Utah Desk Reference Tort & Insurance

“Fault” means any actionable breach of legal duty, act, or omission proximately causing or contributing to injury or damages sustained by a person seeking recovery. Recovery includes negligence in all its degrees, comparative negligence, assumption of risk, strict liability, breach of express or implied warranty of a product, products liability, and misuse, modification, or abuse of a product. U.C.A. § 78b-5-817(2). Under the Liability Reform Act, “fault” also includes non-negligent breaches of duty, such as the duty not to sell a defective product; the Act does not change or redefine the principles of the products liability doctrine. Bylsma v. R.C. Willey, 2017 UT 85, ¶ 7, 416 P.3d 595, 603. Recently, the Utah Supreme Court held the “statutory comparative liability regime” calls for apportionment of responsibility for intentional torts. Graves v. N. E. Servs., Inc., 2015 UT 28, ¶ 46, 345 P.3d 619. Biesele v. Mattena, 2019 UT 30, ¶ 18, 449 P.3d 1, 6 clarifies that apportionment of liability is not required by the factfinder, but will be mandated if one of the parties requests it. The court explains “the fact finder ‘may’ apportion liability ‘to each defendant’ (and to other persons listed by statute) and states specifically that the fact finder ‘shall’ do so only ‘when requested by a party.’” Id.

1.2 Tort Reform

Relevant Statutes

U.C.A. §§ 78b-5-817 to -823.

Notable Law

Utah’s legislature abolished joint and several liability and contribution among joint tortfeasors, and enacted the Liability Reform Act of 1986. Tort reform is based on concepts of “fault” and “causation.” U.C.A. §§ 78b-5-817 to -823.

Tort reform does not affect or impair any common law or statutory immunity from liability, including, but not limited to, governmental immunity and the exclusive remedy under workers’ compensation. It also does not affect or impair any right to indemnity or contribution arising from statute, contract, or agreement. U.C.A. § 78b-5-823.

Tort reform focuses on a “fault” analysis as defined by statute. Therefore, for purposes of assessing “fault,” any type of causative conduct which constitutes “fault” should be evaluated and compared. U.C.A. §§ 78b-5-817 to -823.

Under certain circumstances, jurors may be asked voir dire questions about their knowledge of and attitudes toward tort reform. Courts are allowed discretion in asking jurors tort reform voir dire questions, but that discretion must be exercised in order to detect biases or prejudice in prospective jurors. Barrett v. Peterson, 868 P.2d 96, 100-01 (Utah Ct. App. 1993). But see Smith v. Vicorp, Inc., 107 F.3d 816, 817 (10th Cir. 1997) (noting the distinction between the grant of discretion in Utah courts and in federal courts by stating, “Utah law, requiring tort reform voir dire and specifically prescribing the contours of such, conflicts with the broad discretion vested in federal judges to control the scope and extent of voir dire.”). In some cases, failure to permit a party to ask voir dire questions relating to tort reform may constitute reversible error. See Alcazar v. Univ. of Utah Hospitals & Clinics, 2008 UT App 222, ¶¶ 15-18, 188 P.3d 490.

Under the Liability Reform Act, fault may be apportioned to unnamed parties and to parties who are immune from suit. See, e.g., Thayer v. Washington County Sch. Dist., 2012 UT 31, ¶¶ 64-65, 285 P.3d 1142 (Lee, J., dissenting) (discussing apportionment for immune and non-immune governmental activities). The Liability Reform Act applies the comparative fault doctrine under which a joint tortfeasor pays only an amount proportionate to its fault. Chevron Pipe Line Co. v. Pacificorp, No. 2:12-CV-287-TC, 2016 WL 6998641, at *1 (D. Utah Nov. 29, 2016). Therefore, “[n]o defendant is liable to any person seeking recovery for any amount in excess of the proportion of fault attributed to that defendant[.]”). U.C.A. § 78b-5-818(3).

Intentional conduct and strict liability can also be included in the apportionment. In a motor vehicle accident, however, the existence of an unidentified motor vehicle must be proven by clear and convincing evidence. However, that clear and convincing evidence may consist solely of one person’s testimony. See U.C.A. § 78b-5-818.

A defendant is not entitled to contribution from any other person. U.C.A. § 78b-5-820(2). However, this Act does not affect claims of contribution or indemnity arising under statute, contract, or agreement. See U.C.A. § 78b-5-823. Notably, the statute also does not permit a defendant to bring a civil action against an immune party even though fault may otherwise be apportioned under the act. U.C.A. § 78b-5-820(3).

The joint enterprise theory of liability does not apply when all the participants are simply involved in a pleasurable, non-commercial excursion. See Farmers Ins. Exch. v. Parker, 936 P.2d 1088, 1090-91 (Utah Ct. App. 1997) (group leader not found personally negligent for hiking accident; thus, no liability was imposed on him).

Generally, Utah courts have not been amenable to the suggestion that the Liability Reform Act precludes application of the doctrine of superseding cause, which eliminates the fault of the other parties. Gardner v. SPX Corp., 2012 UT App 45, ¶¶ 34-36, 272 P.3d 175.

1.3 Comparative Negligence

A person seeking recovery may recover from any defendant or group of defendants whose “fault” exceeds his own. If his fault is equal to or greater than the fault of the defendant prior to the reallocation of fault pursuant to statute, then his recovery is barred. U.C.A. § 78b-5-818(2); see also U.C.A. § 78b-5-819 (setting out the standard for reallocation of fault).

Typically, the maximum amount for which a defendant may be liable to any person seeking recovery is that percentage or proportion of the damages equivalent to the percentage or proportion of fault attributed to that defendant. U.C.A. § 78b-5-820(1).

No defendant is liable to any person seeking recovery for any amount in excess of the proportion of fault attributable to that defendant. U.C.A. § 78b-5-818(3).

If the fault attributed to immune defendants is less than 40%, that percentage will be reduced to zero and the trial court will reallocate this percentage to other parties in proportion to their fault. After reallocation, cumulative fault will equal 100% with those immune being allocated no fault. Therefore, no defendant is entitled to contribution. A person immune from suit may not be held liable in any action. U.C.A. §§ 78b-5-818 to -820.

An appellate court can reverse a trial court’s dismissal of a negligence claim when the trial court apparently based its decision on comparative negligence principles and Utah’s Comparative Negligence Act, but failed to adequately explain its reasoning. Gabriel v. Salt Lake City Corp., 2001 UT App 277, ¶ 20, 34 P.3d 234; Russell/Packard Dev., Inc. v. Carson, 2003 UT App 316, ¶ 10 n.6, 78 P.3d 616 (an appellate court can reverse solely based on a district court’s failure to explain the basis of its decision).

Utah’s Liability Reform Act requires the fault of an immune employer who is less than 40% at-fault to be reallocated amongst all other at-fault parties. This Act supersedes the common law doctrine of respondeat superior (doctrine holding that employers are vicariously liable for employees’ acts committed within the scope of employment). A plaintiff-employee’s fault is not combined with nor reallocated to its immune employer’s fault for purposes of determining whether the employer is less than 40% at-fault. The immune employer’s fault is allocated on a proportional basis to remaining at-fault parties, using the percentages of fault apportioned to each party of the total remaining fault. Bishop v. GenTec Inc., 2002 UT 36, ¶ 16, 48 P.3d 218; see also U.C.A. § 78b-5-819(2).

The Liability Reform Act limits a party’s liability to its proportion of fault, but it does not prohibit fact-finders from assigning liability to a party under a claim for strict liability. U.C.A. § 78b-5-817(2); Egbert v. Nissan Motor Co., Ltd., 2010 UT 8, ¶36, 228 P.3d 737 (“Utah’s statute contains an explicit legislative intent and declaration that fault, in all its broadly defined forms, is always apportionable.”). See, e.g., S. H. ex rel. Robinson v. Bistryski, 923 P.2d 1376, 1382-83 (Utah 1996) (using Utah Liability Reform Act to apportion liability under Utah’s strict liability dog-bite statute and also a negligence theory); Red Flame, Inc. v. Martinez, 2000 UT 22, ¶ 10, 996 P.2d 540 (applying the Utah Liability Reform Act to apportion liability under Utah’s strict liability Dramshop Act).

A party may join as a defendant any person, other than one immune from suit, who may have caused or contributed to the injury or damage, for the purpose of having their respective proportions of fault determined. U.C.A. § 78b-5-821(1).

An employer may be joined for purposes of assessing proportionate fault. Apportionment of an employer’s fault does not subject the employer to liability, but ensures that no defendant is held liable to any claimant for an amount of damages in excess of the percentage of fault attributable to that defendant. U.C.A. § 78b-5-818(4); Dahl v. Kerbs Constr. Corp., 853 P.2d 887, 888 (Utah 1993).

Reallocation of fault to persons immune from suit is allowed only in cases where the fault of all parties immune from suit is less than 40 percent. See U.C.A. § 78b-5-819. See also U.C.A. § 78b-5-818(4)(a) (providing for the attribution of fault to immune persons when requested by a party).

Potentially liable parties must be joined in the initial litigation or allowed to participate in settlement negotiations to defend their interests. Otherwise, the possibility of recovery from liable parties who are excluded from such proceedings becomes very slim. Zions First Nat’l Bank, N.A. v. Fox & Co., 942 P.2d 324, 327 (Utah 1997) (refusing to “autopsy” a settlement after a party failed to include other potentially liable parties in settlement negotiations or litigate to allocate fault between the parties). While a person immune from suit may not be named as a party, statute and the Utah Rules of Civil Procedure allow such a party to intervene in the suit. U.C.A. § 78b-5-821(3).

Any fault allocated to a person immune from suit may only be considered in order to accurately determine the fault of the person seeking recovery. A defendant may not subject the person immune from suit to any liability, based on the allocation of fault. See generally U.C.A. § 78b-5-821 (discussing joinder of defendants).

If requested, the trial court must inform the jury of the legal consequences of apportioning 50% or more of the negligence to the plaintiff, so long as the effect of the instruction will not be to confuse or mislead the jury. Dixon v. Stewart, 658 P.2d 591, 596 (Utah 1982); Belden v. Dalbo, Inc., 752 P.2d 1317, 1319 (Utah Ct. App. 1988). In an action by an injured employee against multiple defendants, the employer may be included on the special verdict form, even though the employer is immune from suit under the workers’ compensation statutes. The jury may still apportion the immune employer its proportional share of fault in order to prevent the other non-immune defendants from exposure to liability in excess of their relative fault. U.C.A. § 78b-5-819 (providing for reallocation of fault only in cases where the fault of all parties immune from suit is less than 40 percent); Dahl v. Kerbs Constr. Corp., 853 P.2d 887, 888 (Utah 1993); see also U.C.A. § 78b-5-818(4)(a) (providing for the attribution of fault to immune persons when requested by a party).

The Utah Liability Reform Act bans suits for contribution in almost all circumstances. U.C.A. § 78b-5-820. See also Nat’l Serv. Indus. Inc. v. B.W. Norton Mfg. Co., Inc., 937 P.2d 551, 555-56 (Utah Ct. App. 1997) (noting that the act may also prohibit causes of action that merely circumvent the clear statutory ban on contribution).

Recently, the Utah Supreme Court rejected an argument that comparative fault would bar first-party recovery when an individual supplies an incompetent or impaired individual with a firearm. Herland v. Izatt, 2015 UT 30, ¶ 32, 345 P.3d 661 (concluding such a duty exists based on public policy considerations).

1.4 Standard of Care, Duty, and Proximate Cause

The standard duty of care owed by individuals to others is that care that a reasonable and prudent person would have exercised under the circumstances. Meese v. Brigham Young Univ., 639 P.2d 720, 723 (Utah 1981). In the exercise of ordinary care, the amount of caution required will vary with the nature of the act and the surrounding circumstances. Mitchell v. Pearson Enters., 697 P.2d 240, 243 (Utah 1985). For professionals, the standard of care is that which a reasonable professional in the community would have exercised. See, e.g., Downing v. Hyland Pharmacy, 2008 UT 65, ¶ 9, 194 P.3d 944. The fact that professional services are rendered free of charge does not excuse that duty of care. DCR Inc. v. Peak Alarm Co., 663 P.2d 433, 436 (Utah 1983). There is a heightened duty of care toward children under age 14. Vitale v. Belmont Springs, 916 P.2d 359, 362 (Utah Ct. App. 1996).

To establish the standard duty of care, expert testimony may be necessary to “in cases dealing with the duties owed by a particular profession,” especially where the average person has little understanding of the duties owed by a particular profession, or the case involves complex allegations. Preston & Chambers, P.C. v. Koller, 943 P.2d 260, 263 (Utah Ct. App. 1997). But “expert testimony may be unnecessary where the propriety of the defendant’s conduct is within the common knowledge and experience” of the jury. Id. at 263-64 (citation and internal quotation marks omitted).

The violation of a safety standard set by statute or ordinance is prima facie evidence of negligence but may be subject to justification or excuse if the conduct can reasonably be shown to fall within the standard of reasonable care under the circumstances. Hall v. Warren, 692 P.2d 737, 739 (Utah 1984). Compliance with safety standard is not an absolute defense but is simply some evidence of reasonable care. Schreiter v. Wasatch Manor, Inc., 871 P.2d 570, 575 (Utah Ct. App. 1994).

Utah has adopted the professional rescuer rule, which bars negligence claims by those who take on a professional duty to rescue, either in a public or private capacity. The rule applies if: (1) the injury was derived from the negligence that occasioned the professional rescuer’s response, and (2) the injury was within the scope of those risks inherent in the professional rescuer’s duties. Fordham v. Oldroyd, 2007 UT 74, ¶ 6, 171 P.3d 411 (state highway patrol trooper barred from recovering from motorist for injuries suffered while responding to the motorist’s rollover accident); but see Normandeau v. Hanson Equipment, Inc., 2010 UT App 121, ¶ 5 n.6, 233 P.3d 546 (declining to extend the professional rescue doctrine to tow truck drivers, who are not public employees); Horton v. Murray Energy Corp., No. 2:11-cv-01147-DN, 2012 WL 2602885 (D. Utah July 5, 2012) (refusing to apply extension to an energy corporation).

One who undertakes to render services to another which he should recognize as necessary for the protection of a third person or his property is subject to liability to the third person for harm if: (1) his failure to exercise reasonable care increases the risk of such harm; (2) he has undertaken to perform a duty owed by the other to the third person; or (3) the harm is suffered because of the reliance of the other or the third person upon the undertaking. Alder v. Bayer Corp., 2002 UT 115, ¶ 29, 61 P.3d 1068 (installer of x-ray processing machine may owe duty to technician for installing machine in poorly ventilated room even though hospital retained exclusive control of ventilation system); see also Restatement (Second) of Torts § 324A (1965).

While a person usually has no affirmative duty to: 1) control the conduct of another; 2) protect another from harm; or 3) render aid to someone injured through no act of fault of the person, a duty to act nonnegligently arises when the person undertakes an affirmative act for the benefit of another, whether gratuitously or for pay. Robinson v. Mount Logan Clinic, LLC, 2008 UT 21, ¶ 15, 182 P.3d 333; see also Nelson v. Salt Lake City, 919 P.2d 568, 573 (Utah 1996)(“Where one undertakes an act which he has no duty to perform and another reasonably relies upon that undertaking, the act must generally be performed with ordinary or reasonable care.”).

For example, Utah courts recognize that an individual who undertakes the task of providing protection for another accepts a duty of reasonable care towards that person, regardless of whether the duty existed prior to the service. Atkinson v. Stateline Hotel Casino & Resort, 2001 UT App 63, ¶ 17, 21 P.3d 667 (adopting sections 323 and 324 of the Restatement (Second) of Torts). Recently, the Utah Supreme Court adopted the Restatement (Second) of Torts § 319 for duties owed to a third person for custodians of dangerous persons. Scott v. Utah Cty., 2015 UT 64 ¶ 33, 356 P.3d 1172.

Attorney defendants who had been counsel for the plaintiffs’ class in a class action to reform the child welfare system did not assume a duty to protect a deceased child from physical harm because attorney defendants did not stand in a “special relationship” with the child, despite plaintiffs’ argument that the settlement agreement entered into on behalf of plaintiffs’ class caused attorneys to assume duties in loco parentis. Sanders v. Leavitt, 2001 UT 78, ¶ 23, 37 P.3d 1053; see also Smith v. Bank of Utah, Inc., 2007 UT App 89, ¶ 12, 157 P.3d 817 (bank did not owe bicyclist a duty to protect him from a motorist’s negligent use of the bank’s concrete driveway when exiting the drive-thru lane because there was no special relationship between bank and bicyclist).

In 2015, the Utah Supreme Court adopted Restatement (Second) of Torts § 317, which provides that an employer may have a duty to prevent an employee acting within the scope of employment from “intentionally harming others.” Graves v. N. E. Servs., Inc., 2015 UT 28, ¶¶ 33-34, 345 P.3d 619.

Where the negligence alleged consists of a failure to act, the injured person must demonstrate the existence of a special relationship which creates a duty to act. Owens v. Garfield, 784 P.2d 1187, 1189 (Utah 1989) (state and county did not have a special relationship that would require them to control the activities of a child care provider); Doe v. Corp. of Pres. of Church of Jesus Christ of Latter-day Saints, 2004 UT App 274, ¶ 10, 98 P.3d 429 (by providing faith-based advice or instruction, the church did not have a special relationship, so they had no duty to warn about danger posed to youth); Jeffs v. Rodier, 2015 UT 1, ¶ 12, 342 P.3d 803, (“As a general rule, we all have a duty to act reasonably in our affirmative acts; but no such duty attaches with regard to omissions except in cases of a special relationship.”).

A contractual relationship for the performance of services may impose on the contracting parties a duty of care toward each other, apart from the specific obligations expressed in the contract itself. At the same time, parties may also bargain for immunity from negligence. DCR Inc. v. Peak Alarm Co., 663 P.2d 433, 435 (Utah 1983).

Utah has adopted the “special relation” analysis described in Restatement (Second) of Torts, §§ 314-320. A defendant has no duty to control the conduct of third persons unless a special relation exists between the defendant and the third person. In adopting § 319 of the Restatement (Second) of Torts, Utah has held that one who has custody of a potentially dangerous individual owes a duty to protect others from harm. Scott v. Universal Sales, Inc., 2015 UT 64, 356 P.3d 1172 (“the custodian of a dangerous individual has a duty of care to prevent that individual from harming members of the public.”); see also Cruz v. Middlekauff Lincoln-Mercury, Inc., 909 P.2d 1252, 1256 (Utah 1996) (explaining that a car dealership may owe a duty to the public to take adequate precautions to prevent the theft of its cars if the theft of a car and its negligent operation was foreseeable); B.R. ex rel. Jeffs v. West, 2012 UT 11, ¶¶20-22, 275 P.3d 228 (holding that healthcare providers owe a duty to exercise reasonable care in prescribing medications that pose a risk of injuries to third parties).

For example, in the absence of a special relationship, courts have held there was no duty to friend of defendants’ 19-year-old son who had a party in parents’ home, where injury arose from party and there was no duty to supervise adult son. Drysdale ex rel. Strong v. Rogers, 869 P.2d 1, 3 (Utah Ct. App. 1994); but see Faucheaux v. Provo City, 2015 UT App 3, ¶¶ 18-19, 343 P.3d 288, 293-94 cert. denied, 352 P.3d 106 (Utah 2015) (holding police officers’ specific actions towards member of public may have created a special relationship, when officers failed to contact emergency medical technicians prior to a drug overdose).

At least four circumstances give rise to a special relationship between the government and individuals. A special relationship can be established (1) by statute intended to protect a specific class of persons of which the plaintiff is a member from a particular type of harm; (2) when the government agent undertakes specific action to protect a person or property; (3) by governmental actions that reasonably induce detrimental reliance by a member of the public; and (4) under certain circumstances, when the agency has actual custody of the plaintiff or of a third person who causes harm to the plaintiff. Day v. State ex rel. Utah Dep’t of Pub. Safety, 1999 UT 46, ¶ 13, 980 P.2d 1171; see also Cope v. Utah Valley State Coll., 2014 UT 53, ¶ 21, 342 P.3d 243 (discussing the public duty doctrine at length and holding that while the public duty doctrine does not apply to claims of affirmative misconduct, it does apply to omissions in limited circumstances).

In considering whether a special relationship exists, Utah courts have weighed a number of factors, including: (1) the foreseeability of harm; (2) the nature of the relationship between the parties; and (3) the ease with which the defendant could have fulfilled the duty. Young v. Salt Lake City Sch. Dist., 2002 UT 64, ¶ 17, 52 P.3d 1230.

When a school district lacks custody of a child attending one of its schools, it has no protective obligation and no special relationship exists. For example, a school district lacks custody of a child crossing a street which was not owned by the school, after school had been adjourned for the day, and the child was not participating in any school-sponsored event at the time but was traveling to such an event. Questions of foreseeability of harm, ease of fulfilling a duty, and dependence placed by mother of child upon school are irrelevant to whether a special relationship exists between child and school. Young v. Salt Lake City Sch. Dist., 2002 UT 64, ¶ 11, 52 P.3d 1230.

Utah courts have also concluded that healthcare providers owe a duty of care to third parties not to prescribe medications that could cause their patients to harm third parties, even in the absence of an otherwise special relationship. B.R. ex rel. Jeffs v. West, 2012 UT 11, ¶ 22, 275 P.3d 228.

In 2012, the Utah Court of Appeals concluded that a water district had a special relationship with and therefore owed a duty of care to homeowners located along a water line that the governmental entity had identified for replacement. Jenkins v. Jordan Valley Water Conservancy Dist., 2012 UT App 204, ¶32, 283 P.3d 1009, rev’d and vacated on other grounds 2013 UT 59, 321 P.3d 1049; see also Beach v. Univ. of Utah, 726 P.2d 413, 415 (Utah 1986) (noting that a special relationship arises “when one assumes responsibility for another’s safety or deprives another of his or her normal opportunities for self-protection”).

Defendant’s actions must be the actual and “proximate” cause of the plaintiff’s injury. Proximate cause is the efficient cause which, in natural and continuous sequence, unbroken by efficient intervening causes, necessarily sets in operation factors that produce injury and without which the result would not have occurred. Mitchell v. Pearson Enters., 697 P.2d 240, 245 (Utah 1985). More than one action may be a proximate cause of the injury, so long as each action is a concurrent contributing factor in causing the injury. Such a determination is a question of fact for the jury. Steffensen v. Smith’s Mgmt. Corp., 820 P.2d 482, 486 (Utah Ct. App. 1991), aff’d, 862 P.2d 1342 (Utah 1993). However, a trial court may rule as a matter of law on the issue if there is no evidence to establish a causal connection, thus leaving causation to jury speculation, or where reasonable persons could not differ on the inferences to be derived from the evidence on proximate causation. Id.; Fox v. Brigham Young Univ., 2007 UT App 406, ¶ 21, 176 P.3d 446.

A superseding cause is where an unforeseeable act of subsequent negligence severs the connection to the initial causal act. Thayer v. Washington Cnty. Sch. Dist., 2012 UT 31, ¶ 61, 285 P.3d 1142. A person’s negligence is not superseded by the negligence of another if the subsequent negligence of the other is foreseeable; superseding cause is generally a jury question. Williams v. Melby, 699 P.2d 723, 728-29 (Utah 1985); Godesky v. Provo City Corp., 690 P.2d 541, 544 (Utah 1984); Harris v. Utah Transit Auth., 671 P.2d 217, 219 (Utah 1983); see also Nebeker v. Summit Cnty., 2014 UT App 244, ¶ 42, 338 P.3d 203 (summarizing and illustrating standard); but see Thurston v. Workers Compensation Fund of Utah, 2003 UT App 438, ¶ 15, 83 P.3d 391) (distinguishing Harris and holding that the jury must be given some evidence supporting negligence before the issue becomes a jury question).

Providers of ski equipment, for either rental or purchase, have a duty of care commensurate with the standards of the industry to install and adjust the bindings, considering factors such as the experience level of the skier. A breach of that duty would constitute negligence. Meese v. Brigham Young Univ., 639 P.2d 720, 722-23 (Utah 1981). In contrast, collisions between skiers is considered an inherent risk of skiing. A plaintiff must show evidence that a defendant skied negligently in order to recover. Ricci v. Schoultz, 963 P.2d 784, 786 (Utah Ct. App. 1998).

Summary judgment is appropriate for failure to produce evidence of proximate cause, which is usually seen as a fact issue. This is true in a case where the plaintiff did not know how he was injured, no one saw how he was injured, and his medical witnesses were unable to explain how his injuries arose without speculating or guessing. See Clark v. Farmers Ins. Exch., 893 P.2d 598, 601 (Utah Ct. App. 1995). Courts may not grant summary judgment when the plaintiffs are able to show “but for” causation even though they do not have enough evidence to show exact proximate causation. Scott v. HK Contractors, 2008 UT App 370, ¶ 25, 196 P.3d 635.

Proctor v. Costco Wholesale Corp. expands and provides context to proximate cause by providing that proximate cause is a “cause that directly produces an event and without which the event would not have occurred.” Proctor v. Costco Wholesale Corp., 2013 UT App 226, ¶¶ 10, 311 P.3d 564. To prove proximate cause, however, it is not enough to show that a negligent act brought about the injury; rather, a plaintiff must demonstrate that the act was the “efficient, producing cause of the injury,” which, in a natural and continuous sequence, unbroken by any new cause, produced the injury, and without which the injury would not have occurred. Id. In other words, proximate cause refers to the basic requirement that before recovery is allowed in tort, there must be some direct relation between the injury asserted and the injurious conduct alleged. Id. Proximate cause does not focus so much on “cause,” but instead attempts to articulate the limitation that the courts have placed upon an actor’s responsibility for the consequences of the actor’s conduct. Id. An actor’s negligent conduct is not a proximate cause in bringing about harm to another if the harm would have been sustained even if the actor had not been negligent. Except in cases where more than one person contributes to the plaintiff’s injury, no case has been found where the defendant’s act could be called a proximate cause when the event would have occurred without it. Furthermore, foreseeability is an element of proximate cause that requires an “inquiry” into the specifics of the alleged tortious conduct, such as whether the specific mechanism of the harm could be foreseen. Id. ¶ 11.

Recently, the Utah Court of Appeals held that expert testimony was necessary to establish the standard of care in ordinary and gross negligence cases if the standard “involves issues that do not fall within the common knowledge and experience of lay jurors.” Callister v. Snowbird Corp., 2014 UT App 243, ¶ 19, 337 P.3d 1044 (concluding expert testimony for standard of care owed by operator of ski tram).

1.5 Res Ipsa Loquitur

The doctrine of res ipsa loquitur allows a plaintiff to raise an inference of negligence through circumstantial evidence. Dalley v. Utah Valley Reg’l Med. Ctr., 791 P.2d 193, 196 (Utah 1990); see, e.g., Morgan v. Intermountain Health Care, Inc., 2011 UT App 253, ¶ 10 n.4, 263 P.3d 405 (describing the doctrine as an exception to the “general requirement for expert testimony in medical malpractice cases”). To invoke res ipsa loquitur, a plaintiff must establish an evidentiary foundation from which a finder of fact could logically conclude that an injury was probably caused by negligence. King v. Searle Pharm., Inc., 832 P.2d 858, 862 (Utah 1992). To establish that foundation, a plaintiff must show: (1) the accident was of a kind which, in the ordinary course of events, would not have happened had the defendant used due care; (2) the instrument or thing causing the injury was, at the time of the accident, under the management and control of the defendant; and (3) the accident happened irrespective of any participation at the time by the plaintiff. Dalley, 791 P.2d at 196 (citations omitted). The Utah Court of Appeals has held that when a person has no control over a vehicle at the time of its crash, negligence cannot be established based on res ipsa loquitur. Warenski v. Advanced RV Supply, 2011 UT App 197, ¶ 13, 257 P.3d 1096.

Under Utah law, the doctrine of res ipsa loquitur is “an evidentiary rule that does not need to be separately pleaded in a complaint,” but the party alleging it must provide adequate notice. Callister v. Snowbird Corp., 2014 UT App 243, ¶ 24, 337 P.3d 1044.

There are two ways to establish a prima facie foundation for res ipsa loquitur: (1) show that the common knowledge and experience of the community clearly indicates the accident would not have occurred without negligence; or (2) if the circumstances are beyond the common knowledge of the community, expert testimony may be used. Walker v. Parrish Chem. Co., 914 P.2d 1157, 1160-61 (Utah Ct. App. 1996).

To establish the first of these elements, the defendant must show that the accident or injury was “more probably than not caused by negligence.” Warenski v. Advanced RV Supply, 2011 UT App 197, ¶ 12, 257 P.3d 1096, 1101, cert. denied, 268 P.3d 192 (Utah 2011) (quoting Ballow v. Monroe, 699 P.2d 719, 722 (Utah 1985)).

Cases that rest upon speculation are unable to prove the three elements of res ipsa loquitur. See King v. Searle Pharm., Inc., 832 P.2d 858, 861 (Utah 1992). Without the doctrine of res ipsa loquitur, a jury cannot “infer the negligence of an uninsured motorist or that an uninsured motor vehicle existed under the circumstances of this case” Nau v. Safeco Ins. Co. of Illinois, 2017 UT App 44, ¶ 16, 392 P.3d 993.

1.6 Strict Liability

Strict liability permits a plaintiff to forgo proving causation, which is otherwise required in tort cases. Decius v. Action Collection Servs., Inc., 2004 UT App 484, ¶ 16, 105 P.3d 956.

Dog owners are strictly liable for damages caused by their dogs. No physical contact by the dog is required so long as the dog “committed” the injury. U.C.A. § 18-1-1, et. seq.; Sharp v. Williams, 915 P.2d 495, 498 (Utah 1996). Cat owners are not strictly liable if their cat bites someone. Additionally, a cat owner has no duty to restrain a domestic cat if the animal has not previously demonstrated a propensity to cause harm. Jackson v. Mateus, 2003 UT 18, ¶ 18, 70 P.3d 78. Utah courts have also refrained from imposing strict liability on horse owners, based upon the dog bite statute. Pullan ex rel. Pullan v. Steinmetz, 2000 UT 103, ¶¶ 6-8, 16 P.3d 1245. See also U.C.A. § 78b-4-201, et seq.

The Supreme Court of Utah recently overruled previous decisions and found that passive retailers are not immunized from liability under Utah Liability Reform Act cases in cases where the manufacturer is named in the suit. Bylsma v. R.C. Willey, 2017 UT 85, 416 P.3d 595. The Supreme Court found that retailers, like R.C. Willey, “along with all others in a product’s chain of distribution—are strictly liable for breaching their duty not to sell a dangerously defective product.” Id. ¶ 12.

Under the Utah Liability Reform Act, a plaintiff or defendant may join any other party “alleged to have caused or contributed to the injury or damage for which recovery is sought, for the purpose of having determined their respective proportions of fault.” U.C.A. § 78b-5-821(1). In fact, defendants who seek to allocate fault to other defendants must identify in their answers those persons who may be at fault. U.C.A. § 78b-5-821(4). Therefore, in cases where strict liability is alleged, all other available defendant tortfeasors should be joined and identified in order to apportion fault properly in the case. See S. H. v. Bistryski, 923 P.2d 1376, 1382 (Utah 1996) (evidence of mother’s negligent supervision of her child who was bitten by a dog in a strict liability dog-bite case was admissible for purposes of apportioning fault). This is a form of “fault” which can be compared to other fault, such as negligent supervision of a child. Id.

U.C.A. § 31a-22-303(1) overrides the common-law “sudden incapacity” defense and imposes strict liability (at least in circumstances in which the driver has a liability policy with the coverage mandated by the statute). Therefore, driver’s liability is capped by the limits set forth in the applicable insurance policy. Lancer Ins. Co. v. Lake Shore Motor Coach Lines, Inc., 2017 UT 8, ¶ 9, 391 P.3d 218, 220, reh’g denied (Mar. 29, 2017).

SECTION 2 – Landowner Liability

2.1 Duty of Landowner to Third Parties

A landowner who makes “special use” of a public sidewalk has a duty to passersby to exercise due care to keep the sidewalk in a suitable and safe condition for the public. An abutting landowner makes “special use” of a public sidewalk or a planter strip when he uses it “for some other purpose than merely using [it] as a public sidewalk [or planter strip], such as a driveway.” Rose v. Provo City, 2003 UT App 77, ¶ 12, 67 P.3d 1017; but see Smith v. Bank of Utah, Inc., 2007 UT App 89, ¶ 10, 157 P.3d 817 (explaining that Utah cases considering the special-use duty are limited to instances where the special use of the sidewalk created a physical defect in the sidewalk itself).

Historically, the duty of care owed by a landowner to a person entering his or her land varied with the nature of the visit. Common law distinguished between licensees, invitees, and trespassers. Tjas v. Proctor, 591 P.2d 438, 441 (Utah 1979); see generally RESTATEMENT (SECOND) TORTS §§ 329-343 (1965). These distinctions have never been expressly rejected by the Utah courts and the previous version of the model jury instructions continued to use the common law distinctions. Model Jury Instructions for Utah, Section 11 (1993); Pratt ex rel. Pratt v. Mitchell Hollow Irr. Co., 813 P.2d 1169, 1172 (Utah 1991). It is worth noting that the current model jury instructions do not include an instruction regarding these distinctions. Cf. Kleinert v. Kimball Elevator Co., 854 P.2d 1025, 1027 (Utah Ct. App. 1993) (noting that liability may not hinge on artificial common law categories). Under the common law, the duty owed by a landowner to a licensee is less than that owed to an invitee. A landowner’s duty of care to a trespasser is even less. To establish liability for injury or damages sustained by a trespasser, it is necessary to show that the landowner had acted with “willful misconduct” or in a willful and malicious manner. See Restatement (Second) of Torts §§ 329-343 (1965).

Donahue v. Durfee, 780 P.2d 1275, 1277 (Utah Ct. App. 1989), cert. denied, 789 P.2d 33 (Utah 1990), overruled on other grounds by Hale v. Beckstead, 2005 UT 24, 116 P.3d 263, raises some question as to whether the traditional classifications should still be used. Cf. Kessler v. Mortenson, 2000 UT 95, ¶ 16, 16 P.3d 1225 (declining an invitation to abolish distinctions); see also Hill v. Superior Prop. Mgmt. Servs., Inc., 2013 UT 60, ¶ 25, 321 P.3d 1054 (discussing distinction in context of right of exclusion). However, Golding v. Ashley Cent. Irrigation Co., 793 P.2d 897, 902 (Utah 1990), suggests that the “willful and malicious” standard must still be met in cases where a landowner is sued for injuries sustained by a trespasser. That holding was affirmed on appeal by the Utah Supreme Court in Golding v. Ashley Cent. Irrigation Co., 902 P.2d 142 (Utah 1995). See also U.C.A. § 57-14-204 (landowner liability not limited where willful or malicious conduct is involved).

Despite the general rule that a trespasser cannot recover unless his presence is known to the landowner, a duty of care is owed by landowners who should know that trespassers habitually intrude in an area where there is a risk of serious bodily harm. Lopez v. Union Pac. R.R. Co., 932 P.2d 601, 604 (Utah 1997); see RESTATEMENT (SECOND) TORTS § 334 (1965). But to impose a duty, the following elements must be present: (1) real or constructive knowledge (2) that trespassers (3) constantly intrude (4) upon a limited area and (5) that those trespassers may be injured by the landowner’s activities involving risk of death or serious bodily harm. If all the elements are present, a landowner must exercise reasonable care to protect trespassers. Connor v. Union Pac. R.R. Co., 972 P.2d 414, 417 (Utah 1998). In the case of an amusement park, fault can be apportioned to certain riders who violate posted and communicated rules. See U.C.A. § 78b-4-507(8); cf. U.C.A. § 4-25-205 (imposing liability on owners for trespass of agricultural animals, except when landowner fails to adequately enclose land).

2.2 Liability of Landlord to Third Parties

Dangerous or Defective Condition: A landlord is bound by the usual standard of exercising ordinary prudence and care to see that premises he leased are reasonably safe and suitable for intended uses. Under appropriate circumstances, he may be held liable to third parties for injuries caused by any defects or dangerous conditions which he created, or of which he was aware, and which he should reasonably have foreseen would expose others to an unreasonable risk of harm. Rand v. KOA Campgrounds, 2014 UT App 246, ¶ 9, 338 P.3d 222 (concluding stairs did not create unreasonable risk of harm); Stephenson v. Warner, 581 P.2d 567, 568 (Utah 1978). In order to recover from the landlord, the plaintiff must “demonstrate that the landlord [knew], or in the exercise of ordinary care should have known, that a dangerous condition existed [and that] sufficient time [had elapsed to take corrective action].” Martin v. Safeway Stores Inc., 565 P.2d 1139, 1140-41 (Utah 1977). Summary judgment is appropriate when there is no genuine issue of material fact regarding the landlord’s actual or constructive awareness of a temporary hazard. Forbes v. Wal-Mart Stores, Inc., 2010 WL 988492, *9 (D. Utah 2010).

When a plaintiff’s claim is based on the owner’s failure to repair rather than on affirmative negligence, the plaintiff has the burden of showing the owner knew, or in the exercise of ordinary care should have known, a dangerous condition existed and the owner had sufficient time to take corrective action. Kleinart v. Kimball Elevator Co., 854 P.2d 1025, 1028 (Utah Ct. App. 1993). The duty does not extend to a hazard created by the invitee. English v. Kienke, 848 P.2d 153, 156 (Utah 1993); see RESTATEMENT (SECOND) TORTS §§ 343-343A (1965)

In a situation in which defendant did not create the unsafe condition and is responsible for it only in the context of maintenance, fault cannot be imputed to the defendant so that liability results therefrom unless two conditions are met: (1) that he had knowledge of the condition, that is, either actual knowledge, or constructive knowledge because the condition had existed long enough that he should have discovered it; and (2) that after such knowledge, sufficient time elapsed that in the exercise of reasonable care he should have remedied it. See Gowe v. Intermountain Healthcare, Inc., 2015 UT App 105, ¶ 5; Matheson v. Marbec Invs., LLC, 2007 UT App 363, ¶ 6, 173 P.3d 199 (quoting Goebel v. Salt Lake City S. R.R. Co., 2004 UT 80, ¶ 20, 104 P.3d 1185); see, e.g., Jensen v. Gardner, 2012 UT App 146, ¶¶ 8-9, 279 P.3d 844 (dismissing action based upon an allegedly dangerous balcony where party could not have anticipated plaintiff would run into balcony); Porter v. Farmington City Corp., 2014 UT App 12, ¶¶ 12-13, 318 P.3d 1198 (affirming summary judgment where city lacked constructive notice of hole); Cochegrus v. Herriman City, 2020 UT 14, ¶¶ 29-32, 462 P.3d 357 (summary judgment was improper due to dispute of material fact as to whether Herriman City had constructive knowledge of metal rod protruding from ground).

Although property defects may occur within a building, such flaws do not encompass conditions unrelated to the structure of a building. Miller v. W. Valley City, 2017 UT App 65, ¶ 22, 397 P.3d 761 (holding that a teenager obstructing a swim lane was not a “dangerous condition”).

Constructive notice of a dangerous condition should not be imputed when conjecture and speculation are the only ways to determine the length of time the condition existed. See Warrick v. Property Reserve, 2018 UT App 197, 437 P.3d 439. In Warrick, the Court held that in order to demonstrate that a store owner had constructive notice of an icy sidewalk, the plaintiff had an affirmative duty to present evidence of approximately when the ice formed. Because plaintiff had presented no evidence demonstrating when the ice had formed, such as temperatures on the preceding days or nights or how long ice takes to form, summary judgment was appropriate.

2.3 Liability of Landlord to Tenant

At common law, a landlord was not liable to his tenant for physical harm caused by a dangerous condition existing on the land when the tenant took possession. Over time the general rule was modified to impose liability upon a landlord in certain circumstances for injuries resulting from dangerous conditions on the leased premises. Thus, a landlord could be liable for negligence if (1) he had contracted to repair the premises; (2) there was a hidden or latently dangerous condition which was known to the lessor and caused an injury; (3) the premises were leased for purposes of admitting the public and a member of the public was injured; or (4) part of the premises was retained under the lessor’s control, but was open to the use of the lessee. Williams v. Melby, 699 P.2d 723, 726 (Utah 1985); but see Schreiter v. Wasatch Manor, Inc., 871 P.2d 570, 575 (Utah Ct. App. 1994) (landlord’s duty is to exercise reasonable care in all circumstances, and the care to be exercised in any particular case depends upon the circumstances of that case and on the extent of foreseeable danger involved, which must be determined as a question of fact); Ockey v. Club Jam, 2014 UT App 126, ¶ 8, 328 P.3d 880 (discussing standard for hidden defects and concluding disputed issues of material fact on hidden defect of ladder precluded summary judgment).

Although landlords have some duty to protect tenants from physical injury resulting from dangers on leased premises, landlords do not owe a duty to protect or insure the personal property of tenants from third parties. Tenants are in the best position to take steps to protect the safety of their own property. The heightened duty of an innkeeper under common law to safeguard its guests’ personal belongings has no application to the landlord-tenant relationship. Enerco, 2002 UT 78, ¶¶ 15-18.

The landlord is not liable for obvious and patent defects that exist on the premises at the commencement of the lease. The landlord is also not liable for hazards created by the tenant. English v. Kienke, 848 P.2d 153, 156 (Utah 1993). Moreover, in Williams v. Melby, the Utah Supreme Court noted that a landlord is not an insurer of the safety of his tenants and an injury caused by a defect in the premises does not automatically result in landlord liability. 699 P.2d 723, 727 (Utah 1985); see also U.C.A. § 29-1-1 (limiting liability for damage to personal property for innkeepers for defective storage).

A tenant is presumed to be a coinsured of the landlord absent an express agreement between them to the contrary. For such an agreement to be “express,” it must be unambiguous. McEwan v. Mountain Land Support Corp., 2005 UT App 240, ¶ 27, 116 P.3d 955. However, this does not mean that the landlord necessarily owes the tenant a duty to insure personal property. Enerco, Inc. v. SOS Staffing Services, Inc., 2002 UT 78, ¶ 16, 52 P.3d 1272; see also U.C.A. § 29-1-1 (limiting liability of innkeepers for property damage to a guest’s valuable articles).

A landlord may be subject to a duty of care imposed by a statute or ordinance. To invoke the rule, a party must show (1) the existence of the statute or ordinance, (2) that the statute or ordinance was intended to protect the class of persons which includes the party, (3) that the protection is directed toward the type of harm which has in fact occurred as a result of the violation, and (4) that the violation of the ordinance or statute was a proximate cause of the injury complained of. See Hall v. Warren, 632 P.2d 848, 850 (Utah 1981). That test was affirmed on appeal by the Utah Supreme Court in Hall v. Warren, 692 P.2d 737, 738 (Utah 1984).

As a general rule, violation of a standard of safety set by a statute or ordinance is prima facie evidence of negligence. Cf. Ryan v. Gold Cross Services, Inc., 903 P.2d 423, 426 (Utah 1995). Such a violation may be subject to justification or excuse if the defendant’s conduct could nevertheless be reasonably said to fall within the standard of reasonable care under the circumstances. Hall v. Warren, 632 P.2d 848, 850 (Utah 1981); but see Jeffs v. Rodier, 2015 UT 1, ¶ 16, 342 P.3d 803 (illustrating analysis of whether physician owed duty of care in prescription of medication based on statute and declining to impose such a duty).

Recently, the Utah Court of Appeals reiterated “‘seasonal problems with snow and ice’ are not permanent dangerous conditions for the purposes of allocating duties between landlords and tenants.” Crossgrove v. Stan Checketts Properties, LLC, 2015 UT App 35, ¶ 10, 344 P.3d 1163 (rejecting argument that seasonal accumulation renders presence of ice a permanent condition).

2.4 Landlord’s Duty to Furnish Fit Premises

Relevant Statutes

U.C.A. §§ 57-14-101 to -205; §§ 57-22-1 to -7.

Notable Law

The Utah Fit Premises Act, U.C.A. §§ 57-22-1 to -7, applies only to residential rental units. Under the Act, a landlord may not rent residential properties until they are safe, sanitary, and fit for human occupancy as defined by the Act.

While a landlord may evict for any legal reason or for no reason at all, he is not free to evict in retaliation for his tenant’s report of housing code violations to the authorities. The tenant has the burden to prove that landlord’s primary motivation was retaliatory. Bldg. Monitoring Sys. v. Paxton, 905 P.2d 1215, 1218-19 (Utah 1995). Failure to provide evidence may be fatal to the tenant’s appeal. Brady v. Slater, 2004 UT App 292.

In 2012, the Utah legislature amended the Utah Fit Premises Act. The amended act imposes additional requirements on owners, including but not limited to allowing the renter to inspect the premises. However, failure to comply with the new subsections does not give rise to a cause of action. U.C.A. § 57-22-4(5)(b).

To establish a violation under the Act for the deficient condition of the rental unit, the tenants must give the owner written notice that (1) describes each deficient condition, (2) states the time, in terms of the applicable number of days, that the owner has to correct each deficient condition, (3) states the remedy that the renter has chosen if the owner does not take substantial action toward correcting each deficient condition within the corrective period, (4) provides the owner with permission to enter and make corrective action, and (5) is served on the owner in accordance with the statute (U.C.A. § 78b-6-805) or rental agreement. U.C.A. § 57-22-6(2)(b). After the corrective period expires, the tenant may bring an action in district court to enforce the renter remedy that the renter chose in the notice of deficient condition. See id. § 57-22-6(5)(a); see, e.g., Myrah v. Campbell, 2007 UT App 168, ¶ 16, 163 P.3d 679.

Utah courts have also recognized that allowing a residential lessee to withhold rent for breach of the lease is equally applicable to the commercial context. Not all breaches of covenants by a lessor justify a lessee in withholding rent. Only a significant breach of a covenant material to the purpose for which the lease was consummated justifies a lessee in abating rent. Temporary or minor breaches of routine covenants by a lessor do not. Richard Barton Enters., Inc. v. Tsern, 928 P.2d 368, 377 (Utah 1996).

The Act also imposes obligations upon the renter. In general, the renter must maintain the premises in a clean and safe condition and occupy the residential rental unit in the manner for which it was designed. A renter must comply with its obligations before being entitled to remedies against the landlord. U.C.A. §§ 57-22-5 to -6.

Although not provided for by statute, the promulgation of housing regulations such as U.C.A. § 57-22-1 provides for the establishment of the retaliatory eviction defense in an unlawful detainer action. Bldg. Monitoring Sys. v. Paxton, 905 P.2d 1215, 1218 (Utah 1995).

Utah recognizes a cause of action for breach of an implied warranty of habitability and allows it to be raised as a defense to an unlawful detainer action. P.H. Inv. v. Oliver, 818 P.2d 1018, 1020 (Utah 1991); cf. Davencourt at Pilgrims Landing Homeowners Ass’n v. Davencourt at Pilgrims Landing, LC, 2009 UT 65, ¶¶ 47-48, 221 P.3d 234 (extending cause of action to sale of new residences).

In 2009, the Utah Supreme Court recognized a cause of action for breach of implied warranty of workmanlike manner and habitability in the sale of a new residence. Davencourt at Pilgrims Landing Homeowners Ass’n v. Davencourt at Pilgrims Landing, LC, 2009 UT 65, ¶ 55, 221 P.3d 234.

2.5 Failure to Maintain or Repair Premises

If the damages or injury arise from a failure to repair, the injured party must establish that the condition complained of existed for a long enough time that the landlord had actual or constructive notice of the condition. Gregory v. Fourthwest Inv., 754 P.2d 89, 91 (Utah Ct. App. 1988); Price v. Smith’s Food & Drug Centers, Inc., 2011 UT App 66, ¶ 25, 252 P.3d 365 (applying identical requirement to maintenance of temporary unsafe conditions). The duty of the landlord may have been heightened by Erickson v. Wasatch Manor, Inc., 802 P.2d 1323 (Utah Ct. App. 1990), where the Utah Court of Appeals approved a jury instruction in a slip-and-fall case stating, “the defendant has a further duty to observe any dangerous condition known to him or which by the use of reasonable diligence would have become known to him and to take reasonable steps to remedy or remove any such dangerous condition.” Id. at 1327. It should be noted that in Erickson, under the terms of the lease, the landlord had undertaken to maintain the common area where the plaintiff had been injured.

The care required depends on the circumstances of the case and the extent of foreseeable danger involved. Schreiter v. Wasatch Manor, Inc., 871 P.2d 570, 575 (Utah Ct. App. 1994); see also Jenkins v. Jordan Valley Water Conservancy Dist., 2012 UT App 204, ¶¶ 38-40, 283 P.3d 1009 (applying Schreiter), rev’d and vacated on other grounds 2013 UT 59, 321 P.3d 1049 (holding that there is no sliding scale of care that would require wealthy defendants to provide a higher standard of care than impoverished defendants).

2.6 Store Owner Liability

A store owner is liable only if it had actual or constructive knowledge of the hazardous condition and after obtaining such knowledge, “sufficient time elapsed that in the exercise of reasonable care [the store owner] should have discovered it.” The notice requirement does not apply if the store owner created the hazardous condition. Price v. Smith’s Food & Drug Centers, Inc., 2011 UT App 66, ¶ 10, 252 P.3d 365 (involving temporary unsafe condition); Carlile v. Wal-Mart, 2002 UT App 412, ¶ 8, 61 P.3d 287 (involving injury caused by third-party cart driver).

A restaurant owner who makes “special use” of a public sidewalk has a duty to passersby to use due care to keep it in a suitable and safe condition for the public to travel over. An abutting landowner makes “special use” of a public sidewalk or a planter strip when he uses it “for some other purpose than merely using [it] as a public sidewalk [or planter strip], such as a driveway.” Rose v. Provo City, 2003 UT App 77, ¶ 12, 67 P.3d 1017; but see Smith v. Bank of Utah, Inc., 2007 UT App 89, ¶ 8, 157 P.3d 817 (explaining that Utah cases considering the special-use duty are limited to instances where the special use of the sidewalk created a physical defect in the sidewalk itself); Choate v. Ars-Fresno LLC, 2016 UT App 249, ¶ 15, 391 P.3d 344 (holding that where a plaintiff who saw potential danger–a sidewalk that appeared wet– the evidence was sufficient for the jury to have decided in favor of either party).

“The owner of a business is not a guarantor that his business invitees will not slip and fall. Rather, a business owner is charged with the duty to use reasonable care to maintain the floor of his establishment in a reasonably safe condition for his patrons.” Gowe v. Intermountain Healthcare, Inc., 2015 UT App 105, ¶ 4 (internal quotation marks and citations omitted) (discussing slip-and-fall standards); see also Price v. Smith’s Food & Drug Centers, Inc., 2011 UT App 66, ¶ 8, 252 P.3d 365. To be found liable, a store owner must have either actual or constructive knowledge of a hazardous condition or there must be a showing that the store owner created the hazardous condition. Vanicsek v. Wal-Mart Stores, Inc., No. 1:08CV125DAK, 2010 WL 1329939 (D. Utah Mar. 29, 2010) (explaining the law); Jex v. JRA, Inc., 2007 UT App 249, ¶ 10, 166 P.3d 655; Schnuphase v. Storehouse Mkts., 918 P.2d 476 (Utah 1996).

Constructive notice of a dangerous condition will not be imputed when conjecture and speculation are the only ways to determine the length of time the condition existed. See Warrick v. Property Reserve, 2018 UT App 197. In Warrick, the Court held that in order to demonstrate that a store owner had constructive notice of an icy sidewalk, the plaintiff had an affirmative duty to present evidence of approximately when the ice formed. Because plaintiff had presented no evidence demonstrating when the ice had formed, such as temperatures on the preceding days or nights or how long ice takes to form, summary judgment was appropriate.

2.7 Open and Obvious Dangers

The duty of care that possessors of land in Utah owe to invitees regarding open and obvious dangers is set forth in the Restatement (Second) of Torts, §§ 343 and 343A. Jensen v. Gardner, 2012 UT App 146, ¶ 4, 279 P.3d 844 (citing Hale v. Beckstead, 2005 UT 24, ¶¶ 8-9, 116 P.3d 263).

According to the Restatement, a possessor of land is subject to liability for physical harm caused to his invitees by a condition on the land, but only if he 1) knows, or by the exercise of reasonable care would discover a condition, that involves an unreasonable risk of harm, and 2) should expect the invitee will not discover or realize the danger, or will fail to protect themselves against it, and 3) fails to exercise reasonable care to protect against the danger. Hale v. Beckstead, 2005 UT 24, ¶ 8, 116 P.3d 263 (citing Restatement (Second) of Torts § 343 (1965).

A possessor of land is not liable to invitees for physical harm caused by any dangerous condition on the land that is known or obvious to the invitee unless the possessor should anticipate the harm despite such knowledge or obviousness. In determining whether the possessor should anticipate harm from a known or obvious danger, the fact that the invitee is entitled to make use of public land, or of the facilities of a public utility, is a factor of importance indicating that the harm should be anticipated. Restatement (Second) Of Torts § 343A (1965).

2.8 Limitation of Landowner Liability – Recreational Use

Although Utah has enacted a statute limiting the liability of a landowner who allows land to be used for public recreation, the statute has been narrowly interpreted. Utah Limitation of Landowner Liability-Public Recreation Act, U.C.A. §§ 57-14-101 to -205. In order to be entitled to protections afforded to a landowner under this Act, the landowner must directly or indirectly invite or permit nonpaying (or nominal fee of no more than $1 per year) recreational use of its land to recreational users, thus serving the purpose of promoting the opening of private lands to public recreational use. U.C.A. § 57-14-202. The protections available to a landowner under the Act are not available to landowners who actively discourage or preclude public access to their property. Crawford v. Tilley, 780 P.2d 1248, 1251 (Utah 1989). The landowner also is not protected if he charges a person to enter upon his land. The Act does not affect the liability of a landowner for willful or malicious failure to guard or warn against a dangerous condition, use, structure of activity, or for the deliberate, willful, or malicious injury to person or properties. U.C.A. § 57-14-204. “Willful misconduct” and/or “willful and malicious activity” includes: 1) knowledge of a dangerous condition; and 2) that serious injury is a probable result of inaction in the face of such knowledge. Golding v. Ashley Cent. Irrigation Co., 793 P.2d 897, 899 (Utah 1990).

The Act does not apply to owners of land who negligently operate motor vehicles on recreational land. Owners are not relieved of separate duty to conduct themselves in a reasonably safe manner while on premises. Young v. Salt Lake City Corp., 876 P.2d 376, 379 (Utah Ct. App. 1994).

The Utah Limitation of Landowner Liability Act does not apply to improved urban or suburban municipal parks. Nelson ex rel. Stuckman v. Salt Lake City, 919 P.2d 568, 572 (Utah 1996); De Baritault v. Salt Lake City Corp., 913 P.2d 743, 748 (Utah 1996) (listing five factors as a prerequisite to immunity under recreational use statutes). However, applying the five De Baritault factors, it was held to apply to a federally owned picnic area because it was in a remote area, was part of a National Forest in a relatively natural and undeveloped setting in which visitors encounter elements found in the “true outdoors,” such as cliffs, heavily wooded areas, and rivers, and was appropriate for many of the recreational activities listed in the limitation of landowner liability statute. Sulzen v. United States, 54 F. Supp. 2d 1212, 1215 (D. Utah 1999).

To qualify for immunity under the Landowner Liability Act, landowners must make their land available to all members of the general public, not just a limited group of people. Landowners may impose reasonable restrictions on the type of recreational activities allowed on their land, but they must allow all members of the public to engage in the approved activities to qualify for immunity. Perrine v. Kennecott Mining Corp., 911 P.2d 1290, 1293 (Utah 1996).

