Segal McCambridge Insurance Coverage Team Wins Dismissal of Bank Complaint Seeking Recovery of Insurance Proceeds Based on the Uniform Commercial Code


July 16, 2012

In a case involving complex commercial issues, Segal McCambridge attorneys recently obtained dismissal of both counts brought against the firm's client, the Hanover Insurance Group, in a case involving a damaged hotel roof in Minnesota.

During the early adjustment of a commercial property insurance claim, Hanover issued two "advance" checks totaling $350,000 to assist its insured, Grand Rios Investment LLC, following claimed damage to its hotel & water park roof in December 2010. Pursuant to the insurance policy's "loss payee clause," the checks were issued to multiple payees, including the insured and Northeast Bank (the holder of the mortgage). Grand Rios representatives took receipt of the checks and deposited them with Wells Fargo Bank without first obtaining Northeast Bank's endorsement. Grand Rios subsequently has gone out of business and Northeast Bank to date has not recovered any of the funds.

Although Hanover had already paid the $350,000, Northeast Bank brought suit against Hanover attempting to apply aspects of the Uniform Commercial Code to obtain a second payment of the amount. On July 9, 2012, in the U.S. District Court for the District of Minnesota, Judge Joan N. Ericksen dismissed both counts against Hanover.

Segal McCambridge Senior Shareholder Larry Mason successfully briefed and argued the case for Hanover. He was supported by Senior Associate John Lee.