Complaint,Petition: TECHNOLOGY INSURANCE COMPANY INC. vs B.M. HVAC FITTING SUPPLY INC.

On January 25, 2020 a Complaint,Petition was filed involving a dispute between Technology Insurance Company Inc., and B.M. Hvac Fitting Supply Inc., for Unlimited Civil Other Contract in the District Court of Riverside County.

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I Timothy Carl Aires, I'.sq. (138169)
AIRI S LAW FIRM
2 6 I lughes, Suite 205
Irvine, California 92618
3 (949) 718-2020
(949) 718-2021 FAX
4
Attorneys for Plaintil'f,
5 TECI INDI.OGY INSUIWNCE COMPANY INC.

SUPERIOR COURT (UNLIMITED) OF THE STATE OF CALII'ORNIA

COUNTY OF RIVERSIDE, HISTORIC COURTHOUSE
10

11 TECI INOLOGY INSURANCE COMPANY ) Case No.
INC., )
12 COMPLAINT FOR 13REACII OF
)
PlaintiIT, ) CONTRACT; 13REACH OF CON'I'ILAC1'
13
V.
) ($ 96,082.00 DEMANDED)
14 )
13,M. I IVAC I IT'I'ING SUFI'LY INC4 and [C.C.P. $ 425.10]
)
15 l)OlrS I through 50, inclusive, )
)
Defendants. )
)
17

19 Plaintiff 'I'echnology Insurance Company Inc., by and through its undersigned attorneys,
20 hereby allegcs against Defendants, and each of them, as follows:

22 PRF LIMINARY ALLEGATIONS
23

24 1. Plaintiff Technology Insurance Company lnc. is now, and at all times relevant hereto
25 was, a corporation duly organized and existing under thc Iaws of thc State of New I lampshirc.
26 ///
27 ///
28 ///

COMPLAINT
I 2. Plaintiff is informed and believes and based thereon allegcs that Defendant 13.M.

2 IIVAC Fitting Supply lnc. is now, and at all times relevant hcrcto was, a corporation duly organixcd

3 under thc laws of the State of California, and doing business within this judicial district.

5 3. Plaintiff is ignorant of the true names and capacities of'the Defendants sued herein
6 as Does I through 50, inclusive, and therefore sues these Defendants by such fictitious names.
7 Plaintiff will amend this Complaint to allege the true names and capacities of said Defendants when
8 thc same is ascertained. Plaintiff is informed and believes and based thereon allcges that each of

9 these lictitiously-named Defendants is jointly responsible in some manner for thc transactions and
10 /or occurrences herein alleged, and that the Plaintiffs injuries as alleged were proximately caused
11 by such Defendants.

13 4. Plaintiff is informed and believes and based thereon alleges that at all times hcrcin
14 mentioned each of the Dcl'endants was the agent of each of the remaining Defendants, and in doing
15 the things hcreinal ter alleged, was acting in the course and scope of such agency with the permission

16 and consent of its co-Defendants.

18 5. Plaintiff is informed and believes and based thereon alleges that, at all times relevant
19 hereto, a unity of interest has existed between Defendants such that any separateness between the
20 Defendants has ceased and that it would sanction a fraud or promote an injustice if the separateness
21 of the Defendants werc recognized. Plaintiff is informed and believes and based thereon alleges that
22 Defendants are successors in interest to a party liable to Plaintiff because; [I] I'here is an express or

23 impli&:d agrccment of assumption with respect to the assets of thc seller (or transferor); [2[ The
24 transaction amounts to a consolidation or merger of thc two entities; [3] 'I'hc purchasing entity is a
25 mere continuation of thc seller (or transferor); or [4] The transfer of assets to thc purchaser (or
26 transfcrce) is for thc fraudulent purpose of escaping liability for thc debts of the seller (or transferor).
27 I'laintiff is informed and believes and based thereon alleges that, at all times rclcvant hereto, that
28 certain ol'hc Defendants werc insolvent and/or rendcrcd insolvent by thc actions of other

CO M PLAIN'I'
1 Defendants. Plaintif'f is informed and believes and based thereon alleges that, at all times relevant
2 hereto, that certain of the Defendants werc each active participants, for profit, in the common

3 enterprise conducted through various other Defendants, using thc same tangible and intangible
4 assets, including equipmcnt, employees, and goodwill. 1'laintiff is inl'ormed and believes and based

