Opinion ID: 3014846
Heading Depth: 2
Heading Rank: 1

Heading: Negligence and Common Law Fraud Claims

Text: At the outset, appellants concede that if the Pennsylvania discovery rule is inapplicable, the statute of limitations will act to bar their claims.4 They claim, however, that nothing in the insurance policies or the illustrations, as a matter of law, unambiguously contradicts the representations made by Met Life about the nature of the policy and that, as a consequence, the discovery rule should apply to toll the statute of limitations. In Dilworth we recognized that under certain circumstances, Pennsylvania’s discovery rule will toll the statute of limitations for the period of time a policyholder is reasonably unaware that an injury has been sustained. Dilworth, 418 F.3d at 351. In order to benefit from the discovery rule, a policyholder must show that despite exercising reasonable diligence he could not have known a cause of action had accrued. See id. In certain circumstances, the exercise of reasonable diligence may, as a matter of law, require a cursory review of an insurance policy and/or of illustrations about the policy. See id. This review would be required, for instance, if it would reveal 4. The Pennsylvania statute of limitations for negligence and common law fraud claims is two years. 5 unambiguously that the policyholder had been misled or injured by earlier representations made by an insurer’s agent. However, if a cursory review would not absolutely controvert the representations made by an agent or the reasonable impressions of the policyholder, it cannot be said, as a matter of law, that the policyholder would have discovered the underlying injuries. We held in Dilworth that if a policyholder believes, based on representations made by an insurer’s agent, that he owns a “vanishing premium” life insurance policy, the actual provisions of the policy do not unambiguously contradict that belief by stating a different length of premium payment. Id. at 351-52. The crux of the issue “is not whether the premiums are payable...but from what source the premiums should be derived.” Id. at 352 (quoting Asad v. Hartford Life Ins. Co., 116 F.Supp.2d 960, 965 (N.D.Ill.2000)). Thus while the actual policy in Dilworth indicated that 86 years of payments would be required, even had Dilworth been aware of this provision, it would not have been inconsistent with the agent’s representation that after ten years of payments the remaining payments would come from accrued dividends and interest payments. Id. at 351. In addition, we have held that the statement “the results are not guaranteed,” contained either within the policy or in illustrations, is not directly inconsistent with or contradictory to a policyholder’s belief in the vanishing premium nature of the policy. See Tran, 408 F.3d at 138. 6 Here, the policyholders’ contentions and experiences are almost identical to those of the policyholders in Dilworth. Moreover, the District Court here found that the cause of action accrued when the policyholders received their life insurance policies because they each failed to undertake a cursory examination of the actual policies. The District Court bases this conclusion on the assumption that the actual policy clearly contradicts the representations of the agents (“th[e] policy did not conform to the promises allegedly made by the sales agent concerning premiums being payable for a limited time.”). Like the policy in Dilworth, however, a cursory examination would have revealed nothing inconsistent with, or contrary to, the “vanishing premium” scheme set out by the Met Life agent. Simply because the policy indicates a longer time-period for premium payments, or that the claimed time-periods are not guarantees, it does not render it inconsistent with the policyholders’ beliefs that they would not have to pay premiums after a certain time period. Furthermore, the policy’s illustration containing similar language concerning the lack of guarantees is insufficient as a matter of law to create an unambiguous or ineluctable contradictory conclusion had the policyholders read the policy. The District Court, therefore, erred by holding that the language of the actual policy deprives, as a matter of law, the policyholders from the benefit of the 7 discovery rule.5 Since a cursory review would not absolutely controvert the representations made by an agent or the impressions of the policyholder, it therefore cannot be said that as a matter of law plaintiffs would have discovered their underlying injuries at the time they received their policies.