Jagdish M. SANGHAVI
The PAUL REVERE LIFE INSURANCE COMPANY.
Argued Jan. 4, 1990.
J. Kevin Golger, Fairfield, for appellant-appellee (defendant).
Richard J. Shapiro, Bridgeport, for appellee-appellant (plaintiff).
Before PETERS, C.J., and ARTHUR H. HEALEY, CALLAHAN, GLASS and COVELLO, JJ.
[214 Conn. 304] GLASS, Associate Justice.
This appeal concerns the interpretation and application of certain provisions of an income option rider (rider) to a disability insurance policy that was issued by the defendant, The Paul Revere Life Insurance Company (Paul Revere), to the plaintiff, Jagdish Sanghavi.
The parties have agreed, by a stipulation of facts dated October 13, 1987, that Paul Revere issued to Sanghavi a disability policy on July 7, 1976, that provided for indemnity benefits of $600 per month during the period of disability. For additional consideration, Paul Revere issued a rider to the policy that provided for seven future income options, each in the amount of $100 per month, that could be exercised by Sanghavi pursuant to the terms and conditions of the policy until July 7, 1990. Specifically, the rider stated that monthly payments would be increased, regardless of the status of Sanghavi's health, provided that he met the following four conditions:
"1. That the insured submit a written request and pay an additional premium, unless the premium is waived, within prescribed time limits.
"2. The requested increase cannot exceed the maximum disability income coverage then being offered by [214 Conn. 305] the company to new applicants of the same classification of risk as is the insured, according to the company's then published underwriting and participation limits.
"3. The insured's monthly earned income is sufficient to qualify for an increase on the anniversary option date according to the company's then published income limits.
"4. The insured may exercise only one increase during each period of the continuous disability regardless of the number of anniversary options which become due during such disability."
On July 7, 1978, Sanghavi completed and forwarded an application to exercise the first option pursuant to the rider. His application was approved and his monthly benefit was increased by $100 to $700 per month.
In February, 1979, Sanghavi was declared to be totally disabled and has remained totally disabled since that time. In accordance with the policy, Paul Revere has paid Sanghavi $700 per month because of his disability and continues to make such payments to him. By correspondence dated May 24, 1982, Sanghavi attempted to exercise two options to purchase additional monthly benefits which, if granted, would have increased his monthly benefits to $900. Paul Revere, however, refused to honor Sanghavi's request, claiming, pursuant to condition three of the rider: (1) that Sanghavi failed to provide adequate information concerning his income and other sources of disability insurance; and (2) that Sanghavi's income was insufficient to warrant such an increase in monthly benefits.
Sanghavi then commenced this action by filing a three count complaint dated June 1,
1983. In the first count, he alleged that Paul Revere breached its contract with him by not increasing his monthly benefits in accordance with the rider. The second count alleged [214 Conn. 306] that Paul Revere's issuance of the insurance policy and refusal to grant increased benefits constituted a violation of General Statutes § 42-110b, the Connecticut Unfair Trade Practices Act (CUTPA). In his third count, Sanghavi sought a declaratory judgment entitling him to all indemnity increases that would have fallen due subsequent to the commencement of the action.
By memorandum of decision dated June 13, 1988, the state trial referee, Hon. Milton J. Herman, found in favor of Sanghavi as to the first and third counts and as to Paul Revere on the second count. In particular, the trial court found that conditions three and four of the rider were invalid, and, as a result, retroactively awarded Sanghavi the two increase options that he attempted to exercise on May 24, 1982. The trial court also held, pursuant to the third count, that Sanghavi was entitled to all future increase options as they became due. Finally, the trial court found "nothing in the stipulated factual situation to support" Sanghavi's CUTPA claim. Each ...