Self-Insurers Security Fund v. Esis, Inc.

This appeal follows the dismissal with prejudice of the third amended complaint (complaint) of appellant Self-Insurers’ Securi *1153 ty Fund (Fund) after the trial court sustained respondent William C. Gruber’s (Gruber) demurrer to the complaint without leave to amend. The Fund maintains it has valid tort claims against Gruber individually on two theories: (1) breach of statutory duty and (2) negligent misrepresentation. We find no actionable negligence or breach of statutory duty against Gruber in his personal capacity and affirm.

I. Facts and Statutory Scheme

Gruber is a former vice president of California Canners and Growers (CCG). CCG was a self-insured entity as defined in Labor Code 1 section 3700 et seq. 2 until it became insolvent in 1983. At all relevant times CCG was required annually to post security with the Director of the Department of Industrial Relations (director) in the amount of its estimated workers’ compensation liabilities. (§ 3701; Cal. Code Regs., 3 tit. 8, § 15250.) The amount of the security was determined by the director based on annual and interim reports filed by CCG in 1981 and 1982. (Tit. 8, §§ 15250, 15251, 15402.1.)

Under the statutory…

Concurring in result.—Unlike the majority, I cannot agree that Labor Code section 3700.5 1 does not create a statutory duty in those individuals who, on behalf of a corporate employer, fail “to secure payment” of workers’ compensation. As I read the statutory scheme, the Legislature has imposed such a duty on corporate officers or authorized employees, such as respondent, Mr. Gruber.

Section 3700.5 Applicability to Officers and Authorized Employees

Section 3700.5 provides that “[t]he failure to secure the payment of compensation as required by this article by one who knew, or because of his or her knowledge or experience should be reasonably expected to have known, of the obligation to secure the payment of compensation, is a misdemeanor.” (Italics in original.) Respondent urges us to read “one” as a generic reference to employers, self-insurers, and sureties. A close look at the legislative scheme and at the amendment of this section persuades me otherwise.

As an initial matter, when the Legislature has imposed criminal liability upon an employer and not those individuals acting on an employer’s behalf it has demonstrated the ability to articulate its desires. Thus, section…