Court Opinion

ID: 1009564
Source: CourtListenerOpinion
Date Created: 2013-07-04 19:58:07.506185+00
Date Added: 2024-06-11T09:47:01.344974
License: Public Domain

UNPUBLISHED

UNITED STATES COURT OF APPEALS
                 FOR THE FOURTH CIRCUIT

JANET HAMMOND, as the personal            
representative of the estate of
Marjorie Hammond; DAPHNE
HAMMOND, as the personal
representative of the estate of
Marjorie Hammond; M.H.H.
IRREVOCABLE TRUST; JANET
HAMMOND; DAPHNE HAMMOND,                          No. 02-1002
                  Plaintiffs-Appellees,
                  v.
THE PACIFIC MUTUAL LIFE INSURANCE
COMPANY,
              Defendant-Appellant.
                                          
            Appeal from the United States District Court
         for the Eastern District of Virginia, at Alexandria.
                   T. S. Ellis, III, District Judge.
                          (CA-01-386-A)

                       Argued: October 30, 2002

                       Decided: January 23, 2003

   Before WIDENER, WILLIAMS, and MOTZ, Circuit Judges.

Affirmed by unpublished per curiam opinion.

                              COUNSEL

ARGUED: Jeff Wayne Rosen, PENDER & COWARD, P.C., Vir-
ginia Beach, Virginia, for Appellant. Stephen Allan Saltzburg, THE
2             HAMMOND v. PACIFIC MUTUAL LIFE INSURANCE
NATIONAL LAW CENTER, Washington, D.C., for Appellees. ON
BRIEF: Lisa Ehrich, PENDER & COWARD, P.C., Virginia Beach,
Virginia, for Appellant. James H. Falk, Sr., James H. Falk, Jr., Mere-
dith N. Long, FALK LAW FIRM, Washington, D.C., for Appellees.

Unpublished opinions are not binding precedent in this circuit. See
Local Rule 36(c).

                                OPINION

PER CURIAM:

   Pacific Mutual Life Insurance Company (Pacific Life) appeals
from the district court’s order granting summary judgment to Janet
and Daphne Hammond1 on their claim for breach of contract stem-
ming from a life insurance policy issued to Marjorie Hammond in
June of 1997. Finding no reversible error, we affirm.

                                     I.

    Marjorie Hammond (Hammond) applied for a life insurance policy
from Pacific Life in January of 1997. The application, for a policy
that provided a death benefit of $750,000 with an annual premium of
nearly $30,000, comprised two parts. Hammond completed most of
"Part I" of the application on January 14, 1997, signing but not dating
it. It was not possible to complete all of Part I at that time, however,
because the trust which was to be the beneficiary of the policy had
not yet been formed.
    1
   The plaintiffs in the underlying action were: Janet and Daphne Ham-
mond, in their capacity as personal representatives of Marjorie Ham-
mond’s estate; the M.H.H. Irrevocable Trust, and Janet and Daphne
Hammond in their individual capacities. (J.A. at 16.) For ease of refer-
ence, we refer to the plaintiffs below, Appellees here, collectively as "the
daughters."
              HAMMOND v. PACIFIC MUTUAL LIFE INSURANCE                    3
   Part I of the application included a declarations section containing
the following provision:

      I represent that the foregoing answers and statements con-
      tained in Parts I and II are correctly recorded, complete, and
      true to the best of my knowledge and belief. I understand
      that:

      1. Except as otherwise provided in any Temporary Insur-
         ance Agreement, no insurance will take effect before
         the policy for such insurance is delivered and the first
         premium paid during the lifetime(s) and before any
         change in the health of the Proposed Insured(s). Upon
         such delivery and payment, insurance will take effect if
         the answers and statements in this application are then
         true.

(J.A. at 100.) Pacific Life agent Michael Mullen, the representative in
charge of handling Hammond’s application, sent a copy of the signed
but incomplete Part I form to Pacific Life’s home office in California,
along with a medical release form authorizing examination of Ham-
mond’s medical records.

