Filed 9/22/16 Elias v. McJab, Inc. CA4/1
                      NOT TO BE PUBLISHED IN OFFICIAL REPORTS
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                    COURT OF APPEAL, FOURTH APPELLATE DISTRICT

                                                  DIVISION ONE

                                           STATE OF CALIFORNIA



STEVEN ELIAS et al.,                                                 D068119

         Plaintiffs and Appellants,

         v.                                                          (Super. Ct. No. 37-2012-00093692-
                                                                     CU-BC-CTL)
MCJAB, INC.,

         Defendant and Respondent.



         APPEAL from a judgment of the Superior Court of San Diego County, Joel R.

Wohlfeil, Judge. Affirmed.



         Freeland McKinley & McKinley, Steven A. McKinley and Karen G. McKinley for

Plaintiffs and Appellants.

         Lewis Brisbois Bisgaard & Smith, Brian Slome and Jeffry A. Miller for Defendant

and Respondent.

         Plaintiffs and appellants Steven Elias (Steven) and Kirsten Elias (Kirsten),

husband and wife (sometimes, plaintiffs or Eliases), appeal a judgment following a
defense verdict in favor of defendant and respondent McJab, Inc. (McJab). At the

conclusion of a two-week trial, the jury found that McJab real estate agent Jason

Mullaney (Mullaney)1 did not act within the course and scope of his agency with McJab

in connection with the sale of plaintiffs' real property, when Mullaney misappropriated

about $345,000 from plaintiffs.

       On appeal, plaintiffs contend the court erred in allowing the jury to determine

whether Mullaney was acting within the course and scope of his agency with McJab

because at the time he misappropriated the sale proceeds, Mullaney allegedly was

engaging in an activity for which a license was required and because McJab held that

license after Mullaney left McJab. Plaintiffs further contend that, because Mullaney was

McJab's agent when he misappropriated the sale proceeds, the "only substantial evidence

shows that he was at that time engaged in the business for which he was employed[]" by

McJab.

       As we explain, we disagree with these contentions and affirm the judgment for

McJab.

                  FACTUAL AND PROCEDURAL BACKGROUND2

       John Conn (Conn) testified he started a business in 1998 for the purpose of helping

buyers obtain single-family residential home loans. For the business, Conn obtained his


1      Mullaney is not a party in this appeal.

2       We " 'view the evidence in the light most favorable to the prevailing party, giving
it the benefit of every reasonable inference and resolving all conflicts in its favor.' "
(Wilson v. County of Orange (2009) 169 Cal.App.4th 1185, 1188.)
                                             2
real estate broker's license. In 1998 or 1999, Conn's son-in-law, John Smyth (Smyth),

took charge of the business. Once incorporated, McJab replaced another entity of Conn's,

First California Funding (FCF), which then became a "dba" of McJab for loan

originations.

       In 2005, McJab went into the business of real estate sales. To do so, a second

"dba" of McJab was formed, McJab Realty. Because FCF's customers tended to be other

real estate sales companies and because Conn did not want to compete with FCF's best

customers when McJab Realty was formed, McJab did "very few real estate transactions"

through McJab Realty.

       Mullaney was hired by McJab in about 2002. In 2007, McJab held Mullaney's real

estate license, as it was obligated to do as a broker. McJab retained Mullaney's license

until it expired in 2010.

       McJab allowed its agents to establish their own corporations for the purpose of

conducting business through McJab. Conn testified it was common for agents to do so

for "tax advantages." Mullaney established "Trident Global Corporation" (TGC). Conn

noted neither TGC nor "Trident Financial Holdings and Acquisitions" (TFHA), another

of Mullaney's companies/businesses, was ever part of McJab. Rather, both businesses

were wholly owned by Mullaney and were used by him to market to Navy SEALs, which

use the "trident" as part of their insignia and where Mullaney obtained a "great deal" of

business.




                                             3
       Conn testified Mullaney in February 2006 signed an "ethics and good practice

agreement." That agreement required agents to " 'practice full disclosure, treat each

client fairly, and provide professional mortgage advice to every client.' " It further

provided, "No oral promises of any kind are permitted."

       Smyth testified that he joined Conn in the family business in 1998. When initially

hired by McJab, Mullaney worked as a loan officer and loan originator. At the end of

2007, when the real estate market was in a "terrible, terrible condition," Mullaney told

Smyth he was "leaving the business" and was going into " 'hedge funds.' " When

Mullaney stated he was "leaving the business," Smyth understood that to mean Mullaney

was leaving the mortgage and real estate business "full time."

