who sent the wire transfer request form to the bank was an impostor a fraudster the bank attempted to recover the money from korea but was unable to do so it did what it was required to do not refunded the money to its customer after that the banks made a claim to my client under the terms of a standard form financial institution bond that had been issued to the bank the proof a loss of the bank submitted to everest on the front page had seven boxes that the bank  check to to designate which insuring agreement of the bond the bank was making its claim under it checked the box marked other home equity line of credit fraud electronic wire transfer fraud it did not check the box under which the bank now suits in this lawsuit under ensure an agreement d of the bond there is a rider to the bond that was issued to the bank that actually provides coverage for the exact loss that the banking curd it's for electronic wire fraud that ryder includes a very important risk sharing arrangement it requires the bank to enter into an agreement with its customer that has three requirements one the customer authorizes wire transfers to may be made by fa identifies the persons on behalf of the customer they are authorized to initiate wire transfers by fraud and number three it requires a verification mechanism everest denied the banks claim because the bank to not enter into good faith or through fraud or trickery there are two main issues on appeal that you you proceed and i'll ask my question your two main issues on appeal your honour's one whether the judge cooks summary judgment should be reversed because it clearly were resulted from a loan or an extension of credit by the bank that's the question i mean that loss here was a matter of fraud it wasn't an extension of credit i understand why an extension of credit wouldn't be covered if the bank doesn't do due diligence and extending credit they ought to suffer their loss and certainly you couldn't you couldn't ensure that kind of situation  no banks would ever go under if they are if their losses of that nature could be covered by insurance so i'm not i don't understand how it could possibly be a loss under the right and i'm not sure i have information about this other basis it was a rider is that what you're well the initial plan was made under a rider when the bank sued did not sooner the rotter it switched its request for coverage to insure an agreement d which provides potential coverage for losses from amounts paid on forged documents but only if the document is an a narrow exclusion excluding coverage for loss resulting from a loan over time banks and other insured entities argued exactly the point you're making that the loan exclusion is it is intended to be narrow applying only to normal loans the insurance industry working in connection with the american bankers association because this is an in a go shoot a bond as the bank recognizes in its brief expanded the loan exclusion if you look at it today it is much broader any credit situation the case is recross the country or unanimous that it extends not only to normal loans but also to situations were banks extend credit under the apprehension that they  lending money to borrowers but only when that borrower is the actual customer carette no not at all your honor a loan a standard loan requires money being lent to a customer an extension of credit  think that my concern about your parade there are a number of statements in the brief about john doe who is the customer and you say john doe did not repay the money that he the home equity line of credit my problem is i don't think those statements are true did this customer obtain by trickery the money no the actual customer did not but that is not what it is that the customer is john doe right but no the customer of the bank is an excuse me your honor the customer is john doe the the wire request was made by a f right the bank acted under the apprehension that it was lending money it took money from a home equity line of credit it believed it was sending money to korea at the request of a customer at that point under this policy and  exclusion the risk turned to the bank the bank has agreed that when it makes a loan or thinks it is making a loan the risk of last fall squarely upon it i understood that the cases that you saw i did was that when the bike is choosing to extend credit or to make a lot on the bike beyers the burden of the risk because the bank is the one who's analyzing the viability of that customer but that's not what happens in a party forgery or fraud being uncovered liberty savings bank southern district of ohio nine hundred ninety said it page thirty one of my brief makes it clear that poor credit decisions is not what the loan exclusion is limited to made it clear that poor credit decisions was not what the loan exclusion was limited to  third parties or did they involve improper activity by the customer those did involve improper activities by the customers first insurance funding at page thirty three hundred thirty five of the brief associated community bank of faders thirty four through thirty five involved non banking situations involving similar type exclusions where the persons that the insured entity dealt with in first  a premium finance company issued loans to a fraudster broker be due to the due to the fraud of that broker the exclusion there excluded coverage for any loss rezoning directly or indirectly from a exclusion was for losses caused by a broker the insured says he's not a broker he's a fraudster same thing the bank is arguing here but trying to get this customer third party issue stright but he was the one who