CHAPTER 12 FRAUD AND FALSE SWEARING

• Jurisdiction: United States

A. False Swearing

In the United States the oath to tell the truth, whether given in a court of law or elsewhere, is sacrosanct. The fear of a five-year term in prison for perjury keeps most people testifying honestly.

First-party property insurance policies invariably contain provisions that require the person insured to present a claim under oath in a document called a sworn statement in proof of loss. If there is a question about a claim or a need for proof of the loss, the insurer may also require the insured to submit to an oral examination under oath. Insurers expect that the insured, operating with the utmost good faith, will truthfully respond to every question posed.

Most insurance policies, to make clear to the insured why truth under oath is important, place a condition in the policy making it void in the case of false swearing. In common language, the "false swearing" provision of a policy merely means that if the insured lies under oath he or she will recover nothing under the policy.

The person swearing falsely as part of an insurance claim—even if there is no criminal prosecution—also destroys his or her right to recover under a policy of insurance.

The U.S. Supreme Court stated the rule in 1884 as follows:

A false answer as to any matter of fact material to the inquiry, knowingly and willfully made, with an intent to deceive the insurer, would be fraudulent. If it accomplished its result, it would be a fraud effected; if failed, it would be a fraud attempted. No one can be permitted to say, in respect to his own statements upon a material matter, that he did not expect to be believed; their materiality, in the eye of the law, consists in their tendency to influence the conduct of the party who has an interest in them and to whom they are addressed. ¹

In Cummings v. Fire Ins. Exchange, 202 Cal. App. 3d 1407, 249 Cal. Rptr. 568 (Cal. Ct. App. 1988), plaintiff Mary L. Cummings appealed from a summary judgment granted to defendant Fire Insurance Exchange on her complaint seeking damages from the defendant for its failure to pay a property damage claim and its allegedly malicious instigation of an unsuccessful criminal prosecution of the plaintiff.

Because the record demonstrates (1) that the plaintiff knowingly and wilfully filed a false claim on a casualty policy issued by the defendant and (2) that the defendant had a reasonable basis for believing that the plaintiff had violated the law in so doing, the court affirmed the judgment. The vandalism occurred May 1, 1983, and Plaintiff reported it to Defendant the next day. Within a month, Plaintiff's premises had been almost completely repaired. Defendant expended $18,146 for repairs and $800 for living expenses for Plaintiff. [Shortly after the loss,] Defendant received a call from one of Plaintiff's neighbors who stated that another neighbor, Mr. Rodriguez, had told him that on the day the vandalism occurred, Plaintiff's son was in the premises and there was screaming, commotion, and things being broken. In order to determine the facts, Defendant retained an investigator.

The investigator interviewed Plaintiff and recorded her statement concerning the events of May 1. In her statement, Plaintiff gave a false version of those events.

What Plaintiff told the investigator during her recorded statement was that on the day the vandalism occurred, she left home in the morning and returned that evening to discover the damage. She said there was no one home when she left and that her son did not live with her. She stated she did not know who had caused the damage to her home and taken her personal property. The actual facts were that the vandalism was committed by Plaintiff's son acting in a rage of anger during an argument over a utility bill. Plaintiff was present when the damage was occurring and was driven out of her home at that time by her son, at the point of a gun, just shortly after he threatened to kill her if she told anyone about what he had done.

The next day, the investigator interviewed the witness who related the events and indicated that the plaintiff's son was living with the

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