SW Legal's Case Updates: Agency

SOUTH-WESTERN LEGAL STUDIES IN BUSINESS CASE UPDATES—AGENCY

SW Legal's Case Updates is a SW Legal Studies service to provide briefs of the latest state and federal court cases. Review the summaries and, for cases of interest, select the case brief. If you cannot find a case of interest, return to Topic Index .

*Title*	Summary
Agent May Be Liable for Fraud Committed by Subagent Briefed Case	Trial court held that an agent could possibly be liable for fraud committed by a subagent. While the agent was not aware of the fraud, it is for the jury to determine if the agent should have been more diligent in making sure its subagent could not engage in fraud against clients. (Updated October, 2010)
Agency Relationship Need Not Be in Writing to Be Enforceable Briefed Case	Appeals court held that a real estate agent who provided valuable service for a principal, by identifying property the principal purchased, should be paid a commission for his services. There need not be a signed agency agreement for a court to find that the parties intended to have an agency relationship. (Updated August, 2010)
Driving to Meal When on Road for Employer Is Within Scope of Employment Briefed Case	Appeals court held that an employer is vicariously liable for actions of an employee who was in an accident when driving to a restaurant to eat while on temporary assignment in another city. Since it was an out-of-town assignment, the employer is liable for normal activities involved in such travel. (Updated June, 2010)
Negligent Hiring and Negligent Retention of Employee Basis for Employer Liability Briefed Case	California appeals court held that tort liability based on negligent hiring and retention is a cause of action distinct from vicarious liability based on respondeat superior. The employer may face greater liability than would be the case based on vicarious liability alone. (Updated April, 2010)
Employer Not Responsible for Underage Worker Employed by Independent Contractor Briefed Case	West Virginia high court held that the owner of a building who contracted for a new roof to be installed hired an independent contractor when a firm was employed to do the roofing work. The building owner did not control the work, so had no knowledge that one worker, who suffered a serious injury, was underage. (Updated April, 2010)
Retirement Plan Fiduciaries May Be Liable for Allowing Losses to Occur to Plan Benefits Briefed Case	Appeals court held that if the beneficiaries of a retirement plan exhaust administrative remedies provided by ERISA, they have the right to sue their employer and plan administrators for breach of fiduciary duties if they allowed losses to be incurred in company stock they knew was being manipulated. Suit is for recovery of benefits. (Updated September, 2008)
Hospital May Assume Vicarious Liability for Negligence in Issuing Credentials Briefed Case	Minnesota high court held that Minnesota would adopt the rule that exists in a majority of the states that there is a tort action for negligent credentialing. Hospitals have a duty beyond the furnishing of facilities as patients rely on their expertise in granting credentials to surgeons and other professionals using the facilities. (Updated January, 2008)
Administrator of Nursing Homes Not Liable for Negligent Medical Care Briefed Case	Mississippi high court held that the administrator of a nursing home cannot be sued for negligent medical practice or for breach of fiduciary duty unless the administrator specifically undertook such duties, as those positions are generally not related to such matters. (Updated January, 2007)
Ostensible Authority for Vehicle Use by Employee May Impose Liability on Employer Briefed Case	Appeals court held that an employer could be liable for injuries caused by an employee who caused an accident while using a company car to run an errand. While there was no express permission to use the vehicle for this purpose, the jury could find ostensible authority. (Updated January, 2007)
Release of Negligent Employee from Liability Means Release of Employer Briefed Case	Mississippi high court held that when a plaintiff settles tort liability with a negligent employee, and the settlement ends further liability, the settlement thereby includes the employer who is then released from liability and is not subject to subsequent litigation. (Updated January, 2007)
Tort Related to Charitable Activities While at Work Not Employer’s Responsibility Briefed Case	Mississippi high court held that an employer is not liable on the theory of respondeat superior for a car accident caused by an employee who was engaged in charitable activities during work time. Those activities were not a central part of the work duties. (Updated July, 2006) Ostensible Authority for Vehicle Use by Employee May Impose Liability on Employer
Destroying Valuable Computer Files Terminated Agency Relationship Briefed Case	Appeals court held that an employee violated the Computer Fraud and Abuse Act by deleting valuable and unique files from his computer before he quit the firm. That act violated his duty of loyalty and immediately terminated the agency relationship. (Updated May, 2006)
Company Officer Personally Liable for Failure to Pay Company Taxes Briefed Case	Appeals court held that a company officer was personally liable for the taxes owed by a company he worked for. His defense that he was only an employee responding to orders from superiors did not hold, as he was an officer of the company responsible for payroll and taxes. (Updated June, 2005)
Vicarious Liability Applies in Case of Inherently Dangerous Activity Briefed Case	Appeals court upheld a verdict against a hotel that contracted to host a boxing match. The failure of the match promoter to provide an ambulance was found to have worsened the injury suffered by a boxer. Since boxing is an inherently dangerous activity, vicarious liability made the hotel owner responsible to ensure that such risks were reduced. (Updated January, 2004)
Agent Not Obligated to Minimize Potential Payment from Principal Briefed Case	Nebraska high court held that where an agent was promised a 6% commission for obtaining a buyer for property, unless one particular buyer bought the property, in which case the agent only received 1%, the agent had no duty to make sure the low-commission buyer would get the property when a full-price buyer made an offer first. There was no negligent misrepresentation in this instance. (Updated June, 2003)