5 thereon alleges that, at all times relevant hereto, that thc entity Defendants have been used by the

6 individual Defendants as subterfuges for illegal, fraudulent and/or otherwisc wrongful transactions.
7 Plaintiff is further informed and believes and based thereon allcges that the entity Defendants, at all
8 times relevant hereto, were mere shells and shams without sufficient or adequate capitalization, that

9 the entity Defendants were conceived, intended, and utilized by thc natural person Defendants, and

10 each of them, as devices to avoid individual liability and for the purpose of substituting financially

11 insolvent business entities in the place of the natural person Defendants, and &:ach of them, that other
12

21
ol'5Defendants, and each of them, have failed to observe corporate formalities with respect to thc

activities of thc entity Delendants, that other Defendants, and each of them, have used assets of the

entity Defendants lor personal usc, that other Defendants, and each of them, have caused assets

the entity Delcndants to bc transfcrrcd to the other Del'endants, and each of them, without adcquatc

consideration, that other Defendants, and each of them, have caused thc entity Defendants to pay
excessive compensation to insiders at a time when thc corporation was insolvent, that other

Defendants, and each of them, have caused the entity Defendants to make distributions to

shareholders at a time when the corporation was insolvent in violation of Cornorations Code II500

et seq., and that, during a state of entity insolvency, Defendants, and each of them, engaged
conduct that diverted, dissipated, or unduly risked assets of the entity Dcfcndants that might
in

22 otherwise have been used to satisly creditors'laims. As a result of the preceding allegations,

28
of'6whether Defendants are the alter egos of one another, joint venturers, successors in interest,

co-conspirators, orothcrwisc, Defendants are responsible 1'r the debts, obligations and duties of one
another. 1'laintiff is inl'ormcd and bclicves and based thcrcon alleges that thc damage claim

Plaintiff is separate illid distinct from any damage claim of thc entirety of thc class of the entity
Defendants'creditors in that Plaintiff was the spccihc and particularized target of Defendants'llegal,
lraudulent and/or otherwise wrongful conduct.

COMPLAtN I
I 6. This action is not subject to Civil Code tj1812.10 or Civil Code I'12984.4. The proper
2 county for the trial of this action is thc County of Riverside in that the Defendants, and each of them,

3 contracted to perl'orm the obligation sued upon and/or have their principal place of business in the
4 County of Rivcrsidc within this judicial district.

FIRST CAUSF. Ol AC'I'ION

(13reach of Contract Against All Defendants)

9 7. Plaintiff hereby incorporates by reference paragraphs I through 6, inclusive, of this
10 Complaint as if sct forth in full in this paragraph.

12 8. On or about May 10, 2020, Plaintiff upon the request of Defendants for Workers
13 Compensation and Employers Liability Insurance coverage, provided Defendants with an Insurance
14 Policy No. TWC3880573 lor the period of 5/10/2020 through 5/10/2021, which was subject to an
15 audit and recomputation of its premium (thc "2020 I'olicy"). I'laintil'f is authorixcd under thc terms

16 of thc 2020 Policy to examine and audit all records that relate to the 2020 Policy during thc policy
17 period. The 2020 I'olicy provides that the final premium will be determined by using thc actual
18 premium basis and the proper classifications and rates as determined by an audit. 'I'hc 2020 Policy
19 further obligated Defendants to pay the difference bctwecn the estimated and actual premiums after

20 the audit and lmal premium determined by Plaintiff. In this regard, the 2020 Policy, in part, provides:

22 I'ART FIVE - PREMIUM [/]] 13. Classifications [f[] Item 4 of the
23 information page shov s thc rate and premium basis for certain
24 business or work classilications. These classilications were assigited
25 based on an estimate of the exposures you would have during the
26 policy period. If your actual exposures are not properly described by
27 those classilications, wc will assign proper classilications, rates and
28 premium basis by cndorscment to this policy. Remuneration
[f]] C.

