FAY v. AETNA LIFE INSURANCE AND ANNUITY CO.

307 F.Supp.2d 284 (2004) | Cited 4 times | D. Massachusetts | March 5, 2004

MEMORANDUM AND ORDER ON CROSS-MOTIONS FOR SUMMARY JUDGEMENT

On May 16, 2001, William Fay, Sr, Kathleen Fay, and Frank Santangelo,in his capacity as Trustee of the Fay Insurance Trust, filed thisComplaint against Aetna Life Insurance and Annuity Company (Aetna), and aformer Aetna general manager, Gary Pflugfelder, alleging breach ofcontract, breach of the implied covenant of good faith and fair dealing,fraud and deceit, negligence, estoppel, and violation of G.L. c. 93A andc. 176D.1 Plaintiffs maintain that Pflugfelder misrepresented theterms of a $6 million Aetna lifePage 2insurance policy2 that the Fays purchased for estate planningpurposes in 1990 and in 1991. According to the Complaint, Pflugfelderassured the Fays that the policy required only ten, or at the most,eleven annual premium payments and would be paid in full upon theirdeaths. In fact, the policy sold by Pflugfelder to the Fays required thatpremiums be paid for twenty-eight years. Moreover, the policy providedthat if either of the Fays reached the age of ninety-five, the $6 milliondeath benefit would automatically lapse.3 According to the Fays, theydid not discover the discrepancies between the policy they had purchasedand the policy that Pflugfelder had described until December of 2000 whenAetna billed them for an eleventh annual premium.

On April 17, 2003, Aetna and Pflugfelder filed motions for summaryjudgment arguing that the Fays' Complaint is barred in its entirety bythe statute of limitations.4 On May 19, 2003, plaintiffs opposed thedefendants' motions while simultaneously filing a cross-motion forpartial summary judgment on the breach of contract claim.5 OnFebruary 12, 2004, thePage 3court heard oral argument.6

FACTS

Despite plaintiffs' vigorous efforts to demonstrate otherwise, forpurposes of summary judgment the material facts are not in dispute.7In the light most favorable to the plaintiffs, they are as follows. Mr.Fay founded Faytex, a texfile business, in 1978. Over time, the companygrew into a multi-million dollar concern.8 Fay, despite having nevergraduated from high school, holds five patents (one issued and fourpending), and has extensive international business experience. In 1990,Fay's personal net worth exceeded $12 million.9 Besides the policy atissue in this case, by 1990, Fay had acquired $1.2 million of lifeinsurance.

Fay served on the board of directors of the Daniel Green Company withPflugfelder, who at the time was a general manager at Aetna.10 As aresult of their shared experiencePage 4as directors, Fay came to trust Pflugfelder and rely on his judgment. In1990, Pflugfelder suggested that Fay consider buying life insurance fromAetna as a means of adding liquidity to his estate. Fay tentativelyagreed. In 1990, Santangelo, who since 1980 had acted as Fay's personalattorney, assisted Fay in the negotiations with Pflugfelder. During thediscussions with Pflugfelder, Fay made it clear that he wanted a policythat would require him to make premium payments for no more than tenyears.

In a November 13, 1990 letter, Pflugfelder recommended the purchase ofan Aetna Flexible Premium Adjustable Life Insurance Policy, which hedescribed as having a "ten year premium paying period."

Six million dollars of Life Insurance coverage on both you and Kay [Fay] will cost $111, 900 per year for ten years. Total cost if both of you live for the ten year premium paying period [is] $1, 190, 000. If either of you should pass away during the ten year premium paying period, the policy would immediately be fully paid up (no further premiums required) for $6, 000, 000 which would then be paid to the Trust at the second death.

On December 19, 1990, Pflugfelder sold the recommended policy to theFays.11 Pflugfelder told Fay and Santangelo that because of the sizeof the annual premiums (overPage 5$100, 000 a year), the policy should over ten years accumulate sufficientequity to relieve the Fays from making further premium payments.Pflugfelder cautioned that if interest rates were to drop, an eleventhpremium payment of no more than $12, 000 might be required. Pflugfelderassured Fay that the policy would remain in force until both he and hiswife had died.12

The Fays signed a Policy Application, which over the signature linecontained the following warranty.

