INSURED WAIVES PRIVACY AND SELF INCRIMINATION OBJECTIONS TO WRITTEN DISCOVERY – DEATH PENALTY SANCTIONS UPHELD

December 19, 2011

Last Wednesday, the San Antonio Court of Appeals upheld death penalty sanctions dismissing the insured’s claims against his insurer after finding that the insured waived objections including Fifth Amendment and privacy objections that were untimely asserted.  In Valdez v. Progressive County Mutual Insurance Company, 2011 WL 6288702 (Tex.App. – San Antonio, December 14, 2011), Progressive denied the insured’s claim for the theft of his truck based on evidence showing that the vehicle was driven into Mexico by his associates and was being held as collateral for a drug trafficking transaction.  In the bad faith lawsuit that followed, Progressive sent written discovery seeking the insured’s tax returns and Valdez neither complied nor objected.  After several motions to compel, orders to produce, and failures to comply, the court granted Progressive’s motion for death penalty sanctions dismissing Valdez’s claims.

On appeal, the court observed that even though Valdez later asserted objections based on privacy and invoked his constitutional rights against self-incrimination under the Fifth Amendment, his failure to do so timely waived those objections.  And having failed to produce the documents as ordered by the trial court, the San Antonio Court of Appeals held that a death penalty sanction dismissing his claims was not an abuse of the court’s discretion, and the trial court’s judgment was affirmed.