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In Larson v. Speetjens, No. C 05-3176 SBA, 2006 WL 2567873 (N.D. Cal. Sept. 5, 2006), a group of plaintiffs brought suit against attorney Speetjens and her former law firm, Frazer Davidson in the United States District Court for the Northern District of California. Plaintiff Janet E. Larson hired Frazer Davidson for the purpose of suing Michael Kimsey, an investment advisor. The parties disagreed, however, on whether Larson entered into the attorney-client relationship as an individual or acting as trustee of the Larson Family Revocable Trust.
This question was brought to the forefront after Speetjens and Frazer Davidson sought to compel arbitration of Plaintiffs’ claims, even though Larson’s name was the only signature on the attorney-client agreement containing the binding arbitration clause. The Court ruled in favor of Speetjens, requiring Plaintiffs to arbitrate their claims.
The Court noted that the doctrine of equitable estoppel could be invoked to bind non-signatories to a contract from which they benefited. International Paper Co. v. Schwabedissen Maschinie & Angelagen GMBH, 206 F.3d 411, 418 (4th Cir. 2000). Plaintiffs’ cause of action was “intertwined with” the subject matter of the legal representation agreements, and they acquiesced to receiving the benefits of legal assistance that Larson had obtained. Therefore, Plaintiffs could not later assert that the arbitration provisions of the attorney-client agreement were inapplicable.
Even had Plaintiffs not been bound by Larson’s agreement with Speetjens, the law of agency would still bind them to the arbitration agreement. Principals are liable “when the principal knows the agent holds himself or herself out as clothed with certain authority and remains silent.” NORCAL Mutual Ins. Co. v. Newton, 84 Cal.App.4th 64, 78 (Cal.App. 1 Dist. 2000). Plaintiffs, knowing that Larson had actual or ostensible authority to act on their behalf, failed to object to such authority, and were bound by Larson’s actions under agency principles.
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