Part 8- Agency Law, Chapter 36: Third-Party Relations of the Principal and the Agent, Doc 5

Summary: Tort Suits Against Principals and Agents Joint and Several Liability  Both the principal and the agent may be held jointly and severally liable for the agent’s torts. o A third party can sue and obtain judgments against either or both. o Once a judgment is fully collected from one party, no further recovery can be sought from the other. Indemnification  A party who satisfies the judgment may seek indemnification: o Principal indemnifies agent if the agent acted within the scope of authority. o Agent indemnifies principal if the tort arose from the agent’s breach of duty. Case Problems and Legal Principles 1. Jonas Bravario and Suzanne Hermano (Investment Mismanagement) o Issue: Hermano ignored Bravario’s clear investment strategy and exceeded her authority by purchasing Enron shares and taking a loan in Bravario’s name. o Analysis: Bravario is likely not liable for the loan or the Enron purchase due to Hermano’s lack of authority. He can repudiate the contracts. 2. Kamitra Smith and TLC Catering (Contract Liability) o Issue: Smith signed a contract imposing liability on TLC. o Analysis: Smith likely had express or implied authority to sign the catering contract, binding TLC to its terms, including liability for damages caused by the catering. 3. Peter Drutchal and Adventure Quest (Insurance Fraud and Sexual Abuse) o Issue: Drutchal lied on insurance applications and committed abuse. o Analysis: Virginia Surety could exclude coverage based on Drutchal's personal knowledge and fraudulent acts being imputed to Adventure Quest. Likely no liability for the insurer. 4. Richard Daynard vs. Ness and Scruggs Firms (Jurisdiction and Agency) o Issue: Daynard argued that Ness and Scruggs were agents of each other, giving the court jurisdiction. o Analysis: If Ness acted as Scruggs' agent, the court may impute Ness's contacts to Scruggs for jurisdiction purposes. 5. Sally Leiner and Ecco Bella, Inc. (Personal Liability for Corporate Debts) o Issue: African Bio-Botanica sued Leiner personally for unpaid corporate debts. o Analysis: If Ecco Bella did not clearly operate as a corporation, Leiner could be held personally liable under piercing the corporate veil principles. 6. Jerome Cohen and MCC (Reimbursement Dispute) o Issue: Cohen used personal funds for MCC’s supplies but was not reimbursed. o Analysis: Cohen likely remains liable for the contract with Staples since he did not disclose he was acting on behalf of MCC. 7. Bobby Reed and Bradshaw/NFLIC (Insurance Misrepresentation) o Issue: Reed believed he had immediate coverage based on Bradshaw’s statements. o Analysis: Bradshaw exceeded his authority by misrepresenting coverage start dates. Reed could sue Bradshaw for misrepresentation but may not succeed due to contract disclaimers. 8. Redford and Tube Art (Negligence and Respondeat Superior) o Issue: Redford caused a gas leak leading to an explosion. o Analysis: Tube Art likely liable under respondeat superior since Redford followed precise instructions from Tube Art during the course of his work. 9. LaVar Johnson and Wheaton (Accident Liability) o Issue: Johnson caused a car accident while assisting a store manager. o Analysis: Wheaton may be liable under respondeat superior as Johnson’s actions, although personal, were tied to fostering business relationships. 10.Gary McCoy and Papa John’s (Malicious Prosecution)   Issue: McCoy sued for malicious prosecution based on employee Burke’s false claims. Analysis: RWT (franchisee) could be liable under respondeat superior, but Papa John’s (franchisor) likely not liable unless direct control over employee conduct is proven. 11.Tammy Bauer and Accent Pointe LLP (Misrepresentation in Product Sale)   Issue: Bauer directed her agent to misrepresent product safety. Analysis: Bauer is directly liable for misrepresentation despite the exculpatory clause since she intended the agent’s false statements. 12.Thule Drilling and QGM/Schimberg (Conversion and Tort Liability)   Issue: Thule sued QGM and its CEO, Schimberg, for denying access to rigs. Analysis: Both QGM and Schimberg could be liable if Schimberg personally participated in conversion beyond his corporate authority. Employer Liability for Employee Acts   Scope of Employment: o If acts fall within the scope, the employer is liable under respondeat superior. o Exceptions for intentional criminal acts unless foreseeable in the employee’s duties. Employer Steps to Reduce Liability: o Conduct thorough background checks. o Train employees on workplace behavior and safety. o Supervise employees and enforce conduct policies.