Charles M. Lang v. Continental Assurance Company

* The Honorable Harold A. Ackerman, United States District Judge for the District of
New Jersey, sitting by designation.
NOT PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
__________
No. 01-4009
__________
CHARLES M. LANG,
Appellant
v.
CONTINENTAL ASSURANCE COMPANY;
TRUSTMARK INSURANCE COMPANY, (MUTUAL)
__________
ON APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF PENNSYLVANIA
(D.C. Civil No. 01-cv-00079E)
District Judge: The Honorable Sean J. McLaughlin
__________
Submitted Under Third Circuit LAR 34.1(a)
November 19, 2002
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Before: BARRY, AMBRO, Circuit Judges, and ACKERMAN,* District Judge
(Opinion Filed: December 4, 2002)
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OPINION
____________
BARRY, Circuit Judge

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Appellant Charles M. Lang appeals from the District Court’s dismissal of his suit
against Continental Insurance Company and Trust Mark Insurance Company (collectively,
the “insurers”). The District Court had jurisdiction pursuant to 28 U.S.C. § 1332, and we
have jurisdiction over the appeal pursuant to 28 U.S.C. § 1291. We will affirm.
Because we write only for the parties who are familiar with the underlying facts of
this case, we will dispense with a full explanation of this case’s background. Suffice it to
say that appellant was issued a Disability Insurance Policy by Continental in June, 1985. He
submitted a proof of claim and began receiving disability benefits under the policy in 1987.
On May 11, 2000, appellant initiated this action in Pennsylvania state court, seeking the
addition of a Cost of Living Allowance (“COLA”) to his monthly benefits. The case was
subsequently removed to federal court, and then remanded to state court, where appellant
filed a complaint, alleging: 1) breach of contract; 2) promissory estoppel; 3)
misrepresentation; 4) negligence; 5) breach of the Pennsylvania Unfair Trade Practices and
Consumer Protection Law; and 6) breach of the Pennsylvania Insurance Bad Faith Statute.
The case was removed again in early 2001, and in October, 2001, it was dismissed by the
District Court under Fed.R.Civ.P. 12(b)(6) as barred by the applicable statute of
limitations.
Our review of the Rule 12(b)(6) dismissal is plenary. See Higgins v. Beyer, 293
F.3d 683, 688 (3d Cir. 2002). We must, therefore, decide whether, “under any reasonable
reading of the pleadings, the plaintiff[] may be entitled to relief, and we must accept as true
the factual allegations in the complaint and all reasonable inferences that can be drawn

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therefrom. The complaint will be deemed to have alleged sufficient facts if it adequately
put the defendants on notice of the essential elements of the plaintiff[’s] cause of action.”
Nami v. Fauver, 82 F.3d 63, 65 (3d Cir.1996).
Appellant claims that Hofkin v. Provident Life & Accident Company, 81 F.3d 365
(1996), dictates that his lawsuit was timely filed because he has been continuously disabled
since 1987. He argues, in the alternative, that each improper monthly disability insurance
payment – improper because the COLA was not included – gave rise to a new and distinct
cause of action. Finally, he asserts that the District Court erred in rejecting his contention
that the insurers were equitably estopped from asserting a statute of limitations defense.
The bottom-line issue before the District Court was the point in time at which
appellant’s various causes of action accrued. According to Pennsylvania state law, the
statute of limitations for a particular cause of action “begins to run as soon as the right to
institute and maintain a suit arises; lack of knowledge, mistake or misunderstanding do not
toll the running of the statute of limitations. . . . It is the duty of the party asserting a cause
of action to use all reasonable diligence to properly inform himself of the facts and
circumstances upon which the right of recovery is based and to institute suit within the
prescribed period.” Cappelli v. York Operating Co., Inc., 711 A.2d 481, 484-85 (Pa. Super.
Ct. 1998) (internal quotations and citations omitted).
Even this principle’s primary exception, i.e., what has become known as the
“discovery rule,” only “tolls the running of the applicable statute of limitations until that
point when the plaintiff knows or reasonably should know: (1) that he has been injured, and

