Opinion ID: 2627706
Heading Depth: 2
Heading Rank: 3

Heading: Elements of apparent agency.

Text: The district court's award of summary judgment was based on the incorrect legal conclusion that Idaho had not extended the doctrine of apparent authority to tort claims. Because the parties stipulated that TVH was not negligent in its own right, the district court found no basis under Idaho law for which TVH could be held liable. As such, the district court did not go on to analyze the facts of the case to determine whether Appellants had presented sufficient evidence for their claim of apparent authority against TVH to submit to the jury. Rule 56(c) of the Idaho Rules of Civil Procedure sets forth that summary judgment shall be awarded if the pleadings, depositions, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law. I.R.C.P. 56(c). As such, we must remand the case back to the district court for a determination of whether or not the pleadings, depositions, and admissions on file, together with the affidavits, show that there is a genuine issue of material fact regarding Appellants' claim of apparent authority. Before we remand the case, however, we seek to clarify the elements that Appellants must establish in order to survive summary judgment dismissal. The standard for apparent authority stated in section 2.03 of the Restatement (Third) of Agency and section 429 of the Restatement (Second) of Torts has two essential elements: 1) conduct by the principal that would lead a person to reasonably believe that another person acts on the principal's behalf, i.e., conduct by the principal holding out that person as its agent; and 2) acceptance of the agent's service by one who reasonably believes it is rendered on behalf of the principal. Estate of Cordero v. Christ Hosp., 403 N.J.Super. 306, 958 A.2d 101, 106 (Ct.App.Div.2008). TVH argues that we should affirm the district court's award of summary judgment because Appellants have failed to establish any evidence of reliance in support of their claim of apparent authority. However, the Restatement (Third) of Agency, which superseded the Restatement (Second) of Agency in 2006, only requires that Appellants establish Mrs. Jones reasonably believed that Ms. Kurtz was an agent of TVH. Specifically, section 2.03 of the Restatement (Third) of Agency sets forth that a plaintiff is required to show a reasonable belief that the actor had authority to act on behalf of the principal that is traceable to the principal's manifestations to the plaintiff. Restatement (Third) of Agency, § 2.03 (2006). The doctrine of agency by estoppel, on the other hand, requires a plaintiff to demonstrate justifiable reliance and a detrimental change in position. Id. at § 2.05 and accompanying comments. The Restatement (Second) of Agency did not distinguish between apparent authority and agency by estoppel; thus, most jurisdictions recognizing apparent authority as a basis for hospital liability under the Restatement (Second) of Agency require plaintiffs to demonstrate the more stringent element of reliance to establish liability. However, as the Superior Court of New Jersey recently explained: There is a notable difference between sections 2.03 [of the Restatement (Third) of Agency] and 429 [of the Restatement (Second) of Torts] and the standard for apparent authority provided in section 267 of the Restatement (Second) of Agency (1958), which includes an element of reliance. Reliance is an element of apparent authority under sections 2.03 and 429 only to the extent that it is subsumed in the requirement that the person accepting an agent's services do so in the reasonable belief that the service is rendered in behalf of the principal. Estate of Cordero, 958 A.2d at 106, n. 3. Therefore, under the Restatement (Third) of Agency, a plaintiff is only required to prove reasonable belief, rather than justifiable reliance, to satisfy a claim of apparent authority. Furthermore, we find that a standard of reasonable belief rather than reliance more fairly comports with Idaho's prior case law regarding apparent authority. In Bailey v. Ness, 109 Idaho 495, 708 P.2d 900 (1985), we stated that [apparent authority] is created when the principal `voluntarily places an agent in such a position that a person of ordinary prudence, conversant with the business usages and the nature of a particular business, is justified in believing that the agent is acting pursuant to existing authority.' 109 Idaho at 497, 708 P.2d at 902 (citing Clements v. Jungert, 90 Idaho 143, 152, 408 P.2d 810, 814 (1965)) (italics provided, emphasis added). Although the portions regarding business usages and the nature of a particular business are irrelevant to the case at hand, this language demonstrates that we have only required that a person be justified in believing the agent was acting pursuant to existing authority, rather than relying on the agent's services, in order to establish apparent authority. We find no persuasive reasoning for adopting the more stringent standard of reliance for cases where the principal is a hospital. Therefore, we remand the case back to the district court for a determination of whether Appellants presented sufficient evidence in support of their claim of apparent agency against TVH to survive summary judgment dismissal based on the elements set forth above.