Wise v. American General Life Ins. Co.

• Decision Date: 21 August 2006
• Docket Number: No. 05-2715.,05-2715.
• Parties: Danielle WISE, individually and as Administratrix of the Estate of William Wise, Appellant v. AMERICAN GENERAL LIFE INSURANCE COMPANY, Intelliquote Insurance Services, Gary R. Lardy.
• Court: U.S. Court of Appeals — Third Circuit

459 F.3d 443

Danielle WISE, individually and as Administratrix of the Estate of William Wise, Appellant v. AMERICAN GENERAL LIFE INSURANCE COMPANY, Intelliquote Insurance Services, Gary R. Lardy.

No. 05-2715.

United States Court of Appeals, Third Circuit.

Argued February 27, 2006.

Filed August 21, 2006.

Richard L. Bazelon (Argued), Natalie D'Amora, Philadelphia, PA, Attorneys for Appellant.

Peter Jason (Argued), Jonathan L. Swichar, Duane Morris LLP, James W. Gicking (Argued), Marshall, Dennehey, Warner, Coleman & Goggin, Philadelphia, PA, Attorneys for Appellees.

Before SLOVITER, FUENTES, and BECKER,^* Circuit Judges.

OPINION OF THE COURT

FUENTES, Circuit Judge.

After receiving a quote from an internet website, William Wise applied for a life insurance policy from American General Life Insurance Company. American General approved the application and mailed Wise a policy on March 3, 2004. The policy provided that the policy year would begin on the date of issue, March 3, 2004, but that no coverage would be provided until the first premium was paid by Wise while he remained in good health. Wise died unexpectedly on March 10, 2004, the same day that he received the policy in the mail, and one week after the "date of issue" of the policy. His wife, Danielle Wise, mailed the first premium to American General the following day. We are asked to determine whether the life insurance policy was in effect at the time of Wise's death. Because, as of the date of Wise's death, Wise had not accepted the insurance contract by paying the premium, we conclude that the life insurance policy never took effect.

I. Factual and Procedural Background

In anticipation of the birth of his first child, William Wise ("Wise") used an internet website run by defendant Intelliquote Insurance Services ("Intelliquote") to research life insurance policies for himself in January 2004. By entering personal information on the Intelliquote website, Wise was able to obtain quotes from several insurance carriers. After comparing the annual premiums offered by each carrier, Wise selected an American General policy, and Intelliquote sent him an application.

The American General application mailed to Wise consisted of two parts. Part A of the application required the applicant to disclose personal information for the purposes of obtaining a policy. It also described, among other things, an option for a "Limited Temporary Life Insurance Agreement" ("Temporary Insurance"). (Appendix "App." at A107.) The application stated that Temporary Insurance was available to the applicant only if 1) the full first modal premium was submitted with the application and 2) the applicant had not had certain health problems and was not more than seventy years old.¹ (Id. at A105, A107.) The application did not indicate the amount of the first premium payment.

Part A of the application also required Wise's signature acknowledging that he had read the application, that his statements were true and complete, and that he understood that his application would be the basis of his policy. Wise was also asked to affirm that:

Except as may be provided in a Limited Temporary Life Insurance Agreement (LTLIA), I understand and agree that no insurance will be in effect pursuant to this application, or under any new policy issued by the Company, unless or until: the policy has been delivered and accepted; the first full modal premium for the issued policy has been paid; and there has been no change in the health of any proposed insured that would change the answers to any questions in the application.

(Id. at A107.) Part B required that Wise sign an identical statement after providing his medical history. (Id. at A46.) Wise completed the application, signed both statements, and returned it on or about February 7, 2004. Wise did not submit a premium payment with his application.

American General issued a life insurance policy to Wise on March 3, 2004, in the amount of $500,000. American General mailed the policy to Intelliquote, which in turn mailed the policy to Wise, who received the policy on March 10, 2004. The letter accompanying the policy stated, "[t]his policy is your contract and is for you to keep with other important documents." (Id. at A51.) The letter briefly described the policy and stated:

To place this coverage inforce [sic] the documents listed below need to be completed, signed, and returned:

• Amount Due $600.00 (annual premium due)

• Check must be made payable to American General Life Insurance Company

• Delivery Receipt

All the above requirements must be in our office by March 26th, 2004.

(Id.)

