Mori Lee, LLC v. Just Scott Designs, Inc.

• Decision Date: 04 February 2014
• Docket Number: No. A13A1809.,A13A1809.
• Parties: MORI LEE, LLC v. JUST SCOTT DESIGNS, INC.
• Court: Georgia Court of Appeals

325 Ga.App. 625

754 S.E.2d 616

MORI LEE, LLC

v.JUST SCOTT DESIGNS, INC.

No. A13A1809.

Court of Appeals of Georgia.

Feb. 4, 2014.

Callaway, Braun, Riddle & Hughes, R. Krannert Riddle, Savannah, for Appellant.

Brown Rountree, George Holland Rountree, Statesboro, Robert Felton Mikell, for Appellee.

MILLER, Judge.

Just Scott Designs, Inc., d/b/a Frills ‘N Fancies, (“Just Scott”), brought this action against Mori Lee, LLC alleging that Mori Lee breached a settlement agreement and seeking specific performance.¹ The parties filed cross-partial motions for summary judgment on the issue of the existence of a settlement agreement, and the binding effect thereof. The trial court granted Just Scott's motion and denied Mori Lee's motion. Mori Lee appeals from that order, contending that there was no binding settlement agreement. For the reasons that follow, we affirm the trial court's denial of Mori Lee's partial motion for summary judgment and reverse the trial court's grant of Just Scott's partial motion for summary judgment.

On appeal from a grant of summary judgment, we conduct a de novo review of the evidence to determine if there exists a genuine issue of material fact and whether the undisputed facts, viewed in the light most favorable to the nonmoving party, entitle the movant to a judgment as a matter of law.

(Punctuation and citation omitted.) Capital ColorPrinting, Inc. v. Ahern, 291 Ga.App. 101, 102, 661 S.E.2d 578 (2008).

So viewed, the record shows that Just Scott is in the business of selling ladies formal wear at its retail store in Statesboro, Georgia. Mori Lee is an out-of-state manufacturer and distributor of ladies formal wear, including prom and wedding dresses. Over the course of several years, Just Scott purchased approximately 1,200 dresses from Mori Lee. Just Scott ordered both prom and wedding dresses pursuant to Mori Lee's policy that a retailer order both lines of dresses if the retailer sold both types of dresses.

In early 2011, Just Scott ordered a number of prom and wedding dresses pursuant to Mori Lee's policy. After placing the order, Just Scott discovered that Mori Lee had allowed some retailers to be exempt from its requirement that the retailer buy a wedding dress if it ordered a prom dress. In May 2011, more than five days after receiving its order of prom and wedding dresses, Just Scott returned the bridal packages and sent an e-mail to Mori Lee explaining that it wished to rescind its order of wedding dresses, that it had returned the dresses, and that it expected a refund. In its e-mail, Just Scott stated that Mori Lee's sales representative had provided incorrect information that it was required to purchase both prom and wedding dresses from Mori Lee.

In response, Mori Lee stated that the sales representative accurately conveyed Mori Lee's policy, it would not accept unauthorized returns,² and it would refer Just Scott's account for legal action if full payment for the dresses was not received within seven days. After an exchange of several more e-mails, Mori Lee informed Just Scott that it was proceeding with the collection of $2,182.54—the amount owing for the wedding dresses—and the matter had been sent to the company's attorney.

The vice president of operations for Mori Lee averred that it never actually hired an attorney to collect on the account, but rather, it hired a collection agency, Account Management Systems (“AMS”). In August 2011, Just Scott was contacted by the Law Offices of Ross Gelfand, which had been retained by AMS, regarding an attempt to collect the amount owed to Mori Lee. Just Scott contacted its attorney, who worked with Ross Gelfand to settle the dispute. Just Scott's attorney made an offer to Ross Gelfand to provide full payment of the debt in exchange for becoming a distributor of Mori Lee's prom dresses without the requirement to order and sell Mori Lee's wedding dresses. This offer was communicated from Ross Gelfand to AMS, and AMS agreed to the settlement terms. Just Scott's attorney then sent Ross Gelfand a letter, dated October 19, 2011, memorializing the purported settlement agreement. A check for $2,182.54 was enclosed with that letter, along with instructions that if Ross Gelfand disputed any of the terms of the agreement, it should not negotiate the enclosed check, because negotiation of the check would constitute confirmation of the settlement terms. The $2,182.54 check, which was made payable to Mori Lee, was subsequently deposited.

