Holly A. Boylan v. Jackson National Life Insurance Company, Inc.

NOT PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
_____________
No. 08-4325
_____________
HOLLY A. BOYLAN,
Appellant
v.
JACKSON NATIONAL LIFE INSURANCE COMPANY, INC.
______________
On Appeal From the United States District Court
for the District of New Jersey
(Civil No. 3:06-cv-4099)
District Judge: Honorable Garrett E. Brown
Submitted Under Third Circuit LAR 34.1(a)
November 19, 2009
______________
Before: RENDELL, BARRY, and CHAGARES, Circuit Judges.
(Filed: November 24, 2009)
__________________
OPINION OF THE COURT
__________________
CHAGARES, Circuit Judge.

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In 2001, Thomas Boylan (“Boylan”) purchased a $3 million life insurance policy
(the “Policy”) from Jackson National Life Insurance Company, Inc. (“JNL”), and named
his wife Holly Boylan (“Holly”) the beneficiary. Boylan died in 2006, and JNL thereafter
denied Holly’s claim for benefits, asserting that the Policy had lapsed due to nonpayment
of the annual premium. Holly promptly filed this diversity action against JNL seeking
payment under the Policy. After discovery, the District Court granted JNL’s motion for
summary judgment and denied Holly’s cross-motion for summary judgment. Holly
appeals, and we will affirm.
I.
We write solely for the parties, who are well-versed in the case, and therefore set
forth only the essential facts. Boylan purchased the Policy from JNL on February 27,
2001, under which an annual premium payment of $3,945.00 was due on or before
February 27. In accordance with New Jersey law, the Policy provided a 31-day grace
period, during which time coverage under the Policy would continue uninterrupted:
GRACE PERIOD FOR PAYMENT OF PREMIUMS Any
premium after the first which is not paid on or before the date it
becomes due is in default. A grace period of 31 days will be
allowed for payment of a premium in default. This certificate
will continue in force during this period. If death occurs during
the grace period, the unpaid premium on the premium basis then
in effect will be deducted from the proceeds of the certificate.
Joint Appendix (“JA”) 58. If Boylan failed to remit payment by the end of the grace
period, he would be required to undergo formal reinstatement procedures to resume

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coverage. The Policy stated:
HOW A CERTIFICATE IN DEFAULT MAY BE
REINSTATED This certificate may be reinstated within five
years after the date of any past due premium. Reinstatement is
subject to:
1) receipt of evidence of insurability of the
Insured satisfactory to the Company; and
2) payment of all past due premiums with interest
from the due date of each premium.
Interest at the rate of 8% per year compounded annually on past
due premiums will be payable to the date of reinstatement.
JA 58.
JNL’s automated policy administration system generated and distributed certain
notices to policyholders during the annual billing cycle. Approximately 25 days before a
premium payment was due, the system distributed a “Payment Notice” to the
policyholder, alerting him or her to the upcoming due date. If payment was not received
by the due date, the system automatically mailed a “Grace Period Notice” to the
policyholder approximately ten days after the due date, notifying him or her of the missed
payment, the opportunity to make the payment during the grace period, and the
consequences of failing to submit a timely grace-period payment. Finally, if payment was
not received by the end of the grace period, JNL’s automated system generated and
mailed a “Lapse Notice” to the policyholder, advising him or her that the policy was in
default and formal reinstatement would be necessary to resume coverage.

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It is undisputed that from 2002 through 2005, Boylan received Payment and1
Grace Period Notices at the appropriate times.
4
Boylan’s payment history was checkered. After paying the initial premium to
obtain the Policy in 2001, he did not remit the required premium payment to JNL by the
February 27 due date in 2002, 2003, and 2004, but did make the payments during the
grace period. In 2005, however, Boylan did not make timely payment by February 27,
and did not make a payment during the grace period. Consequently, JNL’s automated1
policy administration system mailed to Boylan a Lapse Notice, which contained a limited
waiver of the formal reinstatement requirements if Boylan submitted payment before
April 28, 2005. Boylan took advantage of JNL’s offer by submitting his premium
payment on April 22, 2005. Coverage under the Policy was therefore reinstated without
incident.
In 2006, Boylan received a Payment Notice from JNL, but did not make payment
on or before the February 27 due date. He subsequently received a Grace Period Notice,
but did not make payment within the grace period. Like the year before, JNL mailed
Boylan a Lapse Notice, dated March 9, 2006. The 2006 Lapse Notice was identical to the
2005 Lapse Notice: it contained a limited waiver of formal reinstatement requirements if
Boylan remitted payment before April 28, 2006. The 2006 Lapse Notice stated in
pertinent part:
We recently sent you a Grace Period Notice to inform you that
unless we received a minimum payment by March 30, 2006,
your policy would lapse on that date. We have not received