U.C.A. § 78b-4-508 declares that hockey facility owners are not liable for damages caused by a hockey puck or stick unless the person injured is situated completely behind a board, glass, or similar barrier and the board, glass, or barrier is defective; or the injury is a result of negligence by the owner, operator of the facility, player, coach, or a manager employed by the owner or operator. Cf. U.C.A. § 78b-4-507 (allowing courts to consider the actions of riders in civil actions involving injuries sustained at amusement parks when apportioning fault).

In recent years, the Utah legislature has amended the act to expand the definition of “recreational purpose” to aircraft operations, equestrian activity, skateboarding, skydiving, paragliding, hang gliding, roller skating, walking, running, jogging, and in-line skating. See U.C.A. § 57-14-102.

SECTION 3 – Dramshop Liability

Dramshop legislation was passed to abrogate the common law rule precluding the liability of a party who sells or otherwise provides alcohol to a person who is intoxicated and injures another. “Dramshop acts are enacted to fill the void that existed at common law by imposing a form of strict liability on specific individuals who illegally provide alcohol to certain classes of consumers.” Adkins v. Uncle Bart’s, Inc., 2000 UT 14, ¶¶ 15-16, 1 P.3d 528. Prior to the enactment of the Dramshop Act, Utah did not recognize a third-party cause of action against dramshops. Id. “[T]he legislature intended the Dramshop Act to be a complete and self-contained solution to a social problem not adequately addressed at common law.” Browder v. International Fidelity Ins. Co., 413 Mich. 603, 321 N.W.2d 668, 675 (1982).

Utah’s Alcoholic Product Liability Act (“APLA”), U.C.A. §§ 32b-15-101 to -302, imposes strict liability for any and all injury and damage, except punitive damages, to a third person, on persons, employers, and establishments that provide alcohol to: (1) an individual who is under the age of 21; (2) an individual who is apparently under the influence of intoxicating alcoholic products or drugs; (3) an individual whom the person furnishing the alcoholic product knew or should have known from the circumstances was under the influence of alcoholic products or drugs; or (4) an individual who is a known interdicted person, and who, as a result of the alcohol provided and his intoxicated state, causes injury or death to a third person. See U.C.A. § 32b-15-201. In such situations, the injured third person or his heir has a cause of action against the provider of the alcoholic beverage. For actions arising after January 1, 2010, total damages under the Act are limited to $1,000,000 per individual and $2,000,000 in the aggregate to all persons per occurrence. U.C.A. § 32b-15-301.

“[A]n employer is liable for the actions of its staff in violation of [the Act].” U.C.A. § 32b-15-202(1)(a). However, the Act does not create liability for the state, state agencies, state employees, the commission, the department, or political subdivisions. U.C.A. § 32b-15-203.

Any action brought under the APLA does not preclude additional causes of action, and any additional causes of action are exempt from the APLA damage cap. U.C.A. § 32b‑15-301(4)(a-b). APLA claims are also exempt from sections 78b-5-817 through 78b-5-823 of the Utah Code. Id. at § 301(4)(c). Thus, APLA claims are not subject to Utah’s comparative negligence and fault apportionment provisions. With a few exceptions, a person against whom an award is made under the APLA may bring a separate cause of action for contribution against any person causing the injury or damage. See U.C.A. § 32b-15-302. But the contribution action cannot be brought against a third person who was injured by the intoxicated individual (see § 302(2)(a)), nor can it diminish the recovery amount for injury or damages awarded and received by the injured third person. Id. at § 302(3)(a). But see Red Flame, Inc. v. Martinez, 2000 UT 22, ¶ 10, 996 P.2d 540 (subjecting original Dramshop Liability Act to provisions within Liability Reform Act).

Only “third persons” or their heirs may recover under the APLA, not the intoxicated person. U.C.A. § 32b-15-201; Herland v. Izatt, 2015 UT 30, ¶ 31, 345 P.3d 661; cf. Horton v. Royal Order of the Sun, 821 P.2d 1167, 1169 (Utah 1991) (interpreting original Dramshop Liability Act). The term “third person” does not include the spouse, child, or parent of the intoxicated person. Richardson v. Matador Steak House, Inc., 948 P.2d 347, 349 (Utah 1997) (interpreting analogous Dramshop Liability Act provision); see also Miller v. Gastronomy, Inc., 2005 UT App 80, ¶ 14, 110 P.3d 144 (finding that Utah does not recognize a common law first-party action or wrongful death action brought by heirs against dramshops for injuries suffered by intoxicated persons).

Some question remains as to whether the original Dramshop Act and the more recent Alcohol Beverage Control Act superseded common law theories of liability and whether the statutory limits apply to such theories. See, e.g., Miller v. Gastronomy, Inc., 2005 UT App 80, ¶ 15, 110 P.3d 144.

SECTION 4 – Products Liability

4.1 Strict Products Liability

Relevant Statutes

U.C.A. §§ 78b-6-701 to -707.

Notable Law

Utah adopted the doctrine of strict products liability outlined in § 402A of the Restatement (Second) of Torts (1965). Ernest W. Hahn, Inc. v. Armco Steel Co., 601 P.2d 152, 158 (Utah 1979). Liability for a defective product arises if the plaintiff can prove that at the time the product was sold by the manufacturer, the product contained a defect which made the product unreasonably dangerous to the user or consumer. Nay v. Gen. Motors Corp., GMC Truck Div., 850 P.2d 1260, 1263 (Utah 1993). To establish a defect, the plaintiff must show that a specific defect caused injury. It is not enough to simply show that an accident occurred involving the product. Burns v. Cannondale Bicycle Co., 876 P.2d 415, 418 (Utah Ct. App. 1994).

In order to recover on strict liability against a seller, the plaintiff must prove that (1) a defect or defective condition of the product made it unreasonably dangerous, (2) the defect was present at the time of the product’s sale, and (3) the defective condition was the cause of the plaintiff’s injuries. Dimick v. OHC Liquidation Trust, 2007 UT App 73, ¶ 8, 157 P.3d 347; Interwest Constr. v. Palmer, 923 P.2d 1350, 1356 (Utah 1996). Proof of injury by a product, “without more, is insufficient to establish that a product is unreasonably dangerous.” Niemela v. Imperial Mfg., Inc., 2011 UT App 333, ¶ 14, 263 P.3d 1191, cert. denied, 272 P.3d 168 (Utah 2012).

The doctrine of strict products liability does not apply to the provision of services. Conger v. Tel Tech, 798 P.2d 279, 281-82 (Utah Ct. App. 1990).

The absence of the defective product is not a ground for dismissal for lack of evidence. The plaintiff should be given every reasonable opportunity to gather all evidence in support of his or her claims. Drysdale v. Ford Motor Co., 947 P.2d 678, 680 (Utah 1997).

Compliance with government standards creates a rebuttable presumption of nondefectiveness that may be overcome by a preponderance of evidence, presented by the plaintiff, that the product is unreasonably dangerous. U.C.A. § 78b-6-703(2); Niemela v. Imperial Mfg., Inc., 2011 UT App 333, ¶ 10, 263 P.3d 1191, 1196, cert. denied, 272 P.3d 168 (Utah 2012) (citing Egbert v. Nissan North Am., Inc., 2007 UT 64, ¶¶ 14-16, 167 P.3d 1058).

The Utah Supreme Court held that the Products Liability Act did not render a clause in a software contract that limited liability of a dentist unenforceable. Blaisdell v. Dentrix Dental Sys., Inc., 2012 UT 37, ¶¶ 8-10, 284 P.3d 616; see also U.C.A. § 78b-6-707 (making void and unenforceable sales contracts or collateral documents that require purchasers or end users to indemnify, hold harmless, or defend the manufacturer).

The Utah Supreme Court has also adopted, at least in part, the “component-parts doctrine” set forth in Restatement (Third) of Torts, Products Liability, § 5. Gudmundson v. Del Ozone, 2010 UT 33, ¶ 57, 232 P.3d 1059; Riggs v. Asbestos Corp., 2013 UT App 86, ¶ 19, 304 P.3d 61 (applying Gudmundson).

The Supreme Court of Utah recently overruled previous decisions and found that passive retailers are not immunized from liability in cases where the manufacturer is named in the suit. Bylsma v. R.C. Willey, 2017 UT 85, 416 P.3d 595. The Supreme Court found that retailers, like R.C. Willey, “along with all others in a product’s chain of distribution—are strictly liable for breaching their duty not to sell a dangerously defective product.” Id. ¶ 12.

4.2 Affirmative Defenses

At least two affirmative defenses to strict products liability exist: (1) misuse of the product by the user or consumer; and (2) assumption of the risk, which involves knowledge of the danger or defect by a user or consumer, who then unreasonably proceeds to make use of the product despite that knowledge. Ernest W. Hahn, Inc. v. Armco Steel Co., 601 P.2d 152, 158 (Utah 1979); see also Perkins v. Fit-Well Artificial Limb Co., 514 P.2d 811, 812-13 (Utah 1973) (when a user of a defective product knows, or in the exercise of ordinary care should know, of the defect and of danger inherent therein, the doctrine of strict liability should not apply).

4.3 Alteration or Modification of Product

“Fault” under the Liability Reform Act includes the alteration or modification of a product, which occurred after the sale by the manufacturer or seller to the initial user or consumer, and which changed the purpose, use, function, design, or intended use or manner of use of the product from that which the product was originally designed, tested, or intended. See U.C.A. § 78b-6-705.

In a products liability action, the defendant may exclude evidence of a recall and redesign of a product if it only applied to a different model whose design was substantially dissimilar to the model which caused the alleged injury. Such evidence has little probative value and is outweighed by the substantial prejudicial effect. Nay v. General Motors Corp., 850 P.2d 1260, 1263 (Utah 1993). The trial court’s exclusion of evidence under Rule 403 is reviewed for abuse of discretion. Clatterbuck v. Call, 2007 UT App 76 (unreported).

4.4 Warranties

Relevant Statutes

U.C.A. §§ 70a-2-313 to -316, express and implied warranties, UCC adopted; § 70a-4-207, transfer or presentment of items, UCC adopted; § 70a-2-316, remedies for breach, UCC adopted; § 31a-21-105, insurance policies; §§ 13-20-1 to -7; and § 41-3-405, motor vehicles. Note that U.C.A. §§ 70a-7-501 to -603, which deal with bills of lading, were repealed in the 2006 legislative session.

Notable Law

Under U.C.A. § 70a-2-313, an affirmation merely of the value of goods or a statement purporting to be merely a seller’s opinion or commendation of the goods does not create an express warranty. Thus, the determination of whether an express warranty has been created ultimately hinges upon an examination of whether representations made by the seller were mere statements of opinion, or rather, were promises or affirmations of fact. To qualify as a promise or an affirmation of fact, the statement must be highly specific, definite and objective enough to be verifiable, or capable of being proven true or false. See Boud v. SDNCO, Inc., 2002 UT 83, ¶ 14, 54 P.3d 1131 (finding that a photograph of a boat apparently moving at a high rate of speed accompanied by caption saying that boat offered “best performance” and “superb handling” did not create express warranty).

Validity of Disclaimer: Warranty disclaimer language located directly above signature line of sales agreement and elsewhere in the agreement in bold, capital letters is a valid disclaimer. Boud v. SDNCO, Inc., 2002 UT 83, ¶¶ 18-19, 54 P.3d 1131. The policy of U.C.A. § 70a-2-316 is to disfavor semi-concealed or obscured self-protective provisions in a contract prepared by one party, which the other party is unlikely to notice. Therefore, a disclaimer should not be binding upon a buyer of goods unless it was actually called to his attention; in the absence of evidence that this was done, the seller cannot rely upon it. U.C.A. § 70a-2-316(2); Christopher v. Larson Ford Sales, Inc., 557 P.2d 1009, 1012 (Utah 1976).

In consumer law, implied warranties are designed to protect ordinary consumers who do not have the knowledge, capacity, or opportunity to ensure that the goods which they are buying are in safe condition. U.C.A. §§ 70a-2-314 to -316; Wade v. Jobe, 818 P.2d 1006, 1010 (Utah 1991), superseded by statute on other grounds as stated in Carlie v. Morgan, 922 P.2d 1 (Utah 1996).

Utah has recognized a cause of action for breach of the implied warranty of workmanlike manner and habitability for the sale of a new home. Davencourt at Pilgrims Landing Homeowners Ass’n v. Davencourt at Pilgrims Landing, LC, 2009 UT 65, ¶ 55, 221 P.3d 234.

4.5 Products Liability in General

U.C.A. § 78b-6-702 codifies common law standards for the meaning “unreasonably dangerous.” A rebuttable presumption exists that a product is free of defects where the plan, design, methods, techniques, inspecting, and testing were in conformity with government standards established for the industry. U.C.A. § 78b-6-703; Niemela v. Imperial Mfg., Inc., 2011 UT App 333, ¶ 10, 263 P.3d 1191, cert. denied, 272 P.3d 168 (Utah 2012) (evaluating liability claim arising out of injury caused by opening of mailbox).

In a products liability case in which the defendant manufacturer’s product complies with applicable government safety standards, the jury should be instructed that a presumption of non-defectiveness has arisen under the Utah Product Liability Act, and that a preponderance of the evidence is sufficient to rebut it. Egbert v. Nissan North America, Inc., 2007 UT 64, ¶ 14, 167 P.3d 1058.

Utah recognizes the “enhanced injury” theory of products liability outlined in the Restatement (Third) of Torts, i.e., when a product is defective at the time of commercial sale or other distribution and the defect is a substantial factor in increasing the plaintiff’s harm beyond that which would have resulted from other causes, the product seller is subject to liability for the increased harm. Egbert v. Nissan North America, Inc., 2007 UT 64, ¶¶ 18-19, 167 P.3d 1058 (quoting Restatement (Third) of Torts (Products Liability) § 16(a)). However, Utah does not recognize section 16(b)-(d) of the Restatement, which deal with the burden of proof and apportionment of fault. Egbert v. Nissan Motor Co., Ltd., 2010 UT 8, ¶¶ 22-23, 228 P.3d 737 (requiring the trial court to instruct the jury to apportion fault between the original tortfeasor and product seller).

No dollar amount may be specified in a prayer for damages, but the complaint shall merely ask for damages that are reasonable in the premises. U.C.A. § 78b-6-704; Simantob v. Mullican Flooring, L.P., No. 2:09CV379DAK, 2010 WL 2486549 (D. Utah June 15, 2010) (permitting a party to seek punitive damages based upon the statutory provision) (unpublished).

Product liability claims are subject to a two-year statute of limitations which runs from the time the plaintiff knew, or in the exercise of reasonable diligence should have known, of the injury, its cause, and the identity of the seller and/or manufacturer of the allegedly defective product. U.C.A. § 78b-6-706; Aragon v. Clover Club Foods Co., 857 P.2d 250, 252 (Utah Ct. App. 1993). Due diligence is defined as highly fact sensitive and must be tailored to fit the circumstances in each case. Id. at 253. See also Martin v. Fresenius USA Mfg., Inc., No. 1:12-CV-0005-PMW, 2012 WL 1448052 (D. Utah Apr. 26, 2012) (denying motion to dismiss where plaintiff alleged exercise of diligence) (unpublished).

It is not clear whether damage to the product itself is recoverable in a products liability action. See W.R.H., Inc. v. Economy Builders Supply, 633 P.2d 42, 44 (Utah 1981). In some contexts, where a contract controls the dispute, the economic loss rule may bar the recovery of damage to the product. Reighard v. Yates, 2012 UT 45, ¶¶ 19-23, 285 P.3d 1168.

In Grundberg v. Upjohn Co., 813 P.2d 89, 92 (Utah 1991), a products liability case against a prescription drug manufacturer, the Supreme Court adopted the policy of comment k, Restatement (Second) of Torts § 402A (1965), as the law to be applied in Utah for unavoidably unsafe products. Comment k requires that the product be “properly prepared, and accompanied by proper directions and warning.” Even though some products have dangers associated with their use even when used as directed, sellers of such products should not be held strictly liable for the “unfortunate consequences” attending their use, so long as the products meet the requirements in comment k of the Restatement. Grundberg, 813 P.2d at 92; but see Creech v. Stryker Corp., No. 2:07CV22 DAK, 2012 WL 33360, *5 n.6 (D. Utah Jan. 6, 2012) (suggesting that the holding of Grundberg was limited to prescription drug manufacturers) (unpublished).

In a products liability action, summary judgment or a directed verdict is inappropriate if the expert witnesses of the non-moving party can express conclusions as to the dispositive issues and identify specific grounds upon which those conclusions are based. Cf. Niemela v. Imperial Mfg., Inc., 2011 UT App 333, 263 P.3d 1191, cert. denied, 272 P.3d 168 (Utah 2012) (affirming summary judgment for defendant where plaintiff failed to present expert testimony or little more than allegations that plaintiff was injured by mailbox). If the experts state conclusions without identifying supporting facts, summary judgment will be appropriate. The fact that the moving party disputes the expert witness’s conclusions as unlikely, or even impossible, merely gives rise to an issue of fact within the province of the jury. Nay v. Gen. Motors Corp., 850 P.2d 1260, 1264 (Utah 1993).

Plaintiff must prove a specific defect in the product caused the accident; it is not enough to contend a defect existed and that an accident occurred, and assume the two are related. Burns v. Cannondale Bicycle Co., 876 P.2d 415, 418 (Utah Ct. App. 1994). To meet this standard of proof, however, an allegedly defective vehicle does not need to exist because even if the vehicle has been destroyed, alternate evidence may be sufficient to prove the claim. See Drysdale v. Ford Motor Co., 947 P.2d 678, 681 (Utah 1997).

After an officer was killed in the line of duty while wearing a protective vest, the widow claimed the vest manufacturer inadequately warned her husband about the vest’s limitations. The court, however, explained that where the manufacturer of a product could have averted the danger in an economically feasible manner, the “open and obvious danger” rule is only one factor to consider when assessing liability. When the danger cannot be avoided in an economically feasible manner, the manufacturer will not be held liable for injuries that result from patent dangers that are inherent in the product and which the reasonable user understands. House v. Armour of Am., Inc., 929 P.2d 340, 343-44 (Utah 1996).

Products liability claims require proof of a defective product, which can include manufacturing flaws, design defects, and inadequate warnings regarding use. See Bishop v. GenTec Inc., 2002 UT 36, ¶ 25, 48 P.3d 218; Niemela v. Imperial Mfg., Inc., 2011 UT App 333, ¶ 8, 263 P.3d 1191, cert. denied, 272 P.3d 168 (Utah 2012). To prevail on a products liability claim, a plaintiff must demonstrate (1) that the product was unreasonably dangerous due to a defect or defective condition, (2) that the defect existed at the time the product was sold, and (3) that the defective condition was a cause of the plaintiff’s injuries. Dimick v. OHC Liquidation Trust, 2007 UT App 73, ¶ 8, 157 P.3d 347.

“Unreasonably dangerous” means that the product was dangerous to an extent beyond which would be contemplated by the ordinary and prudent buyer, consumer or user of that product in that community considering the product’s characteristics, propensities, risks, dangers and uses together with any actual knowledge training, or experience possessed by that particular buyer, user or consumer. Id.; U.C.A. § 78b-6-702 (defining term).

SECTION 5 – Motor Vehicles

5.1 Accidents and Reporting

Relevant Statutes and Rules

U.C.A. § 31a-21-307; § 31a-22-201; §§ 31a-22-301 to -304; §§ 31a-22-305 to -305.5; §§ 31a-22-306 to -309; § 31a-22-310; §§ 32b-15-201 to -202; § 41-1a-102; §§ 41-1a-706, -708; §§ 53-3-101 to -102; §§ 53-3-218 to -225; § 53 3-226; §§ 41-6a-102 to -1509; §§ 41-6a-1601, -1801 to -1806; § 41-8-1; § 41-12a-103; §§ 41-12a-301, -305; §§ 41-12a-401 to -411; §§ 41-12a-501 to -513; §§ 41-12a-601 to -606; §§ 41-12a-801 to -806; §§ 53-1-103 to -109; §§ 53-1-111 to -118; §§ 41-22-1 to 2; § 41-22-3; § 41-22-10.6; § 41-22-10.7; §§ 53-3-204 to -211; §§ 63G-3-101 to -102.

Notable Law

The Department of Public Safety can require any operator of a vehicle involved in an accident resulting in injury to or death of any person or a total property damage to the apparent extent of $1,500 to give a written report of the accident to the department. See U.C.A. § 41-6a-402. The reports are without prejudice to the operator or owner and are confidential. U.C.A. § 41-6a-404(2). The written reports may not be used as evidence in any trial, civil or criminal, arising out of an accident, absent certain conditions, such as request by the court. U.C.A. §§ 41-6a-404(2), -404(4). Written reports required to be filed by peace officers and the information in them are privileged and confidential. See U.C.A. § 41-6a-402(7). They may, however, be disclosed in some circumstances. See U.C.A. § 41-6a-404.

The operator of a vehicle involved in an accident resulting in injury to or death of any person or property damage to an apparent extent of $1,500 or more must immediately give notice to the nearest authorized law enforcement agency. See U.C.A. §§ 41-6a-401 to -401.5. U.C.A. §§ 41-6a-102, -401, -502, -1803, and -1806 have recently been amended. Many of the sections were amended effective May 8, 2018. The majority of changes were numbering and title changes; however a common change was reducing many violations from a class C misdemeanor to “an infraction.” Other similar sections of the code have numerous bill drafts attempting to modify them. The use of this section should be cautioned with the warning that these code sections have recently been amended and some are likely to be modified again in the near future.

The operator of a vehicle involved in an accident resulting in injury or death must render reasonable assistance, including transportation or arranging for transportation to health care providers if it is apparent that treatment is necessary or if the injured person requests. See U.C.A. § 41-6a-401.7. In 2012, the Utah legislature passed an act that prevents the Department of Transportation or individuals contracting to provide emergency services at accidents from imposing flat fees on individuals involved in motor vehicle accidents. See U.C.A. § 41-6a-409. Effective May 2017, section 41-6a-409 was amended to allow a charge for more than the actual cost and now includes a reasonable estimate of the cost to respond to a motor vehicle accident. Other amendments were included, so use of this section should be used with caution.

Physical contact is not a prerequisite to involvement in an accident requiring a driver to stop and render assistance. Marakis v. State Farm Fire & Cas. Co., 765 P.2d 882, 884 (Utah 1988).

5.2 Direct Actions

Every liability policy must provide that the bankruptcy or insolvency of the insured may not diminish the liability of the insurer to third parties and that if execution against the insured is returned unsatisfied, an action may be maintained against the insurer for the portion of liability covered by the policy. See U.C.A. § 31a-22-201.

An injured third party who obtains a judgment in excess of policy limits has no direct cause of action against the insurer who refused to settle within policy limits. Ammerman v. Farmers Ins. Exch., 430 P.2d 576, 577 (Utah 1967). Such a limit may not apply when a first party pursues a bad-faith claim against the insurer. Beck v. Farmers Ins. Exch., 701 P.2d 795, 801 n.5 (Utah 1985) (“In Ammerman, we suggested in dicta that in an action for breach of an insurance policy, the damages could not exceed the policy limits. We expressly disavow this dicta.” (citation omitted)). Notably, the injured third party may obtain the rights of the insured against the insurer by assignment or execution. Black v. Allstate Ins. Co., 2004 UT 66, ¶¶ 19-20, 100 P.3d 1163 (claims submitted by third parties must be diligently investigated to determine their validity and then reasonably evaluated in light of all the facts).

5.3 Equipment Required on Vehicles

Utah statute sets out the requirements for vehicle equipment. See U.C.A. § 41-6a-1601, et seq. (prescribing rules for lamination, brakes, bumpers, seat belts, windshields, air conditioning, air bags, horns, and other vehicle equipment). A 2015 amendment makes a violation of most sections as an infraction. U.C.A. § 41-6A-1601(7).

A motorist who observed taillights on a truck parked on the highway in time to have stopped and avoided the collision, but failed to do so because he mistakenly thought the truck was in motion, was negligent as a matter of law. See U.C.A. § 41-6a-1603; Hirschbach v. Dubuque Packing Co., 316 P.2d 319, 320 (Utah 1957).

The statutory duty to sound the horn is not imposed in any particular traffic situation, but instead requires due care in the exercise of judgment as to whether such a warning is necessary. See U.C.A. § 41-6a-1625; Naisbitt v. Eggett, 295 P.2d 832, 834 (Utah 1956).

5.4 Liability of Owner

An owner of a vehicle is not liable for injuries to a third party allegedly caused by negligent driving if the owner was not the driver. An owner does not have an “identity of interest” with the driver of his vehicle, and may not have the same legal defenses. Therefore, if a plaintiff fails to name the driver as a defendant in a lawsuit prior to the expiration of the statute of limitations, the matter fails as a matter of law. Penrose v. Ross, 2003 UT App 157, ¶ 19, 71 P.3d 631; Sweat v. Boeder, 2013 UT App 206, ¶ 9, 309 P.3d 295 (discussing Penrose and declining to apply relation back rule); see also Tan v. Ohio Cas. Ins. Co., 2007 UT App 93, ¶ 10, 157 P.3d 367 (noting that an amended pleading that substitutes or adds new parties generally will not relate back to the original filing date but concluding that trial court erred in dismissal where the party made a technical, rather than substantive, mistake about the identity of the party).

The transferee, before operating or permitting the operation of a transferred vehicle on a highway, shall present to the division the certificates of registration and title, properly endorsed, and shall apply for a new certificate of title and obtain a new registration for the transferred vehicle, except as permitted in U.C.A. §§ 41-1a-223, -520, 703 and -704.

The owner of a motor vehicle is not liable for damages resulting from negligent operation of the vehicle by another after the owner has made a bona fide sale or transfer of his title or interest and who has delivered possession and registration and properly endorsed the certificate of title. See U.C.A. § 41-1a-708.

Prior to the employer’s delivery of the certificate of title to his employee, the employer’s auto policy providing coverage for permissive users covered the employee even though the employee had agreed to purchase the vehicle. However, there may be equitable grounds for holding that a motor vehicle title passes before full compliance with the statute. State Farm Mut. Ins. Co. v. Holt, 503 P.2d 1205 (Utah 1972); Allstate Ins. Co. v. Liberty Mut. Ins. Group, 868 P.2d 110, 113 (Utah Ct. App. 1994).

5.5 Operator’s License

Low-speed vehicles are “motor vehicles” for purposes of traffic rules, driver licensing, insurance, registration, safety standards, and similar regulations. See U.C.A. § 41-6a-1508. A low-speed vehicle is a “four wheeled electric motor vehicle designed to be operated at speeds of not more than 25 miles per hour and that has a capacity of not more than four passengers, including the driver.” U.C.A. § 41-6a-102(33). This definition “does not include a golf cart or an off-highway vehicle.” Id.

A license may not be granted to a person younger than 16 years of age or to persons of a certain age who have not completed an approved course in driver training. See U.C.A. § 53-3-204.

U.C.A. § 53-3-211 requires a parent, guardian, or, if the minor does not have a parent or guardian, a responsible person willing to assume obligation, to sign a minor’s license application or temporary license. That signature imputes liability to the signor for the minor’s negligent or willful misconduct. Id. But the signor satisfies her liability when she obtains minimum liability insurance covering the minor’s operation of the vehicle as required by U.C.A. § 31a-22-304. See U.C.A. § 53-3-211. A signor is not liable when the minor is only contributorily negligent because the purpose of the statute is only to protect innocent third parties, not to protect negligent third parties. Asay v. Watkins, 751 P.2d 1135, 1136 (Utah 1988); Otto v. Leany, 635 P.2d 410, 411 (Utah 1981); Phillips v. Tooele City Corp., 500 P.2d 669, 673 (Utah 1972).Where the father of a deceased son settled a claim with the mother who had signed the negligent driver/son’s license application, he could not pursue a claim for PIP (personal injury protection) benefits against the mother’s insurer. McCaffery ex rel. McCaffery v. Grow, 787 P.2d 901, 904 (Utah Ct. App. 1990); see also U.C.A. § 31a-22-306 to 309.

It is an established tort law principle that minors participating in adult activity, such as operating a motor vehicle, are held to the same standard of care as adults. Summerhill v. Shipley, 890 P.2d 1042, 1044 (Utah Ct. App. 1995).

5.6 Seat Belts

The driver of a motor vehicle shall wear a safety belt. U.C.A. § 41-6a-1803. The driver shall provide for the protection of each person younger than eight years old by using a child-restraint device for each person in the manner prescribed by the manufacturer of the device. Id. The driver shall provide for the protection of those eight years to sixteen years old by using the proper restraint device to restrain each person or by causing a safety belt to be secured on each person. U.C.A. § 41-6a-1803(1)(a)(iii).

A safety belt is not required if the vehicle was built before July 1, 1966, if a physician has provided written verification that the passenger is unable to wear it, the vehicle is not required to have safety belts under federal law, or if all seats are otherwise occupied. U.C.A. § 41-6a-1804. There is currently proposed legislation that would include paratransit vehicles operated by a public transit district in the express list of exceptions.

A person who violates U.C.A. § 41-6a-1803 is guilty of an infraction and shall be fined $45.00; all of it is waived if an approved 30 minute course is completed and, if a U.C.A. § 41-6a-1803(1)(b) violation, proof of acquisition of a child restraint device. U.C.A. § 41-6a-1805. Additionally, until July 1, 2018, an officer may not issue a citation to an individual for violating U.C.A. § 41-6a-1803 if the person has not been previously warned for a violation of the same section. An officer must first issue a warning before a citation can be issued. U.C.A. § 41-6a-1805.

The failure to wear a seat belt does not constitute contributory or comparative negligence and may not be introduced as evidence in a civil action on the issue of injuries or mitigation of damages. U.C.A. § 41-6a-1806; Whitehead v. Am. Motors Sales Corp., 801 P.2d 920, 927 (Utah 1990).

5.7 Traffic Regulation

An inference of negligence does not arise from the fact that a collision occurred when a driver made a left turn; this is a question of fact for a jury. Depew v. Sullivan, 2003 UT App 152, ¶ 41, 71 P.3d 601.

Right-of-way statutes are designed to prevent accidents by two persons who otherwise are both lawfully on the roadway reaching the same place at the same time. Neither has an absolute right of way and both have a duty to use reasonable care for the safety of others, even when one has the right of way over the other. Langlois v. Rees, 351 P.2d 638, 640 (Utah 1960); see also U.C.A. § 41-6a-901 et seq. The right is not absolute, and the one who has it may not claim it in the face of danger which one exercising due care could see and avoid. Hughes v. Hooper, 431 P.2d 983, 984 (Utah 1967). However, the right of way is not transferred to a disfavored driver by the fact that the favored driver exceeds the posted speed. Cintron v. Milkovich, 611 P.2d 730, 732 (Utah 1980).

Driving in excess of the speed limit may constitute prima facie evidence of negligence, but not conclusive evidence. U.C.A. § 41-6a-601(3); Cardon v. Brenchley, 575 P.2d 184, 186 (Utah 1978).

Violations of safety standards set by statute are regarded as prima facie evidence of negligence subject only to justification or excuse. Platis v. United States, 288 F. Supp. 254, 262 (D. Utah 1968), aff’d, 409 F.2d 1009 (10th Cir. 1969).

Evidence of defendant’s guilty plea in an auto homicide case, punishable under a separate Act, should have been admitted as an admission against interest in a civil case, but the guilty plea did not constitute negligence per se. Dixon v. Stewart, 658 P.2d 591, 600 (Utah 1982).

The operator of a vehicle facing a red light must yield the intersection while the operator of a vehicle facing a green turn arrow may cautiously enter the intersection to make the turn indicated by the arrow and is required to yield the right-of-way only to pedestrians and other traffic lawfully using the intersection. U.C.A. § 41-6a-305(2)(b), (4)(a). A green arrow never permits a driver to proceed carelessly, oblivious to the conditions at hand; the driver must take reasonable precautions to avoid a collision. Keller v. Martinez, 2014 UT App 2, ¶ 11, 318 P.3d 1147.

5.8 Guest Statutes

Utah’s motor vehicle guest statute was held unconstitutional in Malan v. Lewis, 693 P.2d 661, 674-75 (Utah 1984).

5.9 Sale of Motor Vehicles

To transfer a vehicle, the owner shall endorse the certificate of title in the space for assignment and warranty of title, which endorsement and assignment shall include a statement of all liens or encumbrances. U.C.A. § 41-1a-702. In 2012, the Utah legislature passed legislation that limits the ability of the buyer to reendorse or reassign the same certificate to new owners. U.C.A. § 41-1a-702(1)(c).

If a vehicle other than an off-highway vehicle older than a 1988 model year, or a vessel or outboard motor older than a 1985 model year, has not been previously titled, the application for certificate of title shall include the manufacturer’s certificate of origin properly endorsed for transfer. U.C.A. § 41-1a-509.

Before the sale of a vehicle for which a salvage certificate or traded title has been issued, the seller shall provide the purchaser with written notification that such a certificate or title has been issued for the vehicle, unless the prospective purchaser is an auctioneer of salvage vehicles or an insurance company. See U.C.A. § 41-1a-1004.

A license is required of dealers and salesmen of new or used cars. U.C.A. § 41-3-201.

5.10 DUI

A “conviction” as used in this section includes convictions for “driving with any measurable controlled substance that is taken illegally in the body.” U.C.A. § 41-6a-501 (setting out multiple definitions of conviction for reckless driving or driving under the influence); see also U.C.A. § 41-6a-517.

The statutory prohibition on drinking alcoholic beverages and having open alcoholic beverage containers in motor vehicles, see U.C.A. §§ 41-6a-526(1) and (2), does not apply to passengers in motorboats, certain limousine or charted buses, licensed taxicabs or buses, or the living quarters of motor homes and campers. U.C.A. § 41-6a-526(4) and (5).

A person may not operate or be in actual physical control of a vehicle within this state if the person: (1) has sufficient alcohol in his body that a subsequent chemical test shows that the person has a blood or breath alcohol concentration of .05 grams or greater at the time of the test; (2) is under the influence of alcohol, any drug, or the combined influence of alcohol and any drug to a degree that renders the person incapable of safely operating a vehicle; or (3) has a blood or breath alcohol concentration of .05 grams or greater at the time of operation or actual physical control. U.C.A. § 41-6a-502(1). Utah’s DUI statute is not unconstitutionally vague. State v. Manwaring, 2011 UT App 443, ¶ 59, 268 P.3d 201. Furthermore, Section 41-6a-517 does not violate the uniform operation of laws provision of the Utah Constitution nor does it violate the United States Constitution. State v. Outzen, 2017 UT 30 (finding if a person operates or is in actual physical control of a motor vehicle with any measurable amount of metabolite of a controlled substance in his body, there is no requirement of an additional finding of impairment).

A finding that the defendant was driving while under the influence on its own is insufficient to submit the issue of punitive damages to a jury. Punitive damages are recoverable against a drunken driver where the driver acted with actual malice or a reckless disregard of the rights and safety of others, and his drunken driving was a cause of the accident. C.T. ex rel. Taylor v. Johnson, 1999 UT 35, ¶¶ 14-16, 977 P.2d 479; Johnson v. Rogers, 763 P.2d 771, 775 (Utah 1988); Biswell v. Duncan, 742 P.2d 80, 85 (Utah Ct. App. 1987); see also U.C.A. § 78b-8-201(1)(b)(i). However, “in cases seeking punitive damages against an intoxicated driver, the plain language of [§ 78b-8-201] eliminates the . . . requirements (1) that compensatory or general damages be awarded first, and (2) that the plaintiff prove by clear and convincing evidence that the tortfeasor’s conduct rises to the standards set forth in subsection 1(a).” C.T. ex rel. Taylor v. Johnson, 1999 UT 35, ¶ 13, 977 P.2d 479.

A breathalyzer test reading .27 has been found sufficient to sustain the court’s finding that the defendant had operated his vehicle in a willful and wanton disregard for the safety of others. Ellefsen v. Roberts, 526 P.2d 912, 915 (Utah 1974).

SECTION 6 – Governmental Immunity

6.1 Introduction

Relevant Statutes

Governmental Immunity Act of Utah , U.C.A. §§ 63G-7-101 to -904.

Notable Law

Except as waived by the Act, governmental entities are immune from suit for injuries arising from the exercise of a governmental function, so long as immunity does not violate the open courts clause of the Utah Constitution. U.C.A. § 63G-7-201(1); but see Jenkins v. Jordan Valley Water Conservancy Dist., 2012 UT App 204, ¶ 117, 283 P.3d 1009, 1048 (concluding that statutory definition of governmental function was unconstitutional as applied), rev’d and vacated on other grounds 2013 UT 59, 321 P.3d 1049.

Under three-step analysis for determining whether a governmental entity is entitled to immunity under the Governmental Immunity Act, the court considers (1) whether the activity the entity performed was a governmental function and therefore immunized from suit by the general grant of immunity; (2) if the activity was a governmental function, whether some other section of the Act waived blanket immunity; and (3) if so, whether the Act contains an exception to that waiver which results in a retention of immunity against the particular claim asserted in the particular case. Grappendorf v. Pleasant Grove City, 2007 UT 84, ¶ 6, 173 P.3d 166; Lyon v. Burton, 2000 UT 19, ¶ 13, 5 P.3d 616; see also Scott v. Utah Cnty., 2015 UT 64, ¶¶ 54-59 (discussing government function test).

An appellate court can reverse a trial court’s dismissal of a negligence claim against a city when the trial court based its dismissal partly on the Governmental Immunity Act of Utah, but failed to adequately explain its reasoning. Gabriel v. Salt Lake City Corp., 2001 UT App 277, ¶ 20, 34 P.3d 234.

Summary judgment is not appropriate when a court must make factual findings to determine if the Governmental Immunity Act applies. Kouris v. Utah Highway Patrol, 2003 UT 19, ¶ 14, 70 P.3d 72. The governmental discretion exception to the waiver of governmental immunity may not be amenable to summary judgment motions. Johnson v. Utah Dep’t of Transp., 2006 UT 15, ¶¶ 19-21, 133 P.3d 402 (noting that the discretionary function involved a factually intensive inquiry); see, e.g., Barenbrugge v. State, 2007 UT App 263, ¶¶ 16-17, 167 P.3d 549 (concluding that material facts over whether accumulation of water caused the injury remained in dispute and affirming denial of summary judgment motion).

6.2 Governmental Function

Governmental function is judicially defined as activities of such a unique nature that they can only be performed by a governmental agency or which are essential to the core of governmental activity. Compare Johnson v. Salt Lake City Corp., 629 P.2d 432, 434 (Utah 1981), with U.C.A. § 63G-7-102 (prescribing a statutory definition). Under the statute, any activity, undertaking, or operation of a governmental entity may be a governmental function, and the statutory definition includes a failure to act. U.C.A. § 63G-7-102(5)(a); see, e.g., Cook v. City of Moroni, 2005 UT App 40, ¶10, 107 P.3d 713 (construction, repair, and operation of flood and storm systems are governmental functions).

Utah courts apply a four-part test (the Little test) to determine whether a governmental act or decision qualifies as a discretionary function under the Act: (1) Does the challenged act, omission, or decision necessarily involve a basic governmental policy, program, or objective; (2) Is the questioned act, omission, or decision essential to the realization or accomplishment of that policy, program, or objective as opposed to one which would not change the course or direction of the policy, program, or objective; (3) Does the act, omission, or decision require the exercise of basic policy evaluation, judgment, and expertise on the part of the governmental agency involved; (4) Does the governmental agency involved possess the requisite constitutional, statutory, or lawful authority and duty to do or make the challenged act, omission, or decision? When all of the questions are clearly answered in the affirmative, then the challenged act, omission, or decision can, with a reasonable degree of assurance, be classified as a discretionary governmental process. But if one or more of the questions call for or suggest a negative answer, then further inquiry may well become necessary, depending upon the facts and circumstances involved. Kerr v. City of Salt Lake, 2013 UT 75, ¶ 17, 322 P.3d 669; see also Laney v. Fairview City, 2002 UT 79, ¶ 15, 57 P.3d 1007; Little v. Utah State Div. of Family Services, 667 P.2d 49, 51 (Utah 1983) (articulating original discretionary function test).

The Governmental Immunity Act of Utah (“the Act”) is unconstitutionally broad to the extent that its 1987 amendment made it applicable to proprietary functions. A city’s operation of a municipal power system is not entitled to immunity under the Act because it is a proprietary function. The Act can confer immunity constitutionally only for “governmental functions”–those things that the government alone must do. Laney v. Fairview City, 2002 UT 79, ¶ 12, 57 P.3d 1007 (holding that the government’s operation of power lines is a government function).

Prior decisions have indicated that the following operations are not governmental functions: sewer systems, water systems, health and swimming facilities, public parks, convention centers, senior citizen centers, theaters, county fairs, ambulance services, and golf courses. See, e.g., Jenkins v. Jordan Valley Water Conservancy Dist., 2012 UT App 204, ¶ 82, 283 P.3d 1009, (concluding that water district’s maintenance of a water line constituted a governmental function but that application of the statutory definition was unconstitutional under the open courts clause of the Utah Constitution), rev’d and vacated on other grounds 2013 UT 59, 321 P.3d 1049.

The determination of whether an entity is an instrumentality of the state requires a comparison of the proposed entity with those entities enumerated by the statute. Specifically the court must decide “whether the entity is a branch of the state that carries out state functions,” and if so whether those functions are “of the same general kind, class, character, or nature as those enumerated terms.” GeoMetWatch v. Utah State University Research Foundation, 2018 UT 50, 428 P.3d 1064.

6.3 Waiver of Immunity

The Utah Governmental Immunity Act waives immunity for:

Contractual obligations. U.C.A. § 63G-7-301(1);
Actions involving real or personal property. U.C.A. §§ 63G-7-301(2)(a)-(c);
Injury caused by defective, unsafe, or dangerous conditions of highways, bridges, or other structures. U.C.A. § 63G-7-301(2)(h)(i);
Injury caused by dangerous or defective public buildings, dams, reservoirs, or other public improvements. U.C.A. § 63G-7-301(2)(h)(ii);
Injury caused by negligence of an employee committed within the scope of employment. U.C.A. § 63G-7-301(2)(i);
Taking or damaging private property without just compensation. U.C.A. § 63G-7-301(2)(d).

The Utah Legislature recently amended U.C.A. § 63G-7-201 and modified the language relating to actions that constitute an exception to a waiver of governmental immunity, replacing that language with language indicating that immunity is not waiver for an injury under specified conditions. The amended provision moved over twenty exceptions to the waiver of immunity to a new section. See U.C.A. § 63G-7-201(4).

For example, the “natural condition” exception to the waiver of immunity in the Governmental Immunity Act applies to claims based on injuries arising from a government entity’s alleged negligent control of an avalanche. Blackner v. State of Utah, 2002 UT 44, ¶ 16, 48 P.3d 949; but see Grappendorf v. Pleasant Grove City, 2007 UT 84, ¶¶ 14-15, 173 P.3d 166 (finding that a city is not immune under the natural condition exception where injury arises from atmospheric conditions like a gust of wind). Although governmental entities have immunity for injuries arising out of any natural condition on publicly owned or controlled lands under U.C.A. § 63G-7-201(4)(k), if the entity undertakes to protect the public from the condition but negligently fails to properly maintain the protective device, immunity may not be waived. Nelson ex rel. Stuckman v. Salt Lake City, 919 P.2d 568, 573 (Utah 1996).

Similarly, the provision of the Governmental Immunity Act which retains immunity for governmental entities which cause injury while “regulating, mitigating, or handling hazardous materials or hazardous waste” applies to all governmental entities, not just those entities whose primary responsibility is to provide public services that relate to hazardous materials. Lovendahl v. Jordan Sch. Distr., 2002 UT 130, ¶ 58, 63 P.3d 705.

In 2012, the Utah Supreme Court held that the licensing exception did not apply to school officials where an instructor allowed a gun to be used in a theater production, because the school district lacked the formal authority to issue, deny, or suspend such a license. Thayer v. Washington County Sch. Dist., 2012 UT 31, ¶¶ 18-21, 285 P.3d 1142.

In 2012, the Utah Supreme Court held that the incarceration exception did not apply where a governmental entity placed a youth in a community-based proctor home. Whitney v. Div. of Juvenile Justice Servs., 2012 UT 12, ¶ 19, 274 P.3d 906 (concluding that the exception applies only when an individual is under the physical control of the state by either physical restraint or special confinement).

Immunity is not waived for actions arising out of assault and battery, even if the assault or battery escalates to kidnapping and murder. Tiede v. State of Utah, 915 P.2d 500, 502 (Utah 1996). Even if the assault or battery is not committed by a government employee, immunity still applies. Taylor v. Ogden City Sch. Dist., 927 P.2d 159, 163-64 (Utah 1996).

In 2015, the Supreme Court repudiated the but-for standard of causation used to determine whether immunity attached in prior cases. See Barneck v. Utah Dept. of Transp., 2015 UT 50, ¶ 46 (noting previous decisions like Taylor adopted a but-for standard, but the exceptions provisions reinstating immunity are properly invoked only where a plaintiff’s injury is a proximate cause of the statutory exception). In doing so, the Supreme Court interpreted several definitions in the Governmental Immunity Act, including “dangerous condition of any highway . . . culvert,” “management of flood waters,” and “operation of a flood or storm system.” Id. ¶ 12.

In some cases, ordinary tort principles will preclude a suit against the governmental entity. For example, a city does not have a duty to maintain street lights and will not be liable for failure to properly maintain street lights. Fishbaugh v. Utah Power & Light, 969 P.2d 403, 406 (Utah 1998).

If an immunity-invoking condition is at least “a proximate cause” of the claimed injury, then the government entity is immune from suit. Larsen v. Davis Cnty. Sch. Dist., 2017 UT App 221, 409 P.3d 114.

6.4 Employee Immunity

An action under the Governmental Immunity Act against a governmental entity or its employee for an injury caused by an act or omission during the employee’s performance of his duties, “within the scope of employment, or under color of authority is a plaintiff’s exclusive remedy.” U.C.A. § 63G-7-202(3)(a).

However, a plaintiff can sue or bring some other proceeding “based upon the same subject matter against the employee or the estate of the employee whose act or omission gave rise to the claim . . . [if] the employee acted or failed to act through fraud or willful misconduct,” U.C.A. § 63G-7-202(3)(c)(i), or was committed while the employee was impaired by alcohol or drugs, id. at § -202(3)(c)(ii)-(iii), or “in a judicial or administrative proceeding the employee intentionally or knowingly gave, upon a lawful oath or in any form allowed by law as a substitute for an oath, false testimony material to the matter of inquiry under this section[,]” id. at -202(3)(c)(iv).

6.5 Defense and Indemnification of Employees

A governmental entity may decline to defend an action against an employee if the entity determines that the employee committed perjury in a proceeding under the Governmental Immunity Act. U.C.A. §§ 63G-7-902, -903, -202(3)(c)(iv).

Employees of governmental entities, upon written request, are entitled to defense and indemnification by the employer with respect to claims arising from an act or omission within the course and scope of employment, unless:

The injury resulted from fraud or willful misconduct of the employee;
The injury resulted from the operation or control of a vehicle by the employee while under the influence of drugs or alcohol; or
The injury resulted from the employee being physically or mentally impaired and unable to reasonably perform his/her job functions because of the use of alcohol or non-prescribed drugs. U.C.A. § 63G-7-202(3)(c).

Compare U.C.A. § 63G-7-202(3)(c), with U.C.A. §§ 63G-7-902 to -903.

6.6 Notice of Claim

A written notice of claim must be filed with the governmental entity before an action can be maintained and within one (1) year after the claim arises regardless of whether or not the function giving rise to the claim is characterized as governmental. The statute of limitations does not begin to run until the claimant knew, or with the exercise of reasonable diligence, should have known that the claimant had a claim against the governmental entity or its employee, and the identity of the governmental entity or the name of its employee. The court may extend the time for minors or mentally incompetent parties without a legal guardian. The governmental entity may also move for the appointment of a guardian ad litem when the claimant is a minor or mentally incompetent and without a legal guardian. U.C.A. §§ 63G-7-401, 402. Utah courts strictly adhere to the notice of claim requirements. Anderson v. Eyre, 2015 UT App 148, ¶ 4, 353 P.3d 170. A key question in notice of claim disputes may be when the claim arose. Nebeker v. Summit Cnty., 2014 UT App 244, ¶¶ 15-19, 338 P.3d 203 (analyzing issue at length).

The notice of claim shall set forth: (1) a brief statement of the facts; (2) the nature of the claim asserted; (3) the damages incurred by the claimant so far as they are known; and (4) if the claim is being pursued against a government employee individually, the name of the employee. U.C.A. § 63G-7-401(3)(a).

The claim must be signed, directed, and delivered to (a) the city or town clerk, when the claim is against an incorporated city or town; (b) the county clerk, when the claim is against a county; (c) the superintendent or business administrator of the board, when the claim is against a school district or board of education; (d) the president or secretary of the board, when the claim is against a special district; (e) the attorney general, when the claim is against the State of Utah; or (f) a member of the governing board, the executive director, or executive secretary, when the claim is against any other public board, commission, or body, or (g) the agent authorized by a governmental entity to receive the notice of claim by the governmental entity under subsection (5)(e). See U.C.A. § 63G-7-401(3)(b)(ii). Failure to file with the appropriate governmental agency may result in the claim being dismissed. See, e.g., Shunk v. State of Utah, 924 P.2d 879, 882 (Utah 1996).

Whether parties may contractually modify the notice requirements of the Governmental Immunity Act has not been directly addressed by the courts, but precedent implies that the Act’s requirements may not be modified by agreement. Myers v. UTA, 2014 UT App 294, ¶ 19 n. 4, 341 P.3d 935 (“Utah courts have consistently and uniformly held that strict compliance with the Governmental Immunity Act is required.”).

Utah case law appears to indicate that parties may still seek damages not included within the original notice of claim, so long as the damages do not “import into a case a new and different cause of action.” See Jenkins v. Jordan Valley Water Conservancy Dist., 2012 UT App 204, ¶¶ 18-21, 283 P.3d 1009, 1017-18, rev’d and vacated on other grounds 2013 UT 59, 321 P.3d 1049 (citing Behrens v. Raleigh Hills Hospital Inc., 675 P.2d 1179, 1182 (Utah 1983) ; U.C.A. § 63G-7-401.

6.7 Statute of Limitations

An action may be commenced within one (1) year after a claim is denied. The governmental entity must inform the claimant of the claim’s denial or approval within sixty (60) days. A claim is deemed denied if not approved within sixty (60) days after filing. U.C.A. §§ 63G-7-402, -403. Upon denial, the claimant may institute an action in district court, so long as the action is brought within the one year. U.C.A. § 63G-7-403(2).

Because the Utah Governmental Immunity Act’s procedural requirements govern claims against governmental parties, other statute of limitations that would otherwise govern may be inapplicable. The UGIA’s procedural requirements govern claims against governmental parties such that plaintiffs are not bound to observe the statute of limitations that would apply were their claims against private parties. Peak Alarm Co. v. Salt Lake City Corp., 2013 UT 8, ¶ 28, 297 P.3d 592.

The legislature amended the Utah Governmental Immunity Act in 2017 to allow claimants to commence an action if (1) the claimant had commenced a previous action within the one-year limit, (2) the previous action failed or was dismissed for a reason other than on the merits, and (3) the claimant files the new action within one year of the failure or dismissal. U.C.A. § 63G-7-403(3)(b). This amendment nullified the holding of Craig v. Provo City, 2016 UT 40, in which the Supreme Court decided that a statute allowing parties to commence a second action within one year of dismissal of the original action for reasons not on the merits did not apply to claims against governmental entities. Id. ¶ 2.

6.8 Damages

Punitive damages are not recoverable against a governmental entity. U.C.A. § 63G 7-603(1)(a). However, the government may be required to pay exemplary or punitive damages for a judgment entered against governmental employees. U.C.A. § 63G-7-603(1)(b). The Act also imposes a damages cap. See U.C.A. § 63G-7-604.

The damages cap provisions in the Act are constitutional. A court may not award prejudgment costs and interest in excess of the maximum cap, but can add post-judgment costs and interest in excess of that cap. Hart v. Salt Lake County Comm’n, 945 P.2d 125, 137-40 (Utah Ct. App. 1997); see also Nebeker v. Summit Cnty., 2014 UT App 244, ¶¶ 50-52, 338 P.3d 203 (applying cap to property damage).

In Tindley v. Salt Lake City Sch. Dist., the Utah Supreme Court held that the $500,000 cap on all damages resulting from a school bus accident in which two students were killed and three seriously injured, did not violate due process and did not violate the Open Courts Clause of the Utah Constitution. 2005 UT 30, ¶ 26, 116 P.3d 295.

6.9 Constitutional Concerns

Courts have held that the Governmental Immunity Act may violate the Utah Constitution if its application denies an individual a remedy that would have existed at the time of its enactment. See Tindley v. Salt Lake City Sch. Dist., 2005 UT 30, ¶ 21, 116 P.3d 295; Day v. State ex rel. Utah Dep’t of Pub. Safety, 1999 UT 46, ¶ 38, 980 P.2d 1171; Jenkins v. Jordan Valley Water Conservancy Dist., 2012 UT App 204, ¶ 117, 283 P.3d 1009, rev’d and vacated on other grounds 2013 UT 59, 321 P.3d 1049, (engaging in substantial discussion of the relationship between the UGIA and the open courts provision of the Utah Constitution and concluding that the statute’s definition of “government function” was unconstitutional as applied).

SECTION 7 – Medical Malpractice
And Hospital Liability

7.1 Prima Facie Medical Malpractice Case

Relevant Statutes

The Utah Health Care Malpractice Act governs actions against “health care providers.” U.C.A. §§ 78b-3-401 to -426.

Notable Law

To make a prima facie case in a medical malpractice action, the plaintiff must present competent evidence: (1) that establishes the standard of care ordinarily exercised by other practitioners in the defendant’s field of practice; (2) that the defendant departed from the applicable standard of care; and (3) that such departure proximately caused the injury. Nixdorf v. Hicken, 612 P.2d 348, 351, 354 n.17 (Utah 1980).

With limited exceptions, these three elements of the plaintiff’s prima facie case must be established by competent expert testimony. Pete v. Youngblood, 2006 UT App 303, ¶ 20, 141 P.3d 629; Bowman v. Kalm, 2008 UT 9, ¶¶ 7, 9-11, 179 P.3d 754 (recognizing limited “common knowledge” exception); Reeves v. Geigy Pharm., Div. of Ciba-Geigy Corp., 764 P.2d 636, 640 (Utah Ct. App. 1988); Hoopiiaina v. Intermountain Health Care, 740 P.2d 270, 271 (Utah Ct. App. 1987). For example, the Utah Court of Appeals has found that a trial court did not err by granting summary judgment in favor of IHC where the patient failed to present expert testimony on the cause of her shoulder injury. Morgan v. Intermountain Health Care, Inc., 2011 UT App 253, ¶¶ 16-18, 263 P.3d 405, distinguished by Advanced Forming Technologies, LLC v. Permacast, LLC, 2015 UT App 7, ¶ 12, 342 P.3d 808, 811 cert. denied sub nom. Advanced Forming v. Permacast, 347 P.3d 405 (Utah 2015).

Generally, to meet the required evidentiary basis, a party must introduce expert medical testimony to further establish that the outcome is more likely the result of negligence than some other cause. However, in certain situations, the medical procedure is so common or the outcome so affronts notions of medical propriety that expert testimony is not required to establish what would occur in the ordinary course of events. In this type of situation, the plaintiff can rely on the common knowledge and understanding of laymen. Pete v. Youngblood, 2006 UT App 303, ¶ 20, 141 P.3d 629; Baczuk v. Salt Lake Reg’l Med. Ctr., 2000 UT App 225, ¶ 7, 8 P.3d 1037; Dalley v. Utah Valley Reg’l Med. Ctr., 791 P.2d 193, 196 (Utah 1990); Nixdorf v. Hicken, 612 P.2d 348, 352 (Utah 1980). An undesired complication or result from medical treatment does not, by itself, imply that the result was caused by someone’s breach of duty of care. King v. Searle Pharm., Inc., 832 P.2d 858, 862 (Utah 1992).

