United States District Court, M.D. Pennsylvania
KATRINA L. KELLY, BENEFICIARY FOR THE ESTATE OF WILLIAM KELLY, Plaintiff
LINCOLN BENEFIT LIFE COMPANY, Defendant
M. MUNLEY UNITED STATES DISTRICT COURT JUDGE
the court for disposition is Defendant Lincoln Benefit Life
Company's motion for summary judgment in this case
involving a life insurance dispute. The parties have briefed
their respective positions, and the motion is ripe for
October 23, 2013, William Kelly obtained a life insurance
policy from defendant with a benefit of $200, 000.00 and with
Plaintiff Katrina L. Kelly as beneficiary. Approximately ten
months later, on August 20, 2014, William Kelly passed away
from respiratory failure. Plaintiff made a claim to defendant
for the life insurance benefits. Defendant denied the claim.
Plaintiff then instituted this case by filing a three-count
complaint. The complaint raises the following causes of
action: Count I- breach of contract; Count II - bad faith;
and Count III - negligent supervision/vicarious liability. At
the close of discovery, the defendant filed the instant
motion for summary judgment, bringing the case to its present
court has jurisdiction pursuant to the diversity statute, 28
U.S.C. § 1332. Plaintiff is a citizen of Pennsylvania.
(Doc. 1, Not. of Removal ¶ 6). Defendant Lincoln Benefit
is incorporated under the laws of the State of Nebraska with
its principal place of business in Nebraska. (Id.
¶ 7). Thus, defendant is a citizen of Nebraska.
Additionally, the amount in controversy exceeds $75, 000.
(Id. ¶ 9). Because complete diversity of
citizenship exists among the parties and the amount in
controversy exceeds $75, 000, the court has jurisdiction over
this case. See 28 U.S.C. § 1332 (Adistrict
courts shall have original jurisdiction of all civil actions
where the matter in controversy exceeds the sum or value of
$75, 000, exclusive of interest and costs, and is between . .
. citizens of different states[.]@). As a federal court
sitting in diversity, the substantive law of Pennsylvania
shall apply to the instant case. Chamberlain v.
Giampapa, 210 F.3d 154, 158 (3d Cir. 2000) (citing
Erie R.R. v. Tomkins, 304 U.S. 64, 78 (1938)).
summary judgment is proper A>if the pleadings,
depositions, answers to interrogatories, and admissions on
file, together with the affidavits, if any, show that there
is no genuine issue as to any material fact and that the
moving party is entitled to judgment as a matter of
law.'" See Knabe v. Boury, 114 F.3d 407,
410 n.4 (3d Cir. 1997) (quoting Fed.R.Civ.P. 56(c)). A[T]his
standard provides that the mere existence of some
alleged factual dispute between the parties will not defeat
an otherwise properly supported motion for summary judgment;
the requirement is that there be no genuine issue of
material fact." Anderson v. Liberty Lobby,
Inc., 477 U.S. 242, 247-48 (1986) (emphasis in
considering a motion for summary judgment, the court must
examine the facts in the light most favorable to the party
opposing the motion. Int'l Raw Materials, Ltd. v.
Stauffer Chem. Co., 898 F.2d 946, 949 (3d Cir. 1990).
The burden is on the moving party to demonstrate that the
evidence is such that a reasonable jury could not return a
verdict for the non-moving party. Anderson, 477 U.S.
at 248 (1986). A fact is material when it might affect the
outcome of the suit under the governing law. Id.
Where the non-moving party will bear the burden of proof at
trial, the party moving for summary judgment may meet its
burden by showing that the evidentiary materials of record,
if reduced to admissible evidence, would be insufficient to
carry the non-movant's burden of proof at trial.
Celotex v. Catrett, 477 U.S. 317, 322 (1986). Once
the moving party satisfies its burden, the burden shifts to
the nonmoving party, who must go beyond its pleadings, and
designate specific facts by the use of affidavits,
depositions, admissions, or answers to interrogatories
showing that there is a genuine issue for trial. Id.
motion for summary judgment, the defendant insurance company
argues that it properly rescinded the life insurance policy
when it learned of inaccuracies in the insurance application.
Because defendant properly rescinded the policy, it had no
duty to pay benefits and plaintiff's breach of contract
fails. The remaining two claims rely on the validity of the
breach of contract cause of action. No breach of contract
occurred, and thus, according to the defendant, these two
claims fail also and judgment should be entered in favor of
raised this issue in its answer to the complaint, stating:
“Plaintiff's claims are barred because there were
material, knowing and/or fraudulent misrepresentations in the
application for the policy, which rendered the policy void
and of no force and effect, and [Defendant] Lincoln Benefit
properly and timely rescinded and contested the
policy.” (Doc. 6, Ans. at 5). Defendant argues that
William Kelly (hereinafter “Mr. Kelly” or
“decedent”) failed to disclose an extensive
history of medical treatment, including multiple recent
hospital visits, and the diagnostic testing for, and
diagnosis of, lung cancer. Thus, at issue is whether Mr.
Kelly materially misrepresented his health and medical
condition when he purchased the policy and whether such
misrepresentation allows defendant to rescind the policy.
Plaintiff argues that questions of material fact preclude us
from granting summary judgment. After a careful review, we
agree with the defendant.
law allows for rescission of an insurance contract when in
applying for a policy an applicant makes a 1) false
representation; 2) which the insured knew was false when made
or was made in bad faith; and 3) the representation was
material to the risk being insured. New York Life Ins.
Co. v. Johnson, 923 F.2d 279, 281 (3d Cir. 1991);
Estate of Genovese v. AAA Life Ins. Co., No.
3:11cv348, 2011 WL 5835097 *8 (Nov. 21, 2011) .
argues that all off these elements are met. Plaintiff made
false statements, he knew they were false and they were
material to the risk being ...