Businessinsurance.com reported that a court agreed with Traveler’s “which denied coverage on the basis the loss was not a “direct loss” that was “directly caused by the use of a computer” as required by the policy.” My friend Judy Greenwald wrote the article entitled “Manufacturer can’t recover spoofing email losses from insurer” about the ruling by the US District Judge, Eastern District of Michigan (Ann Arbor) in the case American Tooling Center Inc. v. Travelers Casualty and Surety Company of America which included these facts:
The vice president received emails purportedly from the vendor instructing ATC to send payment for several legitimate outstanding invoices to a new bank account, according to the ruling.
Without verifying the new banking instructions, ATC wire-transferred about $800,000 to a bank account that was not, in fact, controlled by the vendor.
The Judge granted Summary Judgment for Traveler’s since:
There was no infiltration or ‘hacking’ of ATC’s computer system,
The emails themselves did not directly cause the transfer of funds; rather, ATC authorized the transfer based upon the information received in the emails,”
No question that verification of the spoofed email would have avoided this result, but no monies would have been transferred.
This blog is made available by Foley & Lardner LLP (“Foley” or “the Firm”) for informational purposes only. It is not meant to convey the Firm’s legal position on behalf of any client, nor is it intended to convey specific legal advice. Any opinions expressed in this article do not necessarily reflect the views of Foley & Lardner LLP, its partners, or its clients. Accordingly, do not act upon this information without seeking counsel from a licensed attorney.
This blog is not intended to create, and receipt of it does not constitute, an attorney-client relationship. Communicating with Foley through this website by email, blog post, or otherwise, does not create an attorney-client relationship for any legal matter. Therefore, any communication or material you transmit to Foley through this blog, whether by email, blog post or any other manner, will not be treated as confidential or proprietary.
The information on this blog is published “AS IS” and is not guaranteed to be complete, accurate, and or up-to-date. Foley makes no representations or warranties of any kind, express or implied, as to the operation or content of the site. Foley expressly disclaims all other guarantees, warranties, conditions and representations of any kind, either express or implied, whether arising under any statute, law, commercial use or otherwise, including implied warranties of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Foley or any of its partners, officers, employees, agents or affiliates be liable, directly or indirectly, under any theory of law (contract, tort, negligence or otherwise), to you or anyone else, for any claims, losses or damages, direct, indirect special, incidental, punitive or consequential, resulting from or occasioned by the creation, use of or reliance on this site (including information and other content) or any third party websites or the information, resources or material accessed through any such websites.
In some jurisdictions, the contents of this blog may be considered Attorney Advertising. If applicable, please note that prior results do not guarantee a similar outcome. Photographs are for dramatization purposes only and may include models. Likenesses do not necessarily imply current client, partnership or employee status.