BALDWIN, J.

This is a legal malpractice and negligent misrepresentation case where we review a trial court judgment directing a verdict in favor of Platten (defendant). In an earlier lawsuit, defendant had represented the Harknesses (plaintiffs) against Kantor, a loan officer, and her successive employers, Sunset Mortgage (Sunset) and Directors Mortgage, Inc. (Directors), as the result of a fraudulent investment and loan scheme directed at plaintiffs by Kantor. That case did not settle to plaintiffs' satisfaction, and plaintiffs sought to recover their remaining loss from defendant. In this case, the trial court granted defendant's motion for a directed verdict based on the conclusion that plaintiffs' liability theories of apparent authority and respondeat superior asserted against Sunset and Directors were not supported by sufficient evidence in the record and could not have led to a result more favorable than the settlement. Plaintiffs appealed the trial court ruling, and the Court of Appeals affirmed. Harkness v. Platten, 270 Or.App. 260, 348 P.3d 1145 (2015). For the reasons explained below, we reverse the decisions of the trial court and the Court of Appeals.

The facts as stated by the Court of Appeals, which we adopt, are as follows:1

Harkness, 270 Or.App. at 262-67, 348 P.3d 1145 (footnotes omitted).

To prevail on their legal malpractice and negligent misrepresentation claims against defendant, plaintiffs needed to prove a "case within a case" — that is, they were required to show, among other things, that, but for defendant's legal malpractice or negligent misrepresentation, they would have gone to trial in the underlying action, prevailed, and been awarded more than the amount that they had received in the settlement. See Chocktoot v. Smith, 280 Or. 567, 570-71, 571 P.2d 1255 (1977) (explaining case-within-a-case methodology). Plaintiffs' underlying action involved both contract and noncontract claims. For their case within a case on their contract claims, plaintiffs proceeded on a theory that Kantor had apparent authority from Sunset and Directors to bind those companies to the oral contract that was the basis for Kantor's investment scheme with plaintiffs — loaning funds to plaintiffs based on the equity in their different properties and then facilitating the lending of those funds to other borrowers for plaintiffs' investment purposes. For their case within a case on their noncontract claims, plaintiffs pursued a respondeat superior theory that Sunset and Directors were vicariously liable as her employers for Kantor's actions, because Kantor had appeared to be acting within the scope of her employment.2 Plaintiffs' apparent authority and respondeat superior theories were ultimately based on the same argument and evidence — i.e., that Sunset and Directors had clothed Kantor with apparent authority to engage in the investment scheme with plaintiffs on behalf of the companies as part of her employment as a loan officer.

At the close of plaintiffs' case, defendant moved for a directed verdict on several grounds, including that plaintiffs could not have prevailed in the underlying action against Sunset and Directors. The trial court agreed, concluding that plaintiffs had failed to present any evidence of actual or apparent authority and, therefore, that they had not presented any evidence that would have allowed them to prevail at trial against Sunset or Directors. Based on that conclusion, the trial court granted a directed verdict to defendant.

On appeal, plaintiffs argued that they had presented sufficient evidence for a factfinder to draw an inference of apparent authority with respect to their contract claims and to draw an inference of respondeat superior with respect to their noncontract claims. Plaintiffs principally relied on this court's decision in Badger v. Paulson Investment Co., Inc., 311 Or. 14, 803 P.2d 1178 (1991), in which this court held that, even though sales representatives of an investment company had actual authority to sell investors only approved securities, the representatives had apparent authority to sell unregistered securities.

The Court of Appeals affirmed the trial court's ruling that plaintiffs had not presented sufficient evidence of apparent authority to survive defendant's directed-verdict motion: "Plaintiffs presented no evidence that Kantor had the apparent authority to give investment advice on behalf of either company, engage in the proposed investment scheme, or, for the contract claim, bind Sunset or Directors to the oral terms of that scheme." Harkness, 270 Or.App. at 272, 348 P.3d 1145. In reaching that conclusion, the court disregarded the evidence related to Kantor arranging for plaintiffs to take out a conventional loan from Sunset and Directors and to those companies receiving a commission on those loans, "because those acts were within Kantor's actual authority as a loan officer for Sunset and Directors and are not evidence that Kantor had apparent authority to do more than just that." Id. The court then considered the remaining evidence and concluded that "[i]t was not objectively reasonable for plaintiffs to believe that that type of investment scheme [in which Kantor had engaged] was part of Kantor's job as a `loan officer,' nor did Sunset or Directors provide any information to plaintiffs, whether directly or indirectly, that such a scheme or financial advice was part of Kantor's job." Id. at 273, 348 P.3d 1145. The court also concluded that "[p]laintiffs' reliance on Badger to make their case is misplaced." Id.

