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June 02, 2023
Tinkle Steals as an Authorized Representative

Theft by Authorized Representative Excluded

Barry Zalma
Jun 2, 2023

Read the full article at https://lnkd.in/gZresFZf and see the full video at https://lnkd.in/gdKPJBr4 and at https://lnkd.in/gqBMujDQ and at https://zalma.com/blog plus more than 4550 posts.

Westlake Chemical Corporation (Westlake) tendered claims to Berkley Regional Insurance Company (Berkley) and Zurich American Insurance Company (Zurich) seeking coverage for $16,000,000 in losses resulting from the payment of fraudulent invoices for shipping bags used to export Westlake’s products. After a dispute arose among the parties regarding coverage for the tendered claims, Westlake sued the insurers for breach of contract, violations of the Texas Insurance Code, and declaratory relief. The trial court granted summary judgment in favor of the insurers and the decision was appealed.

In Westlake Chemical Corporation v. Berkley Regional Insurance Company And Zurich American Insurance Company, No. 01-21-00225-CV, Court of Appeals of Texas, First District (May 25, 2023) Westlake argued the trial court erred in granting summary judgment in favor of the insurers. In two issues, Westlake argued the trial court erred by finding that (1) its loss was not covered by the insurance policy’s computer fraud clause, and (2) the insurance policy contained an exclusion that barred coverage for its loss.

BACKGROUND

Westlake manufactures polyethylene and polyvinyl chloride products, which it sells internationally. From 2007 until 2014, Westlake purchased plastic shipping bags and other supplies to export its products from John Tinkle (“Tinkle”) through his company Tinkle Management Inc. (“TMI”), a supplier of shipping bags to chemical companies. TMI delivered Westlake’s plastic shipping bags to a warehouse owned by Packwell, Inc. (“Packwell”), a plastic bagging and logistics company, and Packwell used the supplies to package and ship Westlake’s chemical products overseas. After the shipping supplies were delivered by TMI, Tinkle would submit an invoice to Westlake for payment of the supplies.

From March 2010 until October 2014, the appropriately named Tinkle submitted fraudulent invoices and supporting documentation to Westlake via email for fictitious bags that were never delivered to Packwell. Relying on these false invoices and shipping reports, Westlake paid Tinkle $16,423,941.78 for shipping bags that Tinkle never provided. Westlake did not discover Tinkle’s fraud until October 23, 2014.

In April 2017, Tinkle pleaded guilty and was sentenced to 48 months in prison and ordered to pay restitution to Westlake in the amount of $15,633,403.98.

INSURANCE CONTRACTS

Westlake purchased a Commercial Crime Insurance Policy from Berkley that provided coverage of $10,000,000 for each occurrence of computer fraud (“Berkley Policy”) and a Crime Insurance Excess Policy from Zurich American Insurance Company that provided Westlake an additional $5,000,000 in coverage (“Zurich Policy”).

Berkley Policy

Berkley promised to “pay for loss of or damage to ‘money’, ‘securities’ and ‘other property’ resulting directly from the use of any computer to fraudulently cause a transfer of that property from inside the ‘premises’ or ‘banking premises’: a. To a person (other than a “messenger”) outside those premises; or b. To a place outside those ‘premises’.”

Zurich Policy

The Zurich Policy’s “Insuring Clause” was excess of the Berkley Policy. In no event shall coverage under this policy be broader than coverage under the Berkley Policy. After Westlake discovered Tinkle’s fraud in October 2014, Westlake tendered timely notices of its discovery and Proof of Loss Statements to Berkley and Zurich. On March 25, 2016, Berkley denied coverage for Westlake’s loss under the Berkley Policy because the loss did not result directly from the use of a computer and because it resulted from a dishonest act by an authorized representative of Westlake. The parties do not dispute that Westlake’s loss is not covered by the Zurich Policy unless the Berkley Policy also covers the loss.

The trial court ordered that Westlake take nothing on its claims against the Insurers.

Insurance Policies

An insured has the initial burden of establishing coverage under the terms of the policy.

DISCUSSION

The Insurers carried their burden to prove that coverage is excluded under the Policy. The Insurers argued that Tinkle was Westlake’s “authorized representative” and thus, whether or not the loss originated from “Computer Fraud,” Westlake’s loss is excluded from coverage based on Section D.1.c of the Berkley Policy, which excludes coverage for “Acts Of Employees, Managers, Directors, Trustees Or Representatives.”

Given the dictionary definitions of the phrase “authorized representative” can be commonly understood to mean someone who has permission to speak or act for another, or someone who is empowered to act on another’s behalf. Nothing in the Berkley Policy indicates that the phrase “authorized representative” was intended to have a technical or legal definition.

