Filed 8/1/17 Berry v. Foothill Securities CA3
NOT TO BE PUBLISHED


California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.



IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA
THIRD APPELLATE DISTRICT
(El Dorado)
----




JOHN BERRY et al.,

Plaintiffs and Appellants,

v.

FOOTHILL SECURITIES, INC.,

Defendant and Respondent.
C075105

(Super. Ct. No. PC20120124)





Appellants John and Linda Berry (the Berrys) appeal from a grant of summary judgment disposing of all of their claims against defendant Foothill Securities, Inc. (Foothill).
We affirm the judgment.
FACTS AND PROCEEDINGS
I
Proceedings in the Trial Court and Contentions on Appeal
The Berrys’ operative complaint alleges three causes of action against Foothill: (1) breach of fiduciary duty, (2) negligence, and (3) fraud committed by intentional misrepresentation.
As to the first cause of action, the Berrys allege they entrusted Foothill with management of and counsel regarding their financial investments, that Foothill failed to advise the Berrys to seek independent counsel regarding the transactions set forth in the complaint, and that the transactions which are the subject of their complaint were unsafe and unsuitable causing the Berrys to lose a substantial portion of their savings, thus violating the fiduciary duties Foothill owed to the Berrys.
Regarding the second cause of action claiming negligence, the Berrys allege Foothill breached its duty to use reasonable skill and care regarding these transactions by advising the Berrys to invest in those transactions without reasonable grounds to believe they were suitable for the Berrys, and advising them the transactions were safe investments. They also allege the transactions breached the duty of care because “such investments constituted conflicts of interest and unsound investments.”
In their third cause of action against Foothill, the Berrys allege that Foothill is guilty of intentional misrepresentation because representations made by Matthew Trulli in association with Foothill were knowingly false and the Berrys relied on them because Foothill was a stockbroker and investment advisor, and, as such, owed fiduciary duties to the Berrys.
Foothill brought a motion for summary judgment as to all three causes of action alleged against Foothill arguing that Trulli, whose actions and representations form the sole factual basis for the Berrys’ claims against Foothill, was not an employee of Foothill, that if he was found to be an employee, he was not acting within the scope of his employment in his dealings with the Berrys, and that Trulli did not have ostensible authority to act on Foothill’s behalf.
The Berrys opposed the motion arguing that there existed a triable issue of material fact (1) as to whether Trulli was Foothill’s employee at the time of the events herein and therefore, under the doctrine of respondeat superior, liable to the Berrys for Trulli’s actions, (2) whether Trulli was acting in the scope of his employment by Foothill in his dealings with the Berrys, (3) whether Trulli, if not an employee of Foothill, was Foothill’s agent and Foothill was liable to the Berrys again under the doctrine of respondeat superior, and (4) whether Trulli acted with Foothill’s apparent authority and, thus, Foothill was liable under the doctrine of ostensible authority.
The trial court granted Foothill’s motion for summary judgment finding that, as a matter of law given the undisputed facts offered on the motion, Trulli was not an employee of Foothill. In the alternative, the court held that, even if Trulli was deemed to be Foothill’s employee, he was acting outside the scope of his employment regarding the transactions the Berrys complain of here and, further, that as to those transactions, Trulli did not act with the apparent or ostensible authority of Foothill.
The Berrys contend on appeal that the trial court erred in granting summary judgment to Foothill because there is a triable issue of material fact as to (1) whether Trulli was Foothill’s agent in the complained of transactions and, therefore, vicariously liable for Trulli’s wrongdoing, (2) whether Trulli was an employee of Foothill, (3) whether Trulli’s transactions with the Berrys came within the scope of his employment, and (4) Foothill owed fiduciary duties to the Berrys in handling their investments.
II
The Evidence on the Motion for Summary Judgment
The evidence presented on the motion that was either undisputed or was the subject of evidentiary objections by the Berrys which objections were overruled by the trial court was as follows:
Foothill is a corporation owned by its brokers and representatives and its former brokers and representatives and by its employees. Foothill, with over 100 offices, is a broker/dealer engaging in the sale of securities through its representatives. Foothill is not licensed to, and does not, offer investments in personal loans.
In August 2006, Matthew Trulli joined Foothill at its Santa Rosa office as a representative stockbroker of Foothill and, until April 2012, was identified as a financial consultant on Foothill’s letterhead
The Representative Agreement (the Agreement) entered into between Foothill and Trulli said that Trulli was an independent contractor and that nothing in the Agreement should be construed as creating a relationship of employer and employee. The Agreement also required Trulli to comply with Foothill’s Compliance and Procedures Manual.
