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A ppel l ant s R ober tG . W y ckoff and M ahendr a G aj ar aw al a appe al the D i s t r i ctC our t ’ s gr antof A ppel l ee M etr opol i t an Li fe I ns ur ance ’ s ( “M etL i fe” ) m ot i ons for s u m m a r yj u d g m e n to n c l a i m s a r i s i n g f r o m th e p u r c h a s e o f

l i f e i n s u r a n c e p o l i c i e s . We have j ur i s di ct i on pur s uantt o 28 U . S. C . § 1291 and, gui ded byouropi ni ons i n D i lw or th v. Metr opol i tan Li

f e I ns ur ance Co. , 418 F. 3d 345 ( 3d C i r . 2005) and Tran v. Metr opol i tan L ife In s u r a n c e C o ., 4 0 8 F . 3 d 1 3 0 (3d C ir . 2 0 0 5 ), w e w i l l r ever s e.1. E ach a ppel l antpur chas ed tw o pol i ci es and i n al l m at er i al r es pect s the pol i ci es

w e re id e n tica l. 2. T hes e pol i ci es w er e s etup as fol l ow s : M etL i fe w oul d i nves tthe annua l pr emi um paym ent s and, as s um i ng t hos e i nves t m ent s di d w el l , the di vi dend/ i nt er es tm ade on the pr emi um i nves t m ent s ( t he pr i nci pal ) w oul d es s ent i al l y“pay ” the pr emi um paym ent s due af ter som e sp ec ifi ed n u m b er o f y ea rs. T h u s, M et L ife w o u ld tell it s p o tential cu stom ers t hatout - of- pocketpaym ent s w oul d s t op aft era ce r t ai n num berof y ear s . O f cour s e, the ent i r e oper at i on r equi r ed thati nves t m entr at es and r eturns s t ayatori m pr ove fr om the curr entr at e. A nydr op and the s peci fi c y earcut - off w oul d no l ongers uffi ce. T he fi xed n u m b e r o f

y e a rs v a rie d d e p e n d in g o n th e ra te o f re tu rn o n th e p re m iu m in v e stm e n t. 3 I. S in c e w e w rite o n lyf

o r th e p a rties , w e sk e tch ju st th e f a c tu a l co re . In b o th cases, M etL i fe sol d “A ccel erat ed P aym ent Pl an” li fe i nsurance p oli ci es t o ap pell ants . 1 C ol l oqui al l yknow n as “vani s hi ng pr emi um ” i ns ur ance pol i ci es , M etL i fe r epr es ent ed that t hes e pol i ci es coul d be pur chas ed bym aki ng out - of- pocketpr emi um paym ent s fora fi xed num berof y ear s . R ei nfor ci ng t hi s r epr es ent at i on, M etL i fe ut i l i zed i l l us t r at i ons that 2 appea r ed t o i ndi cat e thatt he pol i cyonl yr equi r ed a s peci fi c and f i xed per i od of pr emi um paym ent s . U pon t hes e r epr es ent at i ons , both appel l ant s under s t ood t hei rpaym ent s t o be f ix e d a t a d e f

in ite n u m b e r o f

y e a rs, a f ter w h ich p o in t th e yw o u ld n o t b e re q u ire d to c o n tin u e p a y in g th e irp re m iu m s .

H ow ever , al t hough appel l ant s w er e underthe i m pr es s i on thatthei rpr emi um paym ent s w oul d end af t era ce r t ai n t i m e, no s uch guar ant ee w as everm ade. T he ill u stra tio n s u se d b yM e t L if e c o n tain e d a c lau se w h ich d isc lo se d th a t th e re su lts3. T he clause contai ned i n the i l l ust rat i on st at es:

T h e C a sh o u tlayill u stra ted sh o w s th e re su lts if th e c u rre n t d iv id e n d sc a le cont i nues w i t houtchange , D i vi dends ar e notguar ant eed a nd m ayi ncr eas e or decrease i n the futur e. If the fu ture di vidends d ecrease i ti s possi ble that the cash val ue of a ddi t i onal i ns ur ance m aynotbe s uffi ci enti n s om e futur e y ear s t o pay t he ful l curr entpr emi um and s om e ca s h out l aym aybe r equi r ed . . . I l l us t r at i ve fi gur es ar e notguar ant ees ores t i m at es forthe futur e. 4 p roje c te d in th e illu s tr a tio n w e re n o t g u a ra n te e d a n d w e re m e re ly “i llu s tr a tiv e .” 3 M o reo v er, th e p o li cies the m selv es stated o n the c o v er p ag e “ P rem ium s p ay ab le fo r a s t at ed per i od. ” Then, on page tw o, t he pol i ci es cont ai ned cl aus es w hi ch i ndi cat ed: “Y E A R S PA Y A B L E ” fol l ow ed bya numberof y ear s r angi ng fr om 32 t o 72, dependi ng on t he i ndi vi dual pol i cy . A ft err ece i vi ng thei rpol i ci es , appel l ant s nei t herr ead nor r e v i e we d t h e m. II .

