The Texas Supreme Court has issued a proinsurer ruling in a case over coverage for the theft of gold coins worth more than $1 million in which fraudulent checks were used to scam a dealer.  The case is Dillon Gage Inc. v. Certain Underwriters at Lloyds Subscribing to Policy No. EE1701590, No. 21-0312, 2021 Tex. Lexis 1125 (Dec. 3, 2021).

The Texas high court was handed two certified questions by a federal appeals court. In answering those questions, the court said that the policy wording should be interpreted to mean that an exclusion and a sublimit applied and that the alleged negligence of the third party that shipped the goods did not allow for an additional claim.

In 2018, Dillon Gage Inc., a gold coin and precious metal dealer, sold $549,000 worth of gold coins to a thief posing as a person called Kenneth Bramlett. The thief paid with a stolen check and forged Bramlett's wife's signature. The check provisionally cleared, and Dillon Gage shipped the coins to Bramlett's home address, but it sent the tracking information to the thief's email address. After UPS retrieved the package from Dillon Gage, the thief entered the shipment tracking information into UPS's online system and rerouted the shipment. The thief requested that UPS hold the coins at a facility for pickup. Dillon Gage claims that it instructed UPS to not reroute shipments without Dillon Gage's consent.