Posted on 18 Dec 2009
A California court has tentatively dismissed a lawsuit against American International Group Inc. bought by an independent financial planner who accused the insurer of failing to protect its customers.
Linda M. Harris., president and owner of California-based Independent Financial Group Inc., filed the lawsuit earlier this year against AIG and its auditor, PricewaterhouseCoopers L.L.P.
The complaint stemmed from AIG’s financial problems and used “a theory of widespread corporate fraud involving the inflation of revenue reports, risky investments in financial derivative products and other conduct,” according to court records.
The suit argued that as a result of AIG’s investment losses, it raised its insurance premiums. In addition, the suit alleged that the insurer’s California-based customers were left exposed due to AIG’s depleted capital position.
Ms. Harris, who had recommended AIG annuity products to her clients, sought an injunction to stop AIG’s allegedly unlawful business practices. However, AIG argued that Ms. Harris was not harmed by AIG’s actions and did not have standing to sue for alleged violations of insurance code.
In ruling Monday to tentatively dismiss the lawsuit, Los Angeles Superior Court Judge Yvette M. Palazuelos said: “Other than recommending products affiliated with AIG, Harris alleges no relationship, such as a contract, with AIG. No specific injury to the corporate plaintiff has been alleged.”
The judge did give Ms. Harris 30 days to amend the complaint to establish standing to bring the suit.
Reacting to the judge’s decision, AIG said it was satisfied. “We are pleased that the court recognized that plaintiffs had not pled sufficient facts on which to base their allegations,” an AIG spokesman said in an e-mail.
The attorney for Ms. Harris did not respond to a request for comment.