   Pacific Life required Hammond to undergo a physical examination
before it would issue a life insurance policy. On January 22, 1997,
Hammond was examined by an independent medical examiner (not
a doctor) selected by Pacific Life. On that date, Hammond, apparently
with the assistance of Pacific Life’s independent medical examiner,
also completed and signed "Part 2"2 of the application, which asked
her to provide information about her medical history. Pacific Life
thereafter reviewed Hammond’s medical records, her responses to
Part 2 of the application, and the results of the independent medical
  2
    Part I of the application, as is discussed in the text, references "Part
II" of the application. The second part of the application Hammond com-
pleted, however, was entitled "Part 2" rather than "Part II." Before the
district court, the parties disputed whether the "Part II" document refer-
enced in Part I was the same as the "Part 2" document Hammond actually
completed. The district court held that the question was irrelevant, and
neither party has raised it on appeal.
4            HAMMOND v. PACIFIC MUTUAL LIFE INSURANCE
examination. Upon completion of this review, Pacific Life approved
Hammond’s application, and on May 30, 1997 Mullen returned to
Hammond’s home to complete the process of issuing the policy. On
that date, Janet and Daphne Hammond, as beneficiaries of the trust
that Hammond designated as the beneficiary of the policy, signed and
dated the Part I form that Hammond had earlier completed. Hammond
was not asked on May 30 to sign or reaffirm any of the statements
she made in either part of the application. Mullen accepted the com-
pleted Part I form and a premium check for $29,930. Thereafter on
June 3, 1997, Pacific Life issued the policy, and Mullen delivered the
policy to Hammond on June 11, 1997.

   Between January 22, 1997, when she began the process of applying
for life insurance, and June 11, 1997, when the policy was delivered,
Hammond was examined by various doctors on a number of occa-
sions. These doctors saw Hammond both for routine appointments
and regarding specific ailments. The record reveals that Hammond
saw at least six different doctors between January and June of 1997,
in several instances referred from one to another. In the records of
these visits, Hammond’s doctors noted "emphysematous changes" in
her lungs, chronic obstructive pulmonary disease, an irregular heart
rhythm probably of the type known as "multifocal adrenal tachycar-
dia," which is a type of heart rhythm common in persons with lung
diseases, and anemia.

   Hammond died on November 15, 1997. After her death, Janet and
Daphne Hammond, as representatives of Hammond’s estate, filed a
claim for benefits under the policy with Pacific Life. In reviewing this
claim, Pacific Life obtained and reviewed Hammond’s medical
records, including the records of her doctor visits during the period
from January 22 to June 11. Pacific Life denied coverage in a letter
to Janet and Daphne Hammond dated May 8, 1998. In the letter,
Pacific Life stated that it was denying coverage because "the answers
to the questions on the application in Part 2 . . . were no longer accu-
rate as of May 30, 1997" and "Pacific Life relied upon the answers
contained in the application in making its decision to offer coverage."
(J.A. at 255.) Pacific Life noted in this letter that it reserved the right
to change the reason for its denial of coverage at any time. (J.A. at
255.)
             HAMMOND v. PACIFIC MUTUAL LIFE INSURANCE                   5
   Dissatisfied with Pacific Life’s decision to deny coverage, the
daughters commenced this action in the United States District Court
for the Eastern District of Virginia on March 9, 2001. In their com-
plaint, the daughters asserted claims of breach of contract (Count
One), promissory estoppel (Count Two), equitable estoppel (Count
Three), common-law fraud (Count Four), negligence and gross negli-
gence (Count Five), and bad faith (Count Six) against Pacific Life.
They sought judgment against Pacific Life on the life insurance pol-
icy, as well as costs and attorneys’ fees pursuant to Va. Code Ann.
§ 38.2-209 (Michie 2002). Pacific Life moved for summary judgment
on all counts, asserting, inter alia, material misrepresentation as an
affirmative defense. The daughters in turn moved for partial summary
judgment on their breach of contract claim and to strike Pacific Life’s
material misrepresentation defense. In an opinion filed July 9, 2001,
the district court granted Pacific Life’s motion as to each of the
daughters’ claims except breach of contract and denied the daughters’
motion to strike the affirmative defense of material misrepresentation.
The district court took the remaining issues under advisement.

