JCB PROPERTIES v. CARLSON

UNPUBLISHED OPINION

ANDERSON, Judge

Appellant JCB Properties and respondent Kandiyohi Title entered into a settlement agreement. Although the settlement agreement was reduced to writing, appellant specifically instructed its counsel to hold the settlement agreement until performance occurred. Contrary to appellant's specific instructions, the signed settlement agreement was distributed by appellant's counsel. Appellant now claims error in the dismissal of respondent Kandiyohi Title from the action. We affirm.

FACTS

JCB Properties entered into an agreement with Randy Carlson to purchase his mobile home park in August of 1995. Kandiyohi Title acted as the title insurance agent and closer for JCB. The agreement fell through when Carlson failed to deliver the mobile home titles. JCB brought suit against both Carlson and Kandiyohi Title. The parties reached a settlement agreement, prepared by JCB's attorney, David C. McLaughlin.

McLaughlin sent three copies of the agreement to JCB where Peter Sampair, JCB's principal, signed them. Sampair claims that he gave McLaughlin instructions not to sign or forward the agreement until all conditions in the agreement had been met and, further, Sampair told him not to send it. McLaughlin, in violation of these instructions, sent the documents out and Carlson and Kandiyohi Title, the other parties in the dispute, signed them. Kandiyohi Title returned to McLaughlin not only the signed settlement agreement but also the agreed-upon consideration in the amount of $6,500.

Carlson failed to perform under the settlement agreement and, several weeks after transmission of the settlement draft, JCB attempted to withdraw from the settlement agreement. Kandiyohi Title moved for enforcement of the settlement agreement and a dismissal of the action against it. The district court granted summary judgment and dismissed the case against Kandiyohi Title.

DECISION

The settling of lawsuits without trial is highly favored and will not be lightly set aside by the courts. Johnson v. St. Paul Ins. Co., 305 N.W.2d 571, 573 (Minn. 1981). Whether an attorney had authority to settle is a question of fact determined by the trial court that will not be disturbed unless clearly erroneous. Triple B G, Inc. v. City of Fairmont, 494 N.W.2d 49, 52 (Minn.App. 1992). The court asks two questions on an appeal from dismissal of an action pursuant to a settlement agreement: (1) whether there are any material issues of fact; and (2) whether the lower courts erred as a matter of law. Austin Farm Center v. Austin Grain Co., 418 N.W.2d 181, 184 (Minn.App. 1988).

The authority of an attorney to settle lawsuits on behalf of a client is set forth in Minn. Stat. § 481.08 (1998):

An attorney may bind a client, at any stage of an action or proceeding, by agreement * * * made in writing and signed by such attorney.

Id. Whether a settlement agreement is in writing or not, the attorneys compromising a claim have no authority to settle without the consent or knowledge of their clients. Aetna Life Cas., Cas. Sur. Division v. Anderson, 310 N.W.2d 91, 95 (Minn. 1981).

Although it failed to make a direct finding on whether or not JCB's attorney, McLaughlin, had authority to settle, the district court clearly implied that such authority existed. The district court properly dismissed JCB's argument that the settlement agreement was "tentative," pointing out that the document claims to be "complete and final, and supersedes all prior agreements." If the record holds any reasonable basis to support the trial court's order, this court may uphold it. Skalbeck v. Agristor Leasing, 384 N.W.2d 209, 212 (Minn.App. 1986). The court's interpretation of the settlement agreement has a reasonable basis in the record. The trial court's factual findings were not clearly erroneous.

Even if there is a dispute regarding the authority of JCB's attorney to settle the case, JCB ratified the settlement agreement by waiting to see whether Carlson would perform before complaining that McLaughlin had no authority to send out the settlement agreement. See Skalbeck, 384 N.W.2d at 213 (client may be bound by a settlement by impliedly ratifying the agreement through silence).

A contract "must be construed most strongly against the party who drafted it." Career Resources, Inc. v. Pearson Candy Co., 435 N.W.2d 114, 116 (Minn.App. 1989). Therefore, the fact that the agreement drafted by McLaughlin contains no references to any contingency strongly works against JCB. Minnesota law on contract formation follows an objective theory, "under which an outward manifestation of assent is determinative, rather than a party's subjective intention." Speckel by Speckel v. Perkins, 364 N.W.2d 890, 893 (Minn.App. 1985). JCB's private intentions do not supersede the fact that they signed the settlement agreement prepared by their own attorney.

JCB relies on Anderson, 310 N.W.2d at 95, to support the position that, "in the absence of explicit consent" to settlement, a party is entitled to a trial on the merits. Id. JCB claims that no explicit consent was given here. Anderson , however, can be distinguished from this case. In Anderson , a third party attempted to waive the plaintiff's claim by effectuating a settlement with the defendant without the plaintiff's knowledge. 310 N.W.2d at 96. Additionally, the plaintiff never signed the settlement agreement. Id. In this case, JCB not only had knowledge of the settlement, but executed it as well. JCB, by signing the document, cannot claim that explicit consent was not given. The trial court did not err as a matter of law.

Affirmed.