I agree that no agent may alter the terms of the application, the Temporary Insurance Agreement or the policy. No agent may waive any of Aetna's rights or requirements.

The policy was then delivered to Mr. Fay and Santangelo. Both Fay andSantangelo concede that they never read the policy. The cover page to thepolicy stated: Right of Policy Examination: All premiums will be refundedif this policy is returned to Aetna . . . for cancellation within 10 daysafter it is delivered. The policy will then be deemed void from itsbeginning.

The policy further stated that: The Policy and the application are the whole contract. . . . Only an officer of Aetna may agree to a change in the policy, and then only in writing. Premiums: No benefit will be provided on the basis of a premium until that premium is paid. Premiums are payable until the Maturity Date.

MATURITY DATE: DECEMBER 13, 2019.13Page 6 THIS POLICY MAY TERMINATE PRIOR TO THE MATURITY DATE IF PREMIUMS PAID AND INTEREST CREDITED ARE INSUFFICIENT TO CONTINUE COVERAGE TO THAT DATE. PLEASE SEE YOUR STATEMENT OF POLICY COST AND BENEFIT INFORMATION FOR FURTHER DETAILS.

THE PLANNED PREMIUM AMOUNT SHOWN ABOVE MAY NOT CONTINUE THE POLICY IN FORCE TO THE MATURITY DATE EVEN IF THIS AMOUNT IS PAID AS SCHEDULED. THE PERIOD FOR WHICH THE POLICY WILL CONTINUE WILL DEPEND ON . . . CHANGES IN INTEREST CREDITS AND MORTALITY DEDUCTIONS.

The Statement of Policy Costs and Benefit Information stated that thePERIOD OF COVERAGE is 29 YEARS, and that the policy would stay in forceas long as the premiums and credited interest were sufficient, BUT NOTAFTER DECEMBER 13, 2019.14

IMPORTANT NOTICE: THE PROJECTED RESULTS OF YOUR INSURANCE PROGRAM MAY CHANGE WITH VARIATIONS IN THE INTEREST RATE CREDITED BY AETNA. . . . YOU SHOULD READ AND STUDY YOUR POLICY AND POLICY SUMMARY VERY CAREFULLY. . . . CURRENT BENEFITS ARE BASED ON CURRENT RATES AND ARE NOT GUARANTEED. THE CURRENTLY PAID ANNUAL INTEREST RATE IS 8.25% TO THE END OF YEAR 10 AND 8.75% THEREAFTER. IF THE CURRENT COST OF INSURANCE AND THE CURRENT INTEREST RATE ARE CHANGED, BENEFITS MAY BE MORE OR LESS THAN THE AMOUNTS SHOWN BUT NOT LESS THAN THE GUARANTEED BENEFITS. GUARANTEED BENEFITS ARE BASED ON . . . AN ANNUAL INTEREST RATE OF 4.50%

On December 19, 1991, the policy was reissued for estate planningreasons. The 1991 policy was in all material aspects identical to the1990 policy. Before the 1991 policy was delivered (in early 1992),Pflugfeldersent Santangelo two letters iterating his previousPage 7description of the policy's terms. In the second letter, dated January13, 1992, Pflugfelder wrote that:

[t]he Base Policies were Universal Life. This is an interest sensitive policy in which the premium to be paid assumes a rate of interest to be earned and credited by the Insurance Company. The rate of interest at the time of our presentation that we were crediting was 8.25%. Assuming that we could continue to credit that rate of interest each year for Ten Years, the premium would be the quoted annual premium of $111, 967. If the credited interest rate increased, the premium to be billed would decrease. If, on the other hand, the credited interest rate dropped, either the annual premium would increase modestly or the [sic] The Payments would not be enough to carry the policy and some monies would have to be paid in the Eleventh Policy Year. . . . However, we must be mindful that these two policies are `interest-rate sensitive' should the credited interest drop, either the annual premium would have to be actuarially increased to offset the loss of interest, or alternatively, the premium payment period could be lengthened and a payment of whatever amount was required could be made in the Eleventh Year.

