                                                                                                                           Opinions of the United
2003 Decisions                                                                                                             States Court of Appeals
                                                                                                                              for the Third Circuit


6-4-2003

Wallin v. Metro Life Ins Co
Precedential or Non-Precedential: Non-Precedential

Docket No. 02-4297




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                                                          NOT PRECEDENTIAL

                    UNITED STATES COURT OF APPEALS
                         FOR THE THIRD CIRCUIT


                                   No. 02-4297


                              DONNA R. WALLIN,

                                             Appellant

                                        v.

               METROPOLITAN LIFE INSURANCE COMPANY,
                       JACK E. DUCKWORTH,

                                             Appellees


                  On Appeal from the United States District Court
                     for the Western District of Pennsylvania

                             (D.C. No. 97-CV-1173)

                District Judge: The Honorable Donetta W. Ambrose


                    Submitted under Third Circuit LAR 34.1(a)
                              Friday, May 16, 2003

            Before: RENDELL, SMITH and ALDISERT, Circuit Judges.

                              (Filed: June 4, 2003 )




                           OPINION OF THE COURT


ALDISERT, Circuit Judge.
       Donna R. Wallin, the insured under an insurance policy issued by Metropolitan

Life Insurance Company, appeals from the district court’s decision to grant summary

judgment in favor of the company and agent Jack Duckworth on the grounds that the

Appellant’s fraudulent representation claims were barred by state statutes of limitations.

The law of North Carolina applies in this diversity action. Because we agree with the

district court’s decision, we will affirm without reaching the merits of Appellant’s

substantive claims that Duckworth had made fraudulent oral misrepresentations in

inducing Appellant to purchase a number of insurance policies.

                                               I.

       As we write only for the parties who are familiar with the facts and contentions

raised, we will limit our discussion to the controlling legal issues.

       Because Appellant did not raise the issue of the proper length of the statute of

limitations for an alleged breach of a fiduciary duty in the district court, we will not notice

this argument. Gass v. Virgin Islands Tel. Corp., 311 F.3d 237, 245 (3d Cir. 2002)

(noting that the “failure to raise an issue in the district court constitutes a waiver of that

argument”). We shall instead confine ourselves to the statutes of limitations for

fraudulent representation.

        North Carolina General Statute § 1-52(9) states that a claim “[f]or relief on the

grounds of fraud or mistake” must be filed within three years of the aggrieved party’s

“discovery . . . of the facts constituting the fraud or mistake.” Under this provision,



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“discovery” means actual discovery or when the fraud should have been discovered in the

exercise of reasonable diligence. Grubb Props. Inc. v. Simms Inv. Co., 400 S.E.2d 85, 88

(N.C. App. 1990) (concluding that plaintiff failed to exercise reasonable diligence as a

matter of law where it neglected to discover for nearly four years that a tract of land was

not included in a deed). Almost 70 years ago, the North Carolina Supreme Court

remarked that:

              [a] man should not be allowed to close his eyes to facts observable by
              ordinary attention and maintain for his own advantage the position of
              ignorance. Such principle would enable a careless man, and by reason of
              his carelessness, to extend his right to recover for an indefinite length of
              time, and thus defeat the very purpose the statute was designed and framed
              to accomplish.

Moore v. Fidelity and Casualty Co., 177 S.E. 406, 408 (N.C. 1934).

                                             II.

       It is against these statutes and case law precepts that we examine the adjudicative

facts present here.