engaged the relationship with the bank and then he proved not to be what he said necessarily almost almost always under ensure an agreement is supposed to employ dishonest a case or a loan case under almost always under d where there's wire transfer fraud by its very nature it's going to be a third party exclusion doesn't limit this to traditional loans where you have a borrower it is not that narrow it it says it excludes coverage for any los indirectly from the bank acting as a creditor and again i go back to first insurance funding and associated community bank the purpose is this is a risk sharing arrangement easy is meant to put on the bank the burden that any time it enters into or believes it is entering into a loan or a credit relationship it takes extra precautions here it could have avoided this loss easily could have  if it had done what it was required to do it did it and what it was required to do was to match the signature to the signature in its records to call the customer and ask if the customer had requested that transfer and it in fact did both of those correct under its own guidelines that's what it did and in today's world that's not nearly enough cyber crime hits the newspapers once a week this story fraud is happening all over the country it's not intend to be covered by this policy this policy is a basically paper policy that was originally promulgated and in a paper world the insurance industry and the american bankers association are working together to solve the problem of cyber crimes there's a rider to this policy that provides coverage for this loss but it requires the bank to do more than it did here it requires it to take on some other very simple obligations and they have a verification procedure with its customer pursuant to a written agreement it had none and that's why the bank dropped that claim under its rider because it knows it has no coverage this is a travesty of judgment if this court does not reconsider the original issue the claim in this case was pursued under ensuring agreement d ensuring agreement deep is an order ensure an agreement it doesn't apply to cybercrime and that's why every choir's why if there's coverage you ha original wire transfer request form judge cooke in deciding summary judgment conflated two requirements of ensuring agreement d the original document requirement and the authorized signature requirement if you look at his opinion and pages fortified you will see he conflated those two and got the issue completely wrong he said there is coverage because there is an original signature that's not what ensure an agreement he requires it requires an authorized signature and an original document which is not present here is very clearly no coverage under the forepart test this court applies in determining whether to refuse to issue or to consider an issue that was not decided below the main issues the wire transfer document withdrawn the order was an original here we had a fax a fax is not an original the bond defines original as the arch type or first rendering so there is no coverage in the first instance but i bet that considered the issue or if the trial judge based his decision on the issue i think it was both and that's exactly what happened here if again if you look at pages four to five of judge cook's opinion he did i'm just struggling to understand because the argument was not in my opinion passing he notes on the original signature but that was not the basis of his decision wasn't it absolutely was your honor in order to prove breach of contract the judge looked at the ensuring agreement and said what are the requirements of the insuring agreement a page for he did that he said one he said fourteen sure in agreement there's a requirement of an original second there's a requirement of an authorized signature at the top of page five he conflated the two he conflated them and he thought all that was needed was an original signature that's not what's required what's required is no original documents so yes absolutely judge cook considered the issue he decided it and then the authority of carolina casualty because it was considered in clearly decided by judge cooke this court should reach the issue but it should also reach it because it will be a travesty of justice if this court does not this is a critical quick question throughout the country right now i know you're relies on but i just someone last question here so that the states no credit would have occurred not when this money was drawn down that was the subject of the fraud but way back previously when the line of credit was created the exclusion clearly says excludes coverage for last because directly or indirectly from a loan or any extension of credit whether pure in good faith or through trick artifice fraud or false pretense the loan of the line of credit was approved the well there was an approval of a loan but it wasn't drawn upon at the very least this last results indirectly from a loan all right i had think we have it was this and then and thank you boost wallace from ann arbor with susan k'naan my partner on the brief you know as a starting proposition just the plain language rule looking at this policy it's a policy that is it's forgery insurance we purchase forgery insurance and it's pretty plain that that's what occurred here and only if you kind of wander off into the world of whether their language about original and about original but a regional can be that requirement can be met by a reproduce we produce a signature is there perhaps some ambiguity if we even reach that issue but under the pla brief of how our customers defined our customers the