961 F.2d 1521 (10th Cir. 1992), 91-1242, Omnibank Parker Road, N.A. v. Employers Ins. of Wausau

Docket Nº:91-1242.
Citation:961 F.2d 1521
Party Name:OMNIBANK PARKER ROAD, N.A., Plaintiff-Appellant, v. EMPLOYERS INSURANCE OF WAUSAU, a Mutual Company, Defendant-Appellee.
Case Date:April 21, 1992
Court:United States Courts of Appeals, Court of Appeals for the Tenth Circuit
 
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Page 1521

961 F.2d 1521 (10th Cir. 1992)

OMNIBANK PARKER ROAD, N.A., Plaintiff-Appellant,

v.

EMPLOYERS INSURANCE OF WAUSAU, a Mutual Company, Defendant-Appellee.

No. 91-1242.

United States Court of Appeals, Tenth Circuit

April 21, 1992

Page 1522

James V. Pearson, Lannie Y. Iwasaki, and Brian D. Milligan, of Iwasaki & Pearson, Denver, Colo., for plaintiff-appellant.

Bruce F. Fest and Dennis A. Hanson of Wood, Ris & Hames, Denver, Colo., and Charles D. Thomas and Dirk E. Ehlers of Peterson & Ross, Chicago, Ill., for defendant-appellee.

Before SEYMOUR and ANDERSON, Circuit Judges, and SAM, [*] District Judge.

STEPHEN H. ANDERSON, Circuit Judge.

In this diversity case, Plaintiff claims coverage under a Bankers Special Bond (Bond) issued by Defendant for losses sustained when credit card sales drafts deposited by Plaintiff's merchant customer proved to be uncollectible. The district court determined that the Bond excluded coverage for the loss and granted summary judgment for Defendant. We exercise jurisdiction under 28 U.S.C. § 1291 and affirm. 1

Plaintiff had agreed to process credit card payments for its merchant customer, E-Z Rest Adjustable Beds (E-Z Rest). Plaintiff credited immediately the amount of the credit card sales draft to E-Z Rest's account and permitted E-Z Rest to withdraw those amounts without delay. Plaintiff then submitted the credit card sales drafts to the Rocky Mountain Bankcard System (RMBCS) for payment. Without Plaintiff's knowledge, E-Z Rest's representatives obtained and deposited credit card sales drafts for beds that were not delivered. As a result, E-Z Rest's customers exercised their right to charge back the amounts for the undelivered beds, RMBCS debited Plaintiff's account for those chargebacks, and Plaintiff in turn debited E-Z Rest's account, causing an overdraft in E-Z Rest's account at Plaintiff bank. Plaintiff then sought payment from Defendant under the Bond.

The Bond provides coverage for various losses, so long as the losses are not excluded. The Bond does not cover

(e) loss resulting directly or indirectly from the complete or partial nonpayment of or default upon

(1) any loan, or any transaction in the nature of a loan, or extension of credit, whether or not involving the Insured as a lender or borrower, or

(2) any false or genuine note, account, agreement, invoice or other evidence of debt...

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