Marshall v. Aetna Cas. & Sur. Co.
| Decision Date | 10 February 1981 |
| Docket Number | No. 80-2207,80-2207 |
| Citation | 643 F.2d 151 |
| Parties | MARSHALL, W. Frederick, Appellant, v. AETNA CASUALTY & SURETY COMPANY. . Submitted Under Third Circuit Rule 12(6) |
| Court | U.S. Court of Appeals — Third Circuit |
Harry A. Dower and Charles R. Osinski, Dower, Yarema & Co., P.C., Allentown, Pa., for appellant.
A. Richard Bailey, Cozen, Begier & O'Connor, Philadelphia, Pa., for appellee.
Before ALDISERT and HIGGINBOTHAM, Circuit Judges, and LACEY, District Judge. **
The question presented by this appeal from a Fed.R.Civ.Pro. 12(b)(6) dismissal of a diversity jurisdiction suit on an insurance contract tried under Pennsylvania law is whether the court erred in concluding that the action was barred by the twelve month claims limitation period found in the Pennsylvania Standard Fire Insurance Contract, Pa.Stat.Ann. tit. 40, § 636(2). The appellant has alleged that the policy issued by Aetna failed to include the claims limitation provision. He contends that the twelve month period is a contractual and not a statutory limitation on suit and that if the insurance contract is silent on the period of limitations, the six year statute applicable to all contracts in writing, 42 Pa.Cons.Stat.Ann. § 5527(2), controls. We agree and therefore reverse.
Because this case is before us on a dismissal for failure to state a claim upon which relief can be granted, we take all well-pleaded allegations as true. Beginning in 1972, Aetna Casualty and Surety Company issued a policy to insure an apartment building owned by W. Frederick Marshall against fire and other perils. On August 28, 1976, while the policy was in effect, a fire caused substantial damage to the insured property and later vandalism caused additional losses. Marshall notified Aetna of the claim and asked for a copy of the policy that Aetna had issued because his copy had been destroyed in the blaze. According to Marshall, Aetna responded by forwarding a copy which did not include the twelve-month limitation clause mandated by state law. Eleven months after the fire, Aetna's claims agent notified Marshall that his claim had been denied. Three and one-half years after the fire, on March 5, 1980, Marshall brought suit in the Lehigh County Court of Common Pleas, attaching to the complaint a copy of the policy Aetna's agent had supplied to him. Aetna timely removed the case to the United States District Court for the Eastern District of Pennsylvania pursuant to 28 U.S.C. § 1441.
That court granted Aetna's subsequent motion to dismiss for failure to state a claim on which relief could be granted. The court based its ruling on the provision in Pa.Stat.Ann. tit. 40, § 636(2), which mandates the form and language of every fire insurance policy issued in the state of Pennsylvania. At lines 157-62 the statutory policy provides:
No suit or action on this policy for the recovery of any claim shall be sustainable in any court of law or equity ... unless commenced within twelve months next after inception of the loss.
In this case, Marshall brought suit three and one-half years after inception of the loss. He would be barred from suit if the contract conformed to the statute, unless Aetna induced Marshall to delay suit. Commonwealth v. Transamerica Ins. Co., 462 Pa. 268, 341 A.2d 74 (1975).
Marshall has alleged that the contract he received from Aetna did not contain this or any reference to a period after which suit would be barred. He argues that in the absence of either a contractual provision to the contrary or one in conformity with the standard language, the six year statute for written contracts, 42 Pa.Cons.Stat.Ann. § 5527(2), controls. The district court rejected this theory and held that "the omission of the ... language from the the insurance policy would not alter the time period in which plaintiffs could institute suit, for the provision is statutory, not a contractual, one." District Court op., typescript at 2, reprinted in app. at 52, 53.
Although no Pennsylvania Supreme Court holding controls the precise question before us, we are guided by previous interpretations of Pa.Stat.Ann. tit. 40, § 636(2). It has long been settled in Pennsylvania that a contractual provision limiting the time for commencement of suit on an insurance contract to a period shorter than that provided by an otherwise applicable statute of limitations is valid if reasonable. See Lardas v. Underwriters Ins. Co., 426 Pa. 47, 231 A.2d 740 (1962); Selden v. Metropolitan Life Ins. Co., 354 Pa. 500, 47 A.2d 687 (1946). Nevertheless, courts carefully scrutinize agreements to shorten statutory periods of limitation, requiring a clear expression of such an intent to be in the contract for the provision to be enforceable. See Alderney Dairy Co. Inc. v. Hawthorne Melody, Inc., 643 F.2d 113, at 118, (3d Cir. 1981); Fratto v. New Amsterdam Fire Ins. Co., 359 F.2d 842 (3d Cir. 1966) (per curiam). A fortiori if an insurance contract is silent on the period of limitations for suit, the insurance company, presumably the drafter of the agreement, has not expressed clearly its intent to limit actions. To enforce an abridged period of limitations in this suit, then, would require this court to conclude that § 636(2) is a statute of limitations imposed on all fire insurance contracts regardless of contract language.
We reject that conclusion because Pennsylvania's highest court has consistently viewed the provisions of the standard policy as a matter of contract and not of statute. In Lardas v. Underwriters Ins. Co., 426 Pa. at 51, 231 A.2d at 741-42, the court upheld the validity of the language limiting suit, but observed that "(t)his is not a statute of limitation imposed by law; it is a contractual undertaking between the parties and the limitation on the time for...
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