State Bank of Bellingham v. BancInsure, Inc.

Bellingham filed a beach of contract claim against BancInsure after BancInsure denied coverage for loss that BancInsure claimed was not caused by employee-caused loss exclusions, exclusions for theft of confidential information,nor exclusions for mechanical breakdown or deterioration of a computer system. The district court granted summary judgment to Bellingham. The court concluded that no Minnesota case precludes application of the concurrent-causation doctrine to financial institution bonds. The court found that Minnesota courts would adhere to the general rule of treating financial institution bonds as insurance polices and interpreting those bonds in accordance with the principles of insurance law. Furthermore, the court rejected BancInsure’s argument that the Bond imposes a higher standard-of-proof than the concurrent-causation doctrine. Bellingham still had to show that its loss was directly caused by the fraudulent transfer, and the application of the concurrent-causation doctrine did not interfere with that requirement. The court also rejected BancInsure’s argument that the parties successfully drafted around the concurrent-causation doctrine in the Bond. As a matter of law, the Bond’s reference to “indirectly” is not a sufficient invocation of the “anti-concurrent causation” provision, and thus the Bond at issue in this matter does not contain such a provision. Finally, the court agreed with the district court's conclusion that the efficient and proximate cause of the loss was the illegal transfer of the money and not the employees' violations of policies and procedures. In this case, the overriding cause of the loss Bellingham suffered remains the criminal activity of a third party. Accordingly, the court affirmed the judgment. View "State Bank of Bellingham v. BancInsure, Inc." on Justia Law