Am. Tooling Ctr., Inc. v. Travelers Cas. & Sur. Co. of Am.

Am. Tooling Ctr., Inc. v. Travelers Cas. & Sur. Co. of Am.

Opinion

 [***1]  [*457]   KAREN NELSON MOORE, Circuit Judge. The plaintiff, American Tooling Center, Inc. ("ATC"), is a Michigan company that subcontracts some of its manufacturing work to a vendor  [***2]  in China. Between October 1, 2014 and October 1, 2015, it was insured by the defendant, Travelers Casualty and Surety Company of America ("Travelers"). During this time period, ATC received a series of emails, purportedly from its Chinese vendor, claiming that the vendor had changed its bank accounts and ATC should wire transfer its payments to these new accounts. After ATC had transferred approximately $834,000, it learned that the emails were fraudulent and [**2]  had been sent by a wrongdoer impersonating its Chinese vendor. ATC therefore sought coverage for its loss under its "Wrap+" business insurance policy ("the Policy"), which it had purchased from Travelers. Travelers denied the claim. ATC sued for breach of contract, both parties moved for summary judgment, and the district court granted summary judgment to Travelers. For the following reasons, we REVERSE the district court's grant of summary judgment to Travelers, grant summary judgment to ATC, and REMAND for further proceedings consistent with this opinion.

I. FACTS AND PROCEDURE

ATC is a tool and die manufacturer in Michigan that produces stamping dies for the automotive industry. R. 21-3 (Gizinski Dep. at 8) (Page ID #286). The company outsources some of its manufacturing orders. Id. at 19 (Page ID #289). Shanghai YiFeng Automotive Die Manufacture Co., Ltd. ("YiFeng"), a Chinese company, is one of ATC's vendors. Id. ATC pays its vendors in four separate payments, based on the manufacturing progress of the order. Id. at 36-42 (Page ID #293-95). In order to be paid for the work it has done, YiFeng emails ATC invoices. Id. at 45 (Page ID #296). After receiving an invoice  [*458]  from YiFeng, ATC goes through a multi-step [**3]  process before it will wire the money to YiFeng.

First, ATC employees verify that YiFeng has completed the necessary steps required by the payment schedule for the next payment. Id. at 48 (Page ID #296). Each week, ATC's Vice President and Treasurer, Gary Gizinski, reviews a physical spreadsheet of the outstanding accounts payable and determines which bills need to be paid that week. R. 21-3 (Gizinski Dep. at 59-61) (Page ID #299-300). ATC pays YiFeng and its other international vendors via wire transfer. Id. at 62 (Page ID #300). To initiate a wire transfer, Gizinski signs into a banking portal using software on his computer. Id. at 70 (Page ID #302). He manually enters the payee's name, banking information, and the amount to be wired. Id. at 69, 140 (Page ID #302, 319).  [***3]  After Gizinski submits the wire transfer request, ATC's Assistant Comptroller must log into the banking portal using his computer to approve it. Id. at 72 (Page ID #302).

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