   In a subsequent order issued August 23, 2001, the district court
denied the parties’ cross motions for summary judgment on the
breach of contract and material misrepresentation issues. In the
accompanying memorandum opinion, Hammond v. Pac. Mut. Life
Ins. Co., 159 F. Supp. 2d 249 (E.D. Va. 2002), the district court rea-
soned that the condition precedent to the policy’s taking effect — the
policy provision stating that no insurance would take effect unless the
policy was delivered and the first premium was paid before there was
any change in the proposed insured’s health — was valid and enforce-
able. Id. at 258. The district court further noted, however, that the par-
ties disputed whether the Part 2 form that Hammond had completed
was attached to the policy that Mullen delivered to Hammond.3 Id. at
  3
    The daughters contended (and a jury ultimately found) that although
Hammond had completed Part 2 of the application with the assistance of
Pacific Life’s medical examiner on January 22, 1997, Part 2 was not
attached to the policy that Mullen delivered on June 11, 1997. On appeal,
the daughters contend that Pacific Life discovered and attempted to con-
ceal this fact by requesting the policy from the daughters and subse-
quently destroying it. In light of our resolution of the other issues
presented in this appeal, we need not address this contention.
6              HAMMOND v. PACIFIC MUTUAL LIFE INSURANCE
259. The statements contained in the Part 2 form, the district court
concluded, were "necessary for Pacific Life to establish that there was
a change in Hammond’s health that prevented fulfillment of the con-
dition precedent and imposed an affirmative duty on [Hammond and
the daughters] to disclose new information regarding Hammond’s
health. Without Hammond’s statements in Part 2, Pacific Life would
have no datum from which to measure a change." Id. "Moreover," the
district court continued, "Virginia Code Ann. § 38.2-3304(B)(2)
would prevent Pacific Life from offering extrinsic evidence of Ham-
mond’s condition in January and then again in May, because this
extrinsic evidence was plainly not ‘endorsed upon or attached to’ the
policy when it was delivered."4 Id. The district court thus found that
it could not grant summary judgment to either party without resolu-
tion of the question whether Part 2 was attached to the policy when
delivered. Accordingly, it ordered a trial on that issue.

   Following a two-day trial, a jury found that Part 2 was not attached
to the policy when delivered. In light of this verdict and its earlier
conclusions, the district court entered judgment for the daughters on
their breach of contract claim and ordered Pacific Life to pay dam-
ages in the amount of $750,000 plus interest. Pacific Life timely
noticed this appeal.

                                     II.

   In this appeal, Pacific Life asserts that Va. Code Ann. § 38.2-
3304(B)(2) (Michie 2002) does not preclude reliance on "extrinsic
evidence" to demonstrate the non-occurrence of a valid condition pre-
cedent, as the district court found, and, alternatively, that the district
court erred in rejecting its contention that the duty of good faith and
fair dealing precluded judgment for the daughters because of their
failure to notify Pacific Life of changes in Hammond’s health that
would have influenced its decision to offer her coverage. We address
each of these contentions in turn.
    4
     Section 38.2-3304 is quoted in the text, infra, at 8.
             HAMMOND v. PACIFIC MUTUAL LIFE INSURANCE                 7
                                  A.

   Pacific Life first argues that regardless of whether the Part 2 form
was attached to the policy when delivered, it should have been
allowed the opportunity to demonstrate, by reference to the indepen-
dent medical examination conducted on January 22, 1997, and the
records of Hammond’s subsequent doctor visits between then and
June 11, 1997, that Hammond’s health "changed" between January
and June of 1997, and accordingly that the condition precedent to the
insurance contract’s taking effect was not fulfilled.

