Court Opinion

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Opinions of the United
2005 Decisions                                                                                                             States Court of Appeals
                                                                                                                              for the Third Circuit

5-25-2005

Tran v. Metro Life Ins Co
Precedential or Non-Precedential: Precedential

Docket No. 04-2539

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                                     PRECEDENTIAL

  UNITED STATES COURT OF APPEALS
       FOR THE THIRD CIRCUIT

                 No. 04-2539

             HUU NAM TRAN,

                                 Appellant

                      v.

   METROPOLITAN LIFE INSURANCE
       COMPANY; KWOK LAM

On Appeal from the United States District Court
   for the Western District of Pennsylvania
     (D.C. Civil Action No. 01-cv-00262)
District Judge: Honorable Donetta W. Ambrose

          Argued February 18, 2005

        Before: SLOVITER, AMBRO
        and ALDISERT, Circuit Judges

            (Filed: May 25, 2005 )
Kenneth R. Behrend, Esquire (Argued)
Behrend & Ernsberger PC
306 Fourth Avenue, Suite 300
Union National Bank Building,
Pittsburgh, PA 15222

      Counsel for Appellant

B. John Pendleton, Jr., Esquire (Argued)
Sharon T. Boland, Esquire
McCarter & English
100 Mulberry Street
Four Gateway Center
Newark, NJ 07102-0652

      Counsel for Appellees

                OPINION OF THE COURT

AMBRO, Circuit Judge

       Huu Nam Tran appeals from the District Court’s grant of
summary judgment in favor of Metropolitan Life Insurance
Company (“MetLife”), in connection with a complaint filed by
Tran alleging that he was misled by MetLife’s agent as to the
number of years he was obligated to pay premiums on a life

                              2
insurance policy he purchased. We affirm in part and reverse in
part.

          I. Factual Background and Procedural History

        Tran was born in Vietnam and came to the United States
in 1979. He alleged in his complaint that he does not speak or
read English well, and he testified through an interpreter at his
deposition in this case. In 1993, Tran met Kwok Lam, a
MetLife agent, when Lam came into the Chinese restaurant
where Tran worked.1 Lam spoke with Tran about purchasing a
life insurance policy. The communications between Lam and
Tran took place in Chinese.2

       Lam eventually sold Tran what is commonly known as a
“vanishing premiums” policy. Tran testified that Lam told him
that he would only have to pay premiums on the policy for ten
years. Lam, on the other hand, stated that, when explaining the

      1
    According to Tran’s brief and evidence submitted in his
appendix, MetLife at that time encouraged its agents to target
people in Asian-American communities.
  2
   At his deposition, Tran stated that he communicated at work
in Chinese but that he was not fluent in that language. (His
conversations with Lam were in the Cantonese dialect.) He also
testified that he studied English while in high school in Vietnam
and for a period of time after coming to the United States but
that he did not remember the English he had learned in school.

                               3
policy to Tran, he told him that, based on the dividend scale at
that time, Tran could use his dividends to pay the premiums on
the policy. Lam showed Tran a document entitled “Accelerated
Payment Plan Illustration Annual Dividends Used to Buy Paid
Up Additional Insurance,” which Lam used to explain the terms
of the policy he was attempting to sell to Tran. The first column
of this illustration was labeled “End of Policy Year,” and the
second column was labeled “Annual Cash Outlay for Year.”
The illustration shows that the annual cash outlay past year
thirteen is “NONE.” In addition, on the illustration that Lam
showed Tran, a handwritten line was inserted after year thirteen
with a nearby notation (also handwritten) that read “paid up.”

       Lam testified that he drew the line on the illustration to
demonstrate that Tran could use his dividends to pay the
premiums on his policy “after 14 [fourteen] years 3 if the current
dividend scale had not been changed” from what it was at the
time Tran purchased the policy. After the table illustrating the
dividend payment plan, the document states:

        The cash outlay illustrated shows the result if the
        current dividend scale continues without change.
        Dividends are not guaranteed and may increase or

    3
      Looking at Lam’s deposition testimony in context, we
surmise what he meant was that Tran could begin using his
dividends to pay premiums in the fourteenth year of the policy’s
life.

