Westlake Chemical Corporation v. Berkley Regional Insurance Company and Zurich American Insurance Company ( 2023 )

Opinion issued May 25, 2023
In The
Court of Appeals
For The
First District of Texas
————————————
NO. 01-21-00225-CV
———————————
WESTLAKE CHEMICAL CORPORATION, Appellant
V.
BERKLEY REGIONAL INSURANCE COMPANY AND ZURICH
AMERICAN INSURANCE COMPANY, Appellees
On Appeal from the 270th District Court
Harris County, Texas
Trial Court Case No. 2017-43569
MEMORANDUM OPINION
This appeal involves a commercial insurance coverage dispute. Appellant
Westlake Chemical Corporation tendered claims to Appellees Berkley Regional
Insurance Company and Zurich American Insurance Company seeking coverage for
nearly $16,000,000 in losses resulting from the payment of fraudulent invoices for
shipping bags used to export Westlake Chemical Corporation’s products. After a
dispute arose among the parties regarding coverage for the tendered claims,
Westlake Chemical Corporation sued Appellees for breach of contract, violations of
the Texas Insurance Code, and declaratory relief. Appellees counterclaimed for
attorney’s fees. The trial court granted summary judgment in favor of Appellees on
Westlake Chemical Corporation’s claims, and Appellees subsequently nonsuited
their counterclaim for attorney’s fees. This appeal followed.
Westlake Chemical Corporation argues the trial court erred in granting
summary judgment in favor of Appellees. In two issues, Westlake Chemical
Corporation argues 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.
We affirm the trial court’s judgment.
Background1
Appellant Westlake Chemical Corporation (“Westlake”) manufactures
polyethylene and polyvinyl chloride products, which it sells internationally. From
2007 until 2014, Westlake purchased plastic shipping bags and other supplies to
1
Appellant Westlake Chemical Corporation and Appellees Berkley Regional
Insurance Company and Zurich American Insurance Company filed cross-motions
for summary judgment and a joint statement of stipulated facts. This background
section is based on the parties’ stipulated facts.
2
export its products from John Tinkle (“Tinkle”) through his company Tinkle
Management Inc. (“TMI”), a supplier of shipping bags to chemical companies.2
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, 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.
On July 21, 2015, Tinkle was indicted by a federal Grand Jury for fraud and
money laundering. 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.
2
During this time, Tinkle also worked as an employee of Packwell, Inc., a plastic
bagging and logistics company that provided bagging and shipping services to
Westlake.
3
A. Insurance Contracts
Westlake purchased a Commercial Crime Insurance Policy from Appellee
Berkley Regional Insurance Company (“Berkley”) that provided coverage of
$10,000,000 for each occurrence of computer fraud (“Berkley Policy”) and a Crime
Insurance Excess Policy from Appellee Zurich American Insurance Company
(“Zurich,” collectively with Berkley, the “Insurers”) that provided Westlake an
additional $5,000,000 in coverage (“Zurich Policy”).
Berkley Policy
Section A.6 of the Berkley Policy, titled Computer Fraud (“Computer Fraud
Clause”), provides that Berkley
[W]ill 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”.
Section D.1.c of the Berkley Policy excludes coverage for certain “Acts Of
Employees, Managers, Directors, Trustees Or Representatives.” Section D.1.c
provides that coverage is excluded for
Loss resulting from “theft” or any other dishonest act committed by any
of your “employees,” “managers,” directors, trustees or authorized
representatives:
Whether acting alone or in collusion with other persons; or
4
While performing services for you or otherwise; except when covered
under Insuring Agreement A.1.
The Berkley Policy does not define the terms “computer fraud,” “from the use of
any computer,” or “authorized representative.”
Zurich Policy
The Zurich Policy’s “Insuring Clause” states:
[Zurich] shall provide [Westlake] with insurance coverage during the
Policy Period excess of the [Berkley Policy]. Coverage under this
policy shall attach only after all of the Limit(s) of Liability of [the
Berkley Policy] has been exhausted by the actual payment of loss(es).
Except as otherwise provided herein, coverage under this policy shall
then apply in conformance with and subject to the warranties,
limitations, conditions, provisions, and other terms of the [Berkley
Policy] as in effect the first day of the Policy Period, together with the
warranties and limitations 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 loss is also covered by the Berkley Policy.