B ot h appel l ant s fi l ed a c om pl ai ntagai ns tM etL i fe a l l egi ng cl ai m s of, i nt er al i a, N egl i gence , C om m on L aw Fr aud and D ece i t , and V i ol at i ons of the U nfai rT r ade P ra c tic e s a n d C o n s u m e r P ro te c tio n L a w (“ U T P C P L ” ).

A fter co m p let ion o f d isco v ery , M et L ife f il ed M o ti o n s fo r S u m m ary J udgm enton t he bas i s t hatappel l ant s ’ cl ai m s w er e t i m e- barr ed bythe s t atut e of l i m i t at i ons . T he D i s t r i ctC our tagr eed a nd, i n t w o s epar at e opi ni ons , di s m i s s ed a p p e llan ts’ c laim s. In so d o in g , itb a se d its c o n c lu sio n o n th e f a c t th a t ap p e llan ts f

a iled to under t ake e ven a c ur s or yr evi ew of thei rpol i ci es , ther ebypr event i ng them from t aki ng4. T he Penns y l vani a s t atut e of l i m i t at i ons fornegl i gence and comm on l aw fr aud

cl ai m s i s tw o y ears . 5 a d v a n tag e o f

P e n n sy lv a n ia’ s d isc o v e ryru le. A p p e llan ts h a v e tim e lya p p e a led th is deci s i on. III .

A. Ne g l i g e n c e a n d Co mmo n La w Fr a u d Cl a i ms A t th e o u tse t, ap p e llan ts c o n c e d e th a t if th e P e n n sy lv a n ia d isc o v e ryru le is inap p li ca b le, the s tatu te of li m it ati o n s w il l act t o b ar the irclaim s. T h eyclaim , h o w ev er, 4 t h a tn o t h i n g i n t h e i n s u r a n c e p o l i c i e s o rth e i l l u s t r a t i o n s , a s a ma t t e ro f l a w, unambi guous l ycontr adi ct s t he r epr es ent at i ons m ade byM etL i fe a boutthe natur e of the pol i cyand that , as a cons equenc e, t he di s coveryrul e s houl d appl yt o t ol l the s t atut e of lim ita tio n s . I n D i lw or th w e recogn i zed thatun der cert ai n cir cum st ances, Penns y l vani a’ s di s coveryrul e w i l l t ol l the s t atut e of l i m i t at i ons forthe per i od of t i m e a p o lic yh o ld e r i s re a s o n a b ly u n a w a re th a t a n in ju ry h a s b e e n s u s ta in e d . D ilw o rth , 418 F. 3d a t 3 5 1 . In o rd e r to b e n e f it fro m th e d isc o v e ryru le, a p o licyh o ld e r m u st s h o w th a t d e sp ite e x e rc is in g re a s o n a b le d ilig e n c e h e c o u ld n o t h a v e k n o w n a c a u s e o f a c tio n h a d a c c ru e d . S e e id . I n cert ai n ci r cumst ance s , t he exe r ci s e of r eas onabl e di l i gence m ay , as a mat t erof l aw , r equi r e a c ur s or yr evi ew of an i ns ur ance pol i cyand/ orof i l l us t r at i ons aboutthe p o lic y . S e e id . T hi s r evi ew w oul d be r equi r ed, fori ns t ance , i f i tw oul d r evea l6

unambi guous l yt hatt he pol i cyhol derhad bee n m i s l ed ori nj ur ed byear l i err epr es ent at i ons m a d e b ya n in su re r’s a g e n t. H o w e v e r, if a c u rso ryre v iew w o u ld n o t ab so lu tely contr over tt he r epr es ent at i ons m ade byan age ntorthe r eas onabl e i m pr es s i ons of the pol i cyhol der , i tcannotbe s ai d, as a mat t erof l aw , thatthe pol i cyhol derw oul d have d is c o v e re d th e u n d e rl y in g in ju ri e s . W e hel d i n D ilw o rth thati f a pol i cyhol derbel i eves , bas ed on r epr es ent at i ons m ade byan i ns ur er ’ s agent , thathe ow ns a “va ni s hi ng pr emi um ” l i fe i ns ur ance pol i cy , t he ac tual pr ovi s i ons of the pol i cydo notunambi guous l ycontr adi ctt hat b e lie f b ys ta tin g a d if

