“Chutzpah” or how a Guilty Plea to Insurance Fraud Defeats Claim

A Plea of Convenience is Still a Plea of Guilty

“Chutzpah” is a Yiddish word meaning “unmitigated gall” where, for an example, a person who murdered his parents asks the court for clemency because he is an orphan.

In Sonya Fuller, Nationstar Mortgage, LLC v. Mercury Insurance Company Of Georgia,  No. 17-12975, United States Court Of Appeals For The Eleventh Circuit (January 10, 2018) a person who pleaded guilty to insurance fraud had the unmitigated chutzpah to plead guilty to the crime of insurance fraud and still attempt to collect on the fire she caused to her dwelling.


Sonya Fuller appealed the summary judgment against her complaint that her insurer, Mercury Insurance Company of Georgia, breached its contract and acted in bad faith by denying her claim for losses to her home and personal property. The district court ruled that Mercury could deny payment to and cancel Fuller’s homeowner policy under a provision that excluded from coverage claims involving concealment or fraud based on the unrebutted evidence of wrongdoing supplied by her plea of guilty to insurance fraud.

After Fuller’s house in Smyrna, Georgia, was damaged by a fire, she submitted a claim to Mercury for her loss. Mercury determined that Fuller or someone acting at her behest started the fire and denied Fuller’s claim based on two clauses in her insurance policy that excluded coverage for intentional loss and for concealment or fraud. The policy excluded any “Intentional Loss, meaning any loss arising out of any act committed: (a) by or at the direction of any Insured; and (b) with the intent to cause a loss.”

The “concealment or fraud” clause stated that the “policy will be cancelled and any unpaid claims denied if an Insured has, before or after a loss: (a) intentionally concealed or misrepresented any material fact or circumstance; or (b) made false statements or engaged in fraudulent conduct relating to this insurance.”

Mercury answered Fuller’s suit alleging that it had not breached a contractual duty owed to Fuller, requested a judgment declaring that it had “no obligation to satisfy [Fuller’s] claim for insurance proceeds,” and counterclaimed to recover money that it had advanced to Fuller. In the meantime, a grand jury in Georgia indicted Fuller for arson and insurance fraud. Fuller entered a plea of convenience to the charge of insurance fraud and received a sentence of probation.

Mercury moved for summary judgment, which the district court granted as to a lack of liability. The district court ruled that Fuller’s plea of guilty to “fraudulent conduct,” which provided “prima facie evidence of an intentional act that would cancel her insurance policy” and had not been “rebut . . . in any meaningful way,” resulted in a “cancel[lation [of] the Policy, and [the elimination of any duty on the part of] Mercury . . . to cover Fuller’s claim.”


The Eleventh Circuit concluded that the district court did not err by entering summary judgment in favor of Mercury. Fuller’s conviction, the court concluded, was sufficient to establish a prima facie case of insurance fraud.  Fuller’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.

Fuller argued that her plea is only prima facie evidence of her guilt. The insurer, of course countered, that evidence of her guilt was all that was needed to declare the policy void under the standard “Misrepresentation, Concealment or Fraud” clause of the policy. The Eleventh Circuit, however, agreed with Mercury that Fuller failed to create a genuine issue of material fact about the validity of her plea of guilt.

Since there was no evidence that Fuller did not admit her guilt, her plea was conclusive evidence that she committed insurance fraud. Mercury was, therefore,  entitled to a judgment in its favor that it owed no coverage to her.


No matter the extent of the insured’s chutzpah when she admitted to fraud she destroyed her insurance claim. A conviction of insurance fraud is always sufficient, every time and every where, to defeat an insurance claim. Fuller should be happy that the criminal court only sentenced her to probation. Arson or insurance fraud usually carry a sentence of five years in prison. She should be concerned because, in my opinion, going forward with the suit and the appeal is a violation of the terms of her probation.

© 2017 – Barry Zalma

This article, and all of the blog posts on this site, digests and summarizes cases published by courts of the various states and the United States.  The court decisions have been modified from the actual language of the court decisions, were condensed for ease of reading, and convey the opinions of the author regarding each case.

Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant  specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He also serves as an arbitrator or mediator for insurance related disputes. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 50 years in the insurance business. He is available at http://www.zalma.com and zalma@zalma.com.

Mr. Zalma is the first recipient of theLEGEND-TROPHY-2 first annual Claims Magazine/ACE Legend Award.

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About Barry Zalma

An insurance coverage and claims handling author, consultant and expert witness with more than 48 years of practical and court room experience.
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2 Responses to “Chutzpah” or how a Guilty Plea to Insurance Fraud Defeats Claim

  1. Steve Thompson says:

    Where the Hell did Ms. Fuller find someone who studied and passed Bar exams to actually represent her in that attempt?

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