Knoepfler v. Guardian Life Ins. Co. of America, 05-1186.

• Decision Date: 27 February 2006
• Docket Number: No. 05-1186.,05-1186.
• Parties: Jerrold B. KNOEPFLER, Appellant v. GUARDIAN LIFE INSURANCE COMPANY OF AMERICA; Berkshire Life Insurance Company of America, a subsidiary of the Guardian Life Insurance Company of America.
• Court: U.S. Court of Appeals — Third Circuit

Page 287

438 F.3d 287

Jerrold B. KNOEPFLER, Appellant v. GUARDIAN LIFE INSURANCE COMPANY OF AMERICA; Berkshire Life Insurance Company of America, a subsidiary of the Guardian Life Insurance Company of America.

No. 05-1186.

United States Court of Appeals, Third Circuit.

Argued October 18, 2005.

February 27, 2006.

Robert E. Margulies, (Argued), Margulies, Wind & Harrington, Jersey City, NJ, for Appellant.

David R. Kott, Robert P. Lesko, (Argued), McCarter & English, Newark, NJ, for Appellees.

Before SCIRICA, Chief Judge, VAN ANTWERPEN and COWEN, Circuit Judges.

OPINION

COWEN, Circuit Judge.

Jerrold Knoepfler, the insured, appeals the order of the district court granting summary judgment in favor of defendant-appellees Guardian Life Insurance Company of America and Berkshire Life Insurance Company of America (collectively "Guardian") on his claims for benefits under two policies of disability insurance. The district court found that the claims were time-barred based upon a policy provision which requires actions to be brought no more than three years after written proof must be furnished. This appeal calls upon us to construe the policy language which fixes the time for furnishing written proof. The policies provide that the insured must furnish proof of loss within ninety days after "the end of the period for which [the insurer is] liable." Knoepfler argues that this language requires an insured with an ongoing disability to furnish written proof after the end of the entire period of disability, while Guardian contends that the insured is required to submit proofs of loss after the end of each month of disability. Because we predict that the New Jersey Supreme Court would construe the policy language to require proof of loss after the end of the entire period of disability, we will reverse.

I.

On April 4, 1990, Jerrold Knoepfler purchased two policies of disability insurance ("Policies") from Guardian. Knoepfler claims entitlement to disability benefits under the Policies based upon an illness that began in November or December of 1992 and continues to the present.

In September 1995, Knoepfler furnished written notice of claim to Guardian. In October 1995, Knoepfler furnished written proof of loss to Guardian. Thereafter, Guardian conducted an investigation of the claim. In a letter dated March 5, 1997, Guardian unequivocally denied coverage.

The Policies under which Knoepfler claims entitlement to benefits are: (1) a Professional Disability Income Policy (Policy No. G-709770) ("Personal Liability Policy"), which provides for payment of benefits in the event of total and/or residual disability as defined therein;¹ and (2) an Overhead Expense Disability Income Policy (Policy No. G-709771) ("Overhead Expense Policy") (collectively the "Policies"), which provides for payment of benefits in the event of total disability as defined therein.²

The Policies each contain a "Legal actions" provision and a "Time for filing proof of loss" provision ("Proof of loss" provision). The Legal actions provisions in the Policies read as follows:

No one can bring an action at law or in equity under this policy until 60 days after written proof has been furnished as required by this policy. In no case can an action be brought against Guardian more than three years after written proof must be furnished.

(App. at 97a, 129a.) The Proof of loss provision in the Personal Liability Policy reads as follows:

We are liable for benefits at the end of each month while you are disabled beyond the elimination period until the benefit period ends or, if earlier, the date you recover.

You must give us proof of loss at our home office or at any agency office:

• for loss from disability within 90 days after the end of the period for which we are liable; and • for any other loss within 90 days after the date of loss.

If you cannot reasonably give us proof within such time, we will not deny or reduce claim if you give us proof as soon as possible. But we will not pay benefits in any case if proof is delayed for more than a year, unless you have lacked legal capacity.

(App. at 97a.) The Proof of loss provision in the Overhead Expense Policy reads as follows:

We are liable for benefits at the end of each month while you are disabled beyond the elimination period until the aggregate benefit is reached or, if earlier, the date you recover.