5
B. Procedural History
On June 29, 2017, Westlake sued Berkley for breach of the Berkley Policy
and violations of the Texas Insurance Code. Westlake also sought declaratory
judgment against Zurich as to coverage. Westlake requested attorney’s fees pursuant
to Sections 37.009 and 38.001(8) of the Texas Civil Practice & Remedies Code, and
statutory damages pursuant to Sections 541.152(a)(1) and 542.060(a) of the Texas
Insurance Code. Berkley and Zurich counterclaimed for attorney’s fees.
The Insurers filed a traditional and no-evidence motion for summary
judgment on Westlake’s claims. They argued that Westlake’s losses were not
covered by the Berkley Policy because the policy’s Computer Fraud Clause only
covered losses incurred as a result of computer hacking. They also argued that no
evidence supported Westlake’s extracontractual claims. Westlake cross-moved for
summary judgment on its claims arguing its loss was covered because the Computer
Fraud Clause in the Berkley Policy provides coverage for losses “resulting directly
from the use of any computer” and Tinkle had submitted the fraudulent invoices and
supporting documents via email. The Insurers later filed an Amended Motion for
Summary Judgment arguing that Westlake’s losses were not covered by the
Computer Fraud Clause because the losses did not result “directly” from Tinkle’s
use of a computer to transmit the fraudulent invoices and supporting documents.
The Insurers also argued the Computer Fraud Clause provides coverage only for
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transfers of money fraudulently caused while accessing a computer without
authorization. Following a hearing on the cross-motions for summary judgment, the
trial court denied the motions, and directed the parties to prepare a Statement of
Stipulated Facts and Documents and to re-file their motions for summary judgment.
The Insurers filed an Amended Motion for Traditional and No-Evidence
Summary Judgment arguing they were entitled to summary judgment on Westlake’s
claims because Westlake’s losses had not resulted from computer hacking, Tinkle’s
unauthorized access to Westlake’s computer systems, the “use of any computer,” or
“directly” from Tinkle’s emails. The Insurers also argued that coverage was barred
by Section D.l.c. of the Berkley Policy because Tinkle was Westlake’s “authorized
representative” for purposes of ordering the shipping bags and supplies. The parties
also filed a “Joint Statement of Certain Stipulated Facts and Documents for Purposes
of Cross Motions for Summary Judgment.” Westlake also filed a Traditional Motion
for Partial Summary Judgment on its breach of contract claim against Berkley and
its request for declaratory judgment against Zurich.
The trial court held a hearing on the amended cross-motions for summary
judgment and during the hearing, the trial court denied Westlake’s motion because
the court found the Insurers proved that Tinkle was Westlake’s “authorized
representative” and thus, the Berkley Policy’s exclusion barred coverage. After
hearing further arguments, the trial court took the motions under advisement, and
7
continued the hearing to allow the parties to submit supplemental briefing
concerning the Berkley Policy exclusion.
One month later, on September 26, 2019, the trial court denied the Insurers’
Amended Motion for Summary Judgment. Then, on September 4, 2020, the trial
court granted the parties’ joint motion for rehearing. On March 15, 2021, Westlake
filed a “Traditional and No Evidence Motion for Summary Judgment on Questions
of Law for Resolution by the Court” regarding the interpretation of the Computer
Fraud Clause.
On April 20, 2021, the trial court vacated its September 26, 2019 order,
granted the Insurers’ Amended Motion for Summary Judgment, denied Westlake’s
Traditional and No Evidence Motion for Summary Judgment on Questions of Law
for Resolution by the Court, and ordered that Westlake take nothing on its claims
against the Insurers. The Insurers subsequently non-suited their counterclaim for
attorney’s fees rendering the trial court’s April 20, 2021 order a final and appealable
judgment. This appeal followed.
Summary Judgment
Although a denial of a summary-judgment motion is generally not appealable,
we may review the ruling when both parties have moved for summary judgment and
the trial court grants one motion and denies the other. Tex. Mun. Power Agency v.
Pub. Util. Comm’n of Tex., 253 S.W.3d 184, 192 (Tex. 2007); Fallon v. Univ. of Tex.
8
MD Anderson Cancer Ctr., 586 S.W.3d 58, 63 (Tex. App.—Houston [1st Dist.]
2019, pet. denied). In our review of such cross-motions, we review the summary
judgment evidence presented by each party, determine all issues presented, and
render the judgment that the trial court should have rendered. Tex. Mun. Power
Agency, 253 S.W.3d at 192; Fallon, 586 S.W.3d at 63. Each party bears the burden
of establishing that it is entitled to judgment as a matter of law. Tarr v. Timberwood
Park Owners Ass’n, 556 S.W.3d 274, 278 (Tex. 2018).
