J-A13018-19


NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37

    ALISSA O'HARA,                   :         IN THE SUPERIOR COURT OF
                                     :              PENNSYLVANIA
                    Appellant        :
                                     :
                                     :
               v.                    :
                                     :
                                     :
    METLIFE INSURANCE COMPANY USA :            No. 3477 EDA 2018
    A/K/A T/A D/B/A BRIGHTHOUSE LIFE :
    INSURANCE COMPANY, COMPASS       :
    ION ADVISORS LLC, ZENITH         :
    MARKETING GROUP INC.,BENJAMIN    :
    M. DOURTE AND CAROL GANGEWER :

                 Appeal from the Order Dated October 30, 2018
      In the Court of Common Pleas of Philadelphia County Civil Division at
                              No(s): 170500167


BEFORE:      SHOGAN, J., NICHOLS, J., and STRASSBURGER, J.*

MEMORANDUM BY NICHOLS, J.:                      FILED SEPTEMBER 11, 2019

        Appellant Alissa O’Hara appeals from the order granting the motion for

summary judgment filed by Appellee MetLife Insurance Company USA a/k/a

t/a d/b/a Brighthouse Life Insurance Company.1 Appellant argues that the

trial court erred in concluding that Appellee’s life insurance policy for

Appellant’s husband was not in effect before his death. We affirm.

____________________________________________


*   Retired Senior Judge assigned to the Superior Court.

1As noted below, Appellant and Appellee entered into stipulations dismissing,
without prejudice, the claims and cross-claims against the remaining parties,
Compass Ion Advisors LLC (Compass), Zenith Marketing Group Inc. (Zenith),
Benjamin M. Dourte, and Carol Gangewer. Mr. Dourte and Ms. Gangewer
were employees of Compass. Where necessary, we refer to Compass, Mr.
Dourte, and Ms. Gangewer, collectively, as “the Compass defendants.”
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       The factual background to this appeal is not in dispute. The Compass

defendants were financial advisers to Appellant and her husband, Scott O’Hara

(the decedent). In June 2015, one of the Compass defendants, Mr. Dourte,

recommended that Appellant and the decedent purchase life insurance.

According to Appellant, the Compass defendants acted as Appellant’s and the

decedent’s insurance broker. Compl., 5/1/17, at 8.

       In July 2016, the decedent completed an application for a $1 million life

insurance policy with Appellee.           The decedent filled in Section I of the

application, which was entitled “About the Proposed Insured.” Application at

1. Section II of the application was entitled “About the Owner” and stated,

“Complete ONLY if the Owner is NOT the Proposed Insured.”               Id.    The

decedent did not complete Section II of the application.

       Under the heading “Agreement / Disclosure,” the application stated:

       . . .[2] no insurance will take effect until a policy is delivered
       to the Owner and the full first premium due is paid. It will
       only take effect at the time it is delivered if: (a) the condition of
       health of each person to be insured is the same as stated in the
       application; and (b) no person to be insured has received any
       medical advice or treatment from a medical practitioner since the
       date of the application.

Id. at 6 (emphasis added).           The decedent named Appellant as the sole

beneficiary.




____________________________________________


2The language omitted from the quotation referred to temporary insurance.
There is no indication that temporary insurance was at issue in this case.

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      In September 2016, Appellee approved the application and issued a

term life insurance policy with an effective date of June 25, 2016. The first

page of the Policy read as follows:

                             Non-Participating

      This is a yearly renewable term insurance policy that is
      automatically renewable until the Final Expiry Date. Premiums are
      payable for a specified period. Premiums for the first year are
      shown on the Policy Specifications page and for later years are
      shown on the Schedule of Renewal Premiums page. If the
      Insured dies while the Policy is in force, we will pay the
      Policy Proceeds to the Beneficiary. We must receive proof of
      the Insured’s death. Any payment will be subject to all of the
      provisions of the Policy.

                       RIGHT TO EXAMINE POLICY

      Please read the Policy. You may return the Policy to us or
      to our representative through whom it was purchased
      within 10 days from the date you receive it. If you return it
      within this period, we will refund any premium paid and the
      Policy will be void from the start.