The first page of the policy stated that the policy was "a legal contract between the owner and American General." (Id. at A53.) The policy stated that the entire contract consisted of the policy received by Wise on March 10th, any riders and endorsements, and the original application, along with any amendments or supplemental applications. (Id. at 158.) The policy bore a "date of issue" of March 3, 2004. (Id. at A55.) The date of issue was described as the date on which the policy year and all subsequent policy years would begin. (Id. at A57.) The policy explained that, with the exception of the first premium, all premiums not paid by the date of issue, March 3rd of each year, would be in default. (Id.) The policy also stated that the first premium was due on the date of issue and that insurance would "not take effect until that premium [was] paid." (Id.) Moreover, the policy stated that, "[t]he owner may return this policy to us at the above address or to the agent from whom it was purchased within thirty days after receipt. This policy will then be cancelled as of its date of issue and any premium paid will be refunded." (Id. at 55.)

The day that Wise received his policy in the mail, he died suddenly and unexpectedly of a heart attack. His wife, Danielle Wise ("Plaintiff"), mailed the annual premium payment to American General the following day. When she requested the proceeds of the policy, American General denied her claim and returned her premium check. Plaintiff brings claims against American General for breach of contract and bad faith under 42 Pa. Cons.Stat. Ann. § 8371 (2005), and against American General, Intelliquote, and insurance agent Gary R. Lardy for violations of Pennsylvania's Unfair Trade Practices and Consumer Protection Law, 73 Pa. Cons.Stat. Ann. § 201-1 et seq. (2005) (the "UTPCPL").²

The United States District Court for the Eastern District of Pennsylvania dismissed the complaint pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure for failure to state a claim upon which relief can be granted. Wise v. Am. Gen. Life Ins. Co., No. 04-3711, 2005 WL 670697, at * 7 (E.D.Pa. Mar.22, 2005). The District Court found that, taking all the facts alleged in the Complaint as true and making all inferences in favor of Plaintiff, there was no contract formed for insurance because "there is no indication in any of the documents of [American General's] intent to be bound prior to delivery of the policy, and no consideration was offered by [Wise] from which liability might be inferred up to that point." Id. at *3. The District Court determined that the life insurance policy unambiguously required the payment of the premium before any insurance coverage was to take effect, and that this provision was not waived by American General. Id. at *3-5. The District Court reasoned that, because Wise never accepted the offer of the policy by paying consideration in the form of the premium, there was no insurance in effect at the time of his death. Id. Based on this finding, the District Court dismissed all of Plaintiff's claims. Id. at *7. Plaintiff now appeals.

II. Analysis

A. There was no contractual obligation to provide coverage under the American General Policy

We must first determine whether American General was contractually obligated to provide life insurance coverage for Wise on the date of his death.³ Under Pennsylvania law, the creation of an insurance contract requires an offer, an acceptance, and a meeting of the minds. See Moser Mfg. Co. v. Donegal & Conoy Mut. Fire Ins. Co., 362 Pa. 110, 66 A.2d 581, 582 (1949). Plaintiff argues that Wise's insurance application constituted an offer, which American General accepted as of March 3, 2004, by issuing the policy. Plaintiff argues that American General was therefore contractually obligated to provide insurance coverage to Wise as of the March 3, 2004 date of issue.

The application for insurance and the documents accompanying the policy explicitly stated that no coverage would be in effect until and unless Wise paid the premium while he remained in good health.⁴ Under Pennsylvania law, this constitutes a valid requirement that must be fulfilled before coverage begins.⁵ See Landy v. Philadelphia Life Ins. Co., 78 Pa.Super. 47, 54 (1921); see also Brodsky v. Equitable Life Assurance Soc'y of the U.S., No. 99-1218, 1999 WL 637221, at *1 (E.D.Pa. Aug.20, 1999), vacated on other grounds, 1999 WL 755184 (E.D.Pa. Sept.20, 1999); 44 Corpus Juris Secundum Insurance § 324 ("A stipulation or agreement by the company and applicant that a policy of life insurance shall not take effect or be binding on the company unless the first premium is paid while the applicant is alive or in good or sound health is valid and will be given effect according to its terms; it is a condition precedent to liability on the part of the company . . . ."). Neither party was bound by the insurance contract until Wise tendered the premium payment while in good health; Wise was free to turn down the policy, and American General was not obligated to provide insurance coverage. See Landy, 78 Pa.Super. at 56 (holding that, where life insurance policy stated it would only take effect when delivered and accepted through payment of premium while applicant was in good health, no coverage existed where applicant accepted...