Chubb Unit Beats Bank's Suit Over Embezzlement Coverage

Law360, New York (September 13, 2012, 3:03 PM EDT) -- A Wisconsin federal judge on Wednesday rejected a bank's bid to obtain coverage from a Chubb Corp. unit in an underlying suit over $17.4 million embezzled from headphone maker Koss Corp.'s accounts, saying the bank's claim under a financial institution bond was invalid.

Plaintiffs Bankmanagers Corp. and its subsidiary, Park Bank, had sought a declaration of Federal Insurance Co.’s obligation to indemnify them under the bond. They argued the bond provided indemnification for the losses they incurred as a result of Park Bank’s issuance of cashier’s...
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