Opinion
NOT TO BE PUBLISHED
APPEAL from a judgment of the Superior Court of San Diego County No. GIC867419, Jay M. Bloom, Judge.
HUFFMAN, Acting P. J.
We review a defense summary judgment in an action for damages for conspiracy to commit fraud, arising out of various real estate deals. Plaintiff and appellant Corey Loomis (Plaintiff) sued his former business associates, who are not parties to this appeal (defendant Michael Donovan et al., referred to hereafter as Donovan et al. or the business associates). Also, Plaintiff sued defendant and respondent Bert Purdy & Associates, Inc. (Purdy), a tax firm which had, through the services of one of those former business associates, Robert Stovall (not a party to this appeal), prepared Plaintiff's taxes for several years. As relevant here, Stovall had also prepared for the business associates and Plaintiff certain accountings of real estate profits and losses, as well as a partnership agreement between Plaintiff and one of his former business associates. Plaintiff now contends those documents were fraudulent and he seeks to recover damages from Purdy on a respondeat superior or agency theory, contending that it was a principal for Stovall, its actual or ostensible agent, at the relevant times, and Purdy should be bound by the tortious acts of Stovall.
Purdy successfully brought a motion for summary judgment or adjudication of issues, seeking to establish that as a matter of law, Plaintiff could not prevail on his conspiracy and fraud cause of action because the necessary facts to support a showing of Stovall's agency for Purdy could not be demonstrated. The trial court ruled that Purdy had met its burden of proof to show a lack of triable factual issues. (Code Civ. Proc., § 437c, subd. (c).) Reconsideration was denied.
Plaintiff appeals, contending the grant of summary judgment was erroneous. He first argues Purdy's moving papers were insufficient to shift to him the burden of showing there were triable issues about the theory of ostensible agency. (Code Civ. Proc., § 437c, subd. (p)(2).) He next contends the trial court erroneously failed to recognize that triable issues remain about the existence of ostensible or actual agency of Stovall for the principal, Purdy, with respect to the fraud and conspiracy claims.
After reviewing the record de novo, we conclude the trial court correctly granted summary judgment as a matter of law and the judgment must be affirmed.
FACTUAL AND PROCEDURAL BACKGROUND
A. Underlying Business Transactions; Complaint
Plaintiff's cause of action for fraud, deceit and conspiracy is based on three agreements with defendant Michael Donovan. The merits of those disputes are not now before us, and review of the superior court file shows that trial was set to commence in October of 2008 on Plaintiff's claims against Stovall, Donovan, his wife Karen Donovan, and one of the real estate investment companies they formed with Plaintiff (Olaf Inv. #2). (Evid. Code, §§ 452, 459.)
For our purposes here, we briefly summarize the dispute between Plaintiff and Donovan et al., utilizing some of the language of the trial court's summary judgment order in a companion summary judgment motion brought by Donovan et al. The business associates' dispute began over the proceeds of a 2002 settlement that Donovan reached with third parties, about a tour company that he and Plaintiff had operated together, which lost money when other companies interfered with their arrangements. Plaintiff contends he did not receive the correct proportion of those settlement proceeds from Donovan.
Also against Donovan et al., Plaintiff contends that he has not received the appropriate amount of proceeds from a real estate investment project between them, which utilized the "shared proceeds" from the previous settlement to buy residences, fix them up and sell them. Plaintiff claims that Donovan et al. and defendant Stovall, who prepared tax returns for Plaintiff and the companies, defrauded him of his rightful share in the settlement and real estate investments, by misrepresenting the profitability of at least one of these properties, the "Alcott property." Plaintiff argues Stovall prepared his tax returns using fraudulent income information provided by Donovan.
In a third written agreement, drafted by Stovall, Plaintiff and Donovan agreed to continue their partnership. That agreement was intended to settle their disputes at that time (September 2004). Plaintiff now contends that this partnership agreement, reciting that neither he nor Donovan owed the other money, was fraudulent. At the time, Stovall told Plaintiff that he was a neutral party who had no reason to misrepresent the amounts of monies due to Plaintiff. For the past three years, Stovall had prepared personal tax returns on Plaintiff's behalf (2001-2004), as well as tax returns for the business associates and their companies.
