Before Schwelb, Farrell, and Ruiz, Associate Judges.
The opinion of the court was delivered by: Farrell, Associate Judge
Appeal from the Superior Court of the District of Columbia (Hon. A. Franklin Burgess, Jr., Trial Judge)
This appeal presents issues of interpretation of a fidelity bond and, more particularly, a settlement agreement by which the issuer of the bond, Aetna Casualty and Surety Company ("Aetna"), in return for rights of subrogation and reimbursement, paid for certain losses suffered by the appellant labor Unions (hereafter collectively "MEBA") at the hands of dishonest officers and employees. Upon suit by Aetna's successor in interest, Travelers Casualty and Surety Company ("Travelers"), to enforce its right to reimbursement, the Superior Court granted summary judgment to Travelers, though awarding it only part of the monies claimed. The primary issue on appeal is whether an "excess loss" provision incorporated into the settlement agreement operated to bar any reimbursement to Travelers until MEBA had recovered its entire losses from the wrongdoing in question, something it had not done at the time of judgment (and may never do). In the main, we affirm the judgment of the trial court, but vacate and remand for trial on one aspect of the reimbursement award.
In April 1990, Aetna issued a bond ("fidelity bond" or "the bond") to MEBA insuring it against "any loss of funds or other property which the Insured shall sustain . . . through the failure of any of the Employees covered hereunder, acting alone or in collusion with others, to discharge faithfully his duties in handling funds or other property of the Insured." The bond limits were $100,000 per employee, but excess coverage was provided for certain employees. *fn1 In June 1993, a federal grand jury charged MEBA employees DeFries, Dodson, Daulley, Schamann, Cullison, Masingo and others with racketeering, conspiracy to violate the RICO statute, mail fraud, and embezzlement. As later described by the District Court:
[t]he indictment charged that the defendants fraudulently procured their election and re-election to the Union offices that they held between 1985 and 1990; extorted allegiance to themselves and contributions to the Union's political action fund from Union members while in office; and, in March, 1988, embezzled nearly $2 million in Union assets by making bogus "severance payments" to themselves on the occasion of a merger with another maritime union. United States v. DeFries, 909 F. Supp. 13, 15 n.1 (D.D.C. 1995), rev'd on other grounds, 327 U.S. App. D.C. 181, 129 F.3d 1293 (1997).
In July 1993, MEBA filed a claim of loss with Aetna under the fidelity bond, asserting losses from both the embezzlement of severance pay and the salaries paid to the employees who had wrongfully won election and re-election. The claimed losses from the employees totaled $5,400,000. In July 1995, the defendants were convicted as charged, and the District Court subsequently listed the losses caused by several of them as follows:
DeFries: Salary - $1,590,164.00
Dodson: Salary - $738,599.00
Daulley: Salary - $614,819.00