(Reuters) - A Minnesota federal judge sided with an insurer in a dispute with Target Corp related to settlements over its 2013 data breach, finding the retail company didn't meet the burden for showing coverage under its insurance policies.

U.S. District Judge Wilhelmina Wright in St. Paul on Monday denied Target's bid for partial summary judgment, which sought a declaration that the policies issued by ACE American Insurance Co and ACE Property and Casualty Insurance Co cover Target's settlement payments related to banks' claims over costs of replacing payment cards after the breach.

The judge granted ACE's cross-motion for summary judgment, holding that the insurance company doesn't have a duty to indemnify Target under the policies. The companies are part of The Chubb Corp.

Target, represented by Covington & Burling and Taft Stettinius & Hollister, didn't immediately respond to a request for comment. A Chubb representative said the company doesn't comment on legal matters as a matter of policy.

In 2013, Minneapolis-based Target found that a hacker had put malicious software on its computer network, allowing the hacker to steal payment card and personal contact information, according to Target's 2019 complaint against ACE. Banks sued Target for losses, including those caused by having to replace physical credit and debit cards, and Target settled for a total of about $138 million. After ACE allegedly denied coverage for the settlement liability, Target sued for breach of contract and sought declaratory judgment.

Wright in the Monday decision examined whether ACE has to indemnify Target based on the scope of two general liability policies and found the retail giant didn't satisfy the burden to show the breach "resulted in Target's legal obligation to pay damages because of the 'loss of use' of 'tangible property that is not physically injured.'"

The companies disagree on whether damages stemming from the banks' payment card claims are "based on" the loss of use of payment cards, the judge said.

Target had not shown a connection between the damages related to settling the claims for payment card costs and the value of the use of the cards, the judge said.

"For this reason, the connection between the damages claimed and the loss of use of the payment cards is insufficiently direct and, therefore, the damages claimed are not loss-of-use damages covered under the policies," the judge said.

The case is Target Corp v. ACE American Insurance Co et al, U.S. District Court for the District of Minnesota, No. 0:19-cv-02916

For Target: David Goodwin and Gretchen Hoff Varner of Covington & Burling; John Lunseth and Mira Vats-Fournier of Taft Stettinius & Hollister

For ACE: Charles Spevacek and William Hart of Meagher & Geer