The Estate of the Late Terry Gorg & Betty Gorg (Grover) v. Great American Insurance Company of Cincinnati Ohio et al

Filing 20

ORDER - IT IS HEREBY ORDERED that MJ Smyser's R&R is ADOPTED. Pltf's 16 Objections are OVERRULED. Dfts' 2 Motion to Dismiss is GRANTED. and the Clerk of Court is directed to CLOSE the case. 15 Signed by Chief Judge Yvette Kane on July 23, 2012. (sc)

IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF PENNSYLVANIA
THE ESTATE OF THE LATE TERRY
GORG and BETTY GORG (GROVER),
Plaintiffs
v.
GREAT AMERICAN INSURANCE
COMPANY OF CINCINNATI OHIO and
NATIONAL CITY OF CINCINNATI
OHIO,
Defendants

:
:
:
:
:
:
:
:
:
:
:

Civil Action No. 4:12-00531
(Chief Judge Kane)
(Magistrate Judge Smyser)

MEMORANDUM ORDER
Presently pending before the Court are the Report and Recommendation of Magistrate
Judge Smyser (Doc. No. 15) addressing Defendants’ motion to dismiss (Doc. No. 2) as well as
Plaintiffs’ objections thereto (Doc. No. 16). For the reasons that follow, the Court will adopt the
Report and Recommendation.1
The sole issue before the Court is whether Plaintiffs’ breach-of-contract claim and
request for a declaratory judgment are barred by a provision of an Occupational Accident
Insurance Policy issued by Defendant Great American Insurance Company to Terry Gorg.2
Following Mr. Gorg’s death on December 27, 2007, Plaintiffs submitted a claim for accidental

1

The Magistrate Act, 28 U.S.C. § 636, and Federal Rule of Civil Procedure 72(b),
provide that any party may file written objections to a magistrate’s proposed findings and
recommendations. In deciding whether to accept, reject, or modify the Report and
Recommendation, the Court is to make a de novo determination of those portions of the Report
and Recommendation to which objection is made. 28 U.S.C. § 636(b)(1).
2

Plaintiffs also raised a statutory bad faith claim against Defendants, which Magistrate
Judge Smyser found was barred by the statute of limitations. Plaintiffs do not object to this
finding. (Doc. No. 16 ¶ 19.) Therefore, the Court will adopt this portion of the Report and
Recommendation and grant Defendants’ motion to dismiss Plaintiffs’ statutory bad faith claim.
1

death benefits under the policy. Defendant denied the claim on June 30, 2008, and Plaintiffs
commenced this action in the Court of Common Pleas of Potter County, Pennsylvania, on
February 24, 2012. (Doc. No. 1.) The action was removed to this Court on March 23, 2012.
(Id.)
Pennsylvania law provides a four-year statute of limitations for breach-of-contract
claims. 42 Pa. Cons. Stat. § 5525(a). Parties, however, may agree to a shorter limitations period
so long as the shorter period “is not manifestly unreasonable” and “prescribed by written
agreement.” 42 Pa. Cons. Stat. § 5501(a). Here, a provision contained in Section VIII of the
policy states: “No legal action for a claim can be brought against the Company until 60 days
after receipt of proof of loss. No legal action for a claim can be brought against the Company
more than three years after the time for giving proof of loss.” (Doc. No. 19-1 at 21.) As
Magistrate Judge Smyser found, courts have held that a three-year limitations period for breachof-contract claims is reasonable. See, e.g., Koert v. GE Group Life Assurance Co., 231 F. App’x
117, 120 (3d Cir. 2007) (“Pennsylvania law allows parties to contract for limitations periods
shorter than those specified by statute, and a three year period is certainly reasonable.”).
Because Plaintiffs did not commence this action within three years, as prescribed by the policy,
Magistrate Judge Smyser recommended that Defendants’ motion to dismiss be granted. (Doc.
No. 15 at 7-9.)
In their objections, Plaintiffs contend that Magistrate Judge Smyser failed to consider a
rider contained in the policy titled “Rider Applicable to Residents of Pennsylvania,” even though
Plaintiffs did not reference the rider in their brief in opposition to Defendant’s motion to dismiss.
(Doc. No. 16 ¶¶ 4, 7-8.) The rider states in relevant part:

2

This Rider is attached to and made part of the Policy or one of its
certificates as of the Effective Date shown in the Schedule of Benefits
and applies only during the Policy’s effective period. This Rider is
subject to all of the provisions, limitations and exclusions of the
Policy except as the Rider specifically modifies them.
1. Accidental Death and Dismemberment Benefits
Any time limit on accidental death in the certificate does not apply.
(Doc. No. 19-1 at 24.) According to Plaintiffs, because Mr. Gorg was a resident of
Pennsylvania, the rider renders the three-year limitations period contained in Section VIII of the
policy inapplicable, and a four-year statute of limitations period applies, making this action
timely. (Doc. No. 17 at 3.) The Court finds this objection to be without merit. Upon review of
the entire policy, the Court finds that the language in the rider regarding the time limit on
accidental death benefits relates to the distribution of benefits, not the time period in which a
legal action arising out of the policy must be commenced. (See Doc. No. 19-1 at 2.) Indeed, the
rider contains no language referencing a legal action arising out of the policy. (See id. at 24.)
Thus, because Plaintiffs did not bring the instant action within three years, their breach-ofcontract claim and request for a declaratory judgment is barred by the statute of limitations
provided in the policy.
ACCORDINGLY, on this 23rd day of July 2012, IT IS HEREBY ORDERED THAT:
1.
2.
3.
4.

Magistrate Judge Smyser’s Report and Recommendation (Doc. No. 15) is
ADOPTED;
Plaintiffs’ objections (Doc. No. 16) are OVERRULED;
Defendant’s motion to dismiss (Doc. No. 2) is GRANTED; and
The Clerk of Court is directed to close the case.
S/ Yvette Kane
Yvette Kane, Chief Judge
United States District Court
Middle District of Pennsylvania
3

4