State Fund hired F.D. De Leon and Associates, Inc. to collect past due debts on behalf of State Fund. The Master Service Agreement (MSA) required F.D. De Leon and Associates, Inc. to deposit payments that it collected into a trust account, and, once a payment “cleared the banking system,” to remit the payment to State Fund on the first week of the following month. The MSA required each remittance to include a statement identifying the policy account upon which payment had been collected, the commission due to F.D. De Leon and Associates, Inc. (calculated pursuant to a prescribed commission fee schedule) and the “amount due to State Fund.”

In July 2010, it was brought to the attention of State Fund’s program manager of credit and collections, Elizabeth Redican, that a former State Fund policyholder by the name of RDF Production Builders had delivered a $275,000 check “to DeLeon [sic]” in October 2007 as payment for outstanding premiums owed to State Fund. Redican then “made repeated attempts over an extended period of time to contact DeLeon [sic] for an explanation.” She “never received any explanation concerning this check from DeLeon. After Redican discovered there was no record of RDF’s payment being received by State Fund, she initiated an internal audit. Redican “determined that many former State Fund policyholders had sent money to DeLeon [sic] for past due premium[s] and that DeLeon [sic] had failed to remit the money collected to State Fund.” Redican claimed that “DeLeon [sic] received at least 34 additional checks from former State Fund policyholders where no money was ever remitted to State Fund.”

State Fund filed a civil complaint in August 2010 against F.D. De Leon and Associates, Inc., alleging causes of action for breach of written contract and fraud by affirmative misrepresentation and concealment of fact. State Fund’s complaint also named Francisco D. De Leon, individually, as an alleged “officer” of F.D. De Leon and Associates, Inc., in both causes of action. As to Francisco D. De Leon, individually, the complaint does not allege any specific misstatement of fact out of his mouth, or concealment of fact by him personally; the complaint broadly alleged “all defendants” defrauded State Fund. The complaint alleged “alter ego theory” as to Francisco D. De Leon.

In January 2013, State Fund filed a motion for summary judgment but did not identify toward which of the three named defendants, i.e., F.D. De Leon and Associates, Inc., FDDA Incorporated, and Francisco D. De Leon, the motion was actually directed. State Fund’s arguments were somewhat vague in referring only to “DeLeon.” State Fund’s separate statement includes facts continued the agency’s vague use of “De Leon” without differentiating among the named corporate defendants and Francisco D. De Leon the individual. No defendant filed opposition to State Fund’s motion, but Francisco De Leon, in his capacity as an individual defendant, filed objections to certain evidence presented in State Fund’s motion. Despite these deficiencies, the trial court granted the motion in the sum of $1.5 million against all defendants. Francisco D. De Leon, in his capacity as an individual defendant appealed, and the Court of Appeal reversed as to him in the unpublished case of State Compensation Ins. Fund v. De Leon.

State Fund’s evidence did not show who, specifically, made any representation or did any act constituting fraud against State Fund. State Fund’s evidence failed to show that Francisco D. De Leon, individually and personally, collected payments, or that he personally was responsible for the non-remittances or that he personally submitted reports which fraudulently understated the amount of payments recovered on behalf of State Fund.