Lubin v. Cincinnati Insurance Company, 1:09-cv-02985

Debtor Bancshares, Inc. is a Georgia bank holding company whose bank, Integrity Bank, was closed Aug. 29, 2008 and placed in FDIC receivership.
The Trustee Lubin, as chapter 7 trustee, filed this action after prior cases were dismissed for lack of standing.
FDIC, as receiver of Integrity, intervened and asserted Bond-related claims through Counts I and II seeking reformation and ownership of claims.
The Bond (Depository Institutions Blanket Bond) insured Bancshares against direct losses from dishonest acts by employees; Coverage excludes indirect losses.
Trustee alleged dishonest acts by named employees of Integrity/Bank and sought recovery under the Bond on Bancshares’ behalf; CIC denied coverage and moved to dismiss.
FDIC and Trustee cross-claims and intervenor claims are framed around whether Integrity can be a named insured and whether the Bond can be reformed to include Integrity.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether the Trustee states a cognizable breach-of-contract claim against CIC.	Lubin asserts Bancshares suffered direct harm from employees and seeks Bond recovery.	CIC contends no direct harm to Bancshares was pled and claims fall outside Bond coverage.	Trustee's breach claim is insufficient; complaint dismissed.
Whether the Trustee/estate may bring a claim under the Bond.	Trustee contends rights under Bond belong to Bancshares estate.	Bond rights are limited to insureds and the Trustee cannot sue on behalf of Bancshares.	Trustee lacks standing to sue under the Bond; the claim cannot proceed on Bancshares’ behalf.
Whether the FDIC may reform the Bond to include Integrity as a named insured and own the resulting claims.	FDIC seeks reformation to add Integrity and asserts ownership of Proof of Loss claims.	Trustee opposes reformation; contract language controls and reform requires mutual mistake evidence.	Bond reformed to include Integrity as a named insured; FDIC has standing to assert the claim.

Fox v. Washburn, 264 Ga. 617 (Ga. 1994) (reformation and intent questions often require trial credibility)
Yeazel v. Burger King Corp., 241 Ga. App. 90 (Ga. Ct. App. 1999) (parol evidence admissible in reformation when contract does not reflect true intent)
Wall v. Ga. Farm Bureau Mut. Ins. Co., 242 Ga. 176 (Ga. 1978) (reformation of insurance contracts based on mutual mistake)
E A Technical Servs., Inc. v. Am. Mfrs. Mut. Ins. Co., 270 Ga. App. 883 (Ga. Ct. App. 2004) (reformation available where written instrument does not express the parties' contract)
New Amsterdam Cas. Co. v. W.D. Felder & Co., 214 F.2d 825 (5th Cir. 1954) (insured may maintain action against bond under joint insured provisions)
Bonner v. City of Prichard, 661 F.2d 1206 (11th Cir. 1981) (precedes circuit decisions; pre-1981 Fifth Circuit law applied in Eleventh Circuit)
Allen v. Tyson Foods, Inc., 121 F.3d 642 (11th Cir. 1997) (summary judgment standard requires no genuine issue of material fact)
Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574 (Supreme Court 1986) (summary judgment standard; evidence must show genuine dispute)
Anderson v. Liberty Lobby, Inc., 477 U.S. 242 (Supreme Court 1986) (materiality and genuine dispute for summary judgment)
Ashcroft v. Iqbal, 556 U.S. 662 (Supreme Court 2009) (pleading standard requiring plausible claims)