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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 has “extended credit … on the faith of” a forged guarantee. The Facts In 2005, First Premier Capital (FPC), an equipment lease finance company, entered into a Master Lease Agreement with Equipment Acquisition Resources (EA). Player and Malone, who were spouses, each owned 50
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 a law firm and another individual lawyer who fell victim to essentially identical counterfeit cheque scams. The plaintiffs were each retained by a purported purchaser in connection with a commercial transaction involving a vendor known as Nithiyakalyaani Jewellers. As part of the closing
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 in Alabama. Its customer, Hines, obtained a series of loans for which he pledged various assets as collateral. In 2005, Hines assigned 180 shares of The Securance Group (“TSG”) as collateral for a loan, and delivered to the Bank a share certificate representing these
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 condominium project. The loan was secured by, inter alia, mortgage liens on the condominium units. As individual condo units were sold, a percentage of the proceeds was to be used to pay down the loan, and to release the liens on those individual units.
Pestmaster: U.S. District Court affirms Fidelity Insurer’s Intent on Scope of Computer Fraud and Funds Transfer Fraud Coverages
In Pestmaster Services, Inc. v. Travelers Casualty and Surety Company of America, the U.S. District Court for the Central District of California granted partial summary judgment in favour of Travelers on a claim advanced under its Computer Fraud and Funds Transfer Fraud coverages. The decision provides valuable guidance regarding the scope of these coverages. The Facts Pestmaster, a pest control business, was insured under a Travelers Wrap+ policy. In 2009, Pestmaster hired a payroll company, Priority, to handle its payroll and payroll tax obligations. Pestmaster executed an ACH authorization which authorized Priority to obtain payment of Priority’s approved invoices by
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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