For example, in Pete v. Youngblood, the Utah Court of Appeals concluded that expert testimony was not necessary to establish a breach of the standard of care where a plastic surgeon left gauze in a wound after surgery. See 2006 UT App 303, ¶ 20, 141 P.3d 629.

When the appropriate evidentiary basis is presented, a plaintiff may employ the doctrine of res ipsa loquitur. This doctrine establishes an inference of negligence from the circumstances incident to the operation. It is a procedural rather than substantive rule of law. The rule is applicable when (1) the accident was of a kind which, in the ordinary course of events, would not have happened had the defendant used due care, (2) the instrument or thing causing the injury was at the time of the accident under the management and control of the defendant, and (3) the accident happened irrespective of any participation at the time by the plaintiff. Id. at ¶ 22 (citing Dalley v. Utah Valley Reg’l Med. Ctr., 791 P.2d 193, 196 (Utah 1990)); see also Warenski v. Advanced RV Supply, 2011 UT App 197, ¶ 10 & n.4, 257 P.3d 1096. In some cases, the second element may be shown by presenting evidence that the only instrumentalities that could cause the injury were within the area and in the control of the physicians. King v. Searle Pharmaceuticals, Inc., 832 P.2d 858, 864-65 (Utah 1992).

Although troubled youth treatment centers were not specifically enumerated in the statutory list of “health care providers,” they too may fall into the category of “others rendering similar care and services.” The relevant inquiry is whether a particular center provides services similar enough to those on the list so as to qualify as a health care provider. Platts v. Parents Helping Parents, 947 P.2d 658, 663 (Utah 1997).

In 2012, the Utah Supreme Court vacated a jury verdict in which a hospital was found to have not been negligent. Wilson v. IHC Hospitals, Inc., 2012 UT 43, ¶ 123, 289 P.3d 369 (concluding hospital “violated the trial court’s in limine order, misled the trial court, and substantially prejudiced [plaintiff’s] case”). Among other things, the court held that the “care review privilege” protected the hospital’s neonatal morbidity and mortality statistics. Id. at ¶ 112; U.C.A. § 26-25-1.

In 2012, the Utah Supreme Court “affirm[ed] the existence of a duty on the part of healthcare providers to exercise reasonable care in prescribing medications that pose a risk of injury to third parties.” B.R. ex rel. Jeffs v. West, 2012 UT 11, ¶ 22, 275 P.3d 228 (permitting children of deceased nonpatient to bring suit against healthcare provider after provider prescribed medications that caused husband to shoot his wife).

7.2 Statute of Limitations and Medical Malpractice

The statute of limitations for medical malpractice is two years from the date the plaintiff or patient discovers, or through the use of reasonable diligence should have discovered, the injury, whichever first occurs, but not to exceed four years after the date of the alleged act, omission, neglect, or occurrence, with two exceptions: (1) a suit alleging a foreign object was left within the patient’s body must be commenced within one year after the patient discovers, or should have discovered, its existence; and (2) a suit alleging the physician fraudulently concealed his or her malpractice must be commenced within one year after the patient discovers, or should have discovered, the fraudulent concealment. U.C.A. § 78b-3-404. The Supreme Court recently clarified that there are tolling exceptions even for the statute of repose: “the statutory tolling provisions in Utah Code section 78B-3-404(2) apply to both the two-year limitations period and the four-year repose period in section 78B-3-404(1)”. Bright v. Sorensen, 2020 UT 18, ¶ 68, 463 P.3d 626, 640, reh’g denied (Apr. 17, 2020). Section 78b-3-404(2)(a) of the U.C.A., which requires a suit alleging a foreign object was left in the body to be filed within one year of discovery, applies only to claims brought after the four-year repose period. Day v. Meek, 1999 UT 28, ¶ 20, 976 P.2d 1202; but see Jensen v. IHC Hospitals, Inc., 2003 UT 51, ¶¶ 67-80, 82 P.3d 1076 (adopting a narrow interpretation of Day).

A patient “discovers the injury” only after a patient knew or should have known of physical harm and the fact of negligence which resulted in the injury. Schuurman v. Singleton, 2001 UT 52, ¶ 13, 26 P.3d 227; Foil v. Ballinger, 601 P.2d 144, 147 (Utah 1979). The crucial question is whether the plaintiff was aware of the facts that would lead a reasonable person to conclude that he may have a cause of action against the health care provider. Hargett v. Limberg, 598 F. Supp. 152, 155 (D. Utah 1984), rev’d on other grounds, 801 F.2d 368 (10th Cir. 1986). The malpractice limitations period begins to run from the time the plaintiff discovers or should have discovered his or her “legal injury”–which includes knowledge of the injury and that the injury was likely caused by negligence. McDougal v. Weed, 945 P.2d 175, 178 (Utah Ct. App. 1997). Generally, the discovery inquiry is a fact-intensive inquiry left to the province of the jury. Roth v. Joseph, 2010 UT App 332, ¶¶ 22-23, 244 P.3d 391 (recognizing that summary judgment may still be appropriate when the facts are undisputed that a medical malpractice claim is time-barred). A patient’s medical malpractice claim accrues when the patient knows or should have known of the injury. A patient simply discovering that she “might have sustained an injury” is insufficient. Lee v. Williams, 2018 UT APP 16 .

For the Health Care Malpractice Act’s two-year statute of limitations to apply, the health care in question must have been provided to the complaining patient. It does not apply to alienation of affections claims arising from a relationship that developed between a claimant’s spouse and the spouse’s therapist. Dowling v. Bullen, 2002 UT App 372, ¶¶ 9-10, 58 P.3d 877, aff’d, 2004 UT 50, ¶¶ 9-10, 94 P.3d 915. Note, however, that the two-year statute was found to be unconstitutional as to minors. Lee v. Gaufin, 867 P.2d 572, 583 (Utah 1993); see also Smith v. Four Corners Mental Health Ctr., Inc., 2003 UT 23, ¶ 38, 70 P.3d 904 (tolling the statute of limitations until the age of majority). In 2012, the Utah legislature removed language that made the statute of limitations provision applicable to all persons regardless of minority or legal disability. 2012 Utah Laws Ch. 384 (S.B. 240); U.C.A. § 78b-3-404.

Failure to comply with the statutory precondition to filing medical malpractice action as contained in the Health Care Malpractice Act did not render the general statute of limitations savings clause inapplicable to suit after an initial complaint was dismissed for failure to comply with prelitigation requirements; precondition did not prevent patient’s children from “commencing” suit. McBride-Williams v. Huard, 2004 UT 21, ¶ 9, 94 P.3d 175. Dismissal for failure to comply with Malpractice Act was not decision on merits, but went to jurisdiction of court. U.C.A. § 78b-2-111; U.R.C.P. 3.

Absent an agency relationship or privity, the alleged fraud of one defendant may not be imputed to another defendant for tolling purposes. Jensen v. IHC Hosp., Inc., 2003 UT 51, ¶ 66, 82 P.3d 1076. If a doctor was the hospital’s agent and acted to further the hospital’s aims, the doctor’s fraud tolls the statute of limitations for malpractice action against the hospital. Id. Similarly, if the provider’s misconduct prevented the patient from discovering the negligence, the statute of limitations is tolled. Roth v. Joseph, 2010 UT App 332, ¶¶ 30-33, 244 P.3d 391; U.C.A. § 78b-3-404.

7.3 Bifurcation

Either party may demand a separate trial on the statute of limitations defense. U.C.A. § 78b-2-114; see also Jensen v. IHC Hosp., Inc., 2003 UT 51,¶¶ 21-23, 82 P.3d 1076.

7.4 Informed Consent

When a person submits to health care rendered by a health care provider, express or implied consent is presumed. U.C.A. § 78b-3-406(1).

For a patient to overcome the presumption of consent and recover damages based upon failure to obtain informed consent, the patient must prove each element identified in U.C.A. § 78b-3-406(1), including that a reasonable, prudent person in the patient’s position would not have consented to the health care after being fully informed. Wood v. Univ. of Utah Med. Ctr., 2002 UT 134, ¶ 37, 67 P.3d 436 abrogated on other grounds by Waite v. Utah Labor Comm’n, 2017 UT 86, 416 P.3d 635; Burton v. Youngblood, 711 P.2d 245, 249 (1985).

U.C.A. § 78b-3-406(3) provides defenses to an action based upon alleged failure to obtain informed consent, including the execution of a written consent which complies with this statute.

Statute providing defense to lack of informed consent suit against health care providers based on written consent by patient or his representative did not apply to a battery claim against physician for allegedly performing surgery without obtaining patient’s consent. U.C.A. § 78b-3-406(3)(e); Lounsbury v. Capel, 836 P.2d 188, 196-97 (Utah Ct. App. 1992).

U.C.A. § 78b-3-406(6) identifies the persons who are authorized to consent to any health care not prohibited by law. The statute, however, contains an exception for abortion procedures involving minors. See U.C.A. § 76-7-304.5 (imposing a heightened consent requirement). In 2017, section 78b-3-406(6) was amended to include exceptions for emancipated minors, minors who have entered into a lawful marriage, and unaccompanied homeless minors over the age of 15. Under the statute, any person who in good faith consents to or authorizes health care treatment or procedures for another is not subject to civil liability. U.C.A. § 78b-3-406(7).

Statute providing that a married person is authorized to consent to health care for his or her spouse, authorizes such consent only in an emergency, or if spouse is otherwise unable to give his or her own consent; the statute does not confer authority on married person to consent to surgery when spouse is capable of consenting but does not do so. U.C.A. § 78b-3-406(6)(b); Lounsbury v. Capel, 836 P.2d 188, 196-97 (Utah Ct. App. 1992).

The statute establishes a safe harbor for health care providers relative to informed consent in the context of civil malpractice litigation. This does not constitute a general consent law mandating parental consent for family planning services as well as other kinds of medical care. U.C.A. § 78b-3-406(1), (3)-(4); Planned Parenthood Ass’n v. Dandoy, 635 F. Supp. 184, 188 (D. Utah 1986), aff’d 810 F.2d 984 (10th Cir. 1987).

While expert testimony on the informed consent may be necessary, the lack of expert testimony may not preclude a failure-to-provide-informed-consent claim when the claim is predicated on the complete absence of any disclosure. Nguyen v. IHC Health Services, Inc., 2010 UT App 85, ¶¶ 16-18, 232 P.3d 529 (reversing grant of summary judgment).

7.5 Guaranty, Warranty, Contract, or Assurance of Result

A claim based upon an alleged guaranty, warranty, contract, or assurance of successful result is barred unless the agreement is in writing and signed by the health care provider. U.C.A. § 78b-3-408; but see Sorensen v. Barbuto, 2006 UT App 340, ¶ 10, 143 P.3d 295, aff’d and remanded, 2008 UT 8, 177 P.3d 614 (permitting patient to pursue a comparable remedy under tort theory).

7.6 Ad Damnum Clause

A patient cannot request an award of a specific dollar amount in a medical malpractice complaint but is limited to claiming “such damages as are reasonable in the premises.” U.C.A. § 78b-3-409.

7.7 Notice of Intent to Commence Action

A patient must give at least 90 days advance notice before commencing a malpractice action against a health care provider U.C.A. § 78b-3-412(1)(a); Mehio v. Smart Dental Care, LC, 2012 UT App 335, ¶ 3, 291 P.3d 845. The notice must include all elements identified in U.C.A. § 78b-3-412(2). Coroles v. State, 2015 UT 48, ¶ 9, 349 P.3d 739; Allen v. Intermountain Health Care, 635 P.2d 30 (Utah 1981).

A malpractice action against a health care provider will be dismissed if a plaintiff fails to serve a notice of intent to commence action within 90 days prior to the expiration of the statute of limitations period. Carter v. Milford Valley Mem’l Hosp., 2000 UT App 21, ¶ 13, 996 P.2d 1076.

If a notice of intent to commence action is served less than 90 days prior to the expiration of the statute of limitations period, the limitations period is extended an additional 120 days from the date of service of the notice. U.C.A. § 78b-3-412(4); Gramlich v. Munsey, 838 P.2d 1131, 1132 (Utah 1992).

Documents and information obtained by a party solely through participation in proceedings before a prelitigation panel are confidential, privileged, and inadmissible in civil court. U.C.A. § 78b-3-416(1)(d); Munson v. Chamberlain, 2007 UT 91, ¶ 9, 173 P.3d 848. A party is free, however, to share materials created by that party or obtained by that party independent of the proceedings before the panel. Munson v. Chamberlain, 2007 UT 91, ¶ 12, 173 P.3d 848.

The statutory requirements for timely filing of a notice of intent to commence action apply to a foster child seeking relief against an entity supervising foster care placement if the claims arise out of the provision of mental health services. Smith v. Four Corners Mental Health Ctr., Inc., 2003 UT 23, ¶ 39, 70 P.3d 904.

U.C.A. § 78b-3-412(1)(b) previously requiring medical malpractice plaintiffs to obtain a “certificate of compliance” from a state agency was held unconstitutional. A suit that accused a hospital of negligently causing a patient’s death was reinstated. Vega v. Jordan Valley Medical Center, 2019 UT 35, ¶ 13, 449 P.3d 31, 35.

7.8 Prelitigation Panel Review

All medical malpractice claims must be reviewed by a prelitigation panel prior to commencement of a lawsuit. The panel’s decision is not binding or admissible in a later lawsuit. The panel decides whether the claims of liability have merit, and if so, the panel decides whether the conduct complained of caused any injury to the patient. The proceedings may be considered binding arbitration upon written agreement of all parties. Claims against dentists are exempt from the prelitigation requirements. U.C.A. §§ 78b-3-416, -420.

A prelitigation hearing is a compulsory condition precedent to commencing suit against a health care provider. U.C.A. § 78b-3-416; Carter v. Milford Valley Mem’l Hosp., 2000 UT App 21, ¶ 13, 996 P.2d 1076 (concluding EMTs fell within the act).

An action against a health care provider will be dismissed for lack of jurisdiction if the prelitigation hearing requirements are not satisfied prior to commencement of the action. McBride-Williams v. Huard, 2004 UT 21, ¶ 11, 94 P.3d 175; Carter v. Milford Valley Mem’l Hosp., 2000 UT App 21, ¶ 13, 996 P.2d 1076.

A request for a prelitigation hearing must be filed within 60 days after service of a notice of intent to commence action. U.C.A. § 78b-3-416(2)(a).

As soon as a timely request for a prelitigation hearing is filed, the statute of limitations is tolled until 60 days after the prelitigation panel issues its opinion or 60 days following the termination of the pre-litigation panel’s jurisdiction. U.C.A. § 78b-3-416(3)(a); Kittredge v. Shaddy, 2001 UT 7, ¶ 7, 20 P.3d 285; Gramlich v. Munsey, 838 P.2d 1131, 1132 (Utah 1992); Harper v. Evans, 2008 UT App 165, ¶¶ 17-18, 185 P.3d 573.

A defective request for a prelitigation hearing or a request that is not filed within 60 days after service of a notice of intent to commence action does not toll the statute of limitations beyond any extension provided by statute for service of a notice of intent to commence action less than 90 days prior to the expiration of the statute of limitations period. Kittredge v. Shaddy, 2001 UT 7, ¶ 7, 20 P.3d 285.

When a plaintiff serves a notice of intent to commence action within 90 days of the expiration of the statute of limitations, thereby becoming entitled to a 120-day extension of the statute of limitations period, a court may not bar the plaintiff’s action for failure to file a request for prelitigation review within 60 days of the notice of intent. A plaintiff may renew his or her notice of intent to commence action and file a request for a prelitigation review within the 120-day extension period. Kittredge v. Shaddy, 2001 UT 7, ¶ 7, 20 P.3d 285; Gramlich v. Munsey, 838 P.2d 1131, 1132-33 (Utah 1992).

Filing a pre-litigation claim, as required by the Utah Health Care Malpractice Act, prior to filing a complaint does not toll the one-year statute of limitations applicable to claims under the Governmental Immunity Act. Schleger v. State, 2018 UT APP 84, 427 P.3d 300.

7.9 Limitation of Award of Non-Economic Damages

The amount of damages awarded to an injured plaintiff to compensate for pain, suffering, and inconvenience may not exceed certain limits as set forth in U.C.A. § 78b-3-410. To be clear, these limits do not apply in cases where alleged medical malpractice results in death. Smith v. United States, 2015 UT 68. The current limit for actions arising on or after May 15, 2010 is $450,000 to be adjusted for inflation. U.C.A. § 78b-3-410(1). This limitation does not apply to punitive damages. U.C.A. § 78b-3-410(4).

7.10 Periodic Payment of Future Damages

In any malpractice case in which a party is awarded $100,000 or more for future damages, which include future medical treatment, care or custody, loss of future earnings, loss of bodily function or future pain and suffering, the judge, at the request of either party, is required to order payment of those damages in periodic payments at such intervals as ordered by the court. The obligation to make periodic payments for future damages, other than damages for loss of future earnings, ceases upon the death of the injured person. Lost future earnings shall be paid over the injured person’s work life expectancy. If the injured person dies, any unpaid lost future earnings shall be paid to persons whom the decedent had a duty of support. U.C.A. § 78b-3-414.

7.11 Collateral Sources

The collateral source rule bars “explicit reference and methodical allusion to collateral source benefits.” Wilson v. IHC Hospitals, Inc., 2012 UT 43, ¶ 2, 289 P.3d 369. The Utah Supreme Court recently vacated a jury verdict entered in favor of a hospital after concluding that the hospital repeatedly disregarded an in limine order that barred mention of collateral source benefits. Id.

The court is required to reduce the amount of an award by the amount of payments the injured party received from “collateral sources,” which include benefits paid under the United States Social Security Act; any federal, state or local income disability act; any health, sickness or income replacement insurance; any contract or agreement of another person, group or organization to pay for or reimburse the costs of medical care services; and any contractual or voluntary wage continuation plan provided by employers or any other system intended to provide wages during a time of disability. There shall be no reduction for collateral sources for which a properly preserved subrogation right exists. No reduction shall be made and no evidence shall be received for future collateral sources except that evidence of government programs that provide payments or benefits irrespective of a recipient’s ability to pay is admissible and may be considered by the trier of fact in determining the amount of damages awarded to a plaintiff for future damages. U.C.A. § 78b-3-405.

7.12 Attorneys’ Fees

In all malpractice cases, an attorney representing the plaintiff on a contingent fee basis is entitled to no more than one-third of the amount recovered for personal injury or wrongful death. The contingent fee limitation applies regardless of whether the recovery is by settlement, arbitration, judgment or whether an appeal is involved. U.C.A. § 78b-3-411.

7.13 Rights of Terminally Ill Patients

Statutes governing advance directives are found at U.C.A. §§ 75-2a-101 to -125, also known as the Advance Health Care Directive Act.

7.14 Authoritative Texts or Treatises

A medical expert’s failure to read, rely on, or credit a particular authoritative text does not prevent cross-examination as to that work where the cross-examining party otherwise could prove its authoritative nature by independent evidence. Proof by any competent expert witness within the specific discipline that the book was authoritatively used and relied upon within the discipline would satisfactorily establish the authority of the work so as to allow its use in cross-examination. Jenkins v. Parrish, 627 P.2d 533, 539-40 (Utah 1981), overruled on other grounds by State v. Menzies, 889 P.2d 393 (Utah 1994).

Error in admission of a learned text in a medical malpractice action has not always constituted reversible error. Butler v. Naylor, 1999 UT 85, ¶¶ 15-18, 987 P.2d 41 (noting that the jury could have relied on several testimonies).

7.15 Similar Locality Rule

Doctors in Salt Lake City who profess to be experts in a field of surgery or medicine should be held to the standard of care exercised by experts in the same field in cities of comparable size and throughout the medical profession. Physicians should be held to the same national standard of care adhered to by qualified fellow experts in similar medical centers. Robb v. Anderton, 863 P.2d 1322, 1326 (Utah Ct. App. 1993); Jenkins v. Parrish, 627 P.2d 533, 537 (Utah 1981), overruled on other grounds by State v. Menzies, 889 P.2d 393 (Utah 1994); Swan v. Lamb, 584 P.2d 814, 817 (Utah 1978).

7.16 Wrongful Pregnancy, Wrongful Birth, Wrongful Life

The Utah Supreme Court distinguishes claims for wrongful pregnancy from claims for wrongful birth or wrongful life. C.S. v. Nielson, 767 P.2d 504, 506 (Utah 1988). Wrongful pregnancy refers to those cases where parents bring a claim on their own behalf for the monetary and emotional damages they suffered as a result of giving birth to a normal and healthy but unplanned and unwanted child. Id. Wrongful birth, on the other hand, refers to those cases where parents claim they would have avoided conception or terminated an existing pregnancy by abortion but for the negligence of those charged with, among other things, prenatal testing and counseling regarding the likelihood of giving birth to a physically or mentally impaired child. Id. Wrongful life is the corresponding action by or on behalf of an impaired child alleging that but for the medical professional’s negligence, the child would not have been born to experience the pain and suffering associated with his or her impairment. Id.

The Wrongful Life Act (U.C.A. §§ 78-11-23 to -25) was repealed effective February 2008. See Wood v. University of Utah Med. Ctr., 2002 UT 134, ¶¶ 14-17, 67 P.3d 436 (concluding that Wrongful Life Act did not violate open courts provision because a cause of action for wrongful birth had not been recognized prior to 1983). In 2008, the Utah legislature enacted U.C.A. § 78b-3-109, which contained nearly identical language to the Wrongful Life Act provision at issue in Wood and provided that a cause of action may not arise, and damages may not be awarded, based on the claim that but for the acts or omission of another, a person would not have been permitted to have been born alive but would have been aborted.

Parents are entitled to recover damages for “wrongful pregnancy” which resulted from a negligently performed sterilization or abortion, negligent dispensing of a contraceptive prescription, or negligent failure to counsel patients of the risk of pregnancy associated with such treatment. Damages which may be awarded include: (1) medical and hospital expenses incurred, including the costs of the initial unsuccessful treatment, prenatal care, childbirth, postnatal care, and increased costs for a second sterilization procedure if obtained; (2) compensation for physical and mental pain, including the discomfort of pregnancy, childbirth, and sterilization procedures; (3) wage losses occasioned by the pregnancy and sterilization procedures; and (4) punitive damages if misconduct was willful and malicious or extremely reckless. Parents are not entitled to recover the costs of raising an unplanned or unwanted child. C.S. v. Nielson, 767 P.2d 504, 509-10 (Utah 1988).

SECTION 8 – Immunity

8.1 Volunteers and Non-Profit Organizations

Relevant Statutes

U.C.A. §§ 78b-4-101 to -103.

Notable Law

Immunity exists for a volunteer providing services for a nonprofit organization if the volunteer was acting in good faith and reasonably believed he was acting within the scope of his official functions and duties and the damage or injury was not caused by an intentional or knowing act of the volunteer. U.C.A. § 78b-4-102(1). However, immunity is not granted if the injury results from a volunteer’s operation of a motor vehicle or other vehicle for which an operator’s license is required; when suit is brought by state or local government to enforce federal, state or local law; or where the nonprofit organization fails to provide a financially secure source of recovery for individuals who suffer injuries. U.C.A. § 78b-4-102(2).

The granting of immunity to a volunteer of a non-profit organization does not affect the liability of the organization. U.C.A. § 78b-4-102(5). The section should not be construed as placing a duty upon nonprofit organizations to provide financially secure sources of recovery. U.C.A. § 78b-4-102(4).

A nonprofit organization is not liable for the acts or omissions of its volunteers unless the organization had, or reasonably should have had, notice of the volunteer’s unfitness to provide services such as to make the organization’s use of the volunteer reckless or wanton, or if a business employer would not be liable under the laws of Utah for the same act or omission by one of its employees. U.C.A. § 78b-4-103.

8.2 Infants / Family Immunity

Parent-child immunity has never been recognized by the State of Utah. Farmers Ins. Exch. v. Call, 712 P.2d 231, 235 (Utah 1985); Bishop v. Nielsen, 632 P.2d 864, 866 (Utah 1981). In Bishop, the court ruled that even if the doctrine were followed in Utah, it would not prevent the joinder of the plaintiff’s daughter as a third-party defendant. Id. In Farmers Ins. Exch., the court acknowledged that the doctrine has never been established by the legislature and does not exist in Utah. More importantly, the court held that the household or family exclusion often found in automobile liability policies is void to the extent of coverage required by the financial responsibility laws (the exclusion has been enforced above that limit). 712 P.2d at 236-37. In this context, the court noted that it did not consider the threat of intra-family collusion to be a valid rationale for that exclusion. Id. State Farm Mut. Auto. Ins. Co. v. Mastbaum, 748 P.2d 1042, 1044 (Utah 1987) has since confirmed that the household exclusion is valid over and above the statutory minimum required by the No-Fault Insurance Act. See Motor Vehicle Insurance, Personal Injury Protection/No Fault, subsection 2.2; Nat’l Farmers Union Prop. & Cas. Co. v. Moore, 882 P.2d 1168, 1170 (Utah Ct. App. 1994).

In Stoker v. Stoker, 616 P.2d 590 (Utah 1980), the court ruled that the doctrine of interspousal tort immunity did not bar a wife’s action for intentionally caused personal injuries. In 2007, the Utah Supreme Court, agreeing with the Lucero decision, held that the “common-law doctrine of interspousal immunity has been abrogated with respect to all claims[,]” including negligence. Ellis v. Estate of Ellis, 2007 UT 77, ¶ 21, 169 P.3d 441.

There is no clear rule concerning when a child is old enough to have a duty of due care. A child is expected to exercise that degree of care which would ordinarily be observed by children of the same age, intelligence, and experience under similar circumstances. Donohue v. Rolando, 16 Utah 2d 294, 400 P.2d 12, 14 (Utah 1965). The capacity of a child is a factual inquiry and should be decided by the court or a jury. Rivas v. Pac. Fin. Co., 16 Utah 2d 183, 187-87, 397 P.2d 990 (1964); Mann v. Fairbourn, 12 Utah 2d 342, 346, 366 P.2d 603, 606 (1961). A child participating in an adult activity, however, is held to the same standard of care as an adult. Summerhill v. Shipley, 890 P.2d 1042, 1044-45 (Utah Ct. App. 1995) (considering claim against sixteen-year old driver).

The law, however, may impose upon adults a duty of a higher standard of care toward children. Vitale for Christensen v. Belmont Springs, 916 P.2d 359, 362 (Utah Ct. App. 1996) (concluding that a child over the age of fourteen was not entitled to the higher standard of care).

8.3 Husband and Wife Privilege

Relevant Statutes

U.C.A. § 30-2-4; §§ 78b-12-105, -106; § 78b-1-137, civil spousal privilege ; § 77-1-6, criminal spousal privilege.

Notable Law

In Forsman v. Forsman, 779 P.2d 218, 219-20 (Utah 1989), the court adopted Restatement (Second) of Conflict of Laws §§ 145 and 169 which provide that the law of the state with the most significant contacts to the occurrence will govern a claim between spouses, which usually is the law of the state where the parties reside. See also Doe v. Nevada Crossing, Inc., 920 F. Supp. 164, 166 (D. Utah 1966) (recognizing that Utah courts have adopted the most significant relationship standard for most choice of law issues, including intra-family torts); Williams v. Jeffs, 2002 UT App 232, ¶ 12, 57 P.3d 232 (recognizing that injury to the interspousal relationship is most significant where that injury occurs).

See Infants/Family Immunity (subsection 8.2) for rules concerning tort immunity.

The negligence of a driver-spouse cannot be imputed to a passenger-spouse. Steele v. Denver & Rio Grande W. R.R. Co., 396 P.2d 751, 754 (Utah 1964).

One has an insurable interest in another person, for persons closely related by blood or by law if they have a “substantial interest engendered by love and affection.” U.C.A. § 31a-21-104(1)(b)(i). One has an insurable interest in property or liability if he has a “lawful and substantial economic interest in the nonoccurrence of the event insured against.” U.C.A. § 31a-21-104(1)(c). In Nat’l Farmers Union Prop. & Cas. Co. v. Thompson, 286 P.2d 249, 252 (Utah 1955), the Utah Supreme Court concluded that a person having such interest in property that he may derive pecuniary benefit from the property’s continued existence or suffer pecuniary loss from its destruction has a substantial economic interest such that he or she can enforce an insurance policy. See also U.C.A. § 31a-21-104(1)(c).

An innocent coinsured is not necessarily precluded from recovering on a fire insurance policy because a coinsured, her husband, intentionally destroyed the property. Error v. W. Home Ins. Co., 762 P.2d 1077, 1081 (Utah 1988). If, however, the insurance policy contains an unambiguous exclusion for intentional acts, an innocent spouse may be precluded from recovery under the policy. Utah Farm Bureau Ins. Co. v. Crook, 1999 UT 47, ¶ 7, 980 P.2d 685; but see Speros v. Fricke, 2004 UT 69, ¶ 46 n.9, 98 P.3d 28 (distinguishing homeowners insurance from automobile insurance).

Despite a divorce decree that awarded the home to the wife and a restraining order prohibiting the husband from returning to the home, the husband had an insurable interest in the home, albeit minimal. Error v. W. Home Ins. Co., 762 P.2d 1077, 1081 (Utah 1988).

SECTION 9 – Indemnity

9.1 In General

Relevant Statutes

U.C.A. § 13-8-1.

Notable Law

Whether a claim for implied indemnity exists is unsettled. Freund v. Utah Power & Light Co., 793 P.2d 362, 369 (Utah 1990); see also Snyder v. PacifiCorp, 316 F. Supp. 2d 1247, 1252 (D. Utah 2004).

The common law disfavors agreements that indemnify parties against their own carelessness. Penunuri v. Sundance Partners, Ltd., 2011 UT App 183, ¶ 7, 257 P.3d 1049, cert. granted, 263 P.3d 390 (Utah 2011). However, Utah courts allow parties to enter into indemnification contracts. Russ v. Woodside Homes, Inc., 905 P.2d 901, 904-05 (Utah Ct. App. 1995); but see Blaisdell v. Dentrix Dental Sys., Inc., 2012 UT 37, ¶¶ 8-10, 284 P.3d 616 (noting statutory exception for products liability).

Contracts to assume the ultimate financial responsibility for the negligence of another have been strictly construed and enforced only when the intention is clearly and unequivocally expressed. See, e.g., Bishop v. GenTec Inc., 2002 UT 36, ¶ 19, 48 P.3d 218; Shell Oil Co. v. Brinkerhoff-Signal Drilling Co., 658 P.2d 1187, 1189 (Utah 1983); Gordon v. CRS Consulting Eng’rs, 820 P.2d 492, 494 (Utah Ct. App. 1991).

There is a trend to relax the rule of strict construction. See Freund v. Utah Power & Light Co., 793 P.2d 362, 370 (Utah 1990) (finding that although the agreement did not specifically state the effect of any “negligence” on the part of the indemnitee, indemnity was allowed); Russ v. Woodside Homes, Inc., 905 P.2d 901, 905 (Utah Ct. App. 1995). Under the liberalized rule of construction, an indemnity agreement need not contain specific language to that effect. Rather, the language and purpose of the entire agreement, together with the surrounding facts and circumstances, may provide a sufficiently clear expression of the parties’ intent. Healy v. J.B. Sheet Metal, Inc., 892 P.2d 1047, 1049 (Utah Ct. App. 1995). A court may pay lip service to strict construction while applying a liberalized rule of construction. Compare Bishop v. GenTec Inc., 2002 UT 36, ¶ 19, 48 P.3d 218 (holding that the Court will not infer an intention to indemnify against other kinds of liability, including strict liability, where such an intention is not clearly expressed), with Ervin v. Lowe’s Companies, Inc., 2005 UT App 463, ¶ 10, 128 P.3d 11 (holding that the court will look to the surrounding facts and circumstances to interpret the contractual language). In 2015, the Utah Supreme Court held that insurance procurement provisions are distinguishable from indemnity provisions and are not subject to strict construction. Utah Transit Auth. v. Greyhound Lines, Inc., 2015 UT 53, ¶ 19, 355 P.3d 947.

Although an agreement to provide insurance for another’s benefit is analogous in some respects to an agreement to indemnify another for the consequences of the other’s own negligence, such an agreement is not subject to strict construction. Pickhover v. Smith’s Mgmt. Corp., 771 P.2d 664, 667 (Utah Ct. App. 1989), declined to follow by CIG Exploration, Inc. v. Hill, 824 F. Supp. 1532, 1542 n.11 (D. Utah 1993).

Certain indemnity contracts for the promisee’s sole negligence are void as against public policy. U.C.A. § 13-8-1(2); Jacobsen Constr. v. Blaine, 863 P.2d 1329, 1332 (Utah Ct. App. 1993) (concluding that an indemnity agreement in the construction industry violates public policy if it requires indemnification of the indemnitee for its sole negligence); Healy v. J.B. Sheet Metal, Inc., 892 P.2d 1047, 1051 (Utah Ct. App. 1995). A clause in a contract requiring a subcontractor to procure liability insurance and name the general contractor as an additional insured is not an indemnification provision and does not therefore violate public policy. Blaisdell v. Dentrix Dental Sys., Inc., 2012 UT 37, ¶ 9, 284 P.3d 616 (discussing Meadow Valley Contractors, Inc. v. Transcon. Ins. Co., 2001 UT App 190, ¶ 16, 27 P.3d 594). A general contractor bears the risk of harm caused to others, including employees of a subcontractor, by the dangerous character of the structure being built while the work remains in the general contractor’s charge. A subcontractor owes the same duty to employees of another subcontractor as it owes to any other person. A subcontractor owes a duty to perform its work without creating an unreasonable risk to another subcontractor. As between two independent contractors who work on the same premises, either at the same time or one following the other, each owes to the employees of the other the same duty of exercising ordinary care as they owe to the public generally. Where two or more independent contractors, or a general contractor and one or more subcontractors, are engaged in work on the same premises, it is the duty of each contractor, in prosecuting his work, to use ordinary and reasonable care not to cause injuries to the servants of another contractor. Cromwell v. A & S Constr., 2013 UT App 240, ¶¶ 11-13, 314 P.3d 1008.

Ordinarily a parent may not release or waive a minor’s prospective claims for negligence. Also, a parent’s agreement to indemnify a third party for that party’s own negligence is void as against public policy. By shifting financial responsibility to a minor’s parent, such indemnity provisions would allow negligent parties to circumvent the rule voiding waivers signed on behalf of a minor. Hawkins v. Peart, 2001 UT 94, ¶ 13, 37 P.3d 1062, conclusion superseded by statute as stated in Penunuri v. Sundance Partners, Ltd., 301 P.3d 984 (Utah 2013). However, this general rule is inapplicable where otherwise provided by statute. Penunuri, 2013 UT 22, ¶ 21 & n. 43, 301 P.3d 984 (noting that the decision in Hawkins is limited when incompatible with a statute, specifically U.C.A. § 78b-4-203(2)(b) of the Equine Act).

In other contexts, the Utah Supreme Court has permitted pre-injury releases so long as the releases (1) do not offend public policy, (2) do not fit within the public interest exception, and (3) are clear and unambiguous. Pearce v. Utah Athletic Found., 2008 UT 13, ¶ 14, 179 P.3d 760, abrogated on other grounds by Penunuri v. Sundance Partners, Ltd., 2017 UT 54.

SECTION 10 – Agency And Employer’s Liability

10.1 Vicarious Liability

An employer can be vicariously liable for the intentional tortious acts of employees under the theory of respondeat superior if those acts are conducted within the scope of employment. An employer may be held vicariously liable for the intentional and tortious use of force, for sexual battery, sexual abuse, alienation of affections, fraud, etc., by an employee if the conduct is within the scope of employment. Diversified Holdings, L.C. v. Turner, 2002 UT 129, ¶ 37, 63 P.3d 686; Clark v. Pangan, 2000 UT 37, ¶ 8, 998 P.2d 268; Hernandez v. Baker, 2004 UT App 462, ¶ 12, 104 P.3d 664.

An employer’s liability under respondeat superior arises not as a result of negligence by the employer, but solely because of the employment relationship, meaning that the employer reaps the benefits of their employee’s acts, and may more easily spread the cost of accidents. Krukiewicz v. Draper, 725 P.2d 1349, 1351 (Utah 1986).

The relationship between a real estate broker and agent/salesperson is that of employer and employee, not contractor and independent contractor. Therefore, the tortious acts of an agent/salesperson can be imputed to the principal/brokerage firm if the agent is acting within the scope of employment. Phillips v. JCM Dev. Corp., 666 P.2d 876, 881 (Utah 1983).

A principal is not liable for the negligence of an independent contractor unless the principal undertakes control or responsibility for the task performed by the contractor. Carter v. Done, 2012 UT App 72, ¶ 14, 276 P.3d 1127 (quoting Thompson v. Jess, 1999 UT 22, ¶¶ 13-15, 979 P.2d 322); Gleason v. Salt Lake City, 74 P.2d 1225 (Utah 1937). In Poteet v. White, 2006 UT 63, ¶ 8, 147 P.3d 439, the court declined to address whether to adopt Section 427 of the Restatement (Second) of Torts which provides for viability liability for one who employs an independent contractor to do inherently dangerous work. Under the retained control doctrine, however, there may be a narrow category of cases in which the contractor’s participation or control over the employee may give rise to a limited duty of care. See Gonzalez v. Russell Sorensen Const., 2012 UT App 154, ¶ 16, 279 P.3d 422 (citing Magana v. Dave Roth Constr., 2009 UT 45, ¶ 23, 215 P.3d 143).

Based on the “coming and going” rule, the city is not liable for the alleged negligence of a police officer involved in an auto accident in a patrol car while the officer was on her commute home from work. Ahlstrom v. Salt Lake City Corp., 2003 UT 4, ¶¶ 8, 13, 73 P.3d 315; see also Whitehead v. Variable Annuity Life Ins. Co., 801 P.2d 934, 937 (Utah 1989) (stating general rule that employee is not acting within the course and scope of his or her employment while traveling in own automobile to and from work) (declined to extend by Boyko v. Parker 960 F. Supp. 2d 1270, 1275 (D. Utah 2013)); but see Whipple v. Hill, No. 2:11-CV-474-TC, 2012 WL 2711544 (D. Utah July 9, 2012) (describing possible exceptions to the rule including the weighing of benefit to and control of the owner).

Whether a principal/employer is vicariously liable for an agent/employee’s acts and whether a principal/employer is imputed with his or her agent/employee’s knowledge are two separate legal questions. While vicarious liability is generally limited to tort cases, imputation of knowledge applies to cases lying in tort, contract, securities, and property law. Wardley Better Homes & Gardens v. Cannon, 2002 UT 99, ¶ 19, 61 P.3d 1009.

In 2012, the Utah Supreme Court held that a hospital has the right to defend itself and may communicate with employees to determine the extent to which it may be held vicariously liable, and that the patient impliedly consented to allow physicians to share information ordinarily protected by the duty of confidentiality. Wilson v. IHC Hospitals, Inc., 2012 UT 43, ¶ 97, 289 P.3d 369.

Notably, “[a] verdict that finds an entity independently liable and not vicariously liable is neither inconsistent on its face nor uncommon.” Guss v. Cheryl, Inc., 2010 UT App 249, ¶ 21, 240 P.3d 1142. See, e.g., Birkner v. Salt Lake County, 771 P.2d 1053, 1059 (Utah 1989) (affirming the judgment against an employer for negligence even though the company was not considered vicariously liable for the employee’s sexual battery).

10.2 Employee Status

Occasional employees are still considered employees. U.C.A. § 34a-2-103(2)(b)(ii) (defining “regular” employment as employment in the usual course of the business whether continuous or for a portion of the year for purposes of the Workers’ Compensation Act); Osman Home Improvement v. Indus. Comm’n, 958 P.2d 240, 243-44 (Utah Ct. App. 1998); Evans v. Stuart, 410 P.2d 999 (Utah 1966).

An employee’s assistant was eligible for workers compensation benefits because the roofing company’s owner knew the assistant was doing roofing work for the company, the roofing company paid the assistant directly for his work, and the roofing company retained the right to hire and fire all roofers. Osman Home Improvement, 958 P.2d at 245.

Generally, if an “employer” retains the right to control the work of the claimant, the claimant is the employer’s employee for workers compensation purposes. Factors used to determine the right to control include, but are not limited to the following: the express or implied right to direct and control the employee; the right to hire and fire; responsibility for payment of wages; and providing job-related equipment. It is not the actual exercise of control that determines whether an employer-employee relationship exists; it is the right to control that is determinative. Johnson Bros. Constr. v. Labor Comm’n, 967 P.2d 1258, 1260 (Utah Ct. App. 1998) (analyzing employee status under worker compensation law); see also Mitchell v. Rice, 885 P.2d 820, 821 (Utah Ct. App. 1994) (stating that the right to control, and the actual exercise of control, is critical for determining if employment relationship exists under workers compensation law); see also Proctor & Gamble Co. v. Haugen, 222 F.3d 1262, 1277 (10th Cir. 2000) (describing Utah case law).

“Employees” are hired for (1) compensation, (2) for a substantial period of time, (3) to perform duties wherein they are subject to a comparatively high degree of direction and control by the employer. W. Cas. & Sur. Co. v. Marchant, 615 P.2d 423, 426-27 (Utah 1980) (analyzing employee status in the context of insurance policy); Palmer v. Davis, 808 P.2d 128, 130-31 (Utah Ct. App. 1991).

An intern that receives no pay is not an employee, despite the fact that she obtains other benefits from the employment based on the “threshold remuneration” test, where the benefits alleged were not provided by the hospital, were different from traditional benefits, such as a pension or insurance, and were too attenuated to give rise to an employment relationship. Sacchi v. IHC, 918 F. 3d 1155 (10th Cir. 2019).

10.3 Scope of Employment

Acts that fall within the scope of employment are those actions which are so closely connected with what the servant is employed to do that they are arguably methods, even though some may be improper, of carrying out the objectives of the employment. Birkner v. Salt Lake County, 771 P.2d 1053, 1056-57 (Utah 1989); but see Acor v. Salt Lake City Sch. Dist., 2011 UT 8, ¶¶ 17-21, 247 P.3d 404 (affirming Birkner for vicarious liability but suggesting that the inquiry would be different in claims under the state’s reimbursement statute, U.C.A. § 52-6-201).

The criteria for determining whether an employee was acting within the scope of employment are: (1) an employee’s conduct is of the general kind the employee is employed to perform; (2) the employee’s conduct occurs substantially within the ordinary hours and spatial boundaries of employment; and (3) the employee’s conduct is motivated at least in part by the purpose of serving the employer’s interest. Newman v. White Water Whirlpool, 2008 UT 79, ¶ 9, 197 P.3d 654 (citing Birkner v. Salt Lake County, 771 P.2d 1053, 1056-57 (Utah 1989)); Clark v. Pangan, 2000 UT 37, ¶ 20, 998 P.2d 268; Clover v. Snowbird Ski Resort, 808 P.2d 1037, 1040 (Utah 1991); Sutton v. Byer Excavating, Inc., 2012 UT App 28, ¶¶ 7-8, 271 P.3d 169.

Generally, the question of whether an employee is acting within the scope of employment is a question of fact. Only when the conduct in question is so clearly within or outside the scope of employment that reasonable minds could not differ as to the finding is a court permitted to decide the issue as a matter of law. Giusti v. Sterling Wentworth Corp., 2009 UT 2, ¶¶ 65-68, 201 P.3d 966, 979; Clark v. Pangan, 2000 UT 37, ¶ 11, 998 P.2d 268; Newman v. White Water Whirlpool, 2007 UT App 303, ¶ 3, 169 P.3d 774.

When an employee departs from the designated route, if it is such a substantial deviation or detour from the employee’s duties that it clearly constitutes an abandonment of employment, then the activity is outside the scope of employment. Clover v. Snowbird Ski Resort, 808 P.2d 1037, 1041 (Utah 1991). However, employees are arguably within the scope of employment if they return to their duties after a personal detour and an accident occurs. Id. In situations where reasonable minds could differ on whether or not an act constitutes as abandonment, the question goes to the jury. Id.

Generally, employees are not in the scope of employment for purposes of third-party negligence claims when traveling to and from work. Ahlstrom v. Salt Lake City Corp., 2003 UT 4, ¶ 6, 73 P.3d 315; Whitehead v. Variable Annuity Life Ins. Co., 801 P.2d 934 (Utah 1989), declined to extend by Boyko v. Parker, 960 F.Supp.2d 1280 (D. Utah 2013). However, the application of the coming and going rule to a single event may result in treating a person as an employee for the purpose of establishing eligibility for workers compensation benefits, while withholding employee status for the purpose of making the employer liable to third persons. Salt Lake City Corp. v. Labor Comm’n, 2007 UT 4, ¶¶ 19-23, 153 P.3d 179, declined to extend by Jex v. Utah Labor Comm’n, 2013 UT 40, 306 P.3d 799.

An employee returning from a lunch break, at the only restaurant accessible during the lunch break, may be acting within the scope of employment. Christensen v. Swenson, 874 P.2d 125, 128-29 (Utah 1994).

A police officer commuting to and from work in a patrol car may or may not be acting in the scope of employment. Compare Salt Lake City Corp. v. Labor Comm’n, 2007 UT 4, ¶ 27, 153 P.3d 179 (distinguishing workers compensation cases), with Ahlstrom v. Salt Lake City Corp., 2003 UT 4, ¶ 12, 73 P.3d 315.

In 2012, the Utah Court of Appeals, applying the coming and going rule, concluded that an employee’s unilateral decision to drive his own vehicle when transporting another employee to the work site constituted a minimum benefit to the employer, such that the instrumentality of business exception to the rule did not apply. Jex v. Labor Comm’n, 2012 UT App 98, ¶¶ 20-23, 275 P.3d 1078 (concluding that the employer bore no legal consequence) (aff’d by Jex v. Utah Labor Comm’n, 2013 UT 40, 306 P.3d 799).

10.4 Employer Liability

Relevant Statutes

U.C.A. § 34a-2-105

Notable Law

By statute, employees’ exclusive remedy against employers for injury arising out of and in the course of employment is through workers compensation benefits. U.C.A. § 34a-2-105; Sheppick v. Albertson’s, Inc., 922 P.2d 769, 773 (Utah 1996); Morrill v. J & M Constr. Co., Inc., 635 P.2d 88, 89 (Utah 1981). However, an employee need not be bound by the statutory limitation if the employee’s injury did “not arise out of or during the course of employment.” Whipple v. Hill, No. 2:11-CV-474-TC, 2012 WL 2711544 (D. Utah July 9, 2012).

An employee may bring a cause of action against a third party tortfeasor, other than an employer, officer, agent, or employee of the employer. U.C.A. § 34a-2-106. An employee of a company who is “leased” to another company may be considered a co-employee of one who is directly employed by the borrowing company for purposes of the exclusive remedy statute. Averett v. Grange, 909 P.2d 246, 249-50 (Utah 1995).

An employer can only be held vicariously liable for punitive damages for the willful and wanton torts of its employees if: (a) the principal or managerial agent authorized the doing and the manner of the act, or (b) the agent was unfit and the principal or managerial agent was reckless in employing or retaining him, or (c) the agent was employed in a managerial capacity and was acting in the scope of employment, or (d) the principal or managerial agent of the principal ratified or approved the act. Diversified Holdings, L.C. v. Turner, 2002 UT 129, ¶¶ 34-37, 63 P.3d 686; Hodges v. Gibson Prods. Co., 811 P.2d 151, 163 (Utah 1991).

10.5 Borrowed Servant Doctrine

If the plaintiff is an employee of the borrowing employer or is engaged in the same work as was a co-employee, he or she is entitled and required to accept workers compensation and cannot maintain an action against the borrowing employer for negligence in causing any injuries. Bambrough v. Bethers, 552 P.2d 1286, 1289 (Utah 1976).

If the loaning employer indicates that the employee is to follow the procedures of the borrowing employer, then the loaning employer relinquishes the right of control. Employees of the second employer become co-employees of the borrowed servant. Bambrough, 552 P.2d at 1292. An employee of a temporary employee service who contended that he did not subjectively consent to become the borrowing company’s employee could not create an issue of fact about his employment status because subjective belief about one’s status is irrelevant. Walker v. U.S. Gen., Inc., 916 P.2d 903, 906-07 (Utah 1996).

A company that hires a worker from a temporary employee service may be immune from liability for negligence if the company can show that its agreement with the employee service provides that a portion of the fee charged will be used to purchase workers compensation insurance for the temporary employees. Ghersi v. Salazar, 883 P.2d 1352, 1358 (Utah 1994).

A loaned servant does not have to consent subjectively to employment by the borrowing company. Consent may be implied from the employee’s acceptance of the special employer’s control and direction. Pace v. Cummins Engine Co., 905 P.2d 308, 310 (Utah Ct. App. 1995).

10.6 Dual Purpose Doctrine

If an employee is simultaneously serving both the employer’s interest and some personal interest, the activity is within the scope of employment. However, if the employee is primarily serving a personal interest, then the activity is outside the scope of employment. Clover v. Snowbird Ski Resort, 808 P.2d 1037, 1041 (Utah 1991); Whitehead v. Variable Annuity Life Ins. Co., 801 P.2d 934, 937 (Utah 1989); Whipple v. Hill, No. 2:11-CV-474-TC, 2012 WL 2711544, *2 (D. Utah July 9, 2012) (Courts will consider control and benefit to employer when determining whether the Dual Purpose Doctrine applies). A police officer commuting to and from work in a patrol car was not acting primarily in the employer city’s interest even though the city tangentially benefitted from the officer’s personal use of the patrol car. Ahlstrom v. Salt Lake City Corp., 2003 UT 4, 73 P.3d 315, 319; Whipple v. Hill, No. 2:11-CV-474-TC, 2012 WL 2711544, *2 (D. Utah July 9, 2012) (“Where an employee engages in conduct benefitting or controlled by the employer, the benefit and control can be weighed against the nature of the trip in order to determine liability.”).

10.7 Employees’ Assumption of Risk

When employees act in compliance with orders of a superior, they do not assume the risk of harm. However, if they take risks by exposing themselves to obvious dangers, that act can be used to prove their contributory negligence. Evans v. Stuart, 410 P.2d 999, 1002 (Utah 1966); Mikkelsen v. Haslam, 764 P.2d 1384, 1388-89 (Utah Ct. App. 1988).

10.8 Employers’ Negligence

Employers are negligent if they request employees to do something which employers know or should know will be dangerous under the circumstances. Evans v. Stuart, 410 P.2d 999, 1001 (Utah 1966).

10.9 Retaliatory Discharge

The Utah Antidiscrimination Act, U.C.A. §§ 34a-5-101 to -112, preempts a common law cause of action for discharge in retaliation for complaints of employment discrimination. However, both employees who are covered by employment contracts that limit the basis for discharge and employees who are at-will can maintain a tort action for discharge in violation of some other public policy. Rackley v. Fairview Care Ctr., 2001 UT 32, ¶ 13, 23 P.3d 1022; Ryan v. Dan’s Food Stores, Inc., 972 P.2d 395, 404-05 (Utah 1998); Person v. Horizon Health Corp., No. 2:09-cv-00395 CW, 2011 WL 6339708, *4 (D. Utah Dec. 19, 2011); Retherford v. AT&T Commc’ns, 844 P.2d 949, 959 (Utah 1992); Hogan v. Utah Telecommunication Open Infrastructure Agency, No. 1:11-CV-64 TS, 2012 WL 775653, *4 (D. Utah March 8, 2012) (There is no Utah law “holding that the tort of wrongful discharge applies to independent contractors.”).

An at-will employee can be terminated for any reason unless the reason violates a clear and substantial public policy. Touchard v. La-Z-Boy Inc., 2006 UT 71, ¶ 6, 148 P.3d 945; Burton v. Exam Ctr. Indus. & Gen. Med. Clinic, Inc., 2000 UT 18, ¶¶ 6-7, 994 P.2d 1261; Ryan v. Dan’s Food Stores, Inc., 972 P.2d 395, 400 (Utah 1998); Lopez v. Administrative Office of the Courts, No. 2:07-CV-571, 2011 WL 5320980, *6 (D. Utah Nov. 2, 2011); Fox v. MCI Commc’ns Corp., 931 P.2d 857, 859 (Utah 1997); Person v. Horizon Health Corp., No. 2:09-cv-00395 CW, 2011 WL 6339708, *4 (D. Utah Dec. 19, 2011) (“To sustain an action for wrongful termination, the policy must be both clear and substantial.”).

10.10 Employee Release

In determining whether a plaintiff claiming retaliatory discharge has engaged in “protected opposition” as described in U.C.A. § 34a-5-106, a court will examine whether the plaintiff had a good faith, reasonable belief that he or she “engaged in protected opposition to discrimination.” Carter v. Labor Comm’n Appeals Bd., 2006 UT App 477, ¶ 13 n. 1, 153 P.3d 763, 766; Viktron/Lika Utah v. Labor Comm’n, 38 P.3d 993, 995 (Utah Ct. App 2001).

If an injured plaintiff releases the defendant company and other employees from liability, then the plaintiff is barred from bringing claims against them. The release is interpreted according to traditional contract principles. If the injured plaintiff releases an employee from liability, the employer is not automatically released. Nelson ex rel. Hirschfeld v. Corp. of the Presiding Bishop of the Church of Jesus Christ of Latter-day Saints, 935 P.2d 512, 513-14 (Utah 1997); Krukiewicz v. Draper, 725 P.2d 1349, 1350 (Utah 1986).

10.11 Real Estate Agents and Brokers

Relevant Statutes

U.C.A. §§ 61-2f-101 to -512.

Notable Law

It is unlawful for any person to engage in the business, act in the capacity of, advertise or assume to act as a principal real estate broker, associate real estate broker, or a real estate sales agent within this state without obtaining a license. U.C.A. § 61-2f-201. As a licensee of the state, an agent is required to meet standards of “honesty, integrity, truthfulness, reputation and competency.” U.C.A. § 61-2f-203(1)(c).

An agreement between a seller of real property and a broker must be in writing to be enforceable. U.C.A. § 25-5-4; Fritsch v. Hess, 162 P. 70, 71 (Utah 1916).

In order to earn a commission, a broker must locate a buyer that is ready, willing, and able to purchase the property pursuant to the terms of sale set forth in the listing agreement, or as may otherwise be agreed by the seller. The terms of the sale may be amended if the seller signs an earnest money agreement containing different terms. The commission of a broker/agent will be earned if the buyer purchases the property under a real estate contract acceptable to the seller and later defaults in the obligations undertaken under the contract. An agent may receive compensation only from the broker. Only the broker, not the agent, may maintain an action for a commission. U.C.A. § 61-2f-409; Morris v. John Price Assocs., Inc., 590 P.2d 315, 316-17 (Utah 1979).

A real estate broker and his agents are agents of the property owner with whom the broker has entered into a listing agreement and in that capacity, the broker and his agents owe a fiduciary duty to the property owner. Kidd v. Maldonado, 688 P.2d 461, 462 (Utah 1984).

In light of the duty of a real estate salesman and his broker to exercise reasonable skill and diligence on behalf of the principal they represent, the principal is justified in relying upon information received from the salesman and broker without making an independent investigation. Phillips v. JCM Dev. Corp., 666 P.2d 876, 886 (Utah 1983).