       When he left McJab, Mullaney had only one active listing on the multiple listing

service (MLS), which listing dated back to 2006 and which expired in July 2008.

According to Smyth, this listing was located in an area that was "very heavily hit" by

foreclosures when the market turned. Thus, while the listing was active, Smyth noted

there was no activity on that property.

       In early 2007, plaintiffs decided to purchase a home on Port of Spain Road in the

Coronado Cays (Spain property). Plaintiffs chose Mullaney as their agent in connection

with their purchase of the Spain property. Steven and Mullaney had met in the military

in about 1992 in the Navy SEALs unit. As the years went by, Steven and Mullaney

developed a friendship, as they both were stationed in Coronado. In about 2002 or 2003,

Mullaney told Steven he was working for McJab Realty after retiring from the military.


                                              4
       In 2003, Steven hired Mullaney to help him refinance his townhouse in Carmel

Valley. The refinance was done through FCF. Steven was happy with the service

Mullaney provided. Steven subsequently sold the townhouse, and plaintiffs in 2003

bought a single family home in Carmel Valley. Although plaintiffs intended to use the

Carmel Valley home as their residence, they also viewed the property as an "investment"

because Steven wanted to purchase properties below market, remodel them and then sell

them for a profit. In 2005, plaintiffs refinanced their Carmel Valley home, again using

Mullaney and FCF.

       Although the Spain property needed a lot of work, plaintiffs decided to purchase

the home because it was closer to the base and because it looked like a good "project."

Before making an offer, Steven spoke extensively with Mullaney about his plan to

purchase and remodel the Spain property, then sell it in a few years. According to

Steven, Mullaney knew at some point he also would be involved in the sale of the Spain

property. Steven also told Mullaney that he was interested in purchasing other properties

to refurbish.

       In connection with the purchase of the Spain property, Steven in May 2007 signed

a form titled "Confirmation Real Estate Agency Relationships," which also was signed by

Mullaney. This form provided McJab Realty was "representing the [b]uyer exclusively."

       Shortly after the Spain property escrow closed in December 2007, Mullaney

recommended putting only Steven on the deed because Kirsten had just had a baby, and,

according to Mullaney, it would make it easier to complete the transaction. Kirsten


                                            5
agreed and signed an interspousal transfer grant deed. Over the next several months,

Steven worked on the remodel of the Spain property, which was completed in about May

2008.

        Upon completion of the remodel, Steven spoke to Mullaney about selling the

Spain property because they could not afford to keep that property and their home in

Carmel Valley, which they had been unable to sell because of the deteriorating real estate

market. Remarkably, Mullaney advised Steven not to use the MLS to market the Spain

property but rather suggested Steven just put a "for sale" sign on the property. Although

Steven was not "happy" with that advice, he followed it because he trusted Mullaney.

        Conn testified that Mullaney was working as a real estate agent for McJab in May

2007, when plaintiffs sought to buy the Spain property. Conn further testified that

between January and July 2008, Mullaney never told him he was going to be the agent

for, or otherwise advise, plaintiffs in connection with the sale of the Spain property; and

that, to the extent Mullaney and Steven entered into an "oral agreement" for Mullaney to

sell the property, even if Mullaney had still been working for McJab, such an agreement

would have violated the independent contractor and ethics and good faith practice

agreements McJab agents then were required to sign.

        Smyth testified he routinely checked the MLS to determine whether agents listed

property for sale through McJab Realty. Using an agent's MLS number, Smyth could

verify a listing and ensure its accuracy. In 2007 and 2008, Smyth used Mullaney's MLS

number to verify Mullaney's listings (or lack thereof). Smyth testified that, during this


                                             6
time period, he checked the MLS about once a week; that the only listing that came up

under Mullaney's MLS number was for the property that was in the area heavily hit by

foreclosures, which listing properly named McJab Realty as the agent; and that the Spain

property was never listed on the MLS.

         Smyth further testified he had no knowledge of Mullaney doing any other "real

estate deals" after December 2007, when Mullaney told Smyth he was leaving the real

estate business. At the end of 2009, or beginning of 2010, Mullaney returned to work for

McJab for a short while to "get a couple of loans going."

         As Mullaney advised, Steven put a "for sale" sign on the Spain property. Steven's

sister sat at the first open house, as she was then living at the Spain property. On the first

day of the open house, Nadar Zabaneh (Zabaneh) expressed interest in buying the Spain

property. Mullaney was called, and, shortly thereafter, he arrived at the Spain property

and began negotiating with Zabaneh. About a week later, Zabaneh made an offer to buy

the Spain property. After further negotiations proved unfruitful, plaintiffs accepted the

offer.