                                4
       decrease in the future. If the future dividends
       decrease, it is possible that the cash value of
       additional insurance may not be sufficient in some
       future years to pay the full current premium and
       some cash outlay may be required.

       Tran signed an application for a MetLife life insurance
policy on September 7, 1993. MetLife issued a whole life
policy to him on September 16, 1993. Lam testified at his
deposition that he personally delivered the policy to Tran and
went over its terms with Tran in Chinese. Lam stated that “[he]
just told [Tran] that if he dies, how much money would be
payable to his beneficiary, and that he has to pay the premium
lifetime, but after a certain number of years, if the current
dividend scale is okay, he could start using the dividend to pay
for the premium. That’s about it.” Tran agreed only that he
received the policy.

        The front page of Tran’s policy included a provision
titled “10-Day Right to Examine Policy” that stated:

       Please read this policy. You may return the policy
       to Metropolitan or to the sales representative
       through whom you bought it within 10 days from
       the date you receive it. If you return it within the
       10-day period, the policy will be void from the
       beginning. We will refund any premium paid.

                                5
The front page of the policy also stated that “[p]remiums [were]
payable for a stated period.” The premium schedule, on the
third page of the policy, showed that premiums were payable for
fifty-nine years. On the fifth page of the policy, a section titled
“Payments During Insured’s Lifetime” specified how insureds
could use the annual dividends they received from MetLife.
One way was to apply the dividends toward premium payments.

       Finally, the policy included an integration clause as well
as a clause limiting the sales representative’s authority. The
integration clause stated that the policy “include[d] all riders
and, with the application attached when the policy [was] issued,
ma[de] up the entire contract. All statements in the application
[were] representations and not warranties. No statement will be
used to contest the policy unless it appear[ed] in the
application.”      The policy’s limitation on the sales
representative’s authority provided that “[n]o sales
representative or other person except our President, Secretary,
or a Vice-President may (a) make or change any contract of
insurance; or (b) change or waive any of the terms of this policy.
Any change must be in writing and signed by our President,
Secretary, or a Vice-President.” 4

       According to Tran, he only realized that the terms of his
policy were not what he believed them to be in 1999, when he

     4
     The policy application contained essentially the same
language as well.

                                6
received notice of a class action against MetLife. Tran later
opted out of the class action and filed a complaint against
MetLife and Lam on January 8, 2001, asserting causes of action
for negligence, common law fraud and deceit, violations of
Pennsylvania’s Unfair Trade Practice and Consumer Protection
Law (“UTPCPL”), 73 Pa. Cons. Stat. § 201-1, et seq., breach of
the implied covenant of good faith and fair dealing, bad faith,
breach of fiduciary duty, and negligent supervision. At its base
is the claim that Lam misrepresented the terms of the policy to
Tran by telling him that his premium payments on the policy
would cease after a period of time and that Tran, particularly in
light of his difficulty with English, justifiably relied on Lam’s
representations.

       The District Court dismissed Tran’s claims for breach of
the implied covenant of good faith and fair dealing, bad faith,
and breach of fiduciary duty, for failure to state a claim pursuant
to Federal Rule of Civil Procedure 12(b)(6). MetLife and Lam
subsequently filed a motion for summary judgment with respect
to Tran’s remaining claims. The District Court granted this
motion in May 2004. In doing so, it rejected MetLife’s
argument that Tran’s claims were barred by the applicable
statutes of limitation. However, the Court ruled that MetLife
was entitled to summary judgment because Tran could not, as a
matter of law, establish reasonable reliance 5 on Lam’s oral

  5
   The District Court used the terms “reasonable reliance” and
“justifiable reliance” interchangeably.

                                7
representations, as was required to succeed on his fraud,
negligent misrepresentation 6 , and UTPCPL claims. The District
Court, citing the provisions stating that premiums were payable
for fifty-nine years, that the cash value of the policy when Tran
reached retirement age was specific, and that sales agents could
not alter the terms of the policy through oral promises,
concluded that the nature of Tran’s policy was presented on the
specification page of that policy in “clear, plain language.” The
Court acknowledged that “Pennsylvania law permits the
‘reasonable expectations’ of the insured to prevail over the
express language of an insurance policy where the insurance
company creates a reasonable expectation of coverage[,]” but
determined that Tran could not “challenge the unambiguous
provisions of a policy which he made no attempt to read” or to
have read to him.