If the agent purports to state a value for a given property, the duty of the agent is heightened and he or she must be able to support the valuation. Smith v. Carroll Realty Co., 335 P.2d 67, 70 (Utah 1959).

Duty of Broker/Agent to Purchaser: A broker/agent who has entered into a listing agreement with a seller of real property does not occupy a fiduciary relationship with the respective purchasers or their agents. Nonetheless, a real estate agent hired by the vendor is expected to be honest, ethical, and competent and is answerable at law for breaches of his or her statutory duty to the public. West v. Inter-Financial Inc., 2006 UT App 222, ¶ 18, 139 P.3d 1059; Rogers v. Division of Real Estate of Dep’t of Bus. Regulations, 790 P.2d 102, 107 (Utah Ct. App. 1990).

SECTION 11 – Death

11.1 Wrongful Death

Relevant Statutes

U.C.A. § 26-2-26; § 31a-22-415; § 75-1-107; § 75-2-702; § 78b-2-304; § 78b-2-108; § 78b-2-111; § 78b-3-102; § 78b-3-105 to -107.

Notable Law

Actions for wrongful death may be brought by the heirs or the personal representative on behalf of the heirs. U.C.A. § 78b-3-106; Haro v. Haro, 887 P.2d 878, 879 (Utah Ct. App. 1994). A parent or guardian may maintain an action for the death or injury of a minor child when such injury or death is caused by the wrongful act of another. U.C.A. § 78b-3-102; Moreno v. Bd. of Educ., 926 P.2d 886, 887 (Utah 1996). Such an action must be brought within two years after death, but if the judgment for plaintiff is reversed or if plaintiff fails otherwise than on the merits, a new action may be commenced within one year from such reversal or failure. U.C.A. § 78b-2-304(2); § 78b-2-111; In re Estate of Garza, 725 P.2d 1328, 1329 (Utah 1986). Damages for wrongful death may include compensatory damages, loss of support, services, society, prospective inheritance, and mental anguish. Oxendine v. Overturf, 1999 UT 4, ¶ 19, 973 P.2d 417; Evans v. Oregon Short Line R. Co., 108 P. 638, 640-41 (Utah 1910).

Survival actions are allowed in some circumstances. If the decedent died as a result of a wrongful act, a claim for special and general damages of the decedent survives, under U.C.A. § 78b-3-107(1)(a). If the decedent died of a cause other than the injuries received by a wrongful act, the personal representative or heirs have a cause of action for special damages and general damages not to exceed $100,000, resulting from the injury caused by the wrongdoer and which occurred prior to the injured party’s death from the unrelated cause. U.C.A. § 78b-3-107(1)(b), (e).

Decedent’s brothers and sisters could not recover their losses because they were not “heirs,” as defined by the Utah Uniform Probate Code. Kelson v. Salt Lake County, 784 P.2d 1152, 1156 (Utah 1989). “Heirs” are defined for purposes of the wrongful death act in U.C.A. § 78b-3-105.

In a wrongful death action for a child’s death, recoverable damages include loss for intangible injuries such as loss of security, love, companionship, protection, and affection. A mother’s ability to bear additional children is a material factor in considering damages. However, the mother was not entitled to income she lost by devoting her full time to rearing the deceased child. Jones v. Carvell, 641 P.2d 105, 107-08 (Utah 1982).

The estate of a deceased person may not bring a wrongful death action. The real party in interest must be substituted within the two-year limitations period. Haro v. Haro, 887 P.2d 878, 879 (Utah Ct. App. 1994).

Grandparents cannot maintain wrongful death action for death of an unborn grandchild because they were not parents or guardians under U.C.A. § 78b-3-102. State Farm Mut. Auto. Ins. Co. v. Clyde, 920 P.2d 1183, 1185-86 (Utah 1996); Carranza v. U.S., 267 P.3d 912, 914 (Utah 2011) (“The term ‘minor,’ then, may refer to the period from conception to the age of majority, thereby encompassing an unborn child.”).

A guardian of a deceased ward may not maintain a wrongful death action on his or her own behalf but instead must maintain the action on behalf of the deceased ward’s heirs. Moreno v. Bd. of Educ., 926 P.2d 886, 890-91 (Utah 1996).

The two-year statute of limitations for a wrongful death claim is tolled by U.C.A. § 78b-2-108 if the claimants are minors. In re Estate of Garza, 725 P.2d 1328, 1329 (Utah 1986).

SECTION 12 – Various Torts

12.1 Intentional Infliction of Emotional Distress

The tort of intentional infliction of emotional distress is actionable under Utah law. To prove a claim for intentional infliction of emotional distress, a plaintiff must prove by a preponderance of the evidence that defendant: intentionally engaged in some conduct toward the plaintiff, (a) with the purpose of inflicting emotional distress, or, (b) where any reasonable person would have known that such would result; and his actions are of such a nature as to be considered outrageous and intolerable in that they offend the generally accepted standards of decency and morality. Samms v. Eccles, 358 P.2d 344, 345-47 (Utah 1961), abrogated on other grounds by Johnson v. Rogers, 763 P.2d 771, 778 (Utah 1988); see also Defeudis v. Wolfenden, No. 2:13-CV-00429, 2014 WL 2559443, *4 (D. Utah Jun 06, 2014) (explaining the elements of intentional infliction of emotional distress). A shareholder must allege a distinct, palpable injury that is not derivative of the harm to the corporation to maintain an intentional infliction of emotional distress claim. Stone Flood and Fire Restoration, Inc. v. Safeco Ins. Co. of America, 2011 UT 83, ¶40, 268 P.3d 170.

12.2 Negligent Infliction of Emotional Distress

Utah also recognizes a claim for negligent infliction of emotional distress. To prove a claim for negligent infliction of emotional distress, the plaintiff must prove by a preponderance of the evidence that defendant: (a) should have realized that his conduct involved an unreasonable risk of causing the distress, otherwise than by knowledge of the harm or peril of a third person; and (b) from facts known to him, should have realized that the distress might result in illness or bodily harm. Harnicher v. Univ. of Utah Med. Ctr., 962 P.2d 67, 69 (Utah 1998). However, there shall be no recovery where emotional distress arises solely from harm or peril to a third person, unless the plaintiff was placed in actual physical peril. Straub v. Fisher & Paykel Health Care, 1999 UT 102, ¶¶ 9-10, 14, 990 P.2d 384. In cases not involving injury to a third person, the law still requires that the emotional distress suffered must be severe and cause some bodily harm or mental illness. Harnicher v. Univ. of Utah Med. Ctr., 962 P.2d 67, 69-70 (Utah 1998).

12.3 Alienation of Affection

Either spouse may sue a third party for alienation of affections; however, it is an intentional tort and it must be shown that the overtures of the third party constituted the controlling cause of the alienation of affections. Norton v. McFarlane, 818 P.2d 8, 15 (Utah 1991); Nelson v. Jacobsen, 669 P.2d 1207, 1219 (Utah 1983). Braun v. Medtronic Sofamor Danek, Inc., 719 F. App’x 782, 797 (10th Cir. 2017) explains the validity of the aggravating circumstances requirement.

A claim for alienation of affection must be proved by the high standard of clear and convincing evidence. Heiner v. Simpson, 2001 UT 39, ¶¶ 7-8, 23 P.3d 1041; Norton v. McFarlane, 818 P.2d 8, 15 (Utah 1991).

12.4 Loss of Consortium

Relevant Statutes

U.C.A. § 30-2-11.

Notable Law

In 1997, the Utah legislature created a statutory action for spousal loss of consortium. U.C.A. § 30-2-11. A spouse of a person injured by a third party on or after May 4, 1997, may maintain an action against the third party to recover for loss of consortium. U.C.A. § 30-2-11(2). The statute defines “injured” to mean “a significant permanent injury to a person that substantially changes that person’s lifestyle” including paralysis, significant disfigurement, or incapability to perform the types of jobs the person performed before the injury. U.C.A. § 30-2-11(1).

A claim for spousal loss of consortium is derivative and must be made at the time the claim of the injured person is made and joinder of actions is compulsory. The loss of consortium claim is subject to the same defenses as the underlying tort claims. U.C.A. § 30-2-11(4), (5).

The Utah Supreme Court previously held that no cause of action for loss of filial consortium exists under common law in Utah. In Boucher v. Dixie Med. Ctr., 850 P.2d 1179, 1184 (Utah 1992), parents of a tortiously injured adult child sought damages for loss of their child’s consortium. The Court held that Utah law, in particular Hackford v. Utah Power & Light Co., 740 P.2d 1281 (Utah 1987), did not support the adoption of a cause of action for loss of filial consortium, and that the legislature was the appropriate body to determine if Utah should recognize consortium claims. Id. at 1184; but see Figueroa v. United States, 64 F. Supp. 2d 1125, 1146 (D. Utah 1999) (following Boucher but calling it into doubt). However, in August 2016, the Utah Supreme Court distinguished Boucher and Hackford and held that parents of a minor child could recover for loss of filial consortium due to tortious injury to their child so long as the child’s injury met the definition set forth in U.C.A. § 30-2-11. Benda v. Roman Catholic Bishop of Salt Lake City, 2016 UT 37, ¶¶ 10, 20, 384 P.3d 207. The court relied on the passage and expansion of section 30-2-11 to extend damages to cases involving nonfatal injuries to spouses. Id. at ¶ 14. Currently, a cause of action for loss of consortium to parents of a tortiously injured minor child may be maintained where the injury meets the definition set for in section 30-2-11(1)(a). Id. at ¶ 19.

12.5 Fraud

To establish fraud under Utah law, a party must prove by clear and convincing evidence each of the following elements: (1) that a representation was made; (2) concerning a presently existing material fact; (3) which was false; (4) which the representor either (a) knew to be false, or (b) made recklessly, knowing that he had insufficient knowledge upon which to base such representation; (5) for the purpose of inducing the other party to act upon it; (6) that the other party, acting reasonably and in ignorance of its falsity; (7) did in fact rely upon it; (8) and was thereby induced to act; (9) to his injury and damage. Franco v. The Church of Jesus Christ of Latter-day Saints, 2001 UT 25, ¶ 33, 21 P.3d 198; Webster v. JP Morgan Chase Bank, NA, 2012 UT App 321, ¶ 16, 290 P.3d 930.

Insured brought action against an automobile liability insurer to recover for bad-faith failure to settle within the policy limits and also sought damages for fraud and intentional infliction of emotional distress. The court, overruling Turner v. Gen. Adjustment Bureau, Inc., 832 P.2d 62 (Utah Ct. App. 1992), abrogated on other grounds by Campbell v. State Farm Mut. Auto. Ins. Co., 2001 UT 89, 65 P.3d 1134, held damages for emotional distress, both punitive and general, are recoverable for fraud. Campbell v. State Farm Mut. Auto. Ins. Co., 2001 UT 89, ¶ 113, 65 P.3d 1134, rev’d on other grounds, 538 U.S. 408 (2003).

In Yazd v. Woodside Homes Corp., 2006 UT 47, ¶ 10, 143 P.3d 283, the Utah Supreme Court ruled that a developer has a duty to home purchasers to disclose any information that a buyer would deem material. At issue in that case was the developer’s failure to disclose an engineering report, which revealed collapsible soils. The Court stated that the three elements of fraudulent concealment are: “(1) a legal duty to communicate information; (2) the nondisclosed information is known to the party failing to disclose; and (3) the nondisclosed information is material.” Id. at ¶ 35. The Court further stressed that these elements must be addressed in this order. Id. at ¶ 10; see also Moore v. Smith, 2007 UT App 101, ¶ 33, 158 P.3d 562 (addressing the elements of fraudulent concealment).

12.6 Conversion

Utah law recognizes the tort of conversion of property. To sustain an action for conversion, a party must prove that the act in question was “an act of willful interference with [property], done without lawful justification by which the person entitled thereto is deprived of its use and possession.” Fibro Trust, Inc. v. Brahman Fin., Inc., 1999 UT 13, ¶ 20, 974 P.2d 288; Phillips v. Utah State Credit Union, 811 P.2d 174, 179 (Utah 1991); Jones v. Salt Lake County Corp., 2003 UT App 355, ¶ 9, 78 P.3d 988; Mumford v. ITT Commercial Fin. Corp., 858 P.2d 1041, 1045 n.5 (Utah Ct. App. 1993).

A party alleging conversion must establish that he or she was entitled to immediate possession of the property at the time of the conversion. Fibro Trust, Inc., 1999 UT 13, ¶ 20, 974 P.2d 288; Bennett v. Huish, 2007 UT App 19, ¶ 31, 155 P.3d 917.

12.7 Intentional Interference with Contract Rights or Prospective Economic Relations

To recover for wrongful interference with right of contract, plaintiff must show that defendant, without justification by some wrongful and malicious act, interfered with plaintiff’s right of contract and that actual damages resulted. Soter v. Wasatch Dev. Corp., 443 P.2d 663, 664 (Utah 1968).

In order to win a tortious interference claim under Utah law, a plaintiff must now prove “(1) that the defendant intentionally interfered with the plaintiff’s existing or potential economic relations, (2) … by improper means, (3) causing injury to the plaintiff.” Eldridge v. Johndrow, 2015 UT 21, ¶ 13, 345 P.3d 553. The Eldridge Court overruled Pratt v. Prodata, Inc., 885 P.2d 786, 789-90 (Utah 1994) and disavowed all dicta in Leigh Furniture & Carpet Co. v. Isom, 657 P.2d 293, 302-04 (Utah 1982), holding that in the absence of any improper means, an improper purpose is not grounds for tortious interference liability. Eldridge v. Johndrow, 2015 UT 21, ¶ 70, 345 P.3d 553; see also SIRQ, Inc. v. Layton Comp., Inc., 2016 UT 30, 379 P.3d 1237.

12.8 Intentional Interference With Parent-Child Relationship

In White v. Blackburn, 787 P.2d 1315, 1316-17 (Utah Ct. App. 1990), the court discussed the merits of a claim for intentional interference with the parent-child relationship without deciding whether to recognize the validity of the claim.

12.9 Privacy

In Cox v. Hatch, 761 P.2d 556 (Utah 1988), the court discussed various privacy causes of action, including invasion of privacy, appropriation of name or likeness, and false light. See also Stien v. Marriott Ownership Resorts, 944 P.2d 374 (Utah Ct. App. 1997), distinguished by Reid v. LVNV Funding LLC, No. 2:14CV471DAK, 2015 WL 926146, *4 (D. Utah Mar. 4, 2015).

The four privacy torts are as follows: (1) intrusion upon the plaintiff’s seclusion or solitude, or into the plaintiff’s private affairs; (2) appropriation, for the defendant’s advantage, of the plaintiff’s name or likeness; (3) public disclosure of embarrassing private facts about the plaintiff; and (4) publicity which places the plaintiff in a false light in the public eye. Stien v. Marriott Ownership Resorts, 944 P.2d 374, 377-78 (Utah Ct. App. 1997) distinguished by Reid v. LVNV Funding LLC, No. 2:14CV471DAK, 2015 WL 926146, *4 (D. Utah Mar. 4, 2015); see also Shattuck-Owen v. Snowbird Corp., 2000 UT 94, 16 P.3d 555, 558-59 (discussing invasion of privacy tort).

To establish a cause of action for intrusion upon seclusion, a plaintiff must prove the following two elements by a preponderance of the evidence: (1) an intentional, substantial intrusion, physically or otherwise, upon the solitude or seclusion of the complaining party; and (2) that the intrusion would be highly offensive to a reasonable person. Stien v. Marriott Ownership Resorts, 944 P.2d 374, 380 (Utah Ct. App. 1997) distinguished by Reid v. LVNV Funding LLC, No. 2:14CV471DAK, 2015 WL 926146, *4 (D. Utah Mar. 4, 2015).

To assert a claim for appropriation of name or likeness, a plaintiff must prove that his or her name has some intrinsic value that was used or appropriated by the defendant. Cox v. Hatch, 761 P.2d 556, 564 (Utah 1988).

The incidental use of a person’s name or likeness is not an unlawful appropriation of that person’s name or likeness. Cox v. Hatch, 761 P.2d 556, 564 (Utah 1988).

To sustain a claim for publicity of private facts, a plaintiff must prove the following elements: (1) public disclosure of private facts; (2) facts disclosed are private and not public; (3) the matter made public would be highly offensive and objectionable to a reasonable person of ordinary sensibilities; and (4) the public does not have a legitimate interest in having the information made available. Shattuck-Owen v. Snowbird Corp., 2000 UT 94, at ¶ 11, 16 P.3d 555; Stien v. Marriott Ownership Resorts, 944 P.2d 374, 380 (Utah Ct. App. 1997) distinguished by Reid v. LVNV Funding LLC, No. 2:14CV471DAK, 2015 WL 926146, *4 (D. Utah Mar. 4, 2015).

To sustain a claim for false light, a plaintiff must prove the following elements: (1) the defendant gave publicity to a matter about the plaintiff such that the plaintiff is placed before the public in a false light; (2) the false light in which the plaintiff is placed would be highly offensive to a reasonable person; and (3) the defendant had knowledge of or acted in reckless disregard as to the falsity of the publicized matter and the false light in which the plaintiff would be placed. Stien v. Marriott Ownership Resorts, 944 P.2d 374, 380 (Utah Ct. App. 1997) distinguished by Reid v. LVNV Funding LLC, No. 2:14CV471DAK, 2015 WL 926146, *4 (D. Utah Mar. 4, 2015).

12.10 Breach of Warranty

An action of breach of warranty may be brought in contract or in tort. Mitchell v. Pearson Enters., 697 P.2d 240, 247 (Utah 1985).

Courts do not distinguish a breach of warranty claim from a breach of contract claim. Stacey Prop. v. Wixen, 766 P.2d 1080, 1083, at n.2 (Utah Ct. App. 1988).

12.11 False Imprisonment

Relevant Statutes

U.C.A. § 32b-4-209; § 77-7-3.

Notable Law

A store may become liable for false imprisonment where it detains an intoxicated person on a mistaken suspicion of shoplifting, and may not be able to rely on statutes allowing a citizen to arrest another citizen, or a beer retailer to detain an intoxicated minor. Although U.C.A. § 77-7-3 permits a citizen to arrest another for a public offense committed in the citizen’s presence, the statute requires the arresting citizen to give notice of his intention and reasons for arresting the other. A store whose employees arrest someone on the mistaken belief that the person shoplifted can be liable for false imprisonment even though the detainee did actually commit a public offense, if the employees fail to give notice that the public offense was the reason for the citizen’s arrest. Eddy v. Albertson’s, Inc., 2001 UT 88, 34 P.3d 781.

U.C.A. § 32b-4-209 permits state store employees, beer retailers, and certain others to detain other citizens, if the employees or retailers have reason to believe that the citizen is an intoxicated minor, a minor attempting to buy alcohol, an intoxicated person attempting to buy alcohol, or an interdicted person possessing or attempting to buy alcohol. For the detention to be lawful, however, the person must be in the facility where liquor or beer is sold. The person is not in the facility if he or she is actually in the parking lot of the facility, or on neighboring property. Eddy v. Albertson’s, Inc., 2001 UT 88, ¶ 16, 34 P.3d 781.

12.12 Trespass

In classifying a trespass as either permanent or continuing, a court looks “solely to the act constituting the trespass, and not to the harm caused by the act.” Breiggar Props., L.C. v. H.E. Davis & Sons, Inc., 2002 UT 53, ¶ 10, 52 P.3d 1133 (emphasis omitted).

A citizen subjected to an illegal search could sue the wrongdoer for trespass. State v. Walker, 2011 UT 53, ¶ 49, 267 P.3d 210 (Lee, J., concurring).

“The claim for exceeding the scope of an easement is not abandonment, but trespass.” Stern v. Metropolitan Water Dist. of Salt Lake & Sandy, 2012 UT 16, ¶ 82, 274 P.3d 935.

12.13 Defamation

It is not necessary for a person to prove malice to recover for defamation, unless the person is a public figure. See O’Connor v. Burningham, 2007 UT 58, ¶¶ 1, 18, 165 P.3d 1214. In Wayment v. Clear Channel Broad., Inc., 2005 UT 25, ¶ 24, 116 P.3d 271, the Utah Supreme Court ruled that a newscaster did not qualify as an “all purpose” public figure, simply because of her profession. She also did not qualify as a limited-purpose public figure because sponsoring a mentor program for children with cancer did not constitute a public controversy. Id. ¶ 37. Because the newscaster did not qualify as a public figure, she was not required to prove malice to recover for defamation.

A defamatory statement requires “more than sharp criticism” and a court “cannot view individual words in isolation but must carefully examine the context in which the statement was made.” Spencer v. Glover, 2017 UT App 69, ¶ 7, 397 P.3d 780 (internal citations omitted); see also West v. Thomson Newspapers, 872 P.2d 999 (Utah 1994). Expression of opinion cannot serve as the basis for defamation liability. Id. at ¶ 8.

SECTION 13 – Damages

13.1 General Damages

“General damages” are those which are the natural and necessary result of the wrongful act or omission asserted as the foundation of liability, and include those which follow as a conclusion of law from the statement of the facts of the injury. See Cohn v. J. C. Penney Co., 537 P.2d 306, 307 (Utah 1975). General damages are those that “flow naturally from the breach.” Trans-Western Petroleum, Inc. v. United States Gypsum Co., 2016 UT 27, ¶ 1, 379 P.3d 1200; see also State v. Corbitt, 2003 UT App 417, ¶ 20, 82 P.3d 211 (Orme, J., concurring).

Under Utah law, soft compensatory damages, i.e., for pain and suffering, must be awarded with caution. First Sec. Bank of Utah, N.A. v. J.B.J. Feedyards, Inc., 653 P.2d 591, 598 (Utah 1982) (reducing damages for emotional distress from $25,000 to $12,500). However, “when the determination of the jury has been submitted to the scrutiny and judgment of the trial judge, his [or her] action thereon should be regarded as giving further solidarity to the judgment.” Elkington v. Foust, 618 P.2d 37, 41 (Utah 1980).

Appellate courts are reluctant to disturb a jury’s findings of general damages, even if it is only $1. This was the result for a rear-ended plaintiff in Tingey v. Christensen, 1999 UT 68, 987 P.2d 588; see also Robinson v. All-Star Delivery, Inc., 1999 UT 109, 992 P.2d 969. Juries are generally allowed wide discretion in the assessment of damages. Amoss v. Broadbent, 514 P.2d 1284, 1287 (Utah 1973). Where personal injuries involve a loss of employment, personal inconvenience, and pain and suffering, there is no set formula to compute the amount of damages. Jorgensen v. Gonzales, 383 P.2d 934, 936 (Utah 1963); see Stevens-Henager Coll. v. Eagle Gate Coll., Provo Coll., Jana Miller, 2011 UT App 37, ¶ 21, 248 P.3d 1025, 1031.

When physical injury is involved, Utah courts are not hesitant to allow and approve substantial awards as general damages, including pain and suffering. The pain and suffering inflicted upon the mind and the emotions by wrongful acts of another is no less real, and victims should not be less entitled to compensation. Prince v. Peterson, 538 P.2d 1325, 1329 (Utah 1975). A reviewing court will defer to a jury’s damage award unless the award indicates that the jury disregarded competent evidence, Bennion v. LeGrand Johnson Constr. Co., 701 P.2d 1078, 1084 (Utah 1985), Cornia v. Wilcox, 898 P.2d 1379, 1383 (Utah 1995); or that the award is so excessive beyond rational justification as to indicate the effect of improper factors in the determination, Cruz v. Montoya, 660 P.2d 723, 726 (Utah 1983), superseded by statute on other grounds in Nat’l Serv. Indus., Inc. v. B.W. Norton Mfg. Co., Inc., 937 P.2d 551 (Utah Ct. App. 1997); McAfee v. Ogden Union Ry. & Depot Co., 218 P. 98, 104 (Utah 1923); or that “it clearly appears that the award was rendered under [a] misunderstanding or prejudice.” Paul v. Kirkendall, 261 P.2d 670, 671 (Utah 1953).

To justify a new trial for excessive damages under U.R.C.P. 59(a)(5), the damage award must be more than generous; it must be clearly excessive on any rational view of the evidence. See Paul v. Kirkendall, 261 P.2d at 671.

A claimant in a motor vehicle accident must have either incurred more than $3,000 in reasonable and necessary medical expenses, or have sustained death, dismemberment, permanent disability, or permanent disfigurement in order to maintain a claim for general damages. U.C.A. § 31a-22-309(1)(a); see also Allstate Ins. Co. v. Ivie, 606 P.2d 1197, 1199-1200 (Utah 1980). A motor vehicle accident plaintiff whose medical expenses fail to meet the PIP threshold of $3,000 has the burden of demonstrating a permanent disability or impairment based on objective findings. McNair v. Farris, 944 P.2d 392, 394 (Utah 1997).

13.2 Special Damages – Medical Expenses

“Special damages” are a particular type of damages which are a natural consequence of the injury caused but are not the type of damages that necessarily flow from the harmful act. See Cohn v. J. C. Penney, Co., 537 P.2d 306, 307 (Utah 1975); see also USA Power, LLC v. PacifiCorp, 2016 UT 20, 372 P.3d 629. One claiming special damages must plead each type of damage specifically so that the opposing party has an adequate opportunity to defend against the plaintiff’s claims. Hodges v. Gibson Prods. Co., 811 P.2d 151, 162 (Utah 1991); see also Judge v. Saltz Plastic Surgery, PC, 2014 UT App 144, 330 P.3d 126.

“In Utah, in all but the most obvious cases, testimony of lay witnesses regarding the need for specific medical treatment is inadequate to submit the issue to the jury.” Beard v. K-Mart Corp., 2000 UT App 285, ¶ 16, 12 P.3d 1015. If the expert evidence offered on the issue of medical causation is simply that a particular injury could have resulted from a particular accident, but not that it probably did, such testimony is insufficient for submission of the issue to the jury. Id.; see also Eskelson ex rel. Eskelson v. Davis Hosp. & Med. Ctr., 2010 UT 59, ¶ 15, 242 P.3d 762. Utah courts require that a physician opine that the injury or certain treatment was probably, and not just possibly, caused by an accident. Dalebout v. Union Pac. R.R. Co., 1999 UT App 151, ¶ 21, 980 P.2d 1194 (holding that admission of physician’s testimony that there was 30% likelihood that FELA plaintiff will require back surgery was error because it was not probable or more than 50%).

As to foundation for medical bills, the Utah Court of Appeals has held that although a physician or insurance representative’s testimony may be offered to show that medical bills were necessitated by the accident and were reasonable, such testimony is not required. A plaintiff can testify that the proffered bills were for medical expenses arising from the injuries received from the incident in question, were forwarded for payment to her insurance company, and were paid without objection by the insurance company. The Court held that this testimony was sufficient to lay a foundation for the admission of plaintiff’s medical bills. Stevenett v. Wal-Mart Stores, Inc., 1999 UT App 80, ¶ 32, 977 P.2d 508.

It is a general rule that the foundation to establish the reliability of medical expenses is to provide evidence of reasonableness and necessity. Wilson v. IHC Hospitals, Inc., 2012 UT 43, 289 P.3d 369; Gorosteita v. Parkinson, 2000 UT 99, ¶ 35, 17 P.3d 1110.

13.3 Pre-Existing Injuries

If the jury can find a reasonable basis for apportioning damages between a preexisting condition and a subsequent tort, it should do so; however, if the jury finds it impossible to apportion damages, it should find that the tortfeasor is liable for the entire amount of damages. Tingey v. Christensen, 1999 UT 68, ¶ 14, 987 P.2d 588; see also Robinson v. All-Star Delivery, Inc., 1999 UT 109, ¶ 11, 992 P.2d 969 (citing to Restatement (Second) of Torts § 433A (1965)); Harris v. ShopKo Stores, Inc., 2011 UT App 329, 263 P.3d 1184, aff’d but criticized by Harris v. ShopKo, Inc., 2013 UT 34, 308 P.3d 449.

A tortfeasor takes the victim as he finds her, and the tortfeasor “bears the burden of any uncertainty in the amount of the victim’s damages.” Harris, 2011 UT App 329, ¶ 16. However, a plaintiff cannot recover from any pre-existing conditions or disabilities which did not result from the fault of the defendant. A plaintiff is entitled to recover damages for any injuries, proximately caused by the defendant’s negligence, that aggravated or lit up a pre-existing condition or disability. Id. at ¶ 17( citing Brunson v. Strong, 17 Utah 2d 364, 412 P.2d 451, 453 (1966)).

13.4 Lost Profits and Loss of Earning Capacity

The speculative character of evidence on the issue of loss of anticipated profits often invalidates any attempt to award damages in this area. The Utah Supreme Court summarized the law relating to lost profits damages as follows:

The basic and general rule is that loss of anticipated profits of a business venture involve so many factors of uncertainty that ordinarily profits to be realized in the future are too speculative to base an award of damages thereon. The other side of the coin is that damages to a business or enterprise need only be proved with sufficient certainty that reasonable minds might believe from a preponderance of the evidence that the damages were actually suffered.

Howarth v. Ostergaard, 515 P.2d 442, 445 (Utah 1973) (citations omitted); see also Canyon Country Store v. Bracey, 781 P.2d 414, 418 (Utah 1989).

Without the “sufficient certainty” required by Howarth v. Ostergaard and other Utah cases, Utah law does not permit recovery of alleged lost profits. First Sec. Bank of Utah, N.A. v. J.B.J. Feedyards, Inc., 653 P.2d 591, 595 (Utah 1982).

However, a plaintiff has a general right to recover for lost earning capacity. In order to recover for lost earning capacity, the loss must be proven with “reasonable certainty,” although not “mathematical certainty.” When the injured party works in his or her own business and does not receive a set salary or wage, earning capacity may be calculated by reference to the cost of hiring a replacement to perform the tasks the injured party was formerly able to do. Corbett v. Seamons, 904 P.2d 229, 232 (Utah Ct. App. 1995).

13.5 Actual Damages or Injury Required

A claimant cannot file a tort suit based upon the possibility of future damages, such as in a case of failure to diagnose, if there is only an increased risk of cancer in the future due to the failure to diagnose. Utah law holds that without proof of actual damages, an alleged claim for enhanced risk is not adequate to sustain a cause of action for negligence. The Utah Supreme Court rejected the Restatement § 912 approach and held that “the better approach is to wait until the potential harm manifests itself, allowing for more certain proof and fewer speculative lawsuits.” Seale v. Gowans, 923 P.2d 1361, 1366 (Utah 1996).

If a claimant files a suit based on possible future injury in conjunction with a claim for a legally cognizable present injury, both claims are actionable. In Medved v. Glenn, the Utah Supreme Court held “if a plaintiff is able to plead a legally cognizable injury, she ‘is entitled to [seek] damages not only for harm already suffered, but also for that which will probably result in the future.’” 2005 UT 77, ¶ 13, 125 P.3d 913 (quoting Restatement (Second) of Torts § 912 cmt. e (1979)). The court also explained that the Seale ruling is limited “only to those cases where a plaintiff seeks to recover damages for a possible future injury without having suffered any presently cognizable injury.” Id. ¶ 14.

13.6 Punitive Damages

Punitive damages may be awarded only in exceptional cases, if compensatory or general damages are awarded and the plaintiff establishes through clear and convincing evidence that the defendant’s conduct was willful and malicious or intentionally fraudulent or manifested a knowing and reckless indifference toward and a disregard of the rights of others. U.C.A. § 78b-8-201(1)(a). Awarding punitive damages must not merely “vent vindictiveness,” give additional compensation to the plaintiff, or give the plaintiff an “in terrorem” weapon in settlement negotiations. Behrens v. Raleigh Hills Hosp., 675 P.2d 1179, 1187 (Utah 1983); see also Gleave v. Denver & Rio Grande W. R.R. Co., 749 P.2d 660, 671 (Utah Ct. App. 1988).

The question of whether punitive damages should be awarded is a question of fact within the discretion of the trial court. This determination will not be “disturbed” absent an abuse of discretion. Long v. Stutesman, 2011 UT App 438, ¶ 36, 269 P.3d 178 (finding the trial court did not abuse its discretion in denying plaintiff punitive damages, even though it found defendant intentionally defrauded plaintiff; trial court had discretion to award or deny punitive damages).

The standards of conduct identified above do not apply to a claim for punitive damages arising out of the operation of a motor vehicle while voluntarily intoxicated or under the influence of any drug or combination of alcohol and drugs. Johnson v. Rogers, 763 P.2d 771 (Utah 1988) (stating that to recover punitive damages in a drunk driving case, plaintiff must show that defendant acted with knowing and reckless disregard of the rights of others and that the drunken driving contributed to the accident).

Punitive damages are distributed as follows: the first $50,000 to the injured party and any amount in excess of $50,000 is distributed equally between the state and the injured party. U.C.A. § 78b-8-201(3)(a).

Utah adheres to the more conservative view of corporate liability for punitive damages, as found in Restatement (Second) of Torts § 909. Under this view, a corporation is only liable for punitive damages if the acts were ratified, authorized, or performed by a managerial agent or principal, or if the managerial agent or principal recklessly hired or retained the unfit employee who caused injury. This is termed the “complicity” rule. Johnson v. Rogers, 763 P.2d 771, 778 (Utah 1988).

U.C.A. § 63G-7-603 prohibits exemplary or punitive damages against government entities. See also Youren v. Tintic Sch. Dist., 343 F.3d 1296, 1307 (10th Cir. 2003). Additionally, in May 2017, section 63G-7-603 was amended to allow a judgment creditor to garnish a state income tax refund owing to the judgment debtor.

In Crookston v. Fire Ins. Exch., 817 P.2d 789 (Utah 1991), the Utah Supreme Court reexamined Utah’s standards for awarding punitive damages. The court rejected an unbridled totality of factions approach and an “absolute ceiling” approach. Id. at 809. Instead, the court articulated a list of factors and a three-to-one ratio which serves as a guideline, but may be exceeded if the trial court makes a detailed and reasonable showing that the award is not excessive. Historically, in cases involving punitive damage awards below $100,000, punitive damages have seldom been upheld when the ratio of punitive damages to actual damages was more than three to one. In cases involving punitive damages exceeding $100,000, the court has indicated some inclination to overturn a ratio of less than three to one. Id. at 810; see also Burton Lumber & Hardware Co. v. Graham, 2008 UT App 207, ¶ 28, 186 P.3d 1012 (distinguished by Farm Bureau Life Ins. Co. v. American Nat. Ins. Co., 408 Fed. Appx. 162 (10th Cir. 2011)).

In Crookston, the court announced the following factors to consider when awarding punitive damages: (i) the relative wealth of the defendant; (ii) the nature of the alleged misconduct; (iii) the facts and circumstances surrounding each conduct; (iv) the effect thereof on the lives of the plaintiff and others; (v) the probability of future recurrence of the misconduct; (vi) the relationship of the parties; and (vii) the amount of actual damages awarded. 817 P.2d at 808.

Evidence of a defendant’s relative wealth is not a prerequisite for punitive damage awards. However, the courts encourage plaintiffs to submit evidence of a defendant’s relative wealth, or risk losing punitive damages based on excessiveness. Hall v. Wal-Mart Stores, Inc., 959 P.2d 109, 111 (Utah 1998); Bennett v. Huish, 2007 UT App 19, ¶ 39, 155 P.3d 917.

In vacating a trial court’s remittitur order of $25 million and reinstating the jury verdict of $145 million in punitives, the Utah Supreme Court held that the ratio of punitive to compensatory damages is not determinative. It is simply one of the factors to be considered, none of which is more important or conclusive than another. A large award triggers a more searching judicial analysis of the situation to ensure the defendant’s conduct warrants large punitive damages. However, if the other six factors support a large punitive damages award, a judge should not decrease the amount solely because of the ratio of punitive to compensatory damages. Campbell v. State Farm Mut. Auto. Ins. Co., 2001 UT 89, ¶ 49, 65 P.3d 1134, rev’d, 538 U.S. 408, 410 (2003) (“[F]ew awards exceeding a single-digit ratio between punitive and compensatory damages will satisfy due process”).

Pursuant to Cooper Industries, Inc. v. Leatherman Tool Group, Inc., 532 U.S. 424, 436 (2001), Utah appellate courts review the Crookston factors de novo and do not defer to the trial court. Campbell v. State Farm Mut. Auto. Ins. Co., 2001 UT 89, 65 P.3d 1134, reversed on other grounds by State Farm Mut. Auto. Ins. Co. v. Campbell, 538 U.S. 408 (2003); see also Jones v. United Parcel Service, Inc., 674 F.3d 1187, 1205 (10th Cir. 2012) (stating that although Cooper held that it was the jury’s duty to set the amount of punitive damages, this did not mean that “the amount of punitive damages imposed by the jury is itself a ‘fact’ within the meaning of the Seventh Amendment’s Reexamination Clause.”).

The United States Supreme Court reversed the Utah Supreme Court’s decision in Campbell v. State Farm Mut. Auto. Ins. Co., 2001 UT 89, 65 P.3d 1134, finding that the Utah Supreme Court erred in reinstating the jury’s $145 million punitive award, because the award violated due process. The Court held that under the three guideposts set forth in BMW of North America, Inc. v. Gore, 517 U.S. 559 (1996), called into doubt by Stockmar v. Colorado Sch. of Traditional Chinese Med., Inc., No. 13-CV-02906-CMA-MJW, 2015 WL 3568132 (D. Colo. June 8, 2015)(degree of reprehensibility of defendant’s misconduct; disparity between actual or potential harm suffered by plaintiff and punitive award; and difference between punitive award and civil penalties authorized or imposed in comparable cases), the punitive award of $145 million was neither reasonable nor proportionate to the wrong committed, and was an arbitrary deprivation of the property of State Farm. In reaching this conclusion, the Court held that a state cannot punish a defendant for conduct that may have been lawful where it occurred, nor does a state have a legitimate concern in imposing punitive damages to punish a defendant for unlawful acts committed outside the state’s jurisdiction. Moreover, dissimilar acts, independent from the acts upon which liability was premised, may not serve as the basis for punitive damages. Last, the wealth of a defendant cannot justify an otherwise unconstitutional punitive damages award. State Farm v. Campbell, 538 U.S. at 427-28 ; see also Diversified Holdings, L.C. v. Turner, 2002 UT 129, ¶ 15, 63 P.3d 686 (reducing punitive awards to yield 2:1 and 1:1 ratios in real estate case after applying Crookston factors).

A plaintiff can waive her claim to punitive damages by not addressing punitive damages after direct questioning by the district court on damages. Iacono v. Hicken, 2011 UT App 377, ¶13, 265 P.2d 116.

13.7 Economic Loss

Economic losses are not recoverable under a theory of negligent construction design. SME Indus., Inc. v. Thompson, Ventulett, Stainback & Assocs., Inc., 2001 UT 54, ¶ 39, 28 P.3d 669; Schafir v. Harrigan, 879 P.2d 1384, 1388 (Utah Ct. App. 1994), abrogated on other grounds by Davencourt at Pilgrims Landing Homeowners Ass’n v. Davencourt at Pilgrims Landing, LC, 2009 UT 65, ¶ 49, 221 P.3d 234; Maack v. Res. Design & Constr., 875 P.2d 570, 581 (Utah Ct. App. 1994), abrogated on other grounds by Davencourt at Pilgrims Landing Homeowners Ass’n v. Davencourt at Pilgrims Landing, LC, 2009 UT 65, ¶ 49, 221 P.3d 234.

Economic damages are not recoverable under non-intentional tort theories absent physical property damage or bodily injury. Liability for economic losses (e.g., diminution in value) can be recovered only according to the contractual obligations between the parties, and cannot be recovered on a pure negligence theory. SME Indus., Inc. v. Thompson, Ventulett, Stainback & Assocs., Inc., 2001 UT 54, ¶ 32, 28 P.3d 669; Am. Towers Owners Ass’n v. CCI Mech., Inc., 930 P.2d 1182, 1189 (Utah 1996), abrogated on other grounds by Davencourt at Pilgrims Landing Homeowners Ass’n v. Davencourt at Pilgrims Landing, LC, 2009 UT 65, ¶ 49, 221 P.3d 234; Snow Flower Homeowners Ass’n v. Snow Flower, Ltd., 2001 UT App 207, ¶ 10, 31 P.3d 576, abrogated on other grounds by Davencourt at Pilgrims Landing Homeowners Ass’n v. Davencourt at Pilgrims Landing, LC, 2009 UT 65, ¶ 49, 221 P.3d 234. However, plaintiffs may recover purely economic losses in cases involving intentional torts such as fraud, business disparagement, and intentional interference with contract. Am. Towers Owners Ass’n v. CCI Mech, Inc., 930 P.2d 1182, 1190 n.11 (Utah 1996), abrogated on other grounds by Davencourt at Pilgrims Landing Homeowners Ass’n v. Davencourt at Pilgrims Landing, LC, 2009 UT 65, ¶ 49, 221 P.3d 234.

The economic loss rule is a doctrine that “marks the fundamental boundary between contract law, which protects expectancy interests created through agreement between the parties, and tort law, which protects individuals and their property from physical harm by imposing a duty of reasonable care.” Reighard v. Yates, 2012 UT 45, ¶ 19, 285 P.3d 1168. The rule prevents a plaintiff from recovering economic damages under a theory of nonintentional tort when a contract covers the subject matter of the dispute. The economic loss rule covers the following economic losses:

Damages for inadequate value, costs of repair and replacement of the defective product, or consequent loss of profits–without any claim of personal injury or damage to other property…as well as the diminution in the value of the product because it is inferior in quality and does not work for the general purposes for which it was manufactured and sold.

Id. at ¶ 20.

13.8 Pre- and Post-Judgment Interest

Relevant Statutes

U.C.A. §§ 15-1-1, -3; § 15-1-4, § 78b-5-824.

Notable Law

U.C.A. § 78b-5-824 creates a statutory right to prejudgment interest on special damages in personal injury cases. The prejudgment interest rate, per U.C.A. § 15-1-1, is the legal rate of 10% per annum and is calculated from the date of the occurrence until the time of judgment. Prejudgment interest is included in the judgment and subject to the $583,900 damages cap in the Governmental Immunity Act, U.C.A. § 63G-7-604. Lyon v. Burton, 2000 UT 19, ¶ 3, 5 P.3d 616.

The court can properly award prejudgment interest only when the loss is fixed at a particular time and the amount of loss can be fixed with accuracy. Crowley v. Black, 2007 UT App 245, ¶ 7, 167 P.3d 1087; Smith v. Linmar Energy Corp., 790 P.2d 1222, 1225-26 (Utah Ct. App. 1990). For example, prejudgment interest is inappropriate in awards for mental anguish and punitive damages. First Sec. Bank of Utah, N.A. v. J.B.J. Feedyards, Inc., 653 P.2d 591, 598 (Utah 1982). Prejudgment interest is only recoverable on special damages that arise between the date of incident giving rise to the cause of action and entry of judgment in plaintiff’s favor. Gleave v. Denver & Rio Grande W. R.R., 749 P.2d 660, 672 (Utah Ct. App. 1988). However, “‘special damages actually incurred’ does not include damages for future medical expenses, loss of future wages, or loss of future earning capacity.” U.C.A. § 78b-5-824(6). Special damages are those expenses that plaintiffs have paid out of pocket, for which they have used their own money and which they will not get until the settlement of their action. Getting interest on their out-of-pocket expenses will provide a total recoupment of any expenses that they have had from the time of the accident until they are paid in full by a recovery at court or by settlement. Gleave, 749 P.2d at 672.

Any judgments on a lawful contract shall bear the interest agreed upon by the parties; other judgments will bear interest at a per annum rate that is 2% above the federal post-judgment interest rate as of January 1 of each year. U.C.A. § 15-1-4.

SECTION 14 – Miscellaneous

14.1 Real Property

Relevant Statutes

U.C.A. § 57-1-5; §§ 57-1-12, -13; § 57-1-38; § 57-3-101; §§ 57-8-1 to -41; § 76-10-801; § 78b-2-305(1); §§ 78b-6-901 to -909.

Notable Law

Torts Involving Real Property: “Nuisance“ is defined by statute as “any item, thing, manner, condition whatsoever that is dangerous to human life or health or renders soil, air, water, or food impure or unwholesome.” U.C.A. § 76-10-801.

Private nuisance is generally defined as a substantial and unreasonable nontrespassory interference with the private use and enjoyment of another’s land. Walker Drug Co. v. La Sal Oil Co., 972 P.2d 1238, 1243-44 (Utah 1998); Turnbaugh v. Anderson, 793 P.2d 939, 942-43 (Utah Ct. App. 1990). Such an action may rest on conduct that is intentional and unreasonable, negligent or reckless, or that results in abnormally dangerous conditions or activities in an inappropriate place. Id. Such an action is not available to protect the interests of a person who has no property rights or privileges in land. Id.; Stevensen v. Goodson, 924 P.2d 339 (Utah 1996). Utah courts recognize that when the conditions giving rise to a nuisance are also a violation of a statutory prohibition, those conditions constitute a nuisance per se. However, violation of an ordinance does not constitute a nuisance per se. Harper v. Summit County, 963 P.2d 768, 778-79 (Utah Ct. App. 1998), rev’d in part on other grounds, Harper v. Summit County, 2001 UT 10, 26 P.3d 193.

For a nuisance to be considered a “public nuisance,” the disturbance must affect an interest common to the general public, rather than peculiar to one individual or a small group. Therefore, when a salt company lowered the salt content of the Great Salt Lake, it merely left less salt for its competitors, but it did not create a public nuisance. Solar Salt Co. v. S. Pac. Transp. Co., 555 P.2d 286, 289 (Utah 1976); see also Whaley v. Park City Mun. Corp., 2008 UT App 234, ¶ 17, 190 P.3d 1; Restatement (Second) of Torts § 821B (1) (1979). A private party seeking damages from the creation of a public nuisance must show that the condition was a nuisance “per se.” Erickson v. Sorensen, 877 P.2d 144, 148-49 (Utah Ct. App. 1994).

A private right of action for nuisance exists under the public nuisance statute, U.C.A. § 76-10-803, if the plaintiff has suffered damages different from those of society at large. The special injury requirement is satisfied if the plaintiff suffers a physical injury. Erickson, 877 P.2d at 148-49.

A defendant may be liable for trespass to land if there has been an intentional physical invasion of the plaintiff’s real property. Such an invasion may be by the defendant’s person or an object. Generally, the measure of damages for trespass to real property is the difference between the value of the property immediately before and immediately after the injury, also known as the “Diminution of Value“ rule. An alternative measure would be the cost of restoration provided that such costs do not exceed diminution in value. In cases where no substantial damages result from the trespass and none are proved, the law will infer nominal damages to compensate for the unauthorized entry onto the plaintiff’s real property. Thorsen v. Johnson, 745 P.2d 1243, 1244-45 (Utah 1987); Turtle Mgmt., Inc. v. Haggis Mgmt., Inc., 645 P.2d 667, 670 (Utah 1982); Henderson v. For-Shor Co., 757 P.2d 465, 471 (Utah Ct. App. 1988) ; Boyer v. Boyer, 2008 UT App 138, ¶ 22, 183 P.3d 1068, 1072.

If the plaintiff in an action for trespass is unable to prove actual damages, an award of $100 would be considered in excess of “nominal” damages. In such a case, the appellate court may reduce the trial court award to a truly nominal sum of $1. See Henderson, 757 P.2d at 472.

Acknowledgments and Recordation: Utah is a “race-notice” state. U.C.A. § 57-3-103. Documents affecting real property must, in general, be recorded in the county where the real property is located. If the collateral includes fixtures, timber, minerals, or oil and gas interests, filing with the Utah Department of Commerce may also be required. The recording of an instrument affecting real property imparts constructive notice of the contents of such document from the date of recordation. U.C.A. § 57-3-203(2)(b)(i). A bona fide purchaser (including one acquiring a consensual lien) of real property for value that takes such property without notice, constructive or otherwise, of another instrument creating or purporting to create in favor of a third party an interest in such property, takes the property free and clear of the interests of such third party if the acquiring party first records the vesting instrument.

In order to be recorded, an instrument affecting real property must be acknowledged and must set forth a legal description of the property affected. U.C.A. §§ 57-3-101 to -204. Utah permits what is known as the “statutory short form of acknowledgment” but the use of this acknowledgment does not preclude other forms recognized by other states. A typical form notarization may not be sufficient to comply with the acknowledgment requirements.

Condominiums: The Utah Condominium Ownership Act, U.C.A. §§ 57-8-1 to -58, closely parallels a model statute drafted by the Federal Housing Administration pursuant to authority vested under a 1961 amendment to the National Housing Act. The characteristics of a condominium project are defined by statute and by the record of survey map and the covenants, conditions, and restrictions recorded when a condominium project is created under the Act.

This Utah Condominium Ownership Act neither imposes warranties regarding compliance with applicable building codes on transfers of real property, nor creates a private cause of action for breach. Snow Flower Homeowners Ass’n v. Snow Flower, Ltd., 2001 UT App 207, ¶¶ 28-30, 31 P.3d 576, abrogated on other grounds by Davencourt at Pilgrims Landing Homeowners Ass’n v. Davencourt at Pilgrims Landing, LC, 2009 UT 65, ¶ 49, 221 P.3d 234.

A condominium unit is a real property interest in Utah. The condominium owner is the holder of a hybrid real property interest consisting of two distinct tenures, one in severalty and the other in common. Both types, although well established separately, are inseparably joined in a condominium. Brickyard Homeowners Ass’n Mgmt. Comm. v. Gibbons Realty Co., 668 P.2d 535, 537 (Utah 1983), superseded by constitutional amendment on other grounds as stated in Brown v. Cox, 2017 UT 3, 387 P.3d 1040.

Agreement between purchaser of condominium unit and condominium owners association to decrease monthly assessment on purchaser’s unit, which had not received required consent of other owners, was invalid and unenforceable. Johannessen v. Canyon Rd. Towers Owners Ass’n, 2002 UT App 332, 57 P.3d 1119.

Because the Condominium Act does not contain any provision addressing the personal liability of trustees and specifically provides for the application of other non-conflicting law, the trustees of a condominium association incorporated as a nonprofit corporation under the Nonprofit Corporation Act are, pursuant to U.C.A. § 57-8-35(1), subject to the liability provision contained within the Nonprofit Corporation Act. Section 16-6a-115 of the Nonprofit Corporation Act immunizes trustees from personal liability absent intentional misconduct. Reedeker v. Salisbury, 952 P.2d 577, 583 (Utah Ct. App. 1998) (applying prior version of Act, U.C.A. § 16-6-107(1)).

Conveyances to Two or More Persons: Every interest in real estate granted to two or more persons in their own right (other than husband and wife) shall be a tenancy in common, unless expressly declared otherwise in the grant. Utah recognizes joint tenancies, if so declared in the grant, but does not, by statute, recognize a tenancy by the entirety. Every interest in real estate granted to two persons in their own right who are designated husband and wife in the granting documents is presumed to be a joint tenancy. U.C.A. § 57-1-5.

An action to cancel an otherwise valid deed due to alleged fraud or misrepresentation on the part of an agent is a suit of equity and does not sound in tort. Bowles v. State, 652 P.2d 1345, 1346 (Utah 1982).

After-Acquired Title: A conveyance of real property by warranty deed also effects a transfer to the grantee of all interests in the real property subsequently acquired by the grantor as if such legal estate had been vested in the grantor at the time of the conveyance. U.C.A. § 57-1-10; Cox v. Ney, 580 P.2d 1085 (Utah 1978). The rationale behind the after-acquired title statute is to prevent a grantor without title from later challenging his own conveyance of the property. F.D.I.C. v. Taylor, 2011 UT App 416, 267 P.3d 949.

Mortgages and Trust Deeds: Instruments used in Utah to finance the purchase of real property include mortgages, trust deeds, and real estate contracts. There are two views of the definition of mortgage in the United States: the ‘title-theory’ and the ‘lien-theory.’ Utah is a ‘lien-theory’ state, which means that the legal title remains in the mortgagor subject to a lien in favor of the mortgagee. Bybee v. Stuart, 112 Utah 462, 189 P.2d 118, 122 (1948); see also BMBT, LLC v. Miller, 2014 UT App 64, ¶ 9.

A mortgage is a two-party instrument pursuant to which the borrower (“mortgagor”) creates in favor of a lender (“mortgagee”) a lien to secure repayment of the financed debt, including if applicable, a purchase money seller of real property. Upon default of the mortgagor, the mortgagee’s remedy is judicial foreclosure.

Utah has enacted what is commonly known as a “one action rule,” which means that with respect to any debt secured only by an interest in real property, the lender, upon default by the borrower, must first pursue its foreclosure remedies against the real property pledged as collateral for the loan before proceeding against the borrower for a personal judgment. U.C.A. § 78b-6-901. This statutory provision has been applied to both mortgages and trust deeds, and its purpose is to eliminate the harassment of debtors and extended litigation that occurs under the common law rule allowing creditor holding secured note to sue debtors personally, foreclose on security, or both. Machock v. Fink, 2006 UT 30; APS v. Briggs, 927 P.2d 670 (Utah Ct. App. 1996); Utah Mortgage & Loan Co. v. Black, 618 P.2d 43 (Utah 1980).

A trust deed is a three-party instrument pursuant to which the borrower (“trustor”) conveys title to real property in trust to a third party (“trustee”) to secure the performance of an obligation or debt owed to a lender or purchase money seller (“beneficiary”). Only certain persons and entities may serve as trustees. U.C.A. § 57-1-21. The trustee undertakes a fiduciary relationship to both the beneficiary and the trustor. The trustee is not, however, subject to a strict liability standard. The fiduciary nature of the trustee’s responsibility goes to the standard of care to which the trustee is held, and the party claiming damages as a result of the negligent acts of the trustee must prove the elements of a negligence claim, in light of the standard of care adopted in the community. Wycalis v. Guardian Title, 780 P.2d 821, 825 (Utah Ct. App. 1989), abrogated on other grounds by Penunuri v. Sundance Partners, Ltd., 2017 UT 54, 423 P.3d 1150.

A beneficiary under a trust deed may be held liable for damages for refusing to reconvey its trust deed when the underlying debt has been fully satisfied. Hector, Inc. v. United Sav. & Loan Ass’n., 741 P.2d 542, 546-47 (Utah 1987). U.C.A. § 57-1-38 provides for the greater of $1,000 or treble actual damages plus reasonable attorneys’ fees and court costs if the mortgagee fails to release the security interest within 90 days after receipt of the final payment. The mortgagee will not be liable, however, if it has provided a reasonable procedure to timely release the interest, has complied with the procedure in good faith, and is unable to release the interest within 90 days because of inaction of one beyond its direct control. Id.

Upon default under a trust deed, the beneficiary may elect to foreclose the property non-judicially (by private power of sale) pursuant to the procedure required in U.C.A. §§ 57-1-19 to -46. Alternatively, the beneficiary may foreclose the property judicially in the manner approved for foreclosure of mortgages.

Because a bank complied with all the requirements in the trust deed statutes before pursuing foreclosure on the properties the borrower/trustor had pledged as collateral, the bank could not be held liable for breach of contract or breach of fiduciary duty. Five F, L.L.C. v. Heritage Sav. Bank, 2003 UT App 373, ¶ 23, 81 P.3d 105.

14.2 Trustees

Trustees are not personally liable in contract for decisions while acting as the trustee unless they have entered into a contract which binds them personally. Reedeker v. Salisbury, 952 P.2d 577, 581-82 (Utah Ct. App. 1998). The court also held that under the Condominium Ownership Act, U.C.A. §§ 57-8-1 to -36, a trustee’s personal liability is governed under the “intentional misconduct” standard of care set forth in the Utah Non-Profit Corporation Act, which states that a party must plead intentional misconduct to support a tort claim against a trustee. Id. at 583-84.