We allowed review to determine whether the Court of Appeals properly applied this court's case law on apparent authority. More specifically, we allowed review to determine whether the Court of Appeals was correct that, in assessing whether a reasonable fact-finder could infer that Kantor had apparent authority, the court was required to disregard all evidence relating to acts that were within Kantor's actual authority as a loan officer for Sunset and Directors. Id. at 272, 348 P.3d 1145.

On review, plaintiffs argue that the Court of Appeals' reasoning "was based on both an unduly circumscribed view of the evidence in this case and an unduly circumscribed interpretation" of this court's decision in Badger. For his part, defendant argues that the Court of Appeals was correct in its view that the evidence in support of plaintiffs' theories of apparent authority and respondeat superior was insufficient. In particular, defendant argues that "there was insufficient evidence that Sunset and Directors had said or done anything to create the appearance that Kantor was authorized to act on their behalf as a financial advisor and propose, and then carry out, an investment scheme involving the placement of private loans."

We begin with a brief discussion of Oregon law relating to the doctrine of apparent authority. This court recently summarized the legal principles applicable to a determination of when "a putative principal can be held responsible for the acts of another on an apparent agency theory" in Eads v. Borman, 351 Or. 729, 277 P.3d 503 (2012):

Id. at 735-37, 277 P.3d 503 (internal quotation marks omitted).

This court also observed in Eads that the test in Oregon to determine when a principal is bound by an actor under an apparent authority theory is consistent with the rule stated in the Restatement (Third) of Agency section 2.03 (2006):

351 Or. at 737 n. 5, 277 P.3d 503 (quoting Restatement (Third) § 2.03). That test is applicable both "to determine when a principal is bound by actors who appear to be agents but are not, as well as actors who act beyond the scope of their actual authority." Id. (citing Restatement (Third) § 2.03 comment a).

Regarding the first element of the apparent authority test — a putative principal's representation that an agent is authorized to act on its behalf — an agent's actions, standing alone, will not give rise to apparent authority. Id. at 737, 277 P.3d 503 (citing Taylor, 345 Or. at 410, 196 P.3d 532). Instead, the principal "must take some affirmative step in creating the appearance of authority, one that the principal either intended to cause or `should realize' likely would cause a third party to believe that the putative agent has authority to act on the principal's behalf." Id. (ultimately quoting Restatement (Second) of Agency § 27 comment a (1958)). The principal's words, conduct, or other representation need not be made directly to or witnessed directly by the third party for the principal to be liable under a theory of apparent authority; rather, the representation of authority need only be traceable to the principal. Id.; see Taylor, 345 Or. at 411, 196 P.3d 532 (indirect information attributed to principal's conduct "can be used to support apparent agency, as long as that information can be traced back to the principal"); see also Restatement (Third) § 1.03 comment b (although "the presence of actual authority depends upon whether the principal has made a manifestation to the agent," by contrast, "a manifestation sufficient to establish apparent authority may, but need not necessarily be, directed toward an identified person as its audience").3

Further, when a principal cloaks an agent with actual authority to perform certain tasks, that actual authority may create the appearance of authority to perform other, related tasks. Taylor, 345 Or. at 411, 196 P.3d 532; see Badger, 311 Or. at 26, 803 P.2d 1178 (sales representatives' actual authority to sell approved securities lent weight to sales representatives' apparent authority to sell unregistered securities). Additionally, when a principal appoints an agent to a position that carries "generally recognized duties," a principal may create apparent authority to perform those duties. Badger, 311 Or. at 24-25 n. 9, 803 P.2d 1178 (quoting Restatement (Second) § 27 comment a).

Regarding the second element of the apparent authority test — the third party's reasonable reliance — the third party must in fact rely on the principal's representation in dealing with the apparent agent, and that reliance must be objectively reasonable. Eads, 351 Or. at 737, 277 P.3d 503 (citing Jones, 274 Or. at 595-96, 547 P.2d 616; Badger, 311 Or. at 26, 803 P.2d 1178). In assessing the reasonableness of the third part's reliance, a court must consider what is customary and usual for certain positions or within certain professions. Eads, 351 Or. at 737 n. 5, 277 P.3d 503 ("Apparent authority also includes concepts of `usual authority' and `customary authority' in determining whether `a substantial basis for a third party's belief' exists that the person with whom the third party dealt was acting as an agent for a principal in a particular circumstance.") (quoting Restatement (Third) § 2.03 comment b).

