Opinion ID: 219258
Heading Depth: 2
Heading Rank: 2

Heading: The Receivership and Litigation

Text: The operation of § X.E became relevant on August 22, 2008, when the Kansas State Bank Commissioner declared Columbian insolvent and appointed the FDIC as its receiver. Columbian stopped accepting deposits and engaging in active banking business the same day. Soon thereafter BancInsure received a letter dated August 28, 2008, from the FDIC, providing notice of potential claims against the former directors and officers of [Columbian] for mismanagement of lending by the institution and for other activities which may constitute a `wrongful act' or a `wrongful lending act,' as defined in [the Policy]. Id. at 228. On September 3 an attorney representing Columbian and its officers and directors sent a letter notifying BancInsure of potential claims by the FDIC and others. And on September 18 Columbian forwarded to BancInsure a September 12 letter from the Construction Industry Laborers Training Fund (the Laborers Fund) demanding payment of $486,998.06, the amount of its uninsured deposits with Columbian on August 22. BancInsure admits that it received these notices of potential claims by both the FDIC and the Fund within 30 days of August 22. On December 18, 2008, Columbian filed an action in federal court seeking a declaratory judgment. The complaint noted disputes between Columbian and BancInsure regarding the meaning of the Policy and asserted that [a]n actual controversy exist[ed] between Columbian and Banc[I]nsure regarding the[ir] rights, liabilities, and duties ... under the Policy. Id. at 12. Count I sought a determination that [u]nder the terms of the Policy, coverage ceased by the appointment of a receiver, but the policy was not canceled; that the Policy ... remain[ed] in full force and effect; and that notice of a Claim or Wrongful Act [wa]s [timely] if such [wa]s received by BancInsure on or before May 11, 2008. Id. (internal quotation marks omitted). (An amended complaint extended the alleged deadline for timely notice to May 11, 2010.) Count II pleaded in the alternative that if the court treated the Policy as canceled, it should declare that Columbian had the right to purchase an Extended Reporting Period under Section II of the Policy. Id. at 13. A few months later, in early March 2009, the Laborers Fund filed a lawsuit in Missouri state court against Brian McGowan, a former officer of Columbian. After learning of the claim, BancInsure sent McGowan a letter notifying him that the Policy include[d] no duty to defend, but d[id] include a duty to pay reasonable defense costs, and reserved its rights in regard to the claim brought by the [Laborers] Fund.... Id. at 167. The same letter, which is not in the record, allegedly indicated that [BancInsure] would deny coverage for the claim brought by [the Laborers] Fund against Brian McGowan, claiming that notice was not provided during the Policy Period. Id. at 77. In response, Columbian, now joined by McCaffree as a plaintiff, filed on April 28 a second amended complaint, which added a Count III seeking a declaration that: the notices of potential claims sent to BancInsure on or about September 3, 2008 and September 18, 2008 regarding potential claims filed by the FDIC, uninsured depositors, and the [Laborers] Fund were timely and that [the Insureds] are therefore entitled to have any claims which were specifically identified in those notices treated as claims made during the Policy Period. Id. at 80. The dispute about coverage for McGowan was short-lived. On September 3, 2009, the parties stipulated that the claim asserted against Brian McGowan brought by the Laborers Fund in Missouri state court [wa]s covered under the Policy. Id. at 167. Both the Insureds and BancInsure then filed motions for summary judgment. The district court denied BancInsure's motion and granted the Insureds' as to Count I. It ruled that the language of the policy [was] unambiguous and that [t]he policy period continue[d] until May 10, 2010. Id. at 332. It determined that it need not address the alternative claim in Count II. And it held that the Insureds waived Count III by not preserving the issue in the pretrial order.