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THE FEDERAL INSURANCE CO. v. SMITH COUNSEL

ARGUED: Douglas Elwood Bywater, TATE & BYWATER, LTD., Vienna, Virginia, for Appellant. Edward Graham Gallagher, WICK- WIRE GAVIN, P.C., Vienna, Virginia, for Appellee. ON BRIEF: Julia A. Bitner, WICKWIRE GAVIN, P.C., Vienna, Virginia, for Appellee.

Unpublished opinions are not binding precedent in this circuit. See Local Rule 36(c).

OPINION

MOON, District Judge:

Appellant Susan M. Smith was the wife of Myron Smith, who worked for the Armed Forces Benefit Association ("AFBA") as a life insurance claims analyst. Myron Smith stole a total of $300,000 from AFBA in an insurance fraud scheme, whereby he obtained checks payable to his brother for the death of persons falsely claimed to have named his brother as beneficiary. Susan Smith is not alleged to have had knowledge of her husband’s fraudulent scheme, but a significant portion of the $300,000 was used to pay off her debts and obligations. Myron Smith was later killed in California, leaving Susan the benefi- ciary of a large life insurance policy.

Appellee Federal Insurance Company ("FIC") provided insurance coverage for the AFBA, including coverage for losses resulting from employee theft. FIC paid AFBA for its losses, and AFBA assigned all claims and rights of recovery relating to Myron Smith’s thefts to FIC.

FIC brought this conversion action against Susan Smith seeking recovery of the $300,000. The trial judge, in a non-jury trial, found that Susan Smith was liable to FIC for conversion of $229,449.24 of the $300,000 Myron Smith fraudulently obtained from the AFBA. Susan Smith seeks reversal of the trial court’s decision, asserting that

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