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Dadurian v. Underwriters at Lloyd's of London

United States Court of Appeals for the First Circuit · Civil Procedure

Civil Procedurenew trialgreat weight of the evidenceabuse of discretionjudgment n.o.v.material false swearinginsurance policy voidancecredibility

Facts

Dadurian claimed he bought 12 pieces of jewelry in cash from a Providence jeweler over about 30 months and insured them under a Lloyd's jewelry floater policy. After an alleged home robbery, he sought indemnification, but Lloyd's denied coverage on the grounds that his claim was fraudulent and that he knowingly made false statements during examinations under oath. At those examinations, Dadurian specifically identified certain bank promissory notes as the source of cash used to buy most of the jewelry, but trial evidence showed that several of those loans were renewals, that proceeds from others were deposited and withdrawn inconsistently with his story, and that at least one loan went to a corporate account for another stated purpose. Dadurian conceded some of his identifications were wrong but claimed he had merely been mistaken.

Issue

Whether the district court erred in denying Lloyd's post-trial motion where the evidence showed that Dadurian gave knowingly false sworn statements about the source of funds used to purchase the insured jewelry. Also, whether the proper remedy was judgment n.o.v. or a new trial, and whether any new trial should include both false swearing and ownership issues.

Rule

Knowingly false testimony by an insured regarding any material fact relevant to the insurer's investigation voids the policy. A fact is material if it is reasonably relevant to the insurer's investigation, even if it does not ultimately determine the claim's disposition. When a jury verdict is against the great weight of the evidence so that allowing it to stand would amount to a manifest miscarriage of justice, a new trial should be granted; however, courts are reluctant to direct a verdict for the party bearing the burden of proof, especially where credibility is central.

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One of 10 multiple-choice questions for this case. Pick an answer to see why.

After a fire at her townhouse in Portland, Maine, Elena Russo sought payment under a valuables policy for a collection of rare watches. During an examination under oath, she falsely stated that she had withdrawn the purchase money from a particular savings account, though the insurer later discovered the watches had in fact been paid for with cash gifts from relatives and that Elena really did own the watches.

If the insurer proves Elena knowingly lied about the source of the purchase funds, what is the strongest argument for voiding the policy?

Explanation. Knowingly false sworn testimony about any material fact relevant to the insurer’s investigation voids the policy. A fact is material if it is reasonably relevant to the investigation, not only if it ultimately determines the claim’s outcome. Thus, a lie about where the insured got the money to buy the property may be material because it bears on the plausibility of ownership, even if ownership later turns out to be true. (Derived from Dadurian v. Underwriters at Lloyd's of London (n.d.).)