         The record includes a May 20, 2008 email from Mullaney to escrow officer Janet

Viloria (Viloria) of California Title Company regarding opening a "new escrow" for the

sale of the Spain property. The email includes the TFHA logo at the bottom of the page

and is signed "Jason Mullaney[,] President."

         Steven testified that, after he accepted the offer, Mullaney brought some

documents for Steven to sign. However, Mullaney did not go through the documents


                                               7
with Steven as he had done in the past. Steven also did not read the documents but

instead relied on Mullaney's "executive summary" of them.

       One of the documents Steven signed was titled " 'General provisions.' " Steven

initialed each of the four pages of this document and signed on the last page. This

document was an agreement between Steven and Zabaneh to appoint California Title

Company as the escrow holder for the sale of the Spain property. Steven also signed a

document titled " 'California Title Company' " that showed he was agreeing to sell the

Spain property to Zabaneh for $1.178 million; title instructions; and a document titled

" 'Contingency Removal.' " The bottom of the one-page " 'Contingency Removal' "

document listed Mullaney as the agent and McJab Realty as the broker.

       However, Steven testified the handwritten initials placed in the "seller's" box on

each of the seven pages of the eight-page residential purchase agreement that was

submitted to escrow were not made by him, nor did he sign his name under "seller" on

the last page of that agreement. He further testified the initials and signature of the seller

on a document titled " 'Buyer's Inspection Advisory' " were not his, nor was he ever

presented with this document. Steven also did not sign or receive a document titled

" 'Wood Destroying Pest Inspection and Allocation of Cost Addendum,' " although his

name was signed on this document as well.

       Moreover, unlike the document titled "Confirmation of Real Estate Relationship"

that Steven signed when plaintiffs purchased the Spain property in 2007, which stated

McJab Realty represented the buyer "exclusively," Steven did not sign such a document


                                              8
when he was in the process of selling that property. Steven testified he and Mullaney

instead entered into an "oral agreement" in May 2007 providing that Mullaney would act

as Steven's agent if and when Steven was ready to sell the Spain property. Steven further

testified he knew then that there needed to be a written agreement between him and

Mullaney if Mullaney was going to act as the agent in connection with the sale of the

Spain property.

       On May 26, 2008, Steven signed a document providing the proceeds from the sale

of the Spain property would be deposited into his credit union account. Although the

name of the credit union was listed on this document, the spaces to provide the account

number and the routing number were blank. The record shows Steven's account

information was subsequently added to this document, but not by Steven.

       The record further shows the escrow instructions were supplemented to provide

the sale proceeds from the Spain property were to be wired to a different bank and into

the account of "Jason Mullaney -- Trident Financial Holdings & Acquisitions." The

signature at the bottom of this supplemental instruction was Steven's, from the original

document he signed and dated on May 26.

       On or about June 18, 2008, the escrow wiring instructions were again

supplemented. This time escrow was instructed to wire the proceeds from the sale of the

Spain property into Mullaney's personal account, which account Mullaney opened

specifically for this purpose. Although Steven's signature purportedly was included on

the June 18 supplemental instruction, he testified it was not his.


                                              9
       In fact, Steven testified he and his family went to Switzerland for about a month

on or about May 28, 2008, about two days after he initially had signed the escrow wiring

instructions that provided the money would be deposited into his credit union account.

While in Switzerland, escrow closed. However, shortly before the closing, Mullaney

called Steven and told him the money was going to be wired into Mullaney's TGC

account for "tax[]" reasons. Steven testified he was happy escrow was closing and was

not "surprised" the money was going into a different account because Mullaney was his

"broker."

       When asked at trial what he understood the TGC account to be, Steven testified he

thought it was a "trust account" controlled by McJab, Mullaney's "employer." Steven

also testified that Mullaney "always" said he was the "broker for McJab Inc. and McJab

Realty and [FCF]"; that Steven believed TGC was another company under McJab, like

McJab Realty and FCF; but that Mullaney never told Steven the money was being wired

into a McJab trust account.

