A federal appellate court ruled Thursday that shoe retailer DSW Shoe Warehouse Inc. was entitled to insurance coverage of more than $6.8 million in stipulated losses and prejudgment interest from a Chartis Inc. unit in connection with a 2005 computer breach.

In an incident widely reported at the time, DSW, a subsidiary of Columbus, Ohio-based Retail Ventures Inc., reported that data on transaction information involving 1.4 million credit cards had been stolen.

The 6th U.S. Circuit Court of Appeals in Cincinnati in Retail Ventures Inc. et. al. v. National Union Fire Insurance Co. of Pittsburgh Pa., upheld a lower court's ruling that the retailer was entitled to coverage under a computer fraud rider to a “blanket crime policy” for its losses.

National Union, a unit of New York-based Chartis, had alleged in part it was not obligated to provide coverage because DSW “had not sustained loss 'resulting directly from' the theft of customer information,” and that it was an uncovered “indirect loss,” according to the ruling.

But the appellate court disagreed.

“Without ignoring that this is a commercial crime policy directed at the insured's loss and not a commercial liability policy, our task is to determine the intention of the parties from the plain and ordinary meaning of the specific language used,” said the three-judge panel's unanimous ruling.

“Despite defendant's arguments to the contrary, we find that the phrase 'resulting directly from' does not unambiguously limit coverage to loss resulting 'solely' or 'immediately' from the theft itself,” said the ruling.

“In fact,” said the ruling, a policy endorsement “provided coverage for loss that the insured sustained 'resulting from' the 'theft of any insured property by computer fraud'which includes the 'wrongful conversion of assets under the direct or indirect control of a computer system by means of … fraudulent accessing of such computer system.'”

The appellate panel also agreed with the lower court in dismissing DSW's charge of breach of the duty of good faith and fair dealing in the matter.