We review a trial court’s order granting summary judgment de novo. Valence
Operating Co. v. Dorsett, 164 S.W.3d 656, 661 (Tex. 2005). The movant on a
traditional motion for summary judgment has the burden of showing that no genuine
issue of material fact exists and that it is entitled to judgment as a matter of law. See
TEX. R. CIV. P. 166a(c); Mann Frankfort Stein & Lipp Advisors, Inc. v. Fielding, 289
S.W.3d 844, 848 (Tex. 2009). If the movant satisfies its initial burden on the issues
expressly presented in the motion, then the burden shifts to the nonmovant to present
to the trial court any issues or evidence that would preclude a summary judgment.
See Amedisys, Inc. v. Kingwood Home Health Care, LLC, 437 S.W.3d 507, 510–11
(Tex. 2014).
To decide whether issues of material fact preclude summary judgment,
evidence favorable to the non-moving party must be taken as true, every reasonable
inference must be indulged in its favor, and any doubts resolved in its favor.
9
Sandberg v. STMicroelectronics, Inc., 600 S.W.3d 511, 521 (Tex. App.—Dallas
2020, pet. denied). The movant must conclusively establish its right to judgment as
a matter of law. See id. A matter is conclusively established if reasonable people
could not differ as to the conclusion to be drawn from the evidence. City of Keller
v. Wilson, 168 S.W.3d 802, 816 (Tex. 2005).
Insurance Policies
An insured has the initial burden of establishing coverage under the terms of
the policy. JAW The Pointe, L.L.C. v. Lexington Ins. Co., 460 S.W.3d 597, 603 (Tex.
2015). To avoid liability, the insurer then has the burden to plead and prove that the
loss falls within an exclusion to the policy’s coverage. Id.; TEX. R. CIV. P. 94
(“Where the suit is on an insurance contract which insures against certain general
hazards, but contains other provisions limiting such general liability, the party suing
on such contract shall never be required to allege that the loss was not due to a risk
or cause coming within any of the exceptions specified in the contract, nor shall the
insurer be allowed to raise such issue unless it shall specifically allege that the loss
was due to a risk or cause coming within a particular exception to the general
liability[.]”).
Insurance policies are interpreted under the rules of construction applicable to
contracts in general. See JAW The Pointe, L.L.C., 460 S.W.3d at 603; see also
Nassar v. Liberty Mut. Fire Ins. Co., 508 S.W.3d 254, 257 (Tex. 2017) (stating Texas
10
courts construe insurance policies “using ordinary rules of contract interpretation”).
The primary goal of contract construction is to effectuate the parties’ intent as
expressed in the contract. See JAW The Pointe, L.L.C., 460 S.W.3d at 603. Courts
“determine the parties’ intent through the terms of the policy, giving words and
phrases their ordinary meaning, informed by context.” Dillon Gage Inc. of Dallas
v. Certain Underwriters at Lloyds Subscribing to Policy No. EE1701590, 636
S.W.3d 640, 643 (Tex. 2021). “Unless the policy dictates otherwise, [courts] give
words and phrases their ordinary and generally accepted meaning, reading them in
context and in light of the rules of grammar and common usage.” RSUI Indem. Co.
v. The Lynd Co., 466 S.W.3d 113, 118 (Tex. 2015) (citing Gilbert Tex. Constr., L.P.
v. Underwriters at Lloyd’s London, 327 S.W.3d 118, 126 (Tex. 2010)). To
determine a statutory term’s common, ordinary meaning, courts “typically look first
to their dictionary definitions and then consider the term’s usage in other statutes,
court decisions, and similar authorities.” Tex. State Bd. of Exam’rs of Marriage and
Fam. Therapists v. Tex. Med. Ass’n, 511 S.W.3d 28, 35 (Tex. 2017).
If we determine that only one party’s interpretation of the insurance policy is
reasonable, then the policy is unambiguous, and the reasonable interpretation should
be adopted. Nassar, 508 S.W.3d at 258. If both interpretations are reasonable, then
the policy is ambiguous. Id. (“A policy is ambiguous if it is genuinely subject to
more than one meaning after applying the pertinent rules of contract
11
interpretation.”). In that event, “we must resolve the uncertainty by adopting the
construction that most favors the insured,” and because we are construing a
limitation on coverage, we must do so “even if the construction urged by the insurer
appears to be more reasonable or a more accurate reflection of the parties’ intent.”
RSUI, 466 S.W.3d at 118 (quoting Nat’l Union Fire Ins. Co. of Pittsburgh, Pa. v.
