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Unrepaid, Unrecoverable, or Outstanding Credit Exclusion Unenforceable\n\nPost 4731\n\nHuntington National Bank ("Huntington") sued AIG Specialty Insurance \nCompany and National Union Fire Insurance Company of Pittsburgh, \nPennsylvania (together, "AIG") alleging breach of contract and bad faith\n stemming from AIG's denial of insurance coverage for Huntington's \nsettlement of a bankruptcy fraudulent transfer proceeding brought by the\n trustee of a bankrupt company. In granting summary judgment for AIG, \nthe district court held that:\n\nIn Huntington National Bank v. AIG Specialty Insurance Co., et al., No. \n23-3039, United States Court of Appeals, Sixth Circuit (February 1, \n2024) the Sixth Circuit resolved the dispute.\n\nFACTS\n\nAIG issued to Huntington a bankers professional liability insurance \n(BPL) policy for that provided coverage up to $15 million, after a $10 \nmillion retention. Any liability exceeding the primary policy was \ncovered by an excess policy issued by National Union for the same \ncoverage period, which provided $10 million in excess coverage. The \nparties do not dispute that these policies apply to Huntington's claim.\n\nFollowing the FBI raid, creditors of Cyberco and Teleservices, both \nentirely fraudulent companies, discovered that the companies were \nbankrupt. The trustees of Cyberco and Teleservices filed adversary \nproceedings against Huntington, claiming that Huntington put its desire \nto be repaid ahead of its concerns that Watson was committing fraud and,\n by doing so, perpetuated the Ponzi scheme to its benefit and other \nlenders' detriment.\n\nThe bankruptcy proceedings were long and complex, including two trials \nand multiple opinions.\xa0 Huntington argued it was not liable for any \nrepayments before April 30, 2004, and that its liability was thus \nlimited to the $12,821,897.07 in loan repayments for which the Sixth \nCircuit had already found Huntington liable.\n\nTHE INSURANCE CLAIM\n\nThroughout the bankruptcy litigation, Huntington sent AIG several \nrequests for coverage. AIG disclaimed coverage, acknowledging that there\n was "potential coverage" under the policy because the Wrongful Acts \nalleged arose from Huntington's performance of banking services to \nCyberco, but citing\xa0 exclusions. AIG refused Huntington's claims.\n\nHuntington subsequently sued AIG. AIG also moved for summary judgment, \nasserting that Huntington's settlement payment was not a "Loss" under \nthe policy and, even if it was, Endorsements 5, 7, and 10 precluded \ncoverage.\n\nThe district court granted AIG's motion for summary judgment.\n\nANALYSIS\n\nUnder Ohio law, an insurance policy is a contract between the insurer \nand the insured. It is "well-settled" in Ohio law that, where provisions\n of a contract of insurance are reasonably susceptible of more than one \ninterpretation, they will be construed strictly against the insurer and \nliberally in favor of the insured.\n\nUnder the insurance policy, the definition of "Loss" excludes "civil or \ncriminal fines or penalties imposed by law, punitive or exemplary \ndamages . . . or matters that may be deemed uninsurable under the law \npursuant to which this policy shall be construed."\n\n\nGo to the Insurance Claims Library \u2013 \nhttp://zalma.com/blog/insurance-claims-library.