First National Bank of No. Cal v. St. Paul Mercury Insurance Co

MEMORANDUM

First National Bank of Northern California (“the Bank”) appeals from a grant of summary judgment against it and in favor of St. Paul Mercury Insurance Company (“the Insurer”). We affirm. Because the parties are familiar with the history of this case, we need not recount it here.

This insurance coverage dispute arises from a loss caused by the Bank’s payment of two fraudulent wire transfers from the Edwards Living Trust, which the Bank reimbursed. The Bank seeks indemnity from the Insurer under its financial institution bond.

The district court properly concluded that the loss was not covered under the bond. The critical question is whether the Edwardses, who created the Trust, were “customers” within the meaning of the bond. To qualify as a “customer” under the bond, among other things, an individual or entity is required to have a written agreement with the Bank to rely on wire transfer instructions communicated by phone or fax. The undisputed facts show that there was no written agreement. Therefore, the district court properly entered summary judgment.

The Bank argues that the signature card, account agreement, and security procedures may be combined under the…