United States Court of Appeals
         For the Eighth Circuit
     ___________________________

             No. 14-1265
     ___________________________

               Avon State Bank

     lllllllllllllllllllll Plaintiff - Appellee

                        v.

               BancInsure, Inc.

   lllllllllllllllllllll Defendant - Appellant
      ___________________________

             No. 14-2202
     ___________________________

               Avon State Bank

    lllllllllllllllllllll Plaintiff - Appellant

                        v.

               BancInsure, Inc.

    lllllllllllllllllllll Defendant - Appellee
                   ____________

 Appeals from United States District Court
 for the District of Minnesota - Minneapolis
                ____________
                           Submitted: February 10, 2015
                               Filed: June 2, 2015
                                 ____________

Before GRUENDER, SHEPHERD, and KELLY, Circuit Judges.
                        ____________

SHEPHERD, Circuit Judge.

       This action arises from an advance money scam involving a supposed multi-
million dollar estate of a deceased African businessman. Avon State Bank (Avon)
reached a settlement with two individuals who an Avon employee induced to invest
in this scheme. Avon’s insurer, BancInsure, Inc. (BancInsure), refused to provide
coverage to Avon, asserting that the terms of a Directors’ and Officers’ Liability
Policy (D&O Policy) and a separate Fidelity Bond (Bond) did not cover this event.
The district court1 granted BancInsure’s motion for summary judgment in part,
holding the D&O Policy did not provide coverage for this loss. The district court also
granted Avon’s motion for summary judgment in part, holding the Bond covered the
loss and awarding prejudgment interest to Avon. BancInsure appeals and Avon Bank
cross-appeals. We affirm.

                                          I.

      In 2007, a long-time Avon customer, Ambrose Herdering, was contacted by a
man purporting to be the son of an African associate with whom Herdering had done
business. This individual identified himself as “David Gibson” and claimed his father
had passed away, leaving a $9 million estate in Africa. He informed Herdering that
the family wanted to transfer the funds to the United States, and in particular to the

      1
      The Honorable Richard H. Kyle, United States District Judge for the District
of Minnesota.

                                         -2-
bank Herdering used, Avon. Gibson claimed the money was tied up in the
Netherlands and transferring the funds to the United States required up-front
payments of taxes and other fees. Herdering sent Gibson money for these expenses
and continued to send money as Gibson claimed problems and delays required
additional funds.

       Herdering approached Robert Carlson, an Avon Assistant Vice President and
Loan Officer, and asked for his help in transferring the estate to the United States.
Herdering promised Carlson huge returns in exchange for his help. In the summer of
2007, Carlson issued Herdering a loan from Avon and contributed $60,000 of his own
money, all of which was to be used in transferring the estate. When Carlson made the
loan to Herdering, Avon’s President, Glenn Diedrich, contacted Herdering and
expressed his concern that the estate might be a scam. Although Diedrich was aware
of the loan, he remained unaware of Carlson’s personal contribution.

       In October 2007, Gibson requested that Herdering and Carlson cover half of
a $750,000 tax on the estate. Carlson, who at this point had received no return on his
investment, expressed his concern to Herdering that the investment might be a scam,
writing in a letter: “[N]ow that this looks to be impossible, are you sure you really
know these people?” Despite Carlson’s concern, he recruited Donald Imdieke and
Mike Froseth to secure the additional funds. Carlson informed Imdieke and Froseth
of the investment opportunity, promising them they could double their money within
a matter of weeks and assuring them he was “100 percent sure that it was legit.”
Carlson led both Imdieke and Froseth to believe that Avon itself was investing the
money, rather than the men individually, by having both men write checks payable
to Avon. Froseth contributed $405,000 while Imdieke contributed $80,000.




