Cooperation Clause v. the Fifth Amendment … And the winner is …

The clash between an insurer's right and obligation to investigate a claim and the insured's right to assert its Fifth Amendment privilege against self-incrimination was analyzed under Georgia law in Anderson v. Southern Guaranty Ins. Co. of Georgia, 235 Ga. App. 306, 508 S.E.2d 726 (Ga. Ct. App. 1998), cert. denied (Feb. 26, 1999). In Anderson, the insured sought legal defense from its homeowner's liability insurer in a civil case filed against her. She allegedly got on a school bus, attacked the driver with a cane, and then dragged the driver off the bus. At the time of the civil action by the bus driver, a jury already had convicted the insured of aggravated assault, simple battery, and reckless conduct for endangering the safety of school children in the related criminal action.

The easiest issue resolved by the court was that the insurer had no duty to defend the insured against charges of intentional infliction of emotional distress where the policy provided coverage and defense for "bodily injury" and not mental or emotional injury. The more difficult issue involved the insurer's obligation to defend against accidental occurrences that resulted in bodily injury not expected or intended by the insured. The court determined that the allegations of intentional torts in and of themselves will not automatically provide a basis on which the insurer can decline to defend when the insured asserts that the injury was an accident. In Georgia, a criminal conviction cannot be taken as evidence in a civil action to establish the truth of the facts on which the conviction was rendered. Therefore, the insurer could not rely on the conviction for assault and battery to establish that the insured expected or intended bodily injury. Id. at 235 Ga. App. 307, 508 S.E.2d at 729 n.1, citing Continental Cas. Co. v. Parker, 161 Ga. App. 614, 617, 288 S.E.2d 776 (1982). Rather, the insurer had to investigate the claim independently to determine whether the insured's actions were accidental or intentional.

A problem arose because the insured refused to answer the insurer's questions regarding the incident, citing her Fifth Amendment privilege against self-incrimination. She was concerned that her comments would adversely affect the outcome of her then-pending motion for a new trial in the criminal case. The court ruled that the danger of self-incrimination was sufficient to assert the privilege in the civil action. 235 Ga. App. at 310, 508 S.E.2d at 731. This privilege conflicted with the insured's duty to cooperate under the policy, i.e., "to secure and give evidence." The court disagreed with the insured's argument that she was unfairly forced to refuse to answer questions in violation of her insurance contract or give up her privilege, stating,

"In the present declaratory judgment action, [the insured] is not in the position of the usual defendant involuntarily brought into a civil case, then forced to confront the dilemma of surrendering the privilege against self-incrimination or suffering an adverse judgment.... Rather, [the insured's] demands for insurance coverage and a defense of the suit place her in a position more akin to that of a plaintiff who creates her own dilemma by bringing a civil action to enforce a contract, and who then refuses to provide information material to the defendant's defense by asserting the Fifth Amendment Privilege."

235 Ga. App. at 311, 508 S.E.2d at 731-32 (citations omitted). Thus, the Fifth Amendment privilege did not excuse the insured from complying with her contractual obligations. Accordingly, in certain situations, the Fifth Amendment would not prohibit a grant of summary judgment against the insured where a material breach of the contract would void coverage. In this instance, however, the court did not grant summary judgment because there were additional facts that needed to be developed, and the insured had expressed her willingness to cooperate at the conclusion of her criminal appeal, which had occurred by the time of this decision (for those interested, the conviction was affirmed).