FCL Fidelity Blog

Fidelity. Covered.

RealPage: U.S. District Court finds Funds lost by Third Party Payments Processor do not meet Commercial Crime Policy’s Ownership Condition

In the recent decision of RealPage Inc. v. National Union Fire Insurance Company of Pittsburgh, Pa,, the U.S. District Court for the Northern District of Texas held that funds lost by a third party payments processor as a result of a phishing scheme perpetrated on an insured did not meet the commercial crime policy’s ownership condition.  The Court found that the “hold” requirement of the condition requires possession of funds, as opposed to the ability to direct the movement of funds.  The Court also held that RealPage’s after-the-fact reimbursements to its clients did not constitute a “direct loss” under

Posco Daewoo: U.S. District Court applies Ownership Condition in rejecting Creditor’s “Reverse” Social Engineering Fraud Claim under its own Crime Policy

On November 19, 2018, the U.S. District Court for the District of New Jersey released its decision in Posco Daewoo America Corp. v. Allnex USA, Inc. and Travelers Casualty and Surety Company of America.  The decision represents a “sequel” to the Court’s 2017 decision arising out of the same claim (see our November 6, 2017 post).  The case features an interesting twist on the usual social engineering fraud claim scenario, in that it was the intended payee of the funds, not the payor, which asserted a claim under its own crime policy for recovery of funds which the payor had

Cooper Industries: Fifth Circuit applies Crime Policy’s Ownership Condition in finding No Coverage for Loss of Funds in Ponzi Scheme

Jump To: The Facts | The Ownership Condition | The Conclusion On November 20, 2017, the Fifth Circuit Court of Appeals released its decision in Cooper Industries, Limited v. National Union Fire Insurance Company of Pittsburgh, PA.  The Court applied a crime policy’s ownership condition in ruling that the insured did not have coverage for the loss of funds incurred when an investment entity to which it had provided funds in exchange for promissory notes collapsed due to the entity’s principals’ Ponzi scheme. The dispute arose out of the same Ponzi scheme that gave rise to the decision of the

Posco Daewoo: U.S. District Court rejects Creditor’s “Reverse” Social Engineering Fraud Claim under its own Crime Policy

Jump To: The Facts | The Travelers Coverage | The Conclusion On October 31, 2017, the U.S. District Court for the District of New Jersey released its decision in Posco Daewoo America Corp. v. Allnex USA, Inc. and Travelers Casualty and Surety Company of America. This case features an interesting twist on the usual social engineering fraud claim scenario, in that it was the intended payee of the funds, not the payor, which asserted a claim under its own crime policy for recovery of funds which the payor had been duped into paying to an impostor. This type of claim

3M: Eighth Circuit applies Crime Policy’s Ownership Condition in finding No Coverage for Loss of Undistributed Limited Partnership Earnings in Investment Fraud

JUMP TO: THE FACTS | THE OWNERSHIP CONDITION | THE CONCLUSION Guest Co-Author: John Tomaine On May 31, 2017, the Eighth Circuit Court of Appeals released its decision in 3M Company v. National Union Fire Insurance Company of Pittsburgh, PA. The Court affirmed the decision of the U.S. District Court for the District of Minnesota (see our October 13, 2015 post), which had applied a crime policy’s ownership condition in ruling that the insured did not have coverage for the loss of investment earnings incurred when an investment entity in which it had a limited partnership interest collapsed due to the entity’s principals’ Ponzi scheme. The

3M: U.S. District Court applies Ownership Provision in finding No Coverage for Loss of Undistributed Limited Partnership Earnings in Investment Fraud

Guest Co-Author: John Tomaine [Editors’ note: Our guest co-author John Tomaine is the owner of John J. Tomaine LLC, a fidelity insurance and civil mediation consultancy in New Jersey. After over thirty-one years with the Chubb Group of Insurance Companies, he retired as a Vice President in 2009. He is an attorney admitted in Connecticut and New Jersey, and holds a Master’s Degree in Diplomacy and International Relations. He is available to serve as an expert witness in fidelity claim litigation and to consult on fidelity claim and underwriting matters. He will be a speaker at the FSLC’s Fall 2015 meeting