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Carnathan v. Ohio National Life Insurance Co.

June 24, 2008


The opinion of the court was delivered by: Chief Judge Kane


Before the Court is Defendant Ohio National Life Insurance Company's ("Ohio National") motion for summary judgment. (Doc. No. 34.) The motion has been fully briefed and is ripe for disposition. For the reasons that follow, the motion will be granted in part and denied in part.


This action began in the Court of Common Pleas of Dauphin County, Pennsylvania, on April 12, 2006, and was removed to this Court on May 16, 2006, on the basis of diversity jurisdiction. (Doc. No. 1.) In his complaint, Plaintiff seeks a declaratory judgment to reinstate an injury and sickness total disability income policy (the "policy"), which would "provid[e] a monthly benefit of $2500 a month for life if plaintiff becomes disabled."*fn1 (Doc. No. 16, at 4); (see also Doc. No. 2). Plaintiff has never sought benefits under the insurance policy, nor is he doing so now; rather, he simply seeks reinstatement of the policy so that he may receive benefits should he become disabled while the policy would remain in effect.

Plaintiff, who is self-employed, purchased the policy in 1991 from Jefferson National Life Insurance Company, which contracted with Ohio National to administer the policy. (Doc. Nos. 2 & 9, ¶¶ 2, 6, 10; Doc. No. 34, ¶ 2.) Every year thereafter up to and including 2004, Ohio National notified Plaintiff in writing at his business address that his annual premium of $1,426.75 was due and payable (Doc. Nos. 2 & 9, ¶¶ 12, 14), and during these years Plaintiff made the appropriate payments. In 2005, however, the policy lapsed because Plaintiff did not timely submit his annual premium payment. (Doc. No. 34, ¶¶ 6-7.)

Plaintiff asserts that his failure to make his 2005 premium payment was a direct result of Ohio National's failure to provide him with the premium payment notice that it had sent for more than a decade prior.*fn2 (Doc. No. 2, ¶¶ 24-25; Doc. No. 35, ¶ 36.) Because he reasonably relied upon this notice, and because he can no longer obtain similar coverage at a comparable rate given his age and state of health, Plaintiff asserts that "there is no way to avoid injustice but to estop [Ohio Northern] from denying that Plaintiff is covered under his original policy in accordance with the terms set forth therein." (Doc. No. 2, ¶ 26.)

Ohio National, however, asserts that the policy did not obligate it to provide any premium payment notice, and that in any event, it did provide Plaintiff with the customary notices: Ohio National claims that on April 19, 2005, it generated a premium payment notification that it mailed to Plaintiff's business address, and that on June 10, 2005, it sent Plaintiff a "late payment offer" that would have allowed him to submit the 2005 premium even though the grace period for late payment had already passed. (Doc. No. 34, ¶¶ 14-16.) Based upon these mailings, Ohio National argues that Plaintiff cannot credibly claim that the policy lapsed because of Ohio National's failure to provide Plaintiff adequate notice. (Doc. No. 35, ¶¶ 14-17.) Moreover, Ohio National contends that summary judgment in its favor is appropriate because the lapse in the policy was wholly attributable to Plaintiff, who (1) understood that he was obligated to pay annual premiums at a set rate, (2) knew that Ohio National was not obligated under the policy to send annual reminders, (3) had a calendar system in place for triggering the payment of regular bills, and yet (4) failed to pay the required amount in a timely manner. (Doc. No. 34, at 13.)


Summary judgment should be granted only "if the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(c). In making this determination, the Court "must view the facts in the light most favorable to the nonmoving party and draw all inferences in that party's favor." William Paterson Coll. of N.J., 260 F.3d 265, 276 (3d Cir. 2001) (internal quotation marks omitted). Thus, if a reasonable fact finder could find in the non-movant's favor, then summary judgment may not be granted. Congregation Kol Ami v. Abington Twp., 309 F.3d 120, 130 (3d Cir. 2002). The Third Circuit has reminded that "it is important to remember that, '[w]hile the individual pieces of evidence alone may not suffice to make out the claims asserted, [the Court] must view the record as a whole picture.'" Norfolk S. Ry. Co. v. Basell USA Inc., 512 F.3d 86, 91 (3d Cir. 2008) (quoting Abramson, 260 F.3d at 276).


At the heart of Plaintiff's request for reinstatement of the policy is his contention that he reasonably relied upon Ohio National's annual premium payment notices to remind him when, where, and to whom annual premiums were to be sent, and that no such notice was sent or received in 2005. In the instant motion for summary judgment, Ohio National raises two challenges to this contention. First, Ohio National asserts that the company had no duty to notify Plaintiff that his premium was due. Second, Ohio National contends that under the "mailbox rule" a presumption arises that Plaintiff received the premium payment notification and late payment offer letter, a presumption that Plaintiff has failed to rebut. The Court will address each of Ohio National's arguments in turn.

A. Duty to Notify

Ohio National first argues that whether Plaintiff actually received the premium payment notice and late payment offer letter is irrelevant because the policy imposes no obligation on Ohio National to provide such notices. Because Plaintiff knew he had to pay annual premiums and failed to do so, Ohio National asserts that Plaintiff cannot now challenge the cancellation of his policy. Essentially, Ohio National contends that it was Plaintiff's irresponsibility, rather than any action or inaction on its part, that caused the policy to lapse.

Acknowledging that the policy itself does not require annual premium notices to be sent, Plaintiff nevertheless explains that he received such notices from the very beginning of the policy and that he relied upon them to remind him of his obligation under the policy and to determine when and where the annual premium was to be mailed and to whom the payment should be addressed. Under the circumstances, Plaintiff ...

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