Preview
E-FILED
9/2/2020 4:10 PM
Timothy Carl Aires, Esq. (138169) Clerk of Court
AIRES LAW FIRM Superior Court of CA,
6 Hughes, Suite 205
Irvine, California 92618 County of Santa Clara
(949) 718-2020 20CV370212 :
(949) 718-2021 FAX Reviewed By: R. Tien
Attorneys for Plaintiff,
RLI INSURANCE COMPANY
SUPERIOR COURT (UNLIMITED) OF THE STATE OF CALIFORNIA
COUNTY OF SANTA CLARA
RLI INSURANCE COMPANY, ) CaseNo. 20CV370212
)
Plaintiff, ) COMPLAINT FOR BREACH OF
) CONTRACT
v. )
} ($25,688.00 DEMANDED)
SCHRICKER ENGINEERING GROUP.)
INC. aka SEG INC.; and DOES | through) [C.C.P. §425.10]
50, inclusive, )
)
Defendants. )
)
Plaintiff Wesco Insurance Company, by and through its undersigned attorneys, hereby alleges
against Defendants, and each of them, as follows:
PRELIMINARY ALLEGATIONS
1. Plaintiff RLI Insurance Company is now, and at all times relevant hereto was, a
corporation duly organized and existing under the laws of the State of Illinois and qualified to do
business in the State of California.
2. Plaintiffis informed and believes and based thereon alleges that Defendant Schricker
Engineering Group Inc. aka SEG Inc. is now, and at all times relevant hereto was, a corporation
COMPLAINTorganized under the laws of the State of California and doing business in the County of Los Angeles,
State of California and within this judicial district.
3. Plaintiff is ignorant of the true names and capacities of the Defendants sued herein
as Does 1 through 50, inclusive, and therefore sues these Defendants by such fictitious names.
Plaintiff will amend this Complaint to allege the true names and capacities of said Defendants when
the same is ascertained. Plaintiff is informed and believes and based thereon alleges that each of
these fictitiously-named Defendants is jointly responsible in some manner for the transactions and
/or occurrences herein alleged, and that the Plaintiff's injuries as alleged were proximately caused
by such Defendants.
4. Plaintiff is informed and believes and based thereon alleges that at all times herein
mentioned each of the Defendants was the agent of each of the remaining Defendants, and in doing
the things hereinafter alleged, was acting in the course and scope of such agency with the permission
and consent of its co-Defendants.
Plaintiff is informed and believes and based thereon alleges that, at all times relevant
hereto, a unity of interest has existed between Defendants such that any separateness between the
Defendants has ceased and that it would sanction a fraud or promote an injustice if the separateness
of the Defendants were recognized. Plaintiff is informed and believes and based thereon alleges that
Defendants are successors in interest to a party liable to Plaintiff because: [1] There is an express or
implied agreement of assumption with respect to the assets of the seller (or transferor); [2] The
transaction amounts to a consolidation or merger of the two entities; [3] The purchasing entity is a
mere continuation of the seller (or transferor); or [4] The transfer of assets to the purchaser (or
transferee) is for the fraudulent purpose of escaping liability for the debts of the seller (or transferor).
Plaintiff is informed and believes and based thereon alleges that, at all times relevant hereto, that
certain of the Defendants were insolvent and/or rendered insolvent by the actions of other
Defendants. Plaintiff is informed and believes and based thereon alleges that, at all times relevant
2 COMPLAINThereto, that certain of the Defendants were each active participants, for profit, in the common
enterprise conducted through various other Defendants, using the same tangible and intangible
assets, including equipment, employees, and goodwill. Plaintiff is informed and believes and based
thereon alleges that, at all times relevant hereto, that the entity Defendants have been used by the
individual Defendants as subterfuges for illegal, fraudulent and/or otherwise wrongful transactions.
