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July 2015

Gordon & Rees Los Angeles Team Secures Dismissal of Employee’s Claims for Fraud and Misrepresentations

Los Angeles partner Asim Desai and senior counsel Margret Parke obtained a full dismissal with prejudice of all claims for fraud, misrepresentation and breach of contract based on alleged misinformation given to the plaintiff-employee by his supervisors regarding coverage for rental cars used for business purposes. Plaintiff rented a van to take customers on a fishing trip and did not secure UM/UMI coverage based on instructions from his supervisors that the Company’s automobile coverage included UMI coverage. Plaintiff was involved in an accident with an intoxicated driver and sustained serious injuries. Before settling with the adverse drivers’ insurer for policy limits ($50,000), Plaintiff’s attorney sought and obtained assurances from the Company’s insurer that there was $1.0 million in UIM coverage. Months after the settlement, the Company’s insurer informed Plaintiff’s counsel that, in fact, UMI coverage did not apply to rental cars.

Gordon & Rees filed successive demurrers on behalf of its client, the plaintiff’s employer, based on the workers’ compensation exclusivity rule. Plaintiff argued that the misrepresentations by his supervisors regarding the Company’s auto coverage denied him a property right to procure his own coverage and resulted in a loss not contemplated by the exclusivity rule of workers’ compensation. After three rounds of demurrers the court held that the statements by the supervisors were not so far outside the scope of normal employment activity to be exempt from the workers’ compensation bargain and ultimately sustained the demurrer without leave to amend, which resulted in an Order dismissing all claims against Gordon Rees’s client.

Asim K. Desai
Margret G. Parke