In 2004, Stovall created for the business associates several real estate profit and loss statements about the properties they had purchased and sold. These are in rough form, half computerized and half handwritten, and they do not have the Purdy letterhead on them. According to Plaintiff's declaration and the deposition of Stovall, the data from these statements was used in the tax returns that Stovall filed on behalf of Plaintiff and the other business associates, using the Purdy tax forms.
From September 2004 through March 2005, Plaintiff and Donovan continued to work together on buying, upgrading, and selling residential properties. Plaintiff now contends Donovan and Stovall misrepresented the profitability of the properties and withheld appropriate cash disbursements to him.
In 2006, Stovall provided an accounting summary for six properties, including the Alcott property ("Loomis Property Recap"), that the business associates had bought and sold. Plaintiff alleges that when Stovall prepared the 2006 tax returns for the Donovan companies, he used figures provided by Donovan and intentionally misrepresented the profitability of the investments and amounts paid to Plaintiff. Plaintiff received this information and decided to sue.
In the operative pleading, the third amended complaint, Plaintiff seeks to hold Purdy liable for allegedly fraudulent conduct of Stovall, under the theory of respondeat superior, in a separate count of the single cause of action for fraud. Purdy is also named in the general conspiracy count. Although Plaintiff no longer contends that Stovall was actually an employee of Purdy, he does contend that Stovall misrepresented himself to be employed by Purdy, and Purdy knew this.
B. Role of Purdy; Its Motion for Summary Judgment
Purdy is a Nevada corporation, with one office in Las Vegas, Nevada, where it carries out a business of income tax return preparation. A company known as Tax Settlement LLC, for which Stovall worked (or was a partner or independent contractor), rented office space from Purdy. In his work for Plaintiff, Stovall used the computer server, fax machine, phone facilities, and billing services of Purdy, and the 2003 and 2004 tax returns he prepared for Plaintiff and filed electronically showed that Purdy was the paid preparer. Plaintiff paid Purdy for the tax services rendered to him by Stovall, and Purdy continued to maintain those tax files.
Purdy moved for summary judgment, or in the alternative, summary adjudication of two issues, on the theory that any misrepresentations made by Stovall were outside the scope of any authority given him by Purdy, and/or Stovall made no intentional misrepresentations. In support, Purdy submitted the declaration of its corporate director, Julia Purdy, stating that its primary business was income tax return preparation, which did not include other business practices, such as preparing profit and loss statements for real estate investments or drafting legal documents. Ms. Purdy stated that Purdy did not receive money for those particular documents prepared by Stovall, nor was it aware that he had been hired to prepare those documents. Stovall was never its employee, but instead worked for Purdy's tenant, Tax Settlement LLC. Ms. Purdy had never met Plaintiff. Purdy also submitted the answer of Donovan et al., which denied that Stovall had ever misrepresented himself to be an employee of Purdy.
In opposition, Plaintiff submitted his own declaration, authenticating several exhibits, including Stovall's 2004 rough accounting worksheets for profit and loss calculations for the Alcott property, and the 2006 accounting worksheet entitled "Loomis Property Recap," which showed Plaintiff's expenses on the properties and cash payments to Plaintiff from Donovan. The latter document raised the estimate of profit from the Alcott property from the previous estimates by about $110,000, which raised Plaintiff's suspicions of fraud.
In his opposition, Plaintiff also relied on deposition testimony from Stovall and from Julia Purdy, to show that the tax returns that Stovall prepared for him personally in 2004 listed Purdy as the preparer, and he paid Purdy accordingly. Reply papers were filed and the court issued a ruling on Purdy's motion, as well as on the companion motion by Donovan et al. (not before us).
In its ruling to grant Purdy summary judgment, the trial court found that Plaintiff had failed to present any evidence contradicting Purdy's evidence that Stovall was not its employee. Specifically, Plaintiff did not produce any evidence to create triable issues of fact about whether Stovall's performance of accounting functions and preparation of legal documents was within the scope of any employment relationship with Purdy.
Additionally, the court ruled that even if Stovall were deemed to be Purdy's ostensible agent, there was no evidence presented to create a triable issue of fact on whether he had acted within any authority given to him to bind Purdy to the allegedly fraudulent real estate transactions. The court ruled, "The evidence does not suggest Purdy did anything intentionally or carelessly to cause plaintiff to believe Stovall was its agent. [Citation.]"
