Opinion ID: 3016510
Heading Depth: 2
Heading Rank: 1

Heading: Duty to Read Policy

Text: McKenna argues that the District Court improperly placed an affirmative duty on him to read the 1982 Policy, the Annuity, and the check from the cash surrender of the 1969 Policy. We disagree and will discuss each in turn. McKenna claims that he purchased the 1982 Policy based on MetLife’s misrepresentation that he was purchasing an annuity contract not a life insurance policy and that the purported “annuity” required premium payments for only seven years. He argues that the District Court, by ruling that his claims accrued when he received a copy of the 1982 Policy in 1988,4 improperly placed an affirmative duty on him to read and understand the terms of the Policy. The Pennsylvania Supreme Court has stated that “the policyholder has no duty to read the policy unless under the circumstances it is unreasonable not to read it.” Rempel v. Nationwide Life Ins. Co., 370 A.2d 366, 369 (Pa. 1977) (emphasis added). In Rempel, nothing on the face of the policy would have alerted 4. The 1982 Policy was issued on December 6, 1982, but McKenna denies receiving a copy of the policy until three to five years later when he called MetLife. Nevertheless, it is beyond dispute that McKenna has had the 1982 Policy since at least 1988. 5 the insureds that the policy did not contain the coverage expected. See Id. Here, however, it was unreasonable for McKenna not to read the policy. The face of the 1982 Policy should have alerted McKenna that it required a period of payments longer than seven years, and that the agreement was for life insurance rather than for an annuity. The specification page specifically provides for 55 years of payments. The words “Application for Life Insurance” appear at the top of the cover page in large bold text. The District Court did not improperly place an affirmative duty on McKenna to read the policy. Rather, the District Court thought it was “unreasonable under the circumstances” for McKenna not to read the policy. Next, McKenna asserts that MetLife misrepresented the future performance of the 1983 Annuity. He relies on Pennsylvania law that an insured has no duty to examine a policy on receipt but only to conduct a “cursory examination.” See Matcon Diamond v. Pennsylvania Nat’l, 815 A.2d 1109 (Pa. Super. 2003). Even a “cursory review” of the Annuity would have alerted McKenna that the Annuity’s future performance would vary. The Annuity contract provides that “interest [is] credited to [plaintiff’s] contract at the rate set by [MetLife] from time to time.” McKenna also received an annual annuity statement, informing him of the contract’s actual performance, which varied from time to time. In addition, McKenna was given an Annuity Illustration stating that “illustrative figures are not guaranteed for the future.” Therefore, McKenna’s claim regarding the misrepresentation is without merit. 6 Finally, McKenna asserts that the 1969 Policy was cash surrendered without his knowledge to purchase the 1983 Annuity. MetLife issued a check in the amount of $7,898.82 payable to McKenna, as full payment for the cash surrender of the 1969 Policy. The check itself has the 1969 Policy number printed on it and directly above the policy number the phrase “FULL PAYMENT OF POLICY DESCRIBED BELOW.” McKenna admits receiving the check and using the money to partially pay for the Annuity. “Under Pennsylvania insurance law, if the language of an insurance policy is clear and unambiguous, an insured does not have a colorable claim against an insurer in the event of a coverage dispute on the basis that he did not read or understand the policy.” Worldwide Underwriters Ins. Co. v. Brady, 973 F.2d 192, 194 (3d Cir. 1992) (citing Standard Venetian Blind Co. v. Am. Empire Ins. Co., 469 A.2d 563, 567 (Pa. 1983)). “Moreover, in the absence of proof of fraud, failure to read the contract is an unavailing excuse or defense and cannot justify an avoidance, modification, or nullification of the contract or any provision thereof.” Lazovick v. Sun Life Ins. Co., 586 F.Supp. 918, 922 (E.D. Pa. 1984) (internal quotations omitted).5 Because the check is clear and unambiguous and there is no proof of fraud, McKenna may not rely on the excuse of failure to read the contract.