United States District Court, M.D. Pennsylvania
NICHOLAS LOMMA, and J.L, a Minor, by ANTHONY LOMMA, Guardian Plaintiffs,
OHIO NATIONAL LIFE ASSURANCE CORPORATION, and OHIO NATIONAL LIFE INSURANCE COMPANY, Defendants.
D. MARIANI, UNITED STATES DISTRICT JUDGE.
an insurance action against Defendants Ohio National Life
Assurance Corporation and Ohio National Life Insurance
Company for life insurance proceeds. Plaintiffs Nicholas
Lomma and J.L., a minor, by his guardian, Anthony Lomma, seek
to recover $100, 000 as beneficiaries of a life insurance
policy issued by Defendants on the life of their mother, Lora
Marie Lomma, who committed suicide in May of 2009. Defendants
have denied payment of full death benefits based on a suicide
exclusion in the policy.
September 6, 2017, the Court granted Defendants' motion
to dismiss in part and denied the motion in part, allowing
the breach of contract, breach of implied covenant of good
faith and fair dealing, and statutory bad faith claims to
proceed because Plaintiffs had sufficiently pled ambiguity in
the contract language and a reasonable expectation of
coverage, and plausibly pled bad faith on the part of
Defendants. Doc. 24. Presently before the Court are cross
motions for summary judgment by both Plaintiffs and
Defendants. Both motions primarily concern the same issue:
whether the suicide exclusion precludes Plaintiffs from full
coverage under the policy. Docs. 29, 31. For the reasons that
follow, Plaintiffs' motion will be granted in part and
denied in part, and Defendants' motion will be granted in
part and denied in part.
Statement of Undisputed Facts
parties have submitted Statements of Material Facts as to
which they submit there is no genuine issue or dispute for
trial for their respective motions for summary judgment.
Docs. 29, 31. Both parties have also submitted responses to
the statements of material facts in their opposition to the
opposing party's motion for summary judgment. Docs. 38,
39. The parties base their arguments primarily on Ms.
Lomma's policy with Defendants and related policy
documents such as the "Notice Regarding Replacement of
Life Insurance and Annuities" (the "Notice"),
which had already been presented to the Court through
Defendant's motion to dismiss. Doc. 4-4. Thus, the
factual issues remain substantively the same as those
presented at the motion to dismiss stage. The following facts
are not reasonably in dispute except as noted.
Lomma committed suicide on May 24, 2009. Doc. 29 ¶ 6.
Plaintiffs, Nicholas Lomma and J.L., the surviving children
of Ms. Lomma, bring suit against Defendants for the denial of
life insurance benefits. Doc. 1-4 ¶¶ 1-2. In
September 1986, Ms. Lomma was issued a life insurance policy
(the "Original Policy") by Pennsylvania National
Life Insurance Company with a coverage amount of $25, 000.
Doc. 29 ¶ 1. The Original Policy contained a suicide
exclusion, which states "SUICIDE: If, within two years
from the Issue Date, the Insured, while sane or insane,
commits suicide, our liability will be limited to a refund of
the premium paid less any Policy Indebtedness and Partial
Withdrawals." Doc. 29-2 at 15. In 1994, Defendants Ohio
National Life Assurance Corporation and/or Ohio National Life
Insurance Company "purchased or otherwise acquired the
Original Policy from Pennsylvania National Life Insurance
Company." Doc. 29 at ¶ 2. Although this assertion
is "denied as stated" by Defendants, they do not
deny that the assumption of the policy occurred. Doc. 38
¶ 2. Instead, they clarify that only Defendant Ohio
National Life Assurance Corporation
"assumed" the Original Policy, and that Defendant
"Ohio National Life Insurance Company was not
involved in the transaction." Id. (emphasis
added). In support of their "denial", Defendants
submitted a 2006 letter from Ohio National Life
Assurance Corporation to Ms. Lomma, clarifying "a
drafting error" with respect to a formula set forth in
the policy as required by the Internal Revenue Code (the
"2006 Letter"). Doc. 38-2 at 38. The "drafting
error" bears no relevance to the case at hand. Rather,
the 2006 Letter is introduced solely for the proposition that
Ohio National Life Assurance Corporation is the only
Defendant that contracted with Ms. Lomma. Id. (2006
Letter stating "[a]s you know, Ohio National Life
Assurance Corporation has been administering your policy
since June 30, 1994, when we assumed all obligations and
liabilities under your policy as originally issued by
Pennsylvania National Life Insurance Company") (emphasis
added). However, Defendants do not explain why the
distinction between the two Ohio National entities is
significant, nor do they base their legal arguments on this
distinction. Indeed, Defendants have chosen to jointly file
all motion papers to the Court. Further, Defendants
repeatedly refer to themselves jointly as "Ohio
National" in all motion papers, even though there are
two "Ohio National" entities. Thus, the Court finds
that it is undisputed that Defendants assumed the Original
Policy from Penn National Life Insurance Company in 1994.
