Source: https://cbaclelegalconnection.com/tag/receivership/
Timestamp: 2019-04-22 16:26:37+00:00

Document:
The Tenth Circuit Court of Appeals issued its opinion in BancInsure, Inc. v. Federal Deposit Insurance Corporation on Thursday, August 6, 2015.
Columbian Bank & Trust obtained an insurance policy from BancInsure where BancInsure agreed to pay losses the insured would be legally obligated to pay. The policy contained an “insured v. insured” exclusion which barred recovery for claims “by, on behalf of, or at the behest of . . . any . . . receiver of the company” and a regulatory exclusion, barring coverage for any action brought by or on behalf of any state or regulatory agency, including actions brought by those agencies as receiver. However, Columbian purchased a regulatory exclusion endorsement that amended the policy by the deletion of the regulatory exclusion.
In August 2008, the Kansas State Bank Commissioner declared Columbian insolvent and appointed the FDIC as receiver. In September 2008, BancInsure received notice of claims the FDIC intended to file against Columbian’s officers and directors. In anticipation of such suit, Columbian’s parent company and director-defendant Carl McCaffree brought suit against BancInsure, seeking a declaratory judgment that the policy covered claims brought after the company was declared insolvent but before the policy’s expiration date. The district court ultimately held that the policy remained in effect until May 2010. On appeal, the Tenth Circuit held that no case or controversy existed at the time of the judgment and remanded with instructions to vacate the judgment.
BancInsure filed suit in Kansas state court in August 2011, seeking a declaratory judgment that it owed no duty of coverage to the director-defendants for claims brought against them by the FDIC-R. The FDIC-R joined the action and removed it to federal court, simultaneously bringing claims against several of Columbian’s directors and officers for negligence, gross negligence, and breach of fiduciary duty. BancInsure, the FDIC-R, and the director-defendants reached a settlement in February 2013 in which BancInsure agreed to make payments in partial satisfaction of the judgment, reserving the right to seek reimbursement if it succeeds in this litigation.
The parties filed cross-motions for summary judgment on the issue of coverage. The district court granted BancInsure’s motion, finding the insured v. insured exclusion unambiguously barred coverage for claims by the FDIC-R against director-defendants. The FDIC-R and director-defendants timely appealed. Meanwhile, BancInsure was placed into receivership and the Kansas Insurance Guaranty Association intervened to defend BancInsure’s rights.
On appeal, the Tenth Circuit examined BancInsure’s contract with Columbian and found no ambiguity in the insured v. insured exclusion. The Tenth Circuit found the plain meaning of the exclusion barred coverage for claims brought by receivers against director-defendants. Appellants argued the policy as a whole should be construed as ambiguous because the shareholder derivative action exclusion renders the insured v. insured exclusion ambiguous and because the regulatory exclusion renders the insured v. insured exclusion ambiguous as to claims brought by the FDIC. The Tenth Circuit first examined the shareholder derivative action exclusion and found no ambiguity because the insured v. insured exclusion specifically referenced receivership actions. Next, the Tenth Circuit found that the regulatory exclusion did not render the insured v. insured exclusion ambiguous because claims could still be brought by other regulatory agencies that were not appointed receivers.
The Tenth Circuit affirmed the district court’s grant of summary judgment to BancInsure.

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