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Click here for the full text of this decision FACTS:In December 1998, Roger Kelly signed an advisory fee agreement with Robert Thompson, acting on behalf of Commercial Realty Advisors Inc., to assist him in obtaining financing for a 31-acre tract in Burleson. In his agreement with Thompson and Commercial Realty, Kelly stated that he needed to obtain “mortgage financing for the purpose of refinancing and developing” the property. Although Kelly did not own the property, he held a lease and an option to purchase as a result of previous litigation involving the property. Thompson approached Russell Gaines, an officer of Southwest Guaranty Mortgage Corp., about a loan for Kelly, providing Gaines with preliminary information about the proposed transaction. Gaines in turn provided Thompson with a loan application that Thompson delivered to Kelly’s attorneys. Kelly completed the application and returned it to Thompson, who delivered it to Gaines. A few days later, Thompson agreed to do the appraisal on the property at Gaines’ request and withdrew as Kelly’s mortgage broker, notifying Kelly of this in writing on Dec. 11, 1998. Kelly’s attorneys, however, continued to press Gaines for a loan commitment because of the imminent expiration of Kelly’s option on the property. According to Gaines, Kelly’s attorneys represented, among other things, that Kelly had an ownership interest in the property, that Kelly needed the loan for refinancing, that the property had already been platted, and that several lots had been pre-sold. On Dec. 23, 1998, Southwest Guaranty issued a 30-day loan commitment, identifying Kelly and his father-in-law as borrowers, conditioned upon receipt of several items, including a title report. When the subsequent title report indicated that Kelly did not have an ownership interest in the 31-acre tract, Gaines asked for additional documentation concerning Kelly’s ownership and the pre-sold lots. Kelly’s attorneys, however, insisted that Southwest Guaranty fund the loan, and, when Gaines declined, Kelly promptly filed suit. Kelly named Gaines and Southwest Guaranty (collectively, Gaines) and Thompson and Commercial Realty (collectively, Thompson) as defendants, alleging breach of contract, fraud and negligence. He claimed that Gaines’ failure to fund the loan caused him financial loss, because he had no time to seek alternative financing but instead was forced to reduce his interest in the property by taking on additional partners. After the suit had been pending for three years, Gaines and Thompson filed separate no-evidence motions for summary judgment. Kelly thereafter amended his pleadings and Gaines filed a second no-evidence motion, at which time the trial court granted Gaines’ and Thompson’s respective motions and rendered judgment for them. Kelly appealed. The 10th Court of Appeals affirmed the summary judgment for Gaines in part, agreeing that there was no evidence of negligence or breach of contract, and reversed it in part, disagreeing that there was no evidence of fraud. In his fraud claim, Kelly alleged that Thompson told him during the application process that the loan was a “done deal” and that he relied on this false statement to his financial detriment. The 10th Court of appeals concluded that the summary judgment was erroneous as to fraud because there was some evidence that Thompson was Gaines’ agent and some dispute about whether Thompson’s “done deal” comment could be attributed to Gaines. In analyzing Gaines’ potential responsibility for this comment, the 10th Court framed the issue as whether there was evidence that Thompson was acting as Gaines’ agent “for purposes of negotiating the loan.” The 10th Court then concluded that Thompson’s agency remained in dispute and could not be determined by summary judgment, because the summary-judgment evidence indicated that Thompson had authority to act “as an intermediary to process [the] loan paperwork with Kelly and to explain to Kelly [the] requirements for securing the loan.” HOLDING:Reversed and rendered. An agent’s authority to act on behalf of a principal, the court stated, depends on some communication by the principal either to the agent (actual or express authority) or to the third party (apparent or implied authority). The summary-judgment evidence clearly substantiated Thompson’s authority to deliver and explain the loan documents to Kelly. But the relevant question was whether Thompson’s actual authority to deliver documents and facilitate the loan included the authority to negotiate terms and commit the lender. There was no summary-judgment evidence that Thompson had actual authority to negotiate. Thus, the court stated, the question is whether he had apparent or implied authority to negotiate. Apparent authority, the court stated, is based on estoppel, arising “either from a principal knowingly permitting an agent to hold [himself] out as having authority or by a principal’s actions which lack such ordinary care as to clothe an agent with the indicia of authority, thus leading a reasonably prudent person to believe that the agent has the authority [he] purports to exercise.” Gaines’ testimony, the court stated, clearly indicated that Gaines used Thompson as an intermediary to deliver loan documents and facilitate the transaction. But evidence that Thompson brought the parties together, delivered the paperwork and assisted in its completion, the court stated, is not evidence that Gaines authorized or acquiesced in Thompson’s representation that the loan was “a done deal.” The relevant issue, the court stated, was not merely the existence of an agency relationship, but rather the scope of that agency. Kelly did not complain that Thompson lost the papers or failed to deliver them in a timely manner, matters that were clearly entrusted to him. Rather, the court stated, Kelly complained that Thompson, acting for Gaines, fraudulently misled him into believing that the loan was “a done deal.” Thus, the court stated that the relevant issue was whether Thompson’s agency included the authority to alter the express requirements of the commitment letter and commit Gaines and Southwest Guaranty to the loan. Because an agent’s authority is presumed to be co-extensive with the business entrusted to his care, it includes only those contracts and acts incidental to the management of the particular business with which he is entrusted. The summary-judgment evidence, the court stated, failed to raise a fact issue about whether Thompson’s agency included the apparent authority to commit the funds or obligate Gaines to terms other than those agreed to in the parties’ contract, and thus Thompson’s alleged assurance that the loan would close cannot be imputed to Gaines or Southwest Guaranty. Accordingly, the court held that the 10th Court erred in reversing the trial court’s summary judgment and in remanding the fraud claim for trial. OPINION:Per curiam; Willett, J., did not participate in this decision.

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