Appeal From the United States District Court For the District of New Jersey - Newark.
Adams, Hunter and Garth, Circuit Judges.
This appeal arises from a final order of the United States District Court for the District of New Jersey granting summary judgment in favor of defendant New York Life Insurance Company ("New York Life"). Because we believe that the district court erred in its interpretation of New Jersey law, we will reverse the order of the district court and remand.
On April 22, 1980, New York Life issued a One Hundred Thousand Dollar ($100,000) double indemnity life insurance policy on the life of Nicholas Lang, the 10-month-old son of Linda and Neil Lang. The policy was in effect at the time of Nicholas' death, March 14, 1981. Upon notification of death, New York Life paid the Langs $100,000, the face value of the policy. The Langs brought suit in the Superior Court of New Jersey to recover an additional $100,000 under the accidental death provision of the policy.*fn1 New York Life denied liability, alleging that there had been no "accident." New York Life relied, in the alternative, upon an exclusionary clause in the insurance policy which stated:
Benefits Not Payable. The Accidental Death Benefit is not payable if the Insured's death is contributed to or caused by:
1. Any disease or infirmity of mind or body . . . [App. at 9].
The case was removed to federal court on the basis of diversity. Both parties filed motions for summary judgment. The district court granted summary judgment for the defendant based on the exclusionary language quoted above. This appeal followed.
Summary judgment may only be granted if, upon a review of the materials properly before the court, see Fed. R. Civ. P. 56(c), and viewing the evidence thus considered in a light most favorable to the non-moving party, the court is convinced that no genuine issue of material fact remains for trial and that the movant is entitled to judgment as a matter of law. Scott v. Plante, 532 F.2d 939, 945 (3d Cir. 1976). For purposes of this appeal, the following facts must be taken as established.
Except for chronic ear problems,*fn2 Nicholas was generally in good health until March 12, 1981, when he developed a hernia in his left groin. Although this condition is harmless in itself, surgery is usually performed to prevent strangulation, which is a twisting or constricting of the hernia that obstructs the blood supply and causes death. Nicholas underwent corrective surgery on March 13. At no time before or during surgery did his doctors discover a second hernia located in a fissure in the innermost layers of his abdominal wall, a few inches above the first hernia. A hernia in this area is exceedingly rare and difficult to detect, especially when, as in this case, it is asymptomatic. This undiscovered second hernia became strangulated during surgery or presurgical examination. Nicholas died the next morning as a result of the strangulated hernia.
The question before this court is whether the trial court erred in applying the relevant substantive law to these facts. Both parties agree that New Jersey law governs the validity and interpretation of the insurance contract. As a federal court sitting in diversity, it is our duty to predict the course that the New Jersey Supreme Court would take if presented with the legal issues before us. See Erie R.R. v. Tompkins, 304 U.S. 64, ...