National Union Fire Insurance Company of Pittsburgh, Pa. v. The Riggs National Bank of Washington, D.C.

But just quoted. Kleppe v. Club passes Sierra Congress otherwise, and until unless attempt in this make the signs it into law. no need to there is the President the bill word, legisla- regardless of enough a to hold that at its Franklin case. It is If one takes effects direct of NAF- lack of President’s submission proposal’s whether the tive action, be no there can mean that there to Congress would seem would be final TA to judicial re- permit sufficient final action can be action that attributed is no “final” course, is a there APA. Of under the view “agency.” re- saying that APA big difference between saying that officials is unavailable view they NEPA when comply have to with do not Congress If believed legislation.

suggest obligation to up to its lived

agency had not statement, always it could impact

prepare an Or, proposal. agency’s to consider

refuse environmen- to evaluate Congress wanted

if measure to a putting the impacts tal before FIRE INSURANCE NATIONAL UNION hold could vote, committees congressional PITTSBURGH, PA., COMPANY OF large subject. This is how hearings on the Appellant, already proposals legislative proportion impact NEPA’s statement must be treated. only agencies. to federal applies requirement BANK OF NATIONAL RIGGS Congress, who alone introduce Members of WASHINGTON, D.C., Appellee. amendments, are covered. not and offer bills individuals, private corporations, Neither unions, organi- groups or- other citizen

labor frequently avail them- zations, all of which Appeals, States Court United right Amendment their First selves of of Columbia Circuit. District government. petition the Oct. 1993. say wheth- prepared to not I am therefore cases, legis- proposing the act of in NEPA er § 704 of final action under

lation constitutes APA, interpreted that has as Franklin question, a troublesome

provision. is This cases, and should future

bound to arise in nub it here. The on

not stake out judicial under that review problem is agency action” “final

the APA demands impact prepare an state- duty to

whereas the objective main

ment arises earlier. -to ensure impact is statement ef- environmental considers

decisionmaker why in taking action. This is prior to

fects Club, n. 427 U.S. Kleppe v. Sierra n. 49 L.Ed.2d 96 S.Ct. mentioning

(1976),the Court —without which a the “time at

of the APA —identified process” to be “when

court enters the proposal on the

report or recommendation

made, the ab- protests either and someone impact .of the final adequacy or the

sence direct-effects-on- Franklin’s

statement.” suits, test, applied to NEPA the-parties with, portion reconciled have to be Transcripts

tor. Ruling, See of the Court’s (D.D.C. 1992). February No. 91-1992 The questions facts relevant to the certi- 20, 1990, April fied are as follows. Between May and unknown individuals checks, $640,- cashed 14 totalling fraudulent 712.38, Prop- drawn on account of NHP (“NHP”) erty Management, Inc. at the de- Riggs (“Riggs”). fendant National Bank On 22, 1990, requested Riggs June NHP that recredit its Riggs account the loss. After MIKVA, Judge, Before: Chief WALD and formally request denied the on November SILBERMAN,* Judges Circuit proof NHP submitted its of loss to Company

