Metropolitan News-Enterprise


Wednesday, November 3, 2010


Page 1


Former Lawyer, Once Convicted of Fraud, Loses Suit Charging Insurance Company With Misrepresentation




A former Beverly Hills lawyer who served time in prison for attempting to sink a yacht to collect insurance money yesterday lost his appeal in a suit in which he charged an insurance company with misrepresentation.

Div. Three, in an unpublished opinion, affirmed a judgment in favor of Equitable Variable Life Insurance Company. The panel said the plaintiffs, Rex DeGeorge, Kathryn Palmer, and Elizabeth DeGeorge, failed to show that the company acted improperly, and that alleged representations by the agent who sold the policy could not be introduced to contradict the policy’s plain terms.

Rex DeGeorge, who was the insured under the flexible variable premium life insurance policy—an insurance product that includes investment features—resigned from the State Bar four years ago after being sentenced to 90 months in prison.

He had been on interim suspension after being convicted of conspiracy, mail and wire fraud and perjury in 2002 after a month-long jury trial before U.S. District Judge Lourdes G. Baird, who subsequently retired and is now a private judge.

DeGeorge claimed in that case that the yacht had been sunk by its Russian captain. The insurer successfully sued to rescind the yacht’s $3.5 million policy because of misrepresentations, and because the company had not been told of the role of DeGeorge—who had previously received insurance compensation after claiming two of his boats sank and that another was stolen—in the venture.

DeGeorge’s perjury convictions related to his testimony in the civil case, in which he said that he had not purchased power tools and did not know they were aboard the yacht.

In the case ruled on yesterday, the ex-lawyer and the assignees of the policy claimed that DeGeorge’s agent led him to believe that he was not obligated to make payments beyond 1992, when he had paid $88,000 and believed he had purchased $1 million death benefit.

He subsequently learned, he said, that the policy was not paid up and required further premiums, after he sought a third loan against the policy. He was notified in 2000 that the policy was in loan foreclosure and would terminate because its net cash surrender value was insufficient due to the outstanding loan balance and nonpayment of premiums.

Los Angeles Superior Court Judge Gregory Alarcon granted the insurer summary judgment, finding that there were no triable issues on any of the plaintiffs’ claims, including breach of contract, bad faith, and misrepresentation.

Justice Richard Aldrich, writing for the Court of Appeal, said the policy unambiguously stated that the agent had no authority to change the policy terms, including provisions that were conspicuous, plain, and clear. Nor, he added, did the agent have actual authority to make any changes to the policy.

Rex DeGeorge, who according to his court filings now lives in Rhodes, Greece, represented himself on appeal. The assignees were represented by S. Edmond El Dabe, while Kevin W. Alexander, James M. Grady, and Lindsay J. Hully of Gordon & Rees represented the insurer.

The case is Palmer v. Equitable Variable Life Insurance Company, B215786.


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