due date fell on the 4th. The November 4, 1994 policy statement divided
the $366 initial premium payment into payments of $122.31 for the periods
identified as October 4, 1994 to November 4, 1994, November 4, 1994 to
December 4, 1994, and December 4, 1994 to January 4, 1995. (Id., Ex. 11.)
The August 21, 1996 policy statement sent after the failure of the
automatic withdrawal also stated that premiums were paid to "08/4/96" but
that a premium was due "08/04/96" and that another was due "09/04/96."
(Id, Ex. 16.) Accordingly, we rule that under the plain terms of the
Policy, Moore owed a premium payment due August 4, 1996.
We also find that the Policy had lapsed at the time of Moore's death.
The Policy stated that any premium that is not paid on its due date is in
default. (Id., Ex. 6.) It is undisputed that Moore did not make a payment
before his death and that the premium was in default. The Policy also
contained a 31-day grace period and stated that the Policy would lapse if
payments were not made within that time. (Id. at 0.) We have found that
the premium due date was August 4, 1996, and the 31-day grace period
therefore expired on September 4, 1996. Thus, at the time of Moore's
death on September 5, 1996, the Policy had lapsed.*fn4
We find Goduti-Moore's arguments to be without merit. She notes that
August 4, 1996 was a Sunday and therefore argues that the grace period
did not begin to run until Monday, August 5. (Def.'s Br. in Supp. at 18.)
It is true that if the grace period had expired on a weekend or holiday,
it would have been extended to the next business day. See Bohles v.
Prudential Ins. Co., 84 N.J.L. 315, 316, 86 A. 438, 439 (Err.& App.
1913). However, the day on which the grace period ended was a business
day (Wednesday, September 4, 1996) and thus the grace period should not
be extended. Cf. Burgess v. Long Island R.R. Auth., 79 N.Y.2d 777,
579 N.Y.S.2d 631, 587 N.E.2d 269 (N.Y. 1991) (period of one year and 30
days in which passenger had to commence action was not extended by three
days by fact that passenger was injured on Friday night and could not
present his claim to the claims bureau until the following Monday, three
We also reject Goduti-Moore's argument that Guardian Life's use of the
automatic monthly payment system created a premium due date of the 15th
of the month. The November 4, 1994 policy statement announced that
Guardian Life would automatically withdraw money on the 15th of the
month. (See Belsole Certif., Ex. 11 at A.) However, the policy statement
also stated that the initial premium payment had been divided to cover
three payment periods, all with the premium due date as the 4th of the
month. (Id., Ex. 11 at A.) The policy statement thus reaffirmed that the
premium due date fell on the 4th. Moreover, the Policy, which had been
issued a month earlier, stated that changes in payment frequency "must
result in a premium falling due on each policy anniversary" and that
"policy anniversaries are measured from the policy date," identified as
October 4, 1994 in the Policy. (Id., Ex. 6 at C, T.)
Guardian Life's withdrawal of premium payments on the 15th of the month
did not create a waiver of the premium due date. It is true that, in some
jurisdictions, a pattern of accepting premiums beyond the end of the
grace period could constitute a waiver of forfeiture of a policy. See
Horace Mann Life Ins. Co. v. Lunsford, 172 Ga. App. 866, 324 S.E.2d 808,
811 (1984). However, neither New York nor New Jersey has adopted this
rule. See Brecher v. Mutual Life Ins. Co. of N.Y., 120 A.D.2d 423,
501 N.Y.S.2d 879, 882 (App. Div. 1986) ("It is a cardinal rule that an
insurer's voluntary, repeated acceptance of late payment of premium,
neither binds it to accept those overdue at the time of an insured's
death after the grace period under the policy has expired, nor entitles
the beneficiary to invoke the doctrines of waiver or estoppel.");
Sugarman v. Equitable Life Assur. Soc., 7 N.J. Super.
379, 382, 71 A.2d 148, 149 (Ch.Div. 1950), aff'd, 5 N.J. 382, 75 A.2d 822
(1950) (finding that the acceptance of 3 out of 19 premium payments
outside the expiration of the grace period did not create a waiver).