Hudson Energy Co., 811 S.W.2d 552, 555 (Tex. 1991)); see also Gilbert Tex. Const.,
L.P., 327 S.W.3d at 133 (“Terms in insurance policies that are subject to more than
one reasonable construction are interpreted in favor of coverage.”).
Discussion
Westlake and the Insurers moved for summary judgment based on their
competing interpretations of the Berkley Policy. In its first issue, Westlake argues
the trial court erred by granting summary in the Insurers’ favor because
(1) Westlake’s loss is covered by the Berkley Policy’s Computer Fraud Clause, and
(2) Section D.1.c of the Berkley Policy does not bar coverage because Tinkle is not
Westlake’s “authorized representative.”
Assuming without deciding that Westlake met its burden of proving that its
loss is covered under the Berkley Policy’s Computer Fraud Clause, we conclude that
the Insurers carried their burden to prove that coverage is excluded under the Policy.
Once an insured meets its burden to establish that its loss is covered under the
relevant insurance policy, the burden shifts to the insurer to prove that the loss falls
12
within an exclusion to the policy’s coverage. See JAW The Pointe, L.L.C., 460
S.W.3d at 603. The Insurers argue that Tinkle is 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.”
A. Definition of “Authorized Representative”
Section D.1.c of the Berkley Policy bars coverage for losses “resulting from
‘theft’ or any other dishonest act committed by any of [Westlake’s] ‘employees’,
‘managers’, directors, trustees or authorized representatives.” The parties do not
dispute that Tinkle is not Westlake’s employee, manager, director, or trustee, or that
the losses “result[ed] from ‘theft’ or any other dishonest act.” Thus, the only
question presented is whether Tinkle was Westlake’s “authorized representative”
during the relevant time period.
The Insurers argue that the term “authorized representative” refers to someone
who has permission to act on behalf of another. They argue that the summary
judgment evidence conclusively established that Westlake authorized Tinkle to act
on its behalf in placing orders for shipping supplies and managing Westlake’s
inventory.
13
Westlake argues that the term “authorized representative” “has a meaning
similar (if not identical) to ‘agent,’” and thus, to prevail on summary judgment, the
Insurers had to establish that, as a matter of law, “Tinkle was entitled to act
essentially as Westlake’s agent.” According to Westlake, “an agent is one who is
empowered to act on the principal’s behalf.” Westlake argues that the Insurers were
not entitled to summary judgment because the evidence established that Tinkle was
simply Westlake’s vendor, not its agent or authorized representative.
The phrase “authorized representative” is not defined in the Berkley Policy.
Thus, we must look at the phrase’s “ordinary and generally accepted meaning.” See
RSUI Indem. Co., 466 S.W.3d at 118 (“Unless the policy dictates otherwise, [courts]
give words and phrases their ordinary and generally accepted meaning, reading them
in context and in light of the rules of grammar and common usage.”). In determining
the common and ordinary meaning of a term, courts typically look for the term’s
dictionary definition. See Tex. State Bd. of Exam’rs of Marriage and Fam.
Therapists, 511 S.W.3d at 35 (stating courts typically look first to term’s dictionary
definition to determine term’s common, ordinary meaning).
The word “authorized” is defined as “having official permission to do
something” and being “endowed with authority.” See Authorized, Cambridge.org,
https://dictionary.cambridge.org/dictionary/english/authorized (last visited May 22,
2023) (defining authorized as “having official permission to do something or for
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something to happen”); Authorized, https://www.merriam-webster.com/
dictionary/authorized (last visited May 22, 2023) (defining authorized as “endowed
with authority”).3 The word “representative” is defined as “someone who speaks or
does something officially for another person or group of people” and “one that
represents” another. See Representative, Cambridge.org, https://dictionary.
cambridge.org/us/dictionary/english/representative (last visited May 22, 2023)
(defining representative as “someone who speaks or does something officially for
another person or group of people”); Representative, https://www.merriam-
webster.com/dictionary/representative (last visited May 22, 2023) (defining
representative as “one that represents another or others,” “one that represents another
as agent, deputy, substitute, or delegate usually being invested with the authority of
the principal,” and “one that represents a business organization”); Represent,
https://www.merriam-webster.com/dictionary/represents (defining represent as “to
take the place of in some respect”).
Given these dictionary definitions, 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
3
See also Authorize, MERRIAM-WEBSTER.COM DICTIONARY,
https://www.merriam-webster.com/dictionary/authorize#legalDictionary/authorize
(last visited May 22, 2023) (defining authorize as “to give permission to” and “to
give authority to act to”).