party to whom we just played extend credit we extended credit to a customer in ann arbor he was a very good credit always good credit  put up he put up his house as collateral everything about the extension of credit was sound but then a forger came in did but we've understood occurred in and extracted extracted money the bank in good faith paid off on the loan immediately and it paid off on the loss immediately to to the customer and and went to its forgery insurance made a timely application i will digress just for a second the application  that included these boxes to be checked these are the only box that was applicable was other because the box that counsel refers to that we did not checks as forgery of the negotia instrument and if the court has any doubt about that it please look at the exhibit so we didn't check that because there's no no good negotiable instrument involved here we checked other and explained exactly what happened in great detail including submitting the police report  the proposition raised really for the first time in their reply brief in this court that we didn't let them know we were under the forgery provision ensuring agreement d is is pure nonsense i mean from the very beginning  even in their own brief in this court they say both parties agreed this was a code out of a forgery there's never been any mystery about that but you really don't have to reach the argument about original and whether reproduce signature which we feel we feel modified the original language to the definition of virgin you don't have to reach that because in about five different legally recognized ways the insurance company waive this argument altogether in first one and they've never responded to this point there is absolutely michigan black letter law recognized repeatedly by this court in for example jones versus jackson national insurance alike live case there also added that says the insurance company has to in its denial letter set forth all that's going on for the now and if it doesn't those those exclusions those arguments are lost and there's their denial letter that we somehow failed on the requirement for an original they didn't raise that in their denial letter which is really end of issue they did not raise it again in their word so they waived it throughout the pleadings we have rules about pleadings you have to raise these things and so we can litigate them this is an issue never litigated in the district court because they never raised it and the final principle is that rule fifty nine easy as it is a matter of you know the federal rules you can't bring up the issue at the end in a in a motion for reconsideration so on every possible waiver argument they fail and they and they make no explanation of why that why that failure should now be excused by this court the best argument they have or the argument that they're making the that this would be a travesty of justice of course you can imagine how we feel about  the word travesty in this instance having been litigating our forgery insurance policy now for two or three years and ending up in front of this court but then they have a principle that might allow this court to excuse their pleading doesn't allow this court to excuse their failure to raise in the denial letter and that's substantive michigan insurance law which this court consistently applies and how do you respond to your opposing counsel's argument that he has cases such as this i think we settled on this first insurance that show that it does not have to be the customer or are in the cusp the customers activity or based on the customer's account that that would make the exclusion apply i think all of those cases involve a person or entity with whom the bank had a relationship every one of those cases so maybe they're not strictly cuz maybe there was a broker case but involve the original relationship and then you know and that makes sense i mean you could make sense of if the if the facts fell in the right place but that's not no case is taken you know a forgery deception plot like this and called it a loan and because you know again plain language we know that money wasn't loan here i mean the loans were because i me ask you this you're there i'm looking now at your opposing counsel brief and it does say that his client issued an insurance policy to the bank covered losses resulting from certain forward so long as among other things the forged instrument that the bank relied on in incurring a loss was an original and this was a fax why do we if there are any response you have to  days well here's the here's the thing about that because if i mean if we're going to if we're discussing that they define it original is a defined term in the policy and it's a modified term so there are two aspects to it  took us on about this so so that language is modified by a provision that allows recognition of reproduce signatures number one number two this defined term interesting lee instead of saying  original is not a copy or something that you might find in the dictionary and look this looked up all the terms it says and original is a first to enduring or an archetypal so i mean i've looked up first rendering and i invite the court to look it up it's not in dictionaries of course because it's two words if you look if you look it up online so try to find out where the first wintering is it's nothing short of it's confusing gobbledygook there's a first rendering is used with respect to paintings as root you know ancient paintings that's used with respect to certain kinds of three dimensional calculator things i guess we're getting farther and then then we need to i just