Fifth Amendment Doesn’t Apply to a Plaintiff’s Suit

Fear of Arson Arrest Not Basis for Refusing to Testify

When a person obtains insurance under false pretenses and then, as soon as the policy goes into effect, causes it to be set afire to defraud the insurer, he cannot then refuse to testify in a suit he filed pursuant to the Fifth Amendment of the U. S. Constitution.

In Corey Brown v. Certain Underwriters at Lloyd’s, London; Underwriters at Lloyds, No. 18-2977, United States Court of Appeals for the Third Circuit (September 17, 2019) was called upon to deal with a summary judgment entered in favor of the insurer that Corey Brown appealed from the disposition in favor of Certain Underwriters at Lloyds, London, (“Lloyds”).

BACKGROUND

Brown obtained a fire insurance policy from Lloyd’s, an underwriter based in London, for a house he owned in Philadelphia. That policy contained a clause stating that the house must be occupied as a condition of coverage. To demonstrate compliance with that condition, Brown provided Lloyd’s with a copy of a residential lease for the house that listed Judy Cooks as a near-future tenant.

Less than three weeks later, on the day that Cooks was supposedly scheduled to move in, fires began in multiple locations in the house. The record shows the fires were spread by accelerants. An arson.

Brown submitted a claim for the full policy limits of the insurance, but Lloyd’s began an investigation of the fires and determined that the claim should be held pending completion of the investigation into the potential arson-for-profit.

One year later, Brown sued in Pennsylvania state court, seeking to compel Lloyd’s to pay the full policy limits as well as lost rental income. Lloyd’s removed the case to the District Court and asserted counterclaims alleging, among other things, that Brown had violated the Pennsylvania Insurance Fraud Statute.

During discovery, Lloyd’s deposed Brown. At the deposition, Brown invoked his Fifth Amendment right against self-incrimination and, on the advice of counsel, refused to answer questions related to the insurance policy, the house, or the fires.

Lloyd’s subsequently filed a motion for discovery sanctions to preclude Brown from introducing any evidence on those subjects. Brown did not respond to that motion. The District Court partially granted Lloyd’s’ request, barring Brown from testifying on those subjects but nevertheless permitting him to introduce evidence on those subjects from other sources.

Lloyd’s then filed a motion for partial summary judgment on Brown’s claims and most of its counterclaims. For support, Lloyd’s presented the unchallenged testimony of Cooks that she never intended to move into the house and only signed the lease so Brown could obtain insurance for the property. Once again, Brown failed to respond.

The District Court granted the motion in its entirety. The Court found the following facts to be beyond genuine dispute:

1. that Brown represented the property would be occupied based on Cooks’s one-year lease;

2. that Cooks only signed the lease so Brown could obtain insurance;

3. that Brown never believed that Cooks would move in or pay him rent; and

4. that those misrepresentations were material to Lloyds’s risk of insuring the property.

Following an evidentiary hearing, it awarded $171,397.11 in compensatory damages to Lloyd’s.

DISCUSSION

In a bare bones brief, Brown argues that the District Court abused its discretion when it imposed a discovery sanction precluding him from offering testimony because he invoked his Fifth Amendment privilege against self-incrimination. He says that he was within his rights to assert the privilege during his deposition and argues that the sanction imposed was impermissible. He further contends that, because of the sanction, the District Court based its summary judgment decision on a deficient record. His arguments, however, such as they are, have all been waived, so we will affirm.

Failure to respond to a motion is tantamount to not raising an argument, making the argument unavailable on appeal.

Here, Brown failed to respond to any of Lloyds’s arguments before the District Court, and, because of that, he never raised the arguments he now presses on appeal. His arguments have thus been waived.

ZALMA OPINION

The fact that Brown submitted a bare-bones brief and failed to respond to the motion for summary judgment, it is obvious to me that it was more important to him to avoid incriminating himself as an arsonist than in collecting on his fraudulently obtained insurance policy and probable fraudulent insurance claim. Of course, the Fifth Amendment does not apply to civil actions brought by the Plaintiff who can protect the right against self-incrimination by dismissing the suit.