       In October 2008—a few months after the Spain property escrow closed, Steven

transferred $25,000 to Mullaney. In his testimony, Steven referred to the $25,000 as both

a loan to, and an investment in, one of Mullaney's companies involved in what Steven

termed was a hard-lending business. According to Steven, that business involved loaning

money against a tangible asset, including a car, real property or even a certificate of

deposit. The caveat was the asset had to be "free and clear." Steven recalled Mullaney

told him and others who also invested in this business that they could receive up to a 24


                                             10
percent return on their investment. At another point, Mullaney told Steven he could

make these hard-money loans "under some sort or Regulation D or some 506-

something."

       This was not the first time Steven had "loaned" and/or "invested" money in

Mullaney's hard-lending business. In December 2007, Steven invested $40,000 with

Mullaney. Under the agreement, Mullaney would repay the money in 30 or 60 days

along with 7 or 10 percent interest. According to Steven, in January 2008 Mullaney

timely repaid the money with interest.

       Even before the Spain property sold, Mullaney asked Steven to invest a portion of

the proceeds from that sale into Mullaney's hard-lending business. As escrow was about

to close on the Spain property, Steven and Mullaney again discussed Steven investing a

portion of the proceeds from that sale into Mullaney's loan business. Steven testified that

they never agreed on an amount to invest but that he and his wife at some point intended

to make such an investment.

       With respect to the $25,000 Steven transferred to Mullaney in October 2008,

Steven testified their agreement required Mullaney to repay the money in 30 days at 7 or

10 percent interest. Steven knew Mullaney intended to use the $25,000 payment to make

"hard-money" loans. In December 2008, Steven asked Mullaney about repayment of the

$25,000. Mullaney's email response stated he was waiting for others to pay him, that it

would all be " 'taken care of this week' " and that he would "make it up Steven and

Kirsten."


                                            11
       The record shows Steven in late March 2009 again asked Mullaney to repay the

$25,000 because plaintiffs were unable to pay their property taxes that were coming due

on their Carmel Valley home and were behind on their credit card payments. Steven

testified he did not then consider the sale proceeds from the Spain property to be at risk

because he assumed that money was deposited "in a broker's trust account" and they were

merely "waiting for that [money] for tax clearance." With interest, Steven estimated

Mullaney then owed him about $45,000 as a result of the $25,000 investment/loan.

Mullaney told Steven he was in the process of securing a $150,000 loan, and, once

secured, he would repay Steven.

       The next time Steven asked about the $25,000, Mullaney promised to deposit

"some money" into Steven's credit union account. A few days later when Steven

complained no money had been deposited, Mullaney stated he was then working "14-

hour plus days" and discussed his "investment company."

       Steven testified that, in April 2009, he inquired with Mullaney regarding how

Steven should "handle" for tax purposes "the reporting of [Mullaney's] commission" from

the sale of the Spain property. Mullaney gave Steven a "Post-It note" in response,

providing Mullaney received a five percent commission, or $58,900, from the sale of the

Spain property and further providing, " '1099 to TGC.' " Steven believed the proceeds

from the sale of the Spain property would be distributed to him from the "Trident Global

broker trust account" at the end of April 2009, after all the taxes were paid.




                                             12
       Although Mullaney had not yet repaid the $25,000, Steven testified that he then

still considered Mullaney to be "good friend," a "close teammate" and a "brother."

Because of his hectic travel schedule with work and because his mother was ill, Steven

next emailed Mullaney in September 2009 regarding payment of the $25,000. In this

email, Steven demanded Mullaney pay $50,000 of what Steven then believed was

$500,000 owed by Mullaney. Steven testified he estimated he was owed $500,000 based

on the sales proceeds from the Spain property that he then believed was still being held in

trust by Mullaney, the $25,000 loan/investment he had made in October 2008, which had

accrued interest at 7 to 10 percent per month, and the various charges and fees he and his

wife Kirsten had accumulated on credit cards and the like that Mullaney all along had

agreed to pay. Mullaney did not respond to this email.

       Although Mullaney had not repaid the $25,000 or any of the interest due thereon

and ostensibly was still holding the proceeds from the sale of the Spain property in a trust

account for plaintiffs, Steven in February 2010 asked Mullaney to help them refinance

their Carmel Valley home. It appears from the record plaintiffs were then unable to

refinance their home. However, they were successful in doing so in March 2011. For the

March 2011 refinance, plaintiffs used Loren Uber and CFC. Uber also helped the Eliases

refinance their Carmel Valley property in December 2011 and again in or about July

2012, both times using CFC.

       Before forming his own company in the summer of 2012, Uber worked with

Mullaney at TGC. Uber testified that he began working at TGC in summer 2009; that, in


                                            13
November 2009, he obtained a broker's license issued to TGC; and that in the second half

of 2011, he took control of TGC and, ultimately, it became his company after Mullaney's

real estate license lapsed. Uber subsequently dissolved TGC and started his own

company.

