Computer and funds transfer fraud coverage support a "plausible" claim for loss to a policyholder's servers after its computers were hacked.

Before the court was Hartford's motion to dismiss for failure to state a claim under Federal Rule of Civil Procedure 12(b)(6), which was denied. The plaintiff provides voice and messaging services over broadband internet networks. This suit is the result of hackers outside of the plaintiff's premises using a computer to fraudulently access the plaintiff's servers for the hackers' use of those servers. The plaintiff alleged that this loss of use resulted in a financial loss of over $1 million. Hartford denied coverage for the plaintiff's claim, and the plaintiff sued for breach of contract. Hartford argued that the plaintiff did not allege tangible property related to the use of a computer was transferred outside of the plaintiff's premises and that the plaintiff has not alleged that it suffered a "loss of" or "loss from damage to" its tangible property. The court determined that the insurance agreement, relative to the terms involved, was ambiguous and ultimately found that the plaintiff's interpretation of the policy was plausible because the servers are considered "other property." Because ambiguities in the policy are resolved in favor of the plaintiff, Hartford's motion to dismiss was denied.

Case Law Alert - 3rd Qtr 2012