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First National Bank of Northern California: Ninth Circuit analyzes scope of “Customer” under Financial Institution Bond’s Telefacsimile and Voice Instruction Transactions Coverage

In First National Bank of Northern California v. St. Paul Mercury Insurance Company, the Ninth Circuit Court of Appeals analyzed certain requirements for Telefacsimile and Voice Instruction Transactions coverage under a Financial Institution Bond issued by St. Paul (now Travelers) to First National Bank of Northern California (the “Bank”). The decision highlights the importance of clearly … Continued

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Taylor, Bean & Whitaker: U.S. District Court applies Alter Ego doctrine to deny coverage in respect of both Majority Shareholder and Colluding Subordinate Employees

A recent decision of the U.S. District Court for the Middle District of Florida, In Re Taylor, Bean & Whitaker Mortgage Corporation, provides a helpful illustration of how to assess coverage where an insured’s alter ego allegedly colludes with subordinate employees who are not, themselves, directing minds of the insured. The Facts The insured, Taylor, Bean & Whitaker … Continued

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Tesoro Refining: U.S. District Court analyzes scope of “Unlawful Taking” and “Forgery” under Employee Theft Coverage in Commercial Crime Policy

On April 7, 2015, the U.S. District Court for the Western District of Texas released its decision in Tesoro Refining & Marketing Company LLC v. National Union Fire Insurance Company of Pittsburgh, Pennsylvania. The decision analyzes what constitutes “unlawful taking” for the purposes of the Employee Theft coverage, and also provides guidance with respect to the … Continued

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W.L. Petrey Wholesale: U.S. District Court discusses Inventory Exclusion and Threshold for Corroborating Evidence of Employee Dishonesty

In W.L. Petrey Wholesale Co., Inc. v. Great American Insurance Company, the U.S. District Court for the Middle District of Alabama granted summary judgment dismissing a claim under Great American’s Employee Dishonesty coverage. The Court held that the Inventory Shortages exclusion applied to the loss, notwithstanding that the insured (“Petrey”) had been indemnified by the same … Continued

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Highland Bank: Eighth Circuit affirms Necessity of Bank’s Direct Reliance on Personal Guarantee under Financial Institution Bond’s Securities Coverage

On March 3, 2015, the Eighth Circuit Court of Appeals released its decision in BancInsure, Inc. v. Highland Bank. The decision provides guidance with respect to (i) what constitutes a “direct loss” under the Securities Coverage of the Financial Institution Bond; and (ii) the nature of the reliance required for an insured to demonstrate that it … Continued

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Raza Kayani: Ontario Court of Appeal addresses Scope of Fictitious Payee Defence under Canada’s Bills of Exchange Act

In the recent decision of Raza Kayani LLP v. Toronto-Dominion Bank, the Ontario Court of Appeal addressed the scope of the “fictitious payee” defence available to banks and other financial institutions under Canada’s Bills of Exchange Act. The decision has important implications for entities seeking to recover against financial institutions in cheque fraud cases. The plaintiffs were … Continued

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Bank of Brewton: Eleventh Circuit affirms Financial Institution Bond’s Distinction between Counterfeit Documents and Fraudulently-Procured, but Authentic, Documents

On February 9, 2015, the Eleventh Circuit Court of Appeals released its decision in Bank of Brewton v. The Travelers Companies, Inc. The Court’s decision reinforces the distinction between counterfeit documents and documents which, although fraudulently-procured and without intrinsic value, are nonetheless authentic. The Facts The Bank of Brewton (the “Bank”) is a private bank located … Continued

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KeyBank: New York Appellate Division denies Summary Judgment in Mortgage Lien Release case due to Material Issues of Fact as to Bank Employee’s Intent

On January 22, 2015, the New York Supreme Court, Appellate Division, released its decision in KeyBank National Association v. National Union Fire Insurance Company of Pittsburgh, Pa. The decision highlights the difficulties which sometimes arise in assessing manifest intent in financial institution losses. The Facts The insured, KeyBank, loaned a developer some $20 million for a … Continued

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