Pflugfelder delivered the reissued policy to Fay and Santangelo onFebruary 27, 1992. Neither plaintiff read it. In an affidavit, Fayoffered the following explanation of why neither he nor Santangelobothered to read the policies.

At no time did I ever ask Mr. Santangelo or anybody else to read the Aetna policies. I did not think it was necessary. Mr. Pflugfelder was an insurance expert and a trusted fellow board member, and I had no reason to doubt or distrust his word. Mr. Santangelo, on the other hand, was a lawyer in general practice, and I had no reason to believe that he knew any more about insurance than I did. In fact, he told me when I first asked him to be the successor trustee that he knew nothing about life insurance and could not advise me as to what insurance I should purchase. . . . He was not hired to read the policies or check up on Mr. Pflugfelder or provide insurance advice of any kind. As for my son-in-law, David Stangl, he is primarily a stockbroker who also has an insurance license, and I believed that his knowledge of life insurance in 1990 was extremely limited. I did not consult with Mr. Stangl (and I told Mr. Pflugfelder that I was not consulting with Mr. Stangl) about the substance of the Aetna polices. . . .Fay Affidavit, ¶ 7 .Page 8

As the Trustee of the Fay Insurance Trust, Santangelo received AnnualReports from Aetna discussing the performance of the policy, which heforwarded to Mr. Fay. The 1992 Report contained a table showing thatinterest rates had dropped from an initial rate of 8 percent in Decemberof 1991 to 6.75 percent at the beginning of November of 1992. The tableread as follows.

Interest rate of new premiums received during the report period

BEGINNING TO INTEREST RATE

12-19-91 12-31-91 8.00% 01-01-92 01-31-92 7.75% 02-01-92 09-30-92 7.50% 10-01-92 10-31-92 7.00% 11-01-92 PRESENT 6.75% The Report concluded with the following warning.

Additional premiums may be required to keep this policy in force. . . .If no more than planned premiums are paid, this policy will lapse forinsufficient value on

(A) 08-19-00, assuming interest and deductions at the guaranteed rates. (B) 00-00-00, assuming interest and deductions at the current rates. . . .If no date appears, the policy would continue to maturity.

Fay and Santangelo disregarded the 1992 warning about interest rates(as well as similar warnings in subsequent Annual Reports). According toplaintiffs, Pflugfelder periodically wrote to them offering misleadinginterpretations of the Reports and sometimes selectively highlighting thecontents to obscure the meaning.15 Plaintiffs point to a letter ofPage 9January 26, 1993, in which Pflugfelder assured them that "[w] e haveestablished a pattern that will continue to work well on a year to yearbasis."

Pflugfelder opted for early retirement from Aetna in August of1992.16 Thereafter, he worked as an independent "insuranceagent/consultant" selling Aetna products. Although no longer employed atAetna, Pflugfelder continued to correspond with the plaintiffs oninsurance matters. On January 28, 1997, Santangelo wrote Pflugfelderseeking assurance that the Fays' final payment on the policy would takeplace in December of 1999. On May 14, 1997, Pflugfelder replied.

That leads me to the final issue to be addressed, the payment of future premiums. Both policies are Flexible Premium, interest sensitive policies. The original assumptions were based on the fact that the interest rate credited to the policy cash values would be high enough to create sufficient equity at the end of ten premium payment years to carry the policies without further premium payments being required. We will not know that for certain until the premiums due December 18, 1999 have been paid.17

In December of 2000, Aetna billed the Fays foran eleventh annualpremium in excess of $100, 000. The bill prompted plaintiffs to read thepolices. When they did, they came to the realization that they had beenmisled about the premium obligations and the expiration date of thepolicy. They filed this Complaint on May 16, 2001.Page 10