       Uber testified that, during an August 2012 meeting, Steven stated that he had

invested money in TFHA; that it was in the amount of about $250,000 to $350,000; that,

although Uber could not remember the exact sum Steven had invested with Mullaney,

Uber described it as "a significant amount"; and that Steven told Uber that Mullaney had

not returned the money. Uber also recalled Steven talking about investing money with

Mullaney during a March 2011 meeting when they were discussing the Eliases' debt in

connection with their refinancing of the Carmel Valley property.

       Steven first contacted Conn in April 2011 about Mullaney and the loss of the sale

proceeds from the Spain property. Until then, Steven made no contact with anyone at

McJab because Steven was "trying to work with [Mullaney]" and he was "trying to

protect [his] friend."

       Escrow Officer Viloria testified that she opened escrow on the Spain property on

receipt of the purchase and sale agreement provided by Mullaney; that she knew

Mullaney from previous transactions; and that most of his transactions involved

refinancing properties and only a "[v]ery few" involved property sales. Viloria further

testified she was not suspicious when she received supplemental wiring instructions from

Mullaney because she understood Mullaney was "authorized to act on behalf of


                                           14
[Steven]," inasmuch as Mullaney had opened the escrow and told Viloria he "was helping

out his friend." Viloria in response drew up an escrow amendment, which she sent to

Mullaney for signature by Steven. Ultimately, the escrow amendment came back signed

with what Viloria assumed was Steven's signature.

       The escrow status sheet for the Spain property listed "Trident Financial" as the

broker's agent. However, the escrow status sheet also stated, "Trident Financial, Jason

Mullaney, just advising." Viloria testified Mullaney told her he was "just advising" on

the sale of the Spain property and was not receiving a commission. When asked what she

meant by "just advising," Viloria testified, "Well, he's [i.e., Mullaney] not getting a

commission. He was just helping the seller out." Viloria noted that, in escrow terms, a

person who is "just advising" in a transaction also is not the "actual agent on the deal."

       The written purchase and sale agreement that Viloria used to open escrow stated

the "listing agent" was " 'FSBO.' " Viloria testified that "FSBO" referred to "[f]or sale by

owner" and that, in the real estate industry, this meant the seller does not have an agent

and is selling the property on his or her own. The purchase and sale agreement also had

"FSBO" next to the selling agent, who Viloria noted, represents the buyer. The FSBO

reference was repeated on the last page of the purchase and sale agreement, in the box

titled " 'Real estate brokers.' "

       Plaintiffs in March 2012 sued California Title Company,3 McJab and its "dbas,"

Conn and Mullaney. Plaintiffs in their operative complaint alleged causes of action for


3      California Title Company is not a party to this appeal.
                                             15
breach of written and oral contract, negligence, constructive fraud and breach of fiduciary

duty. Conn and McJab moved for summary judgment, which plaintiffs opposed. The

court granted Conn's motion, but not McJab's.

       In connection with McJab's motion, plaintiffs argued among other theories that

there was a triable issue of material fact whether the wrongful acts by Mullaney were

committed within the course and scope of his agency with McJab. In denying McJab's

motion, the court ruled in part as follows:

       "The disputed evidence demonstrates that Defendant Jason Mullaney was actively

licensed as a real estate sales person under the McJab broker license in 2008, when the

transaction occurred. McJab was aware of this continued licensure. Mullaney aided in

negotiating the real estate sale on behalf of plaintiffs in 2008. Plaintiffs Steven Elias and

Kirsten Elias . . . and Mullaney purportedly agreed that Mullaney would be paid a

commission of five [percent] after the sale was consummated. Mullaney represented to

Plaintiffs that he was employed by McJab [R]ealty. These disputed facts suggest that

Mullaney was operating as a licensed real estate salesperson. Regardless of the

representation that the sale was accomplished 'by owner,' there is evidence that Mullaney

was engaged as Plaintiffs['] salesperson. Thus, it is also disputed whether he was

operating under the broker license at this time such that he was McJab's actual agent."

       Before trial, plaintiffs successfully moved to prevent McJab from arguing that

Mullaney was not its agent when he assisted in the sale of the Spain property, in light of

the fact McJab held Mullaney's real estate license when that escrow closed. However,


                                              16
plaintiffs were unsuccessful in preventing McJab from arguing that Mullaney was acting

outside the course and scope of his agency in connection with that sale. In so doing, the

court cogently ruled as follows:

       "I'm inclined to direct the jury that Mr. Mullaney was McJab Inc.'s agent.