                                         -3-
       Carlson deposited Froseth’s check and wired the money to the “Otua Auto
Company”2 account at the “Taipei Fubon Bank” in Hong Kong. This was in violation
of Avon policy that prohibited the wiring of money on behalf of individuals who were
not customers of the bank. Carlson told Avon’s Vice President and Auditor, Rose
Blascziek, that the people requesting the wire would not receive their merchandise
if Blascziek did not approve the wire. Based on this misrepresentation, Blascziek
approved the wire. Carlson held Imdieke’s check while waiting for confirmation of
the wire transfer of Froseth’s funds. He attempted to contact the bank in Hong Kong
to confirm both the transfer and the validity of the account. Despite never hearing
back from the bank, Carlson still wired Imdieke’s $80,000. Unsurprisingly,
Herdering, Carlson, Froseth, and Imdieke never received their promised returns.

        In January 2009, more than a year after Carlson wired Froseth’s and Imdieke’s
funds, Froseth and Imdieke met with Diedrich about Carlson and these transactions.
They showed Diedrich copies of their checks and demanded the return of their
money. This was when Diedrich first learned that Carlson, Froseth, and Imdieke had
invested in the scheme. He immediately notified BancInsure that he was concerned
an employee might have been stealing from the bank. Diedrich suspended Carlson
and ultimately terminated him. Avon sent both Froseth and Imdieke letters stating
that it viewed any investment the men made as related to Carlson’s personal dealings
and not involving the bank.

       Froseth and Imdieke continued to correspond with Avon and, in October 2009,
they sent a letter to Diedrich threatening litigation based on deposits made relying on
a bank officer’s misrepresentations. Diedrich emailed a copy of this letter to
BancInsure and told them he would keep them apprised of the situation. BancInsure
acknowledged the notice of a potential claim and assigned the file to a claims-
adjustment firm for investigation. Several months later, Diedrich inquired about


      2
          The court notes with interest that “Otua” is simply “auto” spelled backwards.

                                           -4-
coverage. BancInsure stated that it had not yet denied the claim as there was no claim
at that time because there was not yet any lawsuit.

       In May 2010, Froseth and Imdieke sued Avon for negligent and fraudulent
misrepresentation. BancInsure agreed to provide coverage under the D&O Policy,
rather than simply defend Avon in the action, and reserved its rights. At trial, Froseth
and Imdieke dropped the claim for negligent misrepresentation and proceeded only
with the fraudulent misrepresentation claim, alleging Avon was vicariously liable for
Carlson’s conduct. In January 2012, a jury returned a verdict in favor of Froseth and
Imdieke, finding Carlson had breached his duty to disclose material information and
had done so while in the scope of his employment with Avon. The court entered
judgment against Avon and, while post-trial appeals were pending, the parties settled.
Avon then gave BancInsure a Sworn Statement in Proof of Loss.

      After the jury verdict, BancInsure informed Avon that its D&O Policy did not
cover the loss because the policy excluded liability for fraudulent acts. BancInsure
requested that Avon reimburse it for defense costs. Avon challenged the denial of
coverage, asserting that the policy covered the judgment and defense costs and that
the Bond also covered the loss.

       Avon commenced this suit on October 5, 2012, asserting claims against
BancInsure for breach of contract under both the D&O Policy and the Bond, for
breach of implied covenant of good faith and fair dealing, and seeking declaratory
judgment. BancInsure counterclaimed for breach of contract and declaratory
judgment. Both parties filed motions for summary judgment on Avon’s claims. The
district court granted both motions in part and denied them in part, ultimately holding
that the Bond covered the loss and the D&O Policy did not cover the loss. The
district court also awarded Avon prejudgment interest.




                                          -5-
       BancInsure appeals, asserting that the district court erred in granting summary
judgment to Avon and holding that the Bond covered the loss. BancInsure also
asserts that the district court erred in its calculation of prejudgment interest. Avon
cross-appeals, asserting that the district court erred in granting summary judgment to
BancInsure and holding that the D&O Policy did not cover the loss.

                                          II.

