Resolution Trust Corporation, Successor to Claims of First Federal Bank, F.S.B. v. Hartford Accident & Indemnity Co.

ROSS, Senior Circuit Judge:

First Federal. Bank obtained a Standard Savings and Loan Blanket Bond from appellee Hartford Accident and Indemnity (Hartford) to protect First Federal and its depositors from a variety of losses. This policy provided broad coverage for losses arising out of dishonest, criminal or malicious acts, including, among other things, employee infidelity.

In 1987, First Federal established a mortgage banking company known as FF Mortgage, and conducted business under the name Midland Mortgage Company (Midland). First Federal owned 86% of the stock, while John Gaustad,…