NOT PRECEDENTIAL
UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT
No. 23-2606
American Builders Insurance Company, Appellant
v.
Keystone Insurers Group, Inc.; Ebensburg Insurance Agency
Ebensburg Insurance Agency, Third Party Plaintiff
Custom Installations & Contracting Services, Third Party Defendant
On Appeal from United States District Court for the Middle District of Pennsylvania (D.C. Civil No. 4-19-cv-01497) District Judge: Honorable Matthew W. Brann
Submitted Pursuant to Third Circuit L.A.R. 34.1(a) June 7, 2024
Before: CHAGARES, Chief Judge, CHUNG, and FISHER, Circuit Judges.
(Filed: August 22, 2024)
OPINION*
* This disposition is not an opinion of the full Court and pursuant to I.O.P. 5.7 does not constitute binding precedent. FISHER, Circuit Judge.
American Builders Insurance Company appeals the District Court’s entry of
summary judgment in favor of Ebensburg Insurance Agency. American Builders’ claims
were barred by Pennsylvania’s two-year statute of limitations, so we will affirm.1
I.2
Pennsylvania law states that “a cause of action accrues when the plaintiff could
have first maintained the action to a successful conclusion.”3 So “the statute of limitations
begins to run as soon as the right to institute and maintain a suit arises.”4 “[L]ack of
knowledge, mistake or misunderstanding do not toll the running of the statute of
1 The District Court had subject matter jurisdiction under 28 U.S.C. § 1332(a)(1) (diversity of citizenship). We exercise appellate jurisdiction under 28 U.S.C. § 1291 (final decisions of the district court). Following entry of summary judgment, Keystone Insurers Group’s (entity that connected Ebensburg with American Builders) crossclaim against Ebensburg as well as Ebensburg’s third-party complaint against Custom Installation Contracting Services (contracting company) remained pending in the District Court. And American Builders filed its notice of appeal prematurely, before the District Court certified its order granting summary judgment as final under Federal Rule of Civil Procedure 54(b). We granted a limited remand, however, for that certification to properly occur. Once it did, this premature appeal became jurisdictionally valid. Instructional Sys. v. Comput. Curriculum Corp., 35 F.3d 813, 818 & nn.8–9 (3d Cir. 1994). 2 We exercise plenary review over a district court’s grant of summary judgment, and apply the same standard as the district court must apply. Huber v. Simon’s Agency, Inc., 84 F.4th 132, 144 (3d Cir. 2023). We also exercise plenary review over a district court’s application of the statute of limitations and the relevant tolling principles. Sheet Metal Workers Local 19 v. 2300 Grp., Inc., 949 F.2d 1274, 1278 (3d Cir. 1991). 3 Fine v. Checcio, 870 A.2d 850, 857 (Pa. 2005). 4 Id.
2 limitations.”5 Generally, the right to sue arises upon the infliction of an injury, but
“[t]here are exceptions that act to toll the running of a statute of limitations.”6 Two such
exceptions are the discovery rule and the doctrine of fraudulent concealment.7 The
District Court properly applied the discovery rule, and the doctrine of fraudulent
concealment cannot resurrect American Builders’ untimely claims.
The Pennsylvania Supreme Court has explained that the discovery rule is based on
“inquiry notice.”8 So whether the statute of limitations has been triggered is tied to the
plaintiff’s “actual or constructive knowledge of at least some form of significant harm
and of a factual cause linked to another’s conduct, without the necessity of notice of the
full extent of the injury, the fact of actual negligence, or precise cause.”9 Once the
plaintiff has been put on sufficient notice to “awaken inquiry and suggest investigation”
into the circumstances of the injury, the statute of limitations begins to run.10 “The party
seeking to invoke the discovery rule bears the burden of establishing the inability to know
of the injury despite the exercise of reasonable diligence.”11
5 Pocono Int’l Raceway, Inc. v. Pocono Produce, Inc., 468 A.2d 468, 471 (Pa. 1983). 6 Fine, 870 A.2d at 858. 7 Id. 8 Rice v. Diocese of Altoona-Johnstown, 255 A.3d 237, 249 (Pa. 2021). 9 Id. at 251. 10 Beauty Time v. VU Skin Sys., Inc., 118 F.3d 140, 144 (3d Cir. 1997). 11 Dalrymple v. Brown, 701 A.2d 164, 167 (Pa. 1997) (citing Pocono, 468 A.2d at 471).