       Tran filed a timely notice of appeal, and the propriety of
the District Court’s grant of summary judgment to MetLife on
Tran’s fraud, negligent misrepresentation, and UTPCPL claims
is now before us.7

  6
   The District Court characterized Tran’s negligence cause of
action as stating a negligent misrepresentation claim, and Tran
does not dispute that characterization.
  7
   The District Court also granted summary judgment in favor
of MetLife on Tran’s negligent supervision claim because he
had presented no evidence that Lam acted outside the scope of

                               8
          II. Jurisdiction and Standard of Review

        The District Court had diversity jurisdiction over this
action pursuant to 28 U.S.C. § 1332, and we have appellate
jurisdiction over the District Court’s final order pursuant to 28
U.S.C. § 1291. Our review of orders granting summary
judgment is plenary, and we apply the same test as the District
Court. Med. Protective Co. v. Watkins, 198 F.3d 100, 103 (3d
Cir. 1999). “Under Federal Rule of Civil Procedure 56(c), that
test is whether there is a genuine issue of material fact and, if
not, whether the moving party is entitled to judgment as a matter
of law.” Id. (internal quotation omitted). Summary judgment
should not be granted “if the evidence is such that a reasonable
jury could return a verdict for the nonmoving party.” Id.
(internal quotation omitted). “Finally, we review the facts in the
light most favorable to the party against whom summary
judgment was entered.” Id. (internal quotation omitted).

                        III. Discussion

       Tran argues that the District Court erred in granting
MetLife summary judgment because a reasonable jury could
find that he justifiably relied on Lam’s representations about the

his employment as is required for such a claim. Tran does not
appeal that portion of the District Court’s ruling, nor does he
appeal the Court’s dismissal of his other claims under Rule
12(b)(6).

                                9
nature of the policy. Complementing this argument is Tran’s
contention that, as a matter of law, he had no duty either to read
the policy or have it read to him. Tran also contends that the
District Court erred in determining that he was required to prove
justifiable reliance, rather than mere ordinary reliance, with
regard to his UTPCPL claims. We address each of these
arguments in turn.

       A.     Tran’s Reliance on Lam’s Representations

      Justifiable reliance on an alleged misrepresentation is an
element of both fraudulent representation and negligent
misrepresentation causes of action in Pennsylvania.8 Courts

  8
    The parties do not dispute that Pennsylvania law applies to
this diversity action.          To succeed on a fraudulent
misrepresentation claim under Pennsylvania law, a plaintiff must
prove the following elements by clear and convincing evidence:
“(1) a misrepresentation; (2) a fraudulent utterance; (3) an
intention by the maker that the recipient will be induced to act;
(4) justifiable reliance on the misrepresentation; and (5) damage
to the recipient as a proximate result.” Tunis Bros. Co., Inc. v.
Ford Motor Co., 952 F.2d 715, 731 (3d Cir. 1991) (emphasis
added) (collecting Pennsylvania cases).                “Negligent
misrepresentation requires proof of: (1) a misrepresentation of
material fact; (2) made under circumstances in which the
misrepresenter ought to have known of the falsity; (3) with an
intent to induce another to act on it; and [](4) which results in
injury to a party acting in justifiable reliance on the

                               10
must consider “the relationship of the parties involved and the
nature of the transaction” when determining whether one party’s
reliance on the allegedly fraudulent representations of another
is justifiable. Rempel v. Nationwide Life Ins. Co., Inc., 370 A.2d
366, 368 (Pa. 1977). “The right to rely upon a representation is
generally held to be a question of fact.” Silverman v. Bell Sav.
& Loan Ass’n, 533 A.2d 110, 115 (Pa. Super. Ct. 1987).
Nevertheless, as discussed above, the District Court held as a
matter of law that Tran’s reliance on Lam’s representations that
premium obligations under his policy would cease after a period
of time was not reasonable, leaving Tran unable to overcome
what the District Court determined were the clear, unambiguous
terms of the policy.