DISCUSSION

Defendants argue that because the Amended Complaint was filed almostfour years after the date on which the last of the applicable statute oflimitations had run, the plaintiffs' claims are entirely barred.Massachusetts imposes a six-year statute of limitations on claims forbreach of contract and breach of the implied duty of good faith and fairdealing. G.L. c. 260, § 2.18 "The general rule is that a contractaction accrues at the time the contract is breached." Berkshire MutualIns. Co. v. Burbank, 422 Mass. 659, 661 (1996). The statute oflimitations is an affirmative defense on which defendants bear theinitial burden of proof. Coastal Oil New England, Inc. v. Citizens FuelsCorp., 38 Mass. App. Ct. 26, 29 n.3 (1995). However, "[w] here summaryjudgment is sought on the basis of a statute of limitations, once thedefendant establishes that the time period between the plaintiff's injuryand the plaintiff's complaint exceeds the limitations period set forth inthe applicable statute, the plaintiff bears the burden of alleging factswhich would take his or her claim outside the statute." McGuiness v.Cotter, 412 Mass. 617, 620 (1992).

Defendants argue that the breach (if any) of the insurance contractoccurred when Aetna delivered policies that did not conform to the Fays'specifications. See Szymanski v. Boston Mut. Life Ins. Co.,56 Mass. App. Ct. 367, 383 (2002). Consequently, the cause of actionaccrued at the latest on February 27, 1992, when the reissued policy wasdeliveredPage 11to the Fays. The statute of limitations therefore ran six years later onFebruary 27, 1998, more than four years before the date on which theComplaint was filed.

While plaintiffs dispute Szymanski's conclusion that the breachoccurred on the delivery of the policy, they nonetheless maintain thatPflugfelder's misrepresentations concealed the fact that they had beeninjured. As a matter of fairness, the statute of limitations is tolledunder Massachusetts law, as it is in most jurisdictions, when a plaintiffhas been harmed by an "inherently unknowable" wrong. Flynn v. AssociatedPress, 401 Mass. 776, 781 (1988). There are limits, however. The"inherently unknowable" standard is no different than the "knew or shouldhave known" standard, or as it is more often termed, the discovery rule.Szymanski, 56 Mass. App. Ct. at 371. "The discovery rule starts alimitations period running when events occur or facts surface which wouldcause a reasonably prudent person to become aware that she or he had beenharmed." Felton v. Labor Relations Commission, 33 Mass. App. Ct. 926, 928(1992). The issue, it must be stressed, is not one of actual notice.Rather, "the action accrues when the injured party knew or, in theexercise of reasonable diligence, should have known, the factual basisfor the cause of action." Tagliente v. Himmer, 949 F.2d 1, 4 (1st Cir.1991) (emphasis in original). Stated another way, a cause of actionaccrues when a plaintiff has "(1) knowledge or sufficient notice that shewas harmed and (2) knowledge or sufficient notice of what the cause ofharm was." Bowen v. Eli Lilly & Co., 408 Mass. 204, 208 (1990)(emphasisPage 12supplied). See also Hendrickson v. Sears, 365 Mass. 83, 90 (1974) ("[A]cause of action accrues on the happening of an event likely to put theplaintiff on notice.").19

Defendants make the unassailable argument that plaintiffs were onnotice of their injury when the policy was delivered because all they hadto do was read it to know that it was something other than what they hadanticipated. Moreover, even if plaintiffs might not have grasped the fullextent of the injury from the language of the policy, it would havebecome apparent had they heeded the 1992 Annual Report.20 SeeBowen, 408 Mass. atPage 13206-207 (the discovery rule requires only reasonable notice of harm, itdoes not require notice of the full extent of a plaintiffs injury); Olsenv. Bell Tel. Laboratories, Inc., 388 Mass. 171, 175 (1983) (same); SheilaS. v. Commonwealth, 57 Mass. App. Ct. 423, 428 (2003) (same).21 Cf.Spritz v. Lishner, 355 Mass. 162, 164 (1969) (one who signs a contractwill be held to its provisions whether or not he has read it or claimsnot to have understood its provisions); Simon v. Simon,35 Mass. App. Ct. 705, 714 (1994) (same).22Page 14

Defendants cite as persuasive authority a pertinent and recent FirstCircuit decision, Loguidice v. Metropolitan Life Ins. Co., 336 F.3d 1, 7(1st Cir. 2003). In Loguidice, the plaintiff, who had purchased a wholelife insurance policy that was falsely represented as a retirement plan,argued that because of the misrepresentation, she was entitled to thetolling benefit of the Massachusetts discovery rule.

