Portland Federal Employees Credit Union, a Non-Profit Corporation v. Cumis Insurance Society, Inc., a Corporation

Portland Federal Employees Credit Union (Portland) appeals from the district court’s entry of summary judgment in favor of Cumis Insurance Society, Inc. (Cu-mis) on the question whether a fidelity bond issued by Cumis covers certain losses Portland suffered because of its employees’ fraud, dishonesty, or lack of faithful performance. The parties dispute whether these losses qualify as losses of “property” as defined by the fidelity bond. The district court had diversity jurisdiction under 28 U.S.C. § 1332 . We have jurisdiction pursuant to 28 U.S.C. § 1291 . We reverse and remand.

I

This case involves two separate cases brought by Portland, consolidated in the district court and tried together. The facts are undisputed for purposes of this appeal. In case number 86-134 (the loan claim), Hoekstra, Portland’s treasurer-manager, disbursed a loan of $62,100.00 to another employee. Disbursement of a loan this large without prior approval from Portland’s credit committee violated Portland’s policies and bylaws as well as Oregon state law. In addition, the loan was secured by real property for which the appraisal was inaccurately high. Thus, the loan exceeded the collateral’s value by…