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Pappano v. Chevy Chase Bank8/30/2002
In this appeal, Martha K. Pappano, plaintiff below and appellant here, challenges the entry of summary judgment by the Circuit Court for Montgomery County in favor of appellees, Chevy Chase, F.N.B. and Chevy Chase Financial Services, Inc. (collectively, "the Bank"); American General Assurance Company, Security of America Life Insurance Company, United States Life Insurance Company, USLIFE Indemnity Company, USLIFE Credit Life Insurance Company (collectively, "American General"); and Union Security Life Insurance Company.
The basis for summary judgment was the trial court's finding that appellant's complaint was barred by the statute of limitations. Hence, we are presented with a single issue, which we rephrase for simplicity, as follows:
Did the trial court err in ruling that appellant's suit was barred by the statute of limitations?
We shall answer the question in the positive and reverse.
FACTUAL AND PROCEDURAL BACKGROUND
In 1990, appellant, Martha K. Pappano, and her husband, Leonard Anthony Pappano, applied to Chevy Chase Bank for a home equity credit line to be secured by their Gaithersburg, Maryland residence. At the closing on October 9, 1990, Mr. and Mrs. Pappano expressed, by filling in certain sections of the printed settlement sheet, their desire for credit life insurance on both their lives. At that time the Bank had a group policy of credit life insurance issued by Security of America Life Insurance Company. As provided by the group policy, the Bank could offer up to $50,000 in credit life insurance to eligible borrowers. Credit life insurance is procured for the purpose of paying off all or part of an outstanding loan balance upon the death of an insured debtor of the lender. Any payment under the credit life policy would have been made directly to the Bank, to be applied to the then outstanding balance of the mortgage or home equity loan.
The Bank was responsible for processing and transmitting its customer's insurance applications to Security of America. Security of America issued a policy of credit life insurance on appellant's life, not on both as requested, effective October 9, 1990, for the maximum amount. Neither the Bank nor Security of America issued a policy or certificate, or other documentation of coverage, to the Pappanos subsequent to the 1990 closing. Their monthly statement from the Bank did contain a charge for insurance, which they regularly paid. The monthly charge, unbeknownst to the Pappanos, was for single insurance coverage on the life of appellant, not on their joint lives as she recalls that they requested.
On July 15, 1994, the Bank terminated its group policy with Security of America and thereafter offered its customers credit life insurance through Union Security Life. No notice of the change in the group policy was provided to the Pappanos.
In July 1994, the Pappanos applied to the Bank for an increase of their home equity line of credit. A closing was held on July 18, 1994 at which, according to appellant, she and her husband again elected credit life insurance on both of their lives. That request, however, is not conclusive because the settlement sheet does not indicate whether the Pappanos clearly expressed a desire for insurance. The form provided a space for a check-off of whether the borrowers desire credit life insurance. An "x" was placed on the form, but partially on the line for "yes" and partially on the line for "no." Also, where the settlement sheet states premium amounts for either single or joint coverage, respectively, no amounts were entered. As before, the monthly statement contained an amount for insurance, which was timely paid. As before, the Pa
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