Greenwich Ins. Co. v. Media Breakaway, LLC
(C.D. Cal. July 22, 2009)
Defendants online marketing company and corporate officer were sued by MySpace Inc. for sending spam mail through MySpace users’ accounts without their knowledge through ‘phishing’. Defendants held a directors’ and liability insurance policy and an errors omissions insurance policy. Each policy excluded coverage for intentionally dishonest conduct, and claims made as a result of profit gained by the policyholder to which it was not entitled. The court held that MySpace’s claim was not covered because the arbitrator clearly found that defendants engaged in intentionally dishonest activity and obtained profits from their phishing scheme to which they were not entitled. Additionally, the court held that the California Insurance Code §533 barred coverage for losses caused by the willful act of the insured, such as defendants’ acts.
For a copy of the decision, click here
By Toni L. Frain and Joanna M. Roberto