C. Reconsideration Motion; Appeal
In response to the ruling, Plaintiff filed his motion for reconsideration, contending that the billing records of Purdy and the answer by Purdy, admitting that it issued bills for work performed by Stovall, created triable issues of fact on agency and scope of employment. Opposition was filed. The court denied the motion on the grounds that Plaintiff had not shown any new or different facts, circumstances or law. (Code Civ. Proc., § 1008.) Specifically, the issues of scope of authority and agency had already been presented in the original Purdy summary judgment motion. The "new" evidence offered on those issues, the answer filed by Purdy, had already been considered. The additional evidence submitted, Purdy's invoices and electronic filing tax forms that showed it was the paid preparer for Plaintiff, including the 2003 tax return, could have been produced earlier, and did not make any difference, because those documents did not change the analysis, as the trial court explained:
"Plaintiff still has not produced evidence that Stovall's performance of accounting functions and preparation of legal documents was within the scope of any employment relationship he may have had with Purdy. The evidence presented then and the evidence presented now still does not show that Purdy did anything intentionally or carelessly to cause plaintiff to believe that Stovall was its agent when Stovall prepared profit/loss statements and legal documents."
Plaintiff appeals.
DISCUSSION
I
STANDARD OF REVIEW: SUMMARY JUDGMENT
Summary judgments are properly granted when there is no triable issue as to any material fact and the moving party is entitled to judgment as a matter of law. (Horn v. Cushman & Wakefield Western, Inc. (1999) 72 Cal.App.4th 798, 805 (Horn).) Summary judgment rulings made upon materially undisputed facts present pure questions of law that are reviewed on a de novo basis. (Delfino v. Agilent Technologies, Inc. (2006) 145 Cal.App.4th 790, 797-798; Lisa M. v. Henry Mayo Newhall Memorial Hospital (1995) 12 Cal.4th 291, 299 (Lisa M.).) When the record contains only undisputed facts, from which no conflicting inferences are possible, even a determination that would ordinarily be factual in nature (e.g., whether an employee has acted within the scope of employment) becomes a question of law. (Ibid.; see 3 Witkin, Summary of Cal. Law (10th ed. 2005) Agency, § 93, pp. 140-141 (Witkin).)
In seeking summary judgment, a defendant bears the initial burden of proving the plaintiff's "cause of action has no merit" by showing that one or more elements of the cause of action cannot be established, or there is a complete defense. (Horn, supra, 72 Cal.App.4th 798, 805-807; Code Civ. Proc., § 437c, subd. (p)(2).) Once the defendant's burden is met, the burden shifts to the plaintiff to show that a triable issue of fact exists as to that cause of action. (Ibid.) To defeat such a motion for summary judgment, the plaintiff must make a showing of specific facts that are evidentiary in nature and raise triable issues, rather than relying upon the allegations of the pleadings. (Ibid.)
Plaintiff contends the trial court erred in granting summary judgment for Purdy as to each of the counts in his fraud cause of action, because triable issues remain as to the existence of Stovall's actual agency for Purdy and/or ostensible agency. We first address Plaintiff's argument that Purdy's initial evidentiary showing in its motion was so incomplete that the burden should never have been shifted to Plaintiff to demonstrate that triable issues remained. We may then determine the adequacy of Plaintiff's efforts to raise triable issues about any actual and ostensible agency of Stovall for Purdy.
II
AGENCY ISSUES
A. Introduction: Agency Doctrine
Civil Code section 2298 provides that an agency is either actual or ostensible. The party asserting the existence of a principal-agent relationship has the burden of proving it existed, as well as the scope of the authority given to the agent by the principal with respect to the transaction upon which the action is brought. (California Viking Sprinkler Co. v. Pacific Indemnity Co. (1963) 213 Cal.App.2d 844, 850.)
As explained in Witkin, a principal may incur liability for an agent's fraud in several ways. (Witkin, supra, Agency, § 192, pp. 244-245.) The first such instance is not claimed here (where the principal is itself at fault, for expressly directing or authorizing the fraudulent acts). (See Witkin, supra, Agency, § 163, pp. 206-207.)