However -- and this is becoming clearer and clearer as I hear counsel argue their

respective positions -- where the rubber meets the road in this case is whether what Mr.

Mullaney did in relationship to the plaintiffs was within the course and scope of his

agency.

       "If it was, for example, as Gi[p]son [v. Davis Realty Co. (1963) 215 Cal.App.2d

190] refers to, to his own end, it sounds to me like the defense has plenty to argue that

what he did was not within the course and scope and, therefore, it does not bind McJab,

Inc. That's a jury question.

       "Similarly -- or I should say correspondingly, plaintiffs will argue how, if at all,

that profited McJab and was certainly within the course and scope and, therefore, does

bind McJab, Inc. But ultimately, the jury will weigh in on the second of those two

elements. They'll be told Mullaney is McJab Inc.'s agent, but they'll have to decide based

upon the totality of the evidence whether what he allege000dly did wrongful was within

the course and scope of his agency." (Italics added.)

       The record shows that, after the presentation of evidence by plaintiffs, the court

granted McJab's motion for nonsuit on plaintiffs' breach of oral contract cause of action.

In so doing, the court noted that the principles of vicarious liability arise "out of a tort,


                                               17
not a contract." The court further noted that plaintiffs had not proffered sufficient

evidence to show McJab, as opposed to Mullaney, entered into a contract with plaintiffs.

As noted, the jury ultimately found Mullaney did not act in the course and scope of his

agency in connection with the sale of the Spain property.

                                       DISCUSSION

       As both parties recognize, the primary issue on appeal is whether Mullaney was

acting within the course and scope of his agency with McJab when he assisted plaintiffs

with the sale of the Spain property.

       A. Guiding Principles

       "Under the common law doctrine of respondeat superior, a principal or employer

is vicariously liable for the acts of an agent or employee committed in the course of

employment [or agency]. (Hinman v. Westinghouse Elec. Co. (1970) 2 Cal.3d 956, 959–

960.)" (Lathrop v. Healthcare Partners Medical Group. (2004) 114 Cal.App.4th 1412,

1421, fn. omitted; see Lisa M. v. Henry Mayo Newhall Memorial Hospital (1995) 12

Cal.4th 291, 296 (Lisa M.).) The plaintiff bears the burden of proving that the employee's

or agent's tortious act was committed within the scope of his or her employment or

agency. (See Ducey v. Argo Sales Co. (1979) 25 Cal.3d 707, 721.) The determination

whether an employee or agent has acted within the scope of employment or agency is a

question of fact unless the facts are undisputed and " 'no conflicting inferences are

possible.' " (Mary M. v. City of Los Angeles (1991) 54 Cal.3d 202, 213 (Mary M.).)




                                             18
       "Although an employee's willful, malicious, and even criminal torts may fall

within the scope of employment, 'an employer is not strictly liable for all actions of its

employees during working hours.' (Farmers Ins. Group v. County of Santa Clara (1995)

11 Cal.4th 992, 1004 (Farmers).) For the employer to be liable for an intentional tort, the

employee's act must have a 'causal nexus to the employee's work.' (Lisa M., supra, 12

Cal.4th at p. 297.) Courts have used various terms to describe this causal nexus: the

incident leading to the injury must be an ' "outgrowth" ' of the employment; the risk of

tortious injury must be ' " 'inherent in the working environment' " '; the risk must be

' " 'typical' " ' or ' " 'broadly incidental' " ' to the employer's business; the tort was ' "a

generally foreseeable consequence" ' of the employer's business. (Id. at pp. 298–299.)

       " ' "One way to determine whether a risk is inherent in, or created by, an enterprise

is to ask whether the actual occurrence was a generally foreseeable consequence of the

activity." ' (Farmers, supra, 11 Cal.4th at pp. 1003–1004.) ' " '[F]oreseeability' [in the

context of determining scope of employment] [or agency] merely means that in the

context of the particular enterprise an employee's [or agent'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." ' (Id. at p. 1004, italics omitted.)

       "These various terms have been condensed into a two-prong disjunctive test.

(Bailey v. Filco, Inc. (1996) 48 Cal.App.4th 1552, 1559; see id. at p. 1561 ['the two-prong

test is substantively similar to the foreseeability-based test'].) The conduct of an

employee falls within the scope of his or her employment if the conduct either (1) is


                                                 19
required by or incidental to the employee's duties, or (2) it is reasonably foreseeable in

light of the employer's business. (Id. at p. 1559; see CACI No. 3720.)"4 (Montague v.

