LUTHERAN BROTHERHOOD, A Fraternal Benefit Society v. Raymond J. Kraynak, D.o

NOT PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
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NO. 01-2285
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LUTHERAN BROTHERHOOD,
A Fraternal Benefit Society
v.
RAYMOND J. KRAYNAK, D.O.,
Appellant
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On Appeal from the United States District Court
For The Middle District of Pennsylvania
(D.C. Civil No. 99-cv-01441)
District Judge: Honorable James F. McClure, Jr.
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Submitted Under Third Circuit LAR 34.1(a)
on March 5, 2002
Before: ALITO, RENDELL and HALL*, Circuit Judges,
(Filed March 12, 2002)
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OPINION OF THE COURT
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RENDELL, Circuit Judge.
Lutheran Brotherhood ("Lutheran") initiated this action against Raymond J.
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*Honorable Cynthia Holcomb Hall, United States Circuit Judge for the Ninth Circuit,
sitting by designation.
Kraynak alleging it was entitled to rescind an insurance policy based on Kraynak’s
fraudulent misrepresentations on his insurance application. Kraynak filed a counterclaim
for benefits under the policy. Lutheran filed a motion for summary judgment, and
Kraynak filed a motion for judgment on the pleadings or, in the alternative, for summary
judgment, and a motion for partial summary judgment. The District Court granted
Lutheran’s motion and denied Kraynak’s motions. Kraynak now appeals. For the
reasons set forth by the District Court, we will affirm.
The District Court had jurisdiction pursuant to 28 U.S.C. 1332. We have
jurisdiction pursuant to 28 U.S.C. 1291. We review the District Court’s grant of
summary judgment de novo and apply the same standards as the District Court properly
did. Beers-Capitol v. Whetzel, 256 F.3d 120, 130 n.6 (3d Cir. 2001).
The District Court applied Pennsylvania law which provides: "[A]n insurance
contract is void if (1) the representation was false; (2) the insured knew it to be false
when made or acted in bad faith; and (3) the representation was material to the risk being
insured." Matinchek v. John Alden Life Ins. Co., 93 F.3d 96, 102 (3d Cir. 1996). The
court properly concluded that three fraudulent misrepresentations made by Kraynak in the
course of obtaining disability insurance from Lutheran supported Lutheran’s decision to
rescind the insurance policy. First, he did not include on his application the fact that he
was covered by other disability insurance policies. Second, he did not cancel any other

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disability insurance as promised in his application. Third, he did not inform Lutheran that
he had been diagnosed with arthritis "during the last ten years." We also agree with the
District Court that laches does not bar Lutheran from pursuing its recission claim.
Kraynak was not prejudiced by a "lack of diligence" on the part of Lutheran "in pursuing
its rights." In the Matter of Dennis J. Iulo, 766 A.2d 335, 338 (Pa. 2001). First, Lutheran
had no affirmative duty to investigate Kraynak’s representations to it, and, second, the
knowledge of a district representative is not binding on Lutheran.
For the above reasons, we agree that Lutheran is entitled to rescind its policy and
will therefore affirm the District Court’s grant of summary judgment in favor of Lutheran,
as well as its denial of Kraynak’s motion for judgment on the pleadings or summary
judgment, and its motion for partial summary judgment. ___________________________
Please file the foregoing Not Precedential Opinion.
/s/ Marjorie O. Rendell
Circuit Judge
Dated: March 12, 200

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