Tinkle was Westlake’s Authorized Representative

Based on the plain meaning of “authorized representative,” the Insurers were entitled to summary judgment if they conclusively established that Tinkle had permission to or was otherwise empowered to act on Westlake’s behalf.

As part of its summary judgment evidence, the Insurers submitted deposition testimony from Westlake’s Corporate Representative Christopher Anderson (“Anderson”), Westlake’s interrogatory responses, and a letter from Westlake responding to Berkley’s questions about Westlake’s loss prepared as part of the claims process. Relying on these exhibits, the Insurers argue that “Westlake admit that Tinkle was its ‘authorized representative’ because Westlake admit that it empowered [Tinkle] to act on its behalf.” Anderson’s testimony, Westlake’s interrogatory responses, and its letter to Berkley demonstrate that Westlake authorized Tinkle to manage its shipping supplies, to order additional shipping bags for Westlake, and to ensure that Westlake received the ordered inventory.

Based on the plain meaning of “authorized representative,” the Insurers had to conclusively establish that Tinkle had permission to, or was otherwise empowered to, act on Westlake’s behalf. The court concluded that Anderson’s uncontradicted testimony that Westlake “outsourced” responsibility to Tinkle to “ensure that Westlake was receiving the [necessary] inventory” is enough to satisfy their burden.

ZALMA OPINION

Insurance covers many risks of loss but no insurance policy covers every possible risk of loss. Westlake trusted its supplier, Tinkle to act on its behalf and deliver necessary shipping materials for Westlake to deliver its product to its customers. It was cheated by someone it trusted and who acted on its behalf. The exclusion was clear and unambiguous and no matter how much Tinkle overcharged it did so with authority and was excluded. Westlake’s only hope now is to recover on the restitution order which will be difficult for Mr. Tinkle to pay as he is in prison.

(c) 2023 Barry Zalma & ClaimSchool, Inc.

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Barry Zalma, Esq., CFE, is available at http://www.zalma.com and [email protected]

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Write to Mr. Zalma at [email protected]; http://www.zalma.com; http://zalma.com/blog; daily articles are published at https://zalma.substack.com. Go to the podcast Zalma On Insurance at https://podcasters.spotify.com/pod/show/barry-zalma/support; Follow Mr. Zalma on Twitter at https://twitter.com/bzalma; Go to Barry Zalma videos at Rumble.com at https://rumble.com/c/c-262921; Go to Barry Zalma on YouTube- https://www.youtube.com/channel/UCysiZklEtxZsSF9DfC0Expg; https://creators.newsbreak.com/home/content/post; Go to the Insurance Claims Library – https://zalma.com/blog/insurance-claims-library.

Subscribe and receive videos limited to subscribers of Excellence in Claims Handling at locals.com https://lnkd.in/gfFKUaTf.

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00:10:21
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August 27, 2026
Offer Made and Accepted Creates Enforceable Contract

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Posted on August 26, 2026 by Barry Zalma

See the full video at https://lnkd.in/g-ZtsSgK and at https://lnkd.in/ghMBdYWR
A Contingent Offer Accepted Ends the Dispute

In Farmers Insurance Exchange, a California Reciprocal Insurance Exchange,  The Superior Court For The County Of San Bernardino, Kathleen Ann Wood, E087128, California Court of Appeals, (July 9, 2026) Farmers Insurance Exchange insured Doyle Archer under an automobile policy with bodily injury limits of $15,000 per person and $30,000 per accident.

FACTUAL BACKGROUND

Archer rear-ended Kathleen Ann Wood at a red light, causing Wood to assert a bodily injury claim against him. Wood’s counsel sent Farmers a pre-litigation settlement demand offering to resolve Wood’s claim for the available policy limits, stating that if the $100,000 demand exceeded the policy, the offer was for the policy limits.

Farmers timely responded in writing, agreed to pay Wood the $15,000 per-person policy limit, and provided the requested ...

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August 26, 2026
Offer Made and Accepted Creates Enforceable Contract

Policy Limits Demand Accepted Settles Claim

Post 5434

Posted on August 26, 2026 by Barry Zalma

See the full video at https://lnkd.in/g-ZtsSgK and at https://lnkd.in/ghMBdYWR
A Contingent Offer Accepted Ends the Dispute

In Farmers Insurance Exchange, a California Reciprocal Insurance Exchange,  The Superior Court For The County Of San Bernardino, Kathleen Ann Wood, E087128, California Court of Appeals, (July 9, 2026) Farmers Insurance Exchange insured Doyle Archer under an automobile policy with bodily injury limits of $15,000 per person and $30,000 per accident.