       Appellant contends that Duckworth, Metropolitan Life’s agent, told her that she

was buying a retirement policy issued on November 24, 1989 – Policy Number 895 193

861 A, the “Life 95 Policy.” Joint Appendix at 320. The policy explicitly stated that the

insurance proceeds would be payable when the insured dies, that premiums were payable

for a stated period and that annual dividends would be paid. Id. at 324-327. The original

annual premium was $34.50 a year for a policy in the amount of $35,000.00. Id. at 349,

351. In February 1993, she decided to purchase “paid-up” additional insurance on the

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same policy with an annual premium of $381.05. Id. at 368-369. By paying this premium

for the policy years four through seven, she would receive additional coverage ranging

from $9,000.00 to $16,000.00. Id. Thereafter, she was not required to pay the additional

premium, but the total insurance would then decrease year by year, except for the year

that she died. Upon her death, there would be an additional insurance payment of

$26,060.34. From an actuarial standpoint, although she would stop paying premiums

after the seventh year, the annual dividend of the company would be used to cover the

additional insurance.

      By the time the original policy was issued in 1989, Appellant had held a number of

positions that required financial acumen. From 1984 through 1989, she served as

assistant manager and later manager of Variety Wholesalers. She was responsible for

bookkeeping, handling the payroll, ordering merchandise, balancing registers and

merchandising. She was no novice to financial transactions.

      Each policy contained the following general provisions:

             The Contract. This policy includes any riders and, with the application
             attached when the policy is issued, makes up the entire contract. All
             statements in the application will be representations and not warranty. No
             statement will be used to contest the policy unless it appears in the
             application.

                                          ***

             Limitation on Sales Representative’s Authority. No sales representative or
             other person except our President, Secretary, or a Vice-President may a)
             make or change any contract of insurance; or b) change or waive any of the
             terms of the policy. Any change must be in writing and signed by our

                                            4
              President, Secretary or Vice-President.

Id. at 328 (emphasis added). The life insurance policies issued by Metropolitan Life

through Duckworth contained clear language explaining their terms, the premium

payment obligations and the inability of sales representatives to modify the terms of the

contract.

       In her complaint, Wallin charged that Duckworth had told her that under the terms

of the policy she could retire at age 65 with a monthly income of $481.37. Id. at 373.

The policy, however, contained no provision stating that it was a retirement policy

entitling her a monthly sum upon reaching the age of 65.

       Wallin was provided ample opportunity – and indeed had the legal obligation – to

read the language in the policy and return it if she were not satisfied. She simply chose

not to do so. Id. at 349. Had she read the policy, she would have seen immediately that

she had a long-term, ongoing obligation to pay premiums and that she purchased a life

insurance policy payable only upon death. Her failure to exercise the right to return the

policies constituted acceptance.

       The limitations period for their fraudulent representation claim is three years. She

purchased her policy in November 1989 but did not bring suit until M arch 1997 – nearly

eight years later. When she received her policies, she was put on actual notice of the

discrepancies between the express written terms of the policies and the alleged oral

representations made to her. Nevertheless, she did not begin the action until long after



                                             5
the expiration of the longest limitations period for her claim.

       Under North Carolina law, policyholders are under a duty to read their insurance

policies. Elam v. Smithdeal Realty & Ins. Co., 109 S.E. 632, 634 (N.C. 1921). Where a

party has reasonable opportunity to read the instrument in question and the language of

the instrument is clear, unambiguous, and easily understood, failure to read the instrument

bars that party from asserting his belief that the policy contained provisions which it does

not. Baggett v. Summerlin Ins. & Realty Co., 554 S.E.2d 336 (N.C. 2001) (citing Baggett

v. Summerlin Ins. & Realty Co., 545 S.E.2d 462, 468-469 (N.C. App. 2001) (Tyson, J.,

dissenting). Appellant testified that she did not thoroughly review her policy, and that she

did not recall seeing the word “retirement” in her policy documents. Joint Appendix at

149-150.

       In light of the foregoing, we agree with the district court that Appellant’s claim

was barred by the statute of limitations.

                                            *****




                                              6
       We have considered all contentions raised by the parties and conclude that no

further discussion is necessary.

       The judgment of the district court will be affirmed.



       TO THE CLERK:

              Please file the foregoing opinion.




                                                   /s/ Ruggero J. Aldisert
                                                       Circuit Judge




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