On July 25, 2025, the Fourth Department issued a decision in Canfield Funding, LLC v. Focalpointe Group, LLC, 2025 NY Slip Op. 04374, holding that giving employees job titles and work e-mail addresses and phone numbers created apparent authority to act for their employer, explaining:
UHG/Optum defendants contend that plaintiff’s allegations are insufficient to establish that the four employees had apparent authority to bind UHG/Optum defendants. We disagree. A principal may be held liable in tort for the misuse by its agent of their apparent authority to defraud a third party who reasonably relies on the appearance of authority, even if the agent commits the fraud solely for their personal benefit, and to the detriment of the principal. Liability is based upon the fact that the agent’s position facilitates the consummation of the fraud, in that from the point of view of the third person the transaction seems regular on its face and the agent appears to be acting in the ordinary course of the business confided to them. The reason for this rule is that the principal, by virtue of its ability to select its agents and to exercise control over them is in a better position than third parties to prevent the perpetration of fraud by such agents through the misuse of their positions. Thus, the principal should not escape liability when an innocent third person suffers a loss as the result of an agent’s abuse, for [their] own fraudulent purposes, of the third person’s reasonable reliance on the apparent authority with which the principal has invested the agent.
Essential to the creation of apparent authority are words or conduct of the principal, communicated to a third party, that give rise to the appearance and belief that the agent possesses authority to enter into a transaction. The agent cannot by their own acts imbue themselves with apparent authority. Rather, the existence of apparent authority depends upon a factual showing that the third party relied upon the misrepresentation of the agent because of some misleading conduct on the part of the principal—not the agent.
Here, plaintiff alleges that the four employees had apparent authority to bind UHG/Optum defendants. Plaintiff alleges that UHG/Optum defendants allowed the four employees to use email accounts and telephones of UHG/Optum defendants during work hours to communicate with plaintiff over a six-year period. The job titles and responsibilities that UHG/Optum defendants gave to the four employees aligned with the transaction that plaintiff sought to verify, i.e., payment for IT staffing, and UHG/Optum defendants, through employee number three, a Vice President, confirmed the existence of a debt owed to Focalpointe and that employee number one was the appropriate contact with respect to financial matters concerning UHG/Optum defendants. Thus, plaintiff sufficiently alleges that UHG/Optum defendants created an appearance of authority on which plaintiff reasonably relied, thereby enabling the agents to successfully perpetrate the tort” of fraudulent misrepresentation.
(Internal quotations and citations omitted).