We now turn to the Court of Appeals' analysis of whether a factfinder could reasonably infer that Kantor had apparent authority to bind Sunset and Directors to the loan transactions between plaintiffs and third parties. As noted, the court focused almost entirely on the nature of the "investment scheme"4 perpetrated by Kantor as precluding a factfinder from drawing an inference of apparent authority, because "[i]t was not objectively reasonable for plaintiffs to believe that that type of investment scheme was part of Kantor's job as a `loan officer[.]'" Harkness, 270 Or App. at 273, 348 P.3d 1145. However, in so narrowing its inquiry, the court disregarded, as irrelevant, the evidence concerning the actual authority with which Sunset and Directors had cloaked Kantor. Having disregarded that evidence, the court readily distinguished Badger, a case in which this court concluded that — under the circumstances presented — sales representatives with actual authority to sell approved securities were apparent agents with authority to sell unregistered securities.

Because both parties rely on Badger — and the Court of Appeals found Badger inapposite — we discuss it in some detail. Badger was a civil case for damages arising from the sale of unregistered securities to investors by representatives of an investment company. The investment company (Paulson) had taken over the investment accounts from a prior company (Slanker) and had informed customers that it had taken over the Slanker accounts. 311 Or. at 17, 803 P.2d 1178. Paulson's sales representatives, Lambo and Kennedy, who had previously worked for Slanker, then made sales presentations to those investors, and other investors, at Paulson's office and solicited sales of unregistered securities using Paulson's letterhead. The unregistered securities "proved to be valueless." Id. The investors brought claims against Paulson, Lambo, and Kennedy for securities fraud under ORS 59.115 and for common-law fraud. A jury entered a verdict against Paulson for damages on all claims based on a finding that the representatives had apparent authority to bind Paulson to the sales. The trial court set aside the verdict for the investors against Paulson on the securities claims and a verdict against Paulson for punitive damages on the common-law claim. Id. at 18, 803 P.2d 1178. The Court of Appeals reversed the trial court's judgment notwithstanding the verdict and reinstated those verdicts. Id. at 18-19, 803 P.2d 1178.

On review, this court concluded that common-law agency principles may be invoked "to impose liability as a seller against a principal for an agent's violation" of the statutory requirements of ORS 59.115(1) and that "the evidence of an apparent agency relationship between Paulson and Kennedy and Lambo [was] sufficient to impose liability on Paulson" under that statute. Id. at 19, 803 P.2d 1178. The court quoted from Wiggins v. Barrett & Associates, Inc., 295 Or. 679, 687, 669 P.2d 1132 (1983), and cited the commentary to the Restatement (Second) section 27 for the principle that apparent authority may arise when an agent does not have actual or implied authority to act for a principal in a matter, but "the principal has clothed the agent with apparent authority to act for the principal in that particular. In other words, the principal permits the agent to appear to have the authority to bind the principal." Badger, 311 Or. at 24 & n. 9, 803 P.2d 1178 (internal quotation marks omitted).

In reviewing whether the evidence was sufficient to support a finding that Kennedy and Lambo were "acting within the apparent authority of Paulson," this court discussed the fact that Kennedy and Lambo "were employed by Paulson as registered representatives" and that Paulson made it known to its customers that Kennedy was associated with Paulson:

Badger, 311 Or. at 25-26, 803 P.2d 1178. This court concluded that the evidence was sufficient "to support the jury's verdict that Kennedy and Lambo conducted the illegal sales with the apparent authority of Paulson." Id. at 26, 803 P.2d 1178.

In this case, the Court of Appeals concluded that Badger did not aid plaintiffs. The court noted that, in Badger, the sales representatives had sold both authorized and unauthorized securities in the same manner and that the investment company had informed customers that the sales representatives were authorized to sell securities. Harkness, 270 Or.App. at 274, 348 P.3d 1145. The court then contrasted those facts with this case, in which "neither Sunset nor Directors provided any information to plaintiffs from which they could reasonably conclude that Kantor was authorized by them to act as a financial advisor to, or engage in investment schemes with, its mortgage customers." Id.

We conclude, however, that the Court of Appeals made two missteps in determining that Sunset and Directors had made no manifestations from which plaintiffs could reasonably have concluded that Kantor was authorized to perform the acts constituting the fraudulent scheme. First, the court disregarded evidence concerning the actual authority with which Sunset and Directors clothed Kantor. Second, the court does not appear to have considered evidence in the record relating to the usual or customary authority of a loan officer for a mortgage company.