                                  *    *    *

      This Policy is a legal contract between the Owner and [Appellee].
      PLEASE READ YOUR CONTRACT CAREFULLY.

Policy, 6/25/17, at 1 (first emphasis added; second emphasis in original). The

policy defined the terms “You and Your” as “The Owner of the Policy.” Id. at

6.

      Section 1 of the policy defined the term “Insured” as “The person whose

life is insured under the Policy. The name of the Insured is shown on the

Policy Specification page.” Id. at 6. Section 2 of the policy, entitled “Policy




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Proceeds,” stated: “We will pay the Policy Proceeds to the Beneficiary upon

receipt of proof of the Insured’s death.” Id. at 7.

       Section 3 of the policy, entitled “Payment of Premiums,” read:

       The first premium is due as of the Policy Date. While the Insured
       is living, premiums after the first premium must be paid at our
       Designated Office. The Policy will not be in force until the first
       premium is paid. If you are in possession of the Policy, and
       the first premium has not been paid, it will be considered
       that you have the Policy for inspection only.

       Premiums for the Policy and for any riders are shown on the Policy
       Specifications and on the Schedule of Renewal Premiums pages.
       No premium is due or payable for any period after the death of
       the Insured.

Id. at 8 (emphasis added). Section 3 provided a 31-day grace period to pay

“each premium” after its due date before the policy would lapse. Id.

       Section 4 defined “The Contract” as follows:

       We have issued the Policy in consideration of the Application and
       payment of premiums. The Policy includes the Application, any
       riders, and any endorsements. Together they comprise the entire
       contract and are made a part of the Policy when the insurance
       applied for is accepted.

Id. at 9.

       Appellee sent the policy to Zenith,3 which forwarded the policy to

Compass. Compass received the policy on October 18, 2016. On October 19,

2016, the decedent suffered cardiac arrest and died.



____________________________________________


3According to Appellee, Zenith was acting as a general managing agent for
Appellee.

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        The Compass defendants still had the policy at the time of the

decedent’s death. One of the Compass defendants contacted Appellant and

sent her the policy on October 28, 2016.         See Compl. at 17.   Meanwhile,

Appellee issued a notice for the payment of the initial premium, which was

dated October 10, 2016, and indicated that the first premium was due by

November 10, 2016. According to Appellant, the Compass defendants sent

her a copy of the initial premium notice. Id. at 18.

        On November 3, 2016, Appellant sent a check to Appellee for the first

premium. Id. at 19. Appellee accepted the payment, but when Appellant

attempted to claim the death benefits in December 2016, Appellee refused to

pay.    Appellee asserted that the policy was not in effect and reimbursed

Appellant for the payment of the premium.

        Appellant commenced the instant action against Appellee, Zenith, and

the Compass defendants by filing a complaint on May 1, 2017. With respect

to Appellee,4 Appellant asserted claims for breach of contract and bad faith

under 42 Pa.C.S. § 8371.5 Compl. at 25-27. Appellee filed an answer, new

matter, and cross-claims against Zenith and Compass.
____________________________________________


4 In full, Appellant raised the following causes of action in her complaint: (1)
negligence as against the Compass defendants and Zenith; (2) breach of duty
to advise as against the Compass defendants and Zenith; (3) breach of
fiduciary duty as against the Compass defendants and Zenith; (4) breach of
contract as against Appellee; and (5) bad faith under 42 Pa.C.S. § 8371 as
against Appellee.

5   Section 8371 states:



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       Of relevance to this appeal, on September 4, 2018, Appellee filed a

motion for summary judgment asserting that all of Appellant’s claims against

it were meritless. Appellee claimed that the policy had not taken effect at the

time of the decedent’s death. That same day, Appellant filed a motion for

partial summary judgment against Appellee, asserting that all conditions for

the policy taking effect were met and the policy was in force when the

decedent died.