December 4, 1995, Ms. Lomma increased the amount of coverage
under the Original Policy with Defendants from $25, 000 to
$100, 000. Doc. 29 ¶ 3. See also Doc. 29-3 at 3
(December 14, 1995 Letter from Defendants, stating that
"[u]pon written request... the stated amount is hereby
increased from $25, 000 to $100, 000 effective December 4,
1995"). On June 6, 2007, Ms. Lomma filed an application
for a new life insurance policy with Defendants with a
coverage amount of $100, 000 (the "Replacement
Policy"). Doc. 29 ¶ 4. See also Doc. 294
(Ms. Lomma's application for change of
policy). On August 15, 2007, Defendants issued the
Replacement Policy to Ms. Lomma with a benefit value of $100,
000. Id. ¶ 5. While the amount of insurance
coverage stayed the same, the parties dispute whether the
beneficiaries changed upon the switch to the Replacement
Policy. According to Plaintiffs, the beneficiaries under the
Replacement Policy "were identical to those under the
Original Policy." Id. However, the documents
submitted by the parties reflect a change in the designation
of beneficiaries at the time of the policy switch.
Compare Doc. 38-2 at 20 (Original Policy designating
Anthony Lomma as the primary beneficiary and Ms. Lomma's
children as contingency beneficiaries) with Doc.
29-4 at 3 (Application for change of policy listing Nicholas
Lomma as the primary beneficiary and J.L. as the contingent
of the switch in policy, Defendants provided Ms. Lomma a
"Notice Regarding Replacement of Life Insurance and
Annuities," which was executed in June, 2007. Doc. 31 at
9; see also Doc. 31-3 at 39. It provides:
You should recognize that a policy that has been in existence
for a period of time may have certain advantages to you over
a new policy....Under your existing policy, the period of
time during which the issuing company could contest the
policy because of a material misrepresentation or omission
concerning the medical information requested in your
application, or deny coverage for death caused by suicide,
may have expired or may expire earlier than it will under the
Id. While the Notice was attached to Defendants'
motion to dismiss, the Court declined to consider it then
because it was not "undisputedly authentic" nor
"integral to Plaintiffs' Complaint, but is instead
relevant to Defendants' affirmative
defenses." Doc. 24 at 8 n.5 (emphasis in original).
At this stage, however, the Notice is properly before the
Court as part of the record, and its validity is undisputed
by Plaintiffs. See Doc. 39 ¶ 4 (admitting the
language in the Notice but denying its "legal effect
imputed by Defendants onto this provision").
issued the Replacement Policy to Ms. Lomma in August, 2007.
Doc. 31-3 at 1-34 (hereinafter the "Replacement
Policy"). It contains a definition of "Contract
Months and Years," which states: "[t]his contract
takes effect on the contract date shown on page 3. Contract
months and years are marked from the contract date. The first
day of the contract year is the contract date and its
anniversaries." Id. at 11. Page 3 of the
Replacement Policy contains two dates, neither of which is
labeled the "contract date". Instead, page 3 shows
a "Policy Date" of August 10, 2007 and an
"Issue Date" of August 15, 2007. Id. at 7.
Replacement Policy, like the Original Policy, contains a
suicide exclusion. The two exclusions, however, do not
contain the same language. The suicide exclusion in the
Replacement Policy provides:
If the insured dies by suicide while sane or insane or by
intentional self-destruction while insane, we will not pay
any death proceed[s] payable on amounts of insurance which
have been in effect for less than 2 years. If the suicide or
intentional self-destruction is within the first 2 contract
years, we will pay as death proceeds the premiums you paid.
Policy at 13 (emphasis added). Although the Replacement
Policy defines the term "contract years," it does
not contain a definition for "amounts or
insurance", nor does it provide any guidance on how to
determine which "amounts of insurance" have
"been in effect for less than 2 years."
after Ms. Lomma's death, Mr. Lomma filed a claim for
death benefits on behalf of his children, the beneficiaries
under the Replacement Policy. Doc. 29 ¶ 7. On August 31,
2009, Defendants informed Mr. Lomma that they would not pay
the full benefit value under the policy, but instead, pay
"$285.12 plus interest at 4.5%," which represents
the "premiums paid on the policy." Doc. 31-3 at 36.