   The district court’s conclusion on this issue is reflected in the
memorandum opinion accompanying its order of August 23, 2001, in
which it stated that Hammond’s statements regarding her health in the
Part 2 medical form "are necessary for Pacific Life to establish that
there was a change in Hammond’s health that prevented fulfillment
of the condition precedent . . . . Without Hammond’s statements in
Part 2, Pacific Life would have no datum from which to measure a
change." Hammond, 159 F. Supp. 2d at 259. As to Pacific Life’s
asserted ability to demonstrate a change by reference to statements or
records apart from the Part 2 form, the district court stated that "Vir-
ginia Code § 38.2-3304(B)(2) would prevent Pacific Life from offer-
ing extrinsic evidence of Hammond’s condition in January and then
again in May, because this extrinsic evidence was plainly not
‘endorsed upon or attached to’ the policy when it was delivered." Id.
Whether the district court correctly concluded that Pacific Life could
not demonstrate a change in Hammond’s health without reference to
"statements" barred by § 38.2-3304(B)(2) is a question involving both
statutory and contract interpretation, issues of law that we review de
novo. See United States v. Myers, 280 F.3d 407, 416 (4th Cir. 2002)
(review of questions of statutory interpretation is de novo); Williams
v. Prof’l Transp. Inc., 294 F.3d 607, 613 (4th Cir. 2002) (review of
questions of contract interpretation is de novo). We bear in mind that
"‘[p]olicies of insurance in cases of doubt or ambiguity are to be con-
strued liberally in favor of the assured, but they must be construed in
accordance with their terms as are other contracts.’" Combs v. Equita-
ble Life Ins. Co., 120 F.2d 432, 436 (4th Cir. 1941) (quoting Kennard
v. Travelers’ Protective Ass’n, 160 S.E. 38, 39 (Va. 1931)).

   A brief overview of the relevant contractual and statutory provi-
sions is in order before commencing our analysis. As to the contract,
8             HAMMOND v. PACIFIC MUTUAL LIFE INSURANCE
the Part I form states that "no insurance will take effect before the
policy for such insurance is delivered and the first premium paid dur-
ing the lifetime(s) and before any change in the health of the Proposed
Insured(s). Upon such delivery and payment, insurance will take
effect if the answers and statements in this application are then true."
(J.A. at 100.) The Part I form was attached to the policy delivered to
Hammond on June 11, 1997. The statute at issue, Va. Code Ann.
§ 38.2-3304, states that

      A. Each individual life insurance policy shall contain a
         provision that the policy, or the policy and the applica-
         tion for the policy if a copy of the application is
         endorsed upon or attached to the policy when issued or
         delivered, shall constitute the entire contract between
         the parties.

      B. The provision shall also state that:

          ....

          2. No statement shall be used in defense of a
             claim under the policy unless it is contained in
             a written application that is endorsed upon or
             attached to the policy when issued or deliv-
             ered.

Va. Code Ann. § 38.2-3304 (Michie 2002).

   Pacific Life first argues that the district court erred in concluding
that Pacific Life could not rely on the records of the "independent
medical examination" conducted on January 22, 1997 to show a
change in Hammond’s health. Pacific Life asserts that the district
court erred in holding that § 38.2-3304(B)(2) prohibited use of these
records because "the statute refers exclusively to ‘statement[s] . . .
contained in a written application,’" and the records of the January 22,
1997 examination do not meet that description. (Appellant’s Br. at 14
(quoting Va. Code Ann. § 38.2-3304).)

    The records of the January 22 examination consist of a one-page
               HAMMOND v. PACIFIC MUTUAL LIFE INSURANCE                     9
medical questionnaire completed on that date by Hammond with the
medical examiner’s assistance (the questionnaire), and a second page
containing the medical examiner’s notes from a physical examination
on that date (the medical examination form).5 Pacific Life does not
seriously suggest that the information on the questionnaire — which
consists of Hammond’s responses to various questions about her
health — is not composed of "statements" made by Hammond as part
of her application for life insurance, and we conclude the district court
properly determined that Pacific Life was barred by § 38.2-
3304(B)(2) from relying on the questionnaire, which was not attached
to the policy when delivered, to defend its denial of the claim.

