A federal district court in Dallas has ruled that American International Group Inc. and Beazley PLCs are not liable to compensate a property management company for money lost in a phishing program because it never technically contained the stolen funds.  The U.S. District Court in Dallas ruled that the funds were held by a third-party payment processor, according to Wednesday's ruling by RealPage Inc. v. National Union Fire Insurance Co. in Pittsburgh, PA and Beazley Insurance Co. , Inc.
San Francisco-based RealPage provides services to property owners and managers including collecting rent payments and other payments from residents and transferring them to their customers, the decision said.
Payments are made through a third-party payment processor, San Francisco-based Stripe Inc. and are held in Stripe's bank account before being forwarded.
RealPage's Commercial Crime Policy with AIG's National Union Fire Insurance, which provided $ 5 million in coverage subject to a deductible of $ 50,000, covered property owned or held by the policyholder. RealPage also had a superior loyalty and crime policy with Beazley, which had a $ 5 million liability limit.
In May 201
AIG denied cover for the loss on the grounds that RealPage had not owned or held the funds, and the company brought an action against it and Beasley. The parties agreed that whether RealPage was entitled to coverage under the Beazley policy depended on whether it was entitled to coverage under the AIG policy.
The court agreed with the insurers. "RealPage's authorization to control the transfer of funds does not imply holding the money," the decision said. "Until the funds were transferred to the bad players' accounts, the funds remained in an account with Wells Fargo Bank in Stripe's name – not RealPages," it said.
"RealPage had no rights to the funds in the account and could not withdraw these funds. … Furthermore, the funds were mixed with other Stripe users," it said.
"Under these circumstances, RealPage did not have the funds in any way; Thus, RealPage did not have the funds," the decision said, giving the insurers a summary judgment when they dismissed the case.
AIG and Beazley's lawyers had no comment, while RealPage's lawyers did not responded to a request for comment.
A federal appeals board upheld a lower court ruling earlier this month that an Axis Capital Holdings Ltd. entity was not required to reimburse a silicon manufacturer for the theft of more than $ 1 million. its policy: approved the transfer.