3M v. National Union Fire Insurance, No. 15-3495 (8th Cir. 2017)
Annotate this Case3M filed an insurance claim to recover losses incurred on a number of investments due to fraud perpetrated by its own investment advisors. The Eighth Circuit affirmed the district court's grant of summary judgment to the Insurers, holding that the ownership requirement of Endorsement 8 applies to the Employee Dishonesty provision. Therefore, 3M does not own the stolen earnings and cannot seek coverage for the earnings under the Policy. Until the earnings were distributed to the partners, the stolen earnings were property of WG Trading, not 3M. The court explained that it is fundamental that property acquired with partnership funds is partnership property, and individual partners do not own partnership assets until the winding up of the partnership. Finally, the Employee Retirement Income Security Act (ERISA), 29 U.S.C. 1001 et seq., does not alter general commercial property rights, but merely defines the nature and scope of the fiduciary duties owed to plan participants.
Court Description: Chief Judge Smith, Author, with Loken and Colloton, Circuit Judges] Civil Case - diversity. After investment partners fraudulently diverted 3M's employee-benefit plan funds and 3M recovered its capital contribution, 3M sought coverage for the stolen earnings from its insurers. District court's holding that coverage under the Employee Dishonesty provision is limited by the ownership requirement of Endorsement 8, is affirmed. The term, "other property" necessarily denotes some form of ownership and the only reasonable construction of the provision limits coverage to insured property. The partnership interest is not property of the partners until the earnings are distributed and 3M's purported interest in the lost earnings are not property of 3M.
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