PUBLISHED ON: February 21, 2020
In the early 1980s, when insurance coverage litigation was in its infancy, most practitioners expected that courts would quickly resolve the key issues. No one expected that they would still be debating basic coverage issues in 2019.
This past year did not see any decisions addressing truly novel issues. Rather, except for those involving cyber insurance, the year’s decisions brought clarity to existing issues with which litigators long have grappled.
The 11th U.S. Circuit Court of Appeals, applying Georgia law, held that a phishing loss constituted a direct loss resulting from a fraudulent transfer. Principle Sols. Grp. LLC v. Ironshore Indemnity Inc., 944 F.3d 886 (11th Cir. 2019). The meaning of “direct” has long been a source of contention.
Except for cyber insurance, the year’s decisions brought clarity to existing issues with which coverage litigators long have grappled.
Principle Solutions concerned a classic phishing case. The company’s controller received a message supposedly from the company’s managing director, advising her to wire $1.7 million pursuant to instructions that the controller would receive from an attorney.
The purported attorney then contacted the controller and gave her instructions to wire the money to a bank in China. The transferring bank, Wells Fargo, asked for verification that the wire transfer was legitimate, which the controller provided.
Wells Fargo then released the funds. The next day, the managing director told the controller that he never gave the instruction…..