Mori Lee subsequently received a check for $1,527.70, after deduction of AMS's fee, and representatives from Mori Lee claimed that they did not learn of the settlement agreement until sometime in December 2011. The vice president of Operations for Mori Lee averred that Mori Lee was not involved in the settlement discussions between AMS and its attorney, Ross Gelfand. The vice president also stated that, had he been asked, he would not have agreed to waive Mori Lee's policy requiring Just Scott to purchase both prom and wedding dresses. Mori Lee subsequently refused to ship an order placed by Just Scott, and the instant lawsuit ensued.

1. On appeal, Mori Lee contends that the trial court erred in granting Just Scott's partial motion for summary judgment and denying its partial motion for summary judgment because the evidence showed that Ross Gelfand did not have the authority to enter into a distributorship agreement or change the company's purchase policy. Since factual questions remain, we conclude that neither party was entitled to summary judgment.

“As a general rule, the question of authority to do an act, when it is to be determined from disputed facts or undisputed facts from which conflicting inferences may be drawn, must be decided by the jury as a question of fact or as a question of mixed fact and law.” (Citation omitted.) Atlanta Limousine Airport Svcs., Inc. v. Rinker, 160 Ga.App. 494, 495(1), 287 S.E.2d 395 (1981).

An agency relationship may arise by implication as well as by express authority, and agency may be proved by circumstantial evidence. Agency may result where one party has apparent authority to effect the legal relations of another party by transactions with a third party, but it must be emphasized that apparent authority to do an act is created as to a third person when the statements or conduct of the alleged principal reasonably cause the third person to believe that the principal consents to have the act done on his behalf by the purported agent.

(Citations and punctuation omitted.) Hinely v. Barrow, 169 Ga.App. 529, 530, 313 S.E.2d 739 (1984). A special agency can arise when one person, expressly or by implication, authorizes another to do a single act on his or her behalf. See Lewis v. Citizens & Southern Nat. Bank, 139 Ga.App. 855, 858(1)(b), 229 S.E.2d 765 (1976). Under OCGA § 10–6–50, the scope of a special agent's authority

shall be construed to include all necessary and usual means for effectually executing it. Private instructions or limitations not known to persons dealing with a general agent shall not affect them. In special agencies for a particular purpose, persons dealing with the agent should examine his authority.

An agent's authority need not be proved by an express contract. 20/20 Vision Center, Inc. v. Hudgens, 256 Ga. 129, 134(4), 345 S.E.2d 330 (1986). Rather, an agent's authority

may be established by the principal's conduct and course of dealing, and if one holds out another as his agent, and by his course of dealing indicates that the agent has certain authority, and thus induces another to deal with his agent as such, he is estopped to deny that the agent has any authority which, as reasonably deducible from the conduct of the parties, the agent apparently has.

(Citation and punctuation omitted.) Id.

It is well-established that an attorney-client relationship is that of a principal and agent. See Anaya v. Coello, 279 Ga.App. 578, 580, 632 S.E.2d 425 (2006). “In order that acts of an agent be binding on his alleged principal, a principal and agent relationship must be proved and it must be established that [the] agent acted within [the] scope of [his] authority.” (Citations omitted.) Id. Additionally,

an attorney who has an attorney-client relationship with a party has apparent authority to enter into [a settlement] agreement on behalf of his client and the agreement is enforceable against the client by other settling parties. This authority is determined by the contract between the attorney and the client and by instructions given the attorney by the client, and in the absence of express restrictions the authority may be considered plenary by the court and opposing parties unless the authority is limited by the client and that limitation is communicated to opposing parties.

(Citations and punctuation omitted.) Id.

Here, there are questions of fact regarding Ross Geilfand's authority to enter into a settlement agreement on behalf of Mori Lee. While Mori Lee representatives averred that Mori Lee did not hire Ross Geilfand as its attorney and that Ross Geilfand was not authorized to enter into the distributorship agreement at issue, an agency relationship was nevertheless created as a matter of law because the evidence showed that Mori Lee never formally assigned the right to collect the debt to a collection agency,³ and that Ross Gelfand worked on behalf of Mori Lee. “When a collecting agency employs a lawyer to handle the claim of a patron, the patron become's the lawyer's client.” Chamberlin Co. of America v. Mays, 96 Ga.App. 755, 758(1), 101 S.E.2d 728 (1957).

Although an attorney-client relationship existed in this case, this does not end the inquiry, because an attorney's authority is limited to the particular purpose for which he was retained. See Addley v. Beizer, 205 Ga.App. 714, 719(1), 423 S.E.2d 398 (1992). There is no doubt that Ross Geilfand's particular purpose was to collect on Just Scott's debt. A factual question remains, however,...