      We first consider whether the district court erred in granting summary
judgment in favor of Avon by holding that the Bond covered Avon’s losses. We
review a district court’s grant of summary judgment de novo. Watkins Inc. v.
Chilkoot Distrib., Inc., 719 F.3d 987, 991 (8th Cir. 2013). We will affirm the grant
of summary judgment “if the movant shows that there is no genuine dispute as to any
material fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ.
P. 56(a).

       BancInsure argues that the district court erred because the jury verdict against
Avon did not constitute a “direct” loss under the terms of the Bond. The Bond
requires BancInsure to indemnify Avon for any “[l]oss resulting directly from
dishonest or fraudulent acts committed by an Employee acting alone or in collusion
with others.” BancInsure first argues that the loss was not “direct” because the Bond
only afforded coverage for first-party losses and not for third-party losses.
BancInsure contends that the language of the Bond does not encompass the situation
that occurred here, where third parties suffered the loss resulting from employee
dishonesty, rather than Avon itself suffering depletion of its own funds through
employee actions like embezzlement. We disagree. First, under the loosely worded
language of the Bond, no such limitation on third-party losses appears. The language
of the Bond simply provides coverage for a loss “resulting directly from dishonest or
fraudulent acts committed by an Employee,” which precisely describes the loss Avon
suffered through Carlson’s fraudulent conduct. Second, under Minnesota law, which

                                         -6-
governs this diversity action, courts recognize a distinction between an insured’s loss
of third-party property in its possession and theft committed against a third party by
the insured’s employee, allowing fidelity bond coverage for the former. See Cargill,
Inc. v. Nat’l Union Fire Ins. Co. of Pittsburgh, No. A03-187, 2004 WL 51671, at *11
(Minn. Ct. App. Jan. 13, 2004) (unpublished) (“Although insurance typically covers
third parties, for the purposes of a fidelity bond, ‘[t]hird-party claims arise only within
this specific context: the employee acted dishonestly and property is taken from or
lost by the insureds/employer that has custody of the property.’” (alteration in
original) (quoting Aetna Cas. & Sur. Co. v. Kidder, Peabody & Co. Inc., 676 N.Y.S.
2d 559, 565 (N.Y. App. Div. 1998))); see also RBC Dain Rauscher, Inc. v. Fed. Ins.
Co., 370 F. Supp. 2d 886, 890 n.3 (D. Minn. 2005) (“Cargill’s claim was based not
on loss of third-party property in its possession, as [this] claim is, but rather on theft
committed against third-parties by its employees. The Cargill court . . . grasped the
crucial difference, observing that the former is covered by fidelity insurance while the
latter is not.” (internal citations and quotation marks omitted)). Here, the Bond
provides coverage because Avon suffered the loss of third-party property in its
possession when Carlson wired Froseth’s and Imdieke’s funds from Avon to an
unverified Chinese bank account. We therefore conclude this loss falls within the
coverage of the Bond, in accordance with Minnesota law.

        Second, BancInsure argues that the loss was not “direct” because Avon did not
own or hold the funds and was not legally liable for them. The language of the Bond
provides coverage for property “held by the Insured in any capacity” or “for which
the Insured is legally liable.” BancInsure maintains that Avon merely served as a
conduit for the funds and thus did not satisfy the requirement that the funds be held
by Avon for the Bond to cover the loss. We disagree. Avon held the funds, even if
it did so fleetingly. In its legal context, “hold” means “to possess by a lawful title.”
Black’s Law Dictionary 800 (9th ed. 2009). Avon possessed Froseth’s and Imdieke’s
funds by a lawful title. Carlson solicited the money from Froseth and Imdieke,
represented that Avon would be handling the money, obtained checks made payable

