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

11-17-2005

Johnson v. Metro Life Ins Co Precedential or Non-Precedential: Non-Precedential

Docket No. 04-4126

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Recommended Citation "Johnson v. Metro Life Ins Co" (2005). 2005 Decisions. Paper 217. http://digitalcommons.law.villanova.edu/thirdcircuit_2005/217

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UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT

___________

No. 04-4126 ___________

MICHAEL V. JOHNSON, Appellant

v.

METROPOLITAN LIFE INSURANCE COMPANY; JOSEPH A. BRUNO

___________

On Appeal from the United States District Court for the Western District of Pennsylvania (D.C. Civil No. 01-cv-00663) District Judge: The Honorable Donetta W. Ambrose

___________

Submitted Under Third Circuit LAR 34.1(a) October 18, 2005

Before: SMITH, NYGAARD, and STAPLETON, Circuit Judges.

(Filed: November 17, 2005)

___________ OPINION OF THE COURT ___________

NYGAARD, Circuit Judge.

Appellant Michael Johnson appeals the District Court’s grant of Appellee

Metropolitan Life Insurance’s (“Met Life”) motion for summary judgment on negligence

and fraud claims arising from the purchase of a life insurance policy. We have

jurisdiction pursuant to

, and will reverse.

This case involves, yet again, the commonly problematic “vanishing

premium” insurance policy. In 1992, a Met Life agent approached Johnson, a resident of

New Jersey at the time, in an effort to sell a life insurance policy. Johnson purchased the

policy based on representations made by the Met Life agent that the policy’s premium

payments would be made from a cash surrender of one of Johnson’s earlier policies and

through a small monthly payment of twenty-two or twenty-three dollars. Essentially,

Johnson was under the impression that the policy would be self-funding through

investment dividends made by Met Life. At the time of the meeting, the Met Life agent

also used an illustration that demonstrated the self-funding nature of the policy. Johnson

testified that after this meeting, he was under the impression that premium payments

would not increase based on the payout of his originally converted policy. In fact, the

actual policy contained no such guarantee. In addition, an illustration used by the Met

2 Life agent contained a clause stating that the self-funding plan was only possible and not

guaranteed. Johnson admits to never reading or reviewing his policy.

Unlike in similar cases based on Pennsylvania law, the District Court did

not dismiss Johnson’s claims as time-barred. Instead, the District Court held, as a matter

of law, that Johnson could not have reasonably relied on the alleged misrepresentations by

the Met Life agent when faced with the plain language of the policy. Because we believe

that the plain language does not unambiguously contradict the alleged misrepresentations,

we will here follow the rationale of our decision in Dilworth v. Metropolitan Life

Insurance Co.,

(3d Cir. 2005). Moreover, we do not believe that New

Jersey law differs in any material way from Pennsylvania law on the question of the effect

of a policyholder’s duty to read an insurance policy on his reasonable expectations about

the nature of the policy.

II.

In Dilworth we held that if a policyholder believes, based on representations

made by an insurer’s agent, they own a “vanishing premium” life insurance policy, the

actual provisions of the policy do not unambiguously contradict that belief by merely

stating a different length of premium payment or by stating that the representations are

merely illustrative. Dilworth,

.

3 Here, the policyholders’ contentions and experiences are, again, almost

identical to those of the policyholders in Dilworth. The District Court based its

conclusion on the assumption that the actual policy clearly contradicts the representations

of the agents (“the policy illustrations used during the sales presentation, as well as the

policy itself, contain language entirely at odds with the alleged misrepresentations made

by [Met Life]”). 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, does not render it

inconsistent with the policyholder’s belief that he would not have to pay premiums after a

certain time period because they would be self-funding.

The District Court, therefore, erred by holding that the language of the

actual policy deprives, as a matter of law, the policyholder from pursuing his claim in

front of a jury. Dilworth established that the plain language of a vanishing premium

policy does not absolutely contradict representations made by an agent or the impressions

of the policyholder about the nature of the policy. It therefore cannot be said that, as a

matter of law, Johnson’s reliance on the oral representations by the Met Life agent was

unreasonable. Because the District Court’s grant of summary judgment here rested

almost entirely on the erroneous belief that the plain language of the policy would have

defeated the reasonable expectations of the policyholder, it was inappropriate.

4 Finally, the District Court held that “an insured has a duty under New Jersey

law to read his insurance contract upon receipt.” Because our decision in Dilworth

explains that the plain language of the vanishing premium policy is not plainly

contradictory to the alleged oral representations, we need not specifically address the

question of whether New Jersey law imposes a duty on an insured to read his insurance

policy. We note, however, our belief that New Jersey law is in accord with Pennsylvania

law in protecting the reasonable expectations of the individual policyholder. We think that

New Jersey, like Pennsylvania, would not unequivocally impose a duty on the

policyholder to read the policy where the policyholder was entitled to and did rely upon

oral representations of an agent. See Harr v. Allstate Insurance Co.,

,

(1969). In addition, to the extent that New Jersey has only carved out

protection for policyholders who rely on representations made about coverage, we are

guided by our decision in Tran v. Metropolitan Life Insurance Co.,

(3d Cir.

2005), where we found no material distinction between misrepresentations regarding

coverage and misrepresentations regarding premium structure. Thus, a policyholder who

does not receive the premium payment structure he anticipated is in exactly the same

position as a policyholder who does not receive the coverage they anticipated due to

misrepresentation. We reiterate, however, that it may be the case here that Johnson’s

reliance on Met Life’s representations was unreasonable. But this question, in light of the

5 operative nature of the policy language and the agent’s actual representations is one most

appropriately addressed by a jury.

IV.

For the foregoing reasons, we will reverse the District Court’s orders and

will remand this case to the District Court for further proceedings consistent with this

opinion.