f e re n t le n g th o f

p re m iu m p a ym e n t. Id . at351- 52. T he crux of the i s s u e “ i s n o twh e t h e rt h e p r e mi u ms a r e p a y a b l e . . . b u tf r o m wh a ts o u r c e th e p r e mi u ms s houl d be der i ved. ” Id . at352 ( quot i ng A s ad v. H ar t f or d Li f e I ns . C o. , 116 F. Supp. 2d 960, 965 ( N . D . I l l . 2000) ) . T hus w hi l e the ac tual pol i cyi n D ilw o rth i ndi cat ed that86 y ear s of p a ym e n ts w o u ld b e re q u ire d , ev e n h a d D ilw o rth b e e n a w a re o f th is p ro v isio n , itw o u ld n o t h a v e b e e n in c o n sis ten t w ith th e a g e n t’s re p re se n tatio n th a t af ter ten y e a rs o f

p a ym e n ts th e re m a in in g p a ym e n ts w o u ld c o m e f ro m a c c ru e d d iv id e n d s a n d in te re s t p a ym e n ts . Id . a t 3 5 1 . In a d d itio n , w e h a v e h e ld th a t th e s ta te m e n t “ th e re s u lts a re n o t g u a ra n te e d ,” cont ai ned ei t herw i t hi n t he pol i cyori n i l l us t r at i ons , i s notdi r ect l yi ncons i s t entw i t h or c o n tr a d ic to ry to a p o lic yh o ld e r’ s b e lie f in th e v a n is h in g p re m iu m n a tu re o f th e p o lic y . See Tr an , 4 0 8 F .3 d a t 1 3 8 .7 H e re , the p o licy h o ld e rs’ c o n ten tio n s a n d e x p e rie n c e s a re a lm o st id e n tica l to t hos e of the pol i cyhol der s i n D ilw o rth . M or eover , the D i s t r i ctC our ther e found thatt he caus e of a ct i on acc rued w hen the pol i cyhol der s r ece i ved thei rl i fe i ns ur ance pol i ci es beca us e theyeac h fai l ed t o under t ake a cur s oryexami nat i on of the ac tual pol i ci es . T he D istric t C o u rt b a se s th is c o n c lu sio n o n th e a ss u m p tio n th a t th e a c tu a l p o licyc lea rly contr adi ct s t he r epr es ent at i ons of the age nt s ( “th[e] pol i cydi d notconform t o t he p rom ises all eg ed lym ad e b ythe s ales a g en t con ce rnin g p rem ium s b eing p ay ab le fo r a l i m i t ed t i m e. ”) . L i ke the pol i cyi n D ilw o rth , how ever , a cur s oryexami nat i on w oul d have r evea l ed nothi ng i ncons i s t entw i t h, orcontr aryt o, the “va ni s hi ng pr emi um ” s cheme s et outbyt he M etL i fe a gent . Si m pl ybeca us e the pol i cyi ndi cat es a l ongert i m e- per i od for pr emi um paym ent s , ort hatt he cl ai m ed t i m e- per i ods ar e notguar ant ees , i tdoes notr ender i ti n c o n s i s t e n twi t h t h e p o l i c yh o l d e r s ’ b e l i e f s th a tth e ywo u l d n o th a v e t o p a yp r e mi u ms aft era ce r t ai n t i m e per i od. Fur t herm or e, the pol i cy ’ s i l l us t r at i on cont ai ni ng s i m i l ar l anguage conce r ni ng t he l ack of guar ant ees i s i ns uffi ci entas a mat t erof l aw t o cr eat e an unambi guous ori nel uct abl e contr adi ct oryconcl us i on had the pol i cyhol der s r ead the p o lic y . T he D i s t r i ctC our t , t her efor e, err ed byhol di ng thatthe l anguage of the actual pol i cydepr i ves , as a mat t erof l aw , the pol i cyhol der s fr om the bene fi tof the5. W e not e thatatt he t i m e of the D i s t r i ctC our t ’ s opi ni on, w e had notdeci ded ei ther