                                           -7-
to Avon, deposited the checks into Avon’s accounts, and wired the money out of
Avon’s accounts. This is sufficient to show that Avon held the funds for the purposes
of Bond coverage, even if Avon did not hold the funds for an extended period of time.
BancInsure urges us to adopt the definition of “held” from other jurisdictions, which
have decided that an insured holds property when it exercises some degree of care,
custody, or control of the funds, either by physical possession or some other manner.
See, e.g., Loeb Props., Inc. v. Fed. Ins. Co., 663 F. Supp. 2d 640, 646-48 (W.D. Tenn.
2009). We decline to adopt this definition and instead rely upon the plain meaning
of the word “hold.” We note, however, that even under this more stringent definition,
Avon held the funds because it had physical possession of the funds once Carlson
deposited them into Avon’s accounts. We therefore reject BancInsure’s argument on
this basis. Because we find that Avon held the funds, we need not determine whether
Avon was legally liable for them.

        Third, BancInsure argues that Avon’s liability to third parties, Froseth and
Imdieke, did not directly result from Carlson’s fraudulent acts. BancInsure asserts
that where a third party is the target of the employee’s act, the insured-employer’s
liability for a loss does not directly result from the employee’s actions. But, under
Minnesota law, a loss of third-party funds entrusted to the insured through employee
theft or fraud may be considered a loss “resulting directly from” the fraudulent acts
of an employee. See RBC Dain Rauscher, 370 F. Supp. 2d at 890 (holding liability
to a third party resulting from an employee’s fraudulent conduct under the
circumstances of this case constituted a direct loss to the insured employer); First
Nat’l Bank of Fulda, Minn. v. BancInsure, Inc., No. 00-2002 DDA/FLN, 2001 WL
1663872, at *2 (D. Minn. Dec. 21, 2001) (“If a bank employee fraudulently seeks to
benefit himself through acts that necessarily make the bank liable to a third party, the
bank suffers a loss just as if the employee had taken the bank’s funds for his own
use.” (citing First Am. State Bank v. Cont’l Ins. Co., 897 F.2d 319, 326 (8th Cir.
1990) (applying Iowa law))). The loss to Avon from Carlson’s fraudulent conduct
is a direct loss because Carlson acted fraudulently to benefit himself by protecting his

                                          -8-
interest and did so through acts which would necessarily make Avon liable to third
parties, Froseth and Imdieke.

       Fourth, BancInsure argues that Carlson did not act with “manifest intent” to
cause Avon to sustain a loss or to obtain an improper financial benefit to himself or
another. Under the terms of the Bond, the employee must commit the fraudulent act
with the requisite intent. This intent is defined as “manifest intent” “to cause the
Insured to sustain such loss” or “to obtain improper financial benefit for the
Employee or another person or entity.” Minnesota case law defines “manifest intent”
as when a person intends the natural consequences of his actions or omissions. First
Nat’l Bank of Fulda, 2001 WL 1663872, at *2 (citing Transamerica Ins. Co. v. FDIC,
465 N.W.2d 713, 716 (Minn. Ct. App. 1991) aff’d in part and rev’d in part on other
grounds, 489 N.W.2d 224 (Minn. 1992)). Here, Carlson acted with manifest intent
to obtain improper financial benefit to himself because he committed the fraudulent
acts to preserve his investment in the advance money scheme. The record is clear that
Carlson sought the investments of both Froseth and Imdieke in an attempt to protect
the $60,000 he already contributed of his own funds. This is evidenced by Carlson’s
correspondence with Herdering where he described continued plans to provide
additional funds as “risky,” but noted “[W]hat have we got to lose? Paying more tax
is better than not getting anything out of this.” We agree with the district court that
“Carlson’s actions and omissions plainly show he committed fraud in order to obtain
an improper financial benefit.”

       Finally, BancInsure argues that, even if the Bond covered this loss, Avon did
not satisfy the proof-of-loss and suit-limitations provisions. With respect to the proof-
of-loss provision, BancInsure asserts that Avon did not provide a duly sworn proof
of loss within six months of discovery, as required by the terms of the Bond. The
Bond defines discovery in two ways: “when a director [or] officer . . . first becomes
aware of facts which would cause a reasonable person to assume that a loss of a type
covered by this Bond has or will be incurred” or “when a director [or] officer . . .