The letter explained that Defendants' investigation
revealed that Ms. Lomma died by suicide, and in accordance
with the policy's suicide exclusion, "the death
proceeds for death due to 'Suicide' within the first
two contract years is a refund of premiums paid."
brought suit against Defendants for the full $100, 000 in
coverage, alleging five causes of action: (1) breach of
contract; (2) unjust enrichment; (3) promissory estoppel; (4)
breach of implied covenant of good faith and fair dealing;
and (5) statutory bad faith pursuant to 42 Pa. C.S.A. §
8371. Doc. 1-4. At the motion to dismiss stage, the Court
found the suicide exclusion to be ambiguous, and denied
Defendants' motion with respect to the breach of
contract, breach of implied covenant of good faith and fair
dealing, and statutory bad faith claims. Doc. 25 (denying the
motion to dismiss with respects to Counts I, IV, and V).
Finding the unjust enrichment and promissory estoppel claims
to be precluded by the existence of an express contract
between the parties, the Court dismissed Counts II and III of
the Complaint. Id.
discovery, Defendants moved for summary judgment on all three
remaining claims. Doc. 31. Meanwhile, Plaintiffs moved for
summary judgment on the breach of contract claim and the
statutory bad faith claim. Both parties have largely recycled
their arguments from the motion to dismiss briefing for their
briefing on summary judgment. Further, the parties have added
no additional evidence to the record since the Court's
ruling on motion to dismiss, but instead focus their
arguments on the legal interpretation of the policy language.
The only "new" document relevant to the insurance
transaction at issue is the Notice, which had been attached
to Defendant's motion to dismiss but was declined to be
considered by this Court as extrinsic to the Complaint. Doc.
24 at 8 n. 5. See also Doc. 43 at 1-2
(Defendants' reply brief in support of their motion for
summary judgment arguing that "evidence that this court
did not consider in ruling on Ohio National's motion to
dismiss is now available for consideration," and citing
exclusively to the Notice, which "must now be considered
as evidence supporting Ohio National's interpretation of
the suicide exclusion and motion for summary judgment").
The parties do not dispute the validity of the relevant
documents before the Court, nor have they presented any
disputed issues of fact through any discovery evidence, such
as use of deposition testimony. Thus, it appears that the
parties' sole dispute turns on the interpretation of the
suicide exclusion when viewing the policy and related
documents as whole. For reasons stated below, the Court will
grant summary judgment in favor of Plaintiffs on the breach
of contract claim, and summary judgment in favor Defendants
on the breach of implied covenant of good faith and statutory
bad faith claims.
Standard Of Review
summary adjudication, the court may dispose of those claims
that do not present a "genuine dispute as to any
material fact." Fed.R.Civ.P. 56(a). "As to
materiality, ...[o]nly disputes over facts that might affect
the outcome of the suit under the governing law will properly
preclude the entry of summary judgment." Anderson v.
Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505,
91 L.Ed.2d 202 (1986).
party moving for summary judgment bears the burden of showing
the absence of a genuine issue as to any material fact.
Celotex Corp. v. Catrett,477 U.S. 317, 323, 106
S.Ct. 2548, 91 L.Ed.2d 265 (1986). Once such a showing has
been made, the non-moving party must offer specific facts
contradicting those averred by the movant to establish a
genuine issue of material fact. Lujan v. Nat'l
Wildlife Fed'n,497 U.S. 871, 888, 110 S.Ct. 3177,
111 L.Ed.2d 695 (1990). Therefore, the non-moving party may
not oppose summary judgment simply on the basis of the
pleadings, or on conclusory statements that a factual issue
exists. Anderson, 477 U.S. at 248. "A party
asserting that a fact cannot be or is genuinely disputed must
support the assertion by citing to particular parts of
materials in the record ... or showing that the materials
cited do not establish the absence or presence of a genuine
dispute, or that an adverse party cannot produce admissible
evidence to support the fact." Fed.R.Civ.P.
56(c)(1)(A)-(B). In evaluating whether summary judgment
should be granted, "[t]he court need consider only the
cited materials, but it may consider other materials in the
record." Fed.R.Civ.P. 56(c)(3). "Inferences should
be drawn in the light most favorable to ...