Legal Question in Civil Litigation in California

I had a debt for a loan I took out and I fell behind in the payments. I called the company and spoke to the Manager in charge of my account. I was offered new payment arrangements that were due at the end of each month. I asked her if this would prevent any further actions like legal actions. She said yes as long as I kept to the arrangements we made.The manager accepted the first payment on the new arrangement from me the same day and debited my account that day. She sent me a letter of receipt for that payment and noted our conversation in the letter. Three weeks later I was served a complaint. I called the Manager and she said that should not have happened and called the attorney's office that served the complaint. She told them the company did not want to presue legally but the attorney said it was too late and they would presue regardless of what she said. Well I continued to make the same payments for 8 months while I answered the complaint and then went to court. I told my side of the story and the plaintiff's attorney denied there was ever a prior agreement with the Manager and that I needed to agree to a new settlement agreement on record that included attorney fees of $1800 and other misc court cost. This settlement was $2500 more then what the original debt was for. The judge said that agreement with the Manager was not binding because she did not have the authority to negoitiate it and the letter was meaningless as well. So I did agree in court to the new terms in order to avoid a judgement on my credit report. My question is, was the judge correct in not honoring or considering my agreement with the Manager? Did I have to commit to new terms?


Asked on 9/08/09, 6:49 pm

1 Answer from Attorneys
Edward Hoffman Law Offices of Edward A. Hoffman

That's hard to say, since you haven't told us what evidence the company offered that the manager lacked this authority.

Even if she was not authorized to make this deal there are two other ways you might have been able to win the case. The first is if the company ratified her actions -- in other words, if it learned of the deal and then acted in a way that was consistent with accepting it and inconsistent with rejecting it. The second is if the company acted in a way that reasonably led you to believe the manager was authorized to make this deal. (Note that the manager's own actions are largely irrelevant to this analysis.)

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Answered on 9/09/09, 2:01 am


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