Principle Sols. Grp., LLC v. Ironshore Indem., Inc.

Principle Sols. Grp., LLC v. Ironshore Indem., Inc.

Opinion

 [*888]  WILLIAM PRYOR, Circuit Judge:

This appeal requires us to decide whether a loss of more than $1.7 million to scammers was covered under a commercial crime insurance policy. The loss stemmed from a sophisticated phishing scheme in which a scammer posing as an executive of Principle Solutions Group, LLC, persuaded an employee to wire money to a foreign bank account. After Principle discovered the fraud and determined that it could not recover the funds, it sought coverage under the "fraudulent instruction" provision of its policy with Ironshore Indemnity, Inc., which then denied Principle's claim. Ironshore asserted that the scammer's communications with the employee did not meet [**2]  the conditions for a fraudulent instruction under the policy and that the loss did not result directly from the alleged fraudulent instruction, as the policy required. Principle filed a complaint against Ironshore to enforce the policy. The district court concluded that the policy covered the loss and granted summary judgment to Principle. Because we also conclude that the policy unambiguously covers Principle's claim, we affirm.

I. BACKGROUND

On the morning of July 8, 2015, Principle lost over $1.7 million in a fraud  [*889]  scheme. It began at 9:10 a.m., when Loann Lien, the controller for Principle, received an email purporting to be from Josh Nazarian, a managing director of Principle. The email informed Lien that Principle had been secretly working on a "key acquisition" and asked her to wire money "in line with the terms agreed . . . as soon as possible." As for the details of the wire transfer, the email told Lien to give her "full attention" to "attorney Mark Leach," who would provide further information. Because the purported deal was not public, Lien was to "treat [the] matter with the upmost discretion and deal solely with" Leach. Lien responded to Nazarian's purported email that [**3]  she would give her "total attention" to Leach.

Lien received an email five minutes later from someone purporting to be Leach, a partner at the London-based law firm Bird & Bird. After Lien confirmed that Principle could wire the money, Leach sent Lien remittance details for a bank in China. Leach later reiterated to Lien over the phone that Nazarian approved the wire transfer.

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