                                          -9-
receives notice of an actual or potential claim in which it is alleged that the Insured
is liable to a third party under circumstances which, if true, would constitute a loss
under this Bond.”

        We agree with the district court that Avon provided a duly sworn proof of loss
within six months of the earliest date on which it could have filed a proof of loss—the
date when the exact amount of the judgment was entered, February 17, 2012. And,
even if Avon did not comply, BancInsure suffered no prejudice from any delay in
receiving proof of loss when it was well aware of the potential liability for the loss
and was defending Avon in the underlying suit. Further, even if Avon could have
provided proof of loss at an earlier date, BancInsure is estopped from asserting this
requirement because it led Avon to believe the D&O Policy covered the loss and that
pursuing coverage under the Bond was futile. Although the district court found
BancInsure waived the proof-of-loss requirement, estoppel is the more appropriate
legal principle when the basis for relieving Avon of this requirement is BancInsure’s
misrepresentation that the D&O Policy covered the loss. Compare L & H Transp.,
Inc. v. Drew Agency, Inc., 403 N.W.2d 223, 227 (Minn. 1987) (explaining that
estoppel is appropriate when an insurer makes a misrepresentation upon which
another party detrimentally relies and it would be “unjust, inequitable, or
unconscionable” to allow the insurer to assert the defense), with Reliance Motor Co.
v. St. Paul Fire & Marine Ins. Co., 206 N.W. 655, 656 (Minn. 1926) (“[W]aiver may
be inferred from any words or conduct of the insurer’s authorized officers or agents,
evincing an intention on the part of the insurer not to insist on compliance with the
requirements of the policy in respect to proofs of loss, and calculated to lead the
insured to believe that they will not be insisted on.”). Avon relied upon BancInsure’s
representation that the D&O Policy covered the loss to its detriment by failing to
pursue coverage under the Bond. We therefore hold that BancInsure is estopped from
asserting this requirement as a basis for denying coverage under the Bond.




                                         -10-
       With respect to the suit-limitation provision, BancInsure asserts that Avon did
not commence the action within two years of the loss, only initiating this action in
October 2012 when it was first aware of the loss, at latest, in October 2009. The
district court determined BancInsure was estopped from asserting this defense. We
agree. See L & H Transp., 403 N.W.2d at 227 (explaining estoppel is appropriate to
bar an insurer from asserting time-limitation defense when insurer makes
misrepresentations upon which the insured relies to its detriment). Estoppel is
appropriate here for the same reasons it is appropriate with respect to the proof-of-
loss requirement: BancInsure misrepresented to Avon that it would provide coverage
under the D&O Policy and Avon relied upon this misrepresentation to its detriment
by not pursuing coverage under the Bond. We therefore conclude that the district
court did not err in granting summary judgment in favor of Avon on the basis that the
Bond covered the loss.

                                         III.

       Because we conclude that the district court did not err in holding that the Bond
covered Avon’s loss and the Bond provides complete coverage, we need not consider
Avon’s cross-appeal that the district court erred in granting summary judgment in
favor of BancInsure on the basis that the D&O Policy did not cover Avon’s loss. See
Cross-Appellant’s Br. 19 n.4 (“Affirming the district court’s ruling concerning the
Bond in all respects would moot Avon’s cross-appeal.”).

                                         IV.

       We next consider whether the district court erred in its calculation of
prejudgment interest awarded to Avon in its order on both parties’ Rule 59(e) motions
to alter or amend the judgment. We review a district court’s ruling with respect to a




                                         -11-
Rule 59(e) motion for abuse of discretion.3 Perkins v. U.S. West Commc’ns, 138
F.3d 336, 340 (8th Cir. 1998). A district court abuses its discretion when it relies
upon clearly erroneous factual findings or legal conclusions. Id. BancInsure argues
that the district court erred by calculating prejudgment interest from the date Avon
requested indemnification, rather than from the date Avon actually paid the settlement
and defense costs, and thus allowed Avon to recover more than it was entitled to.