   Whether the medical examiner’s notes, which appear on the medi-
cal examination form, constitute such "statements" is a somewhat
more difficult question. The information on the form is primarily
Hammond’s vital statistics, including height, weight, blood pressure,
pulse, and whether or not any observable abnormality of any part of
the body existed. Pacific Life suggests that the information on the
medical examination form is not covered by § 38.2-3304(B)(2)
because it is not composed of statements made by Hammond. (Appel-
lant’s Br. at 14 (arguing that § 38.2-3304 "does not address reliance
on information acquired by the insurer apart from the insured’s state-
ments").) Section 38.2-3304(B)(2) does not by its terms apply only to
statements by the proposed insured, however. Rather, its prohibition
states simply that "[n]o statement" shall be used to defend the denial
of a claim unless contained in an application that is attached to the pol-
icy.6
  5
     What, precisely, constitutes "Part 2" of the application for insurance
is not entirely clear from the Joint Appendix provided by the parties.
Pacific Life contended at oral argument that only the questionnaire is
Part 2, and that even absent clerical error the medical examination form
would not have been attached to the policy. The daughters insist that
both the questionnaire and the medical examination form are included in
Part 2. We conclude that resolution of this question is immaterial to our
consideration of the issues presented.
   6
     Virginia Code § 38.1-393, the predecessor to § 38.2-3304, stated:
      In each [life insurance policy] there shall be a provision that the
      policy, or the policy and the application therefor if a copy of the
10            HAMMOND v. PACIFIC MUTUAL LIFE INSURANCE
   Neither this court nor the Virginia courts have addressed the cur-
rent version of § 38.2-3304 in a published opinion. There are, how-
ever, two opinions addressing its substantially identical predecessor.
As Pacific Life points out, these cases involved statements made
directly by the insured on a written application for insurance. See
Evans v. United Life & Accident Ins. Co., 871 F.2d 466 (4th Cir.
1989) (insured falsely stated he had not used tobacco within the last
twelve months); Southland Life Ins. Co. v. Donati, 114 S.E.2d 595
(Va. 1960) (insured allegedly gave knowingly false and fraudulent
answers to question contained in written application). Reading the
statute as a whole and in light of the considerations expressed in
Evans and Donati, however, we conclude that a medical examination
form such as the form at issue here — whether or not the information
it contains is comprised of "statements" by Hammond — is required
to be attached to a policy of insurance if it is to be used to defend the
denial of a claim under the policy.

   In Donati, the Supreme Court of Appeals of Virginia (predecessor
to the Supreme Court of Virginia) stated that, in enacting § 38.1-391,

     [i]t undoubtedly seemed fair to the Legislature that the pol-
     icy holder should have in his possession, during his lifetime,
     such statements or representations which might be claimed,
     after his death, to have been fraudulent, so that he might

     application is endorsed upon or attached to the policy when
     issued, shall constitute the entire contract between the parties,
     and that all statements made by the insured shall, in the absence
     of fraud, be deemed representations and not warranties, and that
     no such statement or statements shall be used in defense of a
     claim under the policy unless contained in a written application
     and unless a copy of such statement or statements be endorsed
     upon or attached to the policy when issued.
Southland Life Ins. Co. v. Donati, 114 S.E.2d 595, 595-96 (Va. 1960)
(quoting Va. Code Ann. § 38.1-393 (1950) (emphasis added)). In Donati,
the Virginia Supreme Court of Appeals noted that § 38.1-393 "applie[d]
only to statements of the insured." Id. at 596. The newer version of the
statute omits the word "such" qualifying "statement," and is thus not
clearly limited to statements by the insured.
             HAMMOND v. PACIFIC MUTUAL LIFE INSURANCE                  11
     know, or could be held to know, what the contract was
     which he had entered into.

Id. at 597 (internal quotation marks and citation omitted). Further, the
court noted with approval the Louisiana Supreme Court’s interpreta-
tion of the purpose of a very similar statute, quoting that court’s state-
ment that "[t]he purpose of the law is that the insured shall have in
his possession during his lifetime, and that the beneficiary shall have
after the death of the insured, the entire evidence of the contract." Id.
(quoting Fisette v. Mut. Life Ins. Co., 110 So. 880 (La. 1926)). Simi-
larly, we noted in Evans the generally accepted principle that "the
purpose of the statutes [such as section 38.1-393] is to require insurers
to attach, as of the date they decide to issue insurance, the statements
on which their decision relied." Evans, 871 F.2d at 470. The purpose
of § 38.2-3304 is thus clear — to inform the insured of the bases for
the insurer’s decision to provide coverage and to ensure that the
insured is aware of any presumptions that have informed that deci-
sion.