COMt'LAlNT
[f~] Premium for each work classification is determined by

multiplying a rate times a premium basis period. Remuneration is the
most common premium basis. This premium basis includes payroll

and all other remuneration paid or payable during thc policy period

for the services of: [1)] l. All your officer and employees engaged in
work covered by this policy; and [fi] 2. All other persons engaged in

work that would m'ike us liable under Part Onc (Workers

Compensation Insurance) of this policy period. If you do not have
payroll records for these persons, the contract price for their services
10 and materials may be used as the premium basis. 'I'his paragraph 2

will not apply if you give us proof that the employers ol these persons

12 lawfully secured their workers compensation obligation. [)t] E. I inal
13 Premium. Thc premium shown on the Information Page, schedules

and endorsemcnts is an estimate. Thc Imal premium will be
15 dctcrmincd al'tcr this policy ends by using thc actual, and not thc
16 estimated, premium basis and the proper classitications and rates that
17 lawfully apply to the business and work covered by this policy. If thc
11nal premium is morc than the premium you paid us, you must pay
19 us the balance. If it is less, we will refund the balance to you. Thc

20 final premium will not be less than thc highest minimum premium for

21 the classifications covered by this policy.... J fJ] I . Records. You will
22 keep records of information needed to compute premium. You will
23 provide us with copies of those records when we ask I'or them. [fi] G.
24 Audit. You will lct us examine and audit all your records that relate
25 to this policy. 'I'hesc records include ledg&ers, journals, registers,

26 vouchcrs, contracts, tax reports, payroll and disbursement records,
27 and prog&rams for storing and retrieving data. We may conduct thc

audits during regular business hours during the policy period and
within three years al'tcr the policy period ends. Information
developed by audit will be used to determine linal premium.
Insurance rate service organizations have the same rights we have
under this provision.

6 9. An audit was subsequently performed on the cflective policy period for thc 2020
7 Policy. 'I'hc audit found the premium basis estimate provided by the Defendants to bc inaccurate and

8 found the actual audited total premium and fees for the effective policy period for the 2020 Policy

9 to be an additional $ 45,346.00, which became fixed or readily ascertainable on July 22, 2021, as

10 evidenced by a premium audit invoice, a true and correct copy of which is attached hereto as Lxhibit
11 "A". Defendants waived any challenge to the amount determined to bc
the premium owed on the
12 pol icy through the audit process, and as described on the linal premium audit endorsement, by failing

13 to pursue the administrative remedy set forth in the 2020 Policy (see Insurance Code 737(f)).
II I I

15 10. Plaintil'f has performed all conditions, covenants and promises required of it on its
16 part in accordance with the terms and conditions ol'the 2020 Policy, except those which arc excused
17 by Del'cndants'reach.

19 11. After July 22, 2021, Defendants refused to make any further payments toward thc
20 2020 Policy premium as audited for thc 2020 Policy. Thus, within the past four years, Defendants

21 have breached thc terms of the 2020 Policy by failing and refusing to satisfy thc amount outstanding

22 on the 2020 Policy of $ 45,346.00.
23

24 12. As a direct and proximate result of Del'endants'reach of thc 2020 I'olicy, I'laintilT
25 has bccn damaged in the amount of $ 45,346.00, together with
prejudgment interest of $ 12.42 per day
26 from July 22, 2021, using thc legal rate of 10% pcr annum.

27 ///
28 ///

COMPLAINT
SECOND CAUSE Ol'CTION
(13reach of Contract Against All Defendants)

4 13. Plaintiff hereby incorporates by reference paragraphs I through 12, inclusive, of this
5 Complaint as if set forth in full in this paragraph.

7 14. On or about May 10, 2021, Plaintiff upon thc retlucst of Defendants for Workers
8 Compensation and Employers Liability Insurance coverage, provided Defendants with an Insurance
9 Policy No. 'I'WC3970452 for the period of 5/10/2021 through 5/10/2022, which was subject to an
10 audit and rccomputation ol'its premium (the "2021 Policy" ). Plaintiff is authorized under the terms
11 of thc 2021 Policy to examine and audit all records that relate to the 2021 Policy during the policy
12 period. 'I'he 2021 Policy provides that the fmal premium will be determined by using thc actual

13 premium basis and the proper classilications illld rates as determined by an audit. The 2021 I'olicy
14 further obligated Defendants to pay thc difference between thc cstimatcd and actual premiums after

15 thc audit and final premium determined by I'laintiff. In this regard, thc 2021 Policy, in part, provides:

