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Eliot M. Harris, OSB No. 116968

SEDGWICK LLP

520 Pike Street, Suite 2200

Seattle, WA 98101-4093

Telephone: 206.462.7560

Facsimile: 206.462.7561

eliot.harris@sedgwicklaw.com

Attorneys for Plaintiff TRAVELERS PROPERTY 

CASUALTY COMPANY OF AMERICA

UNITED STATES DISTRICT COURT

DISTRICT OF OREGON

PORTLAND DIVISION

TRAVELERS PROPERTY CASUALTY 

COMPANY OF AMERICA, a Connecticut 

corporation,

Plaintiff,

v.

PEAK WEB, LLC, a California limited liability 

company,

Defendant.

Case No. _______________________

COMPLAINT FOR DECLARATORY 

JUDGMENT

JURY TRIAL REQUESTED

Plaintiff Travelers Property Casualty Company of America (“Travelers”) alleges as 

follows:

PARTIES

1. Travelers is an insurance company incorporated in the State of Connecticut, with 

its principal place of business in Hartford, Connecticut.

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2. Peak Web, LLC (“Peak Web”) is a California limited liability company, with its 

principal place of business in Tualatin, Oregon. According to public records, Jeffrey Papen is 

the sole member of Peak Web, and is a resident of Oregon. 

JURISDICTION AND VENUE

3. This Court has subject matter jurisdiction over this action pursuant to 28 U.S.C. 

§§ 1332(a), 2201, and 2202 as this suit prays for declaratory judgment, is between citizens of 

different states, and the amount in controversy exceeds the sum of Seventy-Five Thousand 

Dollars ($75,000), exclusive of interest and costs.

4. Venue is proper in this district pursuant to 28 U.S.C. § 1391(b), in that Peak Web 

resides in Oregon, and a substantial part of the events giving rise to this claim occurred in 

Oregon, as this case seeks a declaratory judgment concerning an insurance contract that was 

delivered to Peak Web in Oregon and is to be interpreted under Oregon law.

GENERAL ALLEGATIONS

A. Peak Web’s Business and the Network Outages

5. Peak Web asserts that it specializes in the design, build, and management of 

complex network architectures that support some of the largest online businesses, including 

mobile gaming applications. Peak Web further asserts that it provided network hosting through 

its proprietary architecture to Machine Zone, Inc. (“Machine Zone”).

6. Peak Web asserts that a network outage occurred on October 27, 2015, which 

affected Peak Web’s ability to provide technology services to its clients and damaged Peak 

Web’s relationship with Machine Zone, causing Peak Web financial loss. Peak Web asserts that 

additional network outages occurred on November 1, 3, 4, and 22, 2015. The outages on 

October 27, 2015, and November 1, 3, 4, and 22, 2015 are referred to herein collectively as the 

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“Outages.” Peak Web asserts that the Outages were caused by a bug in software manufactured 

by a third party.

B. Peak Web’s Third-Party Claim to Travelers Following the Outages

7. Machine Zone filed a lawsuit against Peak Web in the Superior Court of the State 

of California, County of Santa Clara, Case No. 115CV288498, following the Outages (the 

“Machine Zone action”). Peak Web tendered its defense of the Machine Zone action to Travelers 

under policy no. ZPL-71M34306-15-13 issued by Travelers to Peak Web for the policy period 

beginning June 19, 2015 (the “Policy”). Travelers has agreed to provide a defense, and is 

providing a defense, to Peak Web under a reservation of rights in the Machine Zone action. The 

Machine Zone action is not the subject of this lawsuit, and Travelers does not, by this complaint, 

seek a judgment declaring Travelers’ and Peak Web’s rights and obligations with respect to the

Machine Zone action.

C. Peak Web’s First-Party Claim to Travelers Following the Outages

8. Peak Web claims to have incurred financial loss caused by the Outages, and it 

presented a first-party insurance claim to Travelers as a result of the claimed loss. Peak Web 

claimed that portions of its claimed loss were covered under the “Business Interruption And 

Additional Expenses Coverage,” the “Computer Program and Electronic Data Restoration 

Expenses Coverage,” and the “Crisis Management Services Expense Coverage” in the 

CyberFirst Expense Reimbursement Coverage Form of the Policy. The amount claimed by Peak 

Web is greater than the jurisdictional minimum of this Court. 

9. Travelers determined that some of Peak Web’s claimed first-party loss was not 

covered under the Policy’s CyberFirst Expense Reimbursement Coverage Form.

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10. A dispute exists between Travelers and Peak Web regarding Travelers’ and Peak 

Web’s rights and obligations under the Policy with respect to Peak Web’s insurance claim under 

the CyberFirst Expense Reimbursement Coverage Form. By this complaint, Travelers seeks a 

judgment declaring Travelers’ and Peak Web’s rights and obligations with respect to Peak Web’s 

first party insurance claim made under the Policy’s CyberFirst Expense Reimbursement 

Coverage Form.

D. The Travelers Insurance Policy

11. Travelers issued the Policy to Peak Web pursuant to all of the terms, conditions, 

limitations, exclusions, and endorsements contained therein. The coverage provided by the 

Policy includes CyberFirst Expense Reimbursement Coverage.

12. The CyberFirst Expense Reimbursement Coverage Form in the Policy provides in 

part:

SECTION I – CYBER FIRST–PARTY COVERAGES

1. Insuring Agreements

* * *

b. Crisis Management Service Expenses Coverage

(1) If Crisis Management Service Expenses Coverage is 

shown in the CyberFirst Declarations, we will 

reimburse you for loss to which this insurance 

applies that is “YOUR CRISIS MANAGEMENT 

SERVICE EXPENSES”. The amount we will pay 

for “your crisis management service expenses” is 

limited as described in Section III – Limits Of 

Insurance in your CyberFirst General Provisions 

Form.

(2) This insurance applies to “your crisis management 

service expenses” only if such expenses are:

(a) Directly attributable to a “wrongful act”

committed on or after the applicable 

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“retroactive date” and before the end of the 

policy period;

(b) First incurred by you during the policy 

period; and

(c) Reported to us during the policy period or 

within 90 days after the end of the policy 

period.

(3) Each “wrongful act” in a series of “related wrongful

acts” will be deemed to have been committed on the 

date the first “wrongful act” in that series is 

committed.

(4) Any of “your crisis management service expenses”

that are:

(a) First incurred by you after the end of the 

policy period; and

(b) “Related” to any of “your crisis management 

service expenses” which are first incurred by 

our during the policy period;

Will be deemed to have been incurred by our during 

the policy period.

c. Business Interruption and Additional Expenses 

Coverage

(1) If Business Interruption and Additional Expenses 

Coverage is shown in the CyberFirst Declarations, 

we will reimburse you for loss to which this 

insurance applies that is “your business interruption 

expenses” is limited as described in Section III –

Limits of Insurance in your CyberFirst General 

Provisions Form.

(2) This insurance applies to “your business 

interruption expenses” only if such expenses are 

directly attributable to a “computer system 

disruption” that:

(a) Occurs during the policy period; and

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(b) Any “described authorized person” knew 

about during the policy period or within 90 

days after the end of the policy period.

(3) Each “computer system disruption” in a series of 

“related” “computer system disruptions” will be 

deemed to have occurred on the date the first such 

disruption in that series occurs.

(4) A “described authorized person” will be deemed to 

know about a “computer system disruption” when 

such person first becomes aware of facts that would 

cause a reasonable person to assume that “your 

business interruption expenses” have been or will 

be incurred, regardless of when such “computer 

system disruption” occurred, even though the exact 

amount or details of such expenses may not then be 

known.

* * *

e. Computer Program and Electronic Data Restoration 

Expenses Coverage

(1) If Computer Program and Electronic Data 

Restoration Expenses Coverage is shown in the 

CyberFirst Declarations, we will reimburse you for 

loss to which this insurance applies that is “your 

restoration expenses”. The amount we will pay for 

“your restoration expenses” is limited as described 

in Section III – Limits of Insurance in your 

CyberFirst General Provisions Form.

(2) This insurance applies to “your restoration 

expenses” only if such expenses are directly 

attributable to a “computer violation” that:

(a) Occurs before the end of the policy period; 

and

(b) Any “described authorized person” knew 

about during the policy period or within 90 

days after the end of the policy period.

(3) Each “computer violation” in a series of “related” 

“computer violations” will be deemed to occur on

the date the first “computer violation” in that series 

occurs.

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(4) A “described authorized person” will be deemed to 

know about a “computer violation” when such 

person first becomes aware of facts that would 

cause a reasonable person to assume that “your 

restoration expenses” have been or will be incurred, 

regardless of when such “computer violation” 

occurred, even though the exact amount or details 

of such expenses may not then be known.

* * *

SECTION II – DEFINITIONS

* * *

4. “Business income loss” means:

a. Net profit before income taxes that you would have earned; 

or

b. Net loss before income taxes that you would not have 

incurred or would have avoided.

if there had been no “computer system disruption, but only with 

respect to your business operations that are dependent on “your 

computer or communications network”.

5. “Business interruption period of restoration” means the period of 

time that:

a. Begins with the date and time that “your computer or 

communications network” has been first interrupted by a 

“computer system disruption” and after application of the 

“waiting period”; and

b. Ends with the earlier of:

(1) The date and time “your computer or 

communications network” is restored to 

substantially the level of operation that had existed 

prior to the “computer system disruption”; or

(2) Thirty days from the date and time that “your 

computer or communications network” was first 

interrupted by such “computer system disruption”.

* * *

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7. “Computer system disruption” means the actual and measurable 

interruption, suspension or failure of “your computer or 

communications network” directly attributable to:

a. A “computer violation”; or

b. An intentional attack on “your computer or 

communications network” with protocols or instructions 

transmitted over the internet or another computer or 

communications network, which triggers the use of “your 

computer or communications network’s” resources to the 

extent that the capacity of those resources to accommodate 

“authorized users” of “your computer or communications 

network” is depleted or diminished;

provided that you are the specific target of such “computer 

violation” or intentional attack.

8. “Computer violation” means:

a. The introduction of a “computer virus” into “your computer 

or communications network”; or

b. Damage to, or destruction of, computer programs, software 

or other electronic data stored within “your computer or 

communications network” by a person who:

(1) is not authorized to access “your computer or 

communications network”; or

(2) is authorized to access “your computer or 

communications network” but uses such access to 

cause such damage or destruction.

9. “Described insured” means any person who qualifies as an insured 

under Section II – Who Is An Insured in your CyberFirst General 

Provisions Form, other than:

a. Any “independent contractor’; or

b. Any person that qualifies as an insured under Paragraph 5. 

of Section II – Who Is An Insured in your CyberFirst 

General Provisions Form.

10. “Extra expense” means necessary expenses incurred by you, with 

our prior written consent, and directly attributable to a “computer 

system disruption”, but only to the extent such expenses exceed 

your normal operating expenses, reduce “business income loss” 

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and would not have been incurred if there had been no “computer 

system disruption”.

* * *

20. “Waiting period” means the number of consecutive hours shown in 

the CyberFirst Declarations that must elapse after the actual and 

measurable interruption or suspension of your business directly 

attributable to a “computer system disruption”.

21. “Your business interruption expenses”:

a. Means the sum of “business income loss” and “extra 

expense” sustained during the “business interruption period 

of restoration”.

b. Does not include:

(1) Contractual penalties of any nature.

(2) Costs or expenses incurred to update, restore, 

replace or otherwise improve “your computer or 

communications network” to a level of functionality 

beyond that which existed before the “computer 

system disruption”.

(3) Costs or expenses incurred to identify or remediate 

computer system errors or vulnerabilities.

(4) Any other consequential loss or damage.

(5) Legal cost or legal expense of any nature.

(6) Loss arising out of liability to any person or 

organization that is not an insured.

(7) Bank interest or investment income.

(8) Fees, costs or expenses to remove software program 

errors or vulnerabilities.

* * *

23. “Your computer or communications network” means any computer 

or communications network that you rent, lease, license, or borrow 

from others, own or operate.

24. “Your crisis management service expenses”:

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a. Means the reasonable fees, costs, or expenses incurred and 

paid by you in:

(1) Retaining a public relations consultant or firm, or a 

crisis management consultant or firm; or

(2) Planning or executing your public relations 

campaign; to mitigate any actual or potential 

negative publicity generated from loss to which the 

insurance provided under any of the liability 

coverages in “your CyberFirst coverage forms” 

applies.

b. Does not include fees, costs or expenses you incur to 

comply with any law or regulation.

* * *

27. “Your restoration expenses”:

a. Means:

(1) Reasonable costs incurred by you, with our prior 

written consent, to restore, replace or reproduce 

damaged or destroyed computer programs, software 

or other electronic data stored within “your 

computer or communications network”, to the 

condition that existed immediately preceding the 

“computer violation”; or

(2) Reasonable costs incurred by you, with our prior 

written consent, to determine that such computer 

programs, software or other electronic data cannot 

reasonably be restored, replaced or reproduced.

b. Does not include:

(1) Expenses incurred as a result of the reconstruction 

of computer programs, software or other electronic 

data which you did not have a license to use.

(2) Expenses incurred to restore, replace or reproduce 

damaged or destroyed computer programs, software 

or other electronic data if such damage or 

destruction was caused by computer programs, 

software or other electronic data which you did not 

have a license to use.

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(3) Expenses incurred to design, update, improve or 

perfect the operation or performance of computer 

programs, software or other electronic data.

(4) Expenses incurred to redo the work product, 

research or analysis that was the basis of, or resulted 

in, any computer programs, software or other 

electronic data stored.

* * *

13. The Policy’s CyberFirst Network and Information Security Liability and 

Coverage Form contains the following definition:

SECTION II – DEFINITIONS

* * *

3. “Computer virus” means malicious code that is introduced through 

your web-site or “your computer or communications network”. 

Once introduced, such code may destroy, alter, contaminate or 

degrade the integrity, quality or performance of data of any 

computer application software, computer network, or computer 

operating system or related network.

* * *

CLAIM FOR RELIEF

(Declaratory Judgment)

14. Travelers incorporates by reference the allegations contained in the paragraphs 

above.

15. An actual controversy has arisen and now exists between Travelers, on the one 

hand, and Peak Web, on the other hand, concerning their respective rights and duties under the 

Policy.

16. Peak Web contends that it incurred financial loss caused by the Outages, and that 

its claimed financial loss is covered under the CyberFirst Expense Reimbursement Coverage 

Form in the Policy.

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17. Travelers contends that some or all of Peak Web’s claimed financial loss is not 

covered under the CyberFirst Expense Reimbursement Coverage Form in the Policy.

18. Travelers desires a judicial determination of its rights and duties under the Policy, 

if any, with respect to Peak Web’s claimed financial loss resulting from the Outages. 

19. A judicial determination is necessary and appropriate at this time under the 

circumstances in order that the parties may ascertain their rights and duties as aforementioned. 

Said controversy is incapable of resolution without judicial adjudication. Accordingly, Travelers 

has no plain, speedy and adequate remedy at law, and requests a declaratory judgment, adjudging 

that some or all of Peak Web’s claimed loss resulting from the Outages is not covered under the 

Policy, and that Travelers has no obligation to pay Peak Web for some or all of its claimed loss.

PRAYER FOR RELIEF

WHEREFORE, plaintiff Travelers Property Casualty Company of America prays for 

judgment against Peak Web, LLC as follows:

1. For a judgment by the Court that, by reason of the terms, conditions, exclusions and 

limitations of the Policy, some or all of Peak Web’s claimed loss resulting from the Outages is not 

covered under the Policy, and Travelers has no obligation to pay Peak Web for some or all of its 

claimed loss.

2. For costs incurred herein; and

3. For such other and further relief as the Court deems just and proper.

JURY DEMAND

Pursuant to Rule 38(b) of the Federal Rules of Civil Procedure, Travelers demands a trial 

by jury.

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DATED this 25th day of January, 2016 SEDGWICK LLP

s/Eliot M. Harris

Eliot M. Harris, OSB No. 116968

520 Pike Street, Suite 2200

Seattle, WA 98101-4093

Phone: 206.462.7560

eliot.harris@sedgwicklaw.com 

Attorneys for Plaintiff TRAVELERS PROPERTY 

CASUALTY COMPANY OF AMERICA

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