       The general rule in Pennsylvania, as elsewhere, is that
courts are required to give effect to the language of contracts,
including insurance policies, if that language is clear and
unambiguous. See Bensalem Township v. Int’l Surplus Lines
Ins. Co., 38 F.3d 1303, 1309 (3d Cir. 1994) (surveying
Pennsylvania law); Standard Venetian Blind Co. v. Am. Empire
Ins. Co., 469 A.2d 563, 566 (Pa. 1983). However, as the
District Court recognized, “in certain situations the insured’s
reasonable expectations will be allowed to defeat the express
language of an insurance policy.” Bensalem Township, 38 F.3d
at 1309; see also Rempel, 370 A.2d at 368 (“Consumers

misrepresentation.” Bortz v. Noon, 729 A.2d 555, 561 (Pa.
1999) (emphasis added).

                               11
. . . view an insurance agent . . . as one possessing expertise in
a complicated subject. It is therefore not unreasonable for
consumers to rely on the representations of the expert rather than
on the contents of the insurance policy itself.”); Toy v. Metro.
Life Ins. Co., 863 A.2d 1, 13 (Pa. Super. Ct. 2004) (“[N]ormal
contract principles are no longer applicable in insurance
transactions because insurance contracts are not freely
negotiated and an insured must place a certain amount of trust
in its agent.” (internal quotation omitted)).

       In Bensalem Township, we canvassed the Pennsylvania
Supreme Court’s decisions on the doctrine of reasonable
expectations and concluded that “we [were] unable to draw any
categorical distinction between the types of cases in which the
Pennsylvania courts will allow the reasonable expectations of
the insured to defeat the unambiguous language of an insurance
policy and those in which the courts will follow the general rule
of adhering to the precise terms of the policy.” 38 F.3d at 1311.
We concluded, however, that

       [o]ne theme that emerges from all the cases . . . is
       that courts are to be chary about allowing
       insurance companies to abuse their position vis-a-
       vis their customers. Thus we are confident that
       where the insurer or its agent creates in the
       insured a reasonable expectation of coverage that
       is not supported by the terms of the policy[,] that
       expectation will prevail over the language of the

                               12
       policy.

Id.; see also W. Am. Ins. Co. v. Park, 933 F.2d 1236, 1239 (3d
Cir. 1991) (“[T]he Supreme Court of Pennsylvania has
consistently applied equitable estoppel to prevent an insurer
from attempting to frustrate the reasonable expectations of the
insured.”).

        Here, the District Court agreed with Tran that his
reasonable expectations regarding the terms of his policy must
be viewed in light of his limited understanding of English. The
Court proceeded to hold, however, that Tran had a duty under
Pennsylvania law to read the policy or to have it read to him
(obviously in a language he understands) and that, because he
failed to fulfill that duty, he could not claim justifiable reliance
on Lam’s representations and his expectations thus could not
defeat the clear policy language. This conclusion was incorrect
because Pennsylvania does not impose a duty to read insurance
policies when insureds allege fraud.

        The Pennsylvania Supreme Court has stated that “[t]he
idea that people do not read or are under no duty to read a
written insurance policy is not novel.” Rempel, 370 A.2d at 369
(citing Dowling v. Merchs. Ins. Co., 31 A. 1087 (Pa. 1895)).
The Rempel Court elaborated on this principle and held that “the
policyholder had no duty to read the policy unless under the
circumstances it is unreasonable not to read it.” Id. (holding that
the question of whether policyholders’ reliance on agent’s

                                13
allegedly fraudulent representations was justifiable should be
presented to the jury); see also Toy, 863 A.2d at 12 (discussing
Rempel and stating “[w]e cannot agree with the trial court that
Appellant’s failure to conduct a cursory examination of the
information contained upon the cover page of the life insurance
policy prevents her from demonstrating her justifiable reliance
on [the agent’s] oral representations.”).

