RECENT DEVELOPMENTS IN FIDELITY AND SURETY LAW

The bank also claimed coverage under Insuring Agreements (E) (securities) and (Q) fraudulent mortgages. 3 The Southern District of Mississippi held that the (A) claim triggered the exclusion of coverage under other insuring agreements, including as to (E) and (Q), whenever an employee is involved, but that (A) covered the loss. Because the borrower admitted making payments to the attorney, there did not need to be an exact quid pro quo between the loan and a financial benefit to the attorney. [...]issues of fact remained as to whether he had been dishonest or received an improper financial benefit. 9 Here, too, the court dismissed the bank's bad faith claim. 10 In Michigan First Credit Union v. Cumis Insurance Society, Inc. , 11 a credit union made a faithful performance claim to recover loan losses sustained as a result of a program with an auto dealer. 12 The credit union intended for the dealer's employees to approve and process low risk loans, while higher risk applications were to be forwarded to the credit union for further review. 13 After a number of loans went bad, the credit union learned that the dealer's employees had not been following lending policies and that management was failing to monitor the loans. 14 The Sixth Circuit affirmed a judgment on a jury verdict finding coverage.