In the instant case, Guardian Life never accepted a premium payment
beyond the expiration of the grace period. The withdrawal of premium
payments on the 15th of the month, during the grace period, simply does
not give rise to a claim of estoppel or waiver. See Couch on Insurance
§ 78:27 (3d ed. 1996) ("[E]ven repeated acceptance of payments within
the grace period can induce no reasonable relief upon the part of the
insured that forfeiture may be postponed beyond such extension period;
moreover, such a custom carries no implication either that there is no
limit of the time when payment may be made, or that it is somewhere
beyond the limit established by the contract.").
Goduti-Moore's argument that the August 21, 1996 policy statement
commenced the 31-day grace period is also flawed. She argues that the
policy statement advised Moore that there was an amount due of $267 but
did not tell him when to pay it or advise that the Policy would lapse.
(Def.'s Br. in Supp. at 30.) However, the statement clearly stated that
there was a premium due "08/04/96" of $133.50. (Belsole Certif., Ex. 16.)
We find that the statement was not misleading so as to create a waiver of
the August 4, 1996 premium due date.
We are also unpersuaded by Goduti-Moore's argument that the
announcement in the August 21, 1996 policy statement that the premium due
on the 4th was $133.50, instead of the $129.61 withdrawn under the
automatic system, established a new premium with a new due date. The
"Request for Guard-O-Matic Premium Arrangement Form," signed by Moore,
clearly stated: "If the Guard-O-Matic premium arrangement is terminated,
premiums falling due thereafter shall be payable directly to the Company
monthly at the monthly premium rate which would have been applicable to
the policy if it had not been placed under the Guard-O-Matic premium
arrangement."*fn5 (Id., Ex. 10 at A.) Accordingly, we find that the
addition of less than four dollars to the premium, as a result of the
termination of the automatic withdrawal system and as agreed to by
Moore, did not alter the premium due date.
Finally, Goduti-Moore mistakenly argues that the Policy could not lapse
because Guardian Life did not send an appropriate warning notice to
Moore. (See Def.'s Br. in Supp. at 34.) Under New York law, a life
insurance policy cannot lapse unless the insurance company provides
notice to the insured at least fifteen days before payment of premium is
due. See N.Y. Ins. Law § 3211. However, the statute does not apply if
the premiums are due monthly. Id. § 3211(f)(2); Brecher, 501 N.Y.S.2d
at 882 (holding that automatic withdrawal of premium payments from bank
account on a monthly basis fell within the exception to the statute). In
addition, a New York insurer does not have to provide notice to an
insured living in another state. See Kaplan v. The Equitable Life Assur.
Soc. of the U.S., 177 Misc. 792, 31 N.Y.S.2d 972, 975 (N.Y.Sup.Ct.
1940), aff'd 261 A.D. 1067, 27 N.Y.S.2d 780 (N.Y.App. Div. 1941).
Accordingly, we will grant the summary judgment motion by Guardian
Life, and the summary judgment motion by Goduti-Moore is therefore moot.
We will next examine the summary judgment motion brought by third-party
defendants Beckett and NPC.*fn6
II. Summary Judgment Motion by Beckett and NPC
Goduti-Moore alleges that Beckett*fn7 breached his duty as a broker to
keep Moore informed of pertinent information with respect to his policies
with Guardian Life. (Third-Party Compl. ¶ 57.) In particular,
Goduti-Moore alleges that Beckett had a duty to provide notice to Moore
that the Policy was lapsing. (Id. ¶ 57, 62, 69.) Goduti-Moore also
alleges that Beckett violated his Field Representative Agreement with
Guardian Life and that Moore was a third-party beneficiary of said
agreement. (Am. Third-Party Compl. ¶ 93, 101.)
Under New Jersey law, one who holds himself out to the
public as an insurance broker is required to have the
degree of skill and knowledge requisite to the
calling. . . . If he neglects to procure the insurance
or if the policy is materially deficient . . . because
of his failure to exercise the requisite skill or
diligence, he becomes liable.
Glezerman v. Columbian Mut. Life Ins. Co., 944 F.2d 146, 149 (3d Cir.
