American Southwest’s Recovery Limited by Insurance Policy Terms

American Southwest Mortgage Corp. and American Southwest Mortgage Funding Corp. can’t recover the maximum amount allowed under the insurance policy of an auditor that failed to note in three annual reports that its client was committing fraud, the Tenth Circuit said Monday.

Under the unambiguous terms of the insurance policy between Continental Casualty Inc. and the auditor, Robinson Gary Johnson & Associates PLLC, the lenders can only recover $1 million, the opinion by Judge Allison H. Eid said.

The two lenders loaned money to First Mortgage Co. on the basis of the auditor’s annual reports from 2014, 2015, and 2016. ...