Opinion
NO. 2019-CA-000150-MR
03-27-2020
CHARLES ADAMSON APPELLANT v. JONATHAN ADAMSON AND PAUL ADAMSON APPELLEES
BRIEFS FOR APPELLANT: Robert B. Frazer Marion, Kentucky BRIEF FOR APPELLEES: William Clint Prow Providence, Kentucky
NOT TO BE PUBLISHED APPEAL FROM UNION CIRCUIT COURT
HONORABLE C. RENE' WILLIAMS, JUDGE
ACTION NO. 15-CI-00099 OPINION
AFFIRMING
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BEFORE: GOODWINE, KRAMER, AND MAZE, JUDGES. GOODWINE, JUDGE: Appellant, Charles Adamson, appeals a Union Circuit Court order in favor of Jonathan and Paul Adamson. Charles argues the circuit court incorrectly: (1) found a settlement agreement between the parties enforceable; (2) found he had apparent authority to bind his wife to the settlement agreement; and (3) did not find his wife a necessary party and failed to join her in the action. After reviewing the record, finding no error, we affirm the Union Circuit Court's order.
This case originated in Union District Court, regarding a probated holographic will of Rickie E. Adamson. Rickie left behind a wife and three children. The will left the estate to his wife, Loueva Adamson, his children's step-mother. His estate consisted of $85,000 and a family farm he and Loueva purchased in 1989. The case was ultimately resolved in February 14, 2014. Three months later, one of Rickie's sons, Charles, and Charles's wife entered into a contract of sale with Loueva to sell the farm for $396,000.
The case before us arose when Rickie's two other sons, Appellees, discovered that someone forged Rickie's probated will. On August 10, 2015, Appellees initiated a proceeding against Loueva and Charles to settle their father's estate. After two years of discovery, the circuit court ordered the parties to mediation.
Mediation took place on June 29, 2017. All parties and their counsel were present at mediation. After six hours of mediation, the parties reached an agreement. Due to the complexity of the agreement, the mediator prepared the settlement agreement. After the mediation, Appellees, their spouses, and Loueva executed the settlement agreement. Charles and his wife refused to sign the agreement, taking issue with only two paragraphs. Those paragraphs pertained to the family farm being deeded to form a limited liability company called Blue Gate Farms, LLC, which Appellees and Charles would own equally.
Due to Charles's refusal to sign the agreement, Appellees filed a request for the circuit court to enter a judgment adopting the settlement agreement. Interestingly, Charles fired the counsel that represented him at the mediation. The same counsel also represented Loueva in the proceeding—and she did not fire him. But Charles contended he was unrepresented by counsel during the mediation. Because of this dispute, the circuit court held a hearing on June 11, 2018.
At this hearing, Charles testified that Appellees asked him at mediation if his wife would "go along with anything," to which he replied, "I'll just tell her to if we come to an agreement." He also testified that he never hired counsel, although he acknowledged he met with counsel with Loueva and had opportunities to talk to counsel outside the presence of other parties. When asked if he believed all involved reached an agreement that day, he responded, "I guess so." However, he further explained that he did not believe the agreement prepared by the mediator properly represented the terms to which the parties agreed. Counsel for Loueva stated at the hearing, "I felt like there was an agreement reached when we left that day. There is no question. I think everybody believed that including [mediator]."
After hearing the testimony, the circuit court found there was an abundant amount of evidence to conclude that a binding agreement was reached and memorialized in writing. Therefore, it granted Appellees' motion to enforce the judgment. This appeal followed.
Because the interpretation of settlement agreements is a question of law, we review under a de novo standard. Frear v. P.T.A. Industries, Inc., 103 S.W.3d 99, 105 (Ky. 2003).
Charles makes three arguments on appeal. He contends the circuit court erred in: (1) finding the settlement was enforceable, as to the real estate; (2) finding Charles had apparent authority to bind his wife to the settlement agreement; and (3) not finding his wife a necessary party and failing to join her in the action. We address each issue in turn.
First, we address the validity of the mediation agreement. To begin, a settlement agreement is a type of contract. Thus, we evaluate such agreements under our current contract law. Id. Since Kentucky contract law governs this agreement, we must next decide whether this agreement needed memorialization through a signed writing. KRS 371.010. Kentucky's statute of frauds outlines nine agreements that must "be in writing and signed by the" charged party. Id.
Kentucky Revised Statute.
From our review, the only conceivable section in which the mediation agreement could fall under would be section (6). This section requires a signed writing for "any contract for the sale of real estate[.]" KRS 371.010(6). Charles argues the real estate cannot pass because it violates this section of Kentucky's statute of frauds. This argument bears no merit. Contrary to Charles's assertions, the mediation agreement was not a specific contract for the sale of real estate under KRS 371.010(6). The mediation agreement was merely a contractual, written agreement to resolve outstanding issues between the parties in a civil dispute. Therefore, the statute of frauds is inapplicable.
