No cents in doing it again: the importance of disclosing insurance coverage at discovery.

• Author: Carmon, Whit

HENRY Ellis, the state of Georgia's second royal governor, is the attributed author of the famous admonition that one should not "make a mountain of a mole-hill." (1) The phrase offers a tenable explanation for the Supreme Court of Georgia's recent ruling in Ford Motor Co. v. Conley, (2) where the court attempted to convince subsequent interpreters of its opinion that "[their] decision... should be not be read as breaking any new ground, but rather as simply affirming... the application of settled rules of law to a set of facts that may well be peculiar to Ford's ill-considered discovery practice." (3) This is true in one respect, given the Conley decision reinforces a Georgia statute more than eighty years old; however, it cannot be denied that the court made a distinct and novel finding in this case. (4) The court's decision: (1) clarified the requirements for an extraordinary motion for new trial that is not based on newly discovered evidence; (2) developed a novel sliding-scale approach to interpret the veracity of discovery responses for the purpose of granting such motions; and (3) found that vague responses can be treated--in some circumstances--as equivalent to overtly false responses.

Though not quite as old as Governor Ellis' storied idiom, the basis of the Conley case stems from a longstanding law in Georgia that allows plaintiffs to question the jury to discover any relationships that may exist between the jury and the defendant's insurer. (5) The plaintiff has a right to request this information from the defendant during discovery, (6) and because this information is discoverable, the defendant is expected to give good faith responses to such requests. (7)

Courts strongly disfavor discovery responses that do not provide a party with a clear answer and are intended to manipulate the requesting party into prematurely stopping their inquiry. (8) In Conley, the Supreme Court recognized the vital impact of such discovery requests when it affirmed the plaintiffs extraordinary motion for new trial on the grounds that the plaintiff was intentionally misled by the defendant's response and was unduly prejudiced as a result. (9) The court recognized that extraordinary motions for new trial are not ordinary remedies. (10) However, it weighed this general aversion to extraordinary motions against the necessity of preserving an honest discovery process and, ultimately, chose to send a message to those who provide intentionally misleading responses that their misrepresentation will be revealed and the trial will be re-opened and re-tried as a result. (11) This article reviews Conley to demonstrate the risks that counsel may face should they choose to conceal the availability of insurance coverage.

1. Factual Background

   In December 2007, Renee and Jordan Conley filed a product liability suit against Ford Motor Company in the State Court of Cobb County. (12) During discovery, the Conleys requested that Ford identify any insurance policies that would cover a possible judgment. Ford objected to the request claiming that it was overly broad and that it sought irrelevant evidence. (13) The company added qualifying language that gave the Conleys the impression Ford was self-insured. (14) The jury, as a result, was not qualified for any relationships with insurers. Trial commenced on November 9, 2009 and, ten days later on November 19, 2009, the jury returned a verdict in favor of Ford. The Conleys did not appeal. (15) Then on June 13, 2011, more than a year after the Conley's original action, the parents of Donald R. Young III filed a similar product liability action against Ford--in the same court and before the same judge as the Conley case. (16)

   During discovery in Ford Motor Co. v. Young, (17) the plaintiffs requested that Ford disclose any insurance policies that might cover a judgment against the company. Ford did not object to the request, as it did in the Conley case, but responded using language very similar to its response in Conley. (18) The Youngs did not make a motion to compel Ford to produce its insurers; however, they prepared a pretrial order that proposed the jurors be qualified for any relationships they might have with two specific insurers, American International Specialty Lines Insurance Company and Lloyds of London, as well as any other insurer that would indemnify Ford in the event of a judgment against it. (19) Ford responded by submitting its own pretrial order proposal which objected to any reference of insurance coverage and reiterated that the company had sufficient resources to cover any judgment against it. (20)

