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Precedential or Non-Precedential: Non-Precedential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.
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NOT PRECEDENTIAL
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 28 U.S.C. § 1291, 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., 418 F.3d 345 (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, 418 F.3d at 351.
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., 54 N.J. 287, 310,
255 A.2d 208, 221 (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., 408 F.3d 130 (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.