(CN) – An investor can sue New York Life Insurance for allegedly hiring an agent who ensnared him in a Ponzi scheme, a California appeals court ruled.
Paul Oravecz purchased security investments in the Tradex Fund from New York Life representative Steve Roth. Oravecz sued for negligent hiring and breach of fiduciary duty after learning that the investments were worthless.
Oravecz blamed New York Life for hiring “a convicted criminal, a high school dropout, and an individual whom New York Life had failed adequately to train to perform his duties.”
The trial court granted New York Life summary judgment on all claims, but Justice Weisberg of the Los Angeles-based appellate court ruled that Oravecz had a valid complaint for breach of fiduciary duty.
Weisberg ruled that New York Life relied on federal law when it argued that Oravecz’s case could only survive if he could prove that his stockbroker had trading authority over his accounts.
Instead, Weisberg wrote, the case is controlled by state law.
“His claim for fiduciary duty is simply a garden variety, common law claim for which the allegations in the complaint are adequate,” Weisberg ruled.