Real Estate Contracts: Real estate contracts are often used in Utah to transfer real property. Utah is a lien-theory state and, where mortgages or trust deeds are used to secure financing, title is conveyed to the buyer, whereupon the buyer by execution by delivery of a mortgage or trust deed creates a security interest in the property to secure repayment of a debt. The theory underlying the use of real estate contracts is that title remains with the seller pending performance of the obligations undertaken by the buyer under the contract. Although a vendee (buyer) under a real estate contract does not acquire legal title to the property, the rights accorded a buyer under Utah law closely approximate the rights of a trustor under a trust deed or a mortgagor under a mortgage. The buyer is accorded all possessory rights in the property and the interest so acquired will support attachment of a lien, mortgage, or other encumbrance. Butler v. Wilkinson, 740 P.2d 1244 (Utah 1987). The seller’s interest under a contract is personal in nature and the title interest retained by the seller will not support the attachment of a lien by a creditor of the seller, although a judgment creditor may attach and execute upon payments owing to the seller under the contract. Real estate contracts take many forms, although a standard form Uniform Real Estate Contract is used in connection with many real estate transfers in Utah.

Real Property – Conveyance of Freehold Interests: Voluntary transfers of freehold interests of real property in Utah are typically accomplished by warranty deed, U.C.A. § 57-1-12, quit-claim deed, U.C.A. § 57-1-13, or by special warranty deed, U.C.A. § 57-1-12.5. A conveyance by warranty deed includes covenants from the grantor that he is lawfully seized of the premises; that he has good right to convey the same, that he guarantees the grantee, his heirs and assigns in the quiet possession thereof; that the premises are free from all encumbrances; and that the grantor, his heirs and personal representatives will forever warrant and defend the title thereof in the grantee, his heirs and assigns against all lawful claims whatever. Exceptions to such covenants may be inserted into the deed following the description of the land. U.C.A. § 57-1-12.

II. INSURANCE LAW OVERVIEW

SECTION 1 – Policies In General

1.1 Construction and Interpretation of Policies

Relevant Statutes and Rules

U.C.A. §§ 31a-21-101 to -111.

Notable Law

An insurer’s duty to defend under a policy is determined by reference to the allegations in the underlying complaint. When those allegations, if proved, could result in liability under the policy, the insurer has a duty to defend. Nova Cas. Co. v. Able Constr., 1999 UT 69, ¶ 8, 983 P.2d 575. The scope of insurer’s duty to defend is determined by comparing the language of the insurance policy with the allegations of the complaint; the complaint must merely allege a potential cause of action, covered by the insurance policy, for the insurer to defend the claim. Novell, Inc. v. Vigilant Ins. Co., No. 10-4102, 421 Fed. Appx. 872, 2011 WL 1615391, *874-75 (10th Cir.).

An exclusionary clause barring claims of an “innocent spouse” or “innocent co-insured” based on the culpability of a co-insured was held to not be against public policy. Utah Farm Bureau Ins. Co. v. Crook, 1999 UT 47, 980 P.2d 685; accord Error v. W. Home Ins. Co., 762 P.2d 1077 (Utah 1988).

Insurance coverage is not precluded for all negligence claims. “When there are covered and non-covered claims in the same lawsuit, the insurer is obligated to provide a defense to the entire suit, at least until it can limit the suit to those claims outside of the policy coverage.” Benjamin v. Amica Mut. Ins. Co., 2006 UT 37, ¶ 25, 140 P.3d 1210. Cf. American Nat. Property and Cas. Co. v. Jackson, No. 1:07-CV-00163, 2010 WL 2555120, *8 (D. Utah June 21, 2010) (holding that insurance company did not have to provide a defense for claims outside of the insurance policy because defendant admitted to intentional acts not covered by the insurance policy).

Coverage does not turn on the legal theory under which liability is asserted, but on the cause of the injury. Taylor v. Am. Fire & Cas. Co., 925 P.2d 1279, 1283-84 (Utah Ct. App. 1996); Church Mut. Ins. v. Maafu, No. 2:13-CV-00672-DS, 2015 WL 4647849, *3 (D. Utah Aug. 5, 2015) (“[I]n Utah, the duty to defend is judged based on a plaintiff’s factual allegations, not the labels attached to a legal cause of action.”).

The term “sudden and accidental” as used in a pollution exclusion clause is not ambiguous. The term “sudden” contains a temporal element, such as being abrupt or quick, and the term “accidental” means something unintended or unexpected. Pollution occurring over a long period of time cannot be considered “sudden and accidental” even if some of the releases viewed individually could be deemed to have occurred suddenly. Sharon Steel Corp. v. Aetna Cas. & Sur. Co., 931 P.2d 127, 135 (Utah 1997).

Utah law has consistently defined the term “accident” in insurance policies as “means which produce effects which are not their natural and probable consequence.” N.M. ex rel. Caleb v. Daniel E., 2008 UT 1, ¶ 6, 175 P.3d 566 (citing Richards v. Standard Accident Ins. Co., 58 Utah 622, 200 P. 1017, 1023 (1921)). There are two ways in which bodily injury or property damage may be nonaccidental: it is the result of actual design or intended by the insured, or it is the natural and probable consequence of the insured’s acts or should have been expected by the insured. N.M. ex rel. Caleb v. Daniel E., 2008 UT at ¶ 6.

Whether a harm is the “natural and probable consequence” of the act is determined from the perspective of the insured. An objective test is applied unless the insured is not an “average individual.” An eight-year-old is not an “average individual,” and thus the natural and probable consequences of his actions are determined from the perspective of an average eight-year-old child. Id. at ¶ 9; Cincinnati Ins. Co. v. Spectrum Dev. Corp., No. 2:11-CV-0015-CW, 2015 WL 730020, *4 (D. Utah Feb. 19, 2015).

The phrase “liability assumed by the insured under any contract” in a commercial general liability policy applies to indemnification and hold-harmless agreements, whereby the insured agrees to assume the tort liability of another. The phrase does not apply to liability that results from breach of contract. Gibbs M. Smith, Inc. v. U.S. Fid. & Guar. Co., 949 P.2d 337, 341 (Utah 1997); Blaisdell v. Dentrix Dental Sys., Inc., 2012 UT 37, ¶ 10, 284 P.3d 616.

An exclusionary clause limiting losses or damages caused by rust or corrosion was properly enforced because the “[e]xcluding coverage for certain losses, the prevention of which is within the insured’s control, advances the objectives of insurance by reducing carelessness by the insured.” S.W. Energy Corp. v. Cont’l Ins. Co., 1999 UT 23, ¶ 18, 974 P.2d 1239.

In a homeowner or automobile liability insurance policy, the term “arising out of” is construed very broadly and is understood to mean originating from, growing out of, or flowing from, and requires only that there be some causal relationship between the injury and the risk for which coverage is provided. Gibbs M. Smith, Inc. v. U.S. Fid. & Guar. Co., 949 P.2d 337, 343 (Utah 1997); Meadow Valley Contractors, Inc. v. Transcon. Ins. Co., 2001 UT App 190, ¶ 14, 27 P.3d 594; Viking Ins. Co. v. Coleman, 927 P.2d 661, 663 (Utah Ct. App. 1996).

For an insured to satisfy the term “legally entitled to recover,” the insured must have a viable claim that is able to be reduced to judgment in a court of law. The insured’s liability does not arise until there is a legal determination of liability and extent of damages. Peterson v. Utah Farm Bureau Ins. Co., 927 P.2d 192, 195 (Utah Ct. App. 1996).

The ordinary meaning of contract terms is often best determined through standard, non-legal dictionaries. Warburton v. Virginia Beach Fed. Sav. & Loan Ass’n, 899 P.2d 779, 783 (Utah Ct. App. 1995) ; Zimmer v. CHG Companies, Inc., No. 2:11-CV-681 TS, 2012 WL 6049118, at *3 (D. Utah Dec. 5, 2012). “Courts interpret words in insurance policies according to their usually accepted meaning and in light of the insurance policy as a whole.” Utah Farm Bureau Ins. Co. v. Crook, 1999 UT 47, ¶ 5, 980 P.2d 685, 686. With respect to ambiguities, insurance policies must be construed in light of how an average, reasonable purchaser of insurance would understand the language of the policy as a whole. U.S. Fid. & Guar. Co. v. Sandt, 854 P.2d 519, 523 (Utah 1993). However, “[e]xclusions from coverage are interpreted no differently when the policy language is clear.” Kuhn v. Ret. Bd., 2015 UT App 18, ¶ 8, 343 P.3d 316 (citation omitted).

Policies are construed as the court perceives they would be understood by the average, reasonable purchaser of insurance who is not trained in the law or in the insurance business, and must employ language clearly identifying the scope of limitations. See U.S. Fid. & Guar. Co. v. Sandt, 854 P.2d 519, 523 (Utah 1993). However, Utah categorically rejected all forms of the reasonable expectations doctrine; if the policy terms plainly limit coverage, coverage cannot be found simply because an insured would reasonably expect it. AOK Lands, Inc. v. Shand, Morahan & Co., 860 P.2d 924, 927 (Utah 1993); Allen v. Prudential Prop. & Cas. Ins. Co., 839 P.2d 798, 803 (Utah 1992).

Ambiguities are construed against the insurer. U.S. Fid. & Guar. Co., 854 P.2d at 522. Ambiguities are construed in favor of coverage. Utah Farm Bureau Ins. Co. v. Crook, 1999 UT 47, 980 P.2d 685, 686-87. Where there is no ambiguity or uncertainty in the language of the policy, it should be enforced according to the plain and ordinary meaning of its terms. Alf v. State Farm Fire & Cas. Co., 850 P.2d 1272, 1274 (Utah 1993).

“Public records,” defined in a title policy as “those records which by law impart constructive notice,” did not include records that could have been located based on inquiry notice – an insurer’s “knowledge of certain facts and circumstances that are sufficient to give rise to a duty to inquire further” – because such notice did not arise from a record. First Am. Title Ins. Co. v. J.B. Ranch, Inc., 966 P.2d 834, 838 (Utah 1998).

“An insurer has the right to contract with an insured as to the risks it will or will not assume, as long as neither statutory law nor public policy is violated.” Farmers Ins. Exch. v. Call, 712 P.2d 231, 233 (Utah 1985)); Neel v. State, 889 P.2d 922, 926 (Utah 1995).

A relative is covered under an insurance policy that covers a “resident of the insured’s household” if that relative maintains a physical presence for a substantial period within a household which is his place of abode. Gov’t Employees Ins. Co. v. Dennis, 645 P.2d 672, 676 (Utah 1982); Mesa Dev. Co., Inc. v. Sandy City Corp., 948 P.2d 366, 369 (Utah Ct. App. 1997). The terms “residence” and “reside” can be read to mean either domicile or physical presence. Lilly v. Lilly, 2011 UT App 53, ¶ 13, 250 P.3d 994.

An insurance company cannot create an exclusion which would prevent a resident family member of the insured from recovering statutorily required no-fault benefits under the insured’s motor vehicle policy. State Farm Mut. Auto. Ins. Co. v. Mastbaum, 748 P.2d 1042, 1042-43 (Utah 1987); McCaffery ex rel. McCaffery v. Grow, 787 P.2d 901, 903-04 (Utah Ct. App. 1990).

Endorsements, marginal references, riders, and other writings which constitute a part of the contract of insurance are to be read and construed with the policy proper. St. Paul Fire & Marine Ins. v. Commercial Union Assurance, 606 P.2d 1206, 1208 (Utah 1980); but see Home Sav. & Loan v. Aetna Cas. & Sur. Co., 817 P.2d 341, 380 (Utah Ct. App. 1991) (reasoning that when a rider specifically indicated that it was meant to revise certain sections, the definitions provided in the rider did not apply to the policy as a whole).

Reinstatement of a life insurance policy constitutes continuation of the original policy and the insurer cannot add conditions or restrictions beyond conditions or restrictions of the original policy. Burnham v. Bankers Life & Cas. Co., 470 P.2d 261, 282 (Utah 1970).

Substantial rather than strict compliance with proof of loss provisions fulfills the insured’s policy obligations. Canyon Country Store v. Bracey, 781 P.2d 414, 418 (Utah 1989) (suggesting that prejudice to the evaluation of the claim is necessary to successfully invoke defense of noncompliance with proof-of-loss requirements).

The stacking provisions of U.C.A. § 31a-22-305 did not apply to an insurance policy that was not delivered or issued for delivery in Utah and was not for a vehicle located in Utah, nor for persons residing in Utah when the policy was issued. Travelers/Aetna Ins. Co. v. Wilson, 2002 UT App 221, ¶¶ 10-11, 51 P.3d 1288.

In 2015, the Court of Appeals noted that “the question of which approach Utah ought to adopt for defining the scope of a waiver of damages provision in a construction contract, and the resulting impact on any right of subrogation, is not yet ripe for resolution.” Hemingway v. Constr. by Design Corp., 2015 UT App 10, ¶ 18, 342 P.3d 1135 (leaving open “source of coverage” or “type of damages” approaches).

In 2015, the Court of Appeals also held that a provision that required notice of UIM coverage to policyholders was not retroactive. Kingston v. State Farm Auto. Ins. Co., 2015 UT App 28, ¶¶ 34-35, 344 P.3d 167. The Court of Appeals went on to hold that a personal liability umbrella policy was not a motor vehicle insurance policy subject to the UIM coverage requirement. Id. ¶¶ 45-46.

1.2 Fraud and Misrepresentation

Relevant Statutes

U.C.A. § 31a-21-105; § 31a-22-405; §§ 31a-31-101 to -111.

Notable Law

No statement, representation, or warranty made by a representative of the insurer in negotiation for an insurance contract affects the insurer’s obligations under the policy unless it is stated in the policy or in a written application signed by the applicant. U.C.A. § 31a-21-105(1)(a).

The insured’s innocent misstatements about her mental condition on her insurance application were not “misrepresentations” under U.C.A. § 31a-21-105. Derbidge v. Mut. Protective Ins. Co., 963 P.2d 788, 796 (Utah Ct. App. 1998); but see Chowdhury v. United of Omaha Ins. Co., No. 1:07-cv-00095 CW, 2009 WL 1851005, *3 (D. Utah Jun. 26, 2009) (concluding that the plain language of the statute shows that an insurance company does not need to rely on intent if the misrepresentation was material).

Intentional conduct cannot be defined as an accident or occurrence under a policy. Nova Cas. Co. v. Able Constr., 1999 UT 69, ¶ 12, 983 P.2d 575; Cincinnati Ins. Co. v. AMSCO Windows, 921 F. Supp. 2d 1226, 1244 (D. Utah 2013) aff’d, 593 F. App’x 802 (10th Cir. 2014).

An intent to deceive and defraud the insurer in an application for insurance may be inferred where the applicant knowingly misrepresents facts which would influence the insurer in accepting or rejecting risk. Theros v. Metro. Life Ins. Co., 407 P.2d 685, 687-88 (Utah 1965).

“[N]o misrepresentation or breach of an affirmative warranty affects the insurer’s obligations under the policy unless: (a) the insurer relies on it and it is either material or is made with intent to deceive; or (b) the fact misrepresented or falsely warranted contributes to the loss.” U.C.A. § 31a-21-105(2); see also Hardy v. Prudential Ins. Co. of Am., 763 P.2d 761, 766 n.6 (Utah 1988) (decided under U.C.A. § 31-19-8, repealed and replaced by U.C.A. § 31a-21-105); Fuller v. Dir. of Fin., 694 P.2d 1045, 1048 (Utah 1985) (noting that unless misrepresentations are made with the intent to deceive and unless they materially affect the acceptance of the risk assumed by the insurer, the insurer may not avoid the contract).

In order to invalidate a policy based on a misrepresentation by an insured, an insurer need only prove that one of the three statutory alternatives in U.C.A. § 31a-21-105(2) apply. In other words, an insurer may rescind a policy if any one of these three provisions is met: (1) the insurer relies on a material misrepresentation made by the applicant; (2) the insurer relies on a misrepresentation that was made by the applicant with the intent to deceive; or (3) the applicant’s misrepresentation contributes to the loss. Derbidge v. Mut. Protective Ins. Co., 963 P.2d 788, 790-91 (Utah Ct. App. 1998).

The insurer has the burden of proving the defense that the applicant made misrepresentations upon which the insurer relied which were either material or made with the intent to deceive, or that the insurer would not have issued the policy if the true facts had been made known. Hardy v. Prudential Ins. Co. of Am., 763 P.2d 761, 765-66 (Utah 1988) (decided under U.C.A. § 31-19-8, repealed and replaced by U.C.A. § 31a-21-105).

Whether a misstatement in an application is material or made with the intent to deceive is generally for the jury. Hardy, 763 P.2d at 768 (decided under U.C.A. § 31-19-8, repealed and replaced by U.C.A. § 31a-21-105). Materiality of misrepresentation made by insured is determined by the extent it initially influenced insurer to assume risk of coverage. Berger v. Minnesota Mut. Life Ins. Co., 723 P.2d 388, 391 (Utah 1986) (decided under U.C.A. § 31-19-8, repealed and replaced by U.C.A. § 31a-21-105).

Under Utah law, a misrepresentation must contain some level of knowledge or awareness of a misstatement. An innocent misstatement, made in ignorance of its falsity, does not rise to the level of a “misrepresentation” for the purposes of rescinding a policy. A genuine issue of material fact as to whether the insured’s misstatements are “innocent” will preclude summary judgment. Derbidge v. Mut. Protective Ins. Co., 963 P.2d 788, 797 (Utah Ct. App. 1998); ClearOne Commc’ns, Inc. v. Nat’l Union Fire Ins. Co. of Pittsburgh, PA, 494 F.3d 1238, 1246-47 (10th Cir. 2007).

Insurer had burden of proof that it would not have issued policy if insured had disclosed previously diagnosed condition. Moore v. Prudential Ins. Co. of Am., 491 P.2d 227, 230 (Utah 1971).

“Nondisclosure of information not requested by the insurer is not a defense to an action against the insurer. Failure to correct within a reasonable time any representation that becomes incorrect because of changes in circumstances is misrepresentation, not nondisclosure.” U.C.A. § 31a-21-105(4).

If, after a policy is issued, the insurer discovers sufficient facts to constitute a general defense to all claims under the policy, the insurer must notify the insured, within 60 days after acquiring the knowledge, of its intent to defend against a claim if one is asserted. Where the insured is actively seeking additional medical information at the end of the 60 days, the insured has a total of 120 days to notify the insured. The insurer has “acquired knowledge” only if the information was “disclosed to the insurer or its agent in connection with communications or investigations associated with the insurance policy under which the subject claim arises.” U.C.A. § 31a-21-105(5).

If the age of the person whose life is insured is misstated in the application, and the error is not corrected in the insured’s lifetime, “the amount payable under the policy is what the premium would have purchased if the age . . . had been stated correctly.” U.C.A. § 31a-22-405(1). If the insured was beyond the maximum age limit designated by the insurer at the time the insurance was applied for, “the insurer shall refund at least the amount of the premiums collected under the policy.” U.C.A. § 31a-22-405(2).

Concealment or misrepresentation by the insured of a diabetic condition is material to the risk assumed by the insurer, even though the insured’s death or injury results from other causes. Berger v. Minnesota Mut. Life Ins. Co., 723 P.2d 388, 391 (Utah 1986) (decided under U.C.A. § 31-19-8, repealed and replaced by U.C.A. § 31a-21-105).

If an insurance policy allows an insurer to void coverage in the event of fraud by an insured, that does not mean that a third-party who committed fraud cannot make a claim against the insured under that policy. Fraud by a third-party claimant is irrelevant to the third party’s claim against the insured on the basis of the policy. Progressive Cas. Ins. Co. v. Dalgleish, 2002 UT 59, ¶ 24, 52 P.3d 1142.

Where an applicant for renter’s insurance failed to disclose that his prior policy had been canceled, the court was justified in rescinding the policy because prior cancellation of similar insurance by a different company is a matter material to the acceptance of the risk by the second company. Prudential Prop. & Cas. Ins. Co. v. Mardanlou, 607 P.2d 291, 293 (Utah 1980).

Mortgage insurer was entitled to rescind a certificate of mortgage insurance issued to an insured lender on the basis of a forgery and misrepresentations in the borrower’s loan application. Wisconsin Mortgage Assurance Corp. v. HMG Mortgage Corp., 712 F. Supp. 878, 880-81 (D. Utah 1989).

Although the insured was technically inaccurate when she declared in the application for insurance that she had no “paralysis” or “back or bone disorders,” as a lay person, she was not obliged to know the technical meaning of terms used, but only the meaning in common usage, and sincere belief that she had not experienced “paralysis” or “back or bone disorders” did not constitute a misrepresentation which would void the policy. Marks v. Cont’l Cas. Co., 427 P.2d 387, 389 (Utah 1967) (decided under U.C.A. § 31-19-8, repealed and replaced by U.C.A. § 31a-21-105).

An insurer that offers coverage to a small employer group may not rescind a policy or individual certificate holder based on application misrepresentation unless the insurer would not have been required to issue the coverage in the absence of the misrepresentation. This does not prevent an insurer from correcting rates if in the absence of misrepresentation a different rate would have been required and the corrected rates are in compliance with U.C.A. § 31a-30-106. See U.C.A. § 31a-21-105(6).

Notably, in 2015, the Court of Appeals held that the insurance-fraud statute “no longer requires that a person present a complete fraudulent or false insurance claim in order to commit the crime.” State v. Ferguson, 2015 UT App 45, ¶ 16, 345 P.3d 763.

Where an insured should have known that his application for a $4 million life insurance policy contained a misstatement about his net worth, but insured failed to correct such misrepresentation, the insurance company was entitled to rescind the policy and retain the premium payments. PHL Variable Ins. Co. v. Sheldon Hathaway Family Ins. Tr. ex rel. Hathaway, 819 F.3d 1283 (10th Cir. 2016).

1.3 Waiver and Estoppel

Relevant Rules

U.R.C.P. 8(c).

Notable Law

Waiver is the intentional relinquishment of a known right. “It has three elements: (1) an existing right, benefit, or advantage; (2) knowledge of its existence; and (3) an intention to relinquish the right.” Jensen v. IHC Hosp., Inc., 2003 UT 51, ¶ 82, 82 P.3d 1076.

Courts generally “‘indulge every reasonable presumption against waiver of constitutional rights.’” State v. Smith, 2011 UT App 336, ¶ 5, 263 P.3d 1219 (citing Bruner v. Carver, 920 P.2d 1153, 1155 (Utah 1996)).

Without specific knowledge that an arbitration provision was mandatory, an insured could not have intentionally relinquished any right to file suit. McCoy v. Blue Cross & Blue Shield of Utah, 2001 UT 31, ¶ 20, 20 P.3d 901.

Party claiming promissory estoppel must establish that the promisor reasonably expected to induce reliance, reasonable reliance including action or forbearance on part of promisee or third person, and detriment to promisee or third person. Prows v. State, 822 P.2d 764, 768-69 (Utah 1991).

The entry of an appearance for an insured may not of itself constitute a waiver of available defenses, because the insurer is entitled to a reasonable time to investigate the facts. The insurer is, however, required to act seasonably in disclaiming liability, and cannot wait so long that the insured’s rights are prejudiced. State Farm Mut. Auto. Ins. Co. v. Kay, 487 P.2d 852, 854-55 (Utah 1971); Farmers Ins. Exch. v. Call, 712 P.2d 231 (Utah 1985).

An automobile insurer owes a duty to the insured as well as to the public to make a reasonable investigation of the insurability of an applicant. The insurer may not rely upon the application, but must at least check public records of the applicant’s past violations. State Farm Mut. Auto. Ins. Co. v. Wood, 483 P.2d 892, 893 (Utah 1971).

An insurer must make a reasonable investigation whether facts which could be proved under a complaint would bring the claim within policy coverage. Failure to provide a defense when a covered claim could be proved results in waiver of policy defenses. Deseret Fed. Sav. & Loan Ass’n v. U.S. Fid. & Guar. Co., 714 P.2d 1143, 1147 (Utah 1986).

An insurer who leads an insured to honestly believe that a policy provision regarding forfeiture for late payment of premiums will not be enforced, because of past custom of receiving overdue payments without objection, is estopped from enforcing the forfeiture provision. General elements of estoppel are that the insured be misled by words, conduct, or omission of the insurer, and prejudice to the insured if the policy provision is strictly enforced. Pollock v. New York Life Ins. Co., 691 F.2d 961, 965 (10th Cir. 1982); Cooper v. Foresters Underwriters, Inc., 275 P.2d 675, 676-77 (Utah 1954); Ballard v. Beneficial Life Ins. Co., 21 P.2d 847, 851 (Utah 1933); Memdata, LLC v. Intermountain Health Care, Inc., No. 2:08-CV-190, 2010 WL 1529275 (D. Utah April 15, 2010). However, where the insurer allows the insured to pay the annual premium in installments, acceptance of a late installment payment is not necessarily a waiver of the right to assert lapse of coverage for a late premium payment which is made at the end of the policy term. Clarke v. Am. Concept Ins. Co., 758 P.2d 470, 473-74 (Utah Ct. App. 1988).

An insurer’s acceptance without objection of premiums, with knowledge of the insured’s non-compliance with a condition of the policy, waives the condition. Matlock v. Gov’t Employees Ins. Co., 546 P.2d 903, 904-05 (Utah 1976).

The prior course of dealing between an insured and an insurer may provide an adequate foundation to estop the insurer from denying coverage. In Travelers Ins. Co. v. Kearl, 896 P.2d 644, 648 (Utah Ct. App. 1995), an insured telephoned his agent and told him to put a new car on his insurance policy. He did not have all of the necessary information about the vehicle but assumed it would still be covered as of that date because he had previously added vehicles without complete information. Three days later, the insured’s nephew and three passengers were killed when the nephew was driving the vehicle. The Court of Appeals reversed summary judgment for the insurer, stating that the insured made out the elements of equitable estoppel based on past dealings with the insurer. Id. at 646, 649.

The court in Travelers identified the following necessary elements of equitable estoppel: (1) a statement, admission, act, or failure to act by one party inconsistent with a claim later asserted; (2) a reasonable action or inaction by the other party, taken on the basis of the first party’s statement, admission, act, or failure to act; and (3) injury to the second party that would result from allowing the first party to contradict or repudiate the statement, admission, act, or failure to act. Id. at 647 (quoting Trolley Square Assocs. v. Nielson, 886 P.2d 61, 65 (Utah App.1994)).

Ordinarily, a parent may not release or waive a minor’s prospective claims for negligence. Also, a parent’s agreement to indemnify a third party for that party’s own negligence is void as against public policy. By shifting financial responsibility to a minor’s parent, such indemnity provisions would allow negligent parties to circumvent the rule voiding waivers signed on behalf of a minor. Hawkins v. Peart, 2001 UT 94, ¶ 13, 37 P.3d 1062, conclusion superseded by statute as stated in Penunuri v. Sundance Partners, Ltd., 301 P.3d 984 (Utah 2013). However, this general rule is inapplicable where otherwise provided by statute. Penunuri, 2013 UT 22, ¶ 21 n. 43, 301 P.3d 984 (noting that when the Hawkins decision conflicts with a statute, specifically U.C.A. § 78b-4-203(2)(b) of the Equine Act, the statute would control and effectively overrule the court’s decision in Hawkins.).

The terms of an insurance contract may be varied by promises made by an insurance company’s agent. A claimant must show that (1) an agent made a material misrepresentation about benefits or other important policy provisions; (2) the claimant acted in reliance on the agent’s misrepresentation; and (3) that reliance caused the claimant injury. Youngblood v. Auto-Owners Ins. Co., 2007 UT 28, ¶ 25, 158 P.3d 1088; Remund v. State Farm Fire & Cas. Co., 483 F. App’x 403, 407 (10th Cir. 2012).

When a party accepts the benefits of a judgment, that party impliedly acknowledges resolution of the underlying controversy and waives the right to appeal that judgment. Under the “acceptance-of-benefits doctrine,” waiver is very narrow. According to this doctrine, the right to appeal is waived only for the specific claims upon which payment is accepted. Richards v. Brown, 2012 UT 14, ¶ 16, 274 P.3d 911.

In Utah, “an insured can generally waive an insurer’s subrogation rights against a particular third party through a pre-loss agreement.” Hemingway v. Constr. by Design Corp., 2015 UT App 10, ¶ 8, 342 P.3d 1135 (discussing waiver at length).

1.4 Contracts

Relevant Statutes

U.C.A. §§ 31a-21-1, et seq.; §§ 31a-22-1, et seq.; § 25-5-1, et seq., Statute of Frauds; Title 70a, UCC.

Notable Law

Insurance policies are normally interpreted according to rules of contract interpretations. Kuhn v. Ret. Bd., 2015 UT App 18, ¶ 4, 343 P.3d 316; Utah Farm Bureau v. Crook, 1999 UT 47, ¶ 5, 980 P.2d 685.

Binding oral contracts of insurance may only be made as to casualty, liability, property, vehicle liability, workers compensation, and combinations of those types of insurance. U.C.A. § 31a-21-102(2).

A party must be 16 years of age to enter into a contract of insurance. U.C.A. § 31a-21-103.

Application for issuance of an insurance policy is a matter of contract law and is governed by the rules thereof. Terry v. Ret. Bd., Pub. Employees’ Health Program, 2007 UT App 87, ¶ 10, 157 P.3d 362; Moore v. Prudential Ins. Co. of Am., 491 P.2d 227, 228 (Utah 1971).

Verbal contracts for insurance coverage are valid and when entered into may result in temporary coverage. Arko v. Farmers Ins. Exch., 516 P.2d 1395, 1397 (Utah 1973).

“No binder is valid beyond the issuance of the policy as to which the binder was given, or beyond 150 days from the binder’s effective date, whichever occurs first.” U.C.A. § 31a-21-102(3); Citizens Cas. Co. v. Hackett, 410 P.2d 767, 769 (Utah 1966) (requiring agent to remit money to insurer).

Insurance policies are construed as the court perceives they would be understood by average, reasonable purchaser of insurance. Village Inn Apartments v. State Farm Fire & Cas. Co., 790 P.2d 581, 583 (Utah Ct. App. 1990).

Although courts generally treat insurance contracts as special and do not always apply principles of contract law, such a tendency should not be allowed to overrun the bounds of legitimate exception. Theros v. Metro. Life Ins. Co., 407 P.2d 685, 688 (Utah 1965).

Insurance adjuster who had authority from insurer to settle claim also had authority to bind insurer to arbitrate claim, as long as the insured was not prejudiced. Insurer and its adjuster cannot bind the insured to arbitrate any claim against the insured for any amount in excess of the policy limits. Jenkins v. Percival, 962 P.2d 796, 799 (Utah 1998).

Correspondence between parties evidencing a meeting of the minds to submit a controversy to arbitration can qualify as the “writing” necessary to render an insurance arbitration provision enforceable under the Utah Arbitration Act. Jenkins v. Percival, 962 P.2d 796, 800 (Utah 1998).

An otherwise unenforceable oral arbitration agreement in an insurance dispute may be rendered enforceable by part performance, if evidenced by the parties’ substantial acts in reliance and furtherance of the agreement. Jenkins v. Percival, 962 P.2d 796, 801 (Utah 1998).

In order to enforce an amendment to a policy, the insurer must demonstrate that the policy amendment was actually prepared and sent specifically to the insured. McCoy v. Blue Cross & Blue Shield of Utah, 2001 UT 31, ¶¶ 18-19, 20 P.3d 901.

Neither conditional life insurance agreement nor the receipt the insurance company issued for payment of the first premium constituted a “binder.” Craner v. Nw. Mut. Life Ins. Co., 12 F. Supp. 2d 1234, 1240 (D. Utah 1998), aff’d, No. 98-4145, 1999 WL 668821 (10th Cir. Aug. 27, 1999).

The Utah Supreme Court has expressly declined to adopt a rule of strict construction for insurance procurement provisions. Utah Transit Auth. v. Greyhound Lines, Inc., 2015 UT 53, ¶ 18, 355 P.3d 947 (holding procurement provision required third party to insure defendant’s negligent acts).

Substitution may not constitute a material change, thus creating a new policy under the UIM statute. Kingston v. State Farm Auto. Ins. Co., 2015 UT App 28, ¶ 26, 344 P.3d 167 (applying three factors and totality of circumstances test).

Generally, insurance policies “are adhesion contracts [and] are to be construed liberally in favor of the insured . . . so as to promote and not defeat the purpose of insurance.” Farmers Ins. Exch. v. Versaw, 2004 UT 73, ¶ 24, 99 P.3d 796; Kingston v. State Farm Auto. Ins. Co., 2015 UT App 28, ¶ 38, 344 P.3d 167.

In 2015, the Utah Supreme Court provided some clarity with respect to vicarious liability for a title insurance. Orlando Millenia, LC v. United Title Servs. of Utah, Inc., 2015 UT 55, ¶ 53, 355 P.3d 965 (discussing U.C.A. § 31a-23a-407 at length).

1.5 Insurable Interest

Relevant Statute

U.C.A. § 31a-21-104.

Notable Law

“Insurable interest” in a person is defined in U.C.A. § 31a-21-104(1)(b). Insurable interest” in a person to which another is related by blood or law includes an interest “engendered by love and affection.” U.C.A. § 31a-21-104(1)(b)(i). “Insurable interest” in a person to which another is not related by blood or law includes an interest in having the life, health, and bodily safety of the person insured continue. U.C.A. § 31a-21-104(1)(b)(ii).

“Insurable Interest” in property or liability means a “lawful and substantial economic interest in the nonoccurrence of the event insured against.” U.C.A. § 31a-21-104(1)(c). A person has an insurable interest in property whenever he would profit by or gain some advantage by its continued existence and suffer some loss or disadvantage by its destruction. If he would sustain such loss, it is immaterial whether he has, or has not, any title in or lien upon, or possession of the property itself. Error v. W. Home Ins. Co., 762 P.2d 1077, 1081-82 (Utah 1988).

An insurer may not knowingly provide insurance to a person who does not have or expect to have an insurable interest in the subject of the insurance, nor may a person knowingly procure an interest in the proceeds of an insurance policy unless he has or expects to have an insurable interest in the subject of the insurance. U.C.A. § 31a-21-104(2)(a)-(b).

Both landlord and tenant have an insurable interest in rented premises. GNS P’ship v. Fullmer, 873 P.2d 1157, 1161 (Utah Ct. App. 1994).

Even though termination of buy-sell agreement upon one partner’s death rendered remaining partner without an insurable interest in life insurance policy of former partner, the insurance policy is still valid and court will equitably distribute insurance proceeds pursuant to U.C.A. § 31a-21-104(6). Parduhn v. Bennett, 2002 UT 93, ¶ 17, 61 P.3d 982, 986-87.

No policy is invalid because the policyholder lacks an insurable interest or because consent has not been given, but the court may order the proceeds to be paid to some person who is equitably entitled to them. U.C.A. § 31a-21-104(6).

When fire insurance is provided for a dwelling, it protects the insurable interests of all joint owners. GNS P’ship, 873 P.2d at 1162.

The law requires interest in the insured property to exist both at time of issuance of the policy and at the time of loss. An owner of a building who retains legal title even though he has contracted to sell it has an insurable interest therein until the purchase price is paid. Kingston v. Great Sw. Fire Ins. Co., 578 P.2d 1278, 1279 (Utah 1978). However, a lessee of a vehicle had no insurable interest in the vehicle where the lease had expired; lessor’s insurer was the sole insurer of the vehicle. Allstate Ins. Co. v. Liberty Mut. Ins. Co., 868 P.2d 110, 114-15 (Utah Ct. App. 1994).

When addressing competing “other insurance” clauses, courts generally determine the effect of the clauses on the date of the accident. In re Aramark Leisure Servs., 523 F.3d 1169, 1177 (10th Cir. 2008).

Except in certain circumstances, written consent is required before issuing a life or disability policy to a person other than the one whose life or health is insured. U.C.A. § 31a-21-104(3). The exceptions to the consent requirement are set forth in U.C.A. § 31a-21-104(5).

A husband’s second marriage gave him an equitable interest in homestead property sufficient to constitute an insurable interest limited to one-half of the property’s appreciation during the time of remarriage, and thus the portion to be deducted from the wife’s insurance recovery after the husband burned the house was minimal. Husband’s arson did not void policy as to wife. Error v. W. Home Ins. Co., 762 P.2d 1077, 1081 (Utah 1988).

A life insurance policy is not void if the insured does not have an insurable interest in the subject of the policy on the date it is issued. An insured may later obtain an insurable interest. U.C.A. § 31a-21-104(2)(c).

A trust has an insurable interest in any subject that its beneficiary has an interest. Id. § 31a-21-104(3)(c).

The insurable interests enumerated in U.C.A. § 31a-21-104 are not exclusive. Interests that are insurable at common law may also be recognized. U.C.A. § 31a-21-104(9)(a).

1.6 Rating

Relevant Statutes

U.C.A. §§ 31a-19a-101 to -407; § 31a-22-602.

Notable Law

Rates may not be excessive, inadequate, or unfairly discriminatory or have the effect of creating a monopoly. U.C.A. § 31a-19a-201(1). Excessive, inadequate, and discriminatory rates are defined in U.C.A. § 31a-19a-201. Criteria for determining whether rates comply with the above standards are set forth in U.C.A. § 31a-19a-202.

Every insurer and every rate service organization shall file with the commissioner all rates and supplementary information and all changes and amendments to them that are made by it for use in this state. U.C.A. § 31a-19a-203(1). Once filed, these rates are open to the public at any time upon request. U.C.A. § 31a-19a-204. Rate Service Organizations are regulated pursuant to the terms of U.C.A. §§ 31a-19a-301 to -309. An insurer may discharge its obligation to file rates with the commissioner by giving notice that it uses rates and supplementary rate information prepared by a designated rate service organization. U.C.A. § 31a-19a-205(2).

All rates are subject to approval by the commissioner. U.C.A. §§ 31a-19a-206 to -207.

Workers Compensation rates are governed by U.C.A. §§ 31a-19a-401 to -408.

Special provisions for title insurance rates and rate filing are set forth in U.C.A. § 31a-19a-209.

There shall be a premium rate reduction for private passenger motor vehicle insurance policies in which the principal driver is 55 years of age or older if they have successfully completed a motor vehicle accident prevention course as outlined in U.C.A. § 31a-19a-211(1).

Insurance companies are prohibited from increasing an insured’s premium due to telephone calls or other inquiries that do not result in the payment of a claim, or when the insured submits a claim for damage, including vandalism, caused by someone other than the insured or a permissive user. U.C.A. § 31a-19a-212.

Approval of individual disability insurance policy rates is governed by U.C.A. § 31a-22-602.

1.7 Foreign Insurers

Relevant Statutes

U.C.A. §§ 16-10a-101 to -129; §§ 15-10a-1501 to -1533; § 31a-4-105.5; §§ 31a-14-101 to -217.

Notable Law

The application procedure for foreign insurers is set forth in U.C.A. § 31a-14-201.

Foreign insurers must maintain a deposit to be held for the benefit of shareholders. U.C.A. § 31a-4-105.5.

Foreign insurers must have a registered agent for service of process within the State of Utah and must comply with the requirements set forth in U.C.A. § 31a-14-204. Incorporated alien insurers must satisfy the requirements of U.C.A. §§ 31a-14-201 and -209. Foreign fraternals must meet the requirements of U.C.A. §§ 31a-14-203 and -210. Restrictions on foreign title insurers are set forth in U.C.A. § 31a-14-211. Under certain conditions, a foreign insurer may be released from regulation under the Insurance Code. See U.C.A. § 31a-14-216.

1.8 Regulation of Insurers

Relevant Statutes and Rules

U.C.A. §§ 31a-1-101 through -31-108 and scattered sections; UAC R590-67 to R590-151.

Notable Law

Detailed claims practices and standards are found in U.C.A. §§ 31a-26-301 to -311 and UAC R590-190 through -192.

Regulation of insurance contracts is within the state’s police power and can be regulated within reasonable limits. Utah Ass’n of Life Underwriters v. Mountain States Life Ins. Co., 200 P. 673, 677 (Utah 1921).

A person may not conduct an insurance business in Utah, either in person, through agents, through brokers, or through the mail or another method of communication unless expressly authorized by statute, and unless within the limits of its certificate of authority. U.C.A. § 31a-4-102; U.C.A. § 31a-5-212. In 2014, the Utah Legislature expanded the statute to include captive insurance companies. Id. “Insurance business” is defined in U.C.A. § 31a-1-301(89).

The Insurance Department administers the Insurance Code. U.C.A. § 31a-2-101. The chief officer of the department is the insurance commissioner, who may exercise all powers given to, and shall perform all duties imposed on, the Insurance Department. U.C.A. § 31a-2-102. The duties and powers of the commissioner are specified throughout various sections of the U.C.A., including U.C.A. § 31a-1-102, U.C.A. §§ 31a-2-201 to -218, and U.C.A. §§ 31a-2-301 to -311.

Persons doing an insurance business in Utah must apply for a Certificate of Authority. U.C.A. § 31a-4-103; U.C.A. § 31a-5-212.

Foreign surety that had issued a bond to guarantee payment of a North Carolina borrower’s debt to a Texas lender did not conduct insurance business in the state and, therefore, was not required to possess a certificate of authority or use a surplus lines broker when it entered indemnity agreement with borrower in another state. The only connection to the state was the correspondence regarding the default sent to the agent and surety in the state more than ten months after the agreement was entered into. Certified Sur. Group, Ltd. v. UT Inc., 960 P.2d 904, 906 (Utah 1998).

An insurance company must obtain the appropriate organization or solicitation permit under U.C.A. § 31a, Chapters 5, 6a, 7, 8, or 9 and file any required statement under U.C.A. § 31a, Chapter 16.

Domestic insurers shall maintain a deposit in the amount of the insurer’s required capital for stock insurers, or minimum permanent surplus for mutuals. U.C.A. § 31a-4-105; § 31a-2-206.

Authorized insurers are required to file a statement of financial conditions annually with the commissioner. U.C.A. § 31a-4-113; see also §§ 31a-17-101 to -613 (determination of financial conditions).

An insurance provider is required to file a plan of orderly withdrawal with the Utah insurance commissioner when the provider plans to withdraw from a line of insurance in Utah or to reduce its total annual premium volume by 75% or more. The plan must include certain information, and will be approved if it meets certain criteria. Insurers who fail to comply with the requirements of this section will be fined. U.C.A. § 31a-4-115.

If an insurer has established a complaint resolution body or grievance appeal board, the body or board shall have at least one consumer representative. U.C.A. § 31a-4-116(1).

An insurance license, including a line of authority, will lapse if the licensee fails to pay fees when due, fails to complete continuing education requirements before submitting the license renewal application, fails to submit a license renewal application, fails to submit additional documentation required to complete the licensing process as related to a specific license type, or fails to maintain an active license in a resident state if the licensee is a nonresident licensee. U.C.A. § 31a-23a-113(1)(a)(i)-(v).

Depository institutions are permitted to engage in insurance business (except as limited by federal law), act as an insurance agent, broker or consultant, and engage in insurance adjusting. Any depository institution that engages in these types of activities is subject to the Insurance Code. U.C.A. § 7-1-901.

1.9 Regulation of Policy Forms

Forms must be filed with and approved by the Commissioner. Provisions of policies of insurance issued within Utah must comply with U.C.A. §§ 31a-21-201 to -203.

Insurance commissioner may not adopt mandatory uniform clauses. U.C.A. § 31a‑21-203(1). However, under certain circumstances as laid out in U.C.A. § 31a-21-203(1)(a) to (d), the commissioner may adopt certain authorized clauses.

1.10 Unfair Trade Practices / Consumer Protection

Relevant Statute

U.C.A. § 31a-23a-402.

Notable Law

False or misleading information relating to an insurance contract, any insurer, or other licensee, including information which is false or misleading because it is incomplete, is prohibited. U.C.A. § 31a-23a-402(1)(a)(i). “False or misleading information” is defined in U.C.A. § 31a-23a-402 (1)(a)(ii).

Insurers may not unfairly discriminate among policyholders by charging different premiums or by offering different terms of coverage, except on the basis of classifications related to the nature and the degree of the risk covered or the expenses involved. U.C.A. § 31a-23a-402(3)(a).

1.11 Group Insurance

Relevant Statutes

U.C.A. §§ 31a-22-501 to -522; § 31a-22-609; §§ 31a-22-701 to -725.

Notable Law

Generally, where a group policy is issued to an employer, no principal-agent relationship arises, but it may arise where the employer, by authority of the insurer, receives applications, determines insurability, determines premium amounts, and collects premiums. Sorenson v. Hartford Accident & Life Ins. Co., 585 P.2d 440, 441-42 (Utah 1978).

An insurer has the right to cancel coverage when an employer discontinues payment for an employee insured under a group policy, whether or not the employee contributes to the cost of the premium. Larson v. Wycoff Co., 624 P.2d 1151, 1153 (Utah 1981). An employee is on notice concerning termination of group insurance benefits where the employee’s handbook states that insurance benefits are offered only to regular, full-time employees and the employee accepts conversion to part-time status. Larson, 624 P.2d at 1154.

Insured who did not meet full employment requirement in group life insurance policy was nevertheless entitled to convert policy to individual policy upon cancellation of group policy while incontestability clause was in effect. Gragun v. Bankers Life Co., 497 P.2d 641, 643 (Utah 1970) (decided under prior law).

An insurer issuing a group policy other than a blanket insurance policy must provide a certificate for each member of the insured group containing, “in the case of group life insurance, the incontestability provision.” U.C.A. § 31a-21-311(1)(a)(ii)(C)(III).

Accident and Health (Disability): Group or blanket disability insurance may be offered only to qualified groups as defined by law and under a policy issued pursuant to a conversion privilege. U.C.A. §§ 31a-22-501 to -509; U.C.A. § 31a-22-701.

Conversion standards and privileges for an insured former spouse are set forth in U.C.A. § 31a-22-612.

An insured has the right to extend the employee’s coverage under the current employer’s group policy for a period of six months. The right to extend coverage includes: (a) voluntary termination; (b) involuntary termination; (c) retirement; (d) death; (e) divorce or legal separation; (f) loss of dependent status; (g) sabbatical; (h) a disability; (i) leave of absence; or (j) reduction of hours. U.C.A. § 31a-22-722 (Utah mini-COBRA benefit).

The incontestability period for group disability policies is two years, except for fraudulent misrepresentation. The insurer has the burden of proving fraud by clear and convincing evidence. U.C.A. § 31a-22-609(1).

A group medical expense policy terminated on the date of the insured’s termination of employment and the only compensable expenses were those incurred prior to the termination date. Wulffenstein v. Deseret Mut. Benefit Ass’n, 611 P.2d 360, 361 (Utah 1980). However, where an insurance benefit book was ambiguous and caused the employee to believe he would continue to receive insurance benefits for a period after termination of employment, the employer’s insurance advisor was required to indemnify the employer amounts paid in settlement for employee’s medical expenses. Salt Lake City Sch. Dist. v. Galbraith & Green, Inc., 740 P.2d 284, 287 (Utah Ct. App. 1987).

Accident and health insurance coverage for dependents begins at the moment of birth or, if the child is adopted, from the moment of birth if placement is within 30 days of birth, or at the time of placement if placement occurs after 30 days of birth. U.C.A. § 31a-22-610(2)(a). If an insured has coverage for maternity benefits on the date of placement, the insured’s policy shall provide an adoption indemnity benefit payable to the insured (currently $4,000), if a child is placed for adoption with the insured within 90 days of the child’s birth. U.C.A. § 31a-22-610.1.

Date-of-birth newborn coverage is required only on family policies, not on single policies. Peckham v. Gem State Mut. Of Utah, 964 F.2d 1043, 1051 (Utah 1992).

Life: Group and blanket life insurance may be offered only to qualified groups as defined by law. U.C.A. §§ 31a-22-501 to -509.

“The group life insurance policy shall contain a provision that the validity of the policy may not be contested, except for nonpayment of premiums, after it has been in force for two years from its date of issue. This provision shall also state that no statement made by any person insured under the policy relating to his insurability may be used in contesting the validity of the insurance with respect to which the statement was made after the insurance has been in force, prior to the contest, for a period of two years during the person’s lifetime, nor may the statement be used unless it is contained in a written instrument signed by him.” U.C.A. § 31a-22-514.

Conversion standards and privileges are set forth in U.C.A. §§ 31a-22-517 to -519.

Group insurance policies are issued to a holder on behalf of a group as defined by a formula. They may include a group member’s dependents. U.C.A. § 31a-1-301(74).

1.12 Brokers and Agents

Relevant Statutes

U.C.A. §§ 31a-23a-101 to -117.

Notable Law

The licensing of insurance brokers and insurance agents is regulated by the Insurance Marketing Licensing Board of the State of Utah. Criteria vary depending upon the type of classification which is sought. Bonding is required for title insurance agents.

Unless exempted from the licensing requirement under U.C.A. § 31a-23a-201 or U.C.A. § 31a-23a-207, “a person may not perform, offer to perform, or advertise any service as a producer, surplus lines producer, limited line producer, consultant, managing general agent, or reinsurance intermediary in Utah, without a valid individual or agency license.” U.C.A. § 31a-23a-103(1)(a). The license application procedures, requirements, and license types are listed in U.C.A. §§ 31a-23a-104 through -106.

U.C.A. § 31a-23a-405(2) creates a rebuttable presumption that every insurer is bound by any act of its agent that is within that agent’s actual or apparent authority until the insurer has canceled the agent’s appointment and made reasonable efforts to recover from the agent its policy forms and other indicia of agency. When a loss occurs from a binding agent with binding authority from several insurers who binds coverage without specifying the insurer, the court may equitably distribute the loss among the insurers with which the agent was licensed to bind as to the particular type of risk. U.C.A. § 31a-23a-405(3).

No binder is valid beyond the issuance of the policy for which it was given or beyond 150 days from the binder’s effective date, whichever occurs first. U.C.A. § 31a-21-102(3).

Mass marketing of disability and life insurance by out-of-state insurers is permitted subject to their compliance with the Insurance Code’s provisions concerning marketing practices and claims practices. U.C.A. § 31a-21-404.

An agent was not a common agent of both the insureds and the insurer where the insureds gave the agent discretion to choose the insurer, where the agent only contacted the insurer after being unable to place the insureds with any company for whom he was a licensed agent, and where the insurer did not authorize the agent to do anything more than ministerial acts. Vina v. Jefferson Ins. Co., 761 P.2d 581, 586 (Utah Ct. App. 1988). Whether an agent is an agent of the insurer or the insured is a question of fact. Id. at 585. In 2019, Drew v. Pac. Life Ins. Co., 2019 UT App 125, ¶ 15, 447 P.3d 1257, 1261, cert. granted, 455 P.3d 1062 (Utah 2019) clarifies that the updated statutory regime directs courts “to focus on how the insurance salesperson is compensated” when considering their employment/agency relationship.

Agents and brokers commission and noncommission compensation is governed by U.C.A. §§ 31a-23a-501 to -505.

Advice from an agent as to whether certain medical history needs to be declared is relevant to whether the insured had an intent to deceive. Hardy v. Prudential Ins. Co. of Am., 763 P.2d 761, 769 (Utah 1988).

1.13 Insuring Against Punitive Damages

Relevant Statute

U.C.A. § 31a-20-101.

Notable Law

Insuring against punitive damages is prohibited. U.C.A. § 31a-20-101(4).

1.14 Duty to Mitigate

An insured’s duty to mitigate damages commences only when some damage has occurred, of which the insured has knowledge. Gibbs M. Smith, Inc. v. U.S. Fid. & Guar. Co., 949 P.2d 337, 345 (Utah 1997).

1.15 Blanket Insurance

Blanket policies cover groups of persons without individual underwriting or application and are determined by definition with or without designating each person covered. U.C.A. § 31a-1-301(14).

SECTION 2 – Motor Vehicle Insurance

2.1 Financial Responsibility

Relevant Statutes

U.C.A. §§ 31a-22-301 to -321; §§ 41-12a-301 to -306; §§ 41-12a-601 to -606.

Notable Law

The Utah Court of Appeals ruled that U.C.A. § 31a-22-314 does not relieve rental car companies of their obligation to provide minimum insurance under Utah’s Financial Responsibility of Motor Vehicles Owners and Operators Act, even when other valid and collectible coverage exists. Li v. Zhang, 2005 UT App 246, ¶ 12, 120 P.3d 30.

Estoppel may bar an insurer’s defense of noncoverage when an insurance agent makes material misrepresentations to a prospective insured before or at the time the contract is formed and the prospective insured reasonably relies upon these misrepresentations. Youngblood v. Auto-Owners Ins. Co., 2005 UT App 154, ¶ 17, 111 P.3d 829.

Car rental companies are required to provide car renters with primary insurance coverage when the renter does not have other valid or collectible insurance. U.C.A. § 31a-22-314(2).

Resident owners and operators shall maintain security in effect at any time the vehicle is operated on a highway within the state. The state and its political subdivisions must maintain security for their vehicles. Non-resident owners must maintain security as required by their home state, and must meet the security requirements of Utah if the vehicle has been present in the state for more than 90 days during the preceding 365 days. U.C.A. § 41-12a-301(2).

Proof of security may be established with a certificate of insurance, a copy of a surety bond, a certificate of deposit, or a certificate of self-funded coverage. U.C.A. §§ 41-12a-401 to -411. Operating a vehicle without required security is a class C misdemeanor. U.C.A. § 41-12a-302.

The tort immunity created by U.C.A. § 31a-22-309(1) (no-fault threshold) does not extend to a person who fails to have the security in effect at the time of an accident, and the owner is personally liable for payment of no-fault benefits. U.C.A. § 41-12A-304. See Continental Ins. Cor. of N.J. v. U.S., 335 F.Supp.2d 532, 541 (D. NJ 2004).

U.C.A. § 31a-22-302 identifies components of the operators’ required security as liability coverage, no-fault coverage (except for motorcycles, off-highway vehicles, street-legal-all-terrain vehicles, trailers and semitrailers, which may be offered first party medical coverage), uninsured motorist coverage unless affirmatively waived, and underinsured motorist coverage unless affirmatively waived. If the insured requests, coverage must also include uninsured motorist property damage protection for the motor vehicle listed in the policy. U.C.A. § 31a-22-305.5(1)(a).

Liability policy minimum limits are $25,000 per person and $65,000 per accident for bodily injury or death, and $15,000 per accident for property damage; or $80,000 per accident for loss arising from personal injury, death and/or property damage. U.C.A. § 31a-22-304(1)-(2).

Liability insurance of an individual who uses a motor vehicle owned by a motor vehicle business will be the primary insurance on the vehicle, and the liability insurance of the motor vehicle business will be the secondary insurance. U.C.A. § 31a-22-303(2)(b)(i)-(ii).

An adult who signs a minor’s driver license application is burdened with joint and several liability for damages caused by the minor. That liability is satisfied, however, by having minimum liability insurance on the minor driver. U.C.A. § 53-3-211(3)(b). However, if a foster parent signs the application for a minor who is in the custody of the Department of Child and Family Services and lives with the foster parent, the foster parent’s liability may not exceed the greater of minimum liability policy limits established in U.C.A. § 31a-22-304 or the policy limits of the foster parent that was in effect at the time of the loss caused by the minor’s operation of a motor vehicle. U.C.A. § 53-3-211(4)(b)(i)-(ii).

Provisions in the policy preventing the stacking of uninsured and underinsured motorist coverage are valid. Nielsen v. O’Reilly, 848 P.2d 664, 666-67 (Utah 1992) (superseded by statute as stated in USA Power, LLC v. PacifiCorp, 2016 UT 20, ¶¶ 107-09, 372 P.3d 629). However, a covered person under U.C.A. § 31a-22-305(8) is entitled to the highest limits of uninsured motorist coverage afforded for any one vehicle for which the covered person is the named insured or an insured family member. U.C.A. § 31a-22-305(7)(b).