National Union Fire Insurance (“National Union”) QUESTIONS $597,980 paid OF and was CERTIFICATION ($640,712.38 $32,732.38 less OF LAW recovered from a deductible). third-party $10,000 bank and a by Appeals the United States Court of policy Section 14 of NHP’s with National of the District Columbia Circuit provides part: Union in relevant Appeals District of of Columbia Court any payment In the event of under this § pursuant D.C.Code Policy, Company subrogated shall be 8, 1993, argu September we heard oral rights recovery to all the insured’s of ment in National Union Fire Ins. Co. of against person organiza- therefor or Pittsburgh, Riggs Bank Pa. v. tion and the insured shall execute and D.C., Washington, Questions papers deliver instruments and and do are of District of Columbia law determinative necessary whatever else is to secure such pending appeal, questions and these rights. significant ones as to which there are no provision, assigned Pursuant to this NHP controlling precedent in the decisions of the rights against Riggs National Union all its Appeals. District of Columbia Court of agreed by and to be bound the result of the Therefore, motion, certify on our own suit. questions of law to District of Columbia against National filed this suit Appeals. Union Court and, Riggs assignee by as an virtue of Sec- questions of law to be answered are: policy, tion of the as a conventional subro- law, 1. Under District of Columbia and trial, gee of NHP. After a bench the district below, given the facts described does the Riggs complied that court found had with “Superior Equities apply Doctrine” to an process- reasonable commercial standards by assignee action an insurer as an and ing negli- was not checks and therefore subrogee conventional of its insured? that, gent. The district court further held law, 2. Under District of Columbia and despite presumption the clear in the Uniform below, given the facts described does the (“UCC”) favoring Commercial Code the de- adoption of the Uniform Commercial bank, positor against the District of Colum- Code, seq., D.C.Code 28:1-101 et ab- requires balancing equities bia law rogate modify Superior Equities or brings depositor’s insurer suit to when Doctrine? bank, by way assign- recover from a either action, Therefore, questions subrogation. ment or under the These arose an Doctrine, brought par- Superior Equities in federal court because of the as between two diversity citizenship, against ties’ innocent Union bank —National by assignee Riggs equities balanced in favor of insurance as —the subrogee Riggs. appealed, asserting conventional of the insured National Union deposi- concurring by Judge separate is attached. *A statement filed SILBERMAN Motorists Ins. Bank v. American Equities Doctrine does not Superior assignee (D.C.App.1988),did not resolve A.2d 736 sues as apply when the insurer Superior Equi opposed to an between the subrogee, apparent conflict conventional alienability of free subrogee. Doctrine and the equitable ties of the insurer’s claims. In a discussion Washington Me recognize that We suit, recognized standing bring the court to District Title Ins. Savings Bank v. chanics’ eq conventional the difference between (D.C.Cir.1933), Co., requires a F.2d 827 65 at 737 n. 1. The subrogation. See id. uitable equities when the insurance balancing of the 2d, court cited 16 Couch on Insurance subroga explicit an policy does not contain 61.2, 61.3, authority recognized §§ which brings the insurer thus provision, tion subrogee does stating that “a conventional rule, subrogee. This the equitable suit as an showing superior the the burden of not have Doctrine, apparently Equities Superior plaintiff to authorize a equity in himself as v. Home Indem good law. See Schrier still However, the insurer recovery.” because 248, (D.C.App. A.2d 251 nity Company, 273 a contract of prove the existence of failed to Riggs 1971); Indemnity Co. Traveler’s analyze proceeded to subrogation, the court (D.C.Cir.1963). Bank, 804, F.2d 804 323 the subrogation claim under equitable the however, unclear, Superi- whether the It is Washing equities” of of framework “balance applies when the insur Equities or Doctrine Security, 538 See American ton Mechanics’. subrogee, equitable brings not as an er suit open n. 1. The court thus left A.2d at 737 assignee subro- an or a conventional but as appeal, question in this the determinative Although Washington Mechanics’ gee. both a Washington applies to whether Mechanics’ equitable subrogation were and Schrier involving assignment and convention an ease claims, supporting authorities from oth some Similarly, in subrogation. Anacostia al opinions in in jurisdictions cited those er Fidelity Guaranty & Bank v. United States assign subrogation and conventional volved (D.C.Cir.1941), the insurer 455 119 F.2d See, e.g., Bank Fort Mill v. Law ments. assignee. subrogee and both a sued as (4th Ins., 313, F.2d 316-17 yers’ Title 268 But, found that the bank because the court Cir.1959) right (“[Ajssignment creates no “[cjases disallowing subroga negligent, was subroga equitable right of greater the than equal’ [citing ‘equities are Wash tion when tion.”); Surety v. Bank American of Califor point.” Id. at ington are not on Mechanics’] (9th Cir.1943) (“If nia, insurers 133 F.2d 160 456. subrogation, position is right of their have no assignments them of improved by the to not jurisdictions held that the en have Other bank.”); against see also claim insured’s abrogated or modified actment of the UCC Glazer, 405, 316 Md. 559 A.2d Bachman