17 I'AR'I''IVI. - I'REMIUM [f[] 13. Classifications [f[] Item 4 of the
information page shows thc rate and premium basis I'or certain
19 business or v ork classilications. These classifications were assigned
20 based on an estimate of the exposures you would have during the
21 policy period. If your actual exposures are not properly described by
22 those classilications, wc will assign proper classilications, rates and
23 premium basis by endorsement to this policy. Rcmuncration
[fi] C.
24 [f[J Premium for each work classilication is determined by
25 multi plying a rate times a premium basis period. Remuneration is the
26 most common premium basis. 'I his premium basis includes payroll
27 and all other rcmuncration paid or payable during thc policy period
28 for the services of: [f[] 1. All your oflicer and employees engaged in

COMPLAINT
work covered by this policy; and [1[] 2. All other persons engaged in

work that would make us liable under Part One (Workers

Compensation Insurance) of this policy period. If you do not have
payroll records for these persons, thc contract price for their scrviccs

and materials may bc used as the premium basis. This paragraph 2

will not apply if you give us proof that the cmploycrs ol'these persons

lawfully secured their workers compensation obligation. [)]] F.. Final
Premium. The premium shown on the Information Page, schedule:s

and endorsements is an estimate. The hnal premium will be
10 determined after this policy ends by using thc actual, and not the
estimated, premium basis and the proper classifications and rates that
12 lawfully apply to thc business and work covered by this policy. If the
13 final premium is more than the premium you paid us, you must pay

14 us thc balance. Il't is less, wc will refund the balance to you. 'I'he

15 final premium will not be less than the highest minimum premium for

the classifications covered by this policy.... [f~] F. Records. You will

17 keep records ol'information needed to compute premium. You will
18 provide us with copies of those records when wc ask for them. [f]] G.
19 Audit. You will lct us examine and audit all your records that relate
20 to this policy. These records include ledgers, journals, registers,
21 vouchers, contracts, tax reports, payroll and disbursement records,
22 and programs for storing and retrieving data. We may conduct thc
23 audits during regular business hours during the policy period and
24 within three years after the policy period ends. Information
25 devclopcd by audit will bc used to dcterminc lmal premium.
26 Insurance rate service organizations have the same rights we have
27 under this provision.
28 ///

COMPLAINT
I 15. An audit was subsequently performed on thc el'fcctive policy period for the 2021
2 I'olicy. The audit found thc premium basis estimate provided by thc Defendants to be inaccurate
and
3 lound the actual audited total premium and fees for thc eITective policy period for the 2021 Policy

4 to bc an additional $ 50,736.00, which became lixed or readily ascertainable on Scptcmbcr 14, 2022,

5 as evidenced by a premium audit invoice, a true and correct copy of which is attached hereto as

6 Exhibit '13". Defendants waived any challenge to the amount determined to bc the premium owed
7 on the policy through the audit process, and as dcscribcd on the lmal premium audit endorsement,

8 by failing to pursue thc administrative remedy set forth in the 2021 Policy (sce Insurance Code

9 tj11737(I)).

11 16. Plaintiff has pcrformcd all conditions, covenants and promises required of it on its
12 part in accordance with thc terms and conditions ol the 2021 I'olicy, cxccpt those which are excused
13 by Defendants'reach.
14

15 17. After September 14, 2022, Defendants rel'used to make any further payments toward
16 the 2021 Policy premium as audited for the 2021 Policy. Thus, within the past four years, Defendants

17 have breached the terms of the 2021 Policy by lai ling and refusing to satisfy the amount outstanding

18 on the 2021 Policy of $ 50,736.00.

20 18. As a direct and proximate result of Defendants'reach of the 2021 Policy, Plaintiff
21 has been damaged in the amount of $ 50,736.00, together with prejudgment interest of $ 13.89 per day

22 I'rom Scptembcr 14, 2022, using thc legal rate of 10% pcr annum.
23

24 WIIERI'.FOICI:, I'laintifT prays for judgment against Defendants, and each of them, as
25 follows:

26 ///
27 ///
28 ///

COMPI.AINT
I 1. I'or the principal sum ol'$45,346.00, together with prejudgment interest of $ 12.42 per

2 day from.luly 22, 2021, using the legal rate of 10% per annum; plus the principal sum of $ 50,736.00,

3 together with prcjudgmcnt interest of $ 13.89 per day from September 14, 2022, using the legal rate
4 of 10% pcl'nnual;

2. For costs of suit, including attorney's fees, if available; and

3. For such other and further relief as the Court deems just and proper.

10 DATED: July 27, 2023

13
'I'ECI INOLOGY INSUIWNCII COMPANY INC.
14

10 COMPI AINT
Workers'ompensation and
Employers'iability Insurance Policy
PREMIUM NOTICE - FINAL PREMIUM
AUDIT
Technology Insurance Company, Inc.
An Am Trust Financial Company