15
Berkley Policy indicates that the phrase “authorized representative” was intended to
have a technical or legal definition. To the extent Westlake attempts to augment the
definition of “authorized representative” to encompass a legal or technical definition
of agent, such an interpretation is inconsistent with the commonly understood
meaning of the term and is thus unreasonable.4
B. Tinkle is 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
4
We further note that Westlake’s agency arguments appear to be based on the legal
principle of agency, as opposed to the commonly understood meaning of the term.
Compare Exxon Mobil Corp. v. Rincones, 520 S.W.3d 572, 589 (Tex. 2017), with
Agent, https://www.merriam-webster.com/dictionary/agent (last visited May 22,
2023) (defining agent as “one who is authorized to act for or in the place of
another”). This principle is typically employed to determine whether one party (the
alleged principal) is liable for the conduct of another (the alleged agent) and whether
one party’s contacts with a forum can be imputed to another for purposes of
establishing jurisdiction. See Gaines v. Kelly, 235 S.W.3d 179, 182 (Tex. 2007)
(stating principal is liable for acts of another acting as its agent only when agent has
actual or apparent authority to do those acts); F.F.P. Operating Partners, L.P. v.
Duenez, 237 S.W.3d 680, 686 (Tex. 2007) (stating doctrine of vicarious liability
makes principal liable for his agent’s conduct); Stocksy United v. Morris, 592
S.W.3d 538, 547 (Tex. App.—Houston [1st Dist.] 2019, no pet.) (“Under Texas law,
an agency-based theory of imputed contacts may serve as the basis for the exercise
of personal jurisdiction over a foreign defendant.”).
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Berkley’s questions about Westlake’s loss prepared as part of the claims process.
Relying on these exhibits, the Insurers argue that “Westlake admit[ted] that Tinkle
was its ‘authorized representative’ because Westlake admit[ted] that it empowered
[Tinkle] to act on its behalf.”
Anderson testified that “Westlake gave John Tinkle the responsibility to
manage how many supplies we needed at a given time.” When asked why Westlake
trusted Tinkle to “order bags on [Westlake’s] behalf,” Anderson explained that
Westlake believed it to be “his forte” and that Tinkle had also served in a similar
role for other companies. According to Anderson, Westlake did not have an
independent system in place to “ensure that Westlake was receiving the inventory”
Tinkle ordered. Rather, Westlake “outsourced that to Mr. Tinkle. . .[a]nd [Westlake]
relied on him to ensure [it] had enough supplies in place when [it] needed them.”
As a result of Tinkle’s fraud, Westlake now “manages [its] own inventory supplies.”
In response to the Insurers’ interrogatories, Westlake responded that “John
Tinkle ordered the bags and shipping supplies for each packaging warehouse as he
determined to be necessary.” Westlake also stated that TMI “had authority for
calculating how many bags Westlake needed at any given time” and that “TMI
ordered additional bags and shipping supplies when it believed the bags and shipping
supplies on hand at the packaging warehouses needed to be replenished.” In a letter
Westlake sent to Berkley as part of the claims process, Westlake stated that, because
17
“TMI maintained bag and shipping supply levels” at Westlake’s facilities, “[n]o
approval process existed” for those orders after March 2010.
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. See City of Keller, 168 S.W.3d at 816 (stating matter
is conclusively established if reasonable people could not differ as to conclusion to
be drawn from evidence). Westlake does not dispute that Tinkle was authorized to
act on its behalf in a limited capacity. In its opening brief, Westlake asserts that “the
question for adjudication is whether a vendor is an ‘authorized representative’ when
the scope of his authorization is to monitor his customer’s inventory and suggest
purchases and does not include making payments.” (Emphasis added). Thus, at a
minimum, Westlake does not dispute that it authorized Tinkle to “monitor”
Westlake’s “inventory and suggest purchases.” Rather, Westlake argues that the
evidence is insufficient to establish that Tinkle was its “authorized representative”
because an “authorized representative” is akin to an agent and therefore the term
requires more than managing supplies and suggesting purchases, such as the ability
to make payments for the shipping supplies using Westlake’s funds.5 But the plain
5
In its reply brief, Westlake argues that although it “has admitted the details of its
relationship with Tinkle. . .those details plainly do not rise to the level of ‘agency.’”
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language of the Berkley Policy does not support this technical or legal definition.
