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Texas High Court Rules for Insurance Companies Covering Gold Fraud



The Supreme Court of Texas last week issued a pro-insurance ruling in issues raised in a dispute over the theft of gold coins worth more than $ 1 million where fraudulent checks were used to defraud a dealer.

Answer two. questions posed to it by a federal appellate court, the Texas High Court said on December 3 that the policy wording would be construed as an exclusion and sublimity and that the sender's alleged negligence did not permit an additional claim.

In the underlying case, Dillon Gage Inc. of Dallas v. Certain Underwriters at Lloyd & # 39 ;s Dillon Gage, a reseller of gold coins and precious metals, sent 2018 $ 549,000 of $ 549,000 and then an additional $ 6,500 and $ 50 worth of a thief who forged signatures on stolen checks to pay for the coins, after the checks were provisionally cleared.

The coins were sent to the address of the owner of the checks, but the thief redirected shipments to UPS Inc. ['Howevertheguarantorsagreedtopayonlyasmallportionofthelossastheinsurancehadaninvalidpaymentclausethatlimitedliabilityto$1

2500forpropertylosses"asaresultof"handingoverinsuredpropertyagainstfraudulentchecks

The dealer claimed. that the immediate cause of the loss was the theft of the packages, not the fake checks. The guarantors claimed that the available limits were limited because the dealer would not have sent the coins but for the payments, and therefore the loss was "a consequence of" the fraud.

In addition, the dealer claimed that the UPS's alleged negligence was a separate cause of loss and therefore the exception did not apply.

Frank Abagnale, "granted a summary judgment to the insurance companies in the matter of the wording" subsequent "and held that the alleged negligence of the UPS was not an independent cause of loss.

Dillon Gage appealed to the U.S. 5th Circuit Court of Appeals and the Court of Appeal sought a ruling from the state Supreme Court on the meaning of the policy formulation and whether the alleged negligence was an independent cause of loss.

In its reply, the Supreme Court said:

In addition, the Court said that the same "actor" used counterfeit checks as part of the overall system. [19659002] "UPS did not. Allow the thief to redirect Dillon Gage's shipments in a vacuum. Instead, the thief caused the UPS alleged negligence by using the shipping information provided by Dillon Gage against the thief's bid for the fraudulent check, "the state Supreme Court ruled.

Dillion Gage did not respond to a request for comment.

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