Policy Number: TWC3880573
Invoice Date: 7/22/2021
Balance Due: 45,346 00
B.M. HVAC Fitting Supply, Inc. Invoice Due Date: Upon Receipt
Att: Juan Herrera
6215 River Crest Dr
Riverside CA 92507
Total Policy Cost: 76,611 00
Total Billed to Date: 76,611 00
Total Paid to Date: 31,265 00
Balance Due: 45,346 00

Payment Options
Online Go to our wcbsite at www. amtrustfinancial.corn to rcgistcr your policy for onc time online
payments by credit card or electronic check.
Credit Card To pay by Mastcrcard or Visa over the phone, please call 877-528-7878. I'artial
payment will not be accepted.
To pay by electronic check directly from your checking or savings account over the phone
for a single payment, please call 877-528-7878
Check Please make your check payable to AmTrust North America, Inc. and include your policy
number on your check.
Certified and overnight mail should be sent to: Important Numbers
Am'I'rust North America, Inc. Customer Scrvicc 877-528-7878
800 Superior Avenue Last, 21st I loor Claim Reporting 866-27249267
Cleveland, OI I 44114 Broker of Record (781) 582-1600

Tc ensure accurate and prompt processing, please include this voucher with your payment.
We are unable tc process changes noted on the invoice voucher. Please contact your broker if you believe corrections io your policy are required.

Installment Due Date: Upon Rcccipt
Balance Due: 45,346.00
Amount Paid:

For Company Use Only RST
Policy Number: TWC3880573
Remit Payment to.
I'.iTcciivc l)sic: 5/10/2020
AmTrust North America, inc. Agent II): 10

P.O. Bcx 6939 Agency: Clucii Commercial insurance Agency, Inc.
Cleveland, OH 44101-1939

0 5 5 2 5 2 4 5 3 4 4
EXHIBIT A
Workers'ompensation and
Employers'iability Insurance Policy
PREMIUM NOTICE - FINAL PREMIUM AUDIT
Technology Insurance Company, Inc.
An Amtrust Financial Company
Policy Number: TWC3970452
Invoice Date: 9/14/2022
Balance Due: 50,736.00
Invoice Due Date: Upon Receipt
B.M HVAC Fitting Supply, Inc.
Attn: Juan Herrera
6215 River Crest Dr
Riverside, CA 92507
Total Policy Cost; 88,034.00
Total Billed to Date: 88,034 00
Total Paid to Date: 37,298 00
Balance Due: 50,736 00

Payment Options:
Online Cfoto our websitc at www.amtrustgroup.com to register your policy for onc time online
payments by credit card or electronic check.
Credit Card To pay by Mastercard or Visa over the phone, please call 877-528-7878. Partial
payment will not be accepted.
E-Check To pay by electronic check directly from your checking or savings account over the phone
for a single payment, please call 877-528-7878.
Check Please make your check payablc to Am Trust North America, Inc. and include your policy
number on your cheek.

Certified and overnight mail should be sent to: Important Numbers:
AmTrust North America, Inc. Customer Service 877-528-7878
800 Superior Avenue East, 2l st Floor Claim Reporting 866-272-9267
Cleveland, OI I 44 I I 4 Broker of Record (78 I) 582-1600
To ensure accurate and prompt processing, please include this voucher with your payment.
We are unable to process changes noted on the invoice voucher. Please contact your broker if you believe corrections to your policy are required.

Installment Due Date: Upan RCCeipt
Balance Due: 50,736.00
Amount Paid:

For Company Use Only RST
Remit Payment to.
Policy Number: TWC3970452
El'fcciivc Dcic: 5/10/2021
AmTrust North America, Inc.
P.O. Box 6939 Agent ID: 10
Cleveland, OH 44101-1939 Agclicv: Clucii Commercial Insurance Agency, Inc.

3361651 50736)

EXHIBIT B

Case Info

Judge

Carol A. Greene Track Judge’s New Case

Case No.

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Document Filed Date

July 28, 2023

Case Filing Date

January 25, 2020

County

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Complaint,Petition: TECHNOLOGY INSURANCE COMPANY INC. vs B.M. HVAC FITTING SUPPLY INC.

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