3 The District Court held that American Builders was on inquiry notice as to the
injury it suffered as of September 14, 2015. We agree. James Scott was injured on
September 8, 2015. By the next week, internal American Builders emails showed that the
company was aware of the fall and, given the circumstances of the fall, the inaccurate
information contained in Custom’s application. American Builders was also aware that
Custom’s application was submitted through eQuotes, and that Ebensburg had sole access
to that system for purposes of Custom’s application. Based on these undisputed facts, the
District Court reasonably found that “by September 14, 2015, [American Builders] was
aware that (1) someone submitted false information to it via eQuotes and (2) only
Ebensburg, and not Custom, had access to the eQuotes system.”12 We agree that “those
facts are sufficient to give [American Builders] inquiry notice of its potential claims
against Ebensburg because it knew that Ebensburg had sole access to the mechanism that
caused its injury.”13
Both Ebensburg and Custom, then, were potential defendants. American Builders
wrongly assumed, however, that Custom was the sole source of the misrepresentation and
ultimately filed suit only against Custom. The District Court correctly held that
“[American Builders] doesn’t identify a basis for that assumption, much less one
sufficient to invoke equitable tolling.”14
12 App. 25. 13 Id. 14 Id. at 26.
4 II.
American Builders argues that the related doctrines of inherent fraud and
fraudulent concealment should have estopped Ebensburg from invoking the statute of
limitations. But neither doctrine saves American Builders’ claims.
Under Pennsylvania law, the doctrine of inherent fraud tolls the accrual of a claim
where “the underlying events are based upon fraud or deceit.”15 “[T]he statute of
limitations is tolled by the tortious conduct, without any further action by the wrongdoer,
until the fraud should have been discovered by the plaintiffs.”16 “To prove inherent
fraud,” a plaintiff must establish that: (1) “the defendant made a representation in regard
to a material fact;” (2) “the representation was false;” (3) “the representation was not
actually believed by the defendant, on reasonable grounds, to be true;” (4) the plaintiff
“acted on the misrepresentation to his damage;” and (5) the plaintiff “was not only
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NOT PRECEDENTIAL
UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT
No. 23-2606
American Builders Insurance Company, Appellant
v.
Keystone Insurers Group, Inc.; Ebensburg Insurance Agency
Ebensburg Insurance Agency, Third Party Plaintiff
Custom Installations & Contracting Services, Third Party Defendant
On Appeal from United States District Court for the Middle District of Pennsylvania (D.C. Civil No. 4-19-cv-01497) District Judge: Honorable Matthew W. Brann
Submitted Pursuant to Third Circuit L.A.R. 34.1(a) June 7, 2024
Before: CHAGARES, Chief Judge, CHUNG, and FISHER, Circuit Judges.
(Filed: August 22, 2024)
OPINION*
* This disposition is not an opinion of the full Court and pursuant to I.O.P. 5.7 does not constitute binding precedent. FISHER, Circuit Judge.
American Builders Insurance Company appeals the District Court’s entry of
summary judgment in favor of Ebensburg Insurance Agency. American Builders’ claims
were barred by Pennsylvania’s two-year statute of limitations, so we will affirm.1
I.2
Pennsylvania law states that “a cause of action accrues when the plaintiff could
have first maintained the action to a successful conclusion.”3 So “the statute of limitations
begins to run as soon as the right to institute and maintain a suit arises.”4 “[L]ack of
knowledge, mistake or misunderstanding do not toll the running of the statute of
1 The District Court had subject matter jurisdiction under 28 U.S.C. § 1332(a)(1) (diversity of citizenship). We exercise appellate jurisdiction under 28 U.S.C. § 1291 (final decisions of the district court). Following entry of summary judgment, Keystone Insurers Group’s (entity that connected Ebensburg with American Builders) crossclaim against Ebensburg as well as Ebensburg’s third-party complaint against Custom Installation Contracting Services (contracting company) remained pending in the District Court. And American Builders filed its notice of appeal prematurely, before the District Court certified its order granting summary judgment as final under Federal Rule of Civil Procedure 54(b). We granted a limited remand, however, for that certification to properly occur. Once it did, this premature appeal became jurisdictionally valid. Instructional Sys. v. Comput. Curriculum Corp., 35 F.3d 813, 818 & nn.8–9 (3d Cir. 1994). 2 We exercise plenary review over a district court’s grant of summary judgment, and apply the same standard as the district court must apply. Huber v. Simon’s Agency, Inc., 84 F.4th 132, 144 (3d Cir. 2023). We also exercise plenary review over a district court’s application of the statute of limitations and the relevant tolling principles. Sheet Metal Workers Local 19 v. 2300 Grp., Inc., 949 F.2d 1274, 1278 (3d Cir. 1991). 3 Fine v. Checcio, 870 A.2d 850, 857 (Pa. 2005). 4 Id.
