Mr. Brown submitted a claim for the full policy limits of the insurance, but Lloyds began an investigation of the fires and determined that the claim should be held pending completion of the investigation.

Thereafter, Mr. Brown sued Lloyds in a Pennsylvania court, seeking to compel Lloyds to pay the full policy limits as well as lost rental income.

In response, Lloyds asserted counterclaims alleging, among other things, that Mr. Brown had violated the Pennsylvania Insurance Fraud Statute.

During discovery, Lloyds deposed Mr. Brown. At his deposition, Mr. 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.

Lloyds subsequently filed a motion for discovery sanctions to preclude Mr. Brown from introducing any evidence on those subjects. Mr. Brown did not respond to that motion.

The U.S. District Court for the Eastern District of Pennsylvania partially granted Lloyds' request, barring Mr. Brown from testifying on those subjects but nevertheless permitting him to introduce evidence on those subjects from other sources.

Lloyds then moved for partial summary judgment on Mr. Brown's claims and most of its counterclaims. For support, Lloyds presented the unchallenged testimony of Ms. Cooks that she had never intended to move into the house and had only signed the lease so Mr. Brown could obtain insurance for the property. Once again, Mr. Brown failed to respond.

The district court granted the motion in its entirety, finding the following facts to be beyond genuine dispute: that Mr. Brown had represented that the property would be occupied based on Ms. Cooks' one-year lease; that Ms. Cooks only signed the lease so Mr. Brown could obtain insurance; that Mr. Brown never believed that Ms. Cooks would move in or pay him rent; and that those misrepresentations were material to Lloyds' risk of insuring the property.

Mr. Brown appealed to the Third Circuit. He argued that the district court had abused its discretion when it imposed a discovery sanction precluding him from offering testimony because he had invoked his Fifth Amendment privilege against self-incrimination. He asserted that he was within his rights to assert the privilege during his deposition and that the sanction imposed was impermissible. He further contended that, because of the sanction, the district court based its summary judgment decision on a deficient record.

The Third Circuit's Decision

The Third Circuit affirmed, finding that Mr. Brown's arguments had "all been waived."

In its decision, the circuit court explained that waiver was the "the intentional relinquishment or abandonment of a known right." The circuit court reasoned that Mr. Brown had "failed to respond to any" of Lloyds' arguments before the district court, and, because of that, he had never raised the arguments he pressed on appeal.

The circuit court concluded, therefore, that his arguments had been waived, it declined to address them.

The case is Brown v. Certain Underwriters at Lloyds, London, No. 18-2977 (3d Cir. Sep. 17, 2019).