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FRANKLIN v. GENERAL ELECTRIC CAPITAL ASSURANCE COMPANY

January 22, 2004.

ROSCOE FRANKLIN
v.
GENERAL ELECTRIC CAPITAL ASSURANCE COMPANY



The opinion of the court was delivered by: THOMAS O'NEILL, Senior District Judge

MEMORANDUM

INTRODUCTION

Plaintiff Roscoe Franklin sued defendant, General Electric Capital Assurance Company (GECA), asserting claims under Pennsylvania law for breach of contract, bad faith by an insurer, and unfair or deceptive trade practices. The parties dispute whether GECA applied the correct formula for the calculation of benefits following the death of Franklin's wife and the amount of the gross Principal Sum to which the contractual benefit formula is to be applied. Presently before me are defendant's motion for partial summary judgment and plaintiffs cross motion for partial summary judgment. For the reasons stated below I will deny both parties' motions without prejudice to the filing of motions for summary judgment after completion of discovery on the amount of the contributory principal sum.

  II. BACKGROUND

  Blanche Franklin, plaintiff's wife, died as the result of an accident on December 12, 2000. She was seventy-three years old at the time of her death. Plaintiff is an "insured person" Page 2 under a group insurance policy issued by GECA to Sentry Federal Credit Union. On or about July 21, 2001, GECA issued a check to plaintiff for $9,900 in response to a plaintiff's claim arising from his wife's death.

  In 1991, Franklin, a member of the credit union, enrolled for the basic $1,000 non-contributory coverage under the group insurance policy. Plaintiff further elected voluntary coverage under the "Family Plan" which covered his wife, who was his sole dependant. The amount of the voluntary or contributory coverage is currently disputed by the parties. Plaintiff alleges that he originally contracted for $50,000 of coverage under the Family Plan and that he subsequently increased his contributory coverage to $100,000 on August 19, 1993; to $110,000 on November 2, 1995; and to $130,000 on February 3, 1998. Defendant maintains that Franklin had only $30,000 of contributory coverage in December of 2000 when Mrs. Franklin died.

  The policy consists of a series of written documents setting forth the terms and conditions of insurance coverage and provides accidental injury or death coverage for members of the credit union. The policy schedule provides that:
If the Insured has made application for the "Family Plan" and paid the required premium therefor, then his or her Spouse is automatically insured for 50% of the contributory Principal Sum which applied to the Insured on the date of the accident. If there are no insured children on the date of the accident, this percentage is increased to 60%. . . .
The benefits to be paid under the Policy for loss sustained by an Insured Person as a result of an accident which occurs on or after the date such person attains 70 years of age shall be reduced to 50% of the benefits otherwise payable. This applies to both contributory and non-contributory.
(Pl's Br. in Opp., Ex. B, GE 000005. See also Id. at GE 000019). A 1996 policy rider alters the Family Plan provision to read in part:

  If an Insured Member has applied for the "Family Plan" and paid the premium Page 3 required for it, his or her spouse is automatically insured for a Principal Sum that is 50% of the Contributory Principal Sum which applied to the Insured Member on the date of the accident. If there are no insured children on the date of the accident, this percentage is increased to 60%.

 (Id at GE 000024) (emphasis added).

  The "Accidental Death and Dismemberment Benefit" section of the policy states:
When an Insured person's injury results in one of the losses stated below within 1 year of the date of the accident, We will pay the percentage of the principal sum stated for such loss. . . . Only one benefit, whichever is greatest, will be paid for all losses which result from any one accident.
Loss of Life 100%
(Id. at GE 000009, GE 00020) (emphasis added). The policy does not provide an explicit definition for the term "principal sum." The 1996 policy rider defines "insured person" as "You and each of Your Eligible Dependents who is insured under the Policy." Id at GE 000024).

  Under the policy terms, plaintiff also was entitled to a continuous coverage bonus of five percent for each two years of continuous coverage. (Pl.'s. Br. in Opp., Ex. B, GE 000010). In calculating the benefit payable to plaintiff, GECA applied a continuous coverage bonus of ten percent to what it believed was the entire amount of coverage, the amount now in dispute.

  III. PROCEDURAL HISTORY

  Plaintiff commenced this action by filing a complaint in the Court of Common Pleas for Philadelphia County. GECA timely removed the case to this Court. Defendant then filed its answer and the parties exchanged discovery. ...


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