Tran v. Metropolitan Life Ins. Co.
| Decision Date | 25 May 2005 |
| Docket Number | No. 04-2539.,04-2539. |
| Citation | 408 F.3d 130 |
| Parties | Huu Nam TRAN, Appellant v. METROPOLITAN LIFE INSURANCE COMPANY; Kwok Lam. |
| Court | U.S. Court of Appeals — Third Circuit |
Kenneth R. Behrend, Esquire (Argued), Behrend & Ernsberger PC, Pittsburgh, PA, Counsel for Appellant.
B. John Pendleton, Jr., Esquire (Argued), Sharon T. Boland, Esquire, McCarter & English, Newark, NJ, Counsel for Appellees.
Before: SLOVITER, AMBRO and ALDISERT, Circuit Judges.
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 insurance policy he purchased. We affirm in part and reverse in part.
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 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] years3 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 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 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.
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 Life-time" 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 The policy's limitation on the sales representative's authority provided that 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 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. 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 reliance5 on Lam's oral representations, as was required to succeed on his fraud, negligent misrepresentation6, 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
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).
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 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.
Justifiable reliance on an alleged misrepresentation is an element of both fraudulent representation and negligent misrepresentation causes of action in Pennsylvania.8 Courts 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...
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