1991) (quoting Rider v. Lynch, 42 N.J. 465, 475, 201 A.2d 561, 567
(1964)). Brokers have been found liable for failing to procure the
requested coverage. See, e.g., Brill v. Guardian Life Ins. Comp. of
America, 142 N.J. 520, 544, 666 A.2d 146, 158 (1995). However, under New
York law, a broker does not have a duty "to advise, guide or direct an
insured's coverage after a broker has complied with his obligation to
obtain insurance coverage on behalf of an insured." Blonsky v. Allstate
Ins. Co., 128 Misc.2d 981, 491 N.Y.S.2d 895, 897 (N.Y.Sup. Ct. 1985).
Thus, under New York law, Beckett did not have a duty to alert Moore that
the Policy would lapse if he did not pay the premium due on August 4,
In New Jersey, a special relationship between the broker and the
insured may create additional responsibilities on the part of the broker
beyond exercising the requisite skill in procuring insurance. Glezerman,
944 F.2d at 151. In Glezerman, the broker had a practice of informing the
decedent when the annual premium was due. Id. at 147. The premiums
themselves were sometimes paid directly to the broker, including one for
$15,000. Id. at 148. The broker would notify the decedent as to which
financial account to use to pay the premium. Id. The broker and the
decedent also established a special procedure whereby the broker would
alert the decedent as the grace period drew to a close so that the
decedent could pay the premium at the very last moment. Id. The plaintiff
in Glezerman alleged that the broker failed to inform the decedent that
his policy had lapsed, thus preventing the decedent from making a special
late payment to reinstate the policy. Id. at 149. The Third Circuit held
that the special relationship between the decedent and the broker, if
true, established the "something more" required by New Jersey law to
create additional responsibilities on the broker. Id. at 150. The court
consequently reversed the district court's grant of summary judgment to
the defendant broker. Id. at 155.
Unlike Glezerman, Beckett and Moore did not have a special relationship
that would place additional responsibilities on Beckett. Moore paid the
premiums directly to Guardian Life and did not rely on Beckett to tell him
when to make the payments. There is no evidence in the record that
Beckett ever contacted Moore about the pending expiration of a grace
period. In addition, we note that the broker in Glezerman communicated
with his clients about the pending expiration of a grace period for a
premium due on an annual basis. In contrast, Moore paid his premiums on a
monthly basis through the automatic withdrawal system. It would be unduly
onerous for brokers to warn every client who misses a monthly premium due
date that the client must pay the amount by the end of the grace period
or face forfeiture. Finally, we note that the plaintiff in Glezerman
alleged that the broker failed to notify the decedent of a policy that
had lapsed. Goduti-Moore, in contrast, alleges that Beckett should have
alerted Moore that the Policy would lapse if he did not pay the premium.
(Third-Party Compl. ¶ 57.) Goduti-Moore has not pointed to any
such a duty. In accordance with our analysis of New Jersey and New York
law, we find that Beckett did not have a duty to inform Moore that the
Policy would lapse at the end of the grace period.
We also reject Goduti-Moore's argument that Beckett violated his Field
Representative Agreement ("Agreement") with Guardian Life and that Moore
was a third-party beneficiary of the Agreement. Goduti-Moore alleges that
Beckett violated a clause in the Agreement that required him to "aid in
the maintenance of insurance in force" to the detriment of Moore. (Am.
Third-Party Compl. ¶ 97, 101.) However, Moore was a third-party
beneficiary to the Agreement only if Guardian Life and Beckett intended
him to be. See Broadway Maintenance Corp. v. Rutgers, 90 N.J. 253, 259,
447 A.2d 906, 909 (1982) ("[T]he real test [of whether a third-party
beneficiary is created] is whether the contracting parties intended that
a third party should receive a benefit which might be enforced in the
courts."); see also Mortise v. United States, 102 F.3d 693, 697 (2d Cir.
1996) (applying New York law) ("Generally, only an intended beneficiary
of a contract may assert a claim as a third-party beneficiary."). Our
reading of the Agreement does not reveal any evidence that either Beckett
or Guardian Life intended that an insured receive a benefit from the
Agreement that could be enforced in court. (See Belsole Certif., Ex. 7 at
E: Field Representative Agreement.) It may be true that Moore was an
incidental beneficiary of the Agreement but that alone is not enough to
make him a third-party beneficiary. Accordingly, we will grant
third-party defendants' motion for summary judgment.