2 limitations.”5 Generally, the right to sue arises upon the infliction of an injury, but
“[t]here are exceptions that act to toll the running of a statute of limitations.”6 Two such
exceptions are the discovery rule and the doctrine of fraudulent concealment.7 The
District Court properly applied the discovery rule, and the doctrine of fraudulent
concealment cannot resurrect American Builders’ untimely claims.
The Pennsylvania Supreme Court has explained that the discovery rule is based on
“inquiry notice.”8 So whether the statute of limitations has been triggered is tied to the
plaintiff’s “actual or constructive knowledge of at least some form of significant harm
and of a factual cause linked to another’s conduct, without the necessity of notice of the
full extent of the injury, the fact of actual negligence, or precise cause.”9 Once the
plaintiff has been put on sufficient notice to “awaken inquiry and suggest investigation”
into the circumstances of the injury, the statute of limitations begins to run.10 “The party
seeking to invoke the discovery rule bears the burden of establishing the inability to know
of the injury despite the exercise of reasonable diligence.”11
5 Pocono Int’l Raceway, Inc. v. Pocono Produce, Inc., 468 A.2d 468, 471 (Pa. 1983). 6 Fine, 870 A.2d at 858. 7 Id. 8 Rice v. Diocese of Altoona-Johnstown, 255 A.3d 237, 249 (Pa. 2021). 9 Id. at 251. 10 Beauty Time v. VU Skin Sys., Inc., 118 F.3d 140, 144 (3d Cir. 1997). 11 Dalrymple v. Brown, 701 A.2d 164, 167 (Pa. 1997) (citing Pocono, 468 A.2d at 471).
3 The District Court held that American Builders was on inquiry notice as to the
injury it suffered as of September 14, 2015. We agree. James Scott was injured on
September 8, 2015. By the next week, internal American Builders emails showed that the
company was aware of the fall and, given the circumstances of the fall, the inaccurate
information contained in Custom’s application. American Builders was also aware that
Custom’s application was submitted through eQuotes, and that Ebensburg had sole access
to that system for purposes of Custom’s application. Based on these undisputed facts, the
District Court reasonably found that “by September 14, 2015, [American Builders] was
aware that (1) someone submitted false information to it via eQuotes and (2) only
Ebensburg, and not Custom, had access to the eQuotes system.”12 We agree that “those
facts are sufficient to give [American Builders] inquiry notice of its potential claims
against Ebensburg because it knew that Ebensburg had sole access to the mechanism that
caused its injury.”13
Both Ebensburg and Custom, then, were potential defendants. American Builders
wrongly assumed, however, that Custom was the sole source of the misrepresentation and
ultimately filed suit only against Custom. The District Court correctly held that
“[American Builders] doesn’t identify a basis for that assumption, much less one
sufficient to invoke equitable tolling.”14
12 App. 25. 13 Id. 14 Id. at 26.
4 II.
American Builders argues that the related doctrines of inherent fraud and
fraudulent concealment should have estopped Ebensburg from invoking the statute of
limitations. But neither doctrine saves American Builders’ claims.
Under Pennsylvania law, the doctrine of inherent fraud tolls the accrual of a claim
where “the underlying events are based upon fraud or deceit.”15 “[T]he statute of
limitations is tolled by the tortious conduct, without any further action by the wrongdoer,
until the fraud should have been discovered by the plaintiffs.”16 “To prove inherent
fraud,” a plaintiff must establish that: (1) “the defendant made a representation in regard
to a material fact;” (2) “the representation was false;” (3) “the representation was not
actually believed by the defendant, on reasonable grounds, to be true;” (4) the plaintiff
“acted on the misrepresentation to his damage;” and (5) the plaintiff “was not only
ignorant of the falsity of the representation, but also reasonably believed it to be true.”17
American Builders cannot make this showing because Ebensburg did not know the
information it supplied to American Builders was incorrect at the time. Ebensburg
submitted Custom’s insurance application and supplemental responses to American
Builders weeks before it learned—through Custom’s responses to the Eastern Alliance
15 Sheet Metal, 949 F.2d at 1280 (citing Gee v. CBS, Inc., 471 F. Supp. 600, 622 (E.D. Pa. 1979)). 16 Beauty Time, 118 F.3d at 147. 17 Sheet Metal, 949 F.2d at 1280 (internal citations and quotation marks omitted).