       On October 30, 2018, the trial court entered orders that granted

Appellee’s motion for summary judgment against Appellant and denied

Appellant’s motion for partial summary judgment against Appellee.             The



____________________________________________


       In an action arising under an insurance policy, if the court finds
       that the insurer has acted in bad faith toward the insured, the
       court may take all of the following actions:

          (1) Award interest on the amount of the claim from the date
          the claim was made by the insured in an amount equal to the
          prime rate of interest plus 3%.

          (2) Award punitive damages against the insurer.

          (3) Assess court costs and attorney fees against the insurer.

42 Pa.C.S. § 8371. The Pennsylvania Supreme Court has held:

       [T]o prevail in a bad faith insurance claim pursuant to Section
       8371, a plaintiff must demonstrate, by clear and convincing
       evidence, (1) that the insurer did not have a reasonable basis for
       denying benefits under the policy and (2) that the insurer knew or
       recklessly disregarded its lack of a reasonable basis in denying the
       claim.

Rancosky v. Washington Nat'l Ins. Co., 170 A.3d 364, 377 (Pa. 2017).

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J-A13018-19



October 30, 2018 orders became final when the remaining claims among the

parties were withdrawn by stipulation.

      On November 21, 2018, Appellant timely appealed. The trial court did

not require Appellant to submit a Pa.R.A.P. 1925(b) statement, but it issued

a Rule 1925(a) opinion.

      In its opinion, the trial court reasoned that Appellant was not entitled to

relief because the policy had not taken effect at the time of the decedent’s

death. Trial Ct. Op., 12/14/18, at 7. The trial court opined that the application

required that the policy be delivered to the decedent before his death. Id. at

7.   Moreover, the trial court determined that “[w]hen [the decedent] died

without paying the first full premium, there was no contract of insurance.” Id.

at 6. In support, the trial court cited the provision that “no premium is due

or payable after the death of the insured” in Section 3 of the policy. Id. The

trial court concluded that Appellant’s “attempt to consummate the contract for

life insurance by sending a premium payment after the death of the person

whose life constituted the subject matter of the contract was invalid.” Id.

      Appellant presents the following questions on appeal:

      [1.] Was there an enforceable contract of insurance . . . ?

      [2.] Did [Appellee] breach the insurance contract by failing to pay
      the policy proceeds to Appellant?

Appellant’s Brief at 7.

      Appellant presents overlapping arguments challenging the trial court’s

order granting summary judgment in favor of Appellee and dismissing her


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breach of contract and bad faith claims. Specifically, Appellant argues that

she met all conditions for coverage to be in effect at the time of the decedent’s

death. Id. at 8-9.

      First, Appellant notes that the application required that a policy be

“delivered to the Owner.” See id. at 26 (quoting Application at 6). Appellant

claims that the delivery of the policy to Compass constituted delivery to the

“Owner” because Compass was an agent of the decedent. Id. at 28. Appellant

contends that the requirement of delivery to an owner of the policy was

ambiguous, and the ambiguity should have been construed against Appellee

as the insurer. Id. at 29. Appellant further asserts that it was reasonable to

expect that delivery to Compass would have satisfied the condition that the

policy was delivered to the “Owner” as defined in the policy. Id. at 30-31.

      Second, Appellant notes that the application provided that the policy

would “only take effect at the time it [was] delivered if . . . the condition of

health of each person to be insured is the same as stated in the application.”

See id. at 26. Appellant contends that the decedent was in the same health

when he applied for the policy and when Compass received the policy. Id. at

31.

      Third, Appellant claims that the application and policy did not require

that the decedent be in the same health at the time of the application when

the first premium was paid. Id. at 33-34 & n.2. Appellant contends that the

trial court erred in relying on Section 3 of the policy, which provided that a

premium would not be “due or payable for any period after the death of the

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Insured.” See id. at 38; Trial Ct. Op. at 6; Policy at 8. Appellant argues that

Section 2 of the policy, which provided for the payment of proceeds based

only on a notice of death, supported her position that she could pay the first

premium after the death of the decedent. Appellant’s Brief at 38.

