First Federal Savings Bank v. Continental Casualty Co.
768 F. Supp. 1449 | District Court, D. Kansas | 1991
What This Case Means for Subcontractors
A bank claimed a fidelity bond covered losses from forged lien waivers on checks. The court ruled that the bond's forgery provision does cover losses from forged lien waivers printed on or attached to checks, but does not cover losses from counterfeit construction documents that don't directly affect the checks themselves. The case was sent back to the lower court to determine the specific facts about what documents were actually forged.
Key Takeaways
- •Fidelity bonds protect against forged lien waivers when they appear on or with checks, but this protection is limited to the checks themselves
- •Counterfeit construction documents (like fake AIA forms or invoices) are generally not covered by standard forgery provisions unless they directly alter the check
- •Subcontractors should verify that lien waivers are authentic before accepting them as payment discharge—forged waivers may not actually release your lien rights
Coverage extends to any loss resulting directly from a forgery or alteration on or in the checks.
Frequently Asked Question
Does a fidelity bond cover losses from forged lien waivers?
Yes, but only if the forged lien waiver appears on or is attached to the actual check. A fidelity bond's forgery provision covers losses directly resulting from forgery on the check itself. However, counterfeit construction documents that don't alter the check are typically not covered. Always verify lien waivers are genuine before accepting them.
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