The U.S. Court of Appeals for the Eleventh Circuit, affirming a district court's decision, has ruled that an insurer did not have to pay an insured's claim after he breached the insurance policy by refusing to answer questions at an examination under oath (“EUO”) – even if he subsequently agreed to do so.
The Case
A home owned in Hogansville, Georgia, by Thomas Hutchinson was destroyed by a fire. Mr. Hutchinson submitted a claim to his insurer, Allstate Insurance Company.
During its investigation of Mr. Hutchinson's claim, Allstate developed doubts regarding whether he had resided at the home prior to the fire. Allstate requested that Mr. Hutchinson submit to an EUO pursuant to the terms of the Allstate insurance contract.
Mr. Hutchinson appeared for the EUO but, before answering any questions, he expressed concern about a letter that he had received from Allstate in which Allstate indicated that he had not responded to communications from Allstate regarding scheduling the EUO. Mr. Hutchinson told Allstate's attorney, Marvin Dikeman, that the statements in the letter were not true and asked Allstate to recant the statements. Mr. Dikeman told Mr. Hutchinson that Allstate would not recant the statements in the letter.
Mr. Hutchinson responded, “We can't move forward until this letter is corrected. I don't have a problem answering any questions you ask.”
Mr. Dikeman warned Mr. Hutchinson, “[I]f you do not respond to the questions that are put to you here today, Allstate will treat that failure to respond as a material breach of the contract. . . . And . . . refusal to respond could result – probably will result in the denial of this claim for that reason standing alone.” Mr. Hutchinson stated that he would answer Allstate's questions but insisted that Allstate recant the disputed statements in the letter first.
Mr. Dikeman then asked Mr. Hutchinson Allstate's questions regarding his residence; Mr. Hutchinson sat in silence, giving no responses.
Allstate denied Mr. Hutchinson's claim.
Over a year after Allstate denied Mr. Hutchinson's claim, Mr. Hutchinson's newly retained counsel sent a demand letter to Allstate, threatening to sue Allstate if it did not pay Mr. Hutchinson's claim within 60 days. The letter also indicated that Mr. Hutchinson was willing to sit for another EUO.
Mr. Dikeman responded to the demand letter on behalf of Allstate. He stated that Allstate would appear for a second EUO with Mr. Hutchinson “expressly subject to a full and complete reservation of all rights and defenses by Allstate.” That EUO never occurred, and Mr. Hutchinson sued Allstate when it did not comply with his demand. In his lawsuit, he claimed that Allstate had breached the terms of his insurance contract and had acted in bad faith by denying his claim.
Allstate argued in part that it had properly denied Mr. Hutchinson's claim because Mr. Hutchinson had refused to submit to an EUO as required by his insurance contract.
The U.S. District Court for the Northern District of Georgia granted summary judgment in favor of Allstate, and Mr. Hutchinson appealed to the Eleventh Circuit.
The Eleventh Circuit's Decision
The circuit court affirmed.
In its decision, the circuit court explained that Mr. Hutchinson's insurance contract with Allstate required him to submit to an EUO at Allstate's request in relation to any claimed loss. This kind of contractual provision was “commonly used in insurance policies and has been upheld by many courts,” the Eleventh Circuit added.
It then pointed out that although Mr. Hutchinson had appeared for an EUO, he had refused to answer Allstate's questions regarding his claim. Moreover, the circuit court continued, Allstate's attorney, Mr. Dikeman, warned Mr. Hutchinson that failing to answer Allstate's questions likely would result in the denial of his claim. The Eleventh Circuit observed that Mr. Hutchinson nevertheless “sat in silence” in response to Mr. Dikeman's questions at the examination.
The circuit court then ruled that this constituted ”a breach of his insurance contract under Georgia law.”
It held that because Mr. Hutchinson had failed to comply with his obligation under the insurance contract, Allstate had been within its rights to deny his claim.
The circuit court also found that Mr. Hutchinson's “belated offer” to submit to an EUO over a year after Allstate had denied his claim “did not cure his prior breach or reinstate Allstate's obligation to pay his claim.” The insurer had no obligation to repeat its request for an examination after Mr. Hutchinson had breached the contract, and his offer to be examined had come “too late to be considered,” the circuit court concluded.
The case is Hutchinson v. Allstate Ins. Co., No. 18-10448 (11th Cir. July 10, 2018). Attorneys involved include: For THOMAS HUTCHINSON, Plaintiff – Appellant: Constance Melissa Ewing, David C. King, Patel Burkhalter Law Group, ATLANTA, GA. For ALLSTATE INSURANCE COMPANY, Defendant – Appellee: Marvin D. Dikeman, Andrei Vlad Ionescu, Melissa Patton, Webb Zschunke Neary & Dikeman, LLP, ATLANTA, GA.
Steven A. Meyerowitz
Steven A. Meyerowitz, a Harvard Law School graduate, is the founder and president of Meyerowitz Communications Inc., a law firm marketing communications consulting company. He may be contacted at [email protected].