Mello v. Hingham Mut. Fire Ins. Co.

• Decision Date: 10 November 1995
• Citation: 421 Mass. 333,656 N.E.2d 1247
• Parties: Americo MELLO & another 1 v. HINGHAM MUTUAL FIRE INSURANCE COMPANY.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

Page 1247

656 N.E.2d 1247

421 Mass. 333

Americo MELLO & another ¹ v. HINGHAM MUTUAL FIRE INSURANCE COMPANY.

Supreme Judicial Court of Massachusetts Essex.

Argued Oct. 2, 1995.

Decided Nov. 10, 1995.

George L. Bernstein, Lynnfield, for plaintiffs.

Ethan Warren, Boston, for defendant.

Before LIACOS, C.J. and ABRAMS, LYNCH, GREANEY and FRIED, JJ.

FRIED, Justice.

The plaintiffs, Americo and Maria Mello, commenced this action against Hingham Mutual Fire Insurance Company (Hingham) in the Superior Court on April 26, 1994, to recover policy proceeds for fire loss. Hingham moved for summary judgment alleging that Americo Mello's failure to submit to an examination under oath, as required both by the policy and G.L. c. 175, § 99, Twelfth (1994 ed.), constituted a material breach of the fire insurance policy, thus barring recovery under the policy. The plaintiff asserted that his refusal to submit to the examination was justified because he had become the subject of a criminal investigation for arson in connection with this fire. The plaintiff contends that the privilege against self-incrimination as protected by art. 12 of the Declaration of Rights of the Massachusetts Constitution and the Fifth Amendment to the United States Constitution justifies his refusal to submit to such an examination.

On October 27, 1994, a Superior Court judge granted Hingham's motion for summary judgment. The plaintiffs have appealed. We granted their application for direct appellate review.

I.

The record on which the Superior Court judge granted summary judgment reveals the following facts. Hingham issued a policy to the plaintiffs effective September 4, 1992, insuring their residence. On September 25, 1992, a fire of undetermined origin broke out in the plaintiffs' residence. On that day, Hingham received oral notice of loss and commenced an investigation. In addition, the Danvers police and the Massachusetts State police began investigations into what they deemed a suspicious fire. The law enforcement authorities immediately informed Hingham that the plaintiff was a suspect in their respective investigations. Four days later, Hingham sent the plaintiffs notice of the cancellation of their policy, effective October 9, 1992. ²

Pursuant to its investigation, on November 10, 1992, Hingham requested that plaintiff submit to an examination under oath, as required by the policy. ³ He initially agreed to an examination. The plaintiff, however, postponed the examination on two occasions; the first to accommodate his attorney and the second to allow him the opportunity to retain a criminal attorney. On February 23, 1993, Hingham requested that the plaintiff submit to an examination within thirty days. His attorney responded by asking why such an examination was necessary. Hingham, by letter, explained that it required the sworn statement to complete its investigation and determine whether to pay the claim. The plaintiff's attorney responded on March 22, 1993, by asserting the plaintiff's constitutional privilege against self-incrimination.

On March 29, 1993, Hingham demanded that the examination take place before April 30, 1993. The plaintiff declined. On May 3, 1993, Hingham denied coverage for the fire loss.

II.

The plaintiffs raise two issues on appeal. First, the plaintiffs contend that, because the plaintiff was a subject of an on-going criminal investigation concerning the fire, his privilege against self-incrimination, as guaranteed by art. 12 and the Fifth Amendment, excused him from providing a statement under oath to Hingham as required by the insurance policy concerning the circumstances surrounding the fire. Second, the plaintiffs suggest that prior to the refusal to submit to the statement under oath, Hingham had materially breached the policy by improperly cancelling it.

A.

General Laws c. 175, § 99 (1994 ed.), prescribes a statutory form for fire insurance policies. The statute sets out the insured's duty to cooperate in two sentences reprinted in the margin. ⁴ Prior to our decision in Johnson Controls, Inc. v. Bowes, 381 Mass. 278, 409 N.E.2d 185 (1980), the satisfaction of the insured's duties embodied in this cooperation clause was a condition precedent to the insurer's liability under the policy. Thus, the insured's failure to provide notice of loss or a sworn statement of loss within the time period allotted in the policy released the insurer from its obligations under the contract. See, e.g., Romanos v. Home Ins. Co., 355 Mass. 499, 501-502, 246 N.E.2d 173 (1969); Rose v. Regan, 344 Mass. 223, 226, 181 N.E.2d 796 (1962).

