3rd Circuit Vacates District Court Summary Judgment Opinion in Favor of Sun Life Over Discretionary Language Dispute

Mar 24, 2016 - Articles by

The United States Court of Appeals for the 3rd Circuit recently vacated the summary judgment opinion of the District Court of New Jersey in Baker v. Sun Life and Health Ins Co. Following Sun Life’s denial of continued long-term disability benefits, Kenneth Baker filed suit against Sun Life in New Jersey District Court. At conflict was whether Mr. Baker’s policy of disability insurance contained language granting discretionary authority to Sun Life in determining whether to award Mr. Baker disability benefits. If the policy contained discretionary language, a court could only review Sun Life’s decision under the arbitrary and capricious standard of review. Otherwise, the law requires a court to review Sun Life’s decision under the de novo standard of review.

During discovery, Mr. Baker presented to the court a copy of the policy that did not contain discretionary language, along with an affidavit from his insurance broker stating this copy of the policy was a “complete and accurate policy.” Sun Life presented a copy of the policy, which while otherwise identical to the one submitted by Mr. Baker, contained two additional unnumbered pages, which included the discretionary language. Sun Life also submitted an affidavit from one of its executives stating its copy was “true and correct.”

Following discovery, both sides moved for summary judgment and Mr. Baker moved to strike the Sun Life executive’s affidavit. The district court granted Sun Life’s motion for summary judgment.

In a non-precedential opinion, the circuit court was critical of the district court’s actions. As the circuit court explained, the district court is permitted to grant summary judgment “if, drawing all inferences in favor of the nonmoving party [Mr. Baker] the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant [Sun Life] is entitled to judgment as a matter of law.” When examining the evidence before it, the circuit court points out there are two versions of the policy, one containing the discretionary language, and one without. The court explains this creates an obvious genuine issue of material fact. For this reason alone, the circuit court finds the district court inappropriately granted Sun Life summary judgment and vacates the district courts decision.