COLFORD v. CHUBB LIFE INS. CO. OF AMERICA
8/13/1996
Chubb Life Insurance Company of America (Chubb) appeals from a judgment entered in the Superior Court (Somerset County, Kravchuk, J.) awarding plaintiff Carroll Colford compensatory and consequential damages for the breach of an insurance contract. Chubb contends that the court erred as a matter of law in concluding that two conditions of the contract issued to Colford, conditions that Colford did not meet, did not preclude contract recovery. Colford cross-appeals from the judgment notwithstanding the verdict in favor of Chubb on Colford's claim for intentional infliction of emotional distress and an award of punitive damages. Colford contends that Chubb did not properly preserve the contract issue, that in any event the court correctly construed the contract, that there was sufficient evidence to support the emotional distress claim and, therefore, the court erred in setting aside the jury's verdict and assessment of emotional distress and punitive damages. We conclude that Chubb properly preserved the issue of the validity of the contract. The formation of a binding insurance contract with Colford was contingent on Colford being "acceptable on that date under the Company's rules . . . for the [plan] and benefits . . . applied for." Because those conditions were not satisfied, there was no contract in effect and thus there was no breach of contract. Accordingly, we vacate the judgment on the breach of contract claim. Because Chubb's conduct does not rise to the level of outrageousness necessary to support a claim of intentional infliction of emotional distress, we affirm the judgment notwithstanding the verdict on that claim and on the award of punitive damages.
Carroll Colford was a self-employed insurance sales agent who sold policies for a number of insurance carriers, including Chubb. On April 22, 1991, Colford applied for disability insurance with Chubb. Colford applied for coverage providing a benefit amount of $2000 per month, payable in the event he became permanently disabled. Colford also applied for the additional "own occupation" benefit available under the plan, which covers the insured if he becomes disabled and unable to perform his listed occupation, even if he is not disabled for purposes of other types of work. On that date, Colford was given a one-page "Receipt and Conditional Insurance Agreement." The conditional receipt states in pertinent part:
1. DATE INSURANCE BEGINS. The insurance will begin on the
latest of the date of the Receipt, the date of the Application,
or the date of the last Medical Application, Part II, required
by the Company on all persons proposed for insurance SUBJECT TO
THESE TERMS AND CONDITIONS AND THOSE OF THE POLICY APPLIED FOR.
a. An advance payment at least equal to one month's premium
must be made in exchange for the completed receipt which
bears the same date and number as the application; it cannot
be less than $50.00; and
b. All persons proposed for insurance are acceptable on that
date under the Company's rules for standard rates for the
plan, benefits and amounts applied for.
2. DATE INSURANCE ENDS. Insurance will end on the earliest of
these dates, if it begins under the Conditional Insurance
Agreement:
a. 60 days after the date of the receipt;
. . . .
c. The date the advance payment is mailed to the Owner;
d. The date the policy is issued and delivered to the Owner
on a standard basis; the first premium must be paid in full.
3. PREMIUM REFUND. Return of the advance payment will be made
to the Owner, if insurance is declined, or the policy,
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