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The check was mailed on June 20, 2006. JA 591.2
5
your payment.
Please note that your policy has lapsed and that all coverage
under this policy has ended.
If the amount due is received at the address below during the
insured’s lifetime and before April 28, 2006, the policy will be
automatically reinstated and we will waive additional
requirements. This offer to reinstate automatically is not a
waiver of the terms of the policy in the event of any future
default of payment of premiums.
Otherwise, you will be required to pay additional unpaid
premiums plus interest and complete the enclosed Reinstatement
Application. Acceptance of the premium does not reinstate the
policy; your policy will remain lapsed and no coverage is
provided until this application has been approved by [JNL].
JA 648 (emphasis in original). This time, Boylan did not submit a payment before April
28, 2006. Instead, he transferred electronically $3,945.00 to JNL on May 19, 2006, but
did not submit a completed reinstatement application. Approximately one month later,
JNL mailed to Boylan a letter dated June 16, 2006, notifying him that it had received the
electronic payment, but that the Policy had lapsed and the payment alone was insufficient
to reinstate coverage. The letter invited Boylan to complete a reinstatement application
(an additional copy of which was enclosed) if he wished to resume coverage under the
Policy. Under separate cover, JNL issued a check to Boylan – also dated June 16, 2006 –
in the amount of $3,945.00, essentially returning the electronic payment. Boylan2
deposited this check and it was presented to JNL’s bank for payment on July 3, 2006.

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The District Court had jurisdiction under 28 U.S.C. § 1332(a), and we have3
jurisdiction under 28 U.S.C. § 1291. Our review of the District Court’s grant of summary
judgment is plenary, and we apply the same legal standard as it should have. Vitalo v.
Cabot Corp., 399 F.3d 536, 542 (3d Cir. 2005). Summary judgment is appropriate “if 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 is entitled to
judgment as a matter of law.” Fed. R. Civ. P. 56(c). We must view the record in the light
most favorable to Holly, the non-movant, and must also draw all reasonable inferences in
her favor. See Vitalo, 399 F.3d at 542; Fed. R. Civ. P. 56(c). The underlying facts of the
case – in which New Jersey substantive law applies, see Great Am. Ins. Co. v. Norwin
Sch. Dist., 544 F.3d 229, 243 (3d Cir. 2008) (citing Erie R.R. Co. v. Tompkins, 304 U.S.
64, 78-80 (1938)) – are not in dispute.
6
There were no communications between JNL and Boylan from May 19, 2006 until
Boylan received JNL’s June 16, 2006 letter in the mail.
Boylan died on July 5, 2006. On August 11, 2006, Holly submitted a claim to JNL
for payment under the Policy, and JNL denied the claim on August 22, 2006. Holly filed
this breach-of-contract action on August 29, 2006 and, as stated, the District Court
granted JNL’s motion for summary judgment and denied Holly’s cross-motion for
summary judgment. This timely appeal followed.3
II.
Holly does not dispute that the Policy lapsed in 2006 when her husband failed to
remit payment by the end of the grace period or by the extended April 28 deadline set
forth in the 2006 Lapse Notice. Nor does she claim that her husband’s transmittal of the
premium on May 19, 2006 by itself sufficed to reinstate the Policy. Her sole claim here,
as it was before the District Court, is that by holding Boylan’s May 19 electronic payment