Tran o r D ilw o rth . 8 di s coveryrul e. Si nce a cur s or yr evi ew w oul d notabs ol ut el ycontr over tthe 5 rep rese n tat ion s m ad e b yan ag en t or th e im p ression s o f th e p o li cy h o lder, i t th ere fo re cannotbe s ai d t hatas a mat t erof l aw pl ai nt i ffs w oul d have di s cover ed thei runder l y i ng in ju ri e s a t th e tim e th e yre c e iv e d th e irp o lic ie s . B. UTP CP L Cl a i ms The D i s t r i c tCour ta nd M e tLi fe a l s o c on t e nd tha ta pp e l l a nt s ’ U TPC PL cl ai m s ar e barr ed byt he s t atut e of l i m i t at i ons , form uch the s ame r eas on. T he D i s t r i ct C our tr eas oned thatt he appe l l ant s fai l ed t o exer ci s e r eas onabl e di l i gence i n r evi ew i ng t hei rpol i ci es and ther efor e coul d notbe cons i der ed t o have r eas onabl yr el i ed on M et L i f e ’ s r e p r e s e n t a t i o n s a b o u tt h e n a tu r e o f th e p o l i c y. I n Tran w e dea l tw i t h s i m i l arU T PC PL cl ai m s t o t hos e i n t he i ns t antcas es and w e fi nd i t s r eas oni ng contr ol l i ng. T her e, w e hel d t hata pol i cyhol der ’ s r el i ance on agentr epr es ent at i ons aboutt he natur e of the pol i cy , even w her e the pl ai n l anguage of the pol i cyi s contr adi ct or y , cr eat es a genui ne i s s ue of f actas t o w hetherthe r el i ance w as ju s tif ie d . Tran , 408 F. 3d at130. M or eover , i n Tran w e c o n clud ed that an insu red ’s fai l ure t o read t he p oli cydo es not, as a m at t er of l aw , precl ud e a fraud clai m becau se6. I ti s i m por t antt o not e thateven i f Penns y l vani a w er e t o i m pos e s uch a duty , t he

l ang uag e con t ai ned i n thi s type o f van i shi ng prem i um po l i cyw ou l d n ot s uff i ce, as a m at t erof l aw , t o defe atappel l ant s ’ cl ai m s thattheyr eas onabl yr el i ed on the al l eged m is re p re s e n ta tio n s . 7 . A s w e h a v e in d ica ted a b o v e , the D istric t C o u rt’s c o n c lu sio n th a t th e p lain l anguage of thes e pol i ci es contr adi ct s the al l eged r epr es ent at i ons , i n l i ghtof D ilw o rth , is err on eou s. 9 P e n n s y lv a n ia d o e s n o t im p o s e a d u ty to re a d in s u ra n c e p o lic ie s w h e re f ra u d is a lle g e d . Id . at139 n. 11. 6

A ct i ng w i t houtt he bene fi tof ourdeci s i on i n Tran , the D istri ct C o u rth ere h e l d t h a tt h e p o l i c yh o l d e r s ’ f a i l u r e t o r e a d th e p o l i c yc o n s t i tu t e d , a s a ma t t e ro f l a w, gr ounds fordi s m i s s al of the U T PC PL fr aud cl ai m beca us e the pl ai n l anguage c o n tra d icte d th e a lleg e d m isre p re se n tatio n s a n d th e a p p e llan ts f a iled to re a d th e ir pol i ci es . I n Tran , w e r ecogni zed thatthi s pr es um pt i on w oul d al l ow i ns ur er s t o defe att he

7 r eas onabl e expe ct at i ons of pol i cyhol der s byr epr es ent i ng one thi ng and then doi ng another . W e ther efor e hel d t hati ti s not , as a mat t erof l aw , unr eas onabl e for pol i cyhol der s t o r el yon r epr es ent at i ons m ade byi ns ur ance agent s r atherthan on the a c tu a l p r o v i s i o n s o f

t h e p o l i c y. I n t he i ns t antcas es , t he pol i cyhol der s al l r el i ed on al l eged m i s r epr es ent at i ons m ade bya M etL i fe a gentconce r ni ng a vani s hi ng pr emi um l i fe in su ra n c e p o licy . T h e D istric t C o u rt’s g ra n t o f su m m a ryju d g m e n t in f a v o r o f M e t L if e is p re m ise d o n th e a p p e llan ts’ f a ilu re to re a d th e a c tu a l p o licy . It th e re f o re f a iled to cons i dert hatt he al l eged mi s r epr es ent at i ons bya M etL i fe a gentaboutthe natur e of the10

i ns ur ance pol i cycr eat es a genui ne i s s ue of f actconce r ni ng the r eas onabl enes s of the p lain tiff ’s e x p e c tatio n s o f th e n a tu re o f

th e p o licy . T h u s, a t lea st w ith re sp e c t to vani s hi ng pr emi um pol i ci es , w her e a pol i cyhol deral l eges r el i ance on r epr es ent at i ons m ade b yan insur er ori nsurer ’s agen t , sum m aryj ud gm ent i s an i nap propri at e m echan i sm if it i s b a se d o n th e p o licy h o ld e r’s f a ilu re to re a d th e a c tu a l p o licy . A s w e sta ted in D ilw o rth , w e re c o g n ize th a t at tria l a p o licyh o ld e r m a yb e u n a b le to p ro v e th a t h is r eas onabl e expe ct at i ons di ffe r ed fr om the pr ovi s i ons of the pol i cy , but , atm i ni m um , t hat p o l i c yh o l d e ri s e n t i t l e d t o t r y.

A ccor di ngl y , w e w i l l r ever s e and r emand t o t he D i s t r i ctC our tforfur t her pr ocee di ngs cons i s t entw i t h t hi s opi ni on.