Humboldt Bank v. Gulf Insurance

ORDER GRANTING DEFENDANT’S MOTION FOR SUMMARY JUDGMENT AND DENYING PLAINTIFF’S CROSS-MOTION FOR SUMMARY ADJUDICATION OF ISSUES

This dispute arises from the theft of $5.25 million belonging to Plaintiff Humboldt Bank (“Humboldt”). Humboldt initiated the present action claiming that this loss is covered through a bond issued by Defendant Gulf Insurance Company (“Gulf’), and that Gulf is liable for any unrecovered amounts. Gulf disagrees. Presently before the Court are Gulfs Motion for Summary Judgment or Summary Adjudication of Issues, and Humboldt Bank’s Cross-Motion for Summary Adjudication of Issues. The Court, having reviewed the plain language of the bond along with the submissions and arguments of the parties, finds that this money is not covered by Humboldt’s bond with Gulf. Accordingly, Gulfs motion for summary judgment is hereby granted, and Humboldt’s cross-motion for summary adjudication is hereby denied.

I. BACKGROUND

A. The Stolen ATM Currency

This case concerns a common practice in the banking industry whereby banks allow owners of automated teller machines (“ATMs”) to use the bank’s vault cash for dispensement in the ATMs in exchange for interest and other fees on…