        Standard Venetian Blind, cited by the District Court and
relied on heavily by MetLife, is not to the contrary. The
Pennsylvania Supreme Court stated in that case that “[i]n 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.” 469 A.2d at 566 (emphasis added) (internal quotation
omitted). Importantly, Standard Venetian Blind involved claims
for breaches of express and implied warranties in an insurance
policy, whereas Rempel involved a fraudulent representation
claim. Compare Standard Venetian Blind, 469 A.2d at 565,
with Rempel, 370 A.2d at 367. Thus, although Standard
Venetian Blind does support the proposition that there is a duty
to read a policy when no fraud is present, its language indicates,
and the Rempel decision dictates, that it does not apply to a
situation where, as here, there have been allegations of
fraudulent misrepresentations. Cf. Pekular v. Eich, 513 A.2d
427, 431 (Pa. Super. Ct. 1986) (stating that the court “was not
inclined to rule, as a matter of law” that policyholders who did
not read the policy were “bound by the terms of the contract”

                               14
under Standard Venetian Blind because, unlike that case, the
plaintiffs had “alleged, and intend[ed] to prove, that the
limitation in coverage provided by the contract was obtained as
a result of intentionally false and fraudulent representations”).

       In Tonkovic v. State Farm Mut. Auto. Ins. Co., 521 A.2d
920 (Pa. 1987), the Pennsylvania Supreme Court discussed at
length the potential tension between the holdings of Standard
Venetian Blind and Rempel. The Court emphasized that it had
“made it clear that [its] holding [in Standard Venetian Blind]
was not to be mechanically applied without regard to the factual
context in which the claim arose. . . . Neither did we intend by
our decision in [Standard] Venetian Blind to overrule or create
a conflict with our decision in Rempel. . . .” Id. at 925.
Tonkovic identified

       a crucial distinction between cases where one
       applies for a specific type of coverage and the
       insurer unilaterally limits that coverage, resulting
       in a policy quite different from what the insured
       requested, and cases where the insured received
       precisely the coverage that he requested but failed
       to read the policy to discover clauses that are the
       usual incident of the coverage applied for.

Id. Rempel applies to the first type of case, and Standard
Venetian Blind applies to the second. Id; accord Pressley v.
Travelers Prop. Cas. Corp., 817 A.2d 1131, 1140–41 (Pa.

                               15
Super. Ct. 2003) (discussing Tonkovic, concluding that Standard
Venetian Blind did not apply to a policyholder who did not
receive the coverage she requested, and holding that the
policyholder did not have an obligation to read her policy).

       Although our case does not involve coverage issues, we
nonetheless believe that the Tonkovic distinction is useful, as
Tran did not receive the premium structure he anticipated just as
the policyholders in Tonkovic and Pressley did not receive the
coverage they anticipated. This brings our case within Rempel
and its progeny rather than Standard Venetian Blind, and the
rule that an insured has no duty to read a policy unless it would
be unreasonable not to do so applies here.9 Summary judgment

  9
    In concluding otherwise, the District Court, while referring
to Standard Venetian Blind, did not discuss Rempel. Instead, the
Court relied mainly on Fried v. Feola, 129 F. Supp. 699 (W.D.
Pa. 1954). That case holds that “where a party to a writing of
any kind is unable to read and understand the terms of the
writing so that he is aware of its actual contents, he is under a
duty to have one who does understand it read and explain it to
him; if he does not he is bound by his signature.” Id. at 703.
Despite this broad language, however, the District Court’s
reliance on Fried was misplaced because Fried: (1) involved a
promissory note, not an insurance policy, and thus did not
implicate the same equitable estoppel concerns that the
Pennsylvania courts have considered in the insurance context;
(2) did not involve any fraud allegations; and (3) predates the
Pennsylvania Supreme Court’s decision in Rempel.