AMN Healthcare, Inc. (2014) 223 CalApp.4th 1515, 1521.)

       B. Analysis

       As a threshold matter, we conclude the determination whether Mullaney was

acting within the scope of his agency when he assisted plaintiffs with the sale of the

Spain property was a question for the jury. (See Mary M., supra, 54 Cal.3d at p. 213.)

We thus conclude the trial court was correct in allowing the jury to hear all the evidence

and decide whether Mullaney was acting within the course and scope of the agency for

purposes of imposing vicarious liability on McJab. (See ibid.)

       As such, we reject plaintiffs' contention that the "course and scope" issue should

have been decided as a matter of law, either because of the "public policy" underlying the

real estate laws or because Mullaney was licensed as a real estate agent and then may

have been engaging in some activity or activities for which a license was required.5 To




4      Insertions added by this court are placed in brackets and italicized to distinguish
them from the bracketed insertions appearing in the original material.

5       We say may and some because there is evidence in the record to support the
finding that Mullaney was merely "advising" a "friend" (i.e., Steven) in connection with
the sale of the Spain property; that Steven himself listed the property for sale while his
sister sat at the open house; that, at the time of the sale of the Spain property, Mullaney
was working "full time" in developing his own separate businesses involved in hard-
money lending, which Steven had invested in; and that, as such, Mullaney may not have
been engaging in an activity or activities for which a real estate license was required
when he assisted in the sale of the Spain property and committed the wrongful conduct.
                                             20
adopt the rule suggested by plaintiffs would make a principal strictly liable for an agent's

wrongful conduct, which we decline to do.

       We further conclude our standard of review of the jury's determination of course

and scope is substantial evidence, inasmuch as there were both myriad disputed facts and

conflicting inferences based upon such facts with respect to this issue, as the trial court

correctly noted in denying both McJab's summary judgment motion and plaintiffs' pretrial

motion to prevent McJab from offering evidence to show Mullaney was acting outside

the course and scope of his agency.

       For example, there was a factual dispute regarding whether Mullaney's

misappropriation of the sale proceeds of the Spain property (i.e., the wrongful conduct) in

June 2008 was an "outgrowth" of, or "broadly incidental" to, his agency with McJab

where he had once worked as a licensed real estate agent (see Lisa M., supra, 12 Cal.4th

at p. 297), on the one hand, or was a risk outside that agency in light of the evidence

Mullaney had left McJab six months earlier to pursue "full time" his own hard-money

lending business through TGC and TFHA, which business or businesses Steven had

invested in both before and after the sale of the Spain property, on the other hand.

       The record also discloses a factual dispute regarding whether Steven invested

some or all of the sale proceeds from the Spain property with Mullaney, or whether

Mullaney was allegedly just holding these proceeds in a "trust account" for plaintiffs as

Steven testified. In our view, this question was relevant to the course and scope issue

because if Steven invested those proceeds with Mullaney in anticipation of receiving up


                                             21
to a 24 percent return, such activity arguably would not be an outgrowth of, or broadly

incidental to, Mullaney's agency with McJab or to McJab's enterprise of offering loan

originations and engaging in real estate sales. (See Lisa M., supra, 12 Cal.4th at pp. 298-

299.)

        Although Steven testified he did not invest any money from the sale of the Spain

property with Mullaney, he admitted discussing such an investment with Mullaney even

before escrow closed. What's more, Uber testified that, during a meeting in 2012, Steven

admitted to investing and losing between $250,000 to $350,000 in Mullaney's businesses.

When coupled with the evidence that Steven already had invested money with Mullaney

both before escrow closed and shortly thereafter, we conclude there was a factual dispute

regarding whether Mullaney was engaging in activities that were related to the enterprise

undertaken by McJab at the time he committed the misconduct.

        In sum, we conclude the issue of whether Mullaney was acting within the course

and scope of his agency with McJab when he assisted Steven with the sale of the Spain

property was a question of fact for the jury, and our review of that determination is based

on substantial evidence. We turn now to the issue of whether substantial evidence

supports the jury's finding Mullaney was acting outside the scope of his agency with

McJab.

