Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Accounting Resources, Inc. v. Hiscox, Inc.

United States District Court, D. Connecticut

September 30, 2016

ACCOUNTING RESOURCES, INC., Plaintiff,
v.
HISCOX, INC., and UNDERWRITERS AT LLOYD'S, LONDON, Defendants.

          RULING GRANTING MOTION TO DISMISS

          Jeffrey Alker Meyer United States District Judge

         Insurance policies commonly exclude coverage for wrongful acts such as theft or misappropriation of property. This case involves denial of an insurance policyholder's claim that arose from a theft of funds accomplished by some clever criminal computer hackers. Now the defendant insurance companies have moved to dismiss plaintiff's complaint, contending that coverage is precluded by the policy's exclusion for claims that are “based upon or arising out of the actual or alleged theft, misappropriation, commingling, or conversion of any funds, monies, assets, or property.” Doc. #21-1 at 32. Plaintiff opposes the motion to dismiss, contending that the exclusion applies only to a theft or misappropriation of funds by plaintiff or its employees, rather than to a theft or misappropriation of funds by third persons such as computer hackers. Because I conclude that the plain language of the exclusion extends to the conduct at issue in this case regardless of who has done the thieving or misappropriating, I will grant defendants' motion to dismiss (Doc. #20).

         Background

         According to the complaint, plaintiff Accounting Resources, Inc. (ARI) provided bookkeeping and accounting services for Halo International SEZC Ltd. (Halo). One of the services ARI provided was to pay Halo's vendors on Halo's behalf. In December 2014, some unauthorized persons “hacked” into Halo's email account and sent several fraudulent email requests for ARI to make certain vendor payments on Halo's behalf. ARI did so, causing Halo's bank to wire more than $500, 000 to fictional vendors at bank accounts that were presumably controlled by the hackers.

         After the loss was discovered, Halo blamed ARI, and ARI in turn filed a claim for insurance coverage with defendants. Defendant Hiscox, Inc., is an insurance agent for defendant Underwriters at Lloyd's London, which issued a professional liability insurance policy to ARI that was in effect at the relevant time in question.

         Defendants denied coverage, relying in principal part on an exclusion in the insurance policy for losses from the misappropriation of funds. Under a heading titled “Exclusions - What is not covered” and a subheading titled “Misappropriation of funds, ” the policy provides in relevant part as follows:

We will have no obligation to pay any sums under this Coverage Part, including any damages or claim expenses, for any claim:
…. 16. based upon or arising out of the actual or alleged theft, misappropriation, commingling, or conversion of any funds, monies, assets, or property.

Doc. #21-1 at 31, 32.

         After defendants denied coverage, ARI filed this lawsuit for breach of contract. Defendants have now moved to dismiss the complaint, contending that plaintiff's claim is foreclosed by the policy's misappropriation-of-funds exclusion provision.

         Discussion

         The principles governing review of a motion to dismiss under Fed.R.Civ.P. 12(b)(6) are well established. First, the Court must accept as true all factual matter alleged in a complaint and draw all reasonable inferences in a plaintiff's favor. See Johnson v. Priceline.com, Inc., 711 F.3d 271, 275 (2d Cir. 2013). But “‘[t]o survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face.'” TechnoMarine SA v. Giftports, Inc., 758 F.3d 493, 505 (2d Cir. 2014) (quoting Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)).

         The principles governing the interpretation of an insurance policy are equally well settled under Connecticut law. A court must interpret the terms of an insurance policy as it would a contract to determine at the outset if the text of the policy makes the parties' intent unambiguously clear. Only if the text of the policy is ambiguous does a court look to other evidence of the parties' intent and in light of the rule that any ambiguity in the policy must be construed in favor of the insured. See, e.g., Connecticut Ins. Guar. Ass'n v. Drown, 314 Conn. 161, 187-88 (2014).

         Here, defendants persuasively argue that the terms of the policy are clear and unambiguous. The misappropriation-of-funds exclusion extends to any claim that is “based upon or arising out of the actual or alleged theft, misappropriation, commingling, or conversion of any funds, monies, assets, or property.” Plaintiff does not dispute that the nature of the wrongful conduct at issue-involving the hackers' fraudulent payment requests and receipt of monies- amounted to a “theft” or “misappropriation” or “conversion” as those terms ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.