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for approximately a month with no communications to him, JNL waived its contractual
right to require Boylan’s completion of formal reinstatement requirements. Accordingly,
she argues, the Policy had been automatically reinstated as a matter of law before her
husband’s death, and that she is therefore entitled to the Policy’s benefits. While
sympathetic to the difficult and unfortunate circumstances prompting this action, we are
impelled to conclude that Holly’s argument finds no refuge in law.
An insurance policy generally should be construed according to its plain and
ordinary language. Voorhees v. Preferred Mut. Ins. Co., 607 A.2d 1255, 1260 (N.J.
1992); Longobardi v. Chubb Ins. Co. of N.J., 582 A.2d 1257, 1260 (N.J. 1990). The
parties agree that the Policy’s language is unambiguous and required by New Jersey law;
therefore, the ordinary rules of construction apply, and the express terms of the Policy
control. Paul Revere Life Ins. Co. v. Haas, 644 A.2d 1098, 1103 (N.J. 1994). New
Jersey law requires that all life insurance policies within the state contain a grace period
of 30 days, during which an insured may submit payment without interruption of
coverage. N.J. Stat. Ann. § 17B:25-3. Another statutory provision governs reinstatement
of lapsed life insurance policies. It states:
There shall be a provision that unless:
a. the policy has been surrendered
for its cash surrender value, or
b. its cash surrender value has
been exhausted, or

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c. the paid-up term insurance, if
any, has expired,
the policy will be reinstated at any time within 3 years . . . from
the due date of the first premium in default upon written
application therefor, the production of evidence of insurability
satisfactory to the insurer, the payment of all premiums in
arrears and the payment or reinstatement of any indebtedness to
the insurer upon the policy, all with interest at a specified rate
and which may be compounded as specified.
N.J. Stat. Ann. § 17B:25-9. Given this clear text, it is beyond dispute that once a life
insurance policy has lapsed for nonpayment, mere submission of an overdue premium –
even if accepted by the insurer – is insufficient to reinstate coverage. See, e.g.,
Glezerman v. Columbian Mut. Life Ins. Co., 944 F.2d 146, 154 (3d Cir. 1991); Hogan v.
John Hancock Mut. Life Ins. Co., 195 F.2d 834, 837 (3d Cir. 1952). Because Boylan did
not submit a completed reinstatement application or demonstrate his continued
insurability to JNL, his remittance of the 2006 premium on May 19, 2006 was insufficient
to reinstate the Policy.
Holly argues, and JNL concedes, that any of the Policy’s provisions – including
the formal reinstatement requirements mandated by N.J. Stat. Ann. § 17B:25-9 – may be
waived. Indeed, JNL expressly waived those very reinstatement requirements in the 2005
and 2006 Lapse Notices, subject to the condition that Boylan remit payment before April
28. “‘Waiver’ is the intentional relinquishment of a known right. It is a voluntary act,
and implies an election by the party to dispense with something of value, or to forego
some advantage which he might at his option have demanded and insisted on.” W. Jersey

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The plaintiff also sued her insurance broker and the policy administrator. The4
claims against those defendants are not germane here.
9
Title & Guaranty Co. v. Indus. Trust Co., 141 A.2d 782, 786 (N.J. 1958) (quoting George
F. Malcolm, Inc. v. Burlington City Loan & Trust Co., 170 A. 32, 34 (N.J. Ch. 1934))
(internal quotation marks omitted). Put differently,
[i]t is requisite to waiver of a legal right that there be “a clear,
unequivocal, and decisive act of the party showing such a
purpose or acts amounting to an estoppel on his part[.] A
waiver, to be operative, must be supported by an agreement
founded on a valuable consideration, or the act relied on as a
waiver must be such as to estop a party from insisting on
performance of the contract or forfeiture of the condition.”
Id. at 786-87 (quoting Aron v. Rialto Realty Co., 136 A. 339, 341 (N.J. Ch. 1927), aff’d,
140 A. 918 (N.J. 1928)). In the insurance context, a waiver
is predicated upon the acts or conduct of the insurer with
knowledge of the breach tending to show a recognition of the
policy, or an intent to relinquish the right to declare a forfeiture
for the known breach. . . . [I]t is always open to the assured to
show a waiver of policy provisions when the conduct of the
insurer gives reasonable ground to the assured, as a layman . . .
to believe that such a forfeiture will not be incurred and the
assured relies thereon to his prejudice.
Bruni v. Prudential Ins. Co. of Am., 241 A.2d 455, 460 (N.J. Super. Ct. App. Div. 1967)
(Carton, J., dissenting), adopted as the Opinion of the Court, 241 A.2d 449, 450 (N.J.
1968).
In Glezerman, the plaintiff sued an insurance company (Columbian) from which
her deceased husband had purchased a life insurance policy. 944 F.2d at 148. The4