In the alternative, where a plaintiff can show that the principal actually or apparently authorized the agent to make representations about a matter related to the agent's duties, and the agent has knowledge of their falsity, this knowledge may be imputed to the principal, even where the agent has acted in an adverse manner to the principal. (Witkin, supra, Agency, § 192, pp. 244-245; Alhino v. Starr (1980) 112 Cal.App.3d 158, 174.) To support his claim there was actual agency of Stovall for Purdy, Plaintiff contends Purdy had control over Stovall that gave him some degree of authorization to make representations in the taxation worksheets, using the Purdy name and office facilities. (Kaplan v. Coldwell Banker Residential Affiliates, Inc. (1997) 59 Cal.App.4th 741, 746-747 (Kaplan) [for a true agency relationship, the principal has control over the activities of the agent]; Civ. Code, § 2299 ["An agency is actual when the agent is really employed by the principal].")
"The fact that parties had a preexisting relationship is not sufficient to make one party the agent for the other. In order to create an agency, the principal must confirm [confer] authority upon the agent. [Citation.] An agency is proved by evidence that the person for whom the work was performed had the right to control the activities of the alleged agent. [Citation.] When the principal only controls the results of the work and not the means by which it is accomplished, an independent contractor relationship is established. [Citation.]" (Kim v. Sumitomo Bank (1993) 17 Cal.App.4th 974, 983 (Kim).) By contending Stovall was merely a tenant of Purdy, Purdy may be analogizing to an independent contractor relationship here, to argue against any actual agency findings.
Plaintiff alternatively contends he has satisfied the requirements for a showing of ostensible agency, to justify recovery against Purdy as a principal for the acts of the ostensible agent, Stovall. These requirements are: " 'The person dealing with the agent must do so with belief in the agent's authority and this belief must be a reasonable one; such belief must be generated by some act or neglect of the principal sought to be charged; and the third person in relying on the agent's apparent authority must not be guilty of negligence. [Citation.]' [Citations.]" (Associated Creditors' Agency v. Davis (1975) 13 Cal.3d 374, 399; Civ. Code, § 2317.) Any finding of ostensible authority of an agent must be based upon the conduct of the principal, not solely upon the agent's conduct. (Kaplan, supra, 59 Cal.App.4th 741, 747-748.) " 'Liability of the principal for the acts of an ostensible agent rests on the doctrine of "estoppel," the essential elements of which are representations made by the principal, justifiable reliance by a third party, and a change of position from such reliance resulting in injury. [Citation.]' [Citation.]" (Ibid.)
Before we examine whether triable issues of fact remain as to actual or ostensible agency, we first reject Purdy's technical argument that since it is a tax preparation firm, not a real estate investment firm, it could be only the tax returns produced by Stovall, using Purdy's facilities, that could possibly give rise to potential agency issues. The undisputed record plainly reflects, in Plaintiff's declaration, Stovall's deposition, and the lodged documents, that the subject real property profit and loss worksheets were prepared in the course of and associated with preparing schedules for Plaintiff's tax returns, such as his 2004 and 2003 Schedule C, "profit or loss from business." Likewise, the partnership agreement arose from those real estate deals, on which the parties paid taxes. We must consider the entire record before us to evaluate the existence of any essential factual disputes about the scope and nature of the representations made by Stovall, with respect to whether trial is necessary on whether Purdy should be deemed to be bound by them.
We further note that we are disregarding Purdy's backup argument that it cannot in any case be held liable for the activities of Stovall, since Purdy merely is claiming without proof that "Stovall did not knowingly and intentionally make any actionable misrepresentation to Loomis." The record contains the trial court's order on the companion motions by the business associates, including Stovall, denying the summary adjudication motions with regard to establishing Stovall's and others' fraudulent intent, or lack thereof. The trial court concluded that no such factual determination could be made at the motion stage of the proceeding. This matter apparently remains set for trial as to Stovall and Donovan et al.
B. Burden of Responding to Summary Judgment Motion
In Plaintiff's third amended complaint, he pleads that Stovall misrepresented to him that he was Purdy's employee. Purdy's summary judgment motion papers produced facts that controverted any contention of such actual employment, and its director's declaration states that Purdy did not treat Stovall as an employee. However, Plaintiff is now arguing that Purdy failed to focus its motion specifically enough upon ostensible agency, or to produce such facts that would controvert any alternative agency showing, that would be sufficient to shift the burden of responding on that particular issue. (Code Civ. Proc., § 437c, subd. (p)(2).)
