A Liberty Mutual Insurance Group unit must indemnify a company scammed out of more than $1.7 million in a phishing incident under its commercial crime insurance policy, says a divided appeals court, in affirming a lower court ruling.

Atlanta-based Principle Solutions Group LLC, which provides information technology services, was the victim of a sophisticated phishing scheme, in which a company official was persuaded to send more than $1.7 million to a Chinese bank account, according to Monday’s ruling by the 11th U.S. Circuit Court of Appeals in Atlanta in Principle Solutions Group LLC v. Ironshore Indemnity Inc.

In July, 2015, Principle’s controller received an email purported to be from the company’s managing director stating the company had been secretly working on a “key acquisition” and asking her to wire money, with details of the transaction to be provided by an outside attorney, according to the ruling.

Five minutes later, she received an email purporting to be from the attorney instructing her to send the funds to a Chinese bank. When the company’s bank’s fraud prevention service asked for verification the wire transfer was legitimate, she confirmed it was, and sent the money to the bank. She discovered the request was fraudulent a day later.

The company sought coverage for its loss from Liberty Mutual Insurance Group unit Ironshore, which denied coverage. Principle filed suit against Ironshore in U.S. District Court in Atlanta, which ruled in its favor. The ruling was upheld by the majority of a three-judge appeals court panel.

Among Ironshore’s arguments was that “the email instructed (the controller) only to work with (the “attorney”) to wire funds later in the day, not to wire a specific amount of money to a specific recipient,” and did not direct Principle to pay money out of its account, as its commercial crime policy coverage provision requires, said the ruling.

“This argument is unpersuasive,” said the majority opinion. “As an initial matter, we are hard pressed to construe the email as doing anything” but directing a financial institution to debit money from Principle’s account, it said.

“But even if we assume that the email needed additional details before we could fairly construe it as ‘directing’ a wire transfer, a later email from (the “attorney”) identified the amount of the wire transfer, the recipient bank and the purported beneficiary of the transfer. That email remedied any possible lack of detail,” said the ruling, in affirming the lower court’s decision.

The dissenting opinion said, “I disagree with the majority’s conclusion that the (managing principle’s) email unambiguously directed a ‘financial institution’ to transfer funds.

“Furthermore, I conclude that the bank’s intervention presents a jury question for whether Principle’s loss resulted directly from this ‘fraudulent in traction.’”

Principle attorney Scott N. Godes, a partner with Barnes & Thornburg LLP in Washington, D.C., said in a statement, “We are very pleased that the 11th Circuit agreed with the District Court that the claim is covered. We believe that the decision was correct and look forward to bringing this long-running litigation to a close for the insured.”

Ironshore’s attorney could not be reached for comment.

A successful phishing attempt against a diabetes medical supply company has led to a putative class action lawsuit filed against the company.