   In discussing the pretrial order, counsel for Ford repeated the position that the company "essentially is self-insured"; however, the trial court explained that the issue was not a question of whether the company had sufficient resources to cover a judgment but, rather, centered on the missed opportunity to qualify the jury for those that might have shared a financial stake in the case. (21) Ford was forced to make a statement, on the record, that the company had no insurance coverage. (22) Counsel for Ford made this representation to the court, repeating that Ford had no applicable insurance. (23) However, the following day, the Youngs informed the court that Ford admitted having insurers. (24) After confirming this with Ford, the court declared a mistrial; subsequently, the parties reached a settlement and dismissed the case. (25)

   After learning that Ford concealed its insurers during discovery, the plaintiffs in Reese v. Ford Motor Co., (16)--yet another products liability action against Ford tried in Cobb County--made an extraordinary motion for new trial, alleging that Ford made similar representations to them concerning its insurers. (27) The trial court granted the Reeses' motion, and interpreted Ford's discovery response as it did in Young, finding that the company intended to convey that it was entirely self-insured. (28) Ford appealed the trial court's ruling and the Georgia Court of Appeals found that, pursuant to Georgia Code Section 5-5-41 (a), the trial judge had discretion to allow the filing of an extraordinary motion for new trial where some good reason was shown. (29) The court noted that it would not disturb a trial court's ruling on such a motion absent an abuse of discretion, which the court did not find in that case. (30) Subsequently, the court affirmed the motion. (31)

   Finally, after discovering the court's decisions in Young and Reese, the Conleys filed their own extraordinary motion for new trial with the trial court. The trial court granted this motion and Ford appealed. The trial court certified its new trial order for immediate review and the court of appeals granted the application. This time, unlike Reese, the court of appeals was divided equally on the disposition. Because the court divided equally, the case was transferred to the Supreme Court of Georgia. (32)

2. Legal Background

   1. The Plaintiff's Right to Qualify the Jury

      It is a well settled principle of Georgia law that plaintiffs have a right to qualify a jury as to any possible relationships or connections they might have with a defendant's insurers. (33) The law creates a per se disqualification under Ga. Code Section 15-12-135 to remove any possibility of jurors with such a relationship. (34) If the jury is not qualified in this way, and the party preserves this issue for review, the alleging party will be presumed prejudiced. (35) If this prejudice is not properly rebutted, a new trial must be ordered. (36) The reason behind this presumption of prejudice stems from the court's interest in providing a plaintiff with the opportunity to disqualify jurors that have a financial stake in the insurance company which might be forced to indemnify the defendant. (37)

      In Franklin v. Tackett, (38) Judge Beasley delivered a special concurrence that cast doubt on the per se presumption of prejudice. (39) Judge Beasley argued that, where there is no mention of the defendant's insurer during trial, there should be no presumption of prejudice because the jury cannot develop bias if they are not aware of any personal disadvantage that might result from ruling in favor of the plaintiff. (40) In addition, in Patterson v. Lauderback, (41) the court found that there might be better methods available than the per se disqualification via Georgia Code Section 15-12-135(a). (42) The court suggested that submitting written questionnaires to discover such disqualifications at an earlier stage, rather than posing qualification questions at voir dire, would be a more appropriate method. (43)

      Judge Beasley's concurrence reflected an interest in protecting the defendant from the presumption that, because he or she has insurance, the jury might be willing to impose a higher judgment figure. (44) In Arp v. Payne, (45) Judge Andrews suggested that a better approach would be to qualify the jurors by asking about all relationships they might have with any insurance company. (46) The special concurrence in Arp also suggests the court should offer a limiting instruction that any insurance coverage the defendant might possess is an immaterial fact to the outcome of the case and should not be considered by the jury. (47) However, neither of these cases, nor any other case since Franklin, suggests that the presumption of harm established by Atlanta Coach Co. should be vacated. (48) The cases that followed Franklin merely reflected a concern for the method by which juries are qualified; these cases were interested in protecting the defendant from any bias that the jury might develop if they learned that the defendant was insured. (49) Such a bias might be that, because the defendant had insurance, he or she was better situated to pay a higher judgment. In 1996 the court of appeals, in Smith v. Crump, (50) reaffirmed the per se presumption of harm from Atlanta Coach Co. (51) Here, the court clarified that any possible...