RECENT DEVELOPMENTS IN FIDELITY AND SURETY LAW

The policy required discovery of loss during the bond period, not before the period, but the court found an issue of fact as to whether the insured discovered the loss before it obtained the policy.17 Arguably, the insured knew funds were missing but did not yet know that a theft had occurred. [...]in spite of an exclusion of loss caused by "any independent contractor," the court allowed the insured to proceed even though the corporate administrator was an independent contractor. "18 Another case addressing the employee issue is Alerus Financial National Association v. St. Paul Mercury Insurance Co.19 The Minnesota Court of Appeals affirmed a ruling that a lawyer handling a loan closing was not an employee of the insured banks. [...]there was no employee dishonesty coverage even if the lawyer had knowledge that the borrower was pledging fictitious collateral. 4. [...]of the indemnification action, the debtor and surety entered into a settlement agreement, which was enforced by the consent judgment.