v. See, e.g., Superior Equities Doctrine. the (1989) (“A 365, subrogee is 370 conventional America v. Fi Accident Ins. Co. General necessarily subrogation to as a not entitled delity Deposit Maryland, 598 & Co. of equities legal right; the relative matter of (After (E.D.Penn.1984) F.Supp. balanced.”). the to be are still UCC, ‘superior equi adoption of the “the hand, District of Columbia law estab other obsolete.”); ty’ analysis past may be of the general rule that all claims are lishes the Companies v. Brotherhood Hanover Ins. assignee freely assignable, permits (D.Kan. Bank, F.Supp. State assignor. in same as the to stand 1979) (“The §at 3- provisions of the UCC Laster, 28-2303; § Flack v. See D.C.Code operate partial at least a 406 and 4-406 (D.C.App.1980). Fol 417 A2d in principles at work codification of lowing principle, the insurer should en this defense.”). surety compensated deci rights depositor, joy the same as its insured Court of of the District of Columbia sions in indisputably prevails over the bank who Although point. this Appeals are unclear on negligence. See D.C.Code the absence was decided after enactment Schrier 28:3-404, §§ 28:4-406. UCC, a automo that case involved stolen subject not Ap- bile and therefore was decision from the Court of The latest Security, In the court cited subject, Security American peals on this American UCC. analysis insurance), equities of the of own depositor’s to the balance assume the Mechanics’, risk of Washington see 538 A.2d at 737 loss—not bank’s. If the law imposes analyzed company greater the case under the on the insurance n. but UCC’s bear, depositor risk than an uninsured shifting provisions. See id. at would burden simply that will result in negligent, the bank was increased insurance 741. Because premiums Therefore, depositors. analysis a doc equities and the UCC balance trine that genesis well have its at n. rendered the same result. See id. impulse prefer post unarticulated ex Superior 1. The effect of the on the UCC local bank to a distant insurance Equities open Doctrine thus remains simply will depositors raise costs for local question law. under D.C. perspective, when viewed from an ex ante uncertainty, Given the above conflict and accordance with legal sound and economic confidently we believe that cannot decide principles. Easterbrook, Frank See H. The significant questions these as a matter of Foreword, Supreme Court: 1983 Term — District of Columbia law without further System, Court and the Economic 98 Harv. guidance from the District of Columbia Court (1984). 4, 10-12 L.Rev. Appeals. Delahanty Hinckley, See v. 845 event, In as between two faultless 1069, (D.C.Cir.1988); Penn F.2d 1072 Mut. parties, liability should rest with the one who Abramson, 1202, v. A.2d Ins. Co. 530 Life positioned is best to avoid the loss. See (D.C.App.1987). 1206 Calabresi, Guido The Decision Accidents: (1) Appended to this certification are the Approach An Allocation Nonfault judgment of the district court and the tran- Costs, (1965). 78 Harv.L.Rev. Placing 713 script ruling of the district court’s in this liability with the least-cost avoider increases ease, 17, 1992, February filed and now sub party the adopt preven incentive for that judice the Court of before United States tive measures and ensures that such mea Circuit; Appeals for the District of Columbia greatest marginal sures would have the ef (2) joint appendix and three sets the and preventing efficiency- fect on the loss. This parties, briefs of the filed the United promoting principle informs the burden-shift Appeals States Court of District of UCC, ing provisions of D.C.Code Circuit, addressing questions Columbia 28:3-406, §§ Rolling 28:4-406. See Putnam Appendix law. note: omitted from [Editor’s Co., Ladder Inc. v. Hanover Manufacturers by publication the court.] Co., 340, 611, Trust 74 N.Y.2d 547 N.Y.S.2d 904, (1989)(“By prospec 546 N.E.2d 908 SILBERMAN, Judge, concurring: tively establishing liability rules of that are fully agree certify I that we should generally not on fault based actual but on question Appeals. raised to the D.C. Court of allocating responsibility party best (for resist, however, commenting I cannot prevent by able to the loss the exercise of gratuitous hope remarks I I will which be care, only guides the UCC not commercial street) forgiven by colleagues our across the certainty in behavior but also increases indeed, peculiar, primitive, on the rather un- efficiency marketplace dispute resolu derstanding of economics that underlies the tion.”). Where both are without have of- n fault, the jurisdictions rationale a number of is better to avoid the bank able support Superior Equities fered to Doc- loss, occupies since it the better compen- trine. referred to as the Sometimes forgery stop detect the the fraud before defense, surety prem- sated that rationale is it succeeds. ised on the notion that since the insurance analysis may suggest This a different re- company paid has been to assume the risk of by perpetrated sult when the fraud is á loss, being equal, all other factors the inno- (with employee depositor dishonest preferred cent bank to the inno- should be insurer) acting fidelity op- as insurer company. cent insurance (and party posed to an unknown third insurer). indemnity palpable logic flaw in that is that the as an In the insurer acts case, argu- by employer-depositor insurance paid has been former (which ably by adopt- the theft depositor, not the bank have its better able to avoid screening personnel stringent ing more measures, recog have and courts

