SKOPIL, Circuit Judge:
This matter is before the court on a number of issues. A recitation of the procedural history of this case will aid in an understanding of the court's resolution of the issues.
I.
In 1972 appellee Reliance Insurance Co. ("Reliance") issued a fidelity bond to Heritage Trust Co. ("Heritage"). The bond, under which Reliance agreed to indemnify Heritage for losses it incurred due to fraud by its employees, was canceled in 1974...
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