The Department of Motor Vehicles is responsible for implementing post-accident security requirements for those who fail to maintain security, as set forth in U.C.A. §§ 41-12a-501 to -513. The Department’s findings, actions, or requirements concerning post-accident security and accident reports prepared by the operator(s) under U.C.A. § 41-12a-502 may not be referenced and are inadmissible as evidence of negligence or due care in the trial of any action to recover damages. U.C.A. § 41-12a-510.

In an action to void an auto insurance policy due to material misrepresentations, the Safety Responsibility Act precludes rescission after the occurrence of the accident to the extent of the minimum coverages required in the No-Fault Act. Dairyland Ins. Corp. v. Smith, 646 P.2d 737, 740 (Utah 1982).

Self-insured is obligated to pay benefits as would any insurer. Chambers v. Agency Rent-A-Car, 878 P.2d 1164, 1167-68 (Utah Ct. App. 1994).

Under the Safety Responsibility Act, a named driver exclusion was void up to minimum statutory requirements. A named driver exclusion was valid in relation to coverage exceeding the minimum statutory requirements. Allstate Ins. Co. v. U.S. Fid. & Guar. Co., 619 P.2d 329, 333 (Utah 1980).

Exclusions which violate statute(s) are invalid to the extent of the mandatory statutory minimum. A household exclusion is invalid under the No-Fault Insurance Act and for failure to give full and adequate notice. Farmers Ins. Exch. v. Call, 712 P.2d 231, 236-37 (Utah 1985). A household exclusion is valid, however, as to benefits provided in excess of the statutory minimum. State Farm Mut. Auto. Ins. Co. v. Mastbaum, 748 P.2d 1042, 1043 (Utah 1987); Nat’l Farmers Union Prop. & Cas. Co. v. Moore, 882 P.2d 1168, 1170 (Utah Ct. App. 1994). Household member who has been specifically excluded from coverage is not covered as a permissive user. Dairyland Ins. Co. v. State Farm Mut. Auto. Ins. Co., 882 P.2d 1143, 1145-46 (Utah 1994).

Loss of consortium is not a cognizable bodily injury for the purposes of minimum liability policies. The wife of a man who was killed in an automobile accident could therefore recover only $25,000 from her insurer, not $50,000. Progressive Cas. Ins. Co. v. Ewart, 2007 UT 52, ¶¶ 19-20, 167 P.3d 1011, 1014.

A vehicle owner may not delegate the duty to maintain liability insurance to the vehicle’s operator. Li v. Enter. Rent-A-Car Co. of Utah, 2006 UT 80, ¶ 13, 150 P.3d 471, 476.

2.2 Personal Injury Protection / No Fault

Relevant Statutes

U.C.A. §§ 31a-22-303, -306, -307, -309, -314.

Notable Law

Insurers are required to pay for damages and injuries caused by a covered driver while stricken by an unforeseeable paralysis, seizure, or other unconscious condition. U.C.A. § 31a-22-303(1)(a)(v).

A policy of motor vehicle liability coverage may limit coverage to statutory minimum policy limits if the insured motor vehicle is operated by a person who has consumed any alcohol or illegal substance, if the policy or a specifically reduced premium was extended to the insured with a written stipulation that the vehicle would not be operated in this manner. U.C.A. § 31a-22-303(7).

A no-fault insurer has no right to subrogation under Utah’s no-fault statute, and as a general rule may not seek reimbursement for PIP (personal injury protection) payments its insured subsequently recovers from the tortfeasor. However, no-fault insurers may obtain reimbursement for PIP payments directly from their insureds’ settlement with tortfeasors when it is clear the parties to the settlement intended that settlement amount include PIP reimbursement. Since a tortfeasor is not personally liable for PIP benefits, the settlement between the no-fault insured and the tortfeasor or tortfeasor’s insurer is presumed to exclude PIP benefits in the absence of evidence to the contrary. Bear River Mut. Ins. Co. v. Wall, 937 P.2d 1282, 1288-1291 (Utah Ct. App. 1997).

Coverage is mandatory and minimum coverage must include medical expenses up to $3,000, lost income allowance of 85% or gross income up to $250 per week for 52 consecutive weeks, special damage allowance up to $20 per day for a maximum of 365 days, funeral/burial/cremation expenses up to $1,500 per person, and death benefit of $3,000. U.C.A. § 31a-22-307(1).

Provisions for lost income and lost household services do not apply to the heirs or estate of a person killed in an automobile accident; they are personal to a living person injured in an automobile accident. Regal Ins. Co. v. Bott, 31 P.3d 524, 526-27 (Utah 2001).

The insurer may issue policies providing greater than the minimum coverages, but the insurer may not require a deductible. U.C.A. § 31a-22-307(5), (6).

Minimum coverages extend to the insured, persons related to the insured, and other natural persons whose injuries arise out of an automobile accident involving the automobile identified in the policy, including pedestrians. U.C.A. § 31a-22-308.

A person who has direct benefit coverage under PIP may not maintain a cause of action for general damages unless he has sustained death, dismemberment, permanent disability, or permanent impairment based upon objective findings, permanent disfigurement, and/or medical expenses in excess of $3,000. U.C.A. § 31a-22-309(1)(a).

A plaintiff whose medical expenses fail to meet the PIP threshold of $3,000 has the burden of demonstrating a permanent disability or impairment with something more than his say so. The express language of U.C.A. § 31a-22-309(1)(a)(iii) requires that any permanent disability or impairment be based on objective findings. McNair v. Farris, 944 P.2d 392, 395 (Utah 1997). The Plaintiff’s past or current treating physician can make an objective finding of permanent disability. Pinney v. Carrera, 2019 UT App 12, ¶ 27, 438 P.3d 902, 909, cert. granted, 440 P.3d 691 (Utah 2019), and aff’d, 2020 UT 43, ¶ 27.

The benefits payable to an injured person are reduced by the benefits a person is entitled to receive under workers compensation or from active duty in the military service. U.C.A. § 31a-22-309(3).

When an injured person is insured under more than one policy, the policy insuring the motor vehicle in use at the time of the accident is primary. U.C.A. § 31a-22-309(4). Non-stacking provisions in the policy are valid and enforceable. Crowther v. Nationwide Mut. Ins. Co., 762 P.2d 1119, 1122 (Utah Ct. App. 1988).

Where the insured is or would be legally liable for injuries sustained by another, his insurer must reimburse any insurer or workers compensation fund for no-fault benefits paid to the other. The issue of liability for reimbursement is subject to mandatory, binding arbitration. U.C.A. § 31a-22-309(6)(a); Ohio Cas. Ins. Co. v. Brundage, 674 P.2d 101, 102 (Utah 1983). There is no right of reimbursement between insurers when the insurer of the person who would be held liable has paid its policy limits. U.C.A. § 31a-22-309(6)(b).

The term “disability” under the Act means an inability to work as contrasted with the term “physical impairment,” which generally refers to loss of bodily function. Jones v. Transamerica Ins. Co., 592 P.2d 609, 611 (Utah 1979), implied overruling on other grounds recognized by Bear River Mut. Ins. Co. v. Wall, 937 P.2d 1282 (Utah Ct. App. 1997).

The motor vehicle liability insurer is not entitled to recover no-fault payments it made to its insured out of the proceeds of a settlement with a third-party tortfeasor. Allstate Ins. Co. v. Anderson, 608 P.2d 235, 235-36 (Utah 1980). However, the Act does grant the insurer a limited, equitable right to seek reimbursement in arbitration against the third party’s liability insurer. Christensen v. Farmers Ins. Exch., 669 P.2d 1236, 1239 (Utah 1983); Allstate Ins. Co. v. Ivie, 606 P.2d 1197, 1202 (Utah 1980).

Twelve-year-old boy’s household chores of taking out the garbage, doing dishes, vacuuming, etc., were not chores for which his family would “reasonably have incurred” expenses within meaning of no-fault statute. Jamison v. Utah Home Fire Ins. Co., 559 P.2d 958, 962 (Utah 1977).

In light of financial security statute, insurance policy did not provide no-fault coverage to son of named insured in connection with son’s use of a motorcycle owned by another person. Barber v. Farmers Ins. Exch., 751 P.2d 248, 252-53 (Utah Ct. App. 1988).

PIP benefits extend to items not covered by workers compensation such as loss of household services and second job wage loss. A provision in an auto insurance policy which prohibited payments or benefits to those covered by workers compensation is invalid. Neel v. State, 889 P.2d 922, 926 (Utah 1995).

2.3 Property Damage Protection

Relevant Statute

U.C.A. § 31a-22-305.5.

Notable Law

For policies that do not provide collision damage protection, at the request of the insured, the insurer shall provide coverage for payment for loss or damage to the insured’s vehicle, not to exceed the vehicle’s actual cash value or $3,500, whichever is less. The coverage extends to those who are entitled to recover damages from the owner or operator of an uninsured vehicle. U.C.A. § 31a-22-305.5(1)-(2).

Coverage is payable only if the damage involves actual physical contact between the covered vehicle and the uninsured vehicle, if the uninsured vehicle’s license plate number, owner, or driver is identified and the occurrence is reported to the insurance company or agent within ten days. U.C.A. § 31a-22-305.5(3).

Coverage is subject to a minimum $250 deductible and is excess to any other insurance covering property damage to the covered vehicle. U.C.A. § 31a-22-305.5(4).

2.4 Uninsured Motorist Coverage

Relevant Statute

U.C.A. § 31a-22-305.

Notable Law

U.C.A. § 31a-22-305 was amended in 2004 to prohibit “interpolicy stacking,” which means recovering benefits for a single incident of loss under more than one insurance policy, except in certain circumstances. The amendment applies retroactively to any claim made on or after January 1, 1995 for which a court has not issued a final unappealable order as of May 2004. U.C.A. § 31a-22-305(9).

An insurer may offer, at appropriate premium rates, additional uninsured motorist coverage above the limits in Subsection (2) and additional deductibles for the coverage in Subsection (5)(a) above the limits provided in Subsection (4). U.C.A. § 31a-22-305.5(5).

Passengers who were injured in automobile accident sought to recover supplementary underinsured motorist (SUM) benefits from their insurer. The statute allowing the stacking of SUM benefits did not apply to automobile policy that was renewed in New York while insureds were still living there. Travelers/Aetna Ins. Co. v. Wilson, 2002 UT App 221, ¶¶ 10-12, 51 P.3d 1288.

Even if the uninsured motorist coverage of the insurance policy does not include a provision for reimbursement of rental vehicle expenses incurred, if the insurer breaches its contractual obligation to promptly pay the insured, the insurer may be liable for actual costs incurred in renting a replacement vehicle. Castillo v. Atlanta Cas. Co., 939 P.2d 1204, 1209 (Utah Ct. App. 1997).

An insurer providing uninsured motorist coverage to an insured involved in an accident may intervene in an action to determine the liability of an uninsured motorist. The intervening insurer may be required to provide independent legal counsel to its insured or to reimburse its insured for reasonable legal expenses incurred in defending against the insurer’s intervention. Chatterton v. Walker, 938 P.2d 255, 262 (Utah 1997).

Receipt of workers compensation benefits precludes claims by employees against their own insurer under underinsured motorists provisions. Peterson v. Utah Farm Bureau Ins. Co., 927 P.2d 192, 194 (Utah Ct. App. 1996). Uninsured motorist coverage may not be reduced by any benefits provided by workers compensation insurance. U.C.A. § 31a-22-305(5)(c)(iii).

Uninsured motorist coverage must be included in the policy unless affirmatively rejected by an express writing to the insurer. However, persons engaged in the business of transportation of people must provide uninsured motorist coverage of at least $25,000 per person and $500,000 per accident. U.C.A. § 31a-22-305(5)(b)(i).

When a person claims that a phantom vehicle caused the accident without touching the covered person or vehicle occupied by the covered person, the covered person must show the existence of the other vehicle by clear and convincing evidence, which shall consist of more than the covered person’s testimony. U.C.A. § 31a-22-305(6).

“Uninsured motor vehicle” includes a vehicle insured for less than the statutory minimum, an unidentified vehicle that left the scene of an accident which the operator caused, a vehicle that has a liability policy but coverage for an accident is disputed by the liability insurer for more than 60 days, and a vehicle where the insurer has been competently declared insolvent. U.C.A. § 31a-22-305(2).

The statute does not require the insurer to provide coverage on a vehicle which is owned by the insured but is not specifically named as an insured vehicle. Uninsured coverage was intended to rest with the vehicle and not with the named insured. The uninsured coverage on claimant’s car did not extend to cover the claimant during use of a motorcycle that claimant owned but failed to insure. Clark v. State Farm Mut. Auto. Ins. Co., 743 P.2d 1227, 1229-30 (Utah 1987). However, where the policy did not define “unlisted automobile” to include the motorcycle under the exclusion, motorcycle was not an unlisted “automobile.” Bear River Mut. Ins. Co. v. Wright, 770 P.2d 1019, 1021 (Utah Ct. App. 1989).

The terms of the uninsured motorist coverage limiting liability to the statutory minimum were enforced where the insured was injured while riding as a passenger in his insured vehicle that was being driven by an uninsured permissive user. Wagner v. Farmers Ins. Exch., 786 P.2d 763, 769 (Utah Ct. App. 1990), abrogated on other grounds by Nielsen v. O’Reilly, 848 P.2d 664 (Utah 1992), superseded by statute, U.C.A. § 31a-22-305(10), as recognized in, State Farm Mutual Auto. Ins. Co. v. Green, 2003 UT 48, 89 P.3d 97.

A common law spouse may receive uninsured motorist benefits under a provision allowing coverage for the insured and “family members.” Whyte v. Blair, 885 P.2d 791, 792 (Utah 1994); see also U.C.A. § 30-1-4.5 (providing that a common law marriage exists if a man and a woman: (a) are of legal age and capable of giving consent; (b) are legally capable of entering a solemnized marriage under the provisions of this chapter; (c) have cohabited; (d) mutually assume marital rights, duties, and obligations; and (e) who hold themselves out as and have acquired a uniform and general reputation as husband and wife).

UIM policies written after January 1, 2001, must have limits equal to the insured’s liability limits or the maximum uninsured coverage limits available under the policy, whichever is less. Insured may elect a lower limit or waiver coverage only after their insurer explains the consequences of denying UIM coverage and the insured gives a written acknowledgment. Gen. Sec. Indem. Co. of Ariz. v. Tipton, 2007 UT App 109, ¶ 19,158 P.3d 1121; see also U.C.A. § 31a-22-305(4).

2.5 Underinsured Motorist Coverage

Relevant Statutes

U.C.A. § 31a-22-305.

Notable Law

In Berkemeir v. Hartford Ins. Co., 2004 UT 104, ¶ 8, 106 P.3d 700 the Utah Supreme Court ruled that limitations on damages contained in Utah’s Survival Statute do not apply to a claim for payment of underinsured motorist coverage benefits by an insured’s heirs.

UIM (underinsured motorist) policies written after January 1, 2001, must have limits equal to the insured’s liability limits or the maximum uninsured coverage limits available under the policy, whichever is less. U.C.A. § 31a-22-305(4)(a). The insured can waive UIM coverage by signing a document provided by the insurer that explains the coverage and explains what is waived. The insured must file the waiver with the department. U.C.A. § 31a-22-305.3(3).

2.6 Use of Credit Information

Relevant Statutes

U.C.A. § 31a-22-320.

Notable Law

Insurers must follow new statutory guidelines when they seek to use consumer credit information and credit scores when making decisions about the issuance of motor vehicle insurance policies. U.C.A. § 31a-22-320.

An insurer may not use credit information to determine renewal, nonrenewal, termination, eligibility, underwriting, or ratings for the relevant motor vehicle policy. U.C.A. § 31a-22-320(2)(a). However, an insurer may use credit information for determining initial underwriting if other risk factors are considered, or to provide the insured a reduction in rates (or any other similar discount) for the motor vehicle policy. U.C.A. § 31a-22-320(2)(b).

2.7 Arbitration

Relevant Statutes

U.C.A. § 31a-22-303.

Notable Law

When a claim is brought exclusively by a named insured or relatives residing in the named insured’s household against a named insured or relative residing in the named insured’s household, the claimant may elect to resolve the claim through binding arbitration or litigation. U.C.A. § 31a-22-303(8)(a). Once a claimant has elected to start litigation, the claimant may not choose to resolve the claim through arbitration without written consent of both parties and the defendant’s liability insurer. U.C.A. § 31a-22-303(8)(b).

The procedure for arbitration is outlined in U.C.A. § 31a-22-303(8)(c) to (f).

Significantly, prior to the rendering of the arbitration award, the existence of a liability insurance policy may be disclosed to the arbitration panel, but the amount of all applicable liability insurance policy limits may not be disclosed to the arbitration panel. U.C.A. § 31a-22-303(8)(h).

The amount of the arbitration award may not exceed the liability limits of all the defendants’ applicable liability insurance policies, including applicable liability umbrella policies. If the initial award exceeds the liability limits of all applicable liability insurance policies, the arbitration award shall be reduced to an amount equal to the liability limits of all applicable liability insurance policies. U.C.A. § 31a-22-303(8)(i).

The arbitration award is the final resolution between the parties unless the award was obtained through fraud, corruption, or undue means. U.C.A. § 31a-22-303(8)(j).

A person injured as a result of a motor vehicle accident may elect to submit all third party bodily injury claims to arbitration if the claimant has previously and timely filed a complaint with the district court that includes a third party bodily injury claim. Notice to submit the claim to arbitration must be filed within 14 days after the complaint has been answered. U.C.A. § 31a-22-321(1)(a).

If a party submits a claim to arbitration, they are limited to an award of $50,000 in addition to any available personal injury protection benefits and any claims for property damage. U.C.A. § 31a-22-321(2)(a).

A claim for property damage may not be made in arbitration unless agreed upon in writing by both parties. U.C.A. § 31a-22-321(2)(c). A claim for punitive damages may never be made in an arbitration. U.C.A. § 31a-22-321(3).

A person who has elected to have an arbitration proceeding may rescind if the rescission is made within 90 days after the election to arbitrate and no less than 30 days before any scheduled arbitration hearing. A notice of rescission must be filed with the district court and sent to all counsel of record. U.C.A. § 31a-22-321(4)(a), (b). Once a party has elected to arbitrate a claim and then rescinded, they may not choose to arbitrate the claim under this section again. U.C.A. § 31a-22-321(4)(d).

U.C.A. §§ 31a-22-321(5) to (10) outline the procedure of arbitration in third party motor vehicle cases.

The arbitration award is the final resolution of all bodily injury claims between the parties unless either party files a request for a trial de novo and serves the non-moving party within 20 days after service of the arbitration award. U.C.A. § 31a-22-321(11).

If the plaintiff as the moving party in a trial de novo does not receive a verdict that is at least $5,000 and at least 30% greater than the arbitration award, the plaintiff is responsible for all of the non-moving party’s costs up to $6,000. The same is true if a moving defendant does not receive a verdict that is at least 30% less than the arbitration award. U.C.A. §§ 31a-22-321(13), (14).

If a defendant requests a trial de novo, the verdict at trial may not exceed $65,000. If a plaintiff requests a trial de novo, the verdict may not exceed $50,000. U.C.A. § 31a-22-321(18).

If a party requests a trial de novo, the party shall file a copy of the notice with the commissioner notifying the commissioner of the party’s request for a trial de novo. Id. U.C.A. § 31a-22-321 (20).

SECTION 3 – Liability Insurance

3.1 In General

Relevant Statutes

U.C.A. § 31a-20-101; §§ 31a-22-201 to -204.

Notable Law

A settlement release must either name the person released from liability or identify that person with some degree of specificity in order to discharge that person from liability. Thornock v. Jensen, 950 P.2d 441, 443 (Utah Ct. App. 1997).

No insurer may insure or attempt to insure against a wager or gaming risk, the loss of an election, the penal consequences of a crime, or punitive damages. U.C.A. § 31a-20-101.

No liability policy insuring against accidental bodily injury or death or for damage to property may be retroactively abrogated to the detriment of any third-party claimant. An attempt to abrogate is void. U.C.A. § 31a-22-202.

Utah’s Notice and Proof of Loss statute, U.C.A. § 31a-21-312(l), will not operate to extend the normal provisions of any claims-made coverage that required notice of an occurrence or claim prior to the expiration of the policy. U.C.A. § 31a-22-203.

An insurer may not limit liability coverage to claims that are first made against the insured while the policy is in force unless the policy contains a conspicuous statement on the cover page that coverage is so limited. U.C.A. § 31a-22-204.

The timeliness of an insured’s notice under “as soon as practicable” clause depends on the circumstances. Johnson Ready-Mix Concrete Co. v. United Pac. Ins. Co., 358 P.2d 337, 338 (Utah 1961). Where the policy requires the insured to give notice of an occurrence “as soon as practicable” as a condition precedent to coverage, where the insured fails to provide such notice and this results in actual prejudice to the insurer, the insurer is under no duty to defend or indemnify. AOK Lands, Inc. v. Shand, Morahan & Co., 860 P.2d 924, 928 (Utah 1993). However, the Utah Supreme Court has not reached the issue of whether insurers must demonstrate the existence of actual prejudice before denying coverage for untimely filed claims. Busch Corp. v. State Farm Fire & Cas. Co., 743 P.2d 1217, 1220 n.6 (Utah 1987). But cf. Broadbent v. U.S. Fid. & Guar. Co., 483 P.2d 894, 896 (Utah 1971) (holding physician should notify insurer of a potential claim of malpractice when it is obvious to physician that such claim may be filed, but this factual question should not be decided on summary judgment).

Where policy contained provision requiring insured to cooperate in defense of actions brought against him, insurer had burden of proving that it used reasonable diligence to obtain cooperation, that insured did not cooperate, and that as a result insurer was prejudiced in its defense of the insured. Peterson v. W. Cas. & Sur. Co., 425 P.2d 769, 770 (Utah 1967). But see Oberhansly v. Travelers Ins. Co., 295 P.2d 1093, 1096 (Utah 1956) (upholding trial court’s determination that insured had not failed to cooperate where he left state and, due to his employment situation, was unable to return to state for trial).

Stacking of multiple liability policies not allowed where three separate policies from one insurance company covered three separate vehicles owned by insured. Hill v. Farmers Ins. Exch., 888 P.2d 138, 141 (Utah Ct. App. 1994).

3.2 Duty to Defend

Relevant Statutes

U.C.A. § 31a-21-307.

Notable Law

As a general rule, an insurer’s duty to defend is determined by comparing the language of the insurance policy with the allegations in the complaint. In such a case, it would be error for the trial court to consider extrinsic evidence, as it is wholly irrelevant to the issue of whether the insurer has a duty to defend its insured. However, if the parties make the duty to defend dependent on whether there is actually a “covered claim or suit,” extrinsic evidence would be relevant to a determination of whether a duty to defend exists. Fire Ins. Exch. v. Estate of Therkelsen, 2001 UT 48, ¶¶ 23-24, 27 P.3d 555.

The duty to defend arises solely under contract. An insurer contracts to pay the entire cost of defending a claim only if it has arisen within the policy period. Sharon Steel Corp. v. Aetna Cas. & Sur. Co., 931 P.2d 127, 141 (Utah 1997).

An insurer’s duty to defend is broader than its duty to indemnify. See Nova Cas. Co. v. Able Const., Inc., 1999 UT 69, ¶ 7, 983 P.2d 575. The duty to defend arises when the allegations in the underlying complaint, if proved, could result in liability under the policy. Sharon Steel Corp. v. Aetna Cas. & Sur. Co., 931 P.2d 127, 133 (Utah 1997).

An insurer may recover costs of defense from other co-insurers who were equally obligated to defend yet failed to do so. The co-insurers may contest the reasonableness of the defense fees paid. When apportioning defense costs among insurers in a continuing injury case, the court considers the coverage dates that each insurer was on the risk and the respective policy limits. Sharon Steel Corp., 931 P.2d at 138.

The liability of co-insurers to contribute a fair share to the insured’s defense costs is not extinguished by entering into a settlement agreement and release with the insured if the co-insurers are on notice that another insurer has been paying significant defense costs. Id. at 139.

An insurer providing uninsured motorist coverage who intervenes in an action to determine the liability of an uninsured motorist may be required to provide independent legal counsel to its insured or to reimburse its insured for reasonable legal expenses incurred in defending against the insurer’s intervention. Chatterton v. Walker, 938 P.2d 255, 262 (Utah 1997).

An insurer who improperly refuses to defend is bound by the findings and judgment against the insured, except as to matters collateral or immaterial to the essential issues involved in the case. McCarty v. Parks, 564 P.2d 1122, 1123 (Utah 1977). If an insurer has responsibly and in good faith paid the available policy limits, then it may be proper in refusing to defend the insured. The insured must not be prejudiced by the timing of the withdrawal of the defense. Every effort must be made not to prejudice the insured. Simmons v. Farmers Ins. Group, 877 P.2d 1255, 1258-59 (Utah Ct. App. 1994).

Insurers may define the extent to which each insurance is primary and each is excess. Where two policies promise to indemnify the insured against the same loss, the “other insurance” provisions will not reduce the aggregate protection below the lesser of the actual insured loss suffered and the maximum indemnification promised without regard to the “other insurance” provision. Where “other insurance” provisions of policies are inconsistent, the insurers are jointly and severally liable to the insured on any overlapping coverage, regardless of any subsequent settlement among the insurers. U.C.A. § 31a-21-307. A dispute concerning “other insurance” provisions is resolved by regarding each insurer as having the same rights and liabilities as its insureds had and then determining who would bear the loss if no insurance existed. Gulf Ins. Co. v. Horace Mann Ins. Co., 567 P.2d 158, 160 (Utah 1977), superseded by statute as recognized in Univ. of Utah Hosp. v. Am. Cas. Co. of Reading, 2004 UT App 111, ¶ 14, 90 P.3d 654. However, the owner’s coverage is generally primary and the nonowner operator’s coverage is generally secondary. Christensen v. Farmers Ins. Exch., 443 P.2d 385, 389 (Utah 1968); Chambers v. Agency Rent-A-Car, 878 P.2d 1164, 1167 (Utah Ct. App. 1994); U.C.A. § 31a-22-309(4).

An insurer may include in the policy any number or kind of exclusions to which the insured agrees and which are not contrary to statute or public policy. Gee v. Utah State Ret. Bd., 842 P.2d 919, 921 (Utah Ct. App. 1992). The insurer must give full and adequate notice of exclusions. Draughon v. CUNA Mut. Ins. Soc’y, 771 P.2d 1105, 1108 (Utah Ct. App. 1989). Limiting or excluding language must be “clear, unambiguous and sufficiently conspicuous in order to give proper notice to insured of the limitations . . .” Simmons v. Farmers Ins. Group, 877 P.2d 1255, 1258 (Utah Ct. App. 1994). Exclusions which violate statute(s) are invalid to the extent of the mandatory statutory minimum. See Nat’l Farmers Union Prop. & Cas. Co. v. Moore, 882 P.2d 1168, 1170 (Utah Ct. App. 1994) (finding the household exclusion enforceable in farm-owner’s and homeowner’s policies); State Farm Mut. Auto. Ins. Co. v. Mastbaum, 748 P.2d 1042, 1044 (Utah 1987) (holding household exclusion valid as to benefits provided in excess of statutory minimum); Farmers Ins. Exch. v. Call, 712 P.2d 231, 234 (Utah 1985) (holding household exclusion in auto policy invalid under statute and for failure to give full and adequate notice); Allstate Ins. Co. v. U.S. Fid. & Guar. Co., 619 P.2d 329, 333 (Utah 1980) (ruling named driver exclusion valid in relation to coverage exceeding minimum statutory requirements); Youngblood v. Auto-Owners Ins. Co., 2007 UT 28, ¶ 29, 158 P.3d 1088 (enforcing provision excluding coverage to pedestrians when first named insured is not an individual).

A court may appropriately appoint counsel to represent an absent non-indigent civil defendant where the defendant cannot be found, and his insurance company has sought a declaration that his absence relieves the insurer of its duty to defend. Burke v. Lewis, 2005 UT 44, ¶ 24, 122 P.3d 533

SECTION 4 – Fire And Property Insurance

4.1 In General

Relevant Statutes

U.C.A. § 31a-1-301; §§ 31a-21-104, -312; §§ 70c-6-301 to -304.

Notable Law

“Property insurance” is defined as “insurance against loss or damage to real or personal property of every kind and any interest in that property; from all hazards or causes; and against loss consequential upon the loss or damage.” Inland marine and ocean marine insurance are excluded. U.C.A. § 31a-1-301(144).

A creditor may not receive a separate charge for insurance against liability arising out of property related to the credit transaction, unless the insurance covers a significant risk of liability. U.C.A. § 70C-6-303.

Any interest in property, be it legal, equitable, qualified, conditional, contingent, or absolute creates an insurable interest in the person who has such a right. Error v. W. Home Ins., 762 P.2d 1077, 1082 (Utah 1988).

Failure to file a proof of loss does not bar recovery under the policy if the insurer fails to show it was prejudiced by the failure. U.C.A. § 31a-21-312. However, this does not extend the statute of limitations applicable under U.C.A. § 31a-21-313.

An insurance policy is not invalid for lack of an insurable interest, but a court may order the proceeds to be paid to a person equitably entitled to them. U.C.A. § 31a-21-104(6).

SECTION 5 – Life Insurance

5.1 In General

Relevant Statutes

U.C.A. § 31a-1-301; §§ 31a-22-400 to -425; §§ 31a-36-101 to -119.

Notable Law

Life Insurance and Annuities Amendments

The commissioner is permitted to make rules to establish standards for materials used in the solicitation or sale of life insurance. U.C.A. § 31a-22-425.

Each life insurance policy, annuity contract, and certificate of life insurance must contain a description on its cover page that includes the type of insurance, whether it is participating or nonparticipating, a significant limitation stated or included in the policy or contract, and a significant specific feature stated or included in the policy or contract. U.C.A. § 31a-22-426.

Insurers shall maintain records affecting the life insurance policy, annuity contract, or certificate of life insurance, for the policy term plus five years. U.C.A. § 31a-22-427.

An employer group category for life insurance is permitted and the groups’ life insurance policies are exempted from certain requirements. U.C.A. § 31a-22-501.1.

Credit union groups and creditor groups that insure debtors are not subject to the requirements under U.C.A. § 31a-22-521 to notify their members of conversion rights and information. U.C.A. § 31a-22-507(3)(c).

Standards for replacement of life insurance policies are set forth in UAC R590-93.

Incontestability contemplates a clause in a life insurance policy providing that after the policy has been in force for a given length of time the insurer shall not be able to contest it as to statements contained in the application. The period of incontestability is two years during the person’s lifetime. This section does not apply to group life policies. U.C.A. § 31a-22-403. A contest by the insurer is too late if begun after two years from the date of issue, even though the insured died within the contestability period. Tracy Loan & Trust Co. v. Mutual Life Ins. Co., 7 P.2d 279, 280 (Utah 1932).

The period of incontestability for suicide is two years. U.C.A. § 31a-22-404. The insurer has the burden to establish the applicability of the suicide exclusion. Where evidence was inconclusive on whether mentally deranged insured had leaped or fallen through window, insurer failed to carry its burden. MacKenzie v. Mut. Benefit Life Ins. Co., 528 P.2d 150, 151 (Utah 1974). Drug overdose was accidental absent evidence of intent to commit suicide. Hardy v. Beneficial Life Ins. Co., 787 P.2d 1, 2-3 (Utah Ct. App. 1990). Clause in policy limiting liability of the insurer to the premiums paid if an insured committed suicide within two years of policy issuance is consistent with U.C.A. § 31a-22-404. Van Der Heyde v. First Colony Life Ins. Co., 845 P.2d 275, 277 (Utah Ct. App. 1993).

Under accidental death policy, a person is a victim of an accident when, from the victim’s point of view, the occurrence causing injury or death is not a natural and probable result of the victim’s own acts. However, the negligence of the insured cannot be raised as a defense. A fact question existed on whether mentally deranged insured who was shot by police died accidentally, and mental defect was a relevant consideration in determining whether the death was accidental. Hoffman v. Life Ins. Co. of N. Am., 669 P.2d 410, 416, 419 (Utah 1983). Although courts are split over whether the term “accidental,” as used in an accident insurance policy, means “accidental means,” or “accidental result,” Utah appears to have adopted the latter. Winchester v. Prudential Life Ins. Co. of Am., 975 F.2d 1479, 1487 (10th Cir. 1992). Insured who died from stress-related aggravation of pre-existing cardiovascular condition did not die by accidental means. Elton v. Bankers Life & Cas. Co., 516 P.2d 165, 178 (Utah 1973). However, recovery under an accident policy is allowed even though the physical condition of the insured may have been a contributing factor. DiEnes v. Safeco Life Ins. Co., 442 P.2d 468, 471 (Utah 1968).

If the designation of a beneficiary is not explicitly irrevocable, the insured may change the beneficiary without the consent of a previously designated beneficiary. U.C.A. § 31a-22-413(1)(b); Bergen v. Travelers Ins. Co., 776 P.2d 659, 662 (Utah Ct. App. 1989). Life insurer does not need to know of change of beneficiary before change is effected. In re Estate of Knickerbocker, 912 P.2d 969, 980 (Utah 1996). For a change to be effective, the insured need only substantially comply with policy requirements for making a change in beneficiaries. The standard to determine competency to change beneficiaries is the testamentary capacity standard, with a presumption of competence. Bergen, 776 P.2d at 663. However, the law of contracts rather than the law of inheritance governs the determination of who was the intended beneficiary. Proctor v. Ins. Co. of N. Am., 714 P.2d 1156, 1158 (Utah 1986); Holman v. New York Life Ins. Co., No. 2:10-CV-490, 2011 WL 1883198 (D. Utah May 17, 2011). Note in decedent’s wallet that he no longer wanted his wife as a beneficiary did not substantially comply with policy requirements for making a change in beneficiaries. Uckerman v. Lincoln Nat’l Life Ins. Co., 588 P.2d 142, 144 (Utah 1978).

Special considerations concerning beneficiaries may apply in divorce cases. Culbertson v. Continental Assur. Co., 631 P.2d 906, 912-13 (Utah 1981); Am. W. Life Ins. Co. v. Hooker, 622 P.2d 775, 779 (Utah 1980); Madsen v. Estate of Moffitt, 542 P.2d 187, 188 (Utah 1975); Travelers Ins. Co. v. Lewis, 531 P.2d 484, 485-86 (Utah 1975); Welty v. Ret. Bd., 2017 UT App 26, ¶ 17, 392 P.3d 893, 897.

A binder was not effective where the insured failed to satisfy a condition precedent concerning a medical examination. See Wade v. Utah Farm Bureau Ins. Co., 700 P.2d 1093, 1096 (Utah 1985); Jacobson v. Kansas City Life Ins. Co., 652 P.2d 909, 911-912 (Utah 1982). However, coverage existed where the applicant paid the first premium and the insurer failed to determine whether to issue the policy or reject the risk during the applicant’s lifetime. See Long v. United Benefit Life Ins. Co., 507 P.2d 375, 378 (Utah 1973); see also Prince v. W. Empire Life Ins. Co., 428 P.2d 163, 165 (Utah 1967) (holding that where parties enter into a “binding receipt agreement,” insurer has obligation to pay when loss occurs before the issuance of the policy if, except for the loss, the company would have issued the policy). But see Aho v. United Transp. Union Ins. of Cleveland, 571 P.2d 1329, 1332 (Utah 1977) (holding that without a binding receipt, where applicant has done everything required by insurer except paying first premium, policy never became effective); Fabrizio v. Fid. & Guar. Ins. Co., 494 P.2d 953, 955 (Utah 1972) (holding that where applicant failed to comply with the conditional requirement that he obtain a physical examination, the policy never became effective).

Insurer gave ineffective notice to insured that temporary life insurance was terminated where unidentified agent of the insurer notified unidentified person at insurance agency by telephone and the unidentified party at the agency communicated the information orally to the insured’s wife, providing no effective date of termination nor any indication when the premium payment would be returned. Stevenson v. First Colony Life Ins. Co., 827 P.2d 973, 979 (Utah Ct. App. 1992).

The Life Settlements Act, enacted as U.C.A. §§ 31a-36-101 to -119, modified the Insurance Code by allowing viatical settlements regardless of whether the viator is terminally ill. The Act provides for licensing and examinations of producers and providers of viatical settlements. The Act provides guidelines in relation to viatical settlements for reporting, disclosure, advertising, fraud, and other general requirements. The Act provides criminal penalties for violations. The Act modifies the Securities Division – Real Estate Division Code by defining a viatical settlement interest as a security.

Insureds have a statutory grace period before a life insurance policy termination becomes effective. U.C.A. § 31a-22-402(1) to (4). Insurers must send written notice of termination of coverage to the policy holder’s last known address at least 30 days before the date of termination. U.C.A. § 31a-22-402(5).

5.2 Annuities

Relevant Statutes

U.C.A. § 31a-1-301(9); §§ 31a-22-400 to -428.

Notable Law

Annuities are defined to include all agreements to make periodic payments for a period certain or over the lifetime of one or more natural persons if the making or continuance of all or some of the series of the payments, or the amount of the payment, is dependent upon the continuance of human life. U.C.A. § 31a-1-301(9).

The transfer of interest or claim in annuities is excluded from Chapter 9 of the Utah Uniform Commercial Code which governs secured transactions. U.C.A. § 70a-9a-109(4)(h).

SECTION 6 – Aviation Liability And Insurance

6.1 Insurance

Relevant Statutes

U.C.A. §§ 72-10-101 to -131; §§ 31a-1-101 to -110.

Notable Law

The Utah Aeronautical Regulatory Act requires applicants for permits allowing landing on county roads to provide a certificate of insurance executed by an authorized insurance company or association that there is in effect a policy of liability insurance against “(a) personal injury or death for any one person in an amount of $50,000 or more; (b) any one accident in an amount of $100,000 or more; and (c) property damage in an amount of $50,000 or more.” U.C.A. § 72-10-117(5).

6.2 Registration

The Act requires all aircraft must maintain a current certificate of registration issued by the Aeronautics Division of UDOT. See U.C.A. § 72-10-109.

6.3 Guest Statutes

The aircraft guest statute, formerly U.C.A. § 2-1-33 (repealed in 1988), was held unconstitutional in Johnston v. Stoker, 685 P.2d 539, 542 (Utah 1984). This guest statute prohibited recovery for a guest’s injury in an aircraft unless it was attributable to ‘willful misconduct’ or ‘intoxication’ of the pilot.

6.4 Life Insurance

In light of aerodynamic principles and the degree of operator control, a water ski kite is a “device for aerial navigation” within a life insurance policy’s exclusionary clause. Deschler v. Fireman’s Fund Am. Life Ins. Co., 663 P.2d 97, 99 (Utah 1983).

6.5 Exclusions

Under a policy covering airplane passengers but excluding coverage while “operating the aircraft under the terms of any agreement which provides any remuneration for the use of said aircraft,” an electrical equipment company, which was required to pay all expenses of a plane’s operation, maintenance, and storage and its pro rata share of insurance premiums, provided “remuneration” for use of plane, and thus the insurer was exempted from liability in connection with a plane crash occurring during the electrical company’s use of the plane. Am. Cas. Co. v. Eagle Star Ins. Co., 568 P.2d 731, 733-34 (Utah 1977).

SECTION 7 – Credit Life And Disability Insurance

7.1 In General

Relevant Statutes

U.C.A. § 31a-20-101; §§ 31a-22-801 to -809.

Notable Law

An insurer is estopped to rely upon an exclusionary provision in a credit life and disability policy to deny coverage if the company has failed to deliver to the insured, the policy or certificate of insurance, or any other document stating the exclusion. Gen. Motors Acceptance Corp. v. Martinez, 668 P.2d 498, 501 (Utah 1983).

Insurance policies may be disapproved if the premium charged is not reasonable in light of the benefits provided under the policy. U.C.A. § 31a-22-807 discusses factors for determining whether premiums are reasonable. “[B]enefits are considered reasonable in relation to the premium charged if, given the costs described in this Subsection (3), the premium rate charged develops or may reasonably be expected to develop a loss ratio of: (i) not less than 50% for credit life insurance; and (ii) not less than 55% for credit accident and health insurance.” U.C.A. § 31a-22-807(3)(b).

7.2 Accident and Health Care Insurance

Relevant Statutes

U.C.A. § 31a-1-301; § 31a-22-401; § 31a-22-412; §§ 31a-22-600 to -639; §§ 31a-22-1601 to -1602; §§ 31a-30-103 to -114.

Notable Law

Health Insurance Law Amendments

The term “preexisting condition” now means a condition that was present before the effective date of coverage under an accident or health insurance policy, whether or not medical advice, diagnosis, care or treatment was recommended or received before the effective date of coverage. Under the amended definition, a preexisting condition does not include a condition indicated by genetic information unless an actual diagnosis of that condition has been made. U.C.A. § 31a-1-301(139).

The terms “enrollment date,” “late enrollee” and “creditable coverage” were all redefined in the 2005 amended section on definitions. U.C.A. §§ 31a-1-301(58), (100), (34).

The number of creditable-coverage days that must be reduced from the exclusion period has been reduced by amendments to U.C.A. § 31a-1-301(34).

An accident or health insurance policy may not impose a preexisting condition exclusion relating to pregnancy. U.C.A. § 31a-22-605.1(4)(c).

Other types of preexisting condition exclusions may be imposed only if (i) the exclusion relates to a preexisting condition for which medical advice, diagnosis, care or treatment was recommended or received within the six-month period ending on the enrollment date; (ii) the exclusion period ends no later than twelve months after the enrollment date, or in the case of a late enrollee, eighteen months after the enrollment date; and (iii) the exclusion period is reduced by the number of days of creditable coverage the enrollee has as of the enrollment date. U.C.A. § 31a-22-605.1(4)(a).

Insurers are required to provide written notice of any preexisting condition exclusion as part of any application materials. U.C.A. § 31a-22-605.1(4)(d)(i).

“Accident and health insurance” means insurance to provide protection against economic losses resulting from (i) a medical condition including medical care expense or the risk of disability; (ii) accident; or (iii) sickness. “Accident and health insurance” includes a contract with disability contingencies including an income replacement contract, a health care contract, an expense reimbursement contract, a credit accident and health contract, a continuing care contract; and long-term care contracts. This insurance may provide hospital coverage, surgical coverage, medical coverage, loss of income coverage, prescription drug coverage, dental coverage, or vision coverage. “Accident and health insurance” does not include workers compensation insurance. U.C.A. § 31a-1-301(1).

Every individual and franchise accident and health insurance policy must contain a “Reinstatement” provision as defined by law. U.C.A. § 31a-22-608.

Incontestability for individual, franchise, and group disability insurance policies results after two years, unless fraudulent misrepresentations are made. Thus, nonfraudulent misstatements made by applicants do not void insurability after two years. “The insurer has the burden of proving fraud by clear and convincing evidence.” The policy may provide for incontestability even for fraudulent misstatements. U.C.A. § 31a-22-609.

A health insurance contract shall not terminate coverage of an unmarried dependent for reason of age before the dependent’s 26^th birthday. U.C.A. § 31a-22-610.5.

Exclusion for charges arising out of a felony did not apply to injuries the insured/motorist sustained in an accident in which the other motorist was killed, even though the insured pleaded guilty to manslaughter. The exclusion was ambiguous concerning whether it required intentional conduct and the victim died after the insured’s injuries were inflicted. Therefore, the insured’s injuries did not “arise out of” a felony. LDS Hosp. v. Capitol Life Ins. Co., 765 P.2d 857, 860 (Utah 1988).

Exclusion concerning dental services was ambiguous, and insured was entitled to coverage for services in connection with accidental injury to jaw and teeth. Wells v. Blue Shield of Utah, 467 P.2d 424, 425 (Utah 1970). The term “medical equipment” was not ambiguous and did not include various implements for insured’s automobile. Camp v. Deseret Mut. Benefit Ass’n, 589 P.2d 780, 781 (Utah 1979).

Coverage under health policy existed for retired employee engaged in “casual” employment despite policy language stating that it would not apply if injuries arose out of employment and workers compensation benefits existed. Phillips v. Utah Local Gov’ts Trust, 660 P.2d 249, 250 (Utah 1983).

Accident and health insurers or health maintenance organizations may offer a choice of coverage that is less than or different from that required by state law if certain requirements are met. U.C.A. § 31a-22-633.

Under the Genetic Testing Restrictions on Insurers Act, insurers must comply with the Genetic Testing Privacy Act. U.C.A. §§ 31a-22-1601 to -1602.

SECTION 8 – Workers’ Compensation

8.1 In General

Relevant Statutes

U.C.A. § 31a-22-1001; §§ 34a-2-101 to -113; §§ 34a-3-101 to -112.

Notable Law

Workers’ compensation statutes are construed liberally in favor of employee coverage when statutory terms reasonably admit such a construction. Olsen v. Samuel McIntyre Inv. Co., 956 P.2d 257, 260 (Utah 1998).

The Utah Worker’s Compensation Act limits the time an injured worker has to prove a claim to twelve years from the date of the accident. This statute acted as a statute of repose, as is capable of cutting off a claimant’s right to assert a claim. The statute was enacted for the valid legislative purpose of ending prolonged liability for insurance companies and employers, and the twelve-year cut-off was not arbitrary or unreasonable. Waite v. Labor Comm’n, 2017 UT 86, 416 P.3dd 635.

The requirement that the accident arise in the course of employment is satisfied if it occurs while the employee is rendering service to his employer, which he was hired to do, at the time and place his employer directed him to render such service. Walker v. U.S. Gen., Inc., 916 P.2d 903, 907-08 (Utah 1996). Injuries must be unexpected or unintended to be an accident compensable under workers’ compensation. Crapo v. Indus. Comm’n, 922 P.2d 39, 41-42 (Utah Ct. App. 1996).

Workers’ compensation statutes focus on the status of the employment relationship rather than on fault. Those parties who are not part of the employment relationship do not participate in the benefits or burdens of workers compensation. Kunz v. Beneficial Temporaries, 921 P.2d 456, 459 (Utah 1996).

Where a general employer loans one of its employees to another employer (“special employer”), a new temporary employment relationship is formed. In determining liability under workers’ compensation, the court analyzes the relative right of control maintained by both general and special employers. An employee of a special employer who is injured by a loaned employee may bring a tort action against a general employer. Kunz, 921 P.2d at 456. The loaned employee’s claims against the special employer are limited to those provided by workers’ compensation if (1) the loaned employee has made an express or implied contract with the special employer; (2) the work performed is essentially that of the special employer; and (3) the special employer has the right to control the details of the work. An implied contract will be found if the employee, having a choice whether to accept the assignment, accepts the assignment. Walker, 916 P.2d at 903.

In workers’ compensation cases, generally the substantive law in effect at the time of the employee’s injury applies throughout the course of that injury. Olsen v. Samuel McIntyre Inv. Co., 956 P.2d 257, 261 (Utah 1998). But see, State v. One Lot of Personal Property, 2004 UT 36, ¶¶ 14, 17, 90 P.3d 639 (holding that when assessing claims for attorney’s fees, courts look to the law in effect on the date on which the attorney fees were incurred rather than the law in effect on date of the alleged deprivation).

If there is no medical controversy (i.e., conflicting doctor reports), the Commission is not required to refer the case to a medical panel. Brown & Root Indus. Serv. v. Indus. Comm’n of Utah, 947 P.2d 671, 677 (Utah 1997).

Utah’s Workers’ Compensation Act is compulsory and not permissive and imposes an unconditional obligation on employers to be properly insured. An employer’s good faith attempt to obtain coverage is irrelevant, and the employer is liable for benefits paid the employee by the Uninsured Employers Fund. Thomas A. Paulsen Co. v. Indus. Comm’n of Utah, 770 P.2d 125, 127 n.4 (Utah 1989).

The insurer bears a proportionate share of the costs and attorneys’ fees incurred in obtaining a recovery against the third party. Lanier v. Pyne, 508 P.2d 38, 40 (Utah 1973). However, an insurer has no right to recover out of that part of a wrongful death recovery due to heirs who received no workers’ compensation benefits. Oliveras v. Caribou-Four Corners, Inc., 598 P.2d 1320, 1325 (Utah 1979).

Disbursements of proceeds recovered in a third-party tort action due to injuries or death arising from a work-related accident is controlled by U.C.A. § 34a-2-106(5). “Double recovery for injuries or death sustained in conjunction with an accident covered by workers’ compensation is not permitted. Therefore, a third-party recovery must reimburse the employer or insurer for workers’ compensation sums already paid as well as offset for future liability of sums owed. However, the employer or insurer must first bear a proportionate share of the expenses for obtaining the recovery.” Esquivel v. Labor Comm’n of Utah, 7 P.3d 777, 781-82 (Utah 2000).

Injuries received from fight while intoxicated were compensable for a trucker who claimed he was trying to protect his cargo when he chased men into field. The incident arose out of employment for workers’ compensation purposes. Commercial Carriers v. Indus. Comm’n of Utah, 888 P.2d 707, 712 (Utah Ct. App. 1994).

The Labor Commission can require that a re-employment plan provide for subsistence benefits and find that a re-employment plan that does not provide for subsistence benefits is defective. Color Country Mgmt. v. Labor Comm’n, 38 P.3d 969, 973-74 (Utah Ct. App. 2001).

Disability benefits for total permanent disability are not subject to reduction on the basis of the potential for re-employment of the claimant. Intermountain Slurry Seal v. Labor Comm’n, 2002 UT App 164, ¶ 14, 48 P.3d 252.

An administrative law judge (ALJ) hearing a workers’ compensation claim cannot rely on theories that were not presented by the parties. Acosta v. Labor Comm’n, 2002 UT App 67, ¶ 33, 44 P.3d 819. However, an ALJ may rely on an inference available from the claims and supporting evidence even if the parties do not assert it. JP’s Landscaping v. Labor Comm’n, 2017 UT App 59, ¶ 35, 397 P.3d 728, 740.

Switching an ALJ because the first ALJ was retiring does not disrupt due process. Without evidence that the second ALJ did not review the record prior to making a ruling, the court cannot hold that due process was violated. Utah Auto Auction v. Labor Comm’n, 2008 UT App 293, ¶ 16-17, 191 P.3d 1252.

A jury may find that an employer knew or should have known that working conditions could cause employees to develop carpal tunnel syndrome, where a plaintiff-employee presents evidence about the nature of his work and offers expert opinion testimony as to causation. Brewer v. Denver & Rio Grande W. R.R., 2001 UT 77, ¶ 36, 31 P.3d 557.

In Target Trucking v. Labor Comm’n, 2005 UT App 70, ¶ 6, 108 P.3d 128, the court ruled that the Labor Commission’s interim order finding that a workers’ compensation claimant qualified for permanent total disability was not a final order and therefore could not be appealed. However, several months later in Ameritemps, Inc. v. Labor Com’n, 2005 UT App 491, ¶ 17, 128 P.3d 31, the Court of Appeals suggested that its opinion in Target Trucking may have confused the distinction between “final order” and “final agency action” and did not apply the necessary test for determining jurisdiction.

The Labor Commission does not have the authority to allocate the burden of proof on permanent total disability determination in workers’ compensation proceedings. The Commission only has the authority to determine whether the facts presented meet the statutory requirements for a finding of permanent total disability. A workers’ compensation claimant has the burden of proving that he has suffered total permanent disability in order to receive benefits. Martinez v. Media-Paymaster Plus, 2007 UT 42, ¶ 50, 164 P.3d 384.

8.2 Exclusive Remedy

Workers’ compensation is not the exclusive remedy for injured employees who seek to recover from someone who is not their employer, or an officer, agent, or employee of the employer. However, U.C.A. § 31a-22-305(5)(c)(ii), provides that uninsured coverage does not apply to an employee, who is injured by an uninsured motorist, whose exclusive remedy is provided by the Workers’ Compensation Act. Therefore, uninsured coverage is not available when the uninsured driver is the employer, or an officer, agent, or employee of the employer because the Workers’ Compensation Act precludes the employee from having a viable tort claim outside its parameters. In contrast, though, such claims, and the resultant coverage, are available when the uninsured driver is a third party. Lieber v. ITT Hartford Ins. Ctr. Inc., 2000 UT 90, ¶ 11, 15 P.3d 1030 (citing to a previous version of the code).

However, an employee who was injured in an automobile accident in the course of employment could not recover in excess of 100 percent of his damages by double recovery under underinsured motorist coverage of the employer’s policy for the same benefits he received in worker’s compensation, but after the worker’s compensation benefits were exhausted, the uninsured motorist coverage carrier was required to pay the remainder of damages up to policy limits or until the employee was fully compensated. Truck Ins. Exch. v. Rutherford, 2017 UT 25, ¶ 11, 395 P.3d 143.

The exclusive remedy provision does not preclude the enforcement of an express indemnity agreement by a third party against the employer for amounts paid by the third party to the employee as a result of the injury. Shell Oil Co. v. Brinkerhoff-Signal Drilling Co., 658 P.2d 1187, 1191 (Utah 1983). However, an action for implied indemnity against the employer does not survive the exclusive remedy provision. Freund v. Utah Power & Light Co., 793 P.2d 362, 370 (Utah 1990).

The exclusive remedy provision precludes a defendant from joining the employer or co-employees to assert a claim for contribution under the former contribution among joint-tortfeasors statute. Curtis v. Harmon Elec., Inc., 552 P.2d 117, 119 (Utah 1976); Phillips v. Union Pac. R.R. Co., 614 P.2d 153, 154 (Utah 1980). Defendants may have the employer’s fault apportioned to reduce a defendant’s proportionate share of an award under Utah’s Liability Reform Act of 1986. Sullivan v. Scoular Grain Co., 853 P.2d 877, 884 (Utah 1993), overruled by statute on other grounds, Anderson v. United Parcel Service, 2004 UT 57, ¶ 13, 96 P.3d 903.

Damage to reputation does not fall within the coverage of the Workers’ Compensation Act; however, damages arising from emotional distress do fall within its coverage. Mounteer v. Utah Power & Light Co., 823 P.2d 1055, 1058-59 (Utah 1991).

The “dual capacity” doctrine is not recognized as an exception to the exclusive remedy provision. Worthen v. Kennecott Corp., 780 F.2d 856, 860 (10th Cir. 1985). An employer’s duty to maintain a safe work place is inseparable from the employer’s duties as an employer toward his employees. Bingham v. Lagoon Corp., 707 P.2d 678, 681 (Utah 1985).

The Utah Workers’ Compensation Act is the exclusive remedy available to an employee’s heirs for any injury or death, in any way contracted, sustained, aggravated, or incurred by the employee in the course of or because of or arising out of the employee’s employment. The heirs of an employee who died of cancer after her employer denied her sick leave to have a lump removed could only recover from the Workers’ Compensation act even though their claim was based on a breach of the employment contract. Cook v. Zions First Nat’l Bank, 2002 UT 105, ¶ 11, 57 P.3d 1084..

An independent statutory or contractual cause of action between a third party and an employer is not barred by the Workers’ Compensation Act’s exclusive remedy provision where that action is not brought “on account of” or “based upon” the accident, injury or death of the employee. Flowell Elec. Ass’n, Inc. v. Rhodes Pump, LLC, 2015 UT 87, ¶ 15, 361 P.3d 91.

8.3 Exempt Employees and Employers

A corporation may elect not to include a director or officer as an employee for purposes of workers compensation if it serves written (which does not include information conveyed by electronic means) notice upon its insurance carrier naming persons to be excluded. A director or officer of a corporation is considered an employee until notice has been given. U.C.A. § 34a-2-104; Olsen v. Samuel McIntyre Inv. Co., 956 P.2d 257, 260 (Utah 1998).