                               16
was therefore inappropriate because the District Court’s
determination that Tran could not justifiably rely on Lam’s
representations as a matter of law rested almost entirely on its
erroneous conclusion that Tran had a duty to read his policy or
have it read to him.

        We also disagree with the District Court’s determination
that the terms of Tran’s policy were clear and unambiguous.
“Interpretation of the language of an insurance policy is
generally the role of the court, rather than the jury.” Williams v.
Nationwide Mut. Ins. Co., 750 A.2d 881, 885 (Pa. Super. Ct.
2000) (citing Standard Venetian Blind, 469 A.2d at 566). Here
the District Court found that the policy was clear because it
stated, inter alia, that premiums were payable for fifty-nine
years and that it contained “no[] promise that premiums [would]
‘vanish’ when [Tran] alleges.”

       However, as the Court of Appeals for the Eighth Circuit
recently noted, a policy provision stating that premiums are
payable for a certain number of years “could be read by a
reasonable unsophisticated insured as being completely
consistent with the agents’ alleged representations that the
premiums paid by plaintiffs for a limited time, in combination
with policy interest and dividends paid, would be sufficient to
cover future premiums.” Knouse v. Gen. Am. Life Ins. Co., 391
F.3d 907, 913 (8th Cir. 2004). It went on to hold that (1) when
insurance sales agents stated that premiums would vanish after
a period of time but at the same time used illustrations

                                17
cautioning that dividend calculations were not guaranteed (as
occurred here), “reasonable minds could differ as to whether
those statements were necessarily inconsistent with the agents’
alleged representations that plaintiffs’ premium payments would
vanish and would not increase at any time,” and (2) “[a]t the
very least, this issue should go before a jury.” Id. (applying
Pennsylvania law).10

   10
     Tran asserts that the Eighth Circuit’s decision in Knouse
should prevent MetLife from relitigating the issue of Tran’s
justifiable reliance in this case under the issue preclusion
doctrine. “Under Pennsylvania law, issue preclusion applies
where: (1) the issue decided in the prior adjudication was
identical with the one presented in the later action; (2) there was
a final judgment on the merits; (3) the party against whom the
plea was asserted was a party or in privity with a party to the
prior adjudication; and (4) the party against whom it is asserted
has had a full and fair opportunity to litigate the issue in
question in a prior action.” Greenleaf v. Garlock, 174 F.3d 352,
357–58 (3d Cir. 1999) (internal quotation omitted). MetLife
apparently owns General American Life Insurance, which was
the defendant-appellee in the Eighth Circuit case. Thus Tran
contends the privity requirement is satisfied. Even if so, Tran’s
issue preclusion argument nonetheless fails because prong one
is not met. Knouse involved a factual situation similar to ours
and many of the same legal arguments were raised in that case
as have been made here. However, the actual issue decided by
the Eighth Circuit was whether the statute of limitations barred
the policyholders’ claims of fraud, negligence, and violations of

                                18
       Similarly, even if Tran had read his policy or had it read
to him, an examination of the policy terms would not necessarily
have revealed that Lam’s alleged statements were false as to
when premium payments would cease. The policy states that
dividends may be used to pay premiums. Thus the policy term
providing that premiums would be payable for fifty-nine years
does not unambiguously mean that Tran would be required to
pay those premiums out-of-pocket for that entire period of time.