      Appellant further contends that Appellee waived any condition that the

decedent be alive when she paid the premium.            In support, Appellant

emphasizes that Appellee accepted her payment and retained the premium

for more than two months despite knowing of decedent’s death. Id. at 40-

41.

      Initially, we note that the following principles govern our review of

Appellant’s issues:

         In evaluating the trial court’s decision to enter summary
         judgment, we focus on the legal standard articulated in the
         summary judgment rule. Pa.R.C.P. 1035.2. The rule states
         that where there is no genuine issue of material fact and the
         moving party is entitled to relief as a matter of law,
         summary judgment may be entered. Where the non-moving
         party bears the burden of proof on an issue, he may not
         merely rely on his pleadings or answers in order to survive
         summary judgment. Failure of a nonmoving party to adduce
         sufficient evidence on an issue essential to his case and on
         which it bears the burden of proof establishes the
         entitlement of the moving party to judgment as a matter of
         law. Lastly, we will view the record in the light most
         favorable to the non-moving party, and all doubts as to the
         existence of a genuine issue of material fact must be
         resolved against the moving party.

      Additionally, we note that the interpretation of an insurance policy
      is a question of law that we will review de novo.




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State Farm Mut. Auto. Ins. Co. v. Dooner, 189 A.3d 479, 482 (Pa. Super.

2018) (some citations omitted). “[W]e are not bound by the rationale of the

trial court and may affirm on any basis.” Volkswagen Grp. of Am., Inc. v.

Kimmel & Silverman, 74 A.3d 1042, 1043 n.3 (Pa. Super. 2013) (citation

omitted).

      It is well settled that

      [t]he task of interpreting [an insurance] contract is generally
      performed by a court rather than by a jury. The purpose of that
      task is to ascertain the intent of the parties as manifested by the
      terms used in the written insurance policy. When the language of
      the policy is clear and unambiguous, a court is required to give
      effect to that language.

Erie Ins. Exch. v. Conley, 29 A.3d 389, 392 (Pa. Super. 2011) (citation

omitted).

      “If doubt or ambiguity exists it should be resolved in insured’s favor.”

Penn-Am. Ins. Co. v. Peccadillos, Inc., 27 A.3d 259, 264 (Pa. Super. 2011)

(en banc) (citation omitted).    “Contractual language is ambiguous if it is

reasonably susceptible of different constructions and capable of being

understood in more than one sense.”           Conley, 29 A.3d at 392 (citation

omitted). However, a court “cannot distort the plain meaning of the language

to find an ambiguity. Moreover, [the court] will not find a particular provision

ambiguous simply because the parties disagree on the proper construction; if

possible, [the court] will read the provision to avoid an ambiguity.” Brown

v. Everett Cash Mut. Ins. Co., 157 A.3d 958, 962 (Pa. Super. 2017) (citation

omitted).

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      It is well settled that “a condition precedent must occur before

performance under a contract arises . . . . While conditions usually deal with

duties of performance, they may relate to the existence of contracts as well.”

Vill. Beer & Beverage, Inc. v. Vernon D. Cox & Co., Inc., 475 A.2d 117,

122 (Pa. Super. 1984) (citations and footnote omitted). Furthermore,

      While the parties to a contract need not utilize any particular
      words to create a condition precedent, an act or event designated
      in a contract will not be construed as constituting one unless that
      clearly appears to have been the parties’ intention. In addition,
      we note that the purpose of any condition set forth in a contract
      must be determined in accordance with the general rules of
      contractual interpretation.

Davis ex rel. Davis v. Gov't Employees Ins. Co., 775 A.2d 871, 874 (Pa.

Super. 2001) (citation omitted).

      Under the doctrine of the reasonable expectations of the insured,

      Courts should be concerned with assuring that the insurance
      purchasing public’s reasonable expectations are fulfilled. Thus,
      regardless of the ambiguity, or lack thereof, inherent in a given
      set of insurance documents (whether they be applications,
      conditional receipts, riders, policies, or whatever), the public has
      a right to expect that they will receive something of comparable
      value in return for the premium paid . . . .

Rourke v. Pennsylvania Nat. Mut. Cas. Ins. Co., 116 A.3d 87, 97 (Pa.