Independent insurance agents may be exempt from workers’ compensation requirements if they meet the statutory requirements. U.C.A. § 34a-2-104(5)(c).

An agricultural employer is not considered an employer for workers’ compensation purposes if the employer’s total annual payroll for all non-immediate family employees was less than $8,000 during the previous calendar year, or if the agricultural employer’s total annual payroll for all non-immediate family employees was equal to or greater than $8,000 but less than $50,000, and the agricultural employer maintains insurance that covers job-related injuries of the employer’s non-immediate family employees in the amount of $300,000 for liability insurance, and $5,000 for medical, hospital and surgical benefits. U.C.A. § 34a-2-103(5)(c).

8.4 Arising out of, or in the Course of Employment

An employee killed in an automobile accident while returning home from work was not killed in an accident arising out of or in the course of employment, despite the fact that his hourly rate had been increased due to the location of the construction site. Barney v. Indus. Comm’n, 506 P.2d 1271, 1272 (Utah 1973). However, where plaintiff was struck by co-employee’s vehicle while they were in their employer’s parking lot, both parties were in the course and scope of their employment. Hope v. Berrett, 756 P.2d 102, 103 (Utah Ct. App. 1988). Similarly, under the “bunkhouse rule,” when an employee was required to reside on the employer’s premises and was injured when traveling for personal purposes in an employer owned van driven by another employee, the court determined her injuries arose “in the course and scope of her employment.” Boyko v. Parker, 960 F. Supp. 2d 1270, 1272-73 (D. Utah 2013).

An employee who had been raped during a robbery was not barred from asserting a negligence claim against her employer where the evidence showed that she was not raped while in the course of her employment. Massie v. Godfather’s Pizza, Inc., 844 F.2d 1414, 1421 (10th Cir. 1988).

Where an employee slipped and fell on her employer’s sidewalk while returning to work after having visited a nearby bank on personal business, her resulting injuries arose out of and in the course of employment. Smith v. Am. Exp. Travel-Related Servs., 765 F. Supp. 1061, 1065 (D. Utah 1991).

When a claimant’s simple, ordinary negligence aggravates an already existing industrial injury, the question of additional compensation hinges on whether the subsequent injury was the “natural result” of the industrial accident that caused the compensable injury. If the subsequent aggravation to the industrial injury was not unexpected, and occurred after a simple accident brought on by ordinary error and miscalculation on the part of the claimant, then the subsequent accident was a “natural result” of the compensable industrial injury, and can receive additional compensation. McKesson Corp. v. Labor Comm’n, 2002 UT App 10, ¶ 27, 41 P.3d 468.

To meet the legal causation requirement in a workers’ compensation case, a claimant with a preexisting condition must show that the employment contributed something substantial to increase the risk he already faced in everyday life because of his condition; this is usually accomplished by showing that the injury was precipitated by an “unusual or extraordinary” exertion greater than that undertaken in normal, everyday life. Murray v. Labor Comm’n, 2013 UT 38, ¶¶ 46-48, 308 P.3d 461. The test for causation, originally laid down in Allen v. Indus. Comm’n, 729 P.2d 15, 25-26 (Utah 1986), applies to claimants with asymptomatic preexisting injuries. Acosta v. Labor Comm’n, 2002 UT App 67, ¶ 20, 44 P.3d 819.

8.5 Unemployment Benefits

A claimant’s lack of awareness of the potential for receiving unemployment benefits is not “good cause” that justifies the claimant’s failure to timely file for the benefits. Ekshteyn v. Dep’t of Workforce Servs., 2002 UT App 74, ¶ 16, 45 P.3d 173.

In Allen v. Department of Workforce Services, Workforce Appeals Board, 2005 UT App 186, ¶ 20, 112 P.3d 1238, the Utah Court of Appeals found that an administrative review board was required to consider issues applying law to fact; the board did not exceed its authority in basing its decision on statutorily required criteria; and the board was entitled to consider conflicting evidence concerning whether the salary for a new position meets the statutory criteria for benefits.

SECTION 9 – Fidelity, Guaranty And Surety

9.1 Fidelity

Relevant Statutes

U.C.A. § 31a-1-301; §§ 31a-20-109, -110; §§ 31a-22-101 to -107; §§ 31a-23-307 to -308.

Notable Law

“Fidelity insurance” is defined as “insurance guaranteeing the fidelity of a person holding a position of public or private trust.” U.C.A. § 31a-1-301(65). “Fidelity insurance” is also within the broad statutory definition of “surety insurance.” U.C.A. § 31a-1-301(168).

9.2 Guaranty and Surety

For purposes of Utah’s statutory and regulatory scheme, “insurance” is defined to include “a contract of guaranty or suretyship entered into by the guarantor or surety as a business and not as merely incidental to a business transaction.” U.C.A. § 31a-1-301(89)(b)(ii).

Commercial surety or guarantor is in the “insurance business” and must be authorized to do business in Utah under the Insurance Code. U.C.A. § 31a-1-104. A surety will not be able to enforce its general indemnity agreement against its indemnitor if the surety issued bond in Utah without the proper Utah license. Sur. Underwriters v. E&C Trucking, Inc., 2000 UT 71, ¶ 21, 10 P.3d 338.

A surety’s undertaking issued by an insurer authorized to do a surety business in the state is in complete compliance with any qualification requirement in Utah law respecting surety bonds. U.C.A. § 31a-22-103(1).

A surety’s right to require indemnity agreements and security is expressly recognized by statute. U.C.A. § 31a-22-104.

If intended by the parties, a guarantee of an existing contract may stand by itself, even if the obligation guaranteed is unenforceable. Rainford v. Rytting, 451 P.2d 769, 772 (Utah 1969).

To be effective under a guaranty provision allowing revocation of the guarantee by written notice, notice must be clear and unequivocal. Wells Fargo Bank, N.A. v. Midwest Realty & Fin., Inc., 544 P.2d 882, 884 (Utah 1975).

Any uncertainty or ambiguity as to the meaning of terms of a guaranty contract will be construed strictly against the framer. Gen. Appliance Corp. v. Haw, Inc., 516 P.2d 346, 347-48 (Utah 1973).

Guaranty agreements will be construed in favor of validity whenever possible, gleaning parties’ intent from the entire documents and from attendant circumstances. Cessna Fin. Corp. v. Meyer, 575 P.2d 1048, 1050 (Utah 1978).

A guarantor’s liability depends on conformity with procedural terms set forth in the guaranty. Carrier Brokers, Inc. v. Spanish Trail, 751 P.2d 258, 261 (Utah Ct. App. 1988).

The doctrine of exoneration is available to a guarantor to compel payment by the principal or contribution from co-guarantors. Gardner v. Bean, 677 P.2d 1116, 1119 (Utah 1984).

9.3 Title Insurance

Title and Escrow Commission Act Regulates Title Insurance Industry. (S.B. 40)

U.C.A. §§ 31a-2-401 through 405 enacted the Title and Escrow Commission Act. This act establishes the Utah Title and Escrow Commission and delineates its authority for regulation of the title insurance industry. It also amends various provisions throughout the Utah Insurance Code related to the title insurance industry.

The Act regulates rate standards and rating methods for title insurance insurers, agencies and producers. U.C.A. § 31a-19a-209.

The Title and Escrow Commission Act requires the Commission’s approval for adjuster and other licensing in the title insurance line of authority, and sets procedures for that type of licensing. U.C.A. § 31a-23a-105.

The Commission is authorized to make rules creating different categories of title insurance lines, and rules regarding unfair business practices in the title insurance industry. U.C.A. § 31a-23a-106.

The Title and Escrow Commission Act mandates that a title insurance producer comply with escrow rules adopted by the Commission. U.C.A. § 31a-23a-204.

The Act also authorizes the Commission to recognize adjuster license classifications related to title insurance, and to regulate class structures related to adjuster license classifications. U.C.A. § 31a-23a-106.

“Title insurance” is statutorily defined as “the insuring, guaranteeing, or indemnifying of an owner of real or personal property or the holder of liens or encumbrances on that property, or others interested in the property against loss or damage suffered by reason of liens or encumbrances upon, defects in, or the unmarketability of the title to the property, or invalidity or unenforceability of any liens or encumbrances on the property.” U.C.A. § 31a-1-301(167). Title insurance guarantees a certain position in the chain of title.

“Marketable title” is one that may be freely made the subject of resale and that can be sold at a fair price to a reasonable purchaser or mortgaged to a person of reasonable prudence as security for the loan of money. Booth v. Attorneys’ Title Guar. Fund, Inc., 2001 UT 13, ¶ 33, 20 P.3d 319.

“Insurance business” is defined to include “making as insurer, guarantor, or surety, or proposing to make as insurer, guarantor, or surety, a contract or policy of title insurance,” or “transacting or proposing to transact any phase of title insurance,” and thus within the express statutory and regulatory scheme of the Insurance Code. U.C.A. § 31a-1-301(91)(f) to (g).

Foreign title insurers may insure property in Utah only through a title insurance agent who is a resident of, or has his principal place of business in, Utah, or through a bona fide branch office, or through a subsidiary title insurer authorized to do business in Utah. U.C.A. § 31a-14-211.

Title insurance agents are subject to licensing requirements beyond those required of other agents. U.C.A. §§ 31a-23a-104 to -106, -204.

All title insurance agents are required to file annual statements with the insurance commissioner setting out financial condition, transactions, and affairs. U.C.A. § 31a-23a-413.

By statute, title companies are directly and primarily liable to others dealing with title insurance agents for the receipt and disbursement of funds deposited in escrows, closings, or settlements with the agents in all transactions where a preliminary report or a commitment or binder for or policy or contract of title insurance has issued. U.C.A. § 31a-23a-407.

Statute prescribes express rules and restrictions on underwriting title insurance. U.C.A. § 31a-20-110.

Policy exclusion denying coverage for defects not shown by public record but known to the insured includes only defects of which the insured has actual, not simply constructive, knowledge. Zions First Nat’l Bank, N.A. v. Nat’l Am. Title Ins. Co., 749 P.2d 651, 654 (Utah 1988).

Parties to a title policy are free to define scope of coverage and to specify the losses or encumbrances encompassed by the policy. Valley Bank & Trust Co. v. U.S. Life Title Ins. Co., 776 P.2d 933, 936 (Utah Ct. App. 1989); Pac. Am. Constr. v. Sec. Union Title, 1999 UT 87, ¶ 5, 987 P.2d 45.

Road maps, filed with the county clerk’s office and not with the county recorder, were not considered “public records” under the definition from the title insurance policy because they did not “impart constructive notice” of matters relating to land. First Am. Title Ins. Co. v. J.B. Ranch, Inc., 966 P.2d 834, 839-40 (Utah 1998).

An attorney licensed to practice law in the state of Utah is exempt from the requirements that a title insurance agent maintain a fidelity bond, a professional liability insurance policy, or other financial protection, and a reserve fund, as long as the attorney issues twelve or fewer policies in any twelve-month period. U.C.A. § 31a-23a-204(8).

Any attorney, whether or not exempt from bond provisions, must maintain a trust account separate from his or her law firm’s account for all title and real estate escrow transactions. U.C.A. § 31a-23a-204(9).

A nonparty to title insurance does not have a third-party beneficiary right to sue a title company for breach of contract in connection with preparation of an incorrect deed, without evidence of the parties’ intent to do so. Holmes Dev., L.L.C. v. Cook, 2002 UT 38, ¶ 53, 48 P.3d 895.

Title insurance agencies and agents are subject to title insurance licensing requirements. U.C.A. § 31a-23a-204.

SECTION 10 – Insolvency of Insurers

10.1 Rehabilitation and Liquidation

Relevant Statutes

U.C.A. §§ 31a-27a-101 to -120; §§ 31a-28-101 to -120.

Notable Law

Uniform Insurers’ Liquidation Act not adopted.

The term “distribution” refers to a transfer of equity from one entity to another. Wasatch Crest Ins. Co. v. LWP Claims Admin’rs Corp., 2007 UT 32, ¶14-15, 158 P.3d 548.

10.2 Guaranty Funds

Utah Life and Health Insurance Guaranty Association Act, U.C.A. §§ 31a-28-101 to 120 covers life, accident, health care, group, and annuity contracts and policies. Limits of the Association’s coverage vary with the type of underlying policy.

Property and Casualty Guaranty Association Act, U.C.A. §§ 31a-28-202 to 222, governs insolvent casualty and property carriers, and limits recovery from the association to $300,000 per covered claim. U.C.A. § 31a-28-207(1)(b).

SECTION 11 – Claim Handling

11.1 Adjusters

Relevant Statutes

U.C.A. § 31a-1-104; §§ 31a-26-101 to -103.

Notable Law

The Utah Supreme Court has ruled that public insurance adjusters may no longer handle third-party claims. They may still handle first-party claims. Utah State Bar v. Summerhayes, 905 P.2d 867, 872 (Utah 1995).

No person may perform or solicit to perform insurance adjusting without a valid license under U.C.A. § 31a-26-201. The following are exempt from the license requirement:

A person engaged in insurance adjusting as a regular salaried employee of, and not an independent contractor for, an insurer;
An arbitrator or umpire selected by claimant and insurer to decide, alone or with others, whether a claim should be paid and how much should be paid;
An attorney-at-law acting in an attorney-client relationship;
An insurance producer, but only as to the classes of insurance for which he is licensed under C.A. § 31a-23-106 and only as to claims adjusted on the request of an insurer for which he is an agent;
A regular salaried employee of, and not an independent contractor for, a policyholder or claimant under an insurance policy;
An employee of a licensed insurance adjuster who provides only administrative or clerical assistance;
A person who does not do insurance adjusting under C.A. § 31a-26-102, but who is specially employed to obtain facts about a loss for, or furnish technical assistance to, a licensed adjuster or a company adjuster, including a photographer, estimator or appraiser, marine surveyor, private detective, engineer, and handwriting expert;
A holder of group insurance policy, with respect to administrative activities in connection with that policy, who receives no compensation for his services beyond the actual expenses estimated on a reasonable basis;
A person engaged in insurance adjusting as a regular salaried employee of, and not an independent contractor for, an administrator licensed under Chapter 25; and
A person who gives advice or assistance without compensation or expectation of compensation, direct or indirect. C.A. § 31a-26-201(2).

An adjuster must be of good character, be at least 18 years of age, and have received 12 to 24 hours of classroom instruction. The commissioner may require applicants for any particular class of license to pass an examination before receiving a license. U.C.A. §§ 31a-26-205, -207.

Adjusters must complete 24 hours of continuing education during each two year licensing period. Three hours must be dedicated to ethics courses. The adjuster is exempt if first licensed before December 31, 1982, and he or she may move to have the requirement waived. U.C.A. §§ 31a-26-206(2)(b)(i), (d)(i)(A).

Nonresident applicants for licenses must execute an agreement to be subject to the jurisdiction of the commissioner and courts of this state. U.C.A. § 31a-26-208.

A license remains in force until it is revoked, suspended, lapsed, surrendered, or the licensee dies or is adjudicated incompetent. U.C.A. § 31a-26-213(1). An insurance adjuster’s license can be terminated for failure to complete continuing education requirements or failing to submit a completed renewal application. U.C.A. § 31a-26-213(5).

No person representing an insurer may engage in any unfair claim settlement practice. U.C.A. § 31a-26-303.

Whether an adjuster’s claim file is discoverable will be determined on a case by-case basis, with the governing inquiry to be whether a document was prepared in anticipation of litigation. An attorney does not have to be involved in the preparation of a document for it to be prepared in anticipation of litigation. The trial court will consider the nature of the requested documents, the reason the documents were prepared, the relationship between the preparer of the document and the party seeking its protection from discovery, the relationship between the litigating parties, and any other relevant factors. Askew v. Hardman, 918 P.2d 469, 474 (Utah 1996).

11.2 Cancellation and Renewal

Relevant Statutes

U.C.A. §§ 31a-8-402.3 to -402.7; §§ 31a-21-303 to -305.

Notable Law

Insurance Cancellation and Nonrenewal Restrictions

A motor vehicle insurer is not able to cancel or decline renewal of a motor vehicle policy solely on the basis of a claim from the insured that results from an accident which meets the following criteria: (1) the accident is not the insured’s fault; (2) the driver of the motor vehicle that is covered by the policy is 21 years of age or older; and (3) the claim is the only such claim within a 36-month period. U.C.A. § 31a-21-303(5)(a)(i).

An insurer cannot cancel or decline renewal of a policy solely on the basis of a single speeding citation for 10 miles per hour over the speed limit or less, if the driver is 21 years of age or older and has not had another such citation within a 36-month period. U.C.A. § 31a-21-303(5)(a)(ii).

Motor vehicle insurers are precluded from canceling or declining a policy for damage resulting from wind, lightning, or an earthquake, if the damage was not preventable by the exercise of reasonable care and it is the only such claim within a 36-month period. U.C.A. § 31a-21-303(5)(a)(iii).

Homeowner insurers also may not fail to renew a policy solely on the basis of damage caused solely from wind, hail, or lightning, if the damage is not preventable by the exercise of reasonable care and is the only such claim within a 36-month period. U.C.A. § 31a-21-303(5)(b).

Cancellation for any reason other than nonpayment of premium is effective no sooner than 30 days after delivery or first-class mailing of written notice to the policy holder. The reason for cancellation must be stated. For nonpayment of premium, the cancellation is effective no sooner than 10 days after delivery or first-class mailing. U.C.A. § 31a-21-303(2)(c), (e).

Unless a new policy has been in effect less than 60 days, it may not be canceled except for failure to pay premium, material misrepresentation, an unforeseen and substantial change in the risk assumed, a substantial breach of contractual duties, attainment of an age specified as the terminal age for coverage or, for automobile insurance, revocation or suspension of driver’s license of the named insured or any other person who customarily drives the car. U.C.A. § 31a-21-303(2)(e)(i).

An enrollee’s health benefit plan may not be canceled unless the enrollee fails to pay premiums, makes material misrepresentations to the insurer, or attempts to defraud the insurer. If the enrollee’s coverage is available through an association, it may only be canceled if the individual leaves the organization or the organization terminates the program. If an enrollee’s coverage is part of a network plan, coverage may only be canceled if the enrollee no longer lives, works, or resides in the area which the insurer services or where the insurer is authorized to do business. U.C.A. § 31a-22-618.7.

The insured has a right to renewal, on terms then being applied by the insurer to similar risks, for an additional period of time equivalent to the period of the expiring period if the agreed term is one year or less, or at least one year if the agreed term is longer than one year. U.C.A. § 31a-21-303(4).

An insurer’s notice of cancellation is effective although not received by the insured when the insurer follows its usual business procedures, the address on the notice is correct, and the insurer prepared a certificate of mailing. Baumgart v. Utah Farm Bureau Ins. Co., 851 P.2d 647, 652 (Utah Ct. App. 1993).

An insurance company waives any right to rescind a policy if it does not promptly assert or reserve the right. Cont’l Ins. Co. v. Kingston, 2005 UT App 233, ¶ 15, 114 P.3d 1158, 1162.

11.3 Death

Relevant Statutes

U.C.A. § 26-2-26; § 31a-22-415; § 75-1-107; § 75-2-702; §§ 78b-3-102, -106; § 78b-2-304.

Notable Law

Anatomical Gifts: Utah has adopted a majority of the Revised Uniform Anatomical Gift Act, with some variations and omissions. U.C.A. §§ 26-28-101 to -125.

Death Certificates: Death certificates may be obtained from the Department of Health, Division of Vital Records and Statistics, 288 North 1460 West, Salt Lake City, Utah 84116.

Determination of Death: The Uniform Determination of Death Act has been adopted. U.C.A. §§ 26-34-1 to -2.

Presumption of Death: A presumption of death arises when a person is absent for a continuous period of five years without being heard from, where the absence is not satisfactorily explained after diligent search or inquiry. U.C.A. § 75-1-107. Interested survivors must file a petition in the probate division of the district court of the county of the presumed decedent’s last residence to establish presumed death.

Simultaneous Deaths: In the absence of evidence of the order in which two or more persons died, an individual who is not established by clear and convincing evidence to have survived an event, including the death of another individual, by 120 hours, is considered to have predeceased the death of the other individual, except as follows:

(a) if it is not established by clear and convincing evidence that one of the two co-owners with right of survivorship survived the other co-owners by 120 hours, one-half of the property passes as if one had survived by 120 hours and one-half as if the other had survived by 120 hours; and

(b) there are more than two co-owners and it is not established by clear and convincing evidence that at least one of them survived the others by 120 hours, the property passes in the proportion that one bears to the whole number of co-owners. “Co-owners with right of survivorship” includes joint tenants, tenants by the entireties, and other co-owners of property or accounts held under circumstances that entitles one or more to the whole of the property of account on the death of the other or others. U.C.A. §§ 75-2-702(1) to (3).

Survival by 120 hours is not required if it falls within the standards set forth in U.C.A. § 75-2-702(4).

11.4 Reinsurance

Relevant Statutes

U.C.A. § 31a-1-301; § 31a-17-404; §§ 31a-22-1201 to -1204.

Notable Law

Reinsurance means an insurance transaction for consideration which transfers any portion of the assurance risk to another insurer. U.C.A. § 31a-1-301(153).

Credit for reinsurance may be granted or allowed a ceding insurer, as either an asset or deduction from liability for reinsurance ceded, only if requirements in U.C.A. § 31a-17-404 are met.

There is no credit for reinsurance ceded under U.C.A. § 31a-17-404 unless, in addition to meeting requirements set forth in U.C.A. § 31a-17-404 or U.C.A. § 31a-17-404.1, the reinsurance agreement provides that the reinsurance shall be payable on the basis of the liability of the ceding insurer under the contract without diminution because of insolvency of the ceding insurer. U.C.A. § 31a-22-1201.

The amount recoverable by the liquidator from a reinsurer may not be reduced as a result of delinquency proceedings. Payment made to an insured or other creditor does not diminish the reinsurer’s obligation to the insurer’s estate, unless the payment was made in discharge of obligation under contract. U.C.A. § 31a-27a-512.

If there is no assumption agreement, the reinsurer’s sole obligation is to the ceding insurer. U.C.A. § 31a-22-1202.

An authorized insurer writing nonassessable policies may assume, as a reinsurer, any risks it may write directly. The commissioner may authorize an insurer to assume, as a reinsurer, designated classes of risks it is not authorized to write directly. U.C.A. § 31a-20-107.

11.5 Subrogation

Relevant Statute

U.C.A. § 31a-21-108.

Notable Law

In the absence of specific contractual terms in either the release and settlement or the insurance policy, the insured must be made whole prior to any recovery by the insurer against the tortfeasor. Subrogation actions may be brought by the insurer in the name of its insured. U.C.A. § 31a-21-108. The insured may not subrogate against a co-insured, including a tenant who is presumed to be insured under the landowner’s policy. Where the insured is required by contract or lease to carry insurance for the benefit of another, the other party may attain the status of a defacto coinsured even if not named as an insured in the policy obtained. In the absence of a design or fraud on the part of the coinsured, no subrogation may be taken against such party. GNS P’ship v. Fullmer, 873 P.2d 1157, 1160 (Utah Ct. App. 1994).

Subrogation is a creature of equity, the purpose of which is to work out an equitable adjustment between parties, by assuring the ultimate discharge of a debt by the party who in good conscience ought to pay it. Allstate Ins. Co. v. Ivie, 606 P.2d 1197, 1202 (Utah 1980).

To preserve subrogation rights, all providers of collateral source payment to a plaintiff in a malpractice action against a health care provider must serve a written notice of their subrogation claim on the defendant health care providers at least 30 days before settlement or trial. U.C.A. § 78b-3-405(4).

The insured is not entitled to recover more than is necessary to return him or her to the financial position which he or she enjoyed prior to the accident. Birch v. Fire Ins. Exch., 2005 UT App 395, ¶ 11, 122 P.3d 696.

Subrogation is permitted in the insurance field with respect to property damage and to medical costs, but a claim or cause of action for personal injuries arising out of a tort is not assignable. State Farm Mut. Ins. Co. v. Farmers Ins. Exch., 450 P.2d 458, 459 (Utah 1969).

The equitable doctrine of subrogation allows an insurer, which has paid a loss, to step into shoes of its insured and recoup its losses from the party whose negligence caused the loss. In absence of design or fraud on the part of the coinsured, no subrogation may be taken against the coinsured. Fashion Place Inv., Inc. v. Salt Lake County/Salt Lake County Mental Health, 776 P.2d 941, 945 (Utah Ct. App. 1989).

The No-Fault Insurance Act does not confer on the no-fault insurer the right of subrogation to funds received by its insured for personal injuries in a subsequent legal action. The insurer has a limited, equitable right to seek reimbursement in an arbitration proceeding against the liability insurer. Allstate Ins. Co. v. Ivie, 606 P.2d 1197, 1202 (Utah 1980).

Subrogation is an equitable doctrine, and a cause of action must be brought in equity. Subrogation cannot be sought under a tort theory of fraud. Educators Mut. Ins. Ass’n v. Allied Prop. & Cas. Ins. Co., 890 P.2d 1029, 1032 (Utah 1995).

Where the insured has received payment from both the insurer and the wrongdoer, the insurer can recover from the insured any excess collected after insured is fully compensated. Gibbs M. Smith, Inc. v. U.S. Fid. & Guar. Co., 949 P.2d 337, 346 (Utah 1997).

A no-fault insurer has no right to subrogation under Utah’s no-fault statute, and as a general rule may not seek reimbursement for PIP payments its insured subsequently recovers from the tortfeasor. However, no-fault insurers may obtain reimbursement for PIP payments directly from their insureds’ settlement with tortfeasors when it is clear the parties to the settlement intended that the settlement amount include PIP reimbursement. Since a tortfeasor is not personally liable for PIP benefits, the settlement between the no-fault insured and the tortfeasor or tortfeasor’s insurer is presumed to exclude PIP benefits in the absence of evidence to the contrary. Bear River Mut. Ins. Co. v. Wall, 937 P.2d 1282, 1289 (Utah Ct. App. 1997), aff’d, 1999 UT 33, 978 P.2d 460.

An insurer can be subrogated only to such rights as the insured possesses. Accordingly, an insured can waive an insurer’s subrogation rights against a particular third party through a pre-loss agreement with that third party. Such waiver of subrogation is upheld even if the insured fails to provide notice to the insurer as required by the pre-loss agreement, unless the agreement specifies that the validity of the waiver is conditioned upon such notice. Bakowski v. Mountain States Steel, Inc., 2002 UT 62, ¶ 23, 52 P.3d 1179.

SECTION 12 – Bad Faith Claims Against Insurers

12.1 Unfair Claims Practices Act

No insurer or person representing an insurer may engage in any unfair claim settlement practice. U.C.A. § 31a-26-303. However, Section 31a-26-303 does not give rise to any private cause of action. Cannon v. Travelers Indem. Co., 2000 UT App 10, ¶ 22, 994 P.2d 824. Acts constituting unfair claims settlement practices are set forth in U.C.A. § 31a-26-303(2), (3), and (4), and include: failing to promptly settle under portions of policies where liability and the amount of loss are reasonably clear; knowingly misrepresenting material facts or the contents of insurance policy provisions; or attempting to use a policy application which was altered by the insurer without notice to the insured.

12.2 Bad Faith

Relevant Statutes

U.C.A. § 78b-5-825.

Notable Law

The court may award reasonable attorneys’ fees to a prevailing party if the court determines that a claim or defense was without merit and was not brought or asserted in good faith. U.C.A. § 78b-5-825. “Without merit” means frivolous or having no basis in law or fact. Bad faith must be established by one or more of the following conditions: (1) absence of an honest belief in the propriety of the activities in question; (2) intent to take unconscionable advantage of others; or (3) intent or knowledge that the action will hinder, delay, or defraud others. Baldwin v. Burton, 850 P.2d 1188, 1199 (Utah 1993).

Before an award of attorneys’ fees can be made in a declaratory judgment action, the insurer must have acted fraudulently, in bad faith, or have been stubbornly litigious. Farmers Ins. Exch. v. Call, 712 P.2d 231, 237 (Utah 1985); Am. States Ins. Co. v. Walker, 486 P.2d 1042, 1044 (Utah 1971).

In the third-party context, there exists a fiduciary duty for an insurer to protect a policyholder’s interests as zealously as it would its own from third-party claimants. A bad faith cause of action in tort exists for breach of this fiduciary duty. Beck v. Farmers Ins. Exch., 701 P.2d 795, 799 (Utah 1985); Ammerman v. Farmers Ins. Exch., 430 P.2d 576, 578-79 (Utah 1967); Campbell v. State Farm Mut. Auto Ins. Co., 840 P.2d 130, 138 (Utah Ct. App. 1992). The test of the insurer’s conduct is reasonableness. Id.

There is no duty of good faith and fair dealing imposed upon an insurer running to a third-party claimant seeking to recover against the insured. Sperry v. Sperry, 1999 UT 101, ¶ 7, 990 P.2d 381; Pixton v. State Farm Mut. Auto. Ins. Co., 809 P.2d 746, 749 (Utah Ct. App. 1991).

A breach of contract, including the implied obligation to perform the contract in good faith, are recognized in a first-party situation. Beck v. Farmers Ins. Exch., 701 P.2d 795, 798-800 (Utah 1985). However, a tort cause of action for bad faith is not recognized in a first-part situation. Id. at 799. In some cases the acts causing the breach may cause breaches of other duties that may lead to an action in tort independent of the contract. Id.

Although bad faith actions in Utah cannot sound in tort, damages for bad faith breach of the insurance contract include both general and consequential damages. Consequential damages are “those reasonably within the contemplation of, or reasonably foreseeable by, the parties at the time the contract was made.” Horton v. Gem State Mut., 794 P.2d 847, 849 (Utah Ct. App. 1990). Consequential damages may include attorneys’ fees, but only in the context of insurance contracts and the third-party exception. Canyon Country Store v. Bracey, 781 P.2d 414, 421 (Utah 1989); Collier v. Heinz, 827 P.2d 982, 983 (Utah Ct. App. 1992).

The implied obligation of good faith performance on the part of the insurer at the very least requires “that the insurer will diligently investigate the facts to enable it to determine whether a claim is valid, will fairly evaluate the claim, and will thereafter act promptly and reasonably in rejecting or settling the claim.” Beck, 701 P.2d at 801.

A claim for bad faith denial of an insurance claim in the first-party context is eliminated if the evidence creates a legitimate factual issue concerning the validity of the insurance claim. Young v. Fire Ins. Exch., 2008 UT App 114, ¶ 22, 182 P.3d 911; Campbell v. State Farm Mut. Auto. Ins. Co., 840 P.2d 130, 138-39 n.16 (Utah Ct. App. 1992); Callioux v. Progressive Ins. Co., 745 P.2d 838, 842 (Utah Ct. App. 1987).

Third-party claimant who is not in privity of contract with the insurer has no cause of action against the carrier for breach of the duty to good faith and fair dealing. Savage v. Educators Ins. Co., 874 P.2d 130, 132 (Utah Ct. App. 1994), aff’d, 908 P.2d 862 (Utah 1995) (employee not in privity with employer’s workers compensation carrier).

The insured is not obliged to pay the amount of the judgment exceeding policy limits as a condition precedent to an action against the insurer for failure to settle the claim within policy limits. Ammerman v. Farmers Ins. Exch., 450 P.2d 460, 462 (Utah 1969).

After a denial of coverage by an insurer, the insured may enter into a settlement with a third party without prejudicing its rights against the insurer. Gibbs M. Smith, Inc. v. U.S. Fid. & Guar. Co., 949 P.2d 337, 344 (Utah 1997).

The knowledge of a corporation’s agent, acting within the scope of his authority, may be imputed to the corporation for the purpose of determining whether attorney fees should be awarded under this section. Wardley Better Homes & Gardens v. Cannon, 2002 UT 99, ¶ 23, 61 P.3d 1009.

When an insured brings extra-contractual claims against an insurer, such as a claim for a bad-faith denial of coverage, the existence of an “appraisal” clause in the insurance contract does not mean that the prescribed appraisal process should settle the dispute. Rather, absent an arbitration clause, the insured has the right to a full and fair opportunity to litigate the bad faith claim in court. Miller v. USAA Cas. Ins. Co., 2002 UT 6, ¶ 54, 44 P.3d 663.

If an insurer acts reasonably in denying a claim, then the insurer did not contravene the covenant of good faith and fair dealing. The denial of a claim is reasonable if the insured’s claim is fairly debatable. An insurer is not required to affirmatively plead a fairly debatable defense in its answer. Denying benefits under an insurance policy in reliance on an expert’s report, such as a doctor’s report, even if the expert’s opinion is provided in exchange for remuneration, is not a bad faith denial because the expert’s report creates a legitimate factual question regarding the validity of an insured’s claim for benefits, making the insured’s claim at least fairly debatable. Prince v. Bear River Mut. Ins. Co., 2002 UT 68, ¶ 35, 56 P.3d 524; Young v. Fire Ins. Exch., 2008 UT App 114, ¶ 22, 182 P.3d 911. But see Jones v. Farmers Ins. Exch., 2012 UT 52, ¶15, 286 P.3d 301 (finding claim not fairly debatable when policy holder failed to report injury to “emergency personnel, medical providers, or the at-fault driver’s insurance company” and the insurer alleged on this basis that the doctor’s statement in support of the policy holder’s claim was based on misrepresentation by the policy holder).

When an insured’s claim is fairly debatable, the insurer is entitled to debate it and cannot be held to have breached the implied contractual covenant of good faith if it chooses to do so. Young v. Fire Ins. Exch., 2008 UT App 114, ¶ 22, 182 P.3d 911.

In Christiansen v. Farmers Ins. Exch., 2005 UT 21, 116 P.3d 259, the Utah Supreme Court ruled that a showing of breach of insurance contract is not a prerequisite for pursuing discovery related to a bad faith claim.

III. PRACTICE AND PROCEDURE

SECTION 1 – Beginnings Of A Civil Action

1.1 Commencement

Relevant Statutes and Rules

U.C.A. §§ 78b-3-101 to -110; U.R.C.P. 3.

Notable Law

An action is commenced by (1) filing a complaint with the court, or (2) serving a summons with a copy of the complaint. If the complaint is not filed within 10 days after commencement by service, the action will be dismissed. U.R.C.P. 3(a). The right to commence an action depends on plaintiff’s suffering an injury to a legally protected right for which the law provides a remedy. Stromquist v. Cokayne, 646 P.2d 746, 747 (Utah 1982).

1.2 Process

Relevant Statutes and Rules

U.C.A. §§ 31a-2-309, -310; § 41-12a-505; §§ 78b-3-205 to -209; U.R.C.P. 4.

Notable Law

U.C.A. § 31a-2-309(1) prescribes the method for substituted service of “a summons, notice, order, pleading, or other legal process relating to a Utah court or administrative agency,” upon:

an insurer authorized to do business in this state, while authorized to do business in this state, and thereafter in a proceeding arising from or related to a transaction having a connection with this state;
a surplus lines insurer for a proceeding arising out of a contract of insurance that is subject to the surplus lines law (U.C.A. § 31a-15-103), or out of a certificate, cover note, or other confirmation of that type of insurance;
an unauthorized insurer or other person assisting an unauthorized insurer under Subsection 31a-15-102(1) by doing an act specified in Subsection 31a-15-102(2), for a proceeding arising out of a transaction that is subject to the unauthorized insurance law;
a nonresident producer, consultant, adjuster, or third party administrator, while authorized to do business in this state, and thereafter in a proceeding arising from or related to a transaction having a connection with this state; and
a reinsurer submitting to the commissioner’s jurisdiction under U.C.A. § 31a-17-404(9).

The Insurance Commissioner and lieutenant governor are irrevocably appointed as the agents for service for any licensed insurer who applies for and receives a certificate of authority, the surplus lines insurer by entering into a contract subject to the surplus lines law, the unauthorized insurer doing in this state any of the acts prohibited by U.C.A. § 31a-15-103, and each nonresident agent, broker, consultant, adjuster, and third party administrator. U.C.A. §§ 31a-2-309(1) to (2).

The procedure for serving process through the commissioner or lieutenant governor is provided in U.C.A. § 31a-2-310.

When an insurer is served with process under U.C.A. § 31a-2-310, defendant has 40 days in which to serve its answer after service of the summons and complaint.

U.R.C.P. 4(d)(1) sets out the requirements for personal service.

A summons and complaint may be served by the sheriff, constable, a United States Marshal, or by the deputy of any of those, or by any person 18 years of age or older who is not a party to the action or a party’s attorney. U.R.C.P. 4(d).

A party seeking service of process may file a motion, supported by affidavit, requesting service by publication, mail, or otherwise where the location and identity of the person to be served is unknown, where service is impracticable, or where there is good cause to believe that the person to be served is avoiding service of process. If the motion is granted, the court orders service by publication, mail from the court clerk, or some other means. The court’s order also specifies the events as of which service will be considered complete. U.R.C.P. 4(d)(4).

Proof of service is made according to U.R.C.P. 4(e).

Pursuant to the Utah “Long-Arm” Statute, nonresidents will be subject to service of process if they transact business within the state; contract to supply goods or services in the state; cause injury within the state; own, use or possess real estate in the state; contract to insure any person, property or risk located within the state at the time of contracting; maintain matrimonial domicile at the time the claim arises; or engage in sexual intercourse within the state which gives rise to a paternity suit. U.C.A. §§ 78b-3-205. Service may be made pursuant to U.R.C.P. 4, or by any individual over 18 years old, not a party to the action.

Use and operation of a motor vehicle on Utah highways by a nonresident, his agent, or a resident who has departed Utah, is an appointment of the Division of Corporations and Commercial Code as the attorney for service of legal process in any action arising out of that use or operation. U.C.A. § 41-12a-505(1).

A trial court may properly dismiss with prejudice a party’s challenge to an ordinance levying a tax assessment when the party fails to strictly comply with U.R.C.P. 4 regarding service of process, even if the party uses Form 2 of the U.R.C.P. in filing its claim, because Form 2 does not meet all of the requirements of U.R.C.P. 4, and is intended for illustration only. Stichting Mayflower Mountain Fonds v. Jordanelle Special Serv. Dist., 2001 UT App 257, ¶ 13, 47 P.3d 86.

1.3 Form

There is one form of action known as a “civil action.” U.R.C.P. 2. Equitable principles may be applied in an action at law. Marlowe Inv. Corp. v. Radmall, 485 P.2d 1402, 1404 (Utah 1971).

1.4 Statute of Limitations

Relevant Statutes and Rules

U.C.A. §§ 78b-2-102 to -117; §§ 78b-2-201 to -226; §§ 78b-2-301 to -314.

Notable Law

Generally, Utah’s statutes of limitations apply to actions brought in Utah. Fin. Bancorp. v. Pingree & Dahle, 880 P.2d 14, 16 (Utah Ct. App. 1994). The statute of limitations begins to run from the day the cause of action arises. Discovery of the claim at a later date will only toll the statute of limitations under limited circumstances. Williams v. Howard, 970 P.2d 1282, 1284 (Utah 1998).

In Russell Packard Dev., Inc. v. Carson, 2005 UT 14, 108 P.3d 741, the Utah Supreme Court ruled that the “equitable discovery rule” tolls the relevant statutes of limitations where defendants have concealed wrongful acts and plaintiff acted reasonably in filing a complaint after expiration of limitations period. This ruling only extends to Rule 9(c) disputes. Bright v. Sorensen, 2020 UT 18, 463 P.3d 626, 637 n. 14, reh’g denied (Apr. 17, 2020).

There are two versions of the equitable discovery rule that tolls the statute of limitations: (1) the concealment version, requiring the plaintiff to show that he did not know about the events giving rise to his claim due to the defendant’s concealment or misleading conduct, and (2) the exceptional circumstances version, requiring the plaintiff to show the existence of exceptional circumstances such that application of the general statute of limitation would be irrational or unjust. Ockey v. Lehmer, 2008 UT 37, ¶ 36, 189 P.3d 51.

Time for Commencement of Actions: Civil actions must be commenced within the prescribed periods, after the cause of action has accrued, except in specific cases where a different limitation is prescribed by statute. U.C.A. § 78b-2-102.

Time Periods: Time periods for commencement of actions involving other than acquisition of real property are:

Eight Years: An action upon a judgment or decree of any court of the United States or any of its states or territories. U.C.A. § 78b-2-311.

Six Years: Action for the mesne profits of real property; upon any contract, obligation, or liability founded upon an instrument in writing, except those mentioned in U.C.A. § 78b-2-311; and to recover fire suppression costs or other damages caused by wildland fire. U.C.A. § 78b-2-309. A cause of action does not accrue upon an anticipatory breach or repudiation of a contract. Koulis v. Standard Oil Co., 746 P.2d 1182, 1186 (Utah Ct. App. 1987).

The statute is applicable to an action by an unpaid materialman to recover from a contractor or his surety. Arnold Mach. Co. v. Prince, 550 P.2d 193, 194 (Utah 1976). Injury to real property caused by a contractor is governed by the six-year period in U.C.A. § 78b-2-309 and not the three-year period in U.C.A. § 78b-2-305 where the plaintiff asserted liability based entirely upon the written instrument. “Liability,” as used in this section, refers to contract rather than tort actions. Brigham Young Univ. v. Paulsen Constr. Co., 744 P.2d 1370, 1373 (Utah 1987). The three-year period was applicable to a failure by corporate directors to meet statutory requirements notwithstanding the argument that personal check, promissory notes and stock certificates were written. Esplin v. Hirschi, 402 F.2d 94, 102 (10th Cir. 1968). Settlement agreements are governed by rules and statute of limitations applied to general contract actions. Butcher v. Gilroy, 744 P.2d 311, 312 (Utah Ct. App. 1987).

Four Years: After the last charge is made or the last payment received: upon a contract, obligation, or liability not founded upon a writing; upon an open account for goods and merchandise; on an open account for services or materials furnished; and for claims under specified sections of the Utah Fraudulent Transfer Act; and for actions for relief not otherwise provided by law. U.C.A. § 78b-2-307. Applicable to actions under Federal Civil Rights Act, 42 U.S.C. § 1983 (1986). Maddocks v. Salt Lake City Corp., 740 P.2d 1337, 1339 (Utah 1987). The statute applies to legal malpractice actions from the time the act complained of was or should have been discovered. Merkley v. Beaslin, 778 P.2d 16, 19 (Utah Ct. App. 1989). Tort actions not otherwise provided for by statute are embraced by this section. Thomas v. Union Pac. R.R., 1 Utah 235, 236 (1875). This section applies to the tort of reckless misconduct, it being a form of negligence and not an intentional tort. Matheson v. Pearson, 619 P.2d 321, 322-23 (Utah 1980), overruled on other grounds by Wagner v. State, 2005 UT 54, 122 P.3d 599.

A civil action against a perpetrator for intentional or negligent sexual abuse suffered as a child may be filed at any time. U.C.A. § 78b-2-308(3)(a). A victim must file a civil action against a non-perpetrator for intentional or negligent sexual abuse suffered as a child within four years after the individual attains the age of eighteen years; or if a person discovers sexual abuse only after attaining the age of eighteen years, that person may bring a civil action for such abuse within four years after the discovery of the sexual abuse, whichever period expires later. U.C.A. § 78b-2-308(3)(b). The statute also provides that the victim need not establish which act in a series of continuing sexual abuse incidents caused the injury complained of, but may compute the date of discovery of the last act by the same perpetrator which is part of a common scheme or plan of sexual abuse. Further, the knowledge of a custodial parent or guardian shall not be imputed to a person under the age of eighteen years.

The Utah Supreme Court recently struck down U.C.A. 78b-2-308(7) as unconstitutional. Mitchell v. Roberts, 2020 UT 34, ¶ 49, 469 P.3d 901. “[A] a ripened limitations defense [is] viewed as a vested right protected from legislative interference,” and so the legislature violates Due Process guarantees when it retrospectively divests citizens of that right. Id. at ¶ 31.

Three Years: Actions for waste, trespass or injury to real property; for taking, detaining, or injuring personal property (discovery rule applies to claim involving underground mining); for relief on the ground of fraud or mistake (discovery rule applies); actions for a liability created by the statutes of this state, other than for a penalty or forfeiture, except where a different period is proscribed; and actions involving U.C.A. §§ 78b-3-603, 78b-6-1701 must be brought within three years. U.C.A. § 78b-2-305. The statute applies to actions for negligently damaging personal property, Holm v. B & M Serv. Inc., 661 P.2d 951, 952-53 (Utah 1983), and to actions for injury to real property grounded in tort. Brigham Young Univ. v. Paulsen Constr. Co., 744 P.2d 1370, 1372 (Utah 1987). In an action for fraud or one where the cause of action has been concealed, the three-year statute of limitations will not begin to run until discovery. Attorney Gen. v. Pomeroy, 73 P.2d 1277, 1300 (Utah 1937). A plaintiff is deemed to have discovered his fraud action when he has actual knowledge of the fraud, or by reasonable diligence and inquiry should know the relevant facts of the fraud perpetrated against him. Colosimo v. Roman Catholic Bishop of Salt Lake City, 2007 UT 25, ¶ 17, 156 P.3d 806. The “discovery rule” applicable to actions based on fraud or mistake does apply to a property vendor’s negligence cause of action against a surveyor. Klinger v. Kightly, 791 P.2d 868, 872 (Utah 1990).

The three-year statute of limitations formerly applied to claims of fraud brought under the Utah blue sky laws, U.C.A. § 61-1-22. Clegg v. Conk, 507 F.2d 1351, 1353 (10th Cir. 1974). The statute has since been amended, and now states that an action brought under the statute must be brought before the earlier of (1) the expiration of five years after the act or transaction constituting the violation, or (2) the expiration of two years after the discovery by the plaintiff of the facts constituting the violation. U.C.A. §61-1-22(7)(a).

An action on a written policy or contract of first-party insurance must be commenced within three (3) years after the inception of the loss. U.C.A. § 31a-21-313.

Two Years: Causes of action against a political subdivision of the State and its employees, for injury to the personal rights of another. U.C.A. § 78b-2-304. Actions for wrongful death and medical malpractice. U.C.A. § 78b-3-404. Product liability action. U.C.A. § 78b-6-706. Actions against a marshal, sheriff, constable, or other officer for acts or omission of official duty. U.C.A. § 78b-2-304.

One Year: Actions for liability created by the statutes of a foreign state; upon a statute for a penalty of forfeiture where the action is given to an individual, or to an individual and the state, except when a different period is proscribed; upon a statute, or upon an undertaking in a criminal action, for a forfeiture or penalty to the state; for libel, slander, false imprisonment, or seduction; against a sheriff or other officer for the escape of a prisoner; against a municipal corporation for damages or injuries to property caused by a mob or riot; claim for relief under specified sections of the Uniform Fraudulent Transfer Act. U.C.A. § 78b-2-302. This section applies to the tort of false arrest. Tolman v. K-Mart Enters. of Utah, Inc., 560 P.2d 1127, 1128 (Utah 1977). The one-year statute of limitations for libel does not commence running until the plaintiff knows or has reason to know of underlying facts that would give rise to a libel action. Allen v. Ortez, 802 P.2d 1307, 1313-14 (Utah 1990). The one year limitation also applies to an action challenging a decision of a county legislature body or executive. U.C.A. § 78b-2-302.

Six Months: An action against an officer to recover goods seized or damages done to goods seized; for money paid to such officer under protest or seized, and claimed should be refunded. U.C.A. § 78b-2-301.

Actions Involving Construction: Reenacted U.C.A. § 78b-2-225 provides that no claim for breach of warranty or contract may be made for defective design or construction of improvements to real property more than six years after completion of construction or abandonment. Where an express contract or warrant establishes a different period of limitations, the action must be initiated within that period. All other actions must be commenced within two years from discovery. If the cause of action is discoverable before completion or abandonment, the two-year period begins to run upon completion or abandonment. In any event, an action may not be commenced more than nine years after completion or abandonment. If the defect is discovered or discoverable in the eighth or ninth year of the nine-year period, the injured person has two additional years from that date to commence an action. If an action is not commenced within the prescribed period because the injured person is incompetent, the person may commence an action within two years from the date the disability is removed.

Stay: A stay of a proceeding to enforce a judgment may be obtained under U.R.C.P. 62. A stay is temporary, and a court may not negate its own judgment by indefinitely staying the execution. Taylor Nat’l, Inc. v. Jensen Bros. Constr. Co., 641 P.2d 150, 154 (Utah 1982).

Actions Against Counties and Cities: Actions against cities and towns, which have been rejected by the governing body of commissioners must be commenced within one year of rejection of notice of claims. U.C.A. § 78b-2-303; see also U.C.A. § 63G-7-402 (Governmental Immunity Act, Time for Filing Notice of Claim).

Absence from State: The statute of limitations is tolled during the time a person against whom a cause of action exists is out of state. U.C.A. § 78b-2-104. The statute of limitations for all actions other than proceedings brought under the Non-resident Motorist Act are tolled during a defendant’s absence, even though the defendant is amenable to service within the state. Van Tassell v. Shaffer, 742 P.2d 111, 113 (Utah Ct. App. 1987). The statute of limitations does not toll in cases involving nonresident motorists and also in cases when a nonresident is subject to the reach of Utah’s long-arm statute. Ankers v. Rodman, 995 F. Supp. 1329, 1334 (D. Utah 1997).

Effect of Death: If a person entitled to bring an action dies before the expiration of the statute of limitations has run, his representatives may commence the action after the expiration of that time and within one year of death. If a person against whom an action may be brought dies before expiration of the time, an action may be commenced against the representatives after the expiration of that time and within one year after the issue of the letters testamentary. U.C.A. § 78b-2-105.

Revival Statute: If a timely commenced action is dismissed or fails otherwise than on the merits, and the time to commence the action shall have expired, the plaintiff may commence a new action within one year after the initial action was dismissed. U.C.A. § 78b-2-111 (1992). Revival, or savings, statute only applies where the limitation period expires before the action is dismissed; if the period expires after dismissal, the revival statute does not apply. Callahan v. Sheaffer, 877 P.2d 1259, 1262 (Utah Ct. App. 1994).

Disabilities; Minority: If a person entitled to bring an action, other than for the recovery of real property, is at the time the cause of action accrued either under the age of majority or mentally incompetent and without a legal guardian, the time of the disability is not a part of the time limited for the commencement of the action. U.C.A. § 78b-2-224. But see U.C.A. § 63G-7-401 (in governmental immunity cases, the court may appoint a guardian ad litem, and the statute begins to run when the guardian ad litem is appointed). There was previously no tolling for disabilities or minority on medical malpractice action. U.C.A. § 78b-3-404. But in Smith v. Four Corners Mental Health Ctr., Inc., 2003 UT 23, 70 P.3d 904, the Utah Supreme Court recognized that the language of § 78b-3-404 had been held unconstitutional in Lee v. Gaufin, 867 P.2d 572 (Utah 1993). U.C.A. § 78b-2-108 provides that during the time when a person is under the age of majority or mentally incompetent, the statute of limitations does not run. No person can avail himself of a disability unless it existed when his right of action accrued. U.C.A. § 78b-2-109. When two or more disabilities coexist at the time a cause of action accrues, the limitation does not attach until all are removed. U.C.A. § 78b-2-110.

Foreign States: Actions barred in other states or foreign countries are generally barred in Utah. U.C.A. § 78b-2-103.

Asbestos Damages: No action for asbestos damages will be barred, notwithstanding other statutes to the contrary, until July 1, 1991, or three years from discovery, whichever is later; the statute acts retroactively to allow claims already barred to be brought. U.C.A. § 78b-2-117. A statute of limitations may not bar an action by the state or other governmental entity to recover asbestos damages, when the action arises out of the manufacturer’s providing materials that contain asbestos to the state or governmental entity. U.C.A. § 78b-2-116.

Medical Malpractice Actions: see Medical Malpractice and Hospital Liability, Statute of Limitations, subsection 7.2.

Claims Against Governmental Entities and Employees: see Governmental Immunity, Time for Filing Notice of Claim, U.C.A. § 63G-7-402.

1.5 Venue

Relevant Statutes

U.C.A. §§ 78b-3-301 to -311.

Notable Law

Generally, venue is proper in the county in which the cause of action arises, or in the county in which any defendant resides at the commencement of the action. U.C.A. § 78b-3-307; Butterfield v. Sevier Valley Hosp., 2010 UT App 357, ¶ 13, 246 P.3d 120.

A corporation resides in the county in which it has its principal office or place of business. U.C.A. § 78b-3-307(2). Residence of a domestic mining corporation for purposes of venue was in the county where its principal office was located and where its principal and general business was conducted. Crookston v. Centennial Eureka Mining Co., 44 P. 714 (Utah 1896).

If none of the defendants resides in Utah, the case may be tried in any county which the plaintiff designates in the complaint. U.C.A. § 78b-3-307(3).

An action for breach of contract may be brought in the county where the obligation is to be performed, the contract was signed, or the defendant resides. U.C.A. § 78b-3-304.

An action arising outside the state in favor of a resident of the state may be brought in the county where the plaintiff resides or in the county in which the “principal defendant” resides. If the principal defendant is a corporation, where the corporation has an office or place of business. U.C.A. § 78b-3-306.

Actions involving interests in real property must generally be brought in the county in which the property is located. U.C.A. § 78b-3-301. If the action is to enforce an interest in real property securing a consumer’s obligation, the action may be brought only in the county where the real property is located or where the defendant resides. U.C.A. § 78b-3-304.

Where two different venue statutes conflict, the general rule in civil suits not regarding real property requires venue to be determined pursuant to the “residency” statute, U.C.A. § 78b-3-307, rather than the “contract” performance statute, U.C.A. § 78b-3-304. Salt Lake Tribune Publ’g Co. v. Memmott, 2001 UT 83, ¶ 16, 40 P.3d 575.

1.6 Pleadings

Relevant Rules

U.R.C.P. 7 through 15 are analogous to the Federal Rules.

Notable Law

U.C.A. § 78b-3-409 and U.C.A. § 78b-6-704 proscribe specifications of a dollar amount in prayer of a complaint alleging medical malpractice or products liability, respectively.

An insurer’s affirmative defense of fraud in the inducement was pleaded with sufficient particularity under U.R.C.P. 9 when the affirmative defense recited a particular answer to a question on the application involving alcoholism, specifically alleged that the answer was fraudulent or material to the acceptance of risk or hazard, and that the insurer would not have issued the policy if true facts had been known. See Williams v. State Farm Ins. Co., 656 P.2d 966, 972 (Utah 1982); Casaday v. Allstate Ins. Co., 2010 UT App 82, 232 P.3d 1075.

In Williams v. State Farm Ins. Co., 754 P.2d 987 (Utah Ct. App. 1988), plaintiff’s service of process on the in-state claims adjustor of an authorized foreign insurance company was sufficient, and service on the insurance commissioner was not the exclusive means for serving a complaint.

A defendant insurance company has 40 days to respond to any complaint or counterclaim. U.C.A. § 31a-2-310(2)(c).

Under U.R.C.P. 8(a), a plaintiff is required to submit a short and plain statement showing that he or she is entitled to relief and a demand for judgment for the relief. Although the plaintiff must only give the defendant fair notice of the nature and basis or grounds of the claim and a general indication of the type of litigation involved, it must do at least that much. Where a company failed to raise a claim in their complaint and three subsequent amended complaints, the requirements of U.R.C.P. 8(a) were not met. See Asael Farr & Sons Co. v. Truck Ins. Exch., 2008 UT App 315, ¶ 19, 193 P.3d 650.

In Zoumadakis v. Uintah Basin Med. Ctr., 2005 UT App 325, ¶ 2, 122 P.3d 891, the court held that a complaint which included the alleged defamatory language was sufficient to state a claim under U.R.C.P. 8(a)(1). The court also held that the plaintiff is not required to plead inapplicability of a qualified privilege as a prerequisite for defamation; rather, the defendant must first raise the privilege as an affirmative defense in a responsive pleading in order to shift the burden to the plaintiff. Id. ¶ 5.

