Archive Links

Consumer Archive
CU System Archive
Market Archive
Products Archive
Washington Archive

News Now

CU System
CU wins appeal on fidelity bond claim
LATHRUP VILLAGE, Mich. (5/27/11)--A 2009 jury decision in for Michigan First CU in a case about an insurer's denial of a fidelity bond claim involving hundreds of defaulted indirect auto loans has been affirmed by the U.S. Court of Appeals, Sixth Circuit. The $568 million asset, Lathrup Village, Mich.-based credit union is entitled to $5 million in damages and another $2.7 million in interest from CUMIS Insurance Society Inc., according to the ruling filed Tuesday by the appeals court regarding the jury decision in the U.S. District Court of the Eastern District of Michigan at Detroit (leagle.com May 25). In 2003, the credit union began offering the loans, with a third-party administrator approving low-risk loans and forwarding higher risk loan applications to the credit union for review. A credit union vice president was charged with submitting monthly reports to the board to ensure compliance, but failed to monitor the program, the ruling said. A quarterly internal audit in October 2003 discovered one loan that violated the credit union's indirect lending policy, said the court documents. But in January 2004, it was discovered that "hundreds of loan applications in violation of the lending policy" were made, resulting in "numerous defaulted loans." The credit union claimed that it suffered financial harm as a result of three of its employees' "conscious disregard of its lending" policies and filed a fidelity bond claim with its insurer, which denied the claim. A seven-day jury trial ensued, with the jury awarding $5.05 million in damages. A motion for a new trial was denied, and the court imposed a $2.7 million interest award. CUMIS appealed the judgment and the credit union countered with an appeal on the interest calculation. In Tuesday's ruling, the court said there was sufficient record evidence to support the jury's finding that the credit union "did not acquiesce to the policy violations at issue." CUNA Mutual Group declined to comment on the case.


RSS print
News Now LiveWire
#FreeGasFriday courtesy of @tvfcu, TN #creditunions http://t.co/wDRFYJVlpz
1 Day ago
If you were unable to watch or attend @cuna 's @thehill Hill forum on Wed., you can now watch the archived version: http://t.co/FhUnp7HbU8
1 Day ago
Time is running out. If you haven't taken the #NewsNow readership survey, please click here now: http://t.co/4Gp6C2Wa4o
1 Day ago
African financial inclusion possible with mobile money: @IMFNews study http://t.co/0V5DTQToxY
1 Day ago
Louise Herring's birthday is Saturday. 105 years later, her legacy lives on through her kids http://t.co/oMqGADmo0d http://t.co/T3NmS9NqEY
1 Day ago