Thief Insurance

Ryan, an accounting firm, made a claim on its professional liability policy for losses caused by a rogue director’s submission of fraudulent tax returns. The insurer acknowledged an obligation to pay for losses resulting from employee “theft,” but instead:

“… maintain[ed] that that Weaver did not unlawfully take money from Ryan but that, instead, he started a chain reaction that caused money to improperly flow from the taxing authorities to Ryan’s clients, to Ryan, and then to Weaver and other employees.”

The Fifth Court found coverage for $346,612 paid to the director in bonuses, as an “unlawful taking” of those funds by him, and remanded for further consideration of related issues. Ryan, LLC v. Nat’l Union Fire Ins. Co., No. 05-22-00286-CV (March 13, 2023) (mem. op.).