Korsak v. Prudential Property & Cas. Ins. Co.
| Decision Date | 26 February 1982 |
| Docket Number | No. 79-414-A,79-414-A |
| Citation | 441 A.2d 832 |
| Court | Rhode Island Supreme Court |
| Parties | Alfred KORSAK et al. v. PRUDENTIAL PROPERTY & CASUALTY INSURANCE COMPANY. |
At the time of the events which gave rise to this lawsuit, the plaintiffs, Alfred Korsak and his wife, Joyce (the Korsaks) were the occupants of a residence located on Cooper Road in Harmony, Rhode Island. They insured these premises and its contents under a homeowner's policy obtained from the defendant Prudential Property & Casualty Insurance Company (Prudential). This policy was in the statutory form set forth in G.L.1956 (1979 Reenactment) chapter 5 of title 27. The effective period of the policy was from February 2, 1978 through February 2, 1979.
The policy contained certain conditions and provisions. One recited that the Korsaks were the owners of the insured property. Another set forth that the entire policy would be void if either before or after a loss, the Korsaks willfully concealed or misrepresented material facts or circumstances concerning the insurance or their ownership of the property, or if they perpetrated any fraud or false swearing in connection with the insurance.
The Korsaks alleged that during the weekend beginning on Friday, May 26, 1978, while they were visiting in Pittsfield, Massachusetts, a burglary occurred at their residence. Shortly thereafter, they filed a claim of their loss with Prudential, after first reporting the matter to the local police.
On May 29, the Glocester police began an investigation in response to the Korsaks' report. Photographs and reports of damage, and information about allegedly stolen items were obtained by the police and the State Bureau of Criminal Identification. Later, a Prudential adjuster also took photographs of the property and obtained a signed statement from Mr. Korsak regarding the damage and stolen items. After a comparison of the photographs and statements taken by the adjuster with the photographs and original reports obtained by the police, numerous discrepancies and contradictions regarding the alleged damage and stolen items were noted by the police and the insurer.
Subsequent investigation by the Glocester police assisted by the State Police, gave rise to suspicions concerning the validity of the Korsaks' burglary claim. The investigation revealed that several items of claimed damages were in fact not caused during the alleged burglary. The evidence established that some of the damage had been caused by Mr. Korsak himself, prior to the submission of his claim to Prudential. Further investigation disclosed that several of the allegedly stolen items were not, in fact, owned by the Korsaks. Regarding those items, Mr. Korsak had prepared and submitted to the police and to Prudential forged bills of sale for items not actually owned by him or his wife.
Later, in a sworn statement given by Mr. Korsak to the police, he admitted that he had damaged some of the items which were included in his insurance claim and that he prepared forged bills of sale for items which he did not own but for which he had made a claim to the insurer. In due course criminal charges were brought against Mr. Korsak based on insurance fraud. A four-count criminal information contained reports, photographs, bills of sale, sworn statements from investigators, and from alleged sellers of items on the bills of sale in question, and Mr. Korsak's own sworn statement implicating himself in the offense. 1 After initially entering not-guilty pleas to each count, he later pleaded nolo contendere to counts 1 and 3 of the information and received a two-year suspended sentence with four years probation on count 1, and one-year suspended sentence with one year of probation on count 3.
As a result of the criminal prosecution, Prudential refused to pay under the provisions of the policy, and the Korsaks filed this law suit. 2 Prudential served the Korsaks with requests for admissions under Rule 36 of the Superior Court Rules of Civil Procedure. In response to the first two requests, Mr. Korsak admitted that he had, in fact, pleaded nolo contendere to charges that he had attempted to obtain and steal money from Prudential by false pretenses. Also, he admitted that he had pleaded nolo contendere to the charge that he had knowingly given a false and erroneous document a proof of loss statement, with the intent to mislead. The third request sought an admission that Korsak had attempted to defraud Prudential. Korsak responded with a written statement: "I, Alfred J. Korsak, being duly sworn, hereby deny that I attempted to defraud (Prudential) in this case (of) the sum of $45,000.00 in connection with the alleged burglary and vandalism referred to in the complaint."
Prudential moved for summary judgment on both counts of the complaint. No affidavit was submitted in support of the motion for summary judgment, but the motion itself had appended thereto a certified copy of Alfred Korsak's conviction on count 1 and count 3 of the criminal information. Also, the motion indicated that it was incorporating by reference the criminal information and a copy of the docket entries of the Superior Court in that criminal proceeding.
The motion for summary judgment further indicated that regarding count 2, Prudential was relying upon A.A.A. Pool Service & Supply, Inc. v. Aetna Casualty & Surety Co., R.I., 395 A.2d 724 (1978). In that case we held that insurance policies written in conformity with the provisions of chapter 5 of title 27 do not support a cause of action sounding in tort against the insurer for bad faith refusal to settle with the insured. Regarding the instant case, A.A.A. Pool Service & Supply, Inc., supra, is dispositive as to count 2 and the appeal from the summary judgment entered on that count has no merit.
It is Prudential's position that Alfred Korsak's conviction on a plea of nolo contendere established the fact of fraud and rendered the policy void. Korsak argues that a conviction on a plea of nolo contendere does not prove the underlying facts of the offense nor can that conviction be used as an admission in a civil suit involving the same matter. He argues further that since he denied the allegation of fraud in his answer to Prudential's requested...
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