The plain terms of Section D.1.c. only require evidence that Tinkle had permission
to or was otherwise empowered to act on Westlake’s behalf, because that is the plain
and ordinary meaning of the phrase “authorized representative.”
The only remaining question is whether Westlake presented some evidence
raising a question of material fact precluding summary judgment on this issue.
Citing to the affidavit of David Bourgeois (“Bourgeois”), Westlake’s Director of
Supply Chain from 2007 to 2016, and the parties’ joint stipulation of facts, Westlake
argues that the summary judgment evidence establishes that “Tinkle was merely a
vendor who could not submit an invoice for payment without approval.”
In their joint stipulation of facts, the parties stipulated:
• TMI served as a vendor to Westlake from 2007 until October 23,
2014, and during that time sold to Westlake various supplies used
in the exportation of Westlake’s polyethylene (‘PE’) and
polyvinyl chloride (‘PVC’) products.
• Tinkle and TMI were authorized by Westlake to ship plastic
shipping bags and related supplies to Packwell for use by
Packwell in bagging Westlake’s PE and PVC for export.
• During the period of time from 2007 through 2014 that Tinkle
perpetrated the fraud referenced in the Grand Jury Indictment,
Westlake’s approval authority for polyethylene vendor invoices
was as follows:
• Logistics Manager – up to $10,000;
• Director - Supply Chain – up to $25,000;
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• Senior Vice President – Polyethylene – up to $100,000; and
• Chief Executive Officer – above $100,000.
Westlake also submitted Bourgeois’ affidavit as part of its summary judgment
evidence to explain Tinkle’s role in more detail. In his affidavit, Bourgeois testified
that “[s]hipping bags and related supplies were purchased from TMI either based
upon requests from Westlake or when Tinkle suggested additional bags were needed
by Westlake.” According to Bourgeois, “Tinkle normally submitted a ‘Sales
Confirmation’ form noting what was to be ordered which was then submitted to
Westlake for approval,” and he later “submit[ted] invoices to Westlake for payment,
along with supporting documentation for those invoices.” Bourgeois stated that
“Tinkle was not appointed to represent or serve as the agent of Westlake,” nor was
Tinkle “authorized by Westlake to act on Westlake’s behalf in dealing with others.”
According to Bourgeois, Tinkle was “nothing more than a vendor” who “did not
have the authority to possess or disburse funds on behalf of Westlake.”
Bourgeois’ testimony that Tinkle was not authorized to possess or disburse
funds or that Tinkle was “not appointed to represent or serve as the agent of
Westlake” with respect to others is inconsequential because, as we have concluded,
the plain and ordinary meaning of the term “authorized representative” in the
Berkley Policy does not require such findings.
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Moreover, even if Bourgeois’ testimony that “[s]hipping bags and related
supplies were purchased from TMI[,] either based upon requests from Westlake or
when Tinkle suggested additional bags were needed by Westlake[,]” contradicted
Anderson’s testimony that Tinkle was authorized to order shipping bags on
Westlake’s behalf, and Westlake’s interrogatory responses that Tinkle and TMI
ordered bags and shipping supplies for Westlake when they believed it was
warranted, Bourgeois’ testimony does not contradict Anderson’s testimony that
Westlake, who currently “manages [its] own inventory supplies,” “outsourced” that
responsibility to Tinkle and authorized him to order shipping bags and supplies for
Westlake and to ensure Westlake received the ordered inventory. As the Insurers
argue, that Tinkle may have suggested quantities of shipping bags to order does not
mean that Tinkle did not place those orders on Westlake’s behalf; nor does
Bourgeois’ testimony dispute that Westlake relied on Tinkle to ensure Westlake
received the bags Tinkle ordered.
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. We conclude 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.
See City of Keller, 168 S.W.3d at 816 (stating matter is conclusively established if
21
reasonable people could not differ as to conclusion to be drawn from evidence).
Thus, even taking Bourgeois’ testimony as true and indulging every reasonable
inference in Westlake’s favor, we conclude that Bourgeois’ testimony does not
create a question of fact precluding summary judgment with respect to the exclusion
clause in Section D.1.c of the Berkley Policy. See Sandberg, 600 S.W.3d at 521.
We overrule Westlake’s second issue.6
Conclusion
We affirm the trial court’s judgment.
Veronica Rivas-Molloy
Justice
Panel consists of Justices Hightower, Rivas-Molloy, and Farris.
6
We need not consider Westlake’s first issue because, even if the Computer Fraud
Clause applies, Westlake’s loss is barred under Section D.1.c. of the Berkley Policy.
22