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policy had lapsed for nonpayment, and Columbian required the policyholder to complete
a reinstatement application. Id. at 149. The decedent completed and submitted the
application along with the overdue premium, and Columbian denied reinstatement
approximately sixty days later. Id. at 154. The plaintiff argued that Columbian had
waived formal reinstatement requirements by retaining the overdue premium payment and
the reinstatement application for an unreasonable amount of time. Id. We rejected the
argument, stating as follows:
An insurer has a reasonable amount of time in which to demand
proof of insurability and then decide whether to reinstate. If the
insurer affords the insured a reasonable opportunity in which to
comply, the insured’s response is a condition precedent for
reinstatement. If these conditions are met, mere payment of the
premium is insufficient for reinstatement; the insured must
submit evidence of insurability. The only exception is waiver on
the part of, or estoppel against, the insurance company. In the
case of Benjamin Glezerman, the Glezermans submitted the
application for reinstatement on May 23, 1986. After reviewing
the medical records, the application for reinstatement was
denied on July 29, 1986.
Under Pennsylvania law, for example, the reinstatement
provision contemplates the making of a new contract between
the parties. The insurance company is not required to reinstate
absent evidence of insurability. However, retaining an overdue
premium for an extended period of time is evidence that a policy
has been reinstated. The benchmark for determining a
reasonable period may be a period specified by the insurance
contract. In Hogan, the policy gave the insurance company sixty
days within which to act, and it did so. The reinstatement
provision in the Glezermans’ policy did not specify the period
in which Columbian had to evaluate the insurability of the
applicant. Columbian did respond in just over sixty days,
however.

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There is no evidence in the record that Columbian acted in a
dilatory or even lackadaisical manner. We therefore hold that
Columbian acted within a reasonable period of time in
responding to the Glezermans’ application.
Id. at 153-54 (emphasis added).
Relying on this passage, the District Court found as a matter of law that JNL had
not waived its right to require Boylan to undertake formal reinstatement procedures, and
that its month-long retention of the May 19, 2006 premium payment was neither
unreasonable nor indicative of a waiver. JA 11-12. We agree. The 2006 Lapse Notice
set forth a limited waiver of formal reinstatement requirements, subject to the explicit
condition that Boylan pay the premium before April 28, 2006. JA 648. “Otherwise,” it
stated, “you will be required to pay additional unpaid premiums plus interest and
complete the enclosed Reinstatement Application.” Id. (emphasis added). Finally, the
Lapse Notice stated in no uncertain terms that “[a]cceptance of the premium does not
reinstate the policy; your policy will remain lapsed and no coverage is provided until this
application has been approved by [JNL].” JA 648 (emphasis added). Far from a “clear,
unequivocal, and decisive act” evincing JNL’s intent to relinquish the right to require a
reinstatement application and proof of insurability, W. Jersey Title & Guaranty Co., 141
A.2d at 787, the 2006 Lapse Notice documented JNL’s affirmative intent to retain the
right to demand formal reinstatement procedures if payment was not made before April
28, 2006.
Holly attacks the District Court’s application of Glezerman, contending that it

