Employer Could Be Held Liable For Employee’s Conspiracy To Commit Fraud
Employer could be held liable for employee’s conspiracy to commit fraud under theory of respondent superior, where public policy preferred placing responsibility for injury upon principal of tortfeasor agent rather than innocent party, and where participation of third-parties precluded intracorporate conspiracy doctrine.
Defendants moved for summary judgment in plaintiff’s fraudulent inducement action. Plaintiffs alleged that defendants fraudulently induced them to invest in a real estate development project called “River City” by misrepresenting applicable zoning regulations, the feasibility of the project, and the value of the underlying real estate. Specifically, plaintiffs alleged that defendants misrepresented the underlying real estate’s sale price, and engaged in purported transactions intended to increase the valuation of the property. Plaintiffs further alleged that certain defendants misappropriated plaintiffs’ funds, such that they never obtained an interest in River City.
The court addressed the summary judgment filed by Cozen, one of the corporate defendants, who sought to dismiss plaintiffs’ claims brought against it under a theory of respondent superior. The court first ruled that Cozen could be held liable for conspiracy to commit fraud under respondent superior. The court rejected Cozen’s argument that conspiracy and respondent superior were intellectually incompatible, noting that liability could be imposed pursuant to respondent superior even when the employer had no knowledge of the tortious conduct because public policy preferred imposing injury upon a principal for the agent’s acts rather than upon an innocent person.
Reference: Digest of Recent Opinions, Pennsylvania Law Weekly, Kilbride Inv. C. Cushman & Wakefield of Pennsylvania, Inc., PICS Case No. 18-0224 (E.D. Pa. Feb 16, 2018)
Kindly visit our Business Law or Business Litigation websites or contact one of our Business/Commercial Litigation Attorneys, Philadelphia or Business Law Attorneys at 215-977-8200 for more information on this topic.