Archive Links

Consumer Archive
CU System Archive
Market Archive
Products Archive
Washington Archive
150x172_CUEffect.jpg
Contacts
LISA MCCUEVICE PRESIDENT OF COMMUNICATIONS
EDITOR-IN-CHIEF
MICHELLE WILLITSManaging Editor
RON JOOSSASSISTANT EDITOR
ALEX MCVEIGHSTAFF NEWSWRITER
TOM SAKASHSTAFF NEWSWRITER

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
CCUA hosts @TheNASCUS college for #creditunion directors http://t.co/CftpSXDKWx
32 minutes ago
#NewsNow CUs as public funds depositories high on Fla. legislative agenda http://t.co/pt5UF4Zutk
57 minutes ago
#NationalConsumerProtectionWeek begins Monday. http://t.co/BFLiUN7Twc
2 hours ago
.@Bankrate highlights #creditunion affordability vs. banks: 'No surprise,' says @Nussle http://t.co/ocu2fImmsS
3 hours ago
Credit card issuers could see a reduced burden for 1 year under a @CFPB proposal issued this week. News Now: http://t.co/CYVXLUmVBq
18 hours ago