In Valero Title v. RLI Ins. Co., No. 22-20155, 2023 WL 1434270, (5th Cir. Feb. 1, 2023), the Court of Appeals affirmed the district court’s ruling that Valero’s proof of loss claim for a fraudulent funds transfer was covered by the crime protection policy under the funds transfer fraud endorsement.

Valero purchased a crime-protection policy from RLI that included a funds transfer fraud endorsement providing that “we will pay for loss of funds resulting directly from a fraudulent instruction directing [sic] financial institution to transfer, pay or deliver funds from your transfer account.” In this case, a fraudster posed as a lender’s employee, and sent the Valero employee fraudulent wiring instructions including fraudulent routing numbers. The Valero employee used these instructions to request Valero’s bank to wire $250,945 to the fraudster.  Valero submitted a proof of loss claim to RLI, but RLI determined the loss was not covered by the funds transfer endorsement, and RLI made various arguments including that it was not covered because the instructions for the wire came directly from a Valero employee.

The district court found the relevant provision in the insurance policy defines a fraudulent instruction as “a written instruction…issued by you, which forged or altered by someone other than you without your knowledge or consent (labeled as Clause A by the court), or which purports to have been issued by you, but was in fact fraudulently issued without your knowledge or consent (labeled as Clause B by the court).”  Parties agreed that the definition created two coverage scenarios defined as Clause A and B.  Relying on the Texas law, which states insurance policies are construed according to ordinary contract principles, the Fifth Circuit looked to the plain language of the policy, examined the entire agreement, and sought to harmonize all provisions so that none would be rendered meaningless, and ruled that the district court correctly held that the “only interpretation of Clause A that does not render Clause B meaningless is one in which a written instruction is forged or altered by someone other than the insured without the insured’s knowledge or consent prior to be being issued by the insured.” Thus, coverage was triggered under the funds endorsement for Valero’s loss.

I originally handled some of the lower court proceedings for Valero Title.  No information in this communication is intended to constitute specific legal advice.  For specific legal advice, please contact an attorney, and if you have any such questions or would like more information about this issue, please contact William “Pat” Huttenbach at 713.752.8616, or email at



William “Pat” Huttenbach | Shareholder | Banking Litigation
Crain Caton & James | Attorneys & Counselors
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Valero Title Incorporated v. RLI Insurance Company