FACTUAL BACKGROUND

Archer rear-ended Kathleen Ann Wood at a red light, causing Wood to assert a bodily injury claim against him. Wood’s counsel sent Farmers a pre-litigation settlement demand offering to resolve Wood’s claim for the available policy limits, stating that if the $100,000 demand exceeded the policy, the offer was for the policy limits.

Farmers timely responded in writing, agreed to pay Wood the $15,000 per-person policy limit, and provided the requested ...

00:08:28
July 22, 2026
The Real Cost of Fraud

The Largest Residential Burglary of All Time
Post 5407

Fraud & the Fear of Bad Faith Suits
Posted on July 22, 2026 by Barry Zalma

See the full video at https://lnkd.in/gWQQEySW and at https://lnkd.in/gyhdK6wv

This is a Fictionalized True Crime Story of Insurance Fraud explaining why Insurance Fraud is a “Heads I Win, Tails You Lose” situation for Insurers. The story is one of a collection designed to help to Understand How Insurance Fraud in America is Costing Everyone who Buys Insurance Thousands of Dollars Every year and Why Insurance Fraud is Safer and More Profitable for the Perpetrators than any Other Crime.

This is a Fictionalized True Crime Story of Insurance Fraud explaining why Insurance Fraud is a “Heads I Win, Tails You Lose” situation for Insurers. The story is one of a collection designed to help to Understand How Insurance Fraud in America is Costing Everyone who Buys Insurance Thousands of Dollars Every year and Why Insurance Fraud is Safer and More Profitable for the Perpetrators than any Other Crime.

After ...

00:12:33
September 04, 2026

Qui Tam Relators are not officers of the United States

Posted on September 4, 2026 by Barry Zalma

Attempt to use Constitution to Stop a Qui Tam False Claims Act Case

Post 5486

FCA’s Qui Tam Provisions do not Violate the Appointments Clause.

In United States Of America, Clarissa Zafirov, ex rel; Dr. v. Florida Medical Associates, LLC, d.b.a. Vipcare, Physician Partners, LLC, Anion Technologies, LLC, Freedom Health, Inc., Optimum Healthcare, Inc., Physician Partners Specialty Services, LLC, et al., No. 24-13581, United States Court of Appeals, Eleventh Circuit (September 1, 2026).

The False Claims Act (“FCA”) allows the Attorney General to bring civil suits against perpetrators of fraud against the government. This case involves another portion of the FCA-the qui tam provisions-which allow people, called relators, who have knowledge about fraud against the government to pursue a case against the perpetrator of the fraud.

Dr. Clarissa Zafirov filed a qui tam action under the False Claims Act on behalf of...

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September 03, 2026
Res Judicata Produces Certainty

Posted on September 3, 2026 by Barry Zalma

You Only Get One Chance to Sue

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In David Cromp v. Johnny Harkrider, Monique Harkrider, and their Marital Community, dba Able Plumbing Plus, No. 61678-5-II, Court of Appeals of Washington, Division 2 (August 25, 2026) David Cromp hired Able Plumbing Plus in 2018 to install plumbing, including two toilets, at his residence. In 2019, both toilets allegedly leaked, causing damage. Insurance claims were submitted through Able’s contractor policy, but the insurer eventually denied the claims.

Cromp sued Able in 2022 for breach of contract based on the allegedly defective toilet installation. During that case, Cromp attempted to add claims related to Able’s conduct during the insurance claim process, including fraud, bad faith, tortious conduct, and bond-related claims, but the superior court denied leave to amend. The 2022 breach-of-contract claim was later dismissed with prejudice on summary judgment as time-barred.

On the same day the 2022 case was dismissed, Cromp filed a ...

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September 02, 2026
A Charge of Insurance Fraud is not Grounds for Deportation

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Post 5483

Posted on September 2, 2026 by Barry Zalma

Over Staying Visa & Charge of Insurance Fraud Still Entitled to Habeas Relief and a Bond Hearing

In Hernan Guillermo Palomino-Crespo v. Warden, Glades County Detention Center et al., No. 2:26-cv-02322-SPC-NPM, United States District Court, M.D. Florida, Fort Myers Division (August 26, 2026) Hernan Guillermo Palomino-Crespo’s Amended Petition for Writ of Habeas Corpus, the government’s response and Palomino-Crespo’s reply.

FACTUAL BACKGROUND

Palomino-Crespo is a native and citizen of Colombia who lawfully entered the United States on a B-2 non-immigrant visa on February 24, 2017. He resides in Miami, Florida with his wife and two minor children, owns and operates a residential restoration and remodeling business, and files U.S. tax returns.
On June 4, 2026, the State of Florida charged Palomino-Crespo with insurance fraud.

Palomino-Crespo claimeds he did not meet the requirements for mandatory detention under § ...

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