    The medical examination form at issue here was completed at
Pacific Life’s insistence, and the examiner, though independent, was
selected and hired by Pacific Life. Accordingly, the examiner acted
as an agent of Pacific Life, not of Hammond, see Metro. Life Ins. Co.
v. Hart, 173 S.E. 769, 770 (Va. 1934), and was not obliged to share
the results of the examination with Hammond. Under these circum-
stances, the results of a medical examination such as that conducted
by the medical examiner in this case might well remain unavailable
to the applicant for insurance absent a requirement that the insurer
attach to the policy the form showing the results. Indeed, in this case
it is not at all clear that Hammond received or was otherwise notified
of the results of Pacific Life’s examination, on which it now proposes
to base its proof of a change in her health. Such a result would run
contrary to the Virginia legislature’s intent in enacting § 38.2-3304,
which was to ensure that the insured is aware of the assumptions that
form the "baseline" for the contract of insurance. In light of the Vir-
ginia legislature’s plain intent in this regard, we must interpret § 38.2-
3304(B)(2) as prohibiting the use of the medical examination form
because it was not attached to the policy when delivered to Ham-
mond.
12           HAMMOND v. PACIFIC MUTUAL LIFE INSURANCE
   Pacific Life also argues that it should not have been denied the
opportunity to prove a change in Hammond’s health by reference to
her medical records from the period before January of 1997 (i.e.,
records of a May 1996 visit to the Mayo Clinic) and the records of
her subsequent examinations by various doctors between January and
June of 1997. Pacific Life requested and reviewed Hammond’s medi-
cal records through 1996 before issuing its policy, and contends that
a comparison of those records to the records of Hammond’s doctor
visits in May of 1997 demonstrate a change in Hammond’s health that
renders the contract’s condition precedent unmet. The district court
apparently rejected this proposition, focusing only on Pacific Life’s
ability to demonstrate a "baseline" of health in January of 1997. Ham-
mond, 159 F. Supp. 2d at 258.

   The relevant contractual provision appears in Part I and was
attached to the policy when delivered. This provision states that "no
insurance will take effect before the policy for such insurance is
delivered and the first premium paid during the lifetime(s) and before
any change in the health of the Proposed Insured(s). Upon such deliv-
ery and payment, insurance will take effect if the answers and state-
ments in this application are then true." (J.A. at 100.) In light of this
provision, Pacific Life’s argument is utterly without merit. The phrase
"before any change in the health of the Proposed Insured(s)" must be
interpreted as requiring that no material change in the proposed
insured’s health occur between (1) the date the application is com-
pleted and signed and (2) the date on which the policy is delivered
and the first premium paid. In other words, a relevant change here
would have to have occurred between January of 1997 and May of
1997.7 Proof of a change in health by reference to medical records
  7
    The daughters argue on appeal that the application was not "com-
pleted and signed" until May 30, 1997, the date when the application for
insurance was finalized by completion of the section listing the M.H.H.
Irrevocable Trust as the beneficiary and by the signatures of the daugh-
ters. Consequently, they assert, Pacific Life would have to show a change
in Hammond’s health between May 30, 1997 and June 11, 1997. Because
the district court assumed that a relevant change could have occurred
between January (when the application was initiated) and June of that
year, because this approach is more favorable to Pacific Life, the party
against whom the district court’s ruling was made, and because in either
event our conclusion would not be altered, we likewise make this
assumption.
             HAMMOND v. PACIFIC MUTUAL LIFE INSURANCE                 13
from May of 1996 and May of 1997, as proposed by Pacific Life,
would be irrelevant, because that time frame would include the possi-
bility that the change occurred, for example, between May and June
of 1996, well before Hammond even applied for insurance with
Pacific Life.

   Without Hammond’s responses on the questionnaire and the medi-
cal examination form, Pacific Life had no evidence of a "baseline" in
January of 1997 from which to demonstrate a change in Hammond’s
health. None of the other medical records reflect examinations con-
temporaneous with her application for insurance, and the district court
thus did not err in rejecting Pacific Life’s contentions that it could
show a relevant change in Hammond’s health by reference to records
other than the questionnaire and the medical examination form.