Foothill’s Compliance and Procedures Manual provided, in part, as follows: “You may not borrow money or securities from customers or loan them to customers. You may not enter into business transactions jointly with a customer without the specific written approval of the Home Office.”
Trulli considered himself to be an independent contractor associated with Foothill and his only compensation from Foothill was the commissions he received from Foothill through the sale of securities.
The Berrys did not offer any evidence on the motion to suggest that Foothill at any time approved the transactions here at issue in writing or otherwise.
John and Linda Berry met Trulli in 2005 when Trulli was a financial consultant or financial advisor associated with Jefferson Pilot Securities, Inc. The Berrys met Trulli through their friends, Pam and Dennis Trulli who were Trulli’s aunt and uncle. Other than receiving a recommendation of Trulli provided by Pam and Dennis Trulli, the Berrys did nothing to investigate Trulli.
While Trulli was at Jefferson Pilot, the Berrys invested $75,000 in a Fidelity investment and transferred their account to Foothill when Trulli became associated with Foothill.
The Berrys did nothing to investigate Foothill before having their account transferred to Foothill, they have never visited a Foothill office, and they have never spoken to a Foothill representative other than Trulli.
In addition to the Fidelity investment transferred from Jefferson Pilot, the Berrys invested in Franklin Templeton, Ohio Life, and Aviva while associated with Foothill. When doing so, they wrote checks to those companies and not to Trulli.
In February 2007, the Berrys, in exchange for a promissory note acknowledging that the money was being loaned to Trulli, the Berrys loaned $100,000 to Trulli personally for his use in his winery business The $100,000 check was written to a company owned by Trulli described as “M. Trulli & Associates, Inc.” The Berrys did nothing to investigate Trulli’s ability to repay the loan. The Berrys did not receive any statements or other written communication from Foothill regarding this loan, and Trulli did not inform Foothill of the transaction.
In August 2008, at a time when Trulli was not current in his payments on the $100,000 loan, the Berrys loaned Trulli personally $40,000 to pay for storage fees for Trulli’s winery. The writing setting forth the terms of the loan was handwritten on notepaper and the check for the loan was written to “Matt Trulli.” The Berrys did not receive any statements or other written communication from Foothill regarding this loan, and Trulli did not inform Foothill of the transaction.
In May 2010, the Berrys loaned to Trulli personally another $7,500 on Trulli’s oral promise to repay the loan. This check was made payable to Kristain Rast who was Trulli’s girlfriend. At the time, Trulli was not current on his payments on the $100,000 loan and was in default on the repayment of the $40,000 loan. The Berrys did not receive any statements or other written communication from Foothill regarding this loan, and Trulli did not inform Foothill of the transaction.
Prior to hiring legal counsel, the Berrys did not make an effort to contact Harry Rubins, the manager of the Santa Rosa office of Foothill where Trulli worked.
DISCUSSION
I
Scope of Review
We begin with a primer on summary judgment. The pleadings define what issues are material for summary judgment purposes. (FPI Development, Inc. v. Nakashima (1991) 231 Cal.App.3d 367, 381.) As the moving party, Foothill has the burden to show that Foothill has a complete defense to the Berrys’ causes of action. (Code Civ. Proc., § 437c, subd. (p)(2).) If Foothill meets its burden to show a complete defense on summary judgment, the burden then shifts to the Berrys to show that a triable issue of material fact exists. (Code Civ. Proc., § 437c, subd. (p)(2).)
We review the record and the determination of the trial court de novo. (Merrill v. Navegar, Inc. (2001) 26 Cal.4th 465, 476; Kahn v. East Side Union High School Dist. (2003) 31 Cal.4th 990, 1003; see also, Miller v. Department of Corrections (2005) 36 Cal.4th 446, 460.) “ ‘First, we identify the issues raised by the pleadings, since it is these allegations to which the motion must respond; secondly, we determine whether the moving party’s showing has established facts which negate the opponent’s claims and justify a judgment in movant’s favor; when a summary judgment motion prima facie justifies a judgment, the third and final step is to determine whether the opposition demonstrates the existence of a triable, material factual issue. . . .’ ” (Waschek v. Department of Motor Vehicles (1997) 59 Cal.App.4th 640, 644.)
Since we find it unnecessary to decide whether Trulli was an independent contractor under the circumstances before us, we deny Foothill’s request for judicial notice of federal authority bearing on the independent contractor analysis.
II
Trulli’s Employment/Agency Status with Foothill Securities
The Berrys argue that Trulli, throughout the course of these loan transactions was, and was acting as, an employee and/or agent of Foothill and that Foothill is, thus, vicariously liable for the Berrys’ losses.
For the reasons set forth in part III, infra, we need not decide this issue.
III
If Trulli was an Agent or an Employee of Foothill, His Acts in Obtaining Personal Loans from the Berrys were Outside the Scope of His Employment
“The rule of respondeat superior is familiar and simply stated: an employer is vicariously liable for the torts of its employees committed within the scope of the employment. (Citation omitted.)” (Lisa M. v. Henry Mayo Newhall Memorial Hospital (1995) 12 Cal.4th 291, 296 (Lisa M.).)
