Snow, Christensen & Martineau Secures Appellate Court Victory

Snow, Christensen & Martineau Secures Appellate Court Victory

Richard A. Vazquez helped secure affirmance of successful trial court summary judgment decisions on coverage and bad faith claims asserted against Scottsdale Insurance Company, the commercial liability insurance carrier for a commercial tenant who experienced flood damage.

The Honorable Stephen Roth writing in a memorandum decision for a unanimous panel of the Utah Court of Appeals, held that an insurer’s duty to investigate third-party claims only exists to protect the express covenants and promises found in an insurance policy’s language, and a carrier’s investigation alone is not actionable absent a breach of or unreasonable performance of those covenants.  The Court also found that an insurer has no affirmative duty to inform an insured that the insured’s claim could have been more appropriately made under different insurance policy issued to the insured by different carrier.  In dicta, the Court also strongly implied that Utah would impose a requirement of showing “actual harm” as a precondition for establishing a claim of bad faith against an insurer.

The Court of Appeals affirmed the trial court’s findings that Scottsdale, in timely and completely providing all benefits due the insured under the express terms of its liability policy in connection with the flood, could not be held liable for the policyholder’s subjective belief that Scottsdale failed to properly investigate the insured’s liability claim which instead should have been initially submitted as a property claim to the insured’s property carrier. Nor could Scottsdale be liable for failing to describe to the insured the type of policy under which the insured made a claim.

The case is Colony Ins. v. The Human Ensemble, LLC, 2013 UT App 68 (Utah Ct. App. March 14, 2013)