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CT Court of Appeals upholds summary judgment verdict obtained by SGL attorneys in data-loss insurance coverage dispute


The Connecticut Appellate Court recently affirmed a summary judgment ruling obtained by Bob Laurie and Beth Ahlstrand on behalf of client Scottsdale Insurance Company (“Scottsdale”) in a case involving coverage under CGL and excess policies for a data loss incident. In the case, data tapes containing the personal information of numerous IBM employees fell out of a transport van and were stolen off the side of the road. Following the loss, IBM expended nearly $6M to protect the identity and credit of its employees. The contractors that lost the tapes reimbursed IBM for the costs incurred and brought suit against Federal Insurance Company (“Federal”) and Scottsdale seeking indemnification. The trial court granted summary judgment in favor of both insurers. Plaintiffs appealed, arguing that the trial court erred as a matter of law in interpreting the coverage afforded under the commercial general liability policy issued by Federal and the excess policy issued by Scottsdale. GL successfully blocked the appellants’ attempt to obtain direct review by the Connecticut Supreme Court, and the Connecticut Appellate Court ultimately rejected the appellate argument and affirmed the trial court’s decision in favor of the insurers. Specifically, the Appellate Court agreed with the insurers’ position that coverage was unavailable under either policy, as a matter of law, because the appellants failed to produce any evidence that a third party accessed the information on the tapes or that any IBM employee suffered any damages as result of theft – as such, there was no personal injury as required under the “Personal and Advertising Injury” coverage grant.