Starnes Davis Florie


Stiff, Newton & Stevens Obtain a Favorable Appellate Ruling in Financial Institution Bond Case

April 23, 2015

* In February of 2015, Sybil Newton, along with Gray Stiff and Scott Stevens, obtained a favorable ruling from the 11th Circuit in a holding which affirmed the District Court’s (Southern District of Alabama) grant of summary judgment to insurance carrier in a case brought by an Alabama bank seeking payment under a financial institution bond. The bank alleged breach of contract and bad faith and sought over $1,000,000 from the carrier after a customer of the Bank defaulted on loans secured, in part, by a stock certificate which he had obtained fraudulently. The primary issue on appeal was whether the fraudulently obtained stock certificate met the definition of a “counterfeit” under the terms of the bond. The trial court held, and the 11th Circuit agreed, that the stock certificate at issue was an authentic document, even if procured under false pretenses, and does not meet the definition of “counterfeit” or trigger coverage under the bond. The Bank’s application for rehearing en banc was denied by the 11th Circuit on April 20, 2015. The opinion issued by the 11th Circuit was the subject of several articles in Appellate Law 360.

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