Joseph Rosenbaum, M.D., Inc. v. Hartford Fire Insurance

This case deals with the scope of an employee dishonesty bond issued to an Employment Retirement Income Security Act (ERISA) plan. The district court granted summary judgment on the grounds that there was a concealment that would void the coverage. We affirm, but on different grounds.

FACTS

Dr. Joseph Rosenbaum established a pension plan for his professional corporation, naming his wife and himself as trustees. He and a firm called California Pension Administrators and Consultants, Inc., were administrators of the plan. Evidently, California Pension Administrators and Consultants only managed the paperwork. The authority to manage and invest the plan’s money resided with Dr. and Mrs. Rosenbaum as trustees.

*260 During the time periods relevant to this case, Dr. Rosenbaum caused some hundreds of thousands of dollars of plan money to be invested in second mortgages in California residential real estate. More precisely, the money was invested through Property Mortgage Company, Inc., managed by a man named Stanley Glickman, in fractional shares of second deeds of trust. The investment scheme called for Mr. Glickman to assign to investors fractional shares of notes and deeds of…