI5:

Rule of Law:

A contractual provision awarding attorney's fees to the prevailing party in litigation is enforceable even if the litigation determines that the contract has expired by its own terms, so long as the party seeking fees based its claims on the contract's provisions. Furthermore, an original party to a contract cannot escape a contractual duty, such as the obligation to pay attorney's fees, merely by assigning their rights to a third party.


Facts:

  • On September 27, 1994, Oral Roberts University ("ORU") entered into an "Option and Agreement for Purchase and Sale of Real Estate" with Travis Anderson.
  • The Agreement contained a clause stating, "In the event of litigation, the prevailing party shall be entitled to recover its reasonable attorney’s fees."
  • This clause was located in a section titled "Purchaser's Remedies."
  • The Agreement also contained a clause stating that paragraph headings were for reference only and did not define or limit the scope of the agreement.
  • Travis Anderson subsequently assigned his rights under the Agreement to a company called Metroplex.
  • A dispute arose between ORU and the defendants (Anderson and Metroplex) over whether the option to purchase the property had been exercised within the specified time frame.
  • ORU contended that the option had expired, terminating the Agreement, while the defendants argued the Agreement remained in full force and effect.

Procedural Posture:

  • Oral Roberts University ("ORU") filed an action in U.S. District Court seeking a declaratory judgment that an option agreement with the Defendants had expired.
  • Defendant Metroplex filed a counterclaim seeking specific performance of the agreement and damages for breach of contract.
  • The court denied the Defendants' motion for summary judgment and granted ORU's motion for summary judgment, finding that the option had not been exercised in time and the agreement had expired.
  • Judgment was entered in favor of ORU.
  • ORU, as the prevailing party, then filed a Motion for Attorney's Fees based on a provision in the expired agreement.

Locked

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 contractual provision awarding attorney's fees to the prevailing party in litigation remain enforceable when the litigation's outcome is a declaration that the contract has expired by its own terms?


Opinions:

Majority - Holmes, District Judge

Yes, a contractual provision awarding attorney's fees to the prevailing party remains enforceable even when the litigation determines that the contract has expired by its own terms. The court rejected the defendants' argument that the fee provision was limited to the purchaser simply because it appeared under the heading "Purchaser's Remedies," citing a separate clause that explicitly states headings are for convenience only and do not limit the agreement's scope. The court found the language "the prevailing party" to be unambiguous. More importantly, the court held that because ORU's lawsuit sought to enforce the terms of the agreement (specifically, the expiration of the option period) rather than to rescind or disaffirm the contract, the provision governing litigation related to the agreement remains valid. Both parties relied on the contract to assert their rights, so the contract's provision for attorney's fees must apply. The court also held that Travis Anderson remained liable for the fees despite assigning his rights to Metroplex, reasoning that while one can assign rights, one cannot delegate duties without the other party's consent, and the duty to pay attorney's fees as the losing party was a contractual duty Anderson could not unilaterally shed.



Analysis:

This decision clarifies that contractual provisions governing litigation, such as attorney's fee clauses, can survive the termination or expiration of the contract's primary obligations. The key distinction is whether a party is seeking to enforce the contract's terms (even an expiration term) versus seeking to rescind the contract and declare it void from the beginning. This holding prevents a party from using a contract as a sword to sue for performance and then, upon losing, claiming the contract is a nullity to avoid a fee-shifting provision. The case also serves as a strong reminder of the fundamental contract law principle distinguishing the assignment of rights from the delegation of duties, confirming that an original obligor remains liable for performance post-assignment unless formally released by the obligee.

G

Gunnerbot

AI-powered case assistant

Loaded: Oral Roberts University v. Anderson (1997)

Try: "What was the holding?" or "Explain the dissent"