Stanford University Hospital v. Federal Insurance

This case stems from a dispute over coverage under crime insurance policies issued by defendant Federal Insurance Company (“Federal”) to Stanford University Hospital (“Stanford”), Verbatim Corporation (“Verbatim”), and Glendale Adventist Medical Center (“Glendale”) (hereinafter collectively referred to as “plaintiffs”). Plaintiffs entered into payroll tax service agreements with Hamilton-Taft & Co. (“Hamilton-JTaft”) requiring that Hamilton-Taft make timely tax payments on their behalf. Plaintiffs seek indemnification for losses resulting from the misappropriation of funds by Connie “Chip” Armstrong, Jr. (“Armstrong”), Hamilton-Taft’s sole shareholder and director. Federal denied plaintiffs’ claims, and plaintiffs filed separate lawsuits in order to receive payments. The three suits ultimately were handled jointly by Judge Claudia Wilken.

Defendant Federal appeals the district court’s July 7, 1997 judgment (“Judgment”) and March 8, 1995 order granting summary judgment in favor of plaintiffs Stanford, Verbatim, and Glendale. In the July 7, 1997 order, Judge Wilken entered judgment in favor of Stanford for $3,396,-960.15, Verbatim for $260,631.91, and Glendale for $772,617.88 in…