FCL Fidelity Blog
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Frazier Industrial: U.S. District Court analyzes Scope of Commercial Crime Policy’s Employee Theft Coverage in Bid-Rigging Scheme
Guest Co-Author: John Tomaine The recent decision of the U.S. District Court for the District of New Jersey in Frazier Industrial Company v. Navigators Insurance Company provides a useful example of judicial analysis of the Employee Theft coverage in the context of a bid-rigging scheme between an insured’s employee and an outside contractor. The Court analyzed the plain wording of the Commercial Crime Policy in issue to find that, although kickbacks paid to the employee by the contractor represented a covered Employee Theft loss, the portion of the excess payments retained by the contractor was not covered. The Facts Frazier Industrial
D2 Contracting: B.C. Supreme Court accepts Bank’s Contractual and Statutory Defences to Forged Cheque Claim under Canada’s Bills of Exchange Act
The recent decision of the British Columbia Supreme Court in D2 Contracting Ltd. v. Bank of Nova Scotia provides useful guidance for fidelity claims and subrogation professionals on dealing with cheque fraud losses arising from forged drawer signatures. The Court’s decision demonstrates the necessity of ensuring that the insured’s bank has been notified of suspected fraud or irregularities immediately upon such issues being discovered. The Facts D2 Contracting Ltd (“D2”) was a contractor operating on Vancouver Island. D2 had two principals, Copeman and Cooper. In January 2006, D2 opened an account with the Bank of Nova Scotia (“BNS”) and agreed
Nine Thirty FEF Investments: New York Appellate Division applies Financial Institution Bond’s Securities Broker Exclusion to Madoff Ponzi Losses
In United States Fire Insurance Company v. Nine Thirty FEF Investments, LLC, the New York Supreme Court, Appellate Division, held that Financial Institution Bonds did not cover losses sustained in a Ponzi scheme orchestrated by Bernie Madoff. Drawing on its own recent decision in Jacobson Family Investments, Inc. v. National Union Fire Insurance Company of Pittsburgh, Pa. (which we discussed in our June 23 post), the Court held that the Securities Broker exclusion brought the loss outside the Bonds’ Outside Investment Advisor coverage, notwithstanding the insureds’ argument that the coverage and the exclusion could not both operate without resulting in
3M: U.S. District Court applies Ownership Provision in finding No Coverage for Loss of Undistributed Limited Partnership Earnings in Investment Fraud
Guest Co-Author: John Tomaine [Editors’ note: Our guest co-author John Tomaine is the owner of John J. Tomaine LLC, a fidelity insurance and civil mediation consultancy in New Jersey. After over thirty-one years with the Chubb Group of Insurance Companies, he retired as a Vice President in 2009. He is an attorney admitted in Connecticut and New Jersey, and holds a Master’s Degree in Diplomacy and International Relations. He is available to serve as an expert witness in fidelity claim litigation and to consult on fidelity claim and underwriting matters. He will be a speaker at the FSLC’s Fall 2015 meeting
Hantz Financial Services: U.S. District Court applies “Direct Means Direct” Approach in Finding No Coverage for Third-Party Losses under Financial Institution Bond
In Hantz Financial Services, Inc. v. National Union Fire Insurance Company of Pittsburgh, PA., the U.S. District Court for the Eastern District of Michigan held that a Financial Institution Bond did not provide coverage to a financial services firm in respect of frauds perpetrated by an employee upon the firm’s clients. The decision is notable in that the Court applied the “direct means direct” approach to loss causation under the Bond. The Court also made some interesting comments with respect to the manifest intent requirement for coverage, and whether a defaulter can manifestly intend a loss to the insured in
W.L. Petrey Wholesale: Eleventh Circuit applies Inventory Shortages Exclusion in finding No Coverage under Crime Policy
In our March 24 post, we summarized the decision of the U.S. District Court for the Middle District of Alabama in W.L. Petrey Wholesale Co., Inc. v. Great American Insurance Company. In that decision, the Court applied the Great American policy’s Inventory Shortages exclusion in holding that no coverage was available to the insured, notwithstanding that the insured (“Petrey”) had been indemnified in respect of a (superficially) similar claim two years before. The Eleventh Circuit Court of Appeals recently affirmed the District Court’s decision. The Eleventh Circuit held that, while evidence of an employee’s exclusive access to insured property may
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TOPICS
- Authorized Access/Entry Exclusion
- Authorized Representative Exclusion
- Bills of Exchange Act (Canada)
- Computer Fraud
- Counterfeit
- Direct Loss
- Employee Theft
- False Pretences Exclusion
- Forgery
- Funds Transfer Fraud
- Inventory Exclusion
- Manifest Intent
- Other Property
- Outside Investment Advisor Rider
- Ownership
- Prior Insurance
- Securities Broker Exclusion
- Securities Coverage
- Social Engineering Fraud
- Standing
- Subrogation
- Subsidiary
- Suit Limitation Provision
- Termination
- Voluntary Parting Exclusion
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RECENT POSTS
- Brooks & Derensis: U.S. District Court finds No Coverage for Cheque Fraud Loss under Forgery Insuring Agreements
- Westlake Chemical: Texas Court of Appeals applies Authorized Representative Exclusion in finding No Coverage under Crime Policy for Phony Invoicing Scheme
- Cachet Financial Services: U.S. District Court finds No Coverage under Commercial Crime Policy for Alleged ACH Kiting and Related Frauds
- Sportsinsurance.com: Second Circuit applies Suit Limitation Period to Dismiss Action on Commercial Crime Policy
- Star Title Partners: Eleventh Circuit finds No Coverage for Social Engineering Fraud Loss under Cybercrime Endorsement to Cyber Protection Policy