      Under Minnesota Statute § 60A.0811:

      [a]n insured who prevails in any claim against an insurer based on the
      insurer’s breach or repudiation of, or failure to fulfill, a duty to provide
      services or make payments is entitled to recover ten percent per annum
      interest on monetary amounts due under the insurance policy, calculated
      from the date the request for payment of those benefits was made to the
      insurer.


      3
        The parties disagree on the standard of review. We note that our court has
applied both an abuse-of-discretion and de novo standard of review to Rule 59(e)
motions. Compare Roudybush v. Zabel, 813 F.2d 173, 178 (8th Cir. 1987) (citing
Harris v. Ark. Dep’t of Human Servs., 771 F.2d 414, 416-17 (8th Cir. 1985))
(applying abuse-of-discretion standard of review to Rule 59(e) motion), with
Computrol, Inc. v. Newtrend, L.P., 203 F.3d 1064, 1069-70 (8th Cir. 2000) (applying
de novo review to subject of Rule 59(e) motion). But “when faced with conflicting
panel opinions, the earliest opinion must be followed, as it should have controlled the
subsequent panels that created the conflict.” Mader v. United States, 654 F.3d 794,
800 (8th Cir. 2011) (en banc) (internal quotation marks omitted). We find no cases
applying a de novo standard of review that predate our cases applying an abuse-of-
discretion standard. As such, we review this challenge to the Rule 59(e) motion for
abuse of discretion. We note, however, that “where the Rule 59(e) motion seeks
review of a purely legal question, ‘[l]ittle turns . . . on whether we label the review of
this particular question abuse of discretion or de novo, for an abuse-of-discretion
standard does not mean a mistake of law is beyond appellate correction.’” Henley v.
Brown, 686 F.3d 634, 639 (8th Cir. 2012) (alterations in original) (quoting Koon v.
United States, 518 U.S. 81, 100 (1996)).

                                          -12-
Notably, the statute does not contain an “as otherwise provided by contract”
exception that other prejudgment interest statutes under Minnesota law contain. See,
e.g., Minn. Stat. § 549.09 (“Except as otherwise provided by contract . . . preverdict
. . . interest on pecuniary damages shall be computed as [follows.]”).

        The district court did not err in calculating prejudgment interest from the date
when Avon first requested indemnification—January 12, 2012. The lack of an
“except as otherwise provided by contract” exception in the language of Minnesota
Statute § 60A.0811 renders BancInsure’s argument that the language of the Bond
dictates when prejudgment interest is to be assessed irrelevant. Further, case law
from the District of Minnesota supports the conclusion that the language of the statute
itself is unambiguous and should be applied as written. See Owatonna Clinic-Mayo
Health Sys. v. Med. Protective Co. of Fort Wayne, Ind., 714 F. Supp. 2d 966, 969 (D.
Minn. 2010) (“The court determines that if the Minnesota Supreme Court were to
interpret § 60A.0811, it would find that the statute is plain and unambiguous.”). And
our court has recognized the possibility of overcompensation when prejudgment
interest is awarded pursuant to Minnesota law. See Marvin Lumber & Cedar Co. v.
PPG Indus., Inc., 401 F.3d 901, 918 (8th Cir. 2005) (“The prevailing party is fully
compensated (indeed, more than fully compensated when preverdict interest is
ordered on damages that were not incurred when suit was filed).”). All of these
factors support the conclusion that the district court did not err in its calculation of
prejudgment interest.

                                          V.

      For the foregoing reasons, the judgment of the district court is affirmed.
                      ______________________________




                                         -13-