In Pett v. Autoliv ASP, Inc., 2005 UT 2, 106 P.3d 705, the Utah Supreme Court ruled that the trial court did not exceed its discretion when it allowed the defendant to amend its answer after discovery. The Court held that U.R.C.P. 15(a) gives the trial court broad discretion in granting leave to amend, and the rule calls for such leave to be freely given when justice requires. In this case, there was not a trial date set and the other party was not prejudiced by the amendment. Id. ¶ 6.

A motion to amend is timely where the plaintiff acts promptly upon becoming aware of problems with the existing complaint. Hancock v. True & Living Church of Jesus Christ of Saints of the Last Days, 2005 UT App 314, ¶ 14, 118 P.3d 297.

In Yanaki v. IOMED, Inc., 2005 UT App 239, ¶ 7, 116 P.3d 962, the court ruled that claims of employment discrimination arise from an employment relationship and therefore must be brought as compulsory counterclaims to an employer’s suit for breach of employment agreements.

1.7 Conflict of Laws

Historically, Utah had followed the lex loci delictus (the law of the place of the wrong) rule for a conflict of laws analysis. However, in Forsman v. Forsman, 779 P.2d 218 (Utah 1989), the court adopted the “most significant relationship” test of Restatement (Second) of Conflict of Laws § 145. The law that governs is therefore the local law of the state which, with respect to that issue, has the most significant relationship to the occurrence and the parties. Id. at 219-20.

A Utah trial court can properly dismiss an action when another state’s common law requires the action to be brought in that state, and comity is applicable. Utah’s “long-arm statute requires trial courts to recognize the full scope of their jurisdiction, but it does not require them to exercise that jurisdiction in the face of countervailing policies, such as principles of comity.” Trillium USA, Inc. v. Bd. of Cty. Comm’rs of Broward Cty., Florida, 2001 UT 101, ¶ 20, 37 P.3d 1093.

A city ordinance in conflict with a state law is invalid. In Hansen v. Eyre, 2005 UT 29, 116 P.3d 290, the Utah Supreme Court ruled that state law expressly requires bicyclists to ride on the right-hand side of the road. Insofar as a Salt Lake City ordinance allowed travel against the flow of traffic, the ordinance conflicted with state law and was invalid. Id. ¶ 16.

Where a city ordinance is in conflict with a state statute, the ordinance is invalid at its inception. In discerning conflict, the test is whether the ordinance permits or licenses that which the statute forbids and prohibits, or vice versa. Implied conflict between an ordinance and a statute does not by itself render an ordinance unconstitutional, but provisions must contradict in the sense that they cannot coexist for an impermissible conflict to arise. Salt Lake City v. Newman, 2006 UT 69, 148 P.3d 931.

1.8 Parties

Actions must be prosecuted in the name of the real party in interest. A fiduciary may sue in his own name without joining the party for whose benefit the action is brought. U.R.C.P. 17(a). An infant or incompetent person must appear by a general guardian or guardian ad litem appointed by the court. U.R.C.P. 17(b). A parent or guardian may maintain an action for the injury of a minor child. U.C.A. § 78b-3-102. The heirs or personal representative of the deceased may maintain an action for the wrongful death of a person. U.C.A. §§ 78b-3-106, -107. A personal representative in a wrongful death settlement has a duty to represent all heirs. Oxendine v. Overturf, 1999 UT 4, ¶ 9, 973 P.2d 417. See Death, Wrongful Death, subsection 11.1. Joint tortfeasors, where liability is joint and severable, are neither indispensable nor necessary parties. Lynch v. MacDonald, 367 P.2d 464, 469 (Utah 1962). But see Tort Reform, subsection 1.2.

a. Corporations

Relevant Statutes and Rules

U.C.A. § 16-10a-622; § 16-10a-630; §§ 16-10a-801 to -853; §§ 16-10a-901 to -909; §§ 16-11-1 to -16; U.R.C.P. 23A.

The primary governing statute for corporations is the Utah Revised Business Corporation Act (“URBCA”), U.C.A. §§ 16-10a-101 to -1705, patterned after the Revised Model Business Corporation Act (effective July 1, 1992).

Separate statutory provisions govern the formation and operation of nonprofit corporations, U.C.A. §§ 16-6a-101 to -1705; co-operative associations, U.C.A. §§ 16-16-101 to -1703; professional corporations, U.C.A. §§ 16-11-1 to -16; financial institutions, U.C.A. §§ 7-1-101 to -24-2305; and religious societies (corporations sole), U.C.A. §§ 16-7-1 to -16.

Insurance companies are regulated by U.C.A. §§ 31a-5-101 to -703; foreign insurers, U.C.A. §§ 31a-14-101 to -217; insurance holding companies, U.C.A. §§ 31a-16-101 to -111; nonprofit health service insurance corporations, U.C.A. §§ 31a-7-101 to -502.

Notable Law

The Department of Commerce, Division of Corporations and Commercial Code, 160 East 300 South, 2nd Floor, Salt Lake City, Utah 84111, has primary supervisory authority for corporations other than insurance companies and financial institutions.

The Commissioner of Insurance, Department of Insurance, State Office Building, Room 3110, Salt Lake City, Utah 84114, has primary supervisory and regulatory authority over the formation and operation of insurance companies.

Liability of Shareholders: A purchaser of shares from a corporation is only personally liable to pay consideration for those shares and is not personally liable for acts or debts solely by ownership of shares unless specifically provided in the articles of incorporation. U.C.A. § 16-10a-622.

The mere absence of certain corporate formalities is insufficient to disregard the corporate form and cause the shareholder to become personally liable, where most of the corporate formalities were observed, and no evidence supported a claim that the alleged informalities caused any harm. Baldwin v. Matthew R. White Inv., Inc., 669 F. Supp. 1054, 1056-57 (D. Utah 1987). A claimant’s inability to collect a judgment from a corporation is not enough to show that fraud or inequitable conduct resulted from the use of a corporation and the fact that harm should result from legitimate liquidation is insufficient to pierce the corporate veil. Id. at 1057.

Factors significant in piercing corporate veil are undercapitalization, failure to observe corporate formalities, nonpayment of dividends, siphoning of corporate funds by dominant stockholder, nonfunctioning of other officers or directors, absence of corporate records, use of the corporation as a facade for operations of the dominant shareholder, and use of the corporate entity in promoting injustice or fraud. Colman v. Colman, 743 P.2d 782, 786 (Utah Ct. App. 1987); Jones & Trevor Mktg., Inc. v. Lowry, 2012 UT 39, ¶ 18, 284 P.3d 630 (adopting the Colman factors); see also Transamerica Cash Reserve v. Dixie Power & Water, 789 P.2d 24 (Utah 1990) (piercing corporate veil and alter ego); Ringwood v. Foreign Auto Works, 786 P.2d 1350 (Utah Ct. App. 1990) (piercing corporate veil and alter ego). The Tenth Circuit recently held that Utah courts also recognize a “reverse-piercing” theory of recovery and that a creditor can hold a corporation liable for the debt of an individual. United States v. Badger, 818 F.3d 563, 571 (10th Cir. 2016).

Shareholder derivative actions must be based on a claim for relief which is owned by the corporation; a shareholder, as a nominal party, has no right, title, or interest whatsoever in the claim itself, whether the action is brought by the corporation or by the shareholder on behalf of the corporation. Richardson v. Arizona Fuels Corp., 614 P.2d 636, 638 (Utah 1980); see also U.R.C.P. 23A (outlining requisite demands that must be made by shareholders prior to commencing a derivative action).

The purpose of a derivative suit is to advance the interests of the corporation, which is an entity distinct from its individual shareholders. Despite this distinction, in closely held corporations, it becomes easy for majority shareholders to identify themselves as the corporation, which may make a corporation more vulnerable to malfeasance. Angel Investors, LLC v. Garrity, 2009 UT 40, ¶ 21, 216 P.3d 944.

In contrast, a direct claim is one where the injury is to the plaintiff as an individual stockholder and not to the corporation as a whole. This occurs when the action is based on a contract to which the plaintiff is a party, or on a right belonging severally to the plaintiff. GLFP, Ltd. v. CL Mgmt., Ltd., 2007 UT App 131, ¶ 8, 163 P.3d 636.

In Albright v. Attorney’s Title Ins. Fund, 504 F. Supp. 2d 1187, 1209 (D. Utah 2007), the court recognized that the standards for the application of the alter ego principles are high, and the imposition of liability despite the corporate shield must be exercised reluctantly and cautiously. The law permits the incorporation of businesses for the very purpose of isolating liabilities among separate entities. In order to pierce the corporate veil, the plaintiff must satisfy a two-part test: (1) the plaintiff must show that there was such unity of interest and lack of respect given to the separate identity of the corporation by its shareholders that the personalities and assets of the corporation and the individual are indistinct; and (2) the plaintiff must show that adherence to the corporate veil would sanction a fraud, promote injustice, or lead to an evasion of legal obligations.

Power and Liability of Directors: Directors possess the power to manage the corporation’s business and affairs and to declare dividends. U.C.A. §§ 16-10a-640.

A director who votes for or assents to a distribution in violation of the URBCA or the articles of incorporation is personally liable to the corporation for the improper portion of the distribution; a director found liable is entitled to contribution from other directors and from shareholders who knew the distribution was in violation of the URBCA. U.C.A. § 16-10a-842.

Any director present at a meeting of the board of directors who did not vote in favor of any action is presumed to have assented to the action unless the director objects at the beginning of the meeting, requests her dissent be entered in the minutes regarding a particular issue, or causes written notice to be given to the presiding officer before the meeting is finished or to the corporation promptly after the meeting is adjourned. U.C.A. § 16-10a-824(4).

A director may rely on information, reports, opinions, or statements in discharging his duties so long as the relied-upon information is prepared by: (1) employees or officers of the corporation, or of any other corporation of which at least 50% of the outstanding shares of stock entitling the holder of the shares to vote in the election of directors is owned directly or indirectly by the corporation, whom the director reasonably believes are competent in the matters presented; (2) legal counsel, public accountants, and other outside sources where the director reasonably believes the matter falls within the external person’s expert or professional competence; or (3) a committee of the board of directors (the director is not a member) that the director reasonably believes merits confidence. U.C.A. § 16-10a-840(2).

A conflicting interest transaction made by a director will not be enjoined, set aside, or give rise to monetary damages if (1) the action was taken after disclosure to and approval by members of the board who do not have the conflict; (2) the action was taken after disclosure to and approval by shareholders who do not have the conflict; or (3) the transaction, judged according to the circumstances at the time of the commitment, is established to have been fair to the corporation. U.C.A. §§ 16-10a-850 to -853.

The liability of directors and officers is limited if they perform their duties in good faith with the care of an ordinarily prudent person in a like position, and in a manner the director or officer reasonably believes is in the best interest of the corporation. U.C.A. § 16-10a-840(1). Liability may be further limited or eliminated by the articles of incorporation, by the bylaws, or by resolution approved by the shareholders. Liability for acts of unlawful distribution, unentitled financial benefit, intentional infliction of harm on the corporation, and intentional violation of criminal law done by the director cannot be limited. U.C.A. § 16-10a-841(1).

The statute of limitations for any action against a director is three years. U.C.A. § 78b-2-306.

To avoid misappropriating a valid corporate opportunity, a director who desires to acquire such an opportunity for his own benefit should make full disclosure and submit any questions of fact, such as the corporation’s interest or financial or legal liability, to the impartial judgment of others. Nicholson v. Evans, 642 P.2d 727, 730-31 (Utah 1982).

Power and Liability of Officers: Officers and agents of the corporation have such authority and may perform such duties as are provided in the bylaws, or as may be determined by resolution of the board of directors if not inconsistent with the bylaws. U.C.A. § 16-10a-831.

Officers and directors have a fiduciary duty of loyalty to both the corporation and its stockholders. Nicholson v. Evans, 642 P.2d 727, 730 (Utah 1982).

The standard of care applicable to officers and directors is that they must exercise ordinary care, skill, and diligence and must give the business under their care such attention as an ordinarily discreet business person would give to his own concerns under similar circumstances. FMA Acceptance Co. v. Leatherby Ins. Co., 594 P.2d 1332, 1334 (Utah 1979).

Mismanagement of a corporation gives rise to a cause of action against the officers and directors for breach of fiduciary duties in favor of the corporation, not the shareholders. Richardson v. Arizona Fuels Corp., 614 P.2d 636, 640 (Utah 1980).

In the absence of evidence of a corporation’s neglect of statutory formalities, or that observance of corporate form would sanction fraud, promote injustice, or produce inequitable results, no justification existed for piercing the veil of corporation and its officers; thus, the amount owed by the corporation to a lessor under a truck rental agreement was not subject to offset by amounts allegedly owed by the lessor to corporate officers in their individual capacities pursuant to separate agreement. Messick v. PHD Trucking Serv., Inc., 678 P.2d 791, 794-95 (Utah 1984).

Indemnification of Directors and Officers by Corporation: A corporation may indemnify present and former officers and directors, including persons who served as officers and directors of affiliated companies at the corporation’s request, against reasonable expenses incurred, including judgments and attorneys’ fees, if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to criminal proceedings, had no reasonable cause to believe his conduct was unlawful. U.C.A. § 16-10a-902(1).

Upon receipt of application, a court may order indemnification of officers and directors involved in derivative actions if the officer and director is adjudged liable to the corporation. U.C.A. §§ 16-10a-905, -907.

Preemptive Rights: The URBCA presumes shareholders have no preemptive rights to acquire additional shares. U.C.A. § 16-10a-630.

Service of Process on Corporation and Agents: Service of process upon a corporation or its agents may be performed as permitted in U.R.C.P. 4, which permits service upon an agent authorized to receive service of process, or upon the person in charge of the defendant’s office or place of business within the state.

Professional Corporations: Professional corporations may be organized solely to render one professional service through its shareholders, directors, officers, employers, or agents who themselves are duly licensed to render the particular professional service provided by the corporation. U.C.A. § 16-11-6. The list of professional services for which professional corporations are available is found at U.C.A. § 16-11-2(3).

The statute preserves and does not alter the personal liability of the professional to the recipient of the professional services rendered by that professional. U.C.A. § 16-11-10. A shareholder in a professional corporation is not vicariously liable for the acts or omissions of another shareholder in the performance of professional service unless that shareholder participated in the alleged acts or omissions. Stewart v. Coffman, 748 P.2d 579, 581 (Utah Ct. App. 1988), cert. granted, 765 P.2d 1277 (Utah 1988), cert. dismissed, August 19, 1988 (unpublished order).

b. Partnerships

Relevant Statutes

U.C.A. §§ 48-1d-101 to -1405 Utah Uniform Partnership Act); §§ 48-2e-101 to -1205 (Utah Uniform Limited Partnership Act).

Notable Law

Under the Uniform Partnership Act, a partnership entity is liable for the negligence of one partner who was acting within the ordinary course of the business of the partnership. Cottonwood Mall Co. v. Sine, 767 P.2d 499, 501 (Utah 1988).

A shareholder of a corporation, when acting solely in the capacity of a shareholder, has no fiduciary duty or other similar duty to any other shareholder of the corporation, including not having a duty of care, loyalty, or utmost good faith. U.C.A. § 16-10a-622(3)(a). See also McLaughlin v. Schenck, 2013 UT 20, ¶ 27, 299 P.3d 1139.

Notice to a partner of any matter relating to partnership affairs operates as notice to or knowledge of the partnership. Jenner v. Real Estate Servs., 659 P.2d 1072, 1074 (Utah 1983).

c. Limited Liability Companies

Relevant Statutes

Utah Limited Liability Company Act, U.C.A. §§ 48-3a-101 to -1405.

Notable Law

A limited liability company is a hybrid entity (essentially a limited partnership with no general partner) that combines the operational flexibility and tax status of a general partnership with the limited liability protections traditionally associated with corporations and limited partnerships.

Limited liability companies may be formed by one or more persons (defined to include individuals, partnerships, corporations, trusts, and any other legal or commercial entity). See U.C.A. §§ 48-3a-102(18), and -201.

Except as provided in Section 48-3a-1104 or 48-3a-1302, the name of a limited liability company must contain the words “limited liability company” or “limited company” or the abbreviation “L.L.C.”, “LLC”, “L.C.”, or “LC”. “Limited” may be abbreviated as “Ltd.”, and “company” may be abbreviated as “Co.” U.C.A. § 48-3a-108(1).

A limited liability company is formed by the filing of a certificate of organization (analogous to a certificate of limited partnership) signed by at least one person acting as an organizer. U.C.A. § 48-3a-201 and -203.

d. Joint Stock Ownership

Relevant Rule

U.R.C.P. 17.

Notable Law

Two or more persons associated as joint-stock company may be sued under the common name of the company. U.R.C.P. 17(d).

e. Third-Party Practice

A defendant may bring a third-party action at any time after the commencement of the action, without leave of court if done not later than 14 days after serving the original answer. U.R.C.P. 14(a). A plaintiff may bring in a third party when a counterclaim is asserted against the plaintiff. U.R.C.P. 14(b).

f. Joinder of Parties

U.R.C.P. 19 and 20 govern compulsory and permissive joinder. Rules 21 and 22 govern misjoinder and interpleader. Under U.C.A. § 78b-5-821, a plaintiff or defendant may join as a defendant any person other than one immune from suit who may have caused or contributed to the injury for determining their respective proportions of fault. See Tort Reform, subsection 1.2. It has been held that one claiming to be injured by an insured was not a proper party to an action by an insurer against the insured for a declaratory judgment as to the insured’s liability. A plaintiff’s attempt to join the defendant’s insurance company as a party defendant was not allowed under either Rule 18(b) or 20. Young v. Barney, 433 P.2d 846, 848 (Utah 1967); see also Green v. Louder, 2001 UT 62, ¶ 41, 29 P.3d 638 (also not allowed under U.R.C.P. 17(a) or 19(a)). A counterclaim against the insurer by persons injured by an insured was not impermissively joined with the insurer’s action against the tortfeasor’s estate. Dairyland Ins. Corp. v. Smith, 646 P.2d 737, 740 (Utah 1982). A liability insurer could not be joined in the original tort action, but after the plaintiff settled with the insured and began pursuing the insured’s assigned rights, the insurer could be joined for determination of its coverage. Christiansen v. Holiday Rent-A-Car, 742 P.2d 77, 80 (Utah 1987).

g. Joinder of Claims and Remedies

U.R.C.P. 18 governs the joinder of claims and remedies. All issues, whether tort or contract, arising out of a transaction between two parties may be joined in a single action. Smoot v. Lund, 369 P.2d 933, 935 (Utah 1962). Because of the practice of not permitting disclosure of insurance coverage in a personal injury action, joinder of a tortfeasor with plaintiff’s uninsured motorist insurer was improper. Christensen v. Peterson, 483 P.2d 447, 448-49 (Utah 1971), overruled in part by Lima v. Chambers, 657 P.2d 279, 281 (Utah 1982) (granting district courts discretion to allow an insurer to intervene in a tort action between its insured and an uninsured tortfeasor where the insurer’s interests are not adequately represented).

h. Class Actions

Class actions are governed by U.R.C.P. 23. Shareholder derivative actions are governed by U.R.C.P. 23A. The size of the class is not solely determinative of impracticability of joinder. Call v. City of West Jordan, 727 P.2d 180, 183 (Utah 1986).

i. Intervention

Intervention, as of right and permissive, is governed by U.R.C.P. 24. An insurance company providing uninsured motorist coverage was allowed as of right to intervene as a party defendant in a tort action between its insured and a tortfeasor. Supernova Media, Inc. v. Pia Anderson Dorius Reynard & Moss, LLC, 2013 UT 7, 297 P.3d 599, 609; Chatterton v. Walker, 938 P.2d 255, 258 (Utah 1997) (noting amendments to Rule 24 which mandate intervention on even more liberal terms, whenever an intervenor claims “an interest relating to the property or transaction” such that it may be impacted by the judgment).

Utah courts follow the general rule that intervention is not permitted after entry of judgment. Exceptions are made only where the would-be intervenor makes a strong showing of entitlement or unusual circumstances. Parduhn v. Bennett, 2005 UT 22, ¶ 15, 112 P.3d 495.

j. Substitution and Survival

Substitution and survival are governed by U.R.C.P. 25. Causes of action for wrongful death or personal injuries survive the death of the injured person and the wrongdoer and may be brought by the decedent’s heirs or personal representative against the wrongdoer or his personal representative, but if the injured person dies from an unrelated cause prior to judgment or settlement, the recovery will be limited to out-of-pocket expenses and a maximum of $100,000 in general damages. U.C.A. § 78b-3-107. The father of a deceased minor child could bring a wrongful death action against the estate of a tortfeasor who predeceased the child. Meads v. Dibblee, 350 P.2d 853, 854 (Utah 1960). A presumption exists of the continuance of life until the contrary is proven. Fretz v. Anderson, 300 P.2d 642, 650 (Utah 1956), opinion modified on denial of reh’g, 308 P.2d 948 (Utah 1957).

A claim against an insurer for failing to pay underinsured motorist benefits for personal injuries incurred by a policyholder who dies before the claim is adjudicated is not affected by the Survival Statute, U.C.A. § 78b-3-107, because the claim arises from a breach of contract, and not from personal injury. A decedent’s estate may maintain a cause of action against the insurer for the benefits and alleged breach. Estate of Berkemeir v. Hartford Ins. Co., 2003 UT App 78, ¶ 15, 67 P.3d 1012.

k. Consolidation and Severance

The court may order joint hearings or trials in actions involving common questions of law or fact. U.R.C.P. 42(a). For convenience or to avoid prejudice, the court may order a separate trial of any claim. U.R.C.P. 42(b).

l. Absentees

Relevant Statutes and Rules

U.C.A. § 31a-22-414; § 75-1-107; § 78b-2-104; §§ 67-4a-101 to -902; U.R.C.P. 4(d)(4).

Notable Law

Limitations: If the cause of action accrues while the person is absent from the state, the statute of limitations is tolled until the person returns to the state. U.C.A. § 78b-2-104.

If the person departs the state after the cause of action accrues, the statute of limitations is not tolled during the absence. U.C.A. § 78b-2-104.

Service of Process: The Utah Rules of Civil Procedure provide for service by publication when, after reasonable inquiry, the location of the person to be served cannot be ascertained. The party seeking service by publication must file an affidavit setting forth the efforts made to locate the person, and the method of publication used must be reasonably calculated to notify the defendant of the pendency of the action. At minimum, inquiry must be made at the person’s last known address in the state. U.R.C.P. 4(d)(4); Weber v. Snyderville West, 800 P.2d 316, 319 (Utah Ct. App. 1990).

Abandoned Property: In 2017, Utah adopted the “Revised Uniform Unclaimed Property Act,” which has significant differences with the Uniform Unclaimed Property Act. The holder of unclaimed property which is presumed abandoned under the Act must notify the deputy state treasurer by November 1 of each year and cover the 12 months preceding July 1 of that year. U.C.A. §§ 67-4a-401 to -403.

Absence as Evidence of Death: A person who is absent and has not been heard from for a continuous period of five years, and whose absence is not satisfactorily explained after reasonable diligence, is presumed dead. Death is presumed to have occurred at the end of the five-year period unless there is sufficient evidence for determining that death occurred earlier. U.C.A. § 75-1-107. The same rule applies to life insurance. U.C.A. § 31a-22-414.

SECTION 2 – Discovery

2.1 Introduction

Relevant Rules

U.R.C.P. 26 through 37.

Notable Law

In 2011, the Utah Supreme Court approved a number of substantial amendments to the U.R.C.P. (the “New” rules) which are effective for cases filed on or after November 1, 2011. These amendments institute a tiered discovery system which limits parties to discovery that is proportional to the stakes of the litigation, curbs excess expert discovery, and expands initial disclosure requirements.

Cases filed before November 1, 2011 are subject to the pre-2011 amendment U.R.C.P. (the “Old” rules), which were substantially similar to the Federal Rules of Civil Procedure.

This section addresses discovery procedures under the New rules.

2.2 Purpose of Discovery

The purposes of the discovery rules are to make discovery as simple and efficient as possible by eliminating any unnecessary technicalities and removing elements of surprise or trickery so that the parties and the court can determine the facts and resolve the issues as directly, fairly, and expeditiously as possible. Ellis v. Gilbert, 429 P.2d 39, 40 (Utah 1967); see also Glacier Land Co. v. Claudia Klawe & Assocs., 2006 UT App 516, ¶ 35, 154 P.3d 852.

2.3 Planning Meeting

The new rules on initial disclosure eliminate the need for case management orders, discovery plans, and attorney planning conferences, and those requirements have been removed from the rules. See U.R.C.P. 26(a).

2.4 Purpose of the Attorney Planning Meeting

See section 2.3 above.

2.5 Discovery Plan

See section 2.3 above. Under the new rules, the filing of the answer triggers “presumptive deadlines” for the completion of fact discovery. See U.R.C.P. 26 advisory committee notes.

2.6 Initial Disclosures

Initial disclosure requirements have been expanded under the 2011 amendments. Initial disclosures are now required to be served on the other parties by the plaintiff within 14 days after filing of the first answer to the complaint and by the defendant within 42 days after filing of the first answer to the complaint, or within 28 days after the defendant’s appearance, whichever is later. U.R.C.P. 26(a)(2). Parties are required to disclose: 1) the name, address, and telephone number of each individual likely to have discoverable information and each fact witness the party may call in its case-in-chief; and, except for an adverse party, a summary of the expected testimony; 2) a copy of all documents, data compilations, electronically stored documents, and tangible things in the possession, custody, or control of the party that the party may offer in its case-in-chief, except for charts and other demonstrative exhibits which fall under the pre-trial disclosure rules; 3) a computation of any damages claimed and a copy of all discoverable documents or evidentiary material on which such computation is based; 4) a copy of any insurance or indemnity agreement; and 5) copies of any documents referred to in the pleadings. U.R.C.P. 26(a)(1)(B).

2.7 Exemptions from Disclosures

The initial disclosure requirements do not apply to cases involving: 1) judicial review of administrative proceedings; 2) enforcement of an arbitration award; 3) cases involving extraordinary or post-conviction relief under Rule 65B or 65C; and 4) water rights general adjudications, unless the parties agree or the court orders that the initial disclosure requirements apply. U.R.C.P. 26(a)(3).

The 2011 Amendments eliminate two categories of actions that previously were exempt from the mandatory disclosure requirements: contract actions in which the amount claimed is $20,000 or less, and actions in which any party is proceeding pro se.

2.8 Duty to Supplement

If a party learns that a disclosure or response is incomplete or incorrect in some important way, the party must timely provide the additional or correct information if it has not been made known to the other parties. The supplemental disclosure or response must state why the additional or correct information was not previously provided. U.R.C.P. 26(d)(5). If a party fails to disclose or to supplement timely a disclosure or response to discovery, that party may not use the undisclosed witness, document or material at any hearing or trial unless the failure is harmless or the party shows good cause for the failure. U.R.C.P. 26(d)(4).

2.9 Case Management Order

See section 2.3 above.

2.10 Deadlines of the Discovery Rules

The new rules establish three tiers of cases based on the damages pled and sets limits and deadlines for standard fact discovery for each tier. U.R.C.P. 26(c)(5).

The days to complete standard fact discovery are calculated from the date the first defendant’s first disclosure is due and do not include expert discovery.

Tier	Amount of Damages	Total Fact Deposition Hours	Rule 33 Interrogatories including all discrete subparts	Rule 34 Requests for Production	Rule 36 Requests for Admission	Days to Complete Standard Fact Discovery
1	$50,000 or less	3	0	5	5	120
2	More than $50,000 and less than $300,000 or non-monetary relief	15	10	10	10	180
3	$300,000 or more	30	20	20	20	210

Id.

A complainant that identifies damages as within Tier 2 case, cannot amend the claim post trial, even if the jury awards damages in excess of the Tier 2 limits. Because a tier designation is a pleaded issue, the Supreme Court has decided that amendment of the Tier 2 designation post-trial is impermissible, and a trial court’s reduction of the excess judgment to $299,999.99 is proper. Pilot v. Hill, 2019 UT 10, 437 P.3d 362.

2.11 Modification of the Discovery Procedure

To obtain discovery beyond the limits established in U.R.C.P. 26(c)(5), the parties must stipulate that extraordinary discovery is necessary and proportional and that each party has approved a discovery budget before the close of fact discovery and after reaching the limits imposed by the rules. Alternatively, the party may, after the close of fact discovery, file a request for extraordinary discovery that satisfies the requirements of Rule 37(a). U.R.C.P. 26(c)(6)(B).

2.12 Expert Witness Designation

Disclosures of expert testimony are made in sequence, with the party who bears the burden of proof on the issue requiring expert testimony going first. Without a formal request and at least within 7 days after the close of fact discovery (see section 2.10 above; U.R.C.P. 26(c)(5)) that party is required to serve on the other parties a disclosure containing the identity of any person who may be used at trial to present evidence under U.R.E. 702. U.R.C.P. 26(a)(4). The disclosure must include the 1) expert’s name and qualifications, including a list of all publications authored within the preceding 10 years, and a list of any other cases in which the expert has testified as an expert at trial or by deposition within the preceding 4 years; 2) a brief summary of the opinions to which the witness is expected to testify; 3) all data and other information that will be relied upon by the witness in forming those opinions; 4) and the compensation to be paid for the witness’s study and testimony. U.R.C.P. 26(a)(4)(A).

Within seven days after this disclosure, the party opposing the retained expert may serve notice electing either a deposition or a written report from the expert, which must be completed within 28 days after this election is made. U.R.C.P. 26(a)(4)(C)(ii). A deposition is limited to four hours, which is not included in the deposition hours under U.R.C.P. 26(c)(5). A written report must fairly disclose the substance of and basis for each opinion the expert will offer, and the expert may not testify in a party’s case-in-chief concerning any matter not fairly disclosed. U.R.C.P. 26(a)(4)(B).

2.13 Depositions

A party may depose a party or witness by oral questions. The attendance of a witness may be compelled under U.R.C.P. 45. An expert who has prepared a report disclosed under U.R.C.P. 26(a)(4)(B) may not be deposed. U.R.C.P. 30(a). Each side is limited to the number of deposition hours corresponding to the tier of the complaint (Tier 1: 3 hours; Tier 2: 15 hours; Tier 3: 30 hours). U.R.C.P. 26(c)(5). Deposition hours are charged to a side for the time spent asking questions of the witness, meaning that in a particular deposition, one side may use two hours while the other side uses only 30 minutes. A party must seek modification of the discovery limits in order to conduct additional depositions beyond the set limit. (See section 2.11 above).

A deposition of a nonparty shall not exceed four hours, and a deposition of a party shall not exceed seven hours. U.R.C.P. 30(d). A deposition of an expert is limited to four hours. U.R.C.P. 26(a)(4)(B).

2.14 Deposition of a Corporation

A party in the notice and subpoena may name as the deponent a public or private corporation, a partnership, an association, or a governmental agency. The organization subpoenaed can designate one or more officers to testify on behalf of the organization. The person so designated shall testify as to matters known or reasonably available to the organization. U.R.C.P. 30(b)(6). Subpoenas to nonparty organizations should advise the nonparty of their obligation to make a designation. Id.

2.15 Use of a Deposition in Court Proceedings

Any part of a deposition can be used at trial, a hearing on a motion, or in an interlocutory proceeding so long as it is admissible under the Utah Rules of Evidence and otherwise complies with Rule 30, which sets forth circumstances in which such use is warranted, the use of objections, the effect of errors, and publication. U.R.C.P. 32(a). The deposition may be used as though the witness were present and testifying. Id.

2.16 Interrogatories

A party may serve written interrogatories upon another party. U.R.C.P. 33(a). Each of the interrogatories should be answered separately and fully in writing under oath, unless it is objected to, in which event the objecting party shall state the reasons for the objection and shall answer to the extent the interrogatory is not objectionable. U.R.C.P. 33(b). The party served the interrogatories has 28 days after the service of the interrogatories to answer. U.R.C.P. 33(b). In certain circumstances, a party may respond to an interrogatory by producing business records. U.R.C.P. 33(d).

The number of interrogatories allowed is proportional to what is at stake in the litigation. U.R.C.P. 26(c)(5) defines the number of interrogatories that is presumed to be proportional at each of the three tiers of litigation (Tier 1: 0; Tier 2: 10; Tier 3: 20). A party seeking to make additional interrogatories may do so by stipulation or by motion, certifying that extraordinary discovery is necessary and proportional and that the party has reviewed and approved a discovery budget. U.R.C.P. 26(c)(5) and (6); see section 2.11 above.

2.17 Production of Documents and Things and Entry Upon Land for Inspection

Any party may serve on any other party a request to produce and permit the requesting party to inspect, copy, test or sample any designated documents (including writings, drawings, graphs, charts, photographs, phono-records, and other data compilations stored in any medium from which information can be obtained) in the possession or control of the responding party. U.R.C.P. 34(a)(1). A party may serve a request on any other party to permit entry upon designated property in the possession or control of the responding party for the purposes of inspecting the property or any discoverable object or operation on the property. U.R.C.P. 34(a)(2).

The number of requests for production allowed is proportional to what is at stake in the litigation. U.R.C.P. 26(c)(5) defines the number of requests that is presumed to be proportional at each of the three tiers of litigation (Tier 1: 5; Tier 2: 10; Tier 3: 20). A party seeking to make additional requests may do so by stipulation or by motion, certifying that extraordinary discovery is necessary and proportional and that the party has reviewed and approved a discovery budget. U.R.C.P. 26(c)(5) and (6); see section 2.11 above.

2.18 Scope of Discovery

Under the 2011 amendments, the scope of discovery must be proportional to what is at stake in the litigation. Parties may discover any matter, not privileged, which is relevant to the claim or defense of any party if the discovery is proportional. U.R.C.P. 26(b)(1). Discovery within the limits established by the three tiers of fact discovery in U.R.C.P. 26(c)(5) is presumed to be proportional. For discovery outside of these limits, the party seeking discovery has the burden of showing proportionality and relevance. U.R.C.P. 26(b)(3);(see section 2.11 above). Discovery is proportional if 1) it is reasonable, considering the needs of the case, the amount in controversy, the complexity of the case, the parties’ resources, the importance of the issues, and the importance of discovery in resolving the issues; 2) the likely benefits of the discovery outweigh the burden or expense; 3) the discovery is consistent with the overall case management and will further the just, speedy and inexpensive determination of the case; 4) the discovery is not unreasonably cumulative or duplicative; 5) the information cannot be obtained from another source that is more convenient, less burdensome, or less expensive; and 6) the party seeking discovery has not had sufficient opportunity to obtain the information by discovery or otherwise, taking into account the parties’ relative access to information. U.R.C.P. 26(b)(2). These factors should guide the inquiry, and the trial court has broad discretion in deciding whether a discovery request is proportional. See U.R.C.P. 26(b) advisory committee note.

2.19 Failure to Comply with Discovery Requirements

A party may move to compel disclosure or discovery and for appropriate sanctions if another party fails to comply with disclosure or discovery requirements. U.R.C.P. 37(a). A party seeking a remedy under Rule 37(a) should file a statement of discovery issues, the contents of which are set out in the rules. See U.R.C.P. 37(a)(2). A party or the person from whom discovery is sought may move for an order of protection from discovery. U.R.C.P. 37(b). The court has discretion to order discovery or protection. U.R.C.P. 37(c).

On a motion, the court may impose appropriate sanctions on a party for failure to follow its orders, including 1) deeming the matter established in accordance with the claim or defense of the party obtaining the order; 2) prohibiting a party from supporting or opposing a claim or from introducing a matter into evidence; 3) staying further proceedings; 4) dismissing the action, striking the pleadings, or rendering default judgment; 5) ordering a party to pay attorney fees; 6) holding a party in contempt of court (but not for failure to submit to a physical or mental examination); and 7) instructing the jury regarding an adverse inference. U.R.C.P. 37(b).

As a general rule, district courts are granted a great deal of discretion in selecting discovery sanctions. The court must first determine that sanctions are warranted, which requires that “(1) the party’s behavior was willful; (2) the party has acted in bad faith; (3) the court can attribute some fault to the party; or (4) the party has engaged in persistent dilatory tactics tending to frustrate the judicial process.” Kilpatrick v. Bullough Abatement, Inc., 2008 UT 82, ¶ 25, 199 P.3d 957; see also Rawlings v. Rawlings, 2015 UT 85, ¶ 16, 358 P.3d 1103.

In May 2015, the Rules Committee and Supreme Court eliminated Rule 37(h), which previously limited the use of late-disclosed evidence, in favor of the standard set forth in Rule 26(d). See Coroles v. State, 2015 UT 48, ¶ 21 n. 4, 349 P.3d 739.

Examples of discovery abuses are myriad. The court properly limited a witness’s testimony after defendant failed to give a complete answer in its interrogatories regarding the affirmative defenses it would assert before the scheduled discovery completion date. Stevenett v. Wal-Mart Stores, Inc., 1999 UT App 80, ¶ 26, 977 P.2d 508.

Failure to respond in any way to a court order for production of documents can subject the party to sanctions by the court. Hales v. Oldroyd, 2000 UT App 75, ¶ 23, 999 P.2d 588.

The trial court need not find wrongful intent to dismiss case for willful noncompliance with discovery requests. Coxey v. Fraternal Order of the Eagles, 2005 UT App 185, ¶ 6, 112 P.3d 1244. More recently, the Supreme Court held the trial court did not abuse its discretion in entering a default judgment, where substantial delay and discovery failures had rendered the litigation pointless. Yuanzong Fu v. Rhodes, 2015 UT 59, ¶ 21, 355 P.3d 995.

SECTION 3 – Pretrial Practice And Motions

3.1 Default Judgment

Relevant Rules

U.R.C.P. 55, 60.

Notable Law

The clerk shall enter a default against parties being sued who fail to plead or otherwise defend. U.R.C.P. 55(a).

Recently, the Utah Supreme Court approved changes to Rule 55, which took effect July 2015. Under the new rule, the clerk of court shall, upon request of the plaintiff, enter a default judgment in cases involving a sum certain if certain requirements are met, including the fact that the defendant was personally served and failed to appear, the defendant is neither an infant nor incompetent, and the party seeking default judgment submits a verified complaint or affidavit setting out the facts necessary to establish the amount of the claim and any credits to the opposing party. U.R.C.P. 55(b)(1). In all other cases, the party entitled to judgment shall apply to the court. U.R.C.P. 55(b)(2).

There is no right to jury trial on the issue of damages once a default has been entered. Amica Mut. Ins. Co. v. Schettler, 768 P.2d 950, 962 (Utah Ct. App. 1989).

Ordinarily, absent special circumstances, once a default judgment has been entered, it can only be set aside in accordance with U.R.C.P. 60(b). Kielkowski v. Kielkowski, 2015 UT App 59, ¶ 27, 346 P.3d 690.

Notice of the entry of default judgment need not be given to a party in default who has failed to enter an appearance in the case. Cent. Bank & Trust Co. v. Jensen, 656 P.2d 1009, 1011& n.2 (Utah 1982); but see Arbogast Family Trust v. River Crossings, LLC, 2010 UT 40, ¶ 15, 238 P.3d 1035 (noting that “although not required . . . the Utah Standards of Professionalism and Civility encourage attorneys to attempt to provide a final notification to the opposing party before entering default judgment”).

3.2 Declaratory Judgment

Relevant Statutes and Rules

U.C.A. §§ 78b-6-401 to -412; U.R.C.P. 57.

Notable Law

F.R.C.P. 57 was substantially adopted.

Utah has adopted the Uniform Declaratory Judgments Act with minor variations. U.C.A. §§ 78b-6-401 to -412. The procedure for obtaining a declaratory judgment is in accordance with Rule 57. U.R.C.P. 57. Under Rule 57, the existence of another remedy does not preclude declaratory judgment, and a party may demand a jury trial to the extent allowed under Rules 38 and 39.

Generally, before a declaratory judgment action can be maintained, there must be a justiciable controversy, the interests of parties must be adverse, the party seeking such relief must have a legally protectable interest in the controversy, and the issues between the parties must be ripe for judicial determination. Baird v. State, 574 P.2d 713, 715 (Utah 1978). Notwithstanding its broad terms, declaratory judgment legislation is still subject to requirements of justiciability, including the prohibition on advisory opinions and mootness. Miller v. Weaver, 2003 UT 12, ¶ 26, 66 P.3d 592; Merhish v. H. A. Folsom & Assocs., 646 P.2d 731, 732-33 (Utah 1982).

A purpose of the Declaratory Judgment Act, U.C.A. §§ 78b-6-401 to -412, is to permit examination of legal documents and statutes to determine questions of construction or validity arising under such instruments. U.C.A. § 78b-6-408; Lindon City v. Eng’rs Constr. Co., 636 P.2d 1070, 1073 (Utah 1981).

3.3 Summary Judgment

Relevant Rules

U.R.C.P. 56.

Notable Law

A party seeking to recover on a claim or to obtain a declaratory judgment may move for a summary judgment in his or her favor 21 days from commencement of the action or after service of such motion from the opposing party. U.R.C.P. 56(b). In certain circumstances, motions for summary judgment may be made with or without supporting affidavits. U.R.C.P. 56(c). Summary judgment can be rendered on the issue of liability alone although there is a genuine issue of fact as to the amount of damages.

In 2015, the Supreme Court modified Rule 56 to make it stylistically similar to the federal rule. Although the substantive standards remain the same, the Supreme Court clarified the appropriate contents and organization for a motion and memorandum in opposition under Rule 56. These briefing requirements differ from Rule 7. U.R.C.P. 56.

Summary judgment is proper only when no genuine issue of material fact exists and the moving party is entitled to judgment as a matter of law. U.R.C.P. 56(a); Weese v. Davis County Comm’n, 834 P.2d 1, 2 (Utah 1992); see also Morra v. Grand County, 2010 UT 21, ¶ 12, 230 P.3d 1022. The Utah Supreme Court recently held that “summary judgment may be appropriate on a gross negligence claim even if the standard of care is not fixed by law.” Penunuri v. Sundance Partners, Ltd., 2017 UT 54, ¶ 34. In such cases, the question for the trial court is “whether reasonable minds could not differ as to whether the defendant was grossly negligent under the circumstances. If they could not differ, then summary judgment is appropriate, whether or not the standard of care is fixed by law.” Id.

A motion for summary judgment may not be granted if a legal conclusion is reached that ambiguity in contract exists and there is factual issue as to what the parties intended. Winegar v. Froerer Corp., 813 P.2d 104, 108 (Utah 1991); see also Park v. Stanford, 2009 UT App 307, ¶ 5, 221 P.3d 877, rev’d on other grounds, 2011 UT 41, 258 P.3d 566.

Litigants must be able to present their cases fully to the court before judgment can be rendered against them, unless it is obvious from the evidence before the court that the party opposing judgment can establish no right to recovery. Prior to completion of discovery, however, it is often difficult to ascertain whether the nonmoving party will be able to sustain its claims. In such a case, summary judgment should generally be denied. Drysdale v. Ford Motor Co., 947 P.2d 678, 680 (Utah 1997).

Generally, summary judgment should not be granted if discovery is incomplete since information sought in discovery may create genuine issues of material fact sufficient to defeat the motion. Bluemel v. Freestone, 2009 UT App 16, ¶ 5, 202 P.3d 304.

Evidence-weighing and fact-finding are beyond the proper purview of the trial court when considering a motion for summary judgment. When considering a motion for summary judgment, the trial court must only determine whether evidence sufficient to create a factual issue exists. If such a factual issue exists, the court must deny summary judgment. See Francisconi v. Union Pac. R.R. Co., 2001 UT App 350, ¶ 17, 36 P.3d 999.

In 2015, amendments resulted in Rule 56(f) becoming Rule 56(d). The change was intended to be stylistic. Under existing case law, a Rule 56(d) motion requesting more time to conduct discovery must be ruled on before a summary judgment motion may be granted. Rule 56(d) motions should be granted liberally unless they are deemed dilatory or lacking in merit. A Rule 56(d) motion for a continuance is not dilatory if the party has already initiated discovery proceedings, diligently seeks access to information that is within the sole control of the adverse party, and is denied an adequate opportunity to conduct the desired discovery. Energy Mgmt. Servs., LLC v. Shaw, 2005 UT App 90, ¶¶ 10-12, 110 P.3d 158.

Relevant factors in determining whether a Rule 56(d) motion is warranted include, but are not limited to: (1) an examination of the party’s Rule 56(d) affidavit to determine whether the discovery sought will uncover disputed material facts or if the party requesting discovery is simply on a “fishing expedition,” (2) whether the party opposing the summary judgment motion has had adequate time to conduct discovery and has been conscientious in pursuing such discovery, and (3) the diligence of the party moving for summary judgment in responding to the discovery requests provided by the party opposing summary judgment. Overstock.com, Inc. v. SmartBargains, Inc., 2008 UT 55, ¶ 21, 192 P.3d 858; see also Gudmundson v. Del Ozone, 2010 UT 33, ¶ 20, 232 P.3d 1059. Appellate courts apply an abuse of discretion standard when evaluating whether the district court properly granted or denied a continuance for additional discovery. Menzies v. State, 2014 UT 40, ¶ 56, 344 P.3d 581, 599, reh’g denied (Feb. 12, 2015) (concluding district court did not err in denying prisoner’s request for discovery under the Overstock.com factors).

A court may grant summary judgment enforcing a contract when the contract terms are complete, clear, and unambiguous. Young v. Wardley Corp., 2008 UT App 104, ¶ 9, 182 P.3d 412.

A district court is not obliged to comb the record to determine whether a genuine issue as to any material fact exists to prevent summary judgment; rather, it is the nonmoving party’s burden to demonstrate that such a conflict exists. Mojo Syndicate, Inc. v. Fredrickson, 2013 UT App 6, ¶ 4, 297 P.3d 36 (quoting Jennings Inv., L.C. v. Dixie Riding Club, Inc., 2009 UT App 119, ¶ 26, 208 P.3d 1077).

Recently, the Court of Appeals reaffirmed the basic principle that failure to designate an expert before the close of discovery for an element that requires expert testimony may result in summary judgment against a plaintiff. Advanced Forming Technologies, LLC v. Permacast, LLC, 2015 UT App 7, ¶ 12, 342 P.3d 808 (holding summary judgment should have nevertheless been denied, where the parties agreed to open-ended discovery periods).

3.4 Pretrial Conferences

Relevant Rules

U.R.C.P. 16.

Notable Law

Rule 16 governs the scheduling and management of pretrial conferences. Recently, the Supreme Court reiterated that it gives district courts “broad authority to manage a case,” which includes the authority to enter a scheduling order. Coroles v. State, 2015 UT 48, ¶ 19, 349 P.3d 739 (concluding that district court’s authority to sanction a party for failure to produce discovery under a scheduling order arises under Rule 16(d)).

On motion from the parties or at its discretion, the court may direct the attorneys and the parties to appear for a pretrial conference. U.R.C.P. 16(a). Appropriate topics at the pretrial conference include, but are not limited to, expediting the action, establishing deadlines, facilitating mediation, extending discovery, and setting a date for trial. Id.

3.5 Jury Selection

Relevant Rules

U.R.C.P. 47.

Notable Law

Failure of judge to dismiss potentially biased jurors for cause, causing plaintiff to exhaust preemptory challenges, was not reversible error unless plaintiff could demonstrate that resulting jury was partial or incompetent. When plaintiff admitted resulting jury was impartial, but too “conservative,” no reversible error occurred. Harding v. Bell, 2002 UT 108, ¶¶ 15-17, 57 P.3d 1093.

To ascertain whether a new trial is warranted for failure to dismiss a prospective juror for cause, appellate courts apply a two-part test: (1) whether the trial court committed legal error in failing to excuse the prospective juror for cause, and (2) whether the trial court’s failure to strike the prospective juror actually prejudiced the party seeking the new trial. State v. Wach, 2001 UT 35, ¶ 24, 24 P.3d 948. However, even if the trial court erred, it is the defendant’s duty to cure the error through the exercise of his peremptory challenges, and failure to do so constitutes a waiver of any objection to the trial court’s action on appeal. Id. ¶ 36 & n. 3. Assuming that the defendant has cured, the appellate court does not directly examine the trial court’s alleged error, but instead focuses its attention on the jury that was seated and considers whether it was fair and unbiased. State v. Robertson, 2005 UT App 419, ¶ 7, 122 P.3d 895.

Recently, the Court of Appeals upheld the district court’s decision to allow the jury to view a property in an eminent domain action. Utah Dep’t of Transp. v. TBT Prop. Mgmt., Inc., 2015 UT App 211, ¶ 21, 357 P.3d 1032.

SECTION 4 – Evidence

4.1 In General

Relevant Statutes and Rules

U.C.A. §§ 34-38-1 to -15 (drug test results); § 77-1-6(2)(c), (d) (rights of criminal defendants); §§ 77-23a-1 to -16 (interception of communications); § 41-6a-404 (accident reports); §§ 78b-1-127 to -152 (witnesses); §§ 78b-5-601 to -620; §§ 78b-5-801 to -828 (various evidentiary and procedural matters); § 78b-12-115 (privilege of spousal communications in the context of child support).

U.S. Const. amend. V; Utah Const. art. I, § 12; U.R.E. 201, 401, 402, 403, 407, 411, 501, 601, 604; 605, 609, 801, 802, 803, 804.

Notable Law

The Utah Rules of Evidence (U.R.E.) are modeled after the Federal Rules of Evidence (F.R.E.), with only a few exceptions. Where the U.R.E. differ from the F.R.E., the Advisory Committee usually indicates the purpose for the deviation. The rules were not intended to be comprehensive and in a few instances simply refer to common law or statute.

The U.C.A. contains several statutes governing diverse evidentiary matters in title 78b, chapters 1 and 5, and scattered in other locations. Care should be used to consult the code, as well as the U.R.E. and common law concerning any particular evidentiary matter.

4.2 Judicial Notice

Judicial notice is governed by Rule 201, which is the federal rule verbatim. The court may take judicial notice without being asked to do so, but must take judicial notice of a fact when asked, if supplied with the necessary information. Mandatory judicial notice is limited to the trial court–judicial notice may not be raised for the first time on appeal. Mel Trimble Real Estate v. Monte Vista Ranch, Inc., 758 P.2d 451, 456 (Utah Ct. App. 1988); see also Riche v. Riche, 784 P.2d 465, 468 (Utah Ct. App. 1989) (finding that mandatory judicial notice does not apply where the request is not timely).

4.3 Relevance

Rule 401 is the federal rule verbatim, and it states the standard for relevance. Rule 402 is similar to the federal rule and states that all relevant evidence is admissible, except as provided by the U.S. Const., Utah Const., statute, the U.R.E., or by other rules applicable in courts of Utah. U.R.E. 403 is the federal rule verbatim, and it provides for circumstances when relevant evidence should be excluded.

Evidence of a manufacturer’s recall is inadmissible because it is prejudicial and of little probative value, when the recall was for an entirely different model with a different layout. Nay v. Gen. Motors Corp., GMC Truck Div., 850 P.2d 1260, 1262-63 (Utah 1993).

Evidence of a plaintiff’s psychiatric history and past drug use was probative of whether her claimed emotional distress damages were the result of a preexisting condition or were caused by the defendant’s conduct, and the probative value of that testimony outweighed its potential for prejudice. Turner v. Gen. Adjustment Bureau, 832 P.2d 62, 69 (Utah Ct. App.), abrogated on other grounds by Campbell v. State Farm Mut. Auto. Ins. Co., 2001 UT 89, 65 P.3d 1134.

Evidence is unfairly prejudicial, so as to require its exclusion, if it has a tendency to influence the outcome of the trial by improper means, or if it appeals to the jury’s sympathies, or arouses its sense of horror, provokes its instinct to punish or otherwise causes a jury to base its decision on something other than the established propositions of the case. Stevenson 3rd East, L.C. v. Watts, 2009 UT App 137, ¶ 48, 210 P.3d 977 (quoting Olympus Hills Shopping Ctr. v. Smith’s Food & Drug Ctrs., 889 P.2d 445, 455 (Utah Ct. App 1994)). Evidence inadmissible under Rule 403 need only result in unfair prejudice; it is not necessary for the evidence to lead a jury to “overmastering hostility.” State v. Cuttler, 2015 UT 95, ¶ 20, 367 P.3d 981; see also State v. Lowther, 2017 UT 34, ¶ 45 & n. 81 (noting that Cuttler expressly disavowed and implicitly overruled the “overmastering hostility” standard used in State v. Killpack, 2008 UT 49, ¶ 53, 191 P.3d 17).

Since all effective evidence is prejudicial in the sense of being damaging to the party against whom it is offered, prejudice which calls for exclusion is given a more specialized meaning: an undue tendency to suggest decision on an improper basis, commonly but not necessarily an emotional one, such as bias, sympathy, hatred, contempt, retribution, or horror. Woods v. Zeluff, 2007 UT App 84, ¶ 7, 158 P.3d 552; see also Robinson v. Taylor, 2015 UT 69, ¶ 32, 356 P.3d 1230.

Although evidence of money received by plaintiff in a prior settlement was irrelevant and admitting such evidence at trial was error, it was harmless error because of the overwhelming amount of evidence that supported the verdict. Larsen v. Johnson, 958 P.2d 953, 958 (Utah Ct. App. 1998). Evidence that defendant was not injured in an automobile accident, when defendant conceded liability, was neither irrelevant nor unduly prejudicial. Robinson v. All-Star Delivery, Inc., 1999 UT 109, ¶¶ 27-28, 992 P.2d 969. The fact that defendant was not injured directly bore upon accident’s severity, which was directly tied to the issue of damages. Id. The evidence was not unduly prejudicial, given the other admissible evidence that suggested a low-impact collision. Id.

In a legal malpractice action, an indemnity agreement which showed defendant law firm amended an indemnity agreement to cover the alleged wrongful conduct at issue in the case was not unduly prejudicial under Rule 403 when evidence was admitted to show bias, prejudice, or control and not to show wrongful conduct. Kilpatrick v. Wiley, Rein & Fielding, 2001 UT 107, ¶ 92, 37 P.3d 1130.

In undertaking Rule 403 weighing, a trial court must be mindful that almost all evidence is prejudicial. This is particularly true in regards to evidence of common law malice necessary to prove abuse of a conditional privilege. Ill will or spite always places a defendant in a bad light. Although prejudicial, this result may not be unfair. A trial court should thus take this context into consideration in weighing probative value against unfair prejudice, otherwise hardly any evidence of ill will or spite would be admissible. Ferguson v. Williams & Hunt, Inc., 2009 UT 49, ¶ 47, 221 P.3d 205.

Recently, the Supreme Court reiterated that evidence of a prior conviction may carry a unique and inherent danger of unfair prejudice, even in civil actions. Robinson v. Taylor, 2015 UT 69, ¶ 33, 356 P.3d 1230.

a. Evidence of Liability Insurance

Rule 411 is the federal rule verbatim. It states that evidence of liability insurance is inadmissible to prove a party acted negligently or wrongfully. U.R.E. 411. The rule does not prohibit admission of this evidence when offered for another purpose. The mention of liability insurance does not necessarily compel a finding of prejudice. Robinson v. Hreinson, 409 P.2d 121, 123 (Utah 1965); see also Avalos v. TL Custom, LLC, 2014 UT App 156, ¶ 22, 330 P.3d 727.

b. Subsequent Remedial Measures

Rule 407 is similar to the language of the federal rule. In one case, the Supreme Court specifically avoided the issue while interpreting an earlier, virtually identical, rule of evidence. Barson v. E.R. Squibb & Sons, Inc., 682 P.2d 832 (Utah 1984). The 1986 Liability Reform Act, U.