As to the first misstep, this court's case law makes clear that the appearance of authority may, at least in part, be based on conduct relating to an agent's actual authority. Taylor, 345 Or. at 411, 196 P.3d 532 ("[W]hen a principal clothes an agent with actual authority to perform certain tasks, the principal might create apparent authority to perform other, related tasks."); Badger, 311 Or. at 26, 803 P.2d 1178 (sales representatives had apparent authority to sell unregistered securities when they had actual authority to sell approved securities). That is so because, as noted, the rationale for the doctrine of apparent authority is that a principal must be held accountable for the results of reasonable third-party beliefs about an actor's authority to act as an agent based on manifestations that are traceable to the principal. One such manifestation is the actual authority with which the principal has cloaked an agent. Indeed, much of the commentary to section 1.03 and section 2.03 of the Restatement (Third) contemplates situations where an actor for a putative principal is an agent for the principal for other purposes. See, e.g., Restatement (Third) § 2.03 comment d ("[A] third party should assess what is observed of the agent in light of the agent's position as a fiduciary with a duty to use authority on behalf of the principal."). Thus, evidence of an agent's actual authority to perform certain tasks is relevant to determining whether the agent was apparently authorized to perform other, related tasks, and the Court of Appeals erred in disregarding that evidence in this case.

As to the second misstep, the Court of Appeals does not appear to have considered the evidence in the record concerning the role of a loan officer for a mortgage company in the local industry. That evidence included excerpts from a deposition of Todd Johnson, Sunset's president, in which Johnson indicated that Sunset was a "mortgage finance provider" and a "mortgage broker" that used its own money and the money of others to make real estate loans and that Kantor was employed on a commission basis as a loan officer to originate loans. Johnson also testified that there could be "a time that a hard money loan would be a benefit" as part of his "creative approach" to making loans, that a good loan officer could tell clients to utilize the equity in their real property to make money, and that his loan officers were encouraged to go out and find business. As we stated in Eads, apparent authority "includes concepts of `usual authority' and `customary authority' in determining whether `a substantial basis for a third party's belief' exists that the person with whom the third party dealt was acting as an agent for a principal in a particular circumstance." 351 Or. at 738 n. 5, 277 P.3d 503 (citing Restatement (Third) § 2.03 comment b); see also Taylor, 345 Or. at 413, 196 P.3d 532 (reasonable reliance on apparent authority where owner's general contractor testified that it was customary to obtain warranties in writing). Accordingly, evidence relating to Kantor's usual or customary role as a loan officer was relevant to the determination whether plaintiffs reasonably believed that Kantor had apparent authority, and that evidence should not have been disregarded by the Court of Appeals.

We now turn to the sufficiency of the evidence for a factfinder to infer that Kantor had apparent authority to bind Sunset and Directors to the loan transactions arranged by Kantor between plaintiffs and third parties. We review the grant of a directed verdict against a party in the light most favorable to that party — here, the plaintiffs — and we draw all inferences from the evidence in plaintiffs' favor. Trees, 354 Or. at 200, 311 P.3d 848.

The record in this case includes evidence that Kantor was employed successively by two mortgage companies, Sunset and Directors, as a "loan officer" during a period of time when Kantor defrauded plaintiffs by use of an investment or loan scheme. The scheme consisted of Kantor advising plaintiffs to take out conventional loans from Sunset and Directors using the equity in their home as collateral and using the proceeds to make hard-money loans to contractors and developers as arranged by Kantor. Unbeknownst to plaintiffs, and contrary to Kantor's representations, those loans by plaintiffs were not secured, and Kantor retained some of the proceeds from those loans for her own benefit. Kantor used Sunset and Directors offices, letterhead, and staff in the presence of plaintiffs during this period of time. Neither mortgage company informed plaintiffs of any limitations on Kantor's authority as a "loan officer" to act for those companies in matters pertaining to loans or financial investment. As noted, Sunset's president, Johnson, testified that Sunset was a "mortgage finance provider" and a "mortgage broker" and that Kantor was employed on a commission basis as a loan officer to originate loans. Johnson also testified that a good loan officer could tell clients to utilize the equity in their real property to make money and that his loan officers were encouraged to go out and find business. Finally, Mrs. Harkness testified that she would not have entered into the loan transactions if Kantor had not been working with Sunset and Directors and that she believed that Kantor had been acting within the scope of her employment in all of her dealings with plaintiffs.