Plaintiff is informed and believes and based thereon alleges that, at all times relevant hereto, that
Defendants, singularly and in combination, and as part of a common enterprise, knowingly and
intentionally misrepresented the types and number of their employees in order to pay a smaller
amount in premiums for the workers compensation insurance policy which is the subject of this
action in violation of California law, e.g., Insurance Code §11760. Moreover, Plaintiff is informed
and believes and based thereon alleges that, at all times relevant hereto, that Defendants were part
of a fraudulent scheme not only to reduce the premium, rate, or cost of the workers compensation
insurance policy which is the subject of this action, but to procure the policy itself in the first place
based on false representations of material fact, all in violation of California law, e.g., Insurance Code
§11760. Plaintiff is informed and believes and based thereon alleges that, at all times relevant
hereto, Defendants were officers of a corporate or association employing unit or a person having
charge of the affairs of a corporate or association employing unit, that knowingly undertook or
agreed to pay without deduction from remuneration paid to its workers the amounts required by law
to be withheld, that willfully failed to hold in trust the amount of worker contributions required of
such workers as and for payroll taxes and other contributions, that willfully failed to file one or more
complete and accurate returns or reports, that failed to supply required information with the intent
to evade a tax imposed by law, and willfully and with like intent, made, rendered, signed, or verified
one or more false or fraudulent returns, reports, or statements, and that supplied false or fraudulent
information to taxing authorities, all in violation of California law, e.g., Unemployment Insurance
Code §§2108, 2110.7, 2117.5, and 2118.5. Plaintiff is further informed and believes and based
thereon alleges that the entity Defendants, at all times relevant hereto, were mere shells and shams
without sufficient or adequate capitalization, that the entity Defendants were conceived, intended,
and utilized by the natural person Defendants, and each of them, as devices to avoid individual
3 COMPLAINTSo ey ne SD
liability and for the purpose of substituting financially insolvent business entities in the place of the
natural person Defendants, and each of them, that other Defendants, and each of them, have failed
to observe corporate formalities with respect to the activities of the entity Defendants, that other
Defendants, and each of them, have used assets of the entity Defendants for personal use, that other
Defendants, and each of them, have caused assets of the entity Defendants to be transferred to the
other Defendants, and each of them, without adequate consideration, that other Defendants, and each
of them, have caused the entity Defendants to pay excessive compensation to insiders at a time when
the 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 Corporations Code §500 et seq., and that, during a state of entity insolvency, Defendants,
and each of them, engaged in conduct that diverted, dissipated, or unduly risked assets of the entity
Defendants that might otherwise have been used to satisfy creditors’ claims. As a result of the
preceding allegations, whether Defendants are the alter egos of one another, joint venturers,
successors in interest, co-conspirators, or otherwise, Defendants are responsible for the debts,
obligations and duties of one another. Plaintiffis informed and believes and based thereon alleges
that the damage claim of Plaintiff is separate and distinct from any damage claim of the entirety of
the class of the entity Defendants' creditors in that Plaintiff was the specific and particularized target
of Defendants’ illegal, fraudulent and/or otherwise wrongful conduct.
6. This action is not subject to Civil Code §1812.10 or Civil Code §2984.4. The proper
county for the trial of this action is the County of Los Angeles in that the Defendants, and each of
them, contracted to perform the obligation sued upon and/or have their principal place of business
in the County of Los Angeles and within this judicial district.
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4 COMPLAINTFIRST CAUSE OF ACTION
(Breach of Contract Against All Defendants)
oe Plaintiff hereby incorporates by reference paragraphs 1 through 6, inclusive, of this
Complaint as if set forth in full in this paragraph.
8. On or about May 9, 2019, Plaintiff upon the request of Defendants for Workers
Compensation and Employers Liability Insurance coverage, provided Defendants with an Insurance
Policy No. PSW0001436, Insurance Policy No. PSB001539, and Insurance Policy No. PSE0001349
for the period of 5/9/2019 through 5/9/2020 (but cancelled 9/12/2019), which was subject to an audit
and recomputation of its premium (the “2019 Policies”). Plaintiff is authorized under the 2019
Policies to examine and audit all records that relate to the 2019 Policies during the policy period.
The 2019 Policies provides that the final premium will be determined by using the actual premium
basis and the proper classifications and rates as determined by an audit. The 2019 Policies further
obligated Defendants to pay the difference between the estimated and actual premiums after the audit
and final premium determined by Plaintiff. In this regard, the 2019 Policies, in part, provides:
PART FIVE - PREMIUM [{] B. Classifications [{] Item 4 of the
information page shows the rate and premium basis for certain
business or work classifications. These classifications were assigned
based on an estimate of the exposures you would have during the
policy period. If your actual exposures are not properly described by
those classifications, we will assign proper classifications, rates and
premium basis by endorsement to this policy. [{] C. Remuneration
[{] 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 the policy period
5 COMPLAINTa nw
for the services of: [{] 1. All your officer and employees engaged in
work covered by this policy; and [J] 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, the contract price for their services
and materials may be used as the premium basis. This paragraph 2
will not apply if you give us proof that the employers of these persons
lawfully secured their workers compensation obligation. [{] E. Final
Premium. The premium shown on the Information Page, schedules
and endorsements is an estimate. The final premium will be
determined after this policy ends by using the actual, and not the
estimated, premium basis and the proper classifications and rates that
lawfully apply to the business and work covered by this policy. If the
final premium is more than the premium you paid us, you must pay
us the balance. [f it is less, we will refund the balance to you. The
final premium will not be less than the highest minimum premium for
the classifications covered by this policy. ... [J] F. Records. You will
keep records of information needed to compute premium. You will
provide us with copies of those records when we ask for them. [4] G.
