Oravecz v. New York Life Ins. Co., 95 Cal. Rptr 3d 1 (Cal. Ct. App. 2009)

Paul Oravecz sued Steve Roth and New York Life (which was allegedly Roth’s employer) after losing money in an investment in an offshore foreign currency trading fund, which Oravecz alleged was a “Ponzi scheme.” Among the claims Oravecz alleged against New York Life were negligent misrepresentation, failure to adequately train Roth, breach of fiduciary duty, securities law violations, negligent hiring (Roth was a convicted criminal) and negligent interference with prospective economic advantage. The trial court dismissed all of Oravecz’s claims against New York Life on demurrer and summary judgment after determining that Roth was an independent contractor and not an employee, that New York Life was unaware of Roth’s sale of non-approved investment products or that he was unfit for his position, that New York Life had no duty to supervise Roth, and that the securities fraud claims were barred by the applicable two-year statute of limitations. The Court of Appeal affirmed dismissal of all claims against New York Life except the claim for breach of fiduciary duty because the company relied exclusively on inapplicable federal authority rather than controlling California law to support its demurrer. Cf. Zaragoza v. Ibarra, 174 Cal. App. 4th 1012 (2009) (worker who was hired by an unlicensed contractor was not limited to workers’ compensation remedy but could not recover from homeowner because his injuries were entirely his own fault).