Panepinto v. New York Life Ins. Co.

• Decision Date: 25 November 1997
• Citation: 90 N.Y.2d 717,688 N.E.2d 241,665 N.Y.S.2d 385
• Parties: , 688 N.E.2d 241, 1997 N.Y. Slip Op. 10,214 Maria PANEPINTO, Appellant, v. NEW YORK LIFE INSURANCE COMPANY, Respondent.
• Court: New York Court of Appeals Court of Appeals

Page 385

665 N.Y.S.2d 385

90 N.Y.2d 717, 688 N.E.2d 241, 1997

N.Y. Slip Op. 10,214

Maria PANEPINTO, Appellant, v. NEW YORK LIFE INSURANCE COMPANY, Respondent.

Court of Appeals of New York.

Nov. 25, 1997.

Duignan & Cella, New York City (Richard M. Duignan, of counsel), for appellant.

Hunton & Williams, New York City (Franklin H. Stone and Vincent J. Wiscovitch, of counsel), and Robert M. Rosh, for respondent.

OPINION OF THE COURT

LEVINE, Judge.

This action involves a dispute over the meaning of language found in two insurance policies that ultimately will determine whether plaintiff's action on the policies is time-barred. Each policy provides for the payment by defendant New York Life Insurance Company of $1,000 per month in the event of the "total disability" of plaintiff. "Total disability" is initially defined as "the complete inability of the insured to perform any and every duty pertaining to his or her occupation." After five years of such disability, the definition becomes "the complete inability of the insured to engage for remuneration or profit in any and every occupation for which the insured is reasonably qualified, based upon his or her education, training, experience and prior average annual earnings."

Plaintiff, Maria Panepinto, claims that she continues to suffer from allergic rhinitis, a severe asthma caused by woolen dust particles that makes it impossible for her to perform her job as an executive overseeing the manufacture and sale of garments containing wool. On January 20, 1984, she filed a notice of claim for total disability and provided proof of loss to New York Life, including her allergist's recommendation that she cease working with clothing and fabrics. Thereafter, pursuant to the terms of the policies, New York Life made monthly payments of $2,000 to plaintiff for a period of three years, during which it waived the payment of premiums due on the policies. Plaintiff was then examined by New York Life's doctor and, relying on its doctor's report that plaintiff was no longer totally disabled, on October 28, 1996, New York Life gave notice of termination of disability payments and other benefits under the two policies retroactively effective August 6, 1986.

Plaintiff commenced the instant action on June 28, 1990, approximately 3 1/2 years after the October 28, 1996 notice of termination. Supreme Court granted summary judgment for New York Life and denied plaintiff's cross motion for further discovery, holding the action time-barred by the three-year limitations period included in the insurance policies. The Appellate Division affirmed (234 A.D.2d 4, 650 N.Y.S.2d 551). We granted leave to appeal, and now reverse.

Resolution of this appeal turns on the interpretation of the provisions of the policies specifying when their three-year limitations period begins to run. Paragraph 17 of the policies unambiguously links the commencement of the limitations period to the date proof of loss must be submitted, in providing that no action shall be brought "after the expiration of three years from the time written proof of loss is required to be furnished." The dispositive issue, therefore, is at what point an insured with a continuing disability such as plaintiff's is required to furnish proof of loss.

Paragraph nine of the policies, entitled "Proofs of Loss," states, in pertinent part:

"Written proof of loss must be furnished to the Company at its Home Office. Such proof must be furnished within ninety days after termination of any period of disability for which the Company is liable. In case of claim for any other loss, such proof must be furnished within ninety days after the date of such loss" (emphasis supplied). ^*

According to the language found under "Benefit 1" of the policies, New York Life must pay a "benefit for each continuous period of * * * disability" in the amount stated by the policies "for each full month * * * during which such disability continues without interruption." The policies also include a "Lifetime Maximum Benefit Period" of obligation of New York Life for a disability that originates before the insured reaches the age of 65.

Plaintiff contends that her disability commenced before age 65 and has "continue[d] without interruption" to this day. Thus, relying on the precise language of the policies, she asserts that there has not been a "termination of any period of disability for which the Company is liable" triggering her obligation to furnish proof of loss within 90 days thereafter and commencing the three-year limitations period. The majority of jurisdictions that have considered the meaning of identical language, found in the laws and insurance policies of other States, have determined this to be the most reasonable interpretation (see, Wall v. Pennsylvania Life Ins. Co., 274 N.W.2d 208 [ND]; Laidlaw v. Commercial Ins. Co., 255 N.W.2d 807 [Minn]; Continental Cas. Co. v. Freeman, 481 S.W.2d 309 [Ky App]; Goodwin v. Nationwide Ins. Co., 104 Idaho 74, 656 P.2d 135; see also, Hofkin v. Provident Life & Acc. Ins. Co., 81 F.3d 365 [3d Cir.]; Clark v. Massachusetts Mut. Life Ins. Co., 749 F.2d 504 [8th Cir.] ).

New York Life proffers two alternative interpretations of the policy provisions regarding the period of limitations for commencement of suit and time requirements for filing a proof of loss. First, it urges us to adopt the position of the Appellate Division that the limitations period was triggered by New York Life's actual termination of plaintiff's benefits. Accepting this interpretation would require us to rewrite the language found in paragraph nine of the policies, either by requiring submission of proof of loss after the "termination of benefits," rather than the "termination of any period of disability" or by inserting, following the words "period of disability for which the Company is liable" the words "as determined by the Company." As there is nothing in the policies that suggests that the obligation to provide timely proof of loss is triggered by the insurer's unilateral decision to terminate disability benefits, we decline to adopt this view. It is noteworthy that no other jurisdiction construing the common disability policy provision at issue has espoused this view.

Alternatively, New York Life contends that the "period of disability for which the Company is liable" in paragraph nine refers to each time interval for which New York Life must make a periodic payment under the policy terms. Applying this construction would have required plaintiff to file proof of loss within 90 days of the end of each monthly period for which the policies obligated New York Life to pay benefits and that the limitations period would run independently for each monthly installment. Thus, under this reading of the policy language, all of plaintiff's claims for benefits more than three years and 90 days old would be time-barred. This interpretation has been adopted by a minority of jurisdictions (see, Nikaido v. Centennial Life Ins. Co., 42 F.3d 557 [9th Cir]; Goff v. Aetna Life & Cas. Co., 1 Kan.App.2d 171, 563 P.2d 1073).

We likewise find this interpretation unpersuasive. The minority view requires inserting into paragraph nine a...