Loguidice's argument that the wrongs she suffered were inherently unknowable until she read the newspaper article about the class-action settlement is undercut by our unwillingness to hand down expansive interpretations of state law at the request of diversity plaintiffs. . . . Loguidice concedes that she did not read through the folder [the Agent] left with her when he delivered her "plan" until after instituting this litigation. Had she looked at the materials in the folder earlier, a reasonable fact finder would have to conclude, she would have learned that there was nothing in the folder that could have constituted part of the retirement plan she thought that she had purchased other than the life insurance policy, which was distinctively so labeled. The Massachusetts courts require plaintiffs seeking to invoke the discovery rule to read the monthly statements sent by their securities broker, see Patsos, 433 Mass, at 327, and seemingly assume that they also must read their insurance policies, any illustrations that accompany the policies, and their annual statements, see Szymanski, 56 Mass. App. Ct. 367, 371 (2002). We therefore have no reason to expect that the Massachusetts courts would forgive Loguidice's failure to read through her folder. Because such a read-through would have put Loguidice on inquiry notice of her claims, the discovery rule does not save those claims. See Patsos, at 327.23Page 15

Plaintiffs are unable to offer a principled distinction that would taketheir case out of the rule laid out in Loguidice. If anything, thecircumstances of Loguidice are more compelling than anything the Fays canpoint to. The plaintiff in Loguidice was a nurse and divorced mother oftwo who had neither business experience nor the opportunity to consultwith a lawyer or an independent insurance licensee as did the Fays.24

Perhaps recognizing the futility of any resort to the discovery rule,plaintiffs emphasize an alternative argument, that the statute oflimitations is irrelevant because the case is not "ripe."

Defendants argue that the statute of limitations supposedly expired before the lawsuit was filed. This argument is also without merit. To establish a successful statute of limitations defense, Defendants first must prove that the causes of action "accrued" outside the limitations period, and then establish that the running of the statute of limitations was not tolled. Defendants conflate these issues by "morphing" the tolling analysis into the accrual analysis. As will be shown, however, the causes of action did not accrue at earliest until the Year 2000, when Aetna's customer service representativePage 16 said that premiums would be due from the Fays "for life, " and then followed up with a new premium bill in December 2000.

Plaintiffs' Opposition, at 3.25 This argument takes its inspirationfrom the Szymanski case where the plaintiff argued that a cause of actionunder a "vanishing premiums" policy does not accrue until the policyholder receives the first premium bill beyond the year when the paymentswere supposed to end. Szymanski, however, is of no help to theplaintiffs. While noting that the plaintiff's argument had achievedoccasional success, particularly in the New York state courts, theMassachusetts Appeals Court rejected it.

[T]he rules for the accrual of causes of action in Massachusetts differ from some other jurisdictions, notably New York. On balance, the pertinent inquiry here with regard to accrual is not when the plaintiff first had to pay unanticipated premiums or what death benefit his policy would have paid had he died before 1996, but rather, when the plaintiff was on notice that he had purchased a policy that was to cost him far more than originally represented.Szvmanski, 56 Mass. Mass. App. Ct. at 383.26

ORDER

For the foregoing reasons, defendants' motions for summary judgment areALLOWED. Plaintiffs' cross-motion for summary judgment on the breach ofcontract claim is DENIED. Defendants' motion to exclude the testimony ofplaintiffs' expert witnesses is MOOT. Defendants shall submit within ten(10) days of the date of this Order a proposed form of Final Judgmentconsistent with the court's rulings.Page 17

SO ORDERED.

