N O T FO R PUB L ICAT IO N UNITED STATES C OUR T OF APPEALS FOR THE NINTH C IR C UIT
PESTM ASTER

SER V IC ES, INC ., a C a l ifornia C orporation, Pla i ntiff - Appe lla

nt,
v. TR AVELER S C A SUALTY AND SURETY C OM PANY OF AM ER IC A, a C onne c t ic ut C orporation,

De fe nda nt - Appe lle e . No. 14-56294 D.C . No. 2:13-c v-05039-JFW
M R W
M EM O R ANDUM *

Appe a l from

the Unite d

Stat e s Distric t C ourt for the C e ntra l Distric t of C a lifornia John F. W a lte r, Distric t Judge , Pre siding Argue d a nd Subm itte d July

8, 2016 Pa sa de n a , C a l ifornia B e fore : VANASKIE, ** M UR GUIA, a nd WA TFORD, C i rc uit Judge s . 

# FIL ED JUL 29 2016 M OLLY C. DW Y ER, CLERK U
. S
. CO URT O F APPEALS

* This disposition is not a ppropria te for public at ion a

nd is not pre c e de nt e xc e pt a s provide d

by Ninth C irc uit R

ule 36-3.
** The Honora

ble Thom a s I. Va

na skie , Unite d Stat e s C i rc uit Judgefor the U .S. C ourt of Appe a ls for the Third C irc u it, sitting by de s igna tion.Pa ge 2 of 3

The distric t c ourt gra

nte d sum m ary judgm e nt to Tra

ve le rs C a sua lty

and Sure ty C om pa ny on the ground tha

t Pe stm a ste r’ s losse s we re not c ove re d unde r its C rim e Polic y . Pe stm a s te r a ppe a ls this de c ision, a l le ging c ove ra ge unde r two provisions. First, Pe stm a ste r a

rgue s tha t the tra nsfe r of funds from

its ba nk a c c ount to Priority 1’ s ba nk a c c ount is c ove re d by

the Funds Tra

nsfe r Fraud provision. The distric t c o urt found tha

t t his provision “ doe s not c ove r a uthoriz e d or va l id
e le c tronic tra

nsa c tions . . . e v e n though they are , or m ay

be , a ssoc iate d with a fraudule nt sc h e m e .” W e a gre e tha t the re is no c ove ra g e unde r this c l a use whe n the transfe rs we re e xpre ssly

a uthoriz e d. Se c ond, Pe stm a s te r se e ks c ove ra ge unde r the C om pute r Fraud provision. The Polic y

de fine s C om

pute r Fraud a s “ [t] he use of a ny c o m pute r to fra

udule ntly
c a use a tra nsfe r . . . .” W e inte rpre t the phra se “ fraudule ntly c a u se a tra n sfe r” to
re quire an una

uthoriz e d tra

nsfe r of funds. W

he n Priority 1 tra

n sfe rre d funds pursua nt to a uthoriz ation from

Pe stm a ste r, the transfe r wa s not fra udule ntly
c a use d. B e c a

use c o m pute rs a re use d in a l m ost e ve ry

busine s s tra

nsa c tion, re a ding this provision to c o ve r a l l tra n sfe rs tha t involveboth a c om

pute r a nd fra ud at som e point in the

tra n sa c tion would c onve rt this C rim e Polic y into a “ Ge ne ra l Fra

ud” Polic y . While Trave le rs c ould ha ve dra fte d this la

ngua ge m o re na

rrowly , wePa ge 3 of 3

be lie ve prote c tion a ga inst a ll fra ud is not wha

t wa s inte nde d by

this provision, a

nd not wha t Pe stm a ste r c ould re a sona bly have e xpe c te d this provision to c ove r. W e a c c ordingly a ffirm

the distric t c o urt’ s de c ision tha t no c o ve ra ge wa s a fforde d unde r the C om

p ute r Fraud provision for a ny tra nsfe rs to Priority 1 tha

t
we re a uthoriz e d by

Pe stm a ste r. Howe ve r, we re m and to thedistric t c ourt to de te rm i ne whe t

h e r the C om

pute r Fraud provision or the Funds Tra

nsfe r Fraud provision c ove rs the a lle ge dly u nauthorized tran sfe rs on M ay 23 a nd 27, 2011, tota ling $11,991.89. Ea

c h pa rty to be ar the ir own c osts. AFFIRM E D IN PART , VACAT E D IN PART , and RE M ANDE D
.