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BARRER v. METROPOLITAN LIFE INSURANCE COMPANY

July 16, 2001

RUTH E. BARRER AND ESTATE OF SIDNEY BARRER
v.
METROPOLITAN LIFE INSURANCE COMPANY



The opinion of the court was delivered by: Curtis Joyner, J.

MEMORANDUM AND ORDER

Metropolitan Life Insurance Company now moves for summary judgment pursuant to Fed.R.Civ.P. 56 on Plaintiffs' Complaint for Declaratory Judgment. For the reasons enumerated below, the motion shall be granted.

History of the Case

On or about January 26, 1961, Metropolitan Life Insurance Company ("Met Life") issued a whole life insurance policy on the life of Sidney Barrer, then age 37, in the face amount of $100,000. Premiums were payable annually, in the amount of $2,752.50 on the anniversary date of the policy until the anniversary following the insured's 90th birthday.*fn1 The policy's owner/beneficiary was Mr. Barrer's wife, Ruth.

The Barrers made the annual premium payments on this policy upon receipt of a bill from the defendant company every year until January, 1980. Apparently, the Barrers did not receive any further bills or notices from Met Life regarding the policy ever again after having received the bill for the annual premium which was due on January 26, 1979, despite the fact that they and their family remained in contact with their long-time Met Life representative, Richard Shiffer. Since they did not receive any bills or notices concerning the policy, the Barrers did not make any further premium payments after the January 26, 1979 payment.

The policy, however, included a provision that automatically converted the policy to extended term insurance "if premiums have been paid for at least the number of years for which a period of Extended Term Insurance is first shown in the Table on Page 6." Given that the Barrers had paid the premiums on the policy for some 18 years, the whole life policy was automatically converted to an extended term policy and remained in effect for an additional 15 years and 216 days from the due date of the premium in default. The policy also retained some cash value, albeit at a reduced rate than that which it would have had had the premiums continued to be paid. Similarly, the policy also provided that, in the event a premium payment was in default beyond the 31 day grace period, it could be reinstated within five years after the due date of the first premium in default subject to production of evidence of insurability satisfactory to the company, payment of all overdue premiums with 5% interest per year and payment of any outstanding indebtedness at the end of the grace period, also with 5% interest per year. If more than five years elapsed since the due date of the first premium in default, the policy could be reinstated "subject to such conditions and payments as may be determined by the Company."

On January 12, 1989, the Barrers, through their attorney, wrote Met Life's Policyholder Service Department asking that the company advise as to whether there were any outstanding policy loans, what the current death benefit and cash surrender values were and seeking confirmation that either Ruth Barrer or her estate was the current beneficiary. Met Life responded via letter dated February 2, 1989 that:

Under this provision, the policy has been continuing in benefit for $102,880.00 of Paid-Up Term Insurance. This is the amount that would be paid if the insured dies before December 11, 1996.

The present cash surrender value of the policy is $33,674.68. However, this amount is subject to change, generally being reduced due to the cost of providing the term insurance protection.

PLEASE BE ADVISED THAT ALL LOANS WERE CANCELLED AT THE TIME THE POLICY LAPSED ONTO PAID-UP TERM INSURANCE. THE BENEFICIARY IS RUTH BARRER.

Apparently, neither the plaintiffs nor their attorney responded to this letter or made any further efforts to contact the defendant company before the policy expired on December 11, 1996. Sidney Barrer died on February 15, 1998. On or about March 20, 1998, Mrs. Barrer's attorney telephoned Met Life and received the materials necessary for filing a claim for benefits. On March 23, 1998, the claim was denied as coverage had expired on December 11, 1996 and the policy had no value at the time of Mr. Barrer's death. The plaintiffs thereafter filed this lawsuit on June 28, 1999 in the Court of Common Pleas of Berks County for breach of contract and bad faith. The case was removed to this Court on August 4, 1999.

Summary Judgment Standards

It is recognized that the underlying purpose of summary judgment is to avoid a pointless trial in cases where it is unnecessary and would only cause delay and expense. Goodman v. Mead Johnson & Co., 534 F.2d 566, 573 (3d Cir. 1976), cert. denied, 429 U.S. 1038, 97 S.Ct. 732, 50 L.Ed.2d ...


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