Seattle Fur Exchange, Inc. v. Foreign Credit Insurance

The issue before us is whether there must be strict compliance with the terms and conditions of an insurance policy where a federal agency, the Export-Import Bank of the United States (“Eximbank”), has agreed to cover losses from exporting in the event of insolvency of a private insurer. We hold that under these circumstances, there must be strict compliance.

Seattle Fur Exchange (“Seattle Fur”) conducts a fur exchange business in which it auctions and sells furs and pelts to wholesale buyers. In 1988, Seattle Fur obtained a “Short Term Comprehensive Multi-Buyer Export Credit Insurance Policy,” No. CSD-65904 (“the policy”), from the Foreign Credit Insurance Association (“FCIA”), a consortium of private insurance companies, 1 and from Eximbank. The policy insured Seattle Fur against losses from foreign buyers who defaulted on their purchases.

In 1988 and 1989, a number of foreign buyers purchased furs and pelts from Seattle Fur. The claims at issue arose after eleven of the foreign buyers defaulted on their payments due to a worldwide decline in the demand for furs. Seattle Fur filed insurance claims, but FCIA denied them.

Seattle Fur brought this diversity action against FÜIA,…