I recently came across an interesting opinion, Fuller v. Mercury Insurance Company of Georgia,1 where the Eleventh Circuit Court of Appeals discussed the effect of a guilty plea on a policyholder’s civil action against their insurance carrier. The opinion stemmed from a residential fire loss and the insured’s subsequent claim for benefits under her homeowner’s insurance policy.

The claim was ultimately denied by the carrier, based on the two “concealment or fraud” clauses in the policy, after local fire department officials concluded that the insured set her own home on fire.

The policyholder – an elderly, partially disabled Georgia resident with no criminal history – maintained that she did not start the fire to her home and noted several flaws with the fire department’s conclusion. According to the insured’s Corrected Initial Brief, the policyholder had been unable to access the basement, one of the two areas where the department determined the fire had originated, for nearly a year to due to a knee condition. The insured also noted that several other individuals had access to her home, and that the sole motive was a tax bill for less than $2,000.

The insured eventually sued her insurance carrier in May of 2013, who maintained that the Ms. Fuller or someone on her behalf had started the fire. Just five months after filing the civil suit, the Cobb County District Attorney obtained indictments against the homeowner for arson and fraud. However, the prosecution later offered to drop the arson charge and to recommend a sentence of nonreporting probation for the insurance fraud charge if the insured entered a plea of guilty (an offer which, according to the insured, suggests the DA’s Office knew it would be difficult to prove its case).

Faced with a probation-only offer on one hand and the possibility of facing the rest of her life in prison on the other, the insured ultimately agreed to the deal and entered a plea of guilty in January of 2015. Even then, the homeowner continued to maintain her innocence and refused to admit she had committed the offenses underlying the plea. In fact, in addition to writing “N/A” on the form accompanying her plea where asked if she admits to her guilt for the underlying charges, the insured wrote-in “Alford v. NC” – a U.S. Supreme Court decision2 which recognized what is often referred to an “Alford plea” – where one enters a plea of guilty without explicitly admitting guilt.

In the civil action, the insurer then moved for summary judgment based solely on the fact that the insured had entered a guilty plea regarding the insurance fraud charge. Despite the insured maintaining her innocence and explaining the plea was entered solely to avoid the possibility of jail time, the trial court and Eleventh Circuit Court of Appeals were not persuaded. The appellate court concluded that the insured’s “plea of guilty constituted an ‘admission that [she] committed the crime charged against [her],’ . . . of making a false or fraudulent statement or misrepresentation in a written statement or when filing her insurance claim […]. Because the state court found that there was ‘[a] satisfactory [factual] basis for [Fuller’s] plea,’ and Fuller confirmed that she was entering her plea knowingly, intelligently, and voluntarily, her entry of a plea of convenience had the same significance as “an ordinary plea of guilt[.]”3

Unfortunately, the court’s ruling put an end to the case before the factual merits of both parties’ claims could be fully developed and resolved by the trier of fact.
We may therefore never know if this was a situation where an innocent individual fell victim to the nuances and technicalities of our justice system, or if justice was served. But regardless of whether you think the decision was too harsh or warranted under the circumstances, it is one which all in the area of property insurance should be aware.
1 Fuller v. Mercury Ins. Co. of Georgia, 708 Fed. Appx. 637 (11th Cir. 2018).
2 North Carolina v. Alford, 400 U.S. 25, 27, 91 S. Ct. 160, 162 (U.S. 1970).
3 Fuller, 708 Fed. Appx. at 638. (Internal citations omitted).