1. The plaintiffs have plead, in the alternative, claims under NewYork General Business Law, §§ 349 and 350, and New York Insurance Law, §§2123 and 4226, in the event that the court finds that New York ratherthan Massachusetts law governs the case. As the parties agree (correctly)that Massachusetts law does apply, the New York law counts will bedismissed as redundant. The Complaint also pleads an equitable count ofrestitution. Where a contract governs the parties' relationship, thecontract provides the measure of a plaintiffs rights and no action forunjust enrichment lies. McKesson HBOC, Inc. v. New York State CommonRetirement Fund, Inc., 339 F.3d 1087, 1091, 1093 (9th Cir. 2003)(Delaware law); Taylor Woodrow Blitman Constr. Corp. v. Southfield GardensCo., 534 F. Supp. 340, 347 (D. Mass. 1982) (federal common-law);Popponesset Beach Ass'n, Inc. v. Marchillo, 39 Mass. App. Ct. 586, 593(1996) (Massachusetts law). Finally, plaintiffs seek a declaration ofrights under the disputed policies.

2. Identical policies were issued for each of the Fays. For the sakeof clarity, the court will refer to the dual policies as "the policy."

3. In this eventuality, the surviving Fay would receive theaccumulated cash value of the deceased spouse's share of the policy.

4. Alternatively, defendants argue that the breach of contract claimmust be dismissed because there has been no breach of the insuranceagreement and that any reliance by the Fays on statements thatPflugfelder may have made was unreasonable as a matter of law.

5. Defendants argue that the cross-motion is untimely. They arecorrect that the cross-motion should have been filed by April 21, 2003,and is inappropriately included in the otherwise timely-filed oppositionto the defendants' motions for summary judgment. However, the argumentsraised by the cross-motion are so interwoven with the facts underlyingthe motions properly before the court that no prejudice will accrue tothe defendants from considering the motion on its merits.

6. Also pending is defendants' motion to exclude the testimony ofplaintiffs' expert witnesses, Theodore Affleck and William Hager.

7. Plaintiffs often confuse a disputed inference that might be drawnfrom a fact with the issue of whether the fact is disputed. As anexample, plaintiffs argue that there is a dispute over the plaintiffs'degree of sophistication in insurance matters. It is undisputed,however, that Santangelo is a practicing attorney and a member of theMassachusetts bar and that Fay is a successful self-made businessman.Plaintiffs argue that because it cannot be assumed that lawyers andbusinessmen are necessarily sophisticated consumers of insurance, thecourt must completely disregard the occupations and experience ofSantangelo and Fay. While the first proposition is true, the second isnot.

8. Mrs. Fay is a Trustee of the Fay Insurance Trust but played nopart in the contested transactions.

9. Fay's net worth in 2003 exceeded $18 million.

10. Plaintiffs seek to equate Pflugfelder's position as an Aetnageneral manager with that of an Aetna corporate officer possessing theauthority to alter or amend the terms of a policy. The court permitted aspecial round of discovery on plaintiffs' contention in this regard andthe parties have briefed the issue separately. It is beyond dispute thatPflugfelder was not imbued with an officer's authority. Aetna's CorporateResolutions do not list general managers among the corporate officersempowered to sign, and thus alter, the terms of a policy. Moreover, theAssignment of Authority specifically drafted for Pflugfelder does notgrant him such a privilege, and nothing in the deposition testimony ofAetna's Rule 30(b)(6) witness is to the contrary.

11. Pflugfelder, as an Aetna general manager, could not serve as thecommissioned agent on the sale. Consequently, the commission was paid toMr. Fay's son-in-law, David Stangl, a stockbroker who also possessed aninsurance license. Fay consulted with Stangl generally about insurancematters, but testified that he and Stangl never discussed the contents ofthe policy.

12. It will be apparent to the reader that Pflugfelder was promotinga so-called "vanishing premiums" policy, an ill-starred insurance productthat has been the subject of much litigation.

13. This is the date upon which Mr. Fay would turn ninety-five.

14. The period of coverage for Mrs. Fay, who was older than Mr. Fay,was 26 YEARS and the PREMIUM PAYMENT PERIOD was accordingly listed as 26YEARS.

