Insurers sue Fremont manufacturer for allegedly failing to pay full amount of premiums

By Justin Stoltzfus | Jun 5, 2018

In a complaint filed May 23 in U.S. District Court in Northern California, two insurance companies are accusing a Fremont-based electronic component manufacturing company of breach of contract and unjust enrichment in a scenario in which the defendant allegedly did not pay premiums calculated after the initial policy write-ups.

In a complaint filed May 23 in U.S. District Court in Northern California, two insurance companies are accusing a Fremont-based electronic component manufacturing company of breach of contract and unjust enrichment in a scenario in which the defendant allegedly did not pay premiums calculated after the initial policy write-ups.

Hartford Fire Insurance Company and Sentinel Insurance Company Ltd. are claiming that Golden State Manufacturing Services LLC failed to pay proper premiums for workers' compensation insurance policies and business insurance policies after the insurers found that the company had understated its payroll and gross sales by a significant amount.

The plaintiff's complaint claims the initial estimates of payroll and sales were “grossly inaccurate” and alleges that Golden State's refusal to pay additional premiums constitutes a breach of contract.

The complaint also mentions a system where the defendant leased employees to another company, Golden State Assembly LLC, in which those employees were supposed to be covered by the defendant's workers' compensation insurance. 

Another argument made in the complaint is that although the policies appeared to be only made to Golden State Manufacturing, they benefited both Golden State Manufacturing and Golden State Assembly. “Accordingly, as a matter of equity, both GS Manufacturing and GS Assembly should be deemed jointly and severally liable for the additional premiums owed under the policies since they both benefited from the insurance coverage provided by the Policies,” the complaint said.

The complaint also alleges that the defendant “received and retained the final insurance bill and did not, contemporaneously or reasonably thereafter, object to or dispute the amounts or charges contained therein and thereby accepted the invoice.”

Hartford, the complaint says, has suffered damages in the form of lost revenues.

The complaint states the plaintiff is demanding a judgment be entered against Golden State Manufacturing Services and Golden State Assembly for over $266,000 plus interest. 

The complaint was filed by Dawn Silberstein of Wilson, Elser, Moskowitz, Edelman and Dicker LLP.

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