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ORITANI SAV. & LOAN v. FIDELITY & DEPOSIT CO.

October 3, 1991

ORITANI SAVINGS & LOAN ASSOCIATION, A CORPORATION ORGANIZED UNDER THE BANKING LAWS OF NEW JERSEY, PLAINTIFF,
v.
FIDELITY & DEPOSIT COMPANY OF MARYLAND, DEFENDANT.



The opinion of the court was delivered by: Harold A. Ackerman, District Judge.

OPINION

This is a declaratory judgment action in which the plaintiff, Oritani Savings & Loan Corporation, ("Oritani"), seeks a ruling that the defendant, Fidelity & Deposit Company of Maryland, ("Fidelity"), is obligated to indemnify it under a Savings and Loan Blanket Bond. Presently before the Court is a motion by Fidelity for partial summary judgment dismissing the Third Count of plaintiff Oritani's Amended Complaint, or in the alternative seeking leave to file a Third-Party Complaint against John Rowe. I will decide this matter on the papers without oral argument as permitted by Federal Rule of Civil Procedure 78.

Procedural History

The parties have twice previously appeared before this Court. On July 9, 1990, the Court denied Fidelity's motion for summary judgment, holding, inter alia, that Oritani's complaint could be said to have asserted a claim under Insuring Agreement (A) and that as a question of fact existed as to whether Insuring Agreement (A) provided coverage in the matter, summary judgment was inappropriate.*fn1 Oritani Savings & Loan Association v. Fidelity & Deposit Company of Maryland, 741 F. Supp. 515, 524 (D.N.J. 1990.) The parties again appeared before the Court in October, 1990 on Fidelity's motion for reconsideration of this Court's June, 1990 decision denying their motion for summary judgment, and on the Oritani Cross-Motions for summary judgment and leave to amend the Complaint to unambiguously assert a claim under Insuring Agreement (A) of the bond. Fidelity asserted three grounds in support of its motion for reconsideration, including, that the Court had erred in finding that a question of fact exists as to whether coverage is afforded under Insuring Agreement (A) of the blanket bond. Fidelity contended that the Court had misapplied the case of National Newark & Essex Bank v. American Insurance Co., 76 N.J. 64, 385 A.2d 1216 (1978) in interpreting Insuring Agreement (A) of the Oritani bond because the language in National Newark differs from that of Insuring Agreement (A). Specifically, the bond in National Newark lacked the definition of "Dishonest and Fraudulent Acts" present in Insuring Agreement (A) of the Oritani bond. This Court rejected Fidelity's first two grounds for reconsideration, and about the contention that the Court misapplied National Newark, concluded that:

  In light of the difficulty of the issue, the absence
  of controlling authorities, and the fact that it is
  wholly unnecessary for me to decide it, (since I have
  already decided that there is coverage under section
  (B)), I decline to rule on this issue at this time.

Oritani, 744 F. Supp. at 1316. Consequently, the Court denied Fidelity's motion for reconsideration, granted Oritani's motion for partial summary judgment, and granted Oritani's motion for leave to amend. Oritani Savings and Loan Association v. Fidelity & Deposit Company of Maryland, 744 F. Supp. 1311 (D.N.J. 1990).

Presently, the Court has once again been asked to consider Fidelity's motion for summary judgment holding that no coverage is afforded under Insuring Agreement (A) of the blanket bond. In light of what counsel for Fidelity have correctly pointed out to be the misapplication of National Newark & Essex Bank v. American Insurance Co., in my prior opinion (See Oritani, supra, 741 F. Supp. at 524), and for the reasons set forth below, I find that summary judgment in favor of Fidelity, the defendant, is appropriate. I have no need to discuss the factual background out of which these claims arise, as it has been completely set forth in this Court's July 1990 opinion. See Oritani, supra, 741 F. Supp. at 517-519.

Fidelity's Motion for Partial Summary Judgment

Fidelity, the defendant, is moving for partial summary judgment on Count Three of the plaintiff's Amended Complaint, in which the plaintiff seeks recovery under Insuring Agreement (A). The issue to be decided is whether the "Dishonest or Fraudulent Acts" clause of this blanket bond, including its definition of dishonest and fraudulent acts, covers the loss resulting from an act by an employee which complies with all company policies and was undertaken without the intent to cause loss to the bank or to financially benefit himself. The clause, contained in Insuring Agreement (A), provides:

Loss resulting directly from dishonest or fraudulent acts of an Employee committed alone or in collusion with others.

Dishonest or fraudulent acts as used in this Insuring Agreement shall mean only dishonest or fraudulent acts committed by such Employee with the manifest intent

(a) to cause the Insured to sustain such loss, and

    (b) to obtain financial benefit for the Employee or
  for any other person or organization intended by the
  Employee to receive such benefit, other than
  salaries, commissions, fees, bonuses, promotions,
  awards, profit sharing, pensions or other ...

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