Western Alliance Bank: U.S. District Court dismisses Creditor Bank’s Claim under Debtor’s Commercial Crime Policy

On February 18, 2016, the U.S. District Court for the Northern District of California released its decision in Western Alliance Bank v. National Union Fire Insurance Company of Pittsburgh, Pa.  The Court dismissed a creditor bank’s direct action against a fidelity insurer for indemnity in respect of alleged thefts by the debtor insured’s employees of assets over which the bank held a security interest.  The decision reinforces the first-party nature of commercial crime coverage and is consistent with other recent U.S. and Canadian case law on “third party direct actions” against fidelity insurers. The Facts Sorrento Networks GmbH (“Sorrento”) carried