Legal Question in Business Law in California
The CFO and Controller of my friend's company committed fraud. The company is facing potential charges from government agencies. Can the parent company sue the CFO and Controller for their actions and if so, how would the damage be measured?
1 Answer from Attorneys
I'm not sure if "company" and "parent company" are the same, or if there is indeed a parent-subsidiary relationship. In any event, a company can sue its officer or the officer of a subsidiary if the company has been harmed by the officer's tortious or illegal acts. The measure of damages for fraud is generally governed by Civil Code section 3333 covering damages for torts in general, is "the amount which will compensate for all the detriment proximately caused thereby, whether it could have been anticipated or not." There are exceptions, and proper interpretation of the statutory language requires training in understanding the legal concept of "proximate cause," but you get the idea that the damages reckoning can be fairly broad.
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