        In analyzing this issue, we recognize that the "power of an appellate court begins

and ends with the determination as to whether, on the entire record, there is substantial

evidence, contradicted or uncontradicted, which will support the determination, and when


                                             22
two or more inferences can reasonably be deduced from the facts, a reviewing court is

without power to substitute its deductions for those of the trial court. If such substantial

evidence be found, it is of no consequence that the trial court believing other evidence, or

drawing other reasonable inferences, might have reached a contrary conclusion."

(Bowers v. Bernards (1984) 150 Cal.App.3d 870, 873–874 (Bowers).) We may not

reweigh the evidence and are bound by the trial court's credibility determinations. (Ibid.;

see Heller v. Pillsbury Madison & Sutro (1996) 50 Cal.App.4th 1367, 1384.)

       Applying the substantial evidence standard of review in this case, we conclude

there is sufficient evidence in the record to support the finding of the jury that Mullaney

was not acting within the course and scope of his agency with McJab when he assisted

plaintiffs with the sale of the Spain property and misappropriated the proceeds from that

sale. The record shows that, about six months before Mullaney assisted in the sale of the

Spain property, he told Smyth he was leaving McJab and was going into hedge funds;

that, before Mullaney assisted plaintiffs in the sale of the Spain property, he also told

Steven he was leaving McJab to do hard-money loans; that, at the time Mullaney left

McJab in December 2007, the real estate market had become "terrible"; that, before

Mullaney assisted in the sale and engaged in the misconduct, Steven already had invested

$40,000 in Mullaney's hard-lending business, receiving a return of between 7 to 10

percent interest on that investment; that Mullaney had explained to Steven what the hard-

lending business entailed, which included, among other requirements, that the borrower

own the asset "free and clear"; that, even before escrow closed, Steven and Mullaney


                                             23
spoke about Steven investing a portion of the sale proceeds from the Spain property in

Mullaney's hard-lending business; that after escrow closed and Mullaney was allegedly

holding the sale proceeds from the Spain property in a "trust account" for Steven, Steven

transferred $25,000 to Mullaney with the expectation he would receive a 7 to 10 percent

return within 30 days on that money; that Steven, on the one hand, and Mullaney on

behalf of McJab, on the other hand, executed a document titled "Confirmation Real

Estate Agency Relationships" in connection with the purchase of the Spain property in

2007, but that no such document was executed by Steven and Mullaney in connection

with the sale of the property in 2008; that Mullaney recommended against listing the

Spain property on the MLS, which listing service Smyth checked about once a week

using an agent's—including Mullaney's—MLS number to track listings and ensure their

accuracy; that Steven himself put a "for sale" sign in the front of the Spain property and

his sister sat at the open house, as Mullaney had advised; that Mullaney engaged in

criminal conduct—forgery—when he signed and initialed Steven's name on multiple

documents in connection with the sale of the Spain property, including the residential

purchase and sale agreement, the " 'Buyer's Inspection Advisory,' " the " 'Wood

Destroying Pest Inspection and Allocation of Cost Addendum' " and the supplemental

escrow instructions that led to the sale proceeds from the Spain property being wired

directly into Mullaney's personal account; that, after Mullaney left McJab in December

2007, Mullaney did not engage in activities that required a real estate license—with




                                            24
perhaps6 the exception of the sale of the Spain property—until late 2009 or early 2010;

that McJab first learned about Mullaney's wrongful conduct in April 2011, almost three

years after Mullaney misappropriated the sale proceeds from the Spain property; that

Steven waited to contact McJab, including Conn and/or Smyth, about Mullaney's

misconduct because Steven was "trying to work with Jason [Mullaney]" and because he

wanted to "protect" Mullaney; and that Steven, among other investors, lost significant

money while investing with Mullaney, which ostensibly involved considerable risk.

       That the record contains evidence that would have supported a contrary finding,

namely that Mullaney was acting in the course and scope of his agency with McJab when

he assisted Steven with the sale of the Spain property in June 2008, does not change our

conclusion. (See Bowers, supra, 150 Cal.App.3d at p. 874; see also Milton v. Perceptual

Dev. Corp. (1997) 53 Cal.App.4th 861, 867 [noting that "[i]f the evidence gives rise to

conflicting inferences, one of which supports the trial court's [or jury's] findings, we must

affirm"].) Because substantial evidence in the record supports the jury's finding in this

case, we must affirm.




6      See footnote 5, ante.
                                             25
                                     DISPOSITION

      The judgment in favor of McJab is affirmed. Each party to bear its own costs of

appeal. (See Cal. Rules of Court, rule 8.278(a)(5).)



                                                                            BENKE, J.

WE CONCUR:



McCONNELL, P. J.



IRION, J.




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