Opinion ID: 774745
Heading Depth: 2
Heading Rank: 1

Heading: Coverage Under the Bond Language

Text: For BNC to obtain coverage under the fidelity portion of the financial institution bond for its loss, Gronlie must have had the the manifest intent: (a) to cause the Insured to sustain such loss; and (b) to obtain financial benefit for the Employee or another person or entity. For loan transactions, Gronlie must also have received a financial benefit of $2500. The district court found that BNC had proved that only two of the transactions in question, ones in which funds were sent to [Tom] Harper in direct violation of the advice given to the bank regarding the use of the money, reflected the manifest intent required as a condition of coverage under the bond. In making this finding, the district court relied on the definition of manifest intent used by this court in First Dakota National Bank v. St. Paul Fire & Marine Insurance Company, 2 F.3d 801 (8th Cir. 1993). BNC argues that the district court clearly erred in not finding that all of its losses, which total approximately two million dollars, resulted from Gronlie's fraudulent or dishonest acts. It urges us to elaborate on our discussion of manifest intent in First Dakota National Bank. Reminding us that BNC had successfully prevailed upon the district court to adopt the definition in First Dakota National Bank that it now argues against, BancInsure contends that we should affirm the court's factual determinations. North Dakota courts have not ruled on the definition of manifest intent. North Dakota contract law requires courts to principally look to the plain, ordinary meaning of the undefined term to guide... interpretation. Hanneman v. Continental Western Ins. Co., 575 N.W.2d 445, 450-51 (N.D. 1998) (internal citations omitted). The dictionary is a good source to determine the plain, ordinary definition. Id. at 451. In the dictionary, manifest is defined as readily perceived by the senses... [and/or] easily understood or recognized by the mind: obvious. Merriam-Webster's Collegiate Dictionary 707 (10th ed. 1993). We believe that the dictionary definition aptly comports with our discussion of manifest intent in First Dakota National Bank. In First Dakota National Bank, 2 F.3d at 813, we upheld a jury instruction that stated that manifest intent under South Dakota law means a clearly evident intent. The instruction stated: You may consider any statement made or act done or omitted by a party whose intent is in issue, and all of the facts and circumstances which indicate his state of mind. Id. You may consider it reasonable to draw the inference and find that a person intends the natural and probable consequences of acts knowingly done or knowingly omitted. Id.; see FDIC v. United Pacific Ins. Co., 20 F.3d 1070, 1077-78 (10th Cir. 1994) (approving similar jury instructions); FDIC v. Oldenburg, 34 F.3d 1529, 1539 (10th Cir. 1994) (holding that manifest intent exists when a particular result is substantially certain to follow from the employee's conduct); but see Resolution Trust Corp. v. Fidelity and Deposit Co. of Maryland, 205 F.3d 615, 637-42 (3d Cir. 2000). Because BNC will not now be heard to complain of the definition that it urged the district court to apply, and because North Dakota's contract law comports with the interpretation of manifest intent adopted in First Dakota National Bank, we hold that the district court did not err in utilizing the definition of manifest intent set forth in First Dakota National Bank. We turn next to BNC's argument that the district court's factual findings are clearly erroneous. The court determined that Gronlie and her husband both had a financial interest in Alamation, thus [a]ll transactions from [the time of its creation] carry the taint of conflict of interest. Although the court found many bad banking practices by Gronlie and others at BNC, it found that only two loan transactions, one in September and one in November of 1996, reflected a manifest intent on Gronlie's part to cause harm to BNC. In these two transactions, Gronlie had involved herself in such a way as to secure her own (Alamation's) rights to a simulator at the expense of the bank's security. The district court observed that Gronlie's loan history comments pertaining to these transactions recited that all of the funds from the loans would stay with the bank and be applied against Top Dog's outstanding line of credit, but that, under Gronlie's direction, this is not what had happened. The court found that in one of the transactions $131,508.85 left the bank and was wired to Top Dog, and that $50,000 left the bank and went to Top Dog in the second transaction, resulting in the line of credit remaining at least $181,508.85 greater than that contemplated when the officer's comments were circulated. The court found that these funds were sent to Top Dog so that Alamation could obtain a simulator. The court concluded that these transactions, in which money earlier earmarked to reduce the loan balances left the bank in a time frame where the funds were needed by Top Dog to obtain delivery of the machine owned jointly by Alamation and Harper[,] do meet the policy criteria. As the Tenth Circuit has stated, where an individual's conduct falls somewhere between the two extremes of embezzlement and simple poor judgment, intent becomes a question of fact. Oldenburg, 34 F.3d at 1540 (quotation marks omitted). In this case, the determination of whether the requisite manifest intent was present required a resolution of disputed facts and findings of credibility. [W]here there are two permissible views of the evidence, the factfinder's choice between them cannot be clearly erroneous. Northgate Homes, Inc. v. City of Dayton, 126 F.3d 1095, 1101 (8th Cir. 1997) (citation omitted); see also Stanton v. Larry Fowler Trucking, Inc., 52 F.3d 723, 729 (8th Cir. 1995). We conclude that the court's findings are not clearly erroneous, and we thus affirm the district court's determination that BancInsure must pay only $181,508.85 under the fidelity coverage portion of the bond.