         “Where a provision of an insurance policy is ambiguous,
it will be construed in favor of the insured.” Williams, 750 A.2d
at 885 (internal quotation omitted). Given the posture of this
case, we must also look at the facts in the light most favorable
to Tran. Doing so, we are compelled to conclude—in light ofthe
ambiguous policy language, Lam’s alleged statements about
premiums being payable for only ten years, the policy

the UTPCPL based on sales agents’ representations regarding
vanishing premiums. Knouse, 391 F.3d at 910. The Eighth
Circuit’s statements on the justifiable reliance issue were made
in the context of discussing the application of the discovery
rule—an equitable rule that tolls the statute of limitations when
plaintiffs cannot, through the exercise of reasonable diligence,
discover that they had been injured before the limitations period
ran, see, e.g., Vitalo v. Cabot Corp., 399 F.3d 536, 542–43 (3d
Cir. 2005)—to vanishing premiums cases. Knouse, 391 F.3d at
913. Thus, the issue litigated in the Eighth Circuit is not
identical to the issues being litigated here, and that Circuit’s
reasoning, while instructive, is not preclusive.

                               19
illustration indicating that premiums would be “paid up” after
thirteen years, and Tran’s apparently limited understanding of
English—that genuine issues of fact would exist in this case
even if it could be shown that Tran read the policy (or had it
read to him).11

       Accordingly, summary judgment was not called for on
the ground that Tran could not demonstrate justifiable reliance.
We stress, as have the Pennsylvania courts, that the issue of
whether reliance on a representation is reasonable (or justifiable)
is generally a question of fact that should be presented to the
jury. See, e.g., Silverman, 533 A.2d at 115; see also Rempel,
370 A.2d at 368; Toy, 863 A.2d at 12. This is particularly true

     11
       Although we believe that the District Court erred in
determining that the policy language was clear, reasonable
jurors in any event could find that, despite Tran’s failure to read
the policy, his reasonable expectations (based on Lam’s
representations) that his policy premiums would “vanish” after
a period of time prevailed even if the District Court had been
correct that those expectations contradicted unambiguous policy
language. See, e.g., UPMC Health Sys. v. Metro. Life Ins. Co.,
391 F.3d 497, 502 (3d Cir. 2004) (“The Pennsylvania doctrine
of reasonable expectations states that ‘[t]he reasonable
expectations of the insured is the focal point of the insurance
transaction . . . regardless of the ambiguity, or lack thereof,
inherent in a given set of documents.’” (quoting Collister v.
Nationwide Life Ins. Co., 388 A.2d 1346, 1353 (Pa. 1978)
(emphasis added)).

                                20
in the insurance context, where the Pennsylvania courts have
consistently applied equitable estoppel principles and have
warned that we should be “chary about allowing insurance
companies to abuse their position vis-a-vis their customers.”
Bensalem Township, 38 F.3d at 1311.

        Having determined that the District Court erred in
concluding that Tran could not establish justifiable reliance as
a matter of law, we turn to Tran’s argument that the District
Court also erred in determining that he was required to prove
justifiable reliance at all as to his UTPCPL claims.

       B.      Justifiable Reliance and the UTPCPL

       Tran alleged that MetLife violated the following
provisions of Pennsylvania’s UTPCPL, all of which deal with
various forms of “unfair methods of competition” and “unfair or
deceptive acts or practices”: (1) § 201-2(4)(v)—“[r]epresenting
that goods or services have sponsorship, approval,
characteristics, ingredients, uses, benefits or quantities that they
do not have”; (2) § 201-2(4)(vii)—“[r]epresenting that goods or
services are of a particular standard, quality or grade, or that
goods are of a particular style or model, if they are of another”;
(3) § 201-2(4)(ix)—“[a]dvertising goods or services with the
intent not to sell them as advertised”; (4) § 201-
2(4)(xiv)—“[f]ailing to comply with the terms of any written
guarantee or warranty given to the buyer at, prior to or after a
contract for the purchase of goods or services is made”; and (5)

                                21
§ 201-2(4)(xv)—“[k]nowingly misrepresenting that services,
replacements or repairs are needed if they are not needed.” In
his brief Tran contended that because these alleged violations of
the UTPCPL are based on MetLife’s unfair business practices
and deceptive conduct, and not on allegations of fraud, the
District Court should have required him to establish only
ordinary reliance, rather than justifiable reliance, with respect to
these claims. Tran retreated from this position at oral argument.
This was wise as recent Pennsylvania decisions substantially
weaken his argument.

