A request by CUMIS Insurance Society asking the Federal Minnesota District Court for a summary judgment on whether or not it has to cover $3 million St. Francis Campus Credit Union (SFCCU) alleges was embezzled, has been denied.
CUMIS attempted to rescind the Credit Union’s policy with the company.
The alleged embezzlement was discovered in January 2014, and St. Francis Campus Credit Union in Little Falls went into receivership soon after.
CUMIS argued that manager and CEO Margurite Cofell, who allegedly embezzled the money according to the Credit Union, had lied to them in a letter asking if any directors, officers or employees had knowledge of an act that would lead to a claim against the Credit Union.
Because Cofell was allegedly acting against the Credit Union and allegedly lied about that specific issue, the insurance can’t be rescinded based on that, the Credit Union claims.
Court documents also say CUMIS argued that because National Credit Union Administration Board (NCUAB) representatives cashed the check refunding premiums paid which came with a denial letter, NCUAB agreed to the rescission of the policy.
According to court documents, the letter and the check were separated during mail sorting and the check was cashed pursuant to the receivership policies of the Credit Union.
NCUAB said the person who sorted the mail did not have the knowledge to make a decision agreeing to the end of the insurance policy.
The court concluded CUMIS could not show NCUAB had completely and without a doubt agreed with the rescission.
Because of these factors, the court chose to deny CUMIS’ motion for summary judgment.
Court documents say, however, that the discovery process could change its opinion.
“It should be noted, however, that discovery has not even begun, and it may
bear out in discovery that Defendant is entitled to rescission,” The court decision said.
Discovery is when both parties are allowed to request to see evidence compiled by the other party before trial.
Representatives from CUMIS said the company does not comment on ongoing litigation and NCUAB also declined to comment.
As of publication no charges have been filed against Cofell.