BancInsure Inc. v. Highland Bank

BancInsure, Inc. v. Highland Bank, No. 13-3324 (8th Cir. March 3, 2015)
The 8th Circuit affirmed the ruling of the U.S. District Court (D. Minn.) granting summary judgment in favor of an insurer for denying coverage to a claimant. The 8th Circuit agreed that under the doctrine of proximate cause, as a matter of law, claimant was unable to establish that the claimant's loss was "loss caused by forgery," i.e., a covered loss, because notwithstanding guarantor's forgery, claimant was unable to establish any factual reliance on the guaranty in extending a loan. Claimant did not obtain the right to pursue the guarantor, and then pursued other remedies for collection on the unpaid debt, but did not pursue the guarantors.
Procedural context:
After insurer denied claim, claimant filed suit in U.S. District Court. Parties cross moved for summary judgment, and trial court granted insurer's motion. Claimant appealed to 8th Circuit.
Bank granted loan to borrower that included funding for various equipment leases, with various collateral agreements, and guarantees by third party, and obtained "banker's bond," or "financial institutions' bond," as insurance against loan default. Bank obtained assignment of collection rights as collateral, but did not receive assignment of separate guarantees of underlying lease transactions. Insurance policy included a provision insuring against "loss caused by forgery." Borrower defaulted on loan, and guarantees of lease agreements turned out to be forgeries. The Bank pursued the principal borrower for collection, including asserting claims against various parties in their respective bankruptcies, and then filed a claim with insurer on the banker's bond for the forged guarantees.
Loken, Beam, and Gruender

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