In 1980, our decision in Johnson Controls, Inc. v. Bowes, supra, "modified the common law in this area by adding prejudice requirements in the contexts of notice provisions." Darcy v. Hartford Ins. Co., 407 Mass. 481, 489, 554 N.E.2d 28 (1990). We reasoned that the notice provision of insurance policies should no longer be strictly construed as a condition precedent to the insurer's liability. Johnson Controls, Inc. v. Bowes, supra, 381 Mass. at 282, 409 N.E.2d 185. Instead, the insurer must establish "both that the notice provision was in fact breached and that the breach resulted in prejudice to its position," for its obligations to be discharged. Id. See Darcy v. Hartford Ins. Co., supra 407 Mass. at 490-491, 554 N.E.2d 28.

Our decision in Johnson Controls, however, affected only the notice provisions of the G.L. c. 175, § 99's duty to cooperate. The second sentence of the statutory provision addresses the insured's responsibilities during the investigation: "as often as may be reasonably required" by the insurer, the "insured ... shall ... submit to examinations under oath." The statute contemplates that the insurer, when it determines that an examination is reasonable, may require that the insured submit to such an examination under oath.

It is the law in most jurisdictions that the submission to an examination, if the request is reasonable, is strictly construed as a condition precedent to the insurer's liability. See 13A G. Couch, Insurance § 49A:361 (2d ed. 1982 & Supp.1994); 5A J.A. Appleman & J. Appleman, Insurance Law and Practice § 3549 (1970 & Supp.1994). See also Pervis v. State Farm Fire & Casualty Co., 901 F.2d 944, 946-947 (11th Cir.), cert. denied, 498 U.S. 899 (1990); Allstate Ins. Co. v. Longwell, 735 F.Supp. 1187, 1193-1195 (S.D.N.Y.1990); Standard Mut. Ins. Co. v. Boyd, 452 N.E.2d 1074, 1077 (Ind.Ct.App.1983), and cases cited. This court agrees with these authorities. ⁵ In this case, Hingham's request was reasonable, and refusal to submit to an examination may have significantly hampered its ability to investigate the fire and assure itself that the plaintiff had not set the fire. The notification from the Danvers and State police that the plaintiff was being investigated on suspicion of arson understandably raised that concern for Hingham. Therefore, unless the privilege against self-incrimination excuses the plaintiff's failure to comply with Hingham's request, by refusing to submit to its reasonable request for an examination under oath, the plaintiff materially breached the insurance policy, releasing Hingham from its obligations.

The plaintiff, though, asserts that the privilege against self-incrimination excuses his compliance with the statement under oath clause. The privilege is contained in art. 12 and the Fifth Amendment. Article 12 provides that "[n]o subject shall ... be compelled to accuse, or furnish evidence against himself...." The Fifth Amendment provides that "[n]o person ... shall be compelled in any criminal case to be a witness against himself." One who invokes the privilege cannot be penalized for that assertion lest the penalty create an impermissible compulsion to testify. See, e.g., G.L. c. 233, § 20, Third (1994 ed.) (failure of defendant to take the stand "shall not create any presumption against him"); Commonwealth v. Smith, 387 Mass. 900, 908-909, 444 N.E.2d 374 (1982) (impermissible to argue to jury that they should draw adverse inferences from defendant's invocation of his privilege against self-incrimination). "Yet not every undesirable consequence which may flow from the exercise of the privilege against self-incrimination can be characterized as a penalty." Flint v. Mullen, 499 F.2d 100, 104 (1st Cir.), cert. denied, 419 U.S. 1026, 95 S.Ct. 505, 42 L.Ed.2d 301 (1974), quoted in Wansong v. Wansong, 395 Mass. 154, 157-158, 478 N.E.2d 1270, cert. denied, 474 U.S. 1014, 106 S.Ct. 546, 88 L.Ed.2d 475 (1985). See also Opinion of the Justices, 412 Mass. 1201, 1208 n. 6, 591 N.E.2d 1073 (1992) (recognizing that some measure of compulsion to provide incriminating evidence is permitted without offending the privilege against self-incrimination).

A person may not seek to obtain a benefit or to turn the legal process to his advantage while claiming the privilege as a way of escaping from obligations and conditions that are normally incident to the claim he makes. This principle holds true particularly where the benefit he seeks is from another private party, who is being asked to make good on its obligation forgoing the countervailing advantages that were part of the bargain. See, e.g., Matter of Kenney, 399 Mass. 431, 437-442, 504 N.E.2d 652 (1987) (upholding enforcement of a subpoena requiring attorney to produce possibly incriminating "required records"); Wansong v. Wansong, supra (upholding discovery sanction against party in a divorce proceeding who invoked his privilege against self-incrimination as to questions about relationship with another woman); United States Trust Co. v. Herriott, 10 Mass.App.Ct. 313, 316-320, 407 N.E.2d 381 (1980) (denial of continuance in civil case where defendant simultaneously subjected to a State grand jury investigation in New York). The principle holds true even where the State is also a party to the transaction. In seeking a license, applying for a position, claiming a benefit or even an...