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Holly argues that “[t]his appeal is not about correspondence that JNL sent before5
Boylan’s electronic funds transfer (‘EFT’) of May 19, 2006.” Holly Rep. Br. at 1
(emphasis in original). We disagree. One cannot adequately assess JNL’s intent (or lack
thereof) to relinquish its contractual rights after receiving the overdue premium without
resort to the prior communications. That these communications demonstrate
unequivocally what JNL’s expectations would be in the event that Boylan did not timely
12
erroneously imposed a bright-line rule of reasonableness and that a jury should decide
whether retention of the premium was reasonable. We disagree. The District Court
stated expressly that “[t]here is no bright line rule for determining the reasonableness of
the time period that a premium has been retained,” and that “the Glezerman court
indicated that a more in-depth examination of the circumstances is warranted.” JA 10-11.
Indeed, we explained in Glezerman that an insurer’s extended retention of an overdue
premium payment was simply “evidence that a policy has been reinstated.” Glezerman,
944 F.2d at 154 (emphasis added). We did not purport categorically to find a waiver for
any particular length of time during which an insurer retains an overdue payment; instead,
the delay is but a factor bearing on the “intentional-relinquishment” standard set forth by
well-settled New Jersey law. Here, JNL placed Boylan on notice time and again that his
failure to remit payment before the end of the grace period – and later, before April 28,
2006 – would result in a lapsed Policy. In such an event, unless and until a reinstatement
application had been completed by Boylan and accepted by JNL, the Policy would be in
default and no coverage would be available in the interim. Based on its prior
communications to Boylan, therefore, we conclude that JNL did not waive its right to
enforce the Policy as written.5

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submit payment is not a reason to disregard them.
In her reply brief, Holly avers that there is a factual irregularity with respect to6
JNL’s suspense account protocol. See Holly Rep. Br. at 3. Because the check returning
Boylan’s electronic payment was “drawn on a general account and not a trust account,”
she says, there is no record evidence that JNL maintained a separate suspense account for
payments that could not be posted to a particular policy. Id. Whether or not the funds
were actually held in a distinct and dedicated bank account, however, is immaterial to our
analysis. The point is that the funds were “suspended” – reasonably, in our view – for
fifteen days to allow the insured sufficient time to submit supplemental documentation
before JNL took action on the transmitted funds. And there is undisputed record evidence
for this proposition. JA 573-75.
The District Court recognized, as do we, that the policyholder in Glezerman had7
submitted a reinstatement application, whereas here Boylan had not. See Glezerman, 944
F.2d at 149, 154. Holly argues that JNL’s retention of the overdue premium payment
sans application is distinguishable from Glezerman because in this case there was nothing
for JNL to review, making the month-long retention of funds unnecessary and therefore
unreasonable. We conclude to the contrary. JNL’s stated procedures for retaining funds
unaccompanied by a completed reinstatement application are reasonably designed to
13
In any event, we also reject Holly’s argument that JNL’s month-long retention of
the overdue premium payment was, in this case, unreasonable (or at least presented a jury
question). JNL submitted an affidavit to the District Court explaining that upon receipt of
a payment that cannot be applied to a particular policy (including a lapsed policy), it
places the funds into a “suspense account” for approximately fifteen days in order to
allow the insured to submit documentation (e.g., an explanation for why the payment was
submitted, a completed reinstatement application, etc.). JA 573-75. After fifteen days,6
JNL conducts research to determine why the funds were received, and takes appropriate
action thereafter. JA 575. Upon review, we find this procedure reasonable and this case
indistinguishable from Glezerman. Holly argues that JNL could have responded more7

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promote efficiency when a policyholder submits documentation soon after submitting
payment. This procedure – even in the absence of any reinstatement application to review
– is simply not indicative of an intentional waiver of JNL’s contractual rights, nor do we
find it unreasonable.
Holly also argues that we should apply by analogy cases interpreting N.J. Stat.8
Ann. § 17B:26-7, the statutory provision governing reinstatement of health insurance
policies. The District Court rejected this argument, and we do so as well. While the
cases Holly cites generally concern the temporal reasonableness of an insurer’s response
to an insured’s overdue payment and/or reinstatement application, they interpret statutory
language not appearing in § 17B:25-9, which is unambiguous and controlling here. The
cited cases are irrelevant to the issue of whether JNL intentionally waived the statutorily
required reinstatement provision appearing in Boylan’s Policy.
14
quickly using its automated policy administration system. We hold, however, that Holly
has produced no evidence that JNL “acted in a dilatory or even lackadaisical manner,”
Glezerman, 944 F.3d at 154, that its retention of the overdue premium was reasonable as
a matter of law, and accordingly that such retention did not result in a waiver of its
contractual rights as set forth in the Policy.8
III.
For the reasons expressed above, we will affirm the judgment of the District Court.

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