You must give us proof of loss at our home office or at any agency office within 90 days after the end of the period of disability for which we are liable.³

If you cannot reasonably give us proof within such time, we will not deny or reduce claim if you give us proof as soon as possible. But we will not pay benefits in any case if proof is delayed for more than one year, unless you have lacked legal capacity.

(App. at 129a.)

The Legal actions and Proof of loss provisions are included in the Policies by statutory mandate. N.J. Stat. Ann. § 17B:26-3. The wording of the Legal actions provisions in the Policies mirrors that of the corresponding statutory provision. N.J. Stat. Ann. § 17B:26-14. The wording of the Proof of loss provisions in the Policies, however, does not mirror the wording of the statutory proof of loss provision, reflecting modifications that Guardian made to the statutory provision, the latter of which reads as follows:

Proofs of loss: Written proof of loss must be furnished to the insurer at its said office in case of claim for loss for which this policy provides any periodic payment contingent upon continuing loss within 90 days after the termination of the period for which the insurer is liable and in case of claim for any other loss within 90 days after the date of such loss. Failure to furnish such proof within the time required shall not invalidate nor reduce any claim if it was not reasonably possible to give proof within such time, provided such proof is furnished as soon as reasonably possible and in no event, except in the absence of legal capacity, later than 1 year from the time proof is otherwise required.

N.J. Stat. Ann. § 17B:26-10. The Commissioner of Insurance approved the modifications which Guardian made to the statutory provision.

II.

On October 10, 2001, Knoepfler filed an action against Guardian⁴ in state court in New Jersey, seeking recovery of disability benefits under the Policies. Guardian removed the action to the United States District Court for the District of New Jersey on the basis of diversity of citizenship.

On March 25, 2004, Guardian moved for summary judgment, arguing that the action was barred by the three-year period of limitations set forth in the Legal actions provision of the Policies. Guardian contended that the phrase "period for which we are liable" in the Proof of loss provision refers to a monthly period, such that proof of loss is required to be furnished within ninety days after the end of each month of disability for which Guardian is liable. Applying this construction of the policy language, Guardian claimed that Knoepfler was required to furnish proof of loss within ninety days after the end of the first month of his alleged disability, i.e., by the end of March 1993, or, at the latest, within the one-year grace period thereafter. Guardian argued that the three-year period of limitations expired by the end of March 1997, and, thus, this action was not timely filed.

Knoepfler opposed the motion, contending that proof of loss is not required to be furnished until after the end of the entire period of continuous disability for which Guardian is liable. Since his alleged disability is ongoing, Knoepfler argued that the three-year period of limitations has not started to run.

Citing to the New Jersey appellate case of Mosior v. Insurance Company of America, 193 N.J.Super. 190, 473 A.2d 86 (1984), the District Court granted the motion for summary judgment in Guardian's favor, holding that the action was time-barred as a result of the period of limitations. The District Court found that Mosior had "interpreted a similar policy provision to preclude a suit filed more than three years after the 90-day proof of loss deadline had passed, despite the plaintiff's alleged ongoing disability." (Order and Opinion at 7.) However, the District Court also noted that "the Policies are ambiguous as to the precise time in which Plaintiff was required to file his proof of loss. . . ." (Id. at 8.) Nevertheless, citing to Mosior and the public policy considerations underlying periods of limitations, the District Court concluded that "it was not reasonable for Plaintiff to believe that his right to file suit under the Policies would survive four years after the final denial of his claim." (Id.)

III.

Knoepfler's appeal challenges the grant of summary judgment on two principal grounds: (1) Mosior, the New Jersey appellate case upon which the District Court relied, never reached the issue posed for adjudication in this case; and (2) the majority of courts, including this Court in Hofkin v. Provident Life & Accident Insurance Co., 81 F.3d 365 (3d Cir.1996), have interpreted the language "period for which we are liable" as requiring proof of loss to be furnished after the end of the entire period of continuous disability, and there is no reason to conclude that the New Jersey Supreme Court would depart from the majority view.

A.

Knoepfler claims that the Mosior court did not construe the policy language at issue in this case. In Mosior, an insured brought an action against the insurer to recover benefits for permanent disability under a group accident insurance policy. 473 A.2d at 87. The insurer in Mosior argued that the insured had failed to bring the action within the three-year period of limitations specified in the policy. Id. As in this case, the period of limitations provision in Mosior barred any action brought more than three years after the time written proof of loss was required. Id. at 88. The policy in Mosior contained the following...