Federal Savings & Loan Insurance v. Transamerica Insurance

MEMORANDUM OPINION

Transamerica Insurance Company (“Transamerica”) issued a Savings and Loan Blanket Bond to Northwestern Savings & Loan Association (“Northwestern”). When Northwestern suffered a loss, Transamerica denied coverage, and Federal Savings & Loan Insurance Corporation (“FSLIC”) ultimately brought this action to recover under the bond. It also sought punitive damages.

Both FSLIC and Transamerica have filed summary judgment motions. The Court will grant those motions in part, and deny them in part.

While the motions cover various issues, only the following will be considered in this Opinion: (1) Is Northwestern’s loss of securities covered by the bond; (2) what jurisdiction’s law should apply to determine the availability and amount of punitive damages, if any; and (3) where- FSLIC has recovered funds from others, how should those recoveries be applied, and what is the effect on Transamerica’s liability?

I. FACTS

Transamerica is a California corporation with its principal place of business in Los Angeles, California. It maintains sales offices in St. Louis, Missouri and in Collins-ville, Illinois.

Northwestern was a Missouri savings and loan association, with its…