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Avon State Bank v. BancInsure, Inc.

United States Court of Appeals, Eighth Circuit

June 2, 2015

Avon State Bank, Plaintiff - Appellee
v.
BancInsure, Inc., Defendant - Appellant; Avon State Bank, Plaintiff - Appellant
v.
BancInsure, Inc., Defendant - Appellee

Submitted February 10, 2015.

Page 953

Appeals from United States District Court for the District of Minnesota - Minneapolis.

For Avon State Bank, Plaintiff - Appellee (14-1265): Margaret S. Brownell, Joseph P. Ceronsky, David Fulton Herr, Maslon Llp, Minneapolis, MN.

For BancInsure, Inc., Defendant - Appellant (14-1265): Joshua Allen Dorothy, Mark J. Johnson, Joseph Arthur Nilan, Gregerson & Rosow, Minneapolis, MN.

For Avon State Bank, Plaintiff - Appellant (14-2202): Margaret S. Brownell, Joseph P. Ceronsky, David Fulton Herr, Maslon Llp, Minneapolis, MN.

For BancInsure, Inc., Defendant - Appellee (14-2202): Joshua Allen Dorothy, Mark J. Johnson, Joseph Arthur Nilan, Gregerson & Rosow, Minneapolis, MN.

Before GRUENDER, SHEPHERD, and KELLY, Circuit Judges.

OPINION

Page 954

SHEPHERD, Circuit Judge.

This action arises from an advance money scam involving a supposed multimillion dollar estate of a deceased African businessman. Avon State Bank (Avon) reached a settlement with two individuals who an Avon employee induced to invest in this scheme. Avon's insurer, BancInsure, Inc. (BancInsure), refused to provide coverage to Avon, asserting that the terms of a Directors' and Officers' Liability Policy (D& O Policy) and a separate Fidelity Bond (Bond) did not cover this event. The district court[1] granted BancInsure's motion for summary judgment in part, holding the D& O Policy did not provide coverage for this loss. The district court also granted Avon's motion for summary judgment in part, holding the Bond covered the loss and awarding prejudgment interest to Avon. BancInsure appeals and Avon Bank cross-appeals. We affirm.

I.

In 2007, a long-time Avon customer, Ambrose Herdering, was contacted by a man purporting to be the son of an African associate with whom Herdering had done business. This individual identified himself as " David Gibson" and claimed his father had passed away, leaving a $9 million estate in Africa. He informed Herdering that the family wanted to transfer the funds to the United States, and in particular to the bank Herdering used, Avon. Gibson claimed the money was tied up in the Netherlands and transferring the funds to the United States required up-front payments of taxes and other fees. Herdering sent Gibson money for these expenses and continued to send money as Gibson claimed problems and delays required additional funds.

Herdering approached Robert Carlson, an Avon Assistant Vice President and Loan Officer, and asked for his help in transferring the estate to the United States. Herdering promised Carlson huge returns in exchange for his help. In the summer of 2007, Carlson issued Herdering a loan from Avon and contributed $60,000 of his own money, all of which was to be used in transferring the estate. When Carlson made the loan to Herdering, Avon's President, Glenn Diedrich, contacted Herdering and expressed his ...


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