Opinion ID: 2423913
Heading Depth: 2
Heading Rank: 2

Heading: Liability under Agency Theory

Text: [¶ 32] Gniadek contends that Newton committed his tort under the apparent authority of the Camp. She further argues that whether the Camp knowingly or negligently held Newton out as possessing the authority to act for it is a question of fact for the jury, and therefore summary judgment on this claim was improper. [¶ 33] Apparent authority is authority which, though not actually granted, the principal knowingly permits the agent to exercise or which he holds him out as possessing. Apparent authority exists only when the conduct of the principal leads a third party to believe that a given party is [its] agent. QAD Investors, Inc. v. Kelly, 2001 ME 116, ¶ 19, 776 A.2d 1244, 1250 (quotation marks omitted). Termination of actual authority will not alone end the apparent authority held by an agent. Restatement (Third) of Agency § 3.11(1) (2006). Instead, apparent authority ceases when it becomes unreasonable for the third party to believe that the agent continues to act with actual authority. Id. § 3.11(2) [¶ 34] The Restatement (Third) of Agency § 7.08 specifically addresses tortious liability for acts of agents cloaked with apparent authority. That section states: A principal is subject to vicarious liability for a tort committed by an agent in dealing or communicating with a third party on or purportedly on behalf of the principal when actions taken by the agent with apparent authority constitute the tort or enable the agent to conceal its commission. Restatement (Third) of Agency § 7.08 (2006). The commentary explains that section 7.08 applies to torts such as fraudulent and negligent misrepresentation[ ], defamation, tortious institution of legal proceedings, and conversion of property obtained by an agent purportedly at the principal's direction. Id. § 7.08 cmt. a. In the commission of these torts, there must be a close link between an agent's tortious conduct and the agent's apparent authority in order for the principal to be liable. Id. cmt. b. Thus, a principal is not subject to liability when actions that an agent takes with apparent authority, although connected in some way to the agent's tortious conduct, do not themselves constitute the tort or enable the agent to mask its commission. Id. [¶ 35] Our interpretation of a predecessor to section 7.08 recognized similar limitations. In Mahar v. StoneWood Transport, we interpreted the Restatement (Second) of Agency § 219(2)(d) (1958) as limited in its application to cases within the apparent authority of the employee, or when the employee's conduct involves misrepresentation or deceit. 2003 ME 63, ¶ 21, 823 A.2d 540, 546. Although we had not expressly adopted that section, we nonetheless explained that it would not encompass assaultive and threatening conduct by an employee who did not purport to act on his employer's behalf Id. ¶¶ 20, 24, 823 A.2d at 545-46. [¶ 36] Here, when Newton invited Gniadek to accompany him on a trip to New York, he told her that he had finished with Camp. By this statement, he conveyed that he was no longer acting with the actual authority of Camp Sunshine. Even assuming that after learning this, it would still be reasonable for Gniadek to believe that Newton acted on behalf of Camp Sunshine, the sexual assault was not committed with apparent authority. Newton's conduct does not fall within the scope of section 7.08.