The Indiana Court of Appeals partially affirmed an insurance company’s first award of judgment in a computer hacking theft but reversed on the second after finding no conflict between the appellant’s deposition testimony and a statement in his affidavit.
Two metal roofing companies owned by Richard Cornett took a hit when a computer hacker stole $78,000 from their bank accounts. When Metal Pro Roofing, LLC and Cornett Restoration, LLC made claims under insurance policies that had been issued to them by The Cincinnati Insurance Company, they were denied coverage.
Cincinnati concluded that computer-hacking losses were not covered by the LLCs cited “Forgery or Alteration” and “Inside the Premises — Theft of Money and Securities” provisions of their CinciPlus Crime XC+ (Expanded Coverage Plus) Coverage.
A trial court granted summary judgment in favor of Cincinnati on all issues but one, finding that Cincinnati designated no evidence on summary judgment on the allegation that it had it deceived the LLCs. It further granted Cincinnati’s motion to strike and awarded a second summary judgement, concluding that Cornett’s statement that he “relied on the description” of a quote including language about computer hackers was “contrary to the deposition testimony at pages 81 and 82 that he did not read the policy until after the loss.”
In addressing the LLCs’ challenge of the two summary judgment orders, the appellate court first found the LLCs attempted to fit a “square peg in a round hole” in arguing that the thieves’ use of a computer to hack money involved “forgery” or “alteration” of a check, draft, promissory note, or similar written promise, order, or direction. It instead concluded that the computer hacking losses were not covered under the plain language of the “Forgery or Alteration” or “Inside the Premises” provisions.
“The LLCs do not direct us to any evidence that the person who committed the thefts was inside the LLCs’ building(s) or a bank building,” Chief Judge Nancy Vaidik wrote for the panel, affirming the first summary judgment in Metal Pro Roofing, LLC and Cornett Restoration, LLC v. The Cincinnati Insurance Company,18A-PL-2205.
However, regarding the trial court’s second summary judgment, the panel agreed with the LLCs that Cincinnati’s quotes for the Crime XC+ coverage led them to believe that computer-hacking losses would be covered if they purchased that policy.
The trial court thus erred, the appellate court determined, in finding the LLCs’ claims failed because Cornett “did not rely upon the document because it wasn’t read.”
“The trial court struck that statement on the ground that it conflicted with Cornett’s earlier deposition testimony. But that is incorrect,” Vaidik wrote. “In the portions of the deposition cited by the trial court, Cornett testified only that he did not read the Crime XC+ portions of the actual policies until Cincinnati denied the LLCs’ claims; he did not testify that he did not read or rely on the descriptions in the quotes when deciding to purchase the policies. As such, there is no conflict between Cornett’s deposition testimony and the statement in his affidavit that he ‘relied on the description’ in the quotes.”
Additionally, the appellate court addressed issues with Cincinnati’s act of not citing any authority for the proposition that a disclaimer stating “This is not a policy” in fine print neutralizes otherwise misleading quote language. It also rejected Cincinnati’s contention that it cannot be held liable for any misrepresentation because the quotes were given to the LLCs by their insurance agency, rather than by Cincinnati itself.
“Cincinnati does not cite any authority suggesting that it is free to say whatever it pleases in its quotes as long it does not deliver those quotes directly to the prospective insured,” the panel wrote. “For all of these reasons, we reverse the trial court’s second summary-judgment order and remand this matter for trial on the LLCs’ amended counterclaim.”