The record is otherwise, and Plaintiff is interpreting agency law too narrowly in the summary judgment context. The pleadings establish the scope of an action. (Emerald Bay Community Association v. Golden Eagle Insurance Corp. (2005) 130 Cal.App.4th 1078, 1091.) Since Plaintiff is alleging that Purdy, as principal, may be liable for allegedly fraudulent acts of an agent falsely claiming to be an employee (Stovall), these pleadings are general enough to encompass theories of either actual or ostensible agency. (See Kaplan, supra, 59 Cal.App.4th at pp. 745-747.) In its answer, Purdy denied that Stovall was its employee, and Purdy sought summary judgment on the basis that Plaintiff would not be able to show that Purdy took any part in the alleged conspiracy to commit fraud, either on its own behalf or vicariously, through the actions of Stovall (use of its name on the computer programs, telephone, fax, and so forth). Those arguments directly addressed the respondeat superior theory of liability that was pled either on an employment basis, or a similar theory of actual agency.
Moreover, the moving papers also provided facts intended to controvert any showing of actual or ostensible agency that might have arisen outside of the employment context, because they characterized Stovall's position as a tenant or employee of a tenant, who had access to their facilities and used them in the manner alleged. Those facts brought forward, sufficiently for purposes of the motion, the issue of whether Stovall, as a nonemployee, had the actual or ostensible authority to bind Purdy as a principal in the financial and accounting transactions that he conducted on behalf of Plaintiff and the business associates.
Accordingly, there was no need for Purdy's moving papers to itemize the types of agency that it was disputing, when it presented facts about the limited nature of its relationship with Stovall. Rather, the trial court correctly noted in its order denying reconsideration that "the issues of scope of authority and agency" had already been presented in the original Purdy summary judgment motion.
We next consider the sufficiency of Plaintiff's efforts to show factual disputes about the nature of the representations made by Stovall, and whether Purdy may properly be held liable for acts of an agent in this regard.
C. Actual Agency
The relationships giving rise to agency or employment are not identical: "It is said that a servant or employee works for the employer, while an agent also acts for and in the place of the principal for the purpose of bringing the principal into legal relations with third persons. [Citations.] [¶] Representation, therefore, seems to be the chief characteristic of agency, although the same person may act as both an agent and an employee. [Citation.]" (Witkin, supra, Agency, § 4, p. 42.)
In this case, Plaintiff is no longer contending Stovall was an employee of Purdy, but only that he misrepresented himself as such. These allegations do not fit within the statutory definition of actual agency, "[a]n agency is actual when the agent is really employed by the principal." (Civ. Code, § 2299.) Plaintiff nevertheless seeks to hold Purdy liable for acts of Stovall in the real estate matter, based upon the use of Purdy's name and office facilities, on a respondeat superior basis.
The tort doctrine of respondeat superior is sometimes used for analysis of agency issues, regardless of whether the fact of employment can be proven. (Witkin, supra, Agency, § 192, pp. 244-245.) "Under the doctrine of respondeat superior, the innocent principal or employer is liable for the torts of the agent or employee, committed while acting within the scope of employment. It is immaterial that the employee acts in excess of authority or contrary to instructions. [Citation.]" (Witkin, supra, Agency, § 165, p. 208.)
Respondeat superior liability cannot be imposed unless the alleged tort was "engendered by" or arose from the work being performed. (Lisa M., supra, 12 Cal.4th 291, 300.) Courts have justified the application of the doctrine of respondeat superior for the following policy reasons: "(1) to prevent recurrence of the tortious conduct, (2) to give greater assurance of compensation for the victim, and (3) to ensure that the victim's losses will be equitably borne by those who benefit from the enterprise that gave rise to the injury. [Citations.]" (Witkin, supra, Agency, § 166, pp. 210-211.)
