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The phrase "series of related acts" in a business insurance policy was not ambiguous, according to the Supreme Court of Minnesota.

American Commerce Insurance Brokers Inc., an insurance brokerage, was covered under a business insurance policy issued by Minnesota Mutual Fire & Casualty Co. The policy covered employee dishonesty but provided that all losses caused by one or more persons or involving a single act or "series of related acts" was to be considered one occurrence. The policy limited coverage to $10,000 per occurrence less a $250 deductible. An employee of American embezzled funds by two distinct methods:

Pocketing payments received as insurance premiums, embezzling $179,201.

Issuing unauthorized payroll checks and petty cash checks to herself, embezzling $13,443 by this method. American submitted a claim to the insurer, which tendered payment of $10,000 claiming the employee's acts constituted only one occurrence. American sued. The trial court found two occurrences and awarded American $20,000. The Court of Appeals reversed, concluding the phrase "series of related acts" was ambiguous.

On appeal to the state Supreme Court, the insurer argued that the phrase at issue here was not ambiguous and, thus, there was only one occurrence, limiting coverage to $10,000. American argued, in turn, that separate wrongful acts should not be deemed part of a "series of related acts" if, as here, they occurred on separate occasions, in separate transactions, and each resulted in a separate, measurable loss to the policyholder. The court concluded the phrase was not ambiguous and was intended to encompass a continuous embezzlement in which the dishonest employee converts funds from an employer by a common scheme on a constant basis. But, the court also concluded that the two methods of embezzlement constituted two occurrences, entitling American to recover $20,000.

American Com. Ins. vs. Minn. Mut. Fire, Supreme Court of Minnesota, July 18, 1996 (BI/01/My.-$10)

These abstracts were prepared by Mayo H. Stiegler. Copies of these decisions are available by sending a $10 check payable to Mayo H. Stiegler, to Business Insurance, 740 N. Rush St., Chicago, Ill. 60611-2590. List the number for each opinion.