Super. 2015) (citation omitted). Courts have generally applied the doctrine

to issues of coverage “to protect non-commercial insureds from both

deception and non-apparent terms.” Id. (citation omitted).

      Instantly, the application stated that “no insurance will take effect until

a policy is delivered to the Owner and the full first premium due is paid.” See


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Application at 6. The language was not subject to different constructions. Put

simply, the application stated that a policy would only take effect upon delivery

to a specific party, the decedent, and the first full premium being paid. This

Court will not strain the plain meaning of the terms to find an ambiguity. See

Brown, 157 A.3d at 962; Conley, 29 A.3d at 392. Because the language was

clear and unambiguous, it must be given effect. See Conley, 29 A.3d at 392.

      Moreover, the policy stated the obligations of the parties in a clear and

unambiguous manner. The policy indicated that “[i]f the Insured dies while

the Policy is in force, we will pay the Policy Proceeds to the Beneficiary.”

Policy at 1 (emphasis added). Section 3 of the policy further explained that

“[t]he Policy will not be in force until the first premium is paid.” Id. at 8

(emphasis added).     Section 3 added that possession of the policy without

payment of the first premium would be regarded as an “inspection” of the

policy. Id.

      Therefore, having reviewed Appellant’s arguments and the relevant

policy language, we conclude that no relief is due. Even if a delivery of the

policy occurred before the decedent’s death, Appellant cannot avoid the clear

meaning of the terms of the application and policy requiring payment of the

premium for the policy to take effect.        Although Appellant asserts the

application and policy permitted her to pay the first premium after the

decedent’s death, the clear and unambiguous of the agreement belies her

position. Accordingly, because the first premium had not been paid at the




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time of the decedent’s death, we agree with the trial court that the policy was

not in effect.6

       To the extent Appellant argues that Appellee waived any of the

conditions precedent, we disagree.                 Our courts have held that “In

Pennsylvania, the doctrine of waiver or estoppel cannot create an insurance

contract where none existed.” Pfeiffer v. Grocers Mut. Ins. Co., 379 A.2d

118, 121 (Pa. Super. 1977) (citation omitted). Therefore,

       The rule is well established that conditions going to the coverage
       or scope of a policy of insurance, as distinguished from those
       furnishing a ground of forfeiture, may not be waived by implication
       from the conduct or action of the insurer. The doctrine of implied
       waiver is not available to bring within the coverage of an insurance
       policy, risks that are expressly excluded therefrom.

Id. (citation and quotation marks omitted).

       Here, Appellant cannot rely on waiver to bring into existence obligations

under a policy that did not exist when the decedent died. See id. In any

event, the mere fact that Appellee deposited and retained Appellant’s check

paying    the     premium    did    not   constitute   an   intentional   or   knowing

relinquishment of Appellee’s right to determine that the policy was not in effect

at the time of the decedent’s death. Although the better practice would have

____________________________________________


6 In light of our conclusion, we need not address Appellant’s first two
arguments that the policy was delivered to the decedent when he was in the
same health as when he applied for coverage. See Volkswagen Grp. of
Am., 74 A.3d at 1043 n.3. Moreover, we do not address Appellant’s argument
that the trial court erred in relying on the provision in Section 3 stating that a
premium would not be due or payable for any period after the decedent died.
See id.

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been for Appellee to refuse the check, we agree with the trial court’s

conclusion that Appellant’s attempt to consummate the contract was not valid.

     In sum, the trial court properly concluded that the policy was not in

effect when the decedent died and that Appellee was entitled to summary

judgment on Appellant’s claims of breach of contract. See Dooner, 189 A.3d

at 482; see also Volkswagen Grp. of Am., 74 A.3d at 1043 n.3. For the

same reason, we agree with the trial court that Appellant could not establish

that Appellee acted in bad faith when denying her claim for death benefits.

See Rancosky, 170 A.3d at 377.

     Order affirmed.

Judgment Entered.




Joseph D. Seletyn, Esq.
Prothonotary



Date: 9/11/19




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