Although Plaintiff's reply brief continues to contend that he produced sufficient evidence to hold Purdy liable for tortious conduct of Stovall on an actual agency theory, the examples he cites do not support any such finding. Plaintiff does not attempt to allege the essential factual predicate of employment or other type of control on the real estate and partnership matters. The nature of his theory that Stovall misrepresented the fact of employment is contrary to any contention here that Stovall actually had any employment relationship with Purdy that would have given rise to a recognized scope of employment, or the type of control that a principal has over an actual agent. It is not enough for him to rely on the pleadings alone, and he did not controvert the showing made by Purdy that there was no known employment relationship. (Code Civ. Proc., § 437c, subd. (p)(2).)
Plaintiff alternatively seems to argue there was ratification of Stovall's acts, when Purdy accepted payment for the work. If a principal voluntarily accepts the benefits of an agent's transaction, with knowledge of the material facts, the principal ratifies the agent's conduct. (Civ. Code, § 2310; Witkin, supra, Agency, § 141, pp. 185-186.) Even though Purdy apparently gave Stovall, as a tenant or employee of a tenant, the right to access its computer and fax facilities to use in his accounting work, Purdy should not be deemed to have anticipated that they would be used fraudulently, on the current record. The acceptance of payment for work of a tenant, through the billing process, was shown by Purdy to be part of the landlord-tenant arrangement, and Plaintiff has not demonstrated that Purdy had knowledge of material facts that tortious conduct was being pursued by Stovall, at the relevant times.
Under Civil Code section 2316, a principal may intentionally confer actual authority upon an agent, or may, intentionally or by want of ordinary care, allow the agent to believe that he has such actual authority. Plaintiff has not shown any facts that Purdy intentionally or by lack of ordinary care gave Stovall authority to represent Purdy as an employee or actual agent to perform these accounting functions, nor that any fraud in those functions arose from or were an outgrowth of the tax work. (Witkin, supra, Agency, § 176, pp. 221-223.) The pre-existing relationship between Stovall and Purdy is not enough to establish agency, without the necessary evidence of control. (Kim, supra, 17 Cal.App.4th at p. 983.) Respondeat superior principles from the employment context may be applied only where the policy justifications outlined above are present, and Plaintiff has failed to provide facts to bring himself within that theory of potential recovery.
D. Ostensible Agency
We next examine the record to determine whether triable issues exist about any conduct by Purdy, as the alleged principal, that would estop it from denying responsibility for the acts of Stovall, as an ostensible agent. (Witkin, supra, Agency, § 144, pp. 188-189.) Under Civil Code section 2317: "Ostensible authority is such as a principal, intentionally or by want of ordinary care, causes or allows a third person to believe the agent to possess." (Also see CACI No. 3709, setting forth the elements of ostensible agency.) Ostensible agency cannot be created by the acts of the agent alone. (Kaplan, supra, 59 Cal.App.4th at p. 747.) Whether ostensible agency exists is normally treated as a question of fact, and circumstantial evidence may be considered; it is a question of law if the facts may only give rise to one permissible inference. (Id. at pp. 745, 748; Lisa M., supra, 12 Cal.4th at p. 299.)
In opposition to the motion, Plaintiff had to show there were triable issues of fact on the elements of this test: "The person dealing with the agent must do so with belief in the agent's authority and this belief must be a reasonable one; such belief must be generated by some act or neglect of the principal sought to be charged; and the third person in relying on the agent's apparent authority must not be guilty of negligence. [Citation.]' [Citations.]" (Associated Creditors' Agency v. Davis, supra, 13 Cal.3d 374, 399.) Plaintiff claims he believed his dealings with Stovall were the same as dealings with Purdy, because of the tax forms that showed Purdy as the electronic filer for him, and the fact that he could reach Stovall at the offices of Purdy. In 2004, Stovall told Plaintiff that he was a neutral person who would have no reason to misrepresent profit and loss figures given him by Donovan. (However, Stovall had been doing Plaintiff's own taxes since 2001, which contradicts that allegation of neutrality.) Plaintiff contends Purdy impliedly represented itself to be the superior of Stovall, by allowing the use of its office facilities.
However, Plaintiff's opposing papers do not clearly assert that he relied on the reputation or the name of Purdy, when he agreed to allow Stovall to calculate the profit and loss statements and compose the partnership agreement. In order for a principal to be held liable for the acts of an ostensible agent, some degree of reliance by the third person, specifically on the principal's actions, is required by statute. Under Civil Code section 2334: "A principal is bound by acts of his agent, under a merely ostensible authority, to those persons only who have in good faith, and without want of ordinary care, incurred a liability or parted with value, upon the faith thereof."