15. Plaintiffs do not dispute the fact that the Reports accuratelystated the premium totals and the applicable interest rates. Rather, theycomplain that Pflugfelder's misrepresentations caused them to ignore thedisclosures.

16. Pflugfelder spent his last year at Aetna managing the lifeinsurance department in Aetna's Syracuse office. After August of 1991, heno longer held the title of a general manager. Although Pflugfelderperformed no duties at Aetna after August of 1992, his official retirementfrom Aetna did not take place until his severance benefits expired inAugust of 1993.

17. Plaintiffs place special emphasis on this response, which theycharacterize as deceptive and therefore significant in any limitationstolling analysis. As an initial matter, it is not clear thatPflugfelder's letter, with its couched predictions, was in factmisleading. More significantly, it is difficult to see how Pflugfelder'srepresentations could be attributed to a company from which he hadretired five years earlier.

18. A six-year statute of limitations also applies to unjustenrichment claims. Palandiian v. Pahlavi, 614 F. Supp. 1569, 1577 (D.Mass. 1985). The remaining claims have shorter statutes of limitations.Consequently, I have addressed the limitations issue in terms of thesix-year period most favorable to the plaintiffs.

19. The rule is different under G.L. c. 260, § 12, if the wrongdoer inbreach of a fiduciary duty of full disclosure "keeps from the personinjured knowledge of the facts giving rise to a cause of action and themeans for acquiring knowledge of such facts." Frank Cooke, Inc. v.Hurwitz, 10 Mass. App. Ct. 99, 106 (1980). "An actual knowledge standardapplies to a plaintiff who argues that a breach of fiduciary duty ofdisclosure constitutes fraudulent concealment under G.L. c. 260, § 12.Such a plaintiff need only show that the facts on which the cause ofaction is based were not disclosed to him by the fiduciary. . . . Theplaintiff is not required to have made an independent investigation."Demoulas v. Demoulas Super Markets, Inc., 424 Mass. 501, 519-520 (1997).This rule does not, however, assist plaintiffs as the relationshipbetween an insurer and a policy holder does not entail a fiduciary duty.Szymanski, 56 Mass. App. Ct. at 381-382, citing Rapp v. Lester L.Burdick, Inc., 336 Mass. 438, 442 (1957). Moreover, plaintiffs'contention that Pflugfelder owed a fiduciary duty to Fay in insurancematters because of their co-service as directors on the board of anunrelated company has no basis in law. Plaintiffs confuse the fiduciaryduty directors owe their corporation and its shareholders with the socialobligations that flow from a private friendship.

20. When plaintiffs were asked at their depositions, whether having atlast read the policy, they understood from its language that premiumswere required to be paid until 2019 (in Mr. Fay's case) and that thepolicy expired when (or if) he reached age ninety-five, both Fay andSantangelo admitted that they did. In this respect, the plaintiffs' casediffers from Szymanski, the case that would superficially appear the mosthelpful to their cause. In Szyrnanski, the vanishing premiums policyissued by the defendant, unlike those in the cases cited by the AppealsCourt where a contrary result was reached, see, e.g., In re NorthwesternMut. Life Ins. Co. Sales Practices Litig., 70 F. Supp.2d 466 (D.N.J.1999), aff'd, 259 F.3d 717 (3d Cir. 2001), contained false informationabout the insurer's historical return on investment, presentedinconsistent and confusing illustrations of the policy's predicted futurevalue, and gave false assurances that the policy would develop cash valueupon the "vanishing" of the premiums. Similarly, the annual reports issuedby the insurer repeated these falsehoods without including any clarifyinginformation about the actual performance of the policy. Perhaps ofgreater significance is the fact that the issue in Szymanski was notwhether the plaintiff had read the policy and the annual reports, butwhether having read them, he should have understood the policy to be theapple rather than the orange he had bargained for. On that issue, theAppeals Court held that there was a material dispute of fact. Szymanski,56 Mass. App. Ct. at 380.

