Fred C. Statum III and Justin D. Wear Obtain Summary Judgment in Financial Institution Bond Coverage Litigation

Posted on October 1, 2013 at 10:09 pm

Manier & Herod attorneys Fred C. Statum III and Justin D. Wear recently prevailed on a motion for summary judgment on behalf of its client in Federal Deposit Insurance Corporation, as receiver for Neighborhood Community Bank v. The Cincinnati Insurance Companies, Inc., No. 3:11-cv-145-TCB (N.D. Ga. Sept. 17, 2013).  The U.S. District Court for the Northern District of Georgia held that Neighborhood Community Bank was not entitled to coverage under a financial institution bond for its loss on a land acquisition and development loan.   Manier & Herod attorneys successfully argued that the bank did not issue the loan “in good faith” because it ignored numerous red flags evident on the face of an allegedly forged land sales contract and attendant documents. The court also held that the bank’s loss was excluded from coverage because the bank’s closing attorney caused the loss.  Lastly, the court determined the bank was not entitled to coverage because it discovered the forged sales contract prior to the bond’s effective date.