Pervis v. State Farm Fire and Cas. Co.

• Decision Date: 18 May 1990
• Docket Number: No. 89-8401,89-8401
• Citation: 901 F.2d 944
• Parties: Allan R. PERVIS, Jr., Plaintiff-Appellant, v. STATE FARM FIRE AND CASUALTY COMPANY, Defendant-Appellee.
• Court: U.S. Court of Appeals — Eleventh Circuit

Page 944

901 F.2d 944

58 USLW 2699

Allan R. PERVIS, Jr., Plaintiff-Appellant, v. STATE FARM FIRE AND CASUALTY COMPANY, Defendant-Appellee.

No. 89-8401.

United States Court of Appeals Eleventh Circuit.

May 18, 1990.

William A. Wehunt, Robert C. Koski, Atlanta, Ga., for plaintiff-appellant.

Michael Hilliard Schroder, Swift Currie McGhee & Hiers, Atlanta, Ga., for defendant-appellee.

Appeal from the United States District Court for the Northern District of Georgia.

Before TJOFLAT, Chief Judge, TUTTLE and RONEY ¹, Senior Circuit Judges.

TUTTLE, Senior Circuit Judge:

This is an appeal by plaintiff Allan R. Pervis, Jr. (Pervis) from the district court's grant of summary judgment in favor of defendant State Farm Fire and Casualty Co. (State Farm) in plaintiff's action to recover fire insurance proceeds.

I. STATEMENT OF THE CASE

In July 1986, Pervis instituted this diversity action against State Farm to recover under a homeowner's insurance policy issued by State Farm. Plaintiff had filed a claim for damage to his residence, which was also his place of business, caused by a fire occurring July 19, 1985. When defendant refused to honor the claim, plaintiff filed this suit seeking $370,000 plus attorney's fees and punitive damages.

Among the numerous defenses State Farm asserted in its answer, the one at issue here is that Pervis failed to submit to an examination under oath, which is required by the insurance policy and is a condition precedent to the insured's commencement of an action against the insurer. Defendant filed a motion for summary judgment based on that defense. The district court stayed the motion pending resolution of criminal proceedings brought against plaintiff in the Superior Court of Lumpkin County, Georgia before plaintiff commenced this action. On March 7, 1986, plaintiff had been found guilty of arson; the conviction was reversed on appeal on January 8, 1987, because the trial court erroneously denied Pervis' motion to inspect and test physical evidence removed from the fire site. On May 5, 1989, the court below granted defendant's summary judgment motion.

II. STATEMENT OF FACTS

After the fire occurred on July 19, 1985, Pervis gave an oral statement to State Farm on July 21, 1985 and again on August 7, 1985. Neither was a sworn statement. On August 28, 1985, State Farm requested a sworn statement from Pervis pursuant to the policy, which provides that in case of a loss to which the insurance may apply, the insured shall, as often as the insurer reasonably requires, "submit to examination under oath and subscribe the same." The insurance contract further provides that no action shall be brought against the insurer "unless there has been compliance with the policy provisions and the action is started within one year after the occurrence causing loss or damage."

The same day or the day after State Farm made its request, a grand jury indictment was issued charging Pervis with arson. Pervis subsequently refused State Farm's request to submit to an examination under oath on the ground that his statement could be used against him at his criminal trial. ² Appellant submits that he gave an additional recorded statement to State Farm representatives on October 11, 1985.

III. ISSUE

In an action brought by an insured to recover insurance proceeds, does the grant of summary judgment in favor of the insurer, based on the insured's failure to comply with the requirement of his insurance policy that he submit to an examination under oath before filing such an action, violate the insured's constitutional rights, when the refusal to be examined is said to be an invocation of the insured's fifth amendment right against self-incrimination?

IV. DISCUSSION

Appellant acknowledges that an insurer has the right to investigate whether a fire for which a claim is made was caused by arson, in order to reach a decision as to whether to pay the claim. Appellant concedes that under the express terms of its insurance contract, State Farm had the right to compel appellant to testify. Therefore, it is clear that plaintiff's refusal to submit to the requested examination under oath constitutes a breach of the insurance contract, unless some privilege excuses plaintiff's failure to comply with the contractual condition. Halcome v. Cincinnati Ins. Co., 254 Ga. 742, 744, 334 S.E.2d 155, 157 (1985); Hines v. State Farm Fire & Casualty Co, 815 F.2d 648, 651 (11th Cir.1987). Appellant contends that the privilege against self-incrimination excuses him from complying with the provisions of the insurance contract. ³ He maintains that, by granting summary judgment for defendant, the district court in effect forced him to forfeit his claim for proceeds, which penalized him for exercising his fifth amendment privilege and thereby violated his due process rights. ⁴

Appellant entered into a contract which required that he submit to an examination under oath as a condition precedent to suit. The contractual provision is commonly used in insurance policies and has been upheld by many courts. See, e.g., Halcome, supra. We agree with the district court's determination that the fifth amendment privilege against self-incrimination does not in this case excuse appellant from fulfilling his contractual obligation. The district court cited Kisting v. Westchester Fire Ins. Co., 290 F.Supp. 141 (W.D.Wis.1968), aff'd, 416 F.2d 967 (7th Cir.1969), which involved facts similar to the ones presented here. In Kisting, the plaintiff refused to answer questions posed by the insurance company concerning income tax returns, which were material and related to defendant's affirmative defense of arson. The refusal to answer was based upon a fifth amendment privilege against self-incrimination. The court held that recovery was barred because the plaintiff sought "to utilize the privilege not only as a shield, but also as a sword." 290 F.Supp. at 149. Likewise, Pervis cannot assert the privilege and maintain his action. Pervis seeks to recover proceeds based on the insurance contract to which he is a party; he must be held to the express terms of the agreement. He is not compelled to incriminate himself. He is, however, bound by the provisions to which he stipulated when he signed the insurance agreement and cannot expect State Farm to perform its obligations under the contract, by being subject to suit for payment of proceeds, without compliance on his part.

To support Pervis' contention that invocation of the privilege has resulted in the automatic entry of summary judgment in favor of State Farm and a complete forfeiture of his rights under the insurance contract, appellant relies upon United States v. White, 589 F.2d 1283 (5th Cir.1979), from which he cites a single passage by the court:

[W]e accept the proposition that a grant of summary judgment merely because of the invocation of the fifth amendment would unduly penalize the employment of the privilege.

Id. at 1287. In White, a criminal defendant contended that he was forced to choose between preserving his fifth amendment privilege against self-incrimination and losing a civil lawsuit, in which he was a defendant. The...