5 Insurance Group18 supplemental questionnaire—that Custom worked at a maximum
height of twenty feet (rather than fifteen feet) and fifty percent of its work involved
“working on rooftops.” Therefore, when it submitted Custom’s application and
supplemental responses to American Builders, Ebensburg had reasonable grounds to
believe the information it submitted was true. That negates one of the required elements
of inherent fraud: that the representation was not reasonably believed by the defendant.19
Nor does the doctrine of fraudulent concealment toll the statute of limitations. This
doctrine is related to, but distinct from, inherent fraud. Fraudulent concealment does not
depend on a defendant’s underlying action, which is at the center of the lawsuit, being
fraudulent.20 Instead, it requires that after the underlying events occurred—whether those
underlying events were fraudulent or not—the defendant fraudulently concealed those
events.21 This doctrine estops the defendant from invoking the statute of limitations
where, “through fraud or concealment, the defendant causes the plaintiff to relax his
vigilance or deviate from his right of inquiry.”22 “The plaintiff has the burden of proving
fraudulent concealment by clear, precise, and convincing evidence.”23
18 Eastern is another company to which Ebensburg applied on Custom’s behalf. 19 Sheet Metal, 949 F.2d at 1280. 20 Beauty Time, 118 F.3d at 146. 21 Id. 22 Molineux v. Reed, 532 A.2d 792, 794 (Pa. 1987) (internal quotation marks and citation omitted). 23 Fine, 870 A.2d at 860.
6 American Builders claims that the District Court conflated the discovery rule and
the doctrine of fraudulent concealment. We cannot agree. While the two legal principles
are distinct, they are related.24 And the District Court recognized that they are similar in a
fundamental way: both involve the same inquiry into what a plaintiff knew or should
have known.25 This Court has applied those identical due diligence standards in both
contexts for decades.26
American Builders argues at length, as it did before the District Court, that
Ebensburg fraudulently concealed the information it subsequently learned through
Custom’s Eastern supplemental questionnaire. But those assertions do not change the fact
that American Builders was on inquiry notice of the injury it suffered as of September 14,
2015. That reality forecloses American Builders’ reliance on the doctrine of fraudulent
concealment.27 Because American Builders knew, or should have known, that it had a
24 Rice, 255 A.3d at 249. 25 Fine, 870 A.2d at 861 (“[A] statute of limitations that is tolled by virtue of fraudulent concealment begins to run when the injured party knows or reasonably should know of his injury and its cause.”); Rice, 255 A.3d at 252 (“identical due diligence standard[s]” apply under both the discovery rule and the doctrine of fraudulent concealment). 26 Mest v. Cabot Corp., 449 F.3d 502, 516 (3d Cir. 2006) (“Like the discovery rule, the fraudulent concealment doctrine does not toll the statute of limitations where the plaintiff knew or should have known of his claim despite the defendant’s misrepresentation or omission.”); Beauty Time, 118 F.3d at 144 (“Courts employ the same ‘knew or should have known’ standard whether the statute is tolled because of the discovery rule or because of fraudulent concealment.” (citation omitted)); Urland v. Merrell-Dow Pharms., Inc., 822 F.2d 1268, 1273 (3d Cir. 1987) (same). 27 Fine, 870 A.2d at 861; Mest, 449 F.3d at 516.
7 claim against Ebensburg in September 2015, the doctrine of fraudulent concealment does
not toll the statute of limitations.
III.
Finally, we agree with the District Court that American Builders’ claims were
time-barred as a matter of law. True, “the determination concerning the plaintiff’s
awareness of the injury and its cause is fact intensive, and therefore, ordinarily is a
question for a jury to decide.”28 “However, courts may resolve the matter at the summary
judgment stage where reasonable minds could not differ on the subject.”29 The District
Court correctly found that the relevant facts here are beyond dispute.
To briefly recount, Ebensburg submitted Custom’s American Builders’ application
through eQuotes in May 2015. American Builders issued a policy to Custom through
Ebensburg that July, and learned of Scott’s fall and the apparent misrepresentations that
September. Once American Builders learned of Scott’s fall, it “was aware of sufficient
critical facts” to notice American Builders of its injury and duty to investigate.30 That is
all that is required for inquiry notice, and so summary judgment was appropriate.
VI.
For these reasons, we will affirm.
28 Wilson v. El-Daief, 964 A.2d 354, 362 (2009). 29 Id.; see also Adams v. Zimmer US, Inc., 943 F.3d 159, 164 (3d Cir. 2019). 30 Vitalo v. Cabot Corp., 399 F.3d 536, 543 (3d Cir. 2005).