An Alaska federal court recently dismissed a construction company’s lawsuit, accusing a D&O insurer of bad faith refusal to provide coverage for an email spoofing scheme that resulted in nearly $2 million in fraudulent wire transfers. Alaska Frontier Constructors, Inc., v. Travelers Cas. and Sur. Co. of Am., No. 3:24-cv-00259 (D. Alaska, Nov. 11, 2024). While the case was voluntarily dismissed before the D&O insurer responded to the complaint, the policyholder’s allegations tell a familiar story and highlight several areas of dispute that companies face when navigating the fallout from cyber incidents.

Background
Alaska Frontier Constructors, Inc. (AFC) experienced a 2023 cyber incident where an imposter tricked AFC into wiring $1.9 million into a fraudulent bank account via email. AFC’s CFO received an email that appeared to have been sent by the CFO of another company, Kuukpik, whom AFC worked closely with. The spoofed email asked when a payment would be made for money owed to Kuukpik by Nanuq, a wholly owned subsidiary of Kuukpik that AFC worked with closely on many projects.

Reprinted courtesy of Geoffrey B. Fehling, Hunton Andrews Kurth LLP and Madalyn “Mady” Moore, Hunton Andrews Kurth LLP

Mr. Fehling may be contacted at gfehling@hunton.com
Ms. Moore may be contacted at mmoore@hunton.com