Municipal Employment Contracts: Post-Execution Board Knowledge Cannot Create Apparent Authority, and Nonratified Mayor-Signed Contracts Create No Due Process Property Interest

Case: Gresham v. Town of Depew, Oklahoma (10th Cir. Mar. 10, 2025) (Order and Judgment, nonprecedential)
Court: United States Court of Appeals for the Tenth Circuit
Core Holding: A statutory town’s mayor lacked authority to bind the town to a written employment contract without board approval; later board awareness does not establish the mayor’s apparent authority at the time of signing; and the board did not ratify the contract. Because the contract was invalid, it created no Fourteenth Amendment property interest.

I. Introduction

Kevin Gresham, hired as Chief of Police for the Town of Depew, Oklahoma, drafted a written “Employment Contract” after the Town’s Board of Trustees orally agreed to hire him at $42,000 per year and send him to “chief’s school.” The mayor signed Mr. Gresham’s self-drafted contract, which added terms never voted on by the Board—most notably a two-year term and a buy-out provision requiring payment of half the remaining salary if terminated without gross misconduct.

After Mr. Gresham suffered a seizure and medical restrictions affected his duties, the Board terminated him. He sued the Town for (1) breach of contract (failure to pay the buy-out) and (2) a Fourteenth Amendment procedural due process violation, alleging the contract created a property interest in continued employment. The key issues on appeal were:

• whether the mayor had apparent authority to bind the Town to the written contract;
• whether the Board ratified the contract despite not voting to approve it; and
• whether an invalid contract can support a due process property interest.

II. Summary of the Opinion

The Tenth Circuit affirmed summary judgment for the Town. Applying Oklahoma agency and municipal-law principles, the court held:

• The mayor lacked actual authority to execute the contract on the Town’s behalf under 11 Okla. Stat. § 12-105, and Mr. Gresham conceded the point.
• The mayor also lacked apparent authority because apparent authority must be grounded in manifestations by the principal (the Board) that make it reasonable to believe the agent is authorized at the time of the transaction; post-signature events (Board discussions/knowledge months later) cannot establish apparent authority when the contract was executed.
• The Board did not ratify the contract under the Oklahoma test (accepting benefits with full knowledge), because the Town’s conduct (paying salary for work performed) was consistent with the Board-approved oral hiring terms and did not show adoption of the additional, self-drafted written terms.
• Because the written contract was invalid, it created no property interest; therefore, the procedural due process claim failed under Steffey v. Orman.

III. Analysis

A. Precedents Cited (and How They Shaped the Outcome)

1. Summary judgment framework and appellate posture

• Universal Underwriters Ins. Co. v. Winton and Fed. R. Civ. P. 56(a) supplied the de novo standard and the requirement of “no genuine dispute as to any material fact.”
• Zahourek Sys., Inc. v. Balanced Body Univ., LLC and Deherrera v. Decker Truck Line, Inc. (citing Weigel v. Broad) reinforced that facts are viewed in the nonmovant’s favor.
• Adamson v. Multi Cmty. Diversified Servs., Inc. and Adler v. Wal-Mart Stores, Inc. provided the burden-shifting principle: a movant without the trial burden can prevail by identifying a lack of evidence on an essential element.
• Butler v. Daimler Trucks N. Am., LLC and Fed. R. Civ. P. 56(e)(2) mattered practically: the court treated many of the Town’s asserted facts as admitted because Mr. Gresham did not properly dispute them. This narrowed what could be argued as “genuinely disputed” on appeal.

2. Contract formation and municipal capacity

• Digital Design Grp., Inc. v. Info. Builders, Inc. framed the breach claim elements, focusing the appeal on “formation of a contract.”
• 15 Okla. Stat. § 2(1) (“capable of contracting”) and 11 Okla. Stat. § 12-105 (mayor’s limited powers) supplied the statutory backdrop: the mayor could not unilaterally bind the Town absent proper authorization.