Viewing that evidence in the light most favorable to plaintiffs, we conclude that a reasonable factfinder could infer that Sunset and Directors manifested their assent to be bound by the acts of Kantor through the observable connections between Kantor and those organizations. Restatement (Third) § 1.03 comment c. As we have explained, a factfinder in this case could consider all of the relevant conduct of Sunset and Directors in the context of those organizations having hired Kantor as a "loan officer," given Kantor actual authority to perform the tasks of a loan officer, and placed her in their offices without notice to customers of any limitation on her authority or fiduciary duties as a loan officer. Under those circumstances, a factfinder could infer that Sunset and Directors manifested their assent to be bound to the loan transactions between plaintiffs and third parties arranged by Kantor. Taylor, 345 Or. at 410-11, 196 P.3d 532; Badger, 311 Or. at 24-25, 803 P.2d 1178; Restatement (Third) § 2.03.5

We further conclude that a reasonable factfinder could infer from the evidence that it was reasonable for plaintiffs to believe that Kantor was authorized — as a loan officer for Sunset and Directors — to engage in the investment and loan scheme on behalf of those companies. In particular, a factfinder could infer that plaintiffs reasonably believed that Kantor's actions were part of her usual or customary authority as a loan officer hired by Sunset and Directors to make and arrange loans on behalf of the mortgage companies. See Eads, 351 Or. at 738 n. 5, 277 P.3d 503 (concepts of "usual authority" and "customary authority" help inform determination whether third party's reliance was reasonable).

Additionally, we find the Restatement (Third) commentary instructive on the question of the reasonableness of plaintiffs' belief. Comment d to section 2.03 notes that, where "a third party knows that the actor in question is an agent and knows the identity of the principal, the third party should assess what is observed of the agent in light of the agent's position as a fiduciary with a duty to use authority on behalf of the principal." Restatement (Third) § 2.03 at comment d. With respect to particular transactions, such as the loan transactions in this case, a third party should consider whether it appears to be reasonably related to the principal's known business. Id. "Absent circumstances that should raise questions in the mind of a reasonable third party, as a general matter there is no requirement that the third party inquire into the scope of an agent's authority." Id. Here, plaintiffs knew that Kantor was an agent of Sunset and Directors and observed Kantor in light of her position as a fiduciary with a duty to use authority on behalf of Sunset and Directors. Under the circumstances described above, plaintiffs could reasonably have believed that all the loans were reasonably related to Sunset's and Directors' business, and that Kantor was acting within her fiduciary duty as a "loan officer."

Finally, we consider plaintiffs' argument that the trial court erred in granting defendant's motion for a directed verdict on plaintiffs' noncontract claims under a theory of respondeat superior. The Court of Appeals did not reach plaintiffs' argument that the trial court failed to determine the vicarious liability of Sunset and Directors on those claims, because, in its view, plaintiffs did "not raise or develop any legal arguments as to how [the] evidence meets the respondeat superior elements." Harkness, 270 Or.App. at 271 n. 6, 348 P.3d 1145. We disagree. In their brief on appeal, plaintiffs argued,

(Record citations omitted.)

We conclude that plaintiffs sufficiently developed their argument on appeal that the trial court failed to determine the vicarious liability of Sunset and Directors on plaintiffs' noncontract claims, and we therefore reach that argument. Again, on review of the grant of defendant's motion for a directed verdict, we view the evidence and draw all reasonable inferences in plaintiffs' favor. Trees, 354 Or. at 200, 311 P.3d 848. Based on the evidence we have discussed in relation to plaintiffs' theory of apparent authority, we also conclude that a factfinder could infer that the requirements for holding an employer vicariously liable under the doctrine of respondeat superior are met in this case.

This court has summarized those requirements as follows:

Chesterman v. Barmon, 305 Or. 439, 442, 753 P.2d 404 (1988) (citation omitted).

In this case, based on the same evidence that plaintiffs presented regarding apparent authority, a reasonable factfinder could infer that the above three requirements have been met:

Thus, the trial court erred in allowing defendant's motion for directed verdict on plaintiffs' theory of respondeat superior. See Stanfield v. Laccoarce, 284 Or. 651, 655, 588 P.2d 1271 (1978) ("question of whether or not an employee has acted within the scope of his employment at any given time is normally a question for the jury, except in cases where only one reasonable conclusion can be drawn from the facts").

We conclude, then, that the trial court erred in allowing defendant's motion for a directed verdict and that the Court of Appeals erred in affirming that decision. Accordingly, we remand to the trial court for further proceedings consistent with this opinion.

The decision of the Court of Appeals is reversed. The judgment of the circuit court is reversed, and the case is remanded to the circuit court for further proceedings.