A federal court in Virginia recently held an insured collaterally estopped from disputing that he breached a fraud provision of a policy where he was convicted for insurance fraud with regard to the same conduct. Miller v. Great Amer. Ins. Co., 2014 WL 5877609 (E.D. Va. Nov. 12, 2014).
Following a fire at his business, the insured submitted a claim for damages to the building structure and for damages to business personal property. After two examinations under oath, the insurer denied the claim, based on (among other things) false testimony provided during the examinations under oath. The insured sued the insurer, alleging breach of contract and bad faith. At the same time he filed suit, however, the insured was indicted for insurance fraud after the Department of Insurance found some of the claimed items of business personal property in his home. The plaintiff was eventually found guilty of the felony of attempting to obtain money by false pretense based on this fraudulent insurance claim. The insurer thereafter moved for summary judgment in the civil action based on the insured’s breach of the policy’s fraud provision.
Granting the insurer’s motion, the court held that the insured was collaterally estopped from disputing that he breached the fraud provision of the insurance policy based on his criminal conviction arising out of the same insurance claim. The court found that the conviction necessarily proved that he breached the fraud provision of the policy, rendering the policy void and barring plaintiff from recovering.