                                   B.

  Pacific Life next argues that the district court erred in rejecting its
defense of good faith and fair dealing under Virginia law. Hammond,
Pacific Life argues, had a duty to disclose the substantial changes in
her health that occurred between January and June of 1997, and
breached that duty when she did not disclose those changes when the
policy was delivered.

   In general, a duty of good faith and fair dealing applies to the par-
ties to an insurance contract under Virginia law. See, e.g., Levine v.
Selective Ins. Co. of America, 462 S.E.2d 81, 84 (Va. 1995). Pacific
Life asserts that this generalized duty of good faith and fair dealing
is unaffected by § 38.2-3304. That section, Pacific Life argues, deals
only with the duty of the insurer and leaves unaffected any duties
imposed by the common law on the insured. (See Appellant’s Br. at
21 ("By its express terms the statute places a duty on the insurer
where the insurer defends against a claim based upon statements
made by the insured. The statute is silent on the affirmative duty
placed on the insured by the common law to ‘make a full disclosure
before accepting the policy, [where] the condition under which the
application was made has changed.’" (quoting Combs, 120 F.2d at
438).) For the reasons explained below, we conclude that in the cir-
cumstances presented here the law of Virginia is clear: an insurer may
not assert a misrepresentation or omission in an insured’s application
14           HAMMOND v. PACIFIC MUTUAL LIFE INSURANCE
as a defense to a claim under a policy if the insurer has not attached
the application to the policy itself.

   In Donati, the court addressed the impact of Va. Code Ann. § 38.1-
393 on an insurer’s proferred defense of "fraud in the procurement"
of the policy. Donati, 114 S.E.2d at 596. The insurer alleged that the
insured had made "knowingly false and fraudulent answers to ques-
tions contained in his written application" for life insurance," that "the
policy would not have been issued had the questions been answered
truthfully," that the "insured was not in good health at the time of the
execution of the written application or when the policy was issued
and delivered to him," and that "good health was a condition prece-
dent to the policy becoming in force." Id. at 595 (internal quotation
marks omitted). Interpreting § 38.1-393, the court rejected the insur-
er’s contentions because the allegedly fraudulent statements had not
been attached to the policy when delivered. The court found that the
provisions of § 38.1-393, substantially identical to those of § 38.2-
3304, were "indicative of an intent to restrict the insurer in the use of
statements made by the insured in defense of a claim under the policy
unless they be incorporated into the contract in the mode prescribed."
Id. at 596-97. For that reason, and because the statute is "remedial,
enacted for the benefit of the insured," id. at 596, the court found that
the defense of "fraud in the procurement" was unavailable to the
insurance company; an allegation of fraud, in other words, could not
overcome the statute’s bar to reliance on statements not attached to
the policy. Id. at 599.

   Donati thus held, under a substantially identical Virginia statute,
that a defense of fraudulent misrepresentation was unavailable to an
insurer where the insured was alleged to have made a false represen-
tation. Here, Pacific Life argues that its allegation is not of misrepre-
sentation on the part of the insured, but rather of failure to provide
information that would have influenced its underwriting decision. We
have noted, however, the general principle that "the suppression of a
material fact which a party is bound in good faith to disclose is equiv-
alent to a false representation." Moore v. Pilot Life Ins. Co., 86 F.2d
197, 199 (4th Cir. 1936) (citing Stipcich v. Metropolitan Life Ins. Co.,
277 U.S. 311 (1928)). Moreover, to adopt a distinction between fail-
ure to provide information and misrepresentation of information
would undercut the Donati court’s reasoning, as its opinion focused
             HAMMOND v. PACIFIC MUTUAL LIFE INSURANCE               15
on the limitation that the statute places on the insurer where it fails
to attach an application containing an alleged misrepresentation. To
hold that the same limitation does not apply where the "misrepresen-
tation" is in fact an omission would create a senseless (and broad)
exception to the limiting rule expressed in the statute. Accordingly,
we conclude that the district court properly rejected Pacific Life’s
defense premised on the duty of good faith and fair dealing.

                                 III.

  For the foregoing reasons the judgment of the district court is

                                                         AFFIRMED.