An example of proof of reliance on alleged ostensible agency is found in Kaplan, supra, 59 Cal.App.4th 741 . That plaintiff was a sophisticated real estate investor who contended that he had relied on the representations of a real estate broker's office (the office) that it was affiliated with a national firm, Coldwell Banker (the firm). The office was an independently owned and operated franchise. The court analyzed whether the firm had, by the want of ordinary care, allowed reasonable reliance upon the use of its name by the office, such that it should be held responsible for the office staff's actions. (Id. at pp. 744-748.) The evidence was that the firm made a significant amount of representations to the public in general, upon which appellant relied, in the form of signage and advertising, described as follows: "We understand why appellant, and members of the public generally, might believe that Coldwell Banker 'stood behind' [the office's] realty company. The venerable name, Coldwell Banker, the advertising campaign, the logo, and the use of the word 'member' were and are designed to bring customers into Coldwell Banker franchises. As appellant stated at his deposition: Coldwell Banker's 'outreach was successful. I believed they [the office] were Coldwell Banker. They do a good job of that.' " (Id. at p. 747.) The plaintiff also gave evidence that he did not notice the small print disclaimer language on the sign. The court concluded that summary judgment to exonerate the firm should not have been granted, because a reasonable person might think that the office was an ostensible agent of Coldwell Banker, and rely on the purported agency in the transactions, incurring damage.
In the case before us, Plaintiff has not pointed to any specific evidence of reliance upon the existence or reputation of Purdy, as contributing to his decision to deal with Stovall. Plaintiff's theory of recovery is civil conspiracy to commit fraud, or intentional torts. He apparently contends that Purdy did not use ordinary care to separate itself from Stovall's activities that were tortious in nature. It is not enough for Plaintiff to point to Stovall's use of Purdy's name to show reliance, under these circumstances. Plaintiff has not shown that Purdy had or should have had knowledge of fraudulent activities at a time that would have enabled it to investigate and dissociate itself from Stovall. (Witkin, supra, Agency, § 141, p. 186 ["If the principal's ignorance of the facts arises from his or her own failure to investigate, and the circumstances are such as to put a reasonable person on inquiry, the principal may be held to have ratified the acts in spite of a lack of full knowledge. [Citations.]"].) Moreover, Plaintiff himself had relied on Stovall to prepare his taxes from 2001-2004, and he does not show Purdy had superior knowledge about any problems with Stovall.
Especially where only ostensible agency is alleged, not actual agency, the Witkin authors conclude: "[T]here is rarely any basis on which the principal may be held liable in tort [for the acts of an ostensible agent]. The essential element of reliance on the representations or conduct of the principal is usually lacking, and the doctrine of estoppel that is the foundation of ostensible agency is ordinarily invoked only where the agent has contracted on behalf of the principal. [Citation.]" (Witkin, supra, Agency, § 175, pp. 220-221.) Plaintiff has not shown that this is a case in which Purdy's actions placed Stovall, as its agent, " in a position to defraud," such that Plaintiff could and did reasonably rely on any apparent authority of Stovall to make certain representations, that are now sued upon. Purdy's own conduct as a principal, not the conduct of Stovall, is the important factor for determining ostensible agency. (Id. at § 193, pp. 245-246 [for recovery against the principal, the agent's position must have facilitated the consummation of the fraud].) No evidence of such affirmative conduct by Purdy to facilitate the alleged fraud has been demonstrated here, nor that Plaintiff must have relied on it to his detriment. (Kaplan, supra, 59 Cal.App.4th 741, 747-748.)
In conclusion, Plaintiff has not demonstrated there is disputed evidence to require trial to go forward on whether Purdy's own actions should require it to be estopped from denying responsibility for Stovall's allegedly tortious acts. The allegations about Purdy's rental of office space and computer facilities to Stovall's employer or firm are not sufficiently tied to the alleged fraud by Stovall to warrant denial of Purdy's summary judgment motion. (See Witkin, supra, Agency, § 144, pp. 188-189.)
DISPOSITION
Summary judgment is affirmed. Costs are awarded to Purdy.
WE CONCUR: NARES, J., IRION, J.