wondered what the law about the use of a faxed document holding of the cases so that's as good luck as you're going to get on the subject i think i mean of facts is it's not a dellec trying the signature it's not a digital signature so i think we win under that well let me ask you another question in the paragraph below the one that i just read from there's this statement both parties agree that the banks lost occurred because someone john doe fa the bank a forged request for a draw on an actual bank customers a line of credit that i gather correct acting upon that forced request the bank wired on loan funds to john doe believing him to be the real bank customer ok so so they're there if we if we reach the question of the original which they haven't raised until way too late in the litigation they are they are clearly subject to the rule that the ambiguit the policy if you can call it an ambiguity at best need to be construed against c insurance company i say that the language of ensuring agreement de pretty effectively tells us that we produce signatures or are valid and should be treated our as i understand our me our meet our burden of going forward to prove to proven title men to summary judgment and i don't really understand this argument but it's either they're either  saying because we checked the wong box or didn't use the term ensuring agreement d and and frankly returning to the law about the relative obligations of the insured in the insurance companies all our obligation is to give them notice of what occurred in insured parties and supposed to not require by any case law to pick through the policy and figure out all the language points arguments exclusion and and deal with them in a notice letter  pleadings number two summary judgment as is the standard for summary judgment is whether on the undisputed facts you can make a clear ruling in the facts one disputed so we submitted these facts nobody was arguing you know if they had raised this much earlier and if we had litigated the significance of a fax and the point about the facts is that if if if if it is a different document one that  this is done correspond to the wire transfer world at all but if that had happened who's who's to say what they had back and probably we would have taken that document compared to the customer signature resembled the customer signature as the fax reproduced signature did and and this is sort of like saying if you if you send in your notice to the insurance company by first class ma is gone so there's no no suggestion and logic tells us that this whole point that they've raised wouldn't made any difference at all in this case if it goes down anything it goes to whether this is a this would be a travesty of justice to  require the insurance company to pay a hundred ninety six thousand dollars on for their insurance at their years of are paying premiums to them for this insurance just out of curiosity mr wallace did they catch the order you know this is this is a scam that's there is some significance to this case beyond what we're talking about here today because this is this you may have noticed in the missouri one hundred ninety six thousand dollars got fed got sent to a bank inquiry of same bank so this is a scam that's being one and has been run much much more broadly to my knowledge nobody's been caught retained after summary judgment is issued not to argue about the amount of this loss we retain because we legitimately believe that there will be a miscarriage of justice if this court does not consider the original issue we didn't address it in an dilator because ensuring agreement deal was not a tissue back then judge cook in this case concluded that there was coverage under ensuring agreement d because there was an original because it's the plainest burden of proof to prove breach of contract in order to do that they have to prove that the conditions of the insuring agreement are met that the banking system day they were arguing for coverage absolutely ok so it was before the court absolutely it had to be before the court and the court got it wrong and if you look at ensuring agreement d it clearly requires an original document that's not what we had here briefly this will be a miscarriage of justice there are eight thousand federally insured banks in this country everyone is obligated to have a financial institution bond most of them have the standard form of issue in this case i chaired a program in boston on cyber crime this fall already lawyers were arguing based upon judge cook's decision that he lock wire transfer fraud scams were covered under insured agreement d because faxes are originals that's what that case stands for and if this court does not consider the issue it would be a travesty of justice under the case i mentioned january the carolina case that judge gilman decided because judge cook the trial court decided the issue this court should reach the issue under this court four part test scores so that the issue is way how is this court making a ruling that that is in fact an original i'm sorry why can't this court resolve it without reaching that issue there's no way if this court says the a written the claim that this is not an original was way and we do not address that klein is right and then there is there is no opinion case out of i think this this circuit about six years ago the district court case continues to be cited that happens all over the country and so i urge this court to please at least consider what the test please look at carolina casually you can consider the original issue and that is the see issue to decide and you should consider it thank you very much