Second, we must address Charles's agency argument. In it, he contends the agreement should be unenforceable because he did not have the apparent authority to act on behalf of his wife. We disagree. In Kentucky, there are three types of agency authority: (1) actual authority, arising from the intentional granting of authority from a principal to an agent; (2) implied authority, arising from a principal intending for the agent to carry out duties; and (3) apparent authority, arising when a principal may, or may not, have specifically granted authority to an agent. Kindred Healthcare, Inc. vs. Henson, 481 S.W.3d 825, 830 (Ky. App. 2014) (citing Mill Street Church of Christ v. Hogan, 785 S.W.2d 263, 267 (Ky. App. 1990)). Agency cannot be proven by a mere statement, but it can be established by circumstantial evidence, including the acts and conduct of the parties. Monohan v. Grayson County Supply Co., 245 Ky. 781, 54 S.W.2d 311 (1932); Wedding v. Duncan, 310 Ky. 374, 220 S.W.2d 564 (1949).
Here, the evidence before the circuit court was sufficient to establish Charles (the agent) acted under the apparent authority of his wife (the principal) during the mediation. Given Charles's words and actions, his brothers had a reasonable, good-faith basis to believe he had apparent authority. The crux of apparent authority deals with the "matter of appearances on which third parties come to rely." Hogan, 785 S.W.2d at 267 (citation omitted). During mediation, Charles expressly indicated to all parties he was acting on his wife's behalf. According to his testimony, he did not have to run any settlement agreement or issues by her during discussions of potential resolutions between the parties. Appellees had no reason to doubt his judgment, therefore, acting reasonably when they moved the circuit court to enter the agreement. Thus, we hold Charles did have apparent authority during the mediation.
We note that Charles did not mention his lack of authority until several months after mediation and after all parties but Charles signed the settlement agreement. --------
Third, and finally, even if Charles did not have apparent authority, his arguments and relief are barred by the doctrine of equitable estoppel. Under Kentucky law, "[t]he doctrine of equitable estoppel is applied to transactions where it is found that it would be unconscionable to allow a person to maintain a position inconsistent with one in which he acquiesced[.]" Smith v. Williams, 396 S.W.3d 296, 300 (Ky. 2012) (quoting Young v. Venters, 229 Ky. 806, 18 S.W.2d 277, 278 (1929)). In essence, it provides that one party can be prevented from taking advantage of another party when they have falsely induced the party to act in some detrimental way. Ping v. Beverly Enterprises, Inc., 376 S.W.3d 581, 594-95 (Ky. 2012).
Our Supreme Court has provided a series of elements that must be met for courts to apply equitable estoppel:
The essential elements of equitable estoppel are[:] (1) conduct which amounts to a false representation or concealment of material facts, or, at least, which is calculated to convey the impression that the facts are otherwise than, and inconsistent with, those which the party subsequently attempts to assert; (2) the intention, or at least the expectation, that such conduct shall be acted upon by, or influence, the other party or other persons; and (3) knowledge, actual or constructive, of the real facts. And, broadly speaking, as related to the party claiming the estoppel, the essential elements are[:] (1) lack of knowledge and of the means of knowledge of the truth as to the facts in question; (2) reliance, in good faith, upon the conduct or statements of the party to be estopped; and (3) action or inaction based thereon of such a character as to change the position or status of the party claiming the estoppel, to his injury, detriment, or prejudice.Sebastian-Voor Properties, LLC v. Lexington-Fayette Urban Cty. Gov't, 265 S.W.3d 190, 194-95 (Ky. 2008) (citations omitted). Therefore, the Supreme Court's test is twofold—relying on both the actions and beliefs of both parties.
In this case, Charles meets each of the doctrine's three elements. His conduct and testimony show he falsely represented to his brothers that his wife would "go along with anything" and, essentially, do what he told her to do regarding the real estate in the agreement. And he now asserts he did not have any such authority over her. Next, he intended for the Appellees to rely on his assertions. The three brothers were in a long mediation. Appellees explicitly asked Charles if his wife would go along with any agreement they reached, which Charles assured she would. And Appellees acted on this assurance. Finally, Charles would have had actual or constructive knowledge of whether his wife would acquiesce to certain agreements, especially about the land they both owned. Thus, he meets each of the doctrine's three elements that evaluate his actions.
On the other side, Appellees also meet each of the doctrine's three elements that pertain to their actions and beliefs. To begin, Appellees had a "lack of knowledge and of the means of knowledge of the truth" of whether Charles's wife would go along with an agreement reached during the mediation. She was not at the mediation. Based on this lack and means of knowledge, Appellees then relied on their brother's assurances. They reached an agreement and asked the circuit court to enforce that agreement. Furthermore, because all three reached such an agreement, the record indicates Appellees halted discovery and the taking of depositions against Charles and Loueva, as well as halted the criminal investigation into the forgery. The factual record clearly indicates they relied and acted on Charles's assurances. And because of their good-faith reliance, Charles now asserts a defense that would contradict that mutual understanding and end in Appellees' detriment. Charles argues Appellees failed to name an indispensable party to this action—his wife. Appellees did not name her in the action because they were under the good-faith belief that Charles acted with her authority. Therefore, if we were to agree with Charles's procedural argument, it would vacate the mediation agreement—to the injury and detriment of Appellees. Charles cannot have his cake and eat it, too. He cannot in one hand tell his brothers he has authority to enter an agreement on behalf of his wife, then with the other hand, blatantly contradict those assurances with this procedural defense. Therefore, we estop his actions, preventing unjust injury, detriment, and prejudice to Appellees.
Based on the foregoing reasons, we affirm the Union Circuit Court's rulings.
ALL CONCUR. BRIEFS FOR APPELLANT: Robert B. Frazer
Marion, Kentucky BRIEF FOR APPELLEES: William Clint Prow
Providence, Kentucky