Agency Rules Govern Employment Relationships Under Discrimination Laws Briefed Case	The Supreme Court held that common-law agency principles of employment relationships will be used to define employment in employment discrimination cases. Since the discrimination statutes do not define who is an employee, the courts will look to the common law for guidance. (Updated May, 2003)
Corporate Officers Not Liable for Unpaid Wages of Employees Briefed Case	Employees of a bankrupt company sued the directors of the company to recover their unpaid wages. The Colorado supreme court held that unless a director personally created a relationship with an employee, so as to be in a principal-agent relationship, there was no personal liability created by their role as principals in the corporation. (Updated April, 2003)
Traditional Rule of Vicarious Liability Applies to Fair Housing Act Briefed Case	The Supreme Court held that traditional rules of vicarious liability in tort apply when a principal is sued for racial discrimination in violation of the Fair Housing Act. Congress did not imply in the Act that the standard of liability would be any different than the one that is imposed at common law. (Updated April, 2003)
Third Party May Rely on Apparent Authority of Agent to Enter Into Binding Contract Briefed Case	Appeals court held that when an agent has apparent authority to enter into a contract on behalf of his client, the third party has the right to rely on the representations of the agent and enter into a binding contract, even if the agent lacked express authority. (Updated March, 2003)
Company President Has Apparent Authority to Enter into Most Contracts Briefed Case	Appeals court affirmed a trial court decision that a company president had apparent authority to buy a significant amount of stock from a shareholder. The company denied the president had such authority after he was fired. The shareholder had the right to assume the president had the authority to enter into such a contract. (Updated August 1, 2001)
Landowner Not Liable for Injuries Suffered by Independent Contractor Briefed Case	Trial court dismissed a suit filed by an independent contractor who was doing survey work on a large construction site and fell into a pit and was injured. Since the landowner did not retain significant control of the construction process and the risk was not peculiar, the landowner cannot be held liable. (Updated December 1, 2000)
Road Rage Victim May Not Hold the Employer of the Assailant Liable Briefed Case	Appeals court affirmed dismissal of a suit brought by a man who was assaulted by a truck driver. Although the truck driver was working at the time of the assault, the violent attack was not in the scope of employment. (Updated October 1, 2000)
Employing Taxicab Company Liable for Driver's Negligence While Off-Duty Briefed Case	Tennessee high court held that a taxicab company was liable for injuries caused by a cab driver who was at fault in an accident when driving the cab while off-duty. By municipal ordinance, taxicab companies must assume complete liability for operation of their vehicles at any time. (Updated June 1, 2000)
Tax Preparer, As an Agent for a Principal, Is in a Fiduciary Relationship Briefed Case	Maryland high court held that H&R Block, as a tax preparer, had an agency relationship with its clients, and owed the clients, as principals, a fiduciary obligation to be loyal to the interests of the principals and disclose any information about their relationship that the principal may reasonably want to know. (Updated April 1, 2000)
Agent Who Acts for Dishonest Principal Liable for Losses Briefed Case	Louisiana appeals court held that an auction house that sold stolen cattle was an agent acting for a dishonest principal, so was liable to the owner of the cattle for his loss. The agent auctioneer failed to make proper inquiry into the ownership of the cattle and should have suspected something was amiss. (Updated February 1, 2000)
Taking Data and Customers to New Employer from Old Employer is Breach of Fiduciary Duty Briefed Case	Appeals court upheld a finding of a securities arbitration panel awarding over $1.1 million to a securities firm that saw two former employees take its files and customers to another securities firm, while they were still employees. This was a breach of the duty of loyalty to their employer. (Updated January 1, 2000)
Agent's Duty Is to Principal, Not a Customer of the Principal Briefed Case	Michigan high court affirmed that an insurance agent, like any other agent, has a fiduciary duty to represent his employing principal. The agent's relationship with customers is a contractual relationship; based on agency law, the greatest duty is owed to the principal. (Updated November 1, 1999)
Release of Agent or Principal from Liability Releases Both from Liability Briefed Case	A plaintiff successfully sued an agent for tort liability. Upon accepting a settlement of the matter, the plaintiff signed a general release of all claims. By doing so, the Connecticut high court held, the plaintiff released the agent and the principal from liability, so the plaintiff could not then sue the principal. (Updated November 1, 1999)
Case for Breach of Implied Warranty of Authority Runs from Time of Learning the Truth Briefed Case	Appeals court held that a cause of action against a party who purported to have the authority to act on behalf of principals to a contract began at the time the party, who presumed the alleged agent had authority, was informed by the principals that there was no authority. (Updated September 1, 1999)
Liability to Independent Contractor Not Based on Possibility of Control Briefed Case	Supreme court of Texas held that an independent contractor's willingness to follow a premises owner's instructions, even though no instructions were given, is not sufficient evidence of the owner's right to control the contractor and assume liability for injuries suffered. (Updated May 1, 1999)
Agents Personally Liable for Contract Due to Failure to Disclose Principal Briefed Case	Managers and members of an LLC contracted for, but did not pay for, engineering work. Engineering firm did not know about the existence of the LLC, hence the managers and members were liable on the contract under agency law for failure to disclose existence of the principal. (Updated May 29, 1998)
Franchisor Is Employer for Unemployment Compensation Insurance When "Substantial Control" Exercised Briefed Case	Labor Commissioner's decision that franchisor was employer, and that franchisees were employees, was upheld because employer exercised substantial control over the supposed franchisees or independent contractors. (Updated 4-6-98)