Nationals urge federal court to keep lawsuit against insurer alive

By Jessica M. Karmasek | Sep 24, 2013

WASHINGTON (Legal Newsline) -- The Washington Nationals, in a federal court filing last week, argue a lawsuit it filed against its insurer -- for the money it lost on a minor league player who lied about his age -- should not be dismissed.

In July 2006, the Nationals signed a player they believed to be 16-year-old Dominican Republic native Esmailyn Gonzales to a contract that provided for a $1.4 million signing bonus and a modest salary.

In October that year, the Nationals paid Gonzales the $1.4 million bonus.

According to the Nationals' complaint, the baseball player who represented himself as Gonzales at the time of the contract signing was really 20-year-old Carlos Alvarez Lugo.

The organization also alleges that Jose Rijo, who at the time of the contract signing was special assistant to the Nationals' general manager, and Jose Baez, who was the Nationals' director of Dominican Republic operations, were involved in Lugo's "scheme to defraud the Nationals" about his true age and identity.

The Nationals allege that had they known Lugo's true age and identity at the time, more likely than not, it wouldn't have paid him the bonus.

The organization contends the $1.4 million signing bonus represents a complete loss "resulting from employee dishonesty, theft and fraud," and reported the incident to its insurer, Westchester Fire Insurance Company.

Westchester investigated, but denied coverage under the Nationals' policy.

The Nationals sued in the Superior Court for the District of Columbia in May. The case was removed to the U.S. District Court for the District of Columbia in August.

Westchester, in its motion to dismiss Aug. 28, argues that the organization is not entitled to coverage for the amounts it paid Lugo and to recover for the insurer's alleged bad faith because its claims are time-barred.

The Nationals, in its 23-page memorandum in opposition filed Sept. 16, contends the lawsuit should be kept alive.

"Defendant Westchester Fire Insurance Company contractually obligated itself to provide the Nationals with $1 million of insurance against employee theft, dishonesty and fraud," lawyers for the organization wrote.

"The Nationals have performed all of their obligations under this contract. Westchester has not."

Click here to read the Nationals' full memorandum.

From Legal Newsline: Reach Jessica Karmasek by email at jessica@legalnewsline.com.

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