Legal Question in Business Law in California

i am a silent partner in an insurance business. I invested $20,000 to help this couple begin their insurance business. The extent of our promissory note states that I am to be paid my full amount back plus 10% of the gross commissions per month. Too date, I have only been paid back $13,000 of the money and I they have basically "went into hiding". When I was first approached by them, they represented themselves as insurance agents of the company. The initial seed capital was to pay for their insurance licensing and opening of their offices, etc. I have strong belief that they have defrraude me out of my money and misrepresented themselves as insurance agents with this company. I have come to find out, when I called their corporate office, that they have been paid little to no commission and haven't closed any business in 2 years their. Can I sue the insurance company as well as them for fraud and misrepresenting themselves to me? I have been unable to reach them and when I spoke with one of their "trainers" they mentioned to me that he trained them a little on product and nothing more. I need to get my money back plus damages and their misrepresentation to me that they were insurance agents for this company. Thank you


Asked on 4/17/10, 9:54 pm

3 Answers from Attorneys
Michael Stone Law Offices of Michael B. Stone Toll Free 1-855-USE-MIKE

How, exactly, did you come into contact with these people and how was it you decided to entrust them with $20,000? Do you know where they live? Did you at least make a copy of their drivers' licenses?

Read more
Answered on 4/22/10, 10:09 pm

You can probably sue them for fraud, definitely for breach of contract, if you can find them. It is doubtful you can put together a valid suit against the insurance company, since insurance companies are only responsible for their independent agents in the transacting of the insurance business, not for the entire business operations of the independent agency. It's just like a car dealership. Both the automaker and the dealer are responsible to you if the car has defects, but the automaker is not responsible if the dealer doesn't pay his bills.

Read more
Answered on 4/23/10, 10:11 am
Terry A. Nelson Nelson & Lawless

You might have grounds to sue the people with whom you had an agreement that has been breached, or who have 'defrauded' you. Just what contractual agreement did you have with the insurance company that they have breached? I doubt they knew you existed. The burden of proof in a lawsuit is on you.

Your action is probably limited to suing the agents. If you can show actual fraudulent intent, you would be entitled to recover general damages in addition to the remaining unpaid principle due. However, they didn't take your money and run, they paid most of it back. That is not 'fraud' on its face.

If this is in SoCal, and if you are serious about pursuing it, and if it is worth it to you to hire an attorney, feel free to contact me. Sounds like you could proceed in small claims court for the remaining $7k due.

Read more
Answered on 4/23/10, 4:18 pm


Related Questions & Answers

More Business Law questions and answers in California