J. Halfnight

The plaintiff bank brought a motion for partial summary judgment seeking a declaration that losses it sustained due to an employee's participation in a Ponzi scheme constituted a 'direct financial loss' under its fidelity bond.

The bank had settled multiple third-party claims after victims transferred funds to the bank based on fraudulent representations by the bank's employee.

The court held that the bank received the funds subject to a constructive trust, and suffered a direct financial loss when those funds were credited to unrestricted accounts controlled by the fraudster.

The court found this narrow issue of policy interpretation appropriate for partial summary judgment and granted the declaration.

The defendants brought a motion to compel the plaintiff to produce three categories of documents in its affidavit of documents.

The plaintiff argued that it was prohibited from producing these documents by United States regulatory and privacy laws, as well as US court protective orders.

The court dismissed the motion, finding that the foreign laws and orders were entitled to comity.

The court held that the plaintiff should not be compelled to violate foreign laws and directed the defendants to seek production or consent directly from the relevant US authorities or courts, with the plaintiff's reasonable cooperation.