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(2) that his injury has been caused by another party's conduct.” Id. at 485 (internal
quotations and citations omitted). Where the discovery rule is invoked, “[t]he limitations
period begins to run when the injured party possesses sufficient critical facts to put him on
notice that a wrong has been committed and that he needs to investigate to determine
whether he is entitled to redress.” Id. (internal quotations and citations omitted); see also
Weik v. Estate of Brown, 794 A.2d 907, 909 (Pa. Super. Ct. 2002).
We agree with the District Court that appellant was most certainly on notice of his
alleged injury since at least December, 1989, at which point in time he was given, in
writing, an affirmative, unequivocal representation that he would not be receiving COLA
benefits under his policy. Appellant’s policy contains no reference to COLA benefits and
the status of his disability and his concomitant eligibility to collect disability payments
under his policy are not at issue in this action. Hofkin, therefore, is inapposite. As in
Adamski v. Allstate Ins. Co., 738 A.2d 1033, 1042 (Pa. Super. Ct. 1999), because
“appellants have alleged no separate acts of bad faith conduct occurring . . . within the
statute of limitations applicable to any viable claim of common law bad faith [and] . . .
appellants' allegations relate to conduct that merely reaffirmed the position appellee
clearly set forth [in writing to plaintiffs],” there is no basis to accept the argument that
renewed causes of action arose each time the insurer allegedly refused coverage in bad
faith. Id. The Adamski Court noted that “[a]s has long been held by Pennsylvania courts, the
tolling of the statute begins at the time of the initial breach, whether or not the breach
continues throughout the trial,” id. at 1041, “and not when the precise amount or extent of

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damages is determined.” Id. at 1042 (citation omitted). The Court ultimately found that
“the alleged harm to . . . appellants as assignees[] occurred when appellee's position was
made clear by the 1986 letter and appellee maintained that position by subsequently
refusing to defend or indemnify. . . . As the [applicable caselaw] indicate[s], appellants may
not separate initial and continuing refusals to provide coverage into distinct acts of bad
faith.” Id.
We also agree with the District Court that the other cases cited by appellant are
distinguishable from this case. The disputed issue before us, i.e., whether or not appellant
should receive COLA benefits, represents a disagreement as to whether an obligation
existed at all as part of appellant’s original contract, whereas the disputes in the cases
appellant cites were disagreements as to continuous and ongoing obligations. See, e.g.,
Dinerstein v. Paul Revere Life Ins. Co., 173 F.3d 826, 827-29 (11th Cir. 1999) (rejecting
argument that insurer’s continuing obligation to pay benefits continually renews triggering
of statute of limitations because “the issue is not whether the total amount due under a
particular installment was fully paid, but rather whether it was owed in the first place”). As
the District Court found, in December 1989, appellant was “unequivocally informed . . . that
Continental would not be providing the COLA benefit.” (Dist. Ct. Op. at 7 (citing Complaint
¶ 23)). The statute of limitations thus began to run as of December 1989, and the time
within which appellant could have brought his claims has long since expired.
The District Court also correctly rejected appellant’s argument that the insurers
should be precluded from raising a statute of limitations defense under the doctrine of

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equitable tolling. Equitable tolling is only applicable “[i]f through fraud or concealment the
defendant causes the plaintiff to relax his or her vigilance or deviate from his or her right of
inquiry”. Lange v. Burd, 800 A.2d 336, 339 (Pa. Super. Ct. 2002) (citing Molineux v.
Reed, 516 Pa. 398, 403 (1987)). While courts applying Pennsylvania law have not required
“fraud in the strictest sense encompassing an intent to deceive, but rather fraud in the
broadest sense which includes an unintentional deception," Nesbit v. Erie Coach Co., 416
Pa. 89, 96 (1964), these courts, including our own, have found that in order for a plaintiff
to successfully invoke the doctrine, a defendant’s actions needed to have constituted “an
affirmative inducement to plaintiff to delay bringing the action." Ciccarelli v. Carey
Canadian Mines, Ltd., 757 F.2d 548, 556 (3d Cir. 1985) (internal quotations and citations
omitted). Moreover, the “burden of proving fraud or concealment, whether intentional or
not, rests upon the party making the claim. The evidence presented must be clear, precise
and convincing, ” Connors v. Beth Energy Mines, Inc., 920 F.2d 205, 211 (3d Cir. 1990),
and "mere mistake, misunderstanding or lack of knowledge is not sufficient to toll the
running of the applicable statutory period.” Bigansky v. Thomas Jefferson University
Hosp., 658 A.2d 423, 426 (Pa. Super. Ct. 1995).
There is utterly no evidence that appellant was ever misled in any way with regard to
his receipt of COLA benefits; indeed, the insurers unwaveringly claimed from the first time
inquiry was made that appellant was not entitled to these benefits. Moreover, there is no
evidence that appellant was ever induced to delay the bringing of his claims. The District
Court correctly determined that even examining the factual allegations of the complaint in

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the light most favorable to appellant, equitable tolling simply did not apply.
We will affirm the October 9, 2001 Order of the District Court.
TO THE CLERK OF THE COURT:
Kindly file the foregoing Opinion.
/s/ Maryanne Trump Barry
Circuit Judge

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