Opinion ID: 681620
Heading Depth: 2
Heading Rank: 2

Heading: Renewal or Refusal?

Text: 47 One further contention by the FDIC deserves mention but not detailed explication. The FDIC argues that American Casualty's failure to offer a policy on the very same terms as were contained in the 1984 policy amounted to a refusal to renew the policy that should have allowed First State Bank to exercise the discovery option in the 1984 policy and thus extend the coverage offered by that earlier contract. The FDIC also insists that the refusal to renew was part of a nationwide scheme by American Casualty to defraud insureds. The district court appropriately determined that there was no merit to either of these contentions. 48 In the first place, the record establishes without dispute that First State Bank voluntarily agreed to the terms of the renewal policy and expressly waived its rights under the discovery option clause of the 1984 contract. Moreover, the extended period available under the 1984 discovery option had expired by the time the claims in this case were made. Finally, and most significantly, the bank and its officers and directors were experienced participants in business affairs, who were given adequate notice of the changes in premium and coverage under the new policy. The FDIC has thus failed to provide any evidence that the officers and directors were placed in an unfair position or were misled into accepting unconscionable policy terms. On the contrary, the evidence before the district court indicated that the change in terms in the 1987 renewal policy was dictated by hard market conditions in a banking industry that was afflicted with numerous cases of mismanagement at that time. As another circuit court has noted when faced with virtually the identical contention made here, involving some of the same players as in this case: 49 It is true that American Casualty increased its premium and decreased its coverage for the officers and directors when it discovered the state of the Bank's loan portfolio. That strikes us, however, as a reasonable business decision rather than bad faith. The parties are sophisticated business people who dealt at arm's length. This transaction could have ended in several different ways. But the fact remains that the parties agreed to the terms of the 1984 [renewal] policy. We will not discard their agreement and remake their business relationship. 50 American Casualty Co. v. FDIC, 944 F.2d 455, 459 (8th Cir.1991). 51 For the reasons set out above, we AFFIRM the district court's order of summary judgment in favor of the plaintiff. 52