Audit. You will let us examine and audit all your records that relate
to this policy. These records include ledgers, journals, registers,
vouchers, contracts, tax reports, payroll and disbursement records,
and programs for storing and retrieving data. We may conduct the
audits during regular business hours during the policy period and
within three years after the policy period ends. Information
developed by audit will be used to determine final premium.
Insurance rate service organizations have the same rights we have
under this provision.
COMPLAINT9. An audit was subsequently performed on the effective policy period for the 2019
Policies. The audit found the premium basis estimate provided by the Defendants to be inaccurate
and found the actual audited total premium and fees for the effective policy period for the 2019
Policies to be an additional $25,688.00, which became fixed or readily ascertainable on September
30, 2019, as evidenced by a premium audit invoice, a true and correct copy of which is attached
hereto as Exhibit “A”.
10. Plaintiff has performed all conditions, covenants and promises required of it on its
part in accordance with the terms and conditions of the 2019 Policies, except those which are
excused by Defendants’ breach.
11. After September 30, 2019, Defendants refused to make any further payments toward
the 2019 Policies premium as audited for the 2019 Policies. Thus, within the past four years,
Defendants have breached the terms of the 2019 Policies by failing and refusing to satisfy the amount
outstanding on the 2019 Policies of $25,688.00.
12. Asadirect and proximate result of Defendants’ breach of the 2019 Policies, Plaintiff
has been damaged in the amount of $25,688.00, together with prejudgment interest of $7.03 per day
from September 30, 2019 using the legal rate of 10% per annum.
WHEREFORE, Plaintiff prays for judgment against Defendants, and each of them, as
follows:
ie For the principal sum of $25,688.00, together with prejudgment interest of $7.03 per
day from September 30, 2019 using the legal rate of 10% per annum;
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/ COMPLAINT0 ee ND WH RB WH NY
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2.
3.
DATED: September 2, 2020
For costs of suit, including attorney’s fees, if available; and
For such other and further relief as the Court deems just and proper.
By: =
Timothy Carl ia 7
~ Attorney for-Plainti
RLI INSURANCE COMPANY
8 COMPLAINTRLI 7 PREMIUM STATEMENT
| Account No: P160006538
Statement Date: 09/30/2019 |
Due Date: PAST DUE |
PAY YOUR BILL ONLINE
easypay.rlicorp.com
Mail To: BILLING QUESTIONS
309:692-1000, EXT 25142
SCHRICKER ENGINEERING GROUP. .
premium.accounting@rlicorp.com
DBA.SEG INC
1793, LAFAYETTE STREET,STE 105
SANTA CLARA, CA 95050
Induding Fees Peggninin & Reet: _.Aalostmenes Paynicnt Fu | Minimum Due
$30,486.00 I ($4,798.00). $0.00 $25,688.00 $25,688.00
Trans Date | Policy Number Description Transaction Amount Minimum Due
09/27/19 PSW0001436 Workers Compensation-Endorsement - Premium (84,669.00) $0.08.
09/22/2019-05/05/2020
09/27/19. PSW0001436 Workets Compensation-Endorscment - Work. ($129.00) $0.00
Coimp Fee'09/12/2019-05/09/2020
Final Due $0.00 $25,688:00.
Minimiim Amount Due $25,688.00
a ‘Detach Here
Please return this portion with your remittance iri the enclosed envelope.
Account No: P100006538
Statement Date: 09/30/2019
Due Date: PAST DUE
Payment in Fall: $25,688.00
525 698.00
Amount Eniclosed: S$
Account Name and Address; Make Check Payable and Remit Fo:
SCHRICKER ENGINEERING GROUP. RLI Insurance Co Dept 3320
DBA SEG INC PO-Box 844122
1793 LAFAYETTE STREET,STE 105. Kansas City, MO 64184-4122
SANTA-CLARA, CA 95050
EXHIBIT &
Earned Premiuny Invoice - Accourit