|
M." Valedano
<br />Apfff 11, 2013
<br />Page 4 of 6
<br />bonds Insuring their- oven honeWy for the VM purpose of placing the
<br />corporation, and incidentally themselves as the vNners of the majority of
<br />the vote oontrQUing *tnt* therein, in a posifion to recoup from the sage .$
<br />the lo&ses. which they were bringing about by their own wrongful acts.
<br />Id, at 235. On these acts, the Court deternilried that1he knowledge of the majority
<br />shareholders was imputed to the carnpariys The Court refijs-ed to apply the adverse
<br />interast except Wcatitse R found that the officers were acting for the corp -araflon in
<br />the transedon, even though they had an opposing personal lnbrest Id. at 2M The
<br />r4ason for this exceplion is nbvlour.; where the offters wntrol the coTpomtlon ltsev,
<br />their actions are deemed to be the actions of th a corporation.
<br />These cases are best explained by ft "tote awe except on to, the adverse
<br />interests do(tine. "Caffornfa courts have recognized a limited ex tion to the rule MeA,
<br />the a c% of o n officer actin g adversely to a company M-11 not be affrbutad to it* th re
<br />Califomle 7D Investments UC, 1:077 -13K -13003 -GM, 2013 WL 827718 (l an CD. Cal,
<br />Mar- 8, X018}= sea also Pederal Depoalt Ins, Corp. v. Loft, 460 F -2d 82, as (5th
<br />Oinl 872). 7bls dootrine is used to impute the 'fraudukant conduct of an officer ancal sole -
<br />shareholder to the cofPciration in spite crErthe fact that his actions were advarse to fit,* Id,
<br />(citing Paregrine FundirW, Inc. v. Shoppord Aefuft�&-hfsr& Hampton LLP, 133 Cal.
<br />App, 4th 658, 679 �2005)),, see also Coit Drapery Cleaners, IrTO. v. Sequoia Ins. Co., 14
<br />Caff.AppAth 15135 (1993). Ws excepfion does not apply in the present case, hovmvar,
<br />because Seeney and 8inlpata wee ria, the DWc';z dedsion rnakerT 0,C' ou* ftae
<br />dectined to impute this exmiptiari. however, where R has not bean established the, a3
<br />relevant de6aion makers for the corporation were eqaqed fn the fraud.11 Ad (citing
<br />Cas,y V. U.S. Bank Nalff Mt,122 Gal AppAth 1138, 1143 (2005)),
<br />Here, the Distdct decided to obtain Insurante from Harfford tong be -fore hiring
<br />Seeney and Slniper. Nelffier See -nay nor Sintpata were rjnaml rs et the Loaf, let
<br />atoms ownarsanWor sola' rapresentattiez of the Distrlix Seeney and Sjnfpqwere in
<br />no:position to dire* ban -aft from the pvrfry, and the Distil Obtained no benefitt from
<br />their alleged ",s "opresentaffons. 11F gr;en or Sinipata had not All ead out the application,
<br />some other employee Nvould have, wfth the same awAmrs. The llaflum to disclose
<br />losses due to their own fraud on the applIcation for insv ran ce only prevenl�d- the Disstrict
<br />from ftcovarjng K sooner and lOrnely r -*porting the loss under the prior policy, which
<br />neither Seeney nor SiMpiata waz involved in procuring.
<br />Hafford has dZed no cases dea[lng witf art innoceril corporation where art officer
<br />who did not stave cote Control of the company Bed on a ren&mal iapplkmt[on, ars the
<br />other hand, in Sanclnsum, Inc, v. U.K. 3ancoTporadon lncJUnitad Kei7lucky Bank of
<br />Pendleton Covnfy, Inc., 830 F. Supp . 2d 294 (E, D. Ky, 2011), the court was faced with
<br />IN s very sGenado. The court revievied te state of 1he lav naflonally, ani found tha t 'ft
<br />�.--w jurisdictions that have addresa-ed this padicular issue have handed down opposite
<br />results,' A at 3131, The court disagread with Paym# pmss, arid held that Ahee actions
<br />of a dishonest officer who lied on ; renevml application to cover up her own mnisdeeda
<br />Nvas not �nputed to the insured, and therefore the poficy was not rescindable. Id The
<br />18 9Z abed - '3F6V
<br />
|