        The “underlying foundation” of the UTPCPL “is fraud
prevention.” Weinberg v. Sun Co., Inc., 777 A.2d 442, 446 (Pa.
2001) (internal quotation omitted). The Pennsylvania Supreme
Court has noted that “[n]othing in the legislative history [of the
UTPCPL] suggests that the legislature ever intended statutory
language directed against consumer fraud to do away with the
traditional common law elements of reliance and causation.” Id.
Recently, that Court also held that, “[t]o bring a private cause of
action under the UTPCPL, a plaintiff must show that he
justifiably relied on the defendant’s wrongful conduct or
representation and that he suffered harm as a result of that
reliance.” Yocca v. Pittsburgh Steelers Sports, Inc., 854 A.2d
425, 438 (Pa. 2004) (emphasis added) (citing, inter alia,
Weinberg, 777 A.2d at 446).

      In addition, the Pennsylvania Superior Court, which had
previously agreed with Tran’s position that plaintiffs were not

                                22
required to prove the elements of common law fraud with regard
to certain sections of the UTPCPL, see DiLucido v. Terminix
Int’l, Inc., 676 A.2d 1237, 1241 (Pa. Super. Ct. 1996), changed
its position on this issue in its 2004 decision in Toy. In that
case, the Court reasoned that Weinberg and Yocca, taken
together, dictate that a distinction between fraud and non-fraud
claims under the UTPCPL cannot be made and that its earlier
holding in DiLucido was thus incorrect. Toy, 863 A.2d at
10–11. In particular, Toy stated:

       Upon our review of the [Pennsylvania] Supreme
       Court’s decision in Weinberg, we must conclude
       that every plaintiff asserting a private cause of
       action under the UTPCPL must demonstrate
       his/her justifiable reliance on the
       misrepresentation or wrongful conduct. As the
       decision in Weinberg emphasized that the
       UTPCPL was designed to prevent fraud and that
       the legislature did not intend to remove the
       common law elements of reliance and causation
       that attend a fraud action, plaintiffs must
       demonstrate the level of reliance that
       accompanies a common law fraud claim.

Id. at 11 (emphasis added).

      We are not bound by Toy’s holding (as it is not a
Pennsylvania Supreme Court decision), but we are persuaded by

                              23
its reasoning, which we are obliged to consider. Gruber v.
Owens-Illinois Inc., 899 F.2d 1366, 1369 (3d Cir. 1990).
Because Toy thoroughly surveys the relevant Pennsylvania
Supreme Court case law and because the Yocca holding
regarding justifiable reliance in UTPCPL claims is so broad, we
believe Toy accurately predicts how the Pennsylvania Supreme
Court would rule on this issue. We therefore reject Tran’s
argument that he is freed from proving justifiable reliance in
connection with his UTPCPL claims and affirm the District
Court’s contrary ruling on this issue.12 For the reasons stated in
Section III(A), supra, however, we also remand Tran’s UTPCPL
claims.

                        IV. Conclusion

       In sum, the District Court was correct that Tran must
establish justifiable reliance to prevail on all of his remaining
claims, including those brought under the UTPCPL. It erred,
however, in concluding that Pennsylvania law imposed upon
Tran a duty to read his insurance policy or to have it read to him.
Its conclusion that the pertinent policy provisions were clear and

  12
    As the Pennsylvania courts have spoken on this issue, we
need not address Tran’s argument that we should look to
decisions of the Federal Trade Commission (“FTC”) for
guidance in interpreting the UTPCPL, nor need we address
MetLife’s contention that Tran waived his argument that we
should consider FTC decisions by not raising it below.

                                24
unambiguous was similarly in error. This case, like most others
raising the issue of justifiable reliance, presents disputed issues
of material fact that are simply more appropriate for resolution
by a jury than by a judge. We therefore affirm in part, reverse
in part, and remand for further proceedings consistent with this
opinion.13

    13
      Because we have determined that we must reverse the
District Court for the reasons stated above, we need not reach
Tran’s other arguments in favor of reversal.

                                25