security See South Carolina difference.

nized this City v. Lake State Bank Charleston

Bank, 164 S.E.2d 251 S.C. Royal (1968); v. Indem. Trust Co. Louisville (1929).

Co., Ky. S.W.2d Savings Bank v.

Washington Mechanics’ (D.C.Cir. Co., 65 F.2d 827 Ins.

District Title

1933), Fi Bank v. United States Anacostia Co., Guaranty 119 F.2d 455

delity & Security

(D.C.Cir.1941), Bank and American A.2d 736 Ins. American Motorists involving cases dishon

(D.C.App.1988)are all employees or fiduciaries.

est Defender, Kramer, Federal Public

A.J. Rehearing Suggestion for filed a Petition Rehearing En Banc on behalf of defen- dant-appellee. America, STATES

UNITED Johnson, Atty., R. Ramsey U.S. John J. Plaintiff-Appellant, Corcoran, Asst. and M. Evan U.S. Fisher Attys., Opposition Appellee’s Peti- filed an Re- Rehearing Suggestion tion for PRANDY-BINETT, Pedro Jolio plaintiff-appel- hearing En Banc on behalf of Defendant-Appellee. lant. GINSBURG, EDWARDS, D.H. Before: Appeals, Court United States RANDOLPH, Judges. Circuit Circuit. District of Columbia 8, 1993. Oct. ReheaRing Appellee’s Petition FOR ON

RANDOLPH, Judge, with whom Circuit GINSBURG, Judge, concurs: D.H. rehearing charges that our petition for “effectively eviscerates the Fourth opinion “conjures up a theo- Amendment” because it probabilities’.” “Eviscer- ry of ‘conditional ate,” “conjure” strong are words. —these had they deployed, their author When strong reasoning to back supply some better Nothing appears up. of the sort them rehearing petition. There is Prandy-Binett’s assumption just hyperbole.1 more misunderstanding from a this stems thoroughly discredited in the rehearing petition each of which is consists of an 1. The entire arts, petition, government’s response do not surpassing vituperative even in the exercise repeating. charges, dissenting opinion deserve in this case. Its

Case Details

Case Name: National Union Fire Insurance Company of Pittsburgh, Pa. v. The Riggs National Bank of Washington, D.C.

Court Name: Court of Appeals for the D.C. Circuit

Date Published: Oct 5, 1993

Citation: 5 F.3d 554

Docket Number: 92-7041

Court Abbreviation: D.C. Cir.