Insureds are Made More Equal Than Insurers

California Court of Appeals Extends Meaning of Statute to Make Insured More Powerful than Insurers at EUO

Barry Zalma

May 24, 2024

Transcript

FIRE POLICY EUO CONDITION

Residential property insurance policies commonly require an insured to submit to an examination under oath (EUO) if requested by the insurer in connection with the resolution of a claim. Insurance Code section 2071.1, subdivision (a)(4), provides that an insured subject to an EUO "may record the examination proceedings in their entirety."

In an issue of first impression: whether the statute entitles an insured to make a video recording of the insurer's participants in an EUO. After considering the statute's plain language, statutory framework, and legislative history, the Court of Appeals concluded the provision does confer such a right.

BACKGROUND

Following water damage to his home, Vladimir Myasnyankin (Myasnyankin or plaintiff) filed a claim under his property insurance policy with Nationwide Mutual Insurance Company (Nationwide). Pursuant to the policy terms, Nationwide required plaintiff to submit to an EUO, which was scheduled to be in person. Relying on section 2071.1, subdivision (a)(4) (hereafter section 2071.1(a)(4)), plaintiff sought to video record the entire proceeding, including Nationwide's attorneys and claims adjusters. Nationwide refused to proceed with the EUO, asserting section 2071.1(a)(4) only permitted plaintiff to video record himself. Further, Nationwide threatened to deny plaintiff's claim unless he agreed to proceed with the EUO. Plaintiff then sued Nationwide seeking a declaration of his rights under section 2071.1.

DISCUSSION

An insured's compliance with a policy requirement to submit to an examination under oath is a prerequisite to the right to receive benefits under the policy. Examinations under oath are frequently conducted under circumstances where the loss is undocumented or suspect. The purpose of the examination under oath is to enable the insurer to obtain the information necessary to process the claim. The examination is normally conducted orally before a court reporter who administers the oath and transcribes the proceeding.

The plain language provides an insured may record every element and part of the examination proceeding just as the insurer may by the means of a certified court reporter or a video. Like a video taped deposition only the face and statements of the witness are viewed while questions and answers are recorded.

The Court of Appeals noted that the legislative history of the statute does not explicitly address whether section 2071.1(a)(4) encompasses the right to video record the insurer's representatives. However, it demonstrates an express and unequivocal intent to protect insureds from harassment in EUO proceedings. Significantly, video records nonverbal conduct, such as eye-rolls or glares, which would not be captured by audio recordings or reporter's transcripts. In addition, the knowledge that a person is being video recorded may prompt that person to modify their behavior in a positive manner.

The Court of Appeals concluded that the plain language, statutory framework, and legislative history all support a construction of section 2071.1(a)(4) granting insureds the the right to record the proceedings.

THE DISSENT

Presiding Justice Teri L. Jackson dissented because she disagreed with the majority's interpretation of section 2071.1(a)(4). Justice Jackson noted that had the Legislature wanted to confer specific recording rights, it could have done so as it has done in a variety of other contexts. For example, persons attending various public meetings "shall have the right to record the proceedings with an audio or video recorder ...." (Gov. Code, §§ 11124.1, subd. (a), 54953.5, subd. (a), italics added; see Welf. &Inst. Code, § 4660.)

Justice Jackson noted that there is little, if any, discussion in the legislative history about specific recording methods. And what minimal references there are, none mention an insured's right to video record an insurer's participants.

Case law has long confirmed an insurer may contractually require, as a condition of coverage, that an insured submit to an EUO. She concluded that "[F]rom review of the plain language of section 2071.1 and its legislative history, together with the applicable case law and statutory scheme, the conclusion is that section 2071.1(a)(4) does not give an insured an unqualified right to video record an insurance company's participants in every instance and/or a concomitant right to refuse to participate in an EUO unless this specific method of recording is permitted.

ZALMA OPINION

In my opinion the only purpose of recording the facial expressions and appearance of the lawyers representing the insurer at an EUO and any representative of the insurer is to harass, intimidate or make the process of the EUO expensive. The statute requires that the insurer provide the insured with a copy of the transcript of the proceedings and if recorded by oral or video recording. Adding a second or third video record is only their to intimidate or lesson the inquiries of the insurer faced with a potentially fraudulent claim. Hopefully the case will go up to the California Supreme court to consider the well reasoned dissent of Justice Jackson.