Failure to Supervise – Corporate Officer Liability
California Business and Professions Code Section 10159.2 establishes a duty to supervise employees by a designated officer of a corporate real estate broker. However, the Court of Appeal decided that this duty only applies to the corporation and not to any third parties harmed if supervision is not provided. (Sandler v. Sanchez (Jun. 18, 2012) 2012 DJDAR 8129.)
This does not preclude third parties from pursuing lawsuits based on agency and indirect responsibility principles. In general, the company can be held accountable for the actions and/or omissions of its employees. Corporate officials may be held accountable in some cases. According to the court, more than just a basic statutory supervisory duty is required in most cases.
When one brings a claim against a business, they must examine the facts and the law to see if one or more officials, directors, or employees may be personally liable. However, this may not be the case. The defense must conduct thorough research since representing both the company and any individuals within it may result in a conflict of interest. A conflict waiver may be permissible in certain circumstances but not in others.
With many businesses shuttering, in this type of suit, plaintiffs are likely seeking alternative money pools or insurance plans to reward them. In this ever-evolving field of law, consult a business litigation attorney to evaluate the possible liabilities of a corporation and its officials.