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News Now

CU System
CU in Alabama sues over bond claim
BIRMINGHAM, Ala. (2/15/11)--A credit union in Alabama has filed a lawsuit seeking $3 million over a bond claim regarding loan losses that was denied by CUMIS Insurance Society. The credit union also is seeking to get the case remanded back to an Alabama circuit court. Alabama Central CU, based in Birmingham, had submitted a claim to CUMIS over losses from loans approved by former credit union senior vice president William Kiser Jr. The credit union filed suit in Circuit Court of Jefferson County, Ala., on Jan. 3 against CUMIS Insurance Society and CUNA Mutual Insurance Society. CUNA Mutual Insurance Society and CUNA Mutual Group are improperly named in the lawsuit, said court records, because the bond was issued by CUMIS. CUMIS had the case removed to a U.S. District Court on Feb. 9, and the credit union responded Friday with a motion to remand the case back to the Alabama court, according to court documents. The motion to return to the original court is based on the fact that Kiser, also a defendant in the case, is an Alabama resident. "The lawsuit involves a faithful performance claim involving loans made by a former credit union vice president (not a CUMIS representative)," Phil Tschudy, CUNA Mutual Group media relations manager, told News Now. "The claim was denied because we believe it does not fall within the Faithful Performance coverage under the Bond. We hope this matter can be resolved in a fair manner for all parties," he added.


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