“Civil Code section 2338, which has been termed a codification of the respondeat superior doctrine (citation omitted), is not limited to employer and employee but speaks more broadly of agent and principal; it makes the principal liable for negligent and ‘wrongful’ acts committed by the agent ‘in and as part of the transaction of such [agency] business.’ ” (Lisa M., supra, 12 Cal.4th at p. 296, fn. 2.)
Thus, in this matter, whether Trulli was Foothill’s employee or was acting as its agent, for Foothill to be liable for his wrongful acts, Trulli must have been acting within the scope of his employment with Foothill at the time he obtained the loans from the Berrys which are at issue here.
We note that “[b]ecause an intentional tort gives rise to respondeat superior liability only if it was engendered by the employment, [a] disavowal of motive as a singular test of respondeat superior liability does not mean the employee’s motive is irrelevant. An act serving only the employee’s personal interest is less likely to arise from or be engendered by the employment than an act that, even if misguided, was intended to serve the employer in some way.” (Lisa M., supra, 12 Cal.4th at p. 298.)
“[T]he nature of an employee’s conduct and his . . . purpose and intent in so acting are important considerations in determining whether he . . . acted in the course and scope of employment. [Citation.]” (Kephart v. Genuity, Inc. (2006) 136 Cal.App.4th 280, 290.)
“A risk arises out of the employment when ‘in the context of the particular enterprise, an employee’s conduct is not so unusual or startling that it would seem unfair to include the loss resulting from it among other costs of the employer’s business. [Citations.] In other words, where the question is one of vicarious liability, the inquiry should be whether the risk was one “that may fairly be regarded as typical of or broadly incidental” to the enterprise undertaken by the employer. [Citation.]’ Accordingly, the employer’s liability extends beyond his actual or possible control of the employee to include risks inherent in or created by the enterprise.” (Perez v. Van Groningen & Sons, Inc. (1986) 41 Cal.3d 962, 968.)
In making the decision as to whether Trulli was working within the scope of his employment at the time he obtained the personal loans from the Berrys, we consider “whether the conduct benefited the employer, whether it was authorized or directed by the employer, the reasonable expectations of the employer, the amount of freedom the employee has [to do] the job, the type of work the employee was hired to do, the nature of the conduct involved, and the time and place of the [transactions], among other things. [Citations.]” (Tognazzini v. San Luis Coastal Unified School Dist. (2001) 86 Cal.App.4th 1053, 1058.)
Considering the above principles, it is abundantly clear that, given the undisputed facts set forth above, Trulli was not acting within the scope of his employment with Foothill when he borrowed money for his personal business from the Berrys. Each of the transactions was intended to benefit only Trulli and not Foothill, Trulli had been advised and agreed that he was prohibited from obtaining personal loans from Foothill’s clients, the loan proceeds were given directly to Trulli or his girlfriend so that Trulli could pursue his personal business which was wholly unrelated to Foothill’s business, the loan transactions that were memorialized were on documents prepared by or at the behest of Trulli none of which made any reference to Foothill, and none of the loans were made with any involvement of Foothill, written or otherwise. Moreover, none of Trulli’s loans from the Berrys benefited Foothill and, finally, it was reasonable for Foothill to expect that Trulli would abide by the conditions of his employment.
The Berrys’ are mistaken that Blackburn v. Witter (1962) 201 Cal.App.2d 518 supports holding Foothill responsible for Trulli’s misconduct, as that case is factually distinguishable. In Blackburn, an investment house was held liable for the acts of its broker who recommended investment in a fictitious company, which that broker represented had been fully vetted by the investment company. (Id., at pp. 519-520, 523.) Here, nothing in the record suggests that Trulli ever represented that Foothill recommended or was otherwise involved in the personal loans to Trulli. Given the nature of Trulli’s acts, it would be unfair to include the Berrys’ losses resulting from Trulli’s unauthorized and unforeseeable actions among the costs of Foothill’s business.
There is no triable issue of material fact on this record that would reasonably allow a jury to conclude that Trulli was acting on behalf of Foothill in arranging these personal loans from the Berrys. The trial court was correct in so-concluding.
IV
Foothill’s Fiduciary Duties
The Berrys also argue that, given all of the circumstances, Foothill owed fiduciary duties to the Berrys with respect to their loans to Trulli. But, having concluded that these loans were well outside Trulli’s employment by Foothill without any involvement by Foothill, there was no relationship between Foothill and the Berrys that would give rise to fiduciary duties owed by Foothill to the Berrys with respect to these transactions.
DISPOSITION
The judgment is affirmed. Foothill is awarded its costs on appeal. (Cal. Rules of Court, rule 8.278.)



HULL , J.



We concur:



RAYE , P. J.



BLEASE , J.