21. "[T] he question when a plaintiff knew or should have known of hiscause of action is one of fact which in most instances will be decided bythe trier of fact." Riley v. Presnell, 409 Mass. 239, 240 (1991). Thecontrary instances are those (as here) where plaintiffs as a matter oflaw fail to sustain their burden of showing that their action wastimely. See Phinney v. Morgan, 39 Mass. App. Ct. 202, 209 (1995)(concluding as a matter of law that plaintiffs, while not aware of thefull extent of their psychological injuries stemming from childhoodsexual abuse, possessed knowledge or sufficient notice that they had beenharmed and what the cause of the harm was); Doe v. Creighton, 439 Mass. 281,285 (2003) (same).

22. Plaintiffs cite John Hancock Life Ins. Co. v. Schwarzer,354 Mass. 327, 330 n.3 (1968), as holding that the usual rule that aparty to a contract is charged with its terms whether he reads them or notdoes not apply in an insurance context. This is a serious misreading ofthe case. In Schwarzer, an agent made knowingly false entries on aninsurance application that was never shown to the insured. On the basisof the agent's false statements, the insurer sought to avoid the policy.Obviously troubled by the insurer's litigating tactic, the Court heldthat the "well established principle . . . that the acceptance of acontract establishes all its terms" will give way "where the elements ofequitable estoppel are present." The language cited by the plaintiffs forthe proposition that the law does not impose a duty on an insured to reada policy is not part of the holding of the case, but is taken from afootnote quoting a law review article criticizing a New York state courtdecision for an overly rigid and inequitable application of the absoluterule. The Schwarzer equitable estoppel rule applies only when an insurerattempts to escape the obligations of its policy on the basis of errorsfor which it (or its agent) is solely responsible. See Sullivan v. TheManhattan Life Ins. Co. of N.Y., 626 F.2d 1080, 1083 (1st Cir. 1980).

23. ln Foisy v. Royal Maccabees Life Ins. Co., 356 F.3d 141, 146 (1stCir. 2004), the First Circuit elaborated on its holding in Loguidice. We are unpersuaded by Maccabees' argument that our decision in Loguidice v. Metro. Life Ins. Co., 336 F.3d 1 (1st Cir. 2003), requires us to find that Foisy had knowledge of her claims as far back as 1994. In Loguidice, despite a sympathetic factual background in which an unsavory insurance agent misled the plaintiff into believing she purchased a retirement plan when in fact she purchased life insurance, we held that the claims were barred because the language of the policy clearly indicated it was life insurance, thus putting the plaintiff on inquiry notice of her claim. See id. at 7. Here, however, because the language in Maccabees' policy is ambiguous, see infra at 148, Foisy could not be expected to have had knowledge of a particular construction of the policy. As it is undisputed that the language of the Aetna policy unambiguouslyset out the insurance term and the number of required premiums, the Fays'policy is like the policy in Loguidice and unlike the one that figured inFoisy.

24. ln Szymanski, the Appeals Court favorably noted the decision inMcCord v. Minnesota Mut. Life Ins. Co., 138 F. Supp.2d 1180, 1184-1185nn. 5 & 6 (D. Minn. 2001), where the court found it significant that theplaintiffs, who had purchased "vanishing premium" policies, "wereexperienced businessmen, one who `owned his own business, bought and soldreal property, conducted title searches, executed and carried outbusiness contracts . . ., `another the `president of a company in whichhe owns an interest, interacts frequently with lawyers and accountants,and has owned life insurance policies. . . . `"Szvmanski, 56 Mass. App.Ct. at 379 n.10.

25. Plaintiffs misstate the burden of proof. It is their obligation todemonstrate facts justifying the tolling of the statute. There is noburden on the defendants to do so. McGuiness, 412 Mass, at 620.

26. If one follows the logic of plaintiffs' argument, a cause ofaction based on Pflugfelder's alleged misrepresentation that the policywould never expire would only become "ripe" in 2019 when Mr. Fay turned95 years old (should he live that long).

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