3. Apparent authority (agency doctrine as applied to public entities)

• Stephens v. Yamaha Motor Co., Ltd., Japan supplied the foundational definition: apparent authority arises from a manifestation by the principal to a third person; it exists only to the extent it is reasonable to believe the agent is authorized (with reference to Restatement (Second) of Agency § 8 cmt. c).
• Traders Ins. Co. v. Johnson provided the critical limitation applied here: apparent power is determined by acts of the principal, not acts of the agent. The court used this to reject arguments based on the mayor’s statements or conduct.
• Keel v. Titan Constr. Corp. and Thornton v. Ford Motor Co. placed the burden on the party asserting agency/apparent authority and clarified that agency can be resolved as a matter of law when facts are undisputed and no conflicting inferences exist.
• Franco v. State ex rel. Bd. of Regents of the Univ. of Okla. reinforced that an agent cannot unilaterally expand authority; it also supported the proposition that apparent authority can become a legal question on an undisputed record.
• The court acknowledged an intra-state tension about whether “detrimental reliance” is an element by citing both Sparks Bros. Drilling Co. v. Tex. Moran Expl. Co. and Sanders v. Cole (plus Eddy v. Bricktown Hosp., LLC), but found it immaterial because the dispositive defect was the absence of a principal’s manifestation at the relevant time.
• Although not Oklahoma cases, the court’s time-of-transaction rule was bolstered by GP3 II, LLC v. Litong Cap., LLC, Lagerquist v. Stergo, and R-Delight Holding LLC v. Anders, each reflecting the orthodox principle that events after contract formation cannot retroactively create apparent authority.

4. Municipal “notice of limits” doctrine

• Nichols v. Jackson and Nottingham v. City of Yukon (quoting Indep. Sch. Dist. No. 1, McIntosh Cnty. v. Howard) supplied a stringent public-law rule: persons dealing with municipal officers are presumed to know the scope limits of municipal authority; contracting beyond those limits is at one’s peril. This principle undercut any claim that a city official’s signature alone made reliance “reasonable.”

5. Ratification

• Kincaid v. Black Angus Motel, Inc. provided the governing three-part ratification standard (accept benefits, full knowledge, competence), which the court treated as decisive.
• Diamond Sevens, L.L.C. v. Intelligent Home Automation, Inc. (citing Amazon Fire Ins. Co. v. Bond) supplied the definition of ratification as adoption/confirmation of an unauthorized act.
• G.E. Cap. Info. Tech. Sols., Inc. v. Okla. City Pub. Schs. was especially important because it applied the same ratification test in the municipal context, reinforcing that municipal entities are not casually deemed to have ratified unauthorized agreements.
• Riddle v. Ellis supported the court’s point that conduct consistent with both the existence and absence of the disputed contract (e.g., payment consistent with a separate understanding) is insufficient to prove ratification.
• Williams v. TAMKO Bldg. Prods., Inc. reinforced the “full knowledge of the facts” requirement: no ratification where evidence does not show awareness of the specific term at issue (there, an arbitration clause; here, the added written terms such as the buy-out).
• Sundance Energy Okla., LLC v. Dan D Drilling Corp. was used to show that evidence consistent with either an express contract or no express contract is not enough to establish ratification of the express contract.
• On “silence as ratification,” the court relied on Alexander v. Phillips Petroleum Co. and addressed Minneapolis Threshing Mach. Co. v. Humphrey, distinguishing the latter’s two-year silence (and other conduct) from the short time period in this case.

6. Forfeiture/waiver and judicial estoppel discussion

• Richison v. Ernest Grp., Inc. disposed of a new appellate argument because Mr. Gresham did not raise it below and did not seek plain-error review.
• For inadequate briefing/waiver, the court cited First W. Cap. Mgmt. Co. v. Malamed and Leathers v. Leathers.
• On preservation, it cited Lyons v. Jefferson Bank & Tr. (quoting Monarch Life Ins. Co. v. Elam) to reject “vague references” as insufficient.
• On judicial estoppel, the court drew from Stender v. Archstone-Smith Operating Tr. (quoting New Hampshire v. Maine) and applied the factors as articulated in Malamed (quoting Eastman v. Union Pac. R.R. Co.).
• Clinton v. Sec. Benefit Life Ins. Co. explained why the Town’s earlier motion-to-dismiss posture did not amount to a binding admission: at Rule 12(b)(6), the movant assumes well-pleaded facts as true for purposes of the motion.
• United States v. Sup. Ct. of N.M. underscored the “high bar” for showing clearly inconsistent positions.
• As additional support, the court cited Lehman Bros. Holdings, Inc. v. Hirota for the notion that accepting allegations as true at dismissal does not estop a later merits argument.

7. Due process “property interest” requirement

• Steffey v. Orman supplied the rule that a procedural due process claim requires a constitutionally cognizable liberty or property interest. Because Mr. Gresham’s asserted property interest depended entirely on an invalid contract, the due process claim failed.

B. Legal Reasoning

1. Why the mayor’s signature did not bind the Town

The court’s reasoning begins from Oklahoma’s statutory structure for “statutory towns.” Under 11 Okla. Stat. § 12-105, the mayor’s enumerated powers are narrow and do not include general contracting authority on behalf of the Board. With no ordinance expanding the mayor’s powers, there was no actual authority.

2. Apparent authority fails because (a) the principal is the Board, and (b) timing matters

The opinion tightens the apparent authority inquiry around two constraints:

• Source constraint: The principal’s manifestations control. The relevant “principal” was the Board of Trustees, not the mayor. Evidence focused on the mayor’s assurances (“the Town had approved it”) did not satisfy Traders Ins. Co. v. Johnson’s requirement to look to the principal’s conduct.
• Temporal constraint: Apparent authority must exist when the contract is executed. Mr. Gresham’s primary evidence (Board discussions in September; Board awareness before October termination) occurred after the July 23 signing. The court treated this as legally insufficient because post-execution conduct cannot retroactively “cloak” an agent with authority at formation.

The court also invoked the municipal notice-of-limits doctrine (Nichols v. Jackson; Nottingham v. City of Yukon): those who contract with municipalities are presumed to know legal limits on official authority, making reliance on a mayor’s unilateral signature especially difficult to deem “reasonable.”

3. Ratification fails because the Town’s conduct matched the Board-approved oral hiring terms

Ratification required proof that the Board accepted benefits of the specific unauthorized contract with full knowledge of its material terms. The Town paid Mr. Gresham and accepted his work, but those benefits aligned with the July 1 board vote (salary, position) rather than uniquely evidencing acceptance of the written contract’s added terms (two-year term; buy-out; paid time off; reimbursement; termination limitations).

The court also rejected “silence equals ratification.” Even assuming the Board learned of the contract sometime after July 23, only two to three months elapsed before termination, which the court found insufficient—especially compared to Minneapolis Threshing Mach. Co. v. Humphrey’s two-year silence scenario.

4. Due process fails because there is no valid contract-based property interest

Mr. Gresham anchored his property interest claim entirely in the written Employment Contract’s termination restrictions. Once the contract was deemed invalid and unratified, there was no contract-based entitlement to continued employment, and thus no cognizable property interest under Steffey v. Orman.

C. Impact

1. Practical impact for public employees and municipal employers

• Board action is essential: In statutory-town governance structures, a mayor’s signature alone may be insufficient to create enforceable employment protections (such as fixed terms or severance/buy-out provisions) absent proper board approval.
• Apparent authority is hard to prove against municipalities: The “persons are bound to know the extent of authority” doctrine limits reliance-based theories where the public entity’s internal approval processes are legally prescribed.
• Ratification requires clear, contract-specific adoption: Routine payment for work performed—especially when consistent with an earlier board vote—may not show acceptance of additional, unauthorized written terms.

2. Litigation impact

• Timing of manifestations matters: The opinion emphasizes that post-formation knowledge/discussion is generally irrelevant to apparent authority at execution, an argument likely to be deployed in future agency disputes.
• Summary judgment fact practice can be dispositive: The court’s reliance on Rule 56(e)(2) admissions (via Butler v. Daimler Trucks N. Am., LLC) highlights that failing to controvert asserted facts can collapse otherwise fact-intensive agency questions into legal ones.
• Do not overread motion-to-dismiss postures: A party’s decision to assume pleaded facts at Rule 12(b)(6) does not necessarily create estoppel on later merits defenses, as illustrated by the court’s discussion of judicial estoppel and Rule 12 standards.

IV. Complex Concepts Simplified

• Actual authority: The agent really has power because law, ordinance, or the principal expressly granted it. Here, 11 Okla. Stat. § 12-105 did not grant the mayor power to bind the Town by contract without authorization.
• Apparent authority: Even if the agent lacks real authority, the principal’s conduct may lead a third party reasonably to believe the agent is authorized. Key points emphasized here:
  • It must come from the principal (the Board), not the agent (the mayor).
  • It must exist at the time of signing; later events generally do not retroactively create it.
• Ratification: The principal can adopt an unauthorized contract after the fact. Oklahoma requires acceptance of benefits with full knowledge. Merely paying someone for work, when that payment is already required under a separate approved arrangement, may not prove ratification of additional disputed terms.
• Procedural due process “property interest”: A protected property interest is an entitlement the law recognizes (often via statute, ordinance, or a valid contract). If the contract is invalid, it cannot create the entitlement needed to trigger due process protections.

V. Conclusion

Gresham v. Town of Depew, Oklahoma underscores that municipal contracting authority is formal and rule-bound: where a statutory town’s board never approved a mayor-signed employment contract, apparent authority cannot be manufactured from later board awareness, and ratification will not be inferred from conduct equally consistent with an earlier, limited board-approved agreement. The decision also illustrates a downstream constitutional consequence: without a valid contract-based entitlement, a public employee’s procedural due process claim premised on continued employment cannot proceed.