Berkshire Hathaway doesn’t have to defend the travel agency | Tech US News


A unit of Berkshire Hathaway Inc. does not have to defend a travel agency in arbitration proceedings arising indirectly from being the victim of embezzlement, a federal appeals court said Tuesday, upholding a lower court ruling.

An employee responsible for reconciling financial transactions embezzled about $1.1 million in company funds from Maitland, Fla.-based Global Travel International Inc., a travel agency that operates primarily over the Internet, according to the court’s ruling. Tuesday from the 11th U.S. Circuit Court of Appeals in Atlanta. in Global Travel International Inc. v. Mount Vernon Fire Insurance Co.

The theft left him unable to meet many financial commitments, including his payment obligations to San Mateo, Calif.-based Qualpay Inc., a credit card processor. This led to an arbitration proceeding with Qualpay claiming it was owed more than $300,000.

The Berkshire Hathaway unit issued GTI a professional errors and omissions liability insurance policy, which included an exclusion for alleged contractual liability. There was an exception to the exclusion for unintentional breach of written contracts.

In an amended lawsuit, Qualpay said the breach of contract was the result of unintentional acts.

The travel agency argued that the situation with Qualpay fell under the exclusion exception, and that the insurer must defend it.

After Mount Vernon refused to defend the travel agency, it filed suit in U.S. District Court in Orlando, Florida, seeking a declaratory judgment that the insurer must do so.

The district court ruled in favor of the insurer and was affirmed by a three-judge appeals court.

“The threshold question in this case is whether the amended language sufficiently alleges unintentional conduct. The district court found that it does not, but instead alleges only that GTU breached Qualpay’s contract because it could not afford to pay the fees owed under the agreement, a statement that amounts to a conclusory “buzzword.” We agree,” the ruling said.

“The amended language creates at most an inference as to the circumstances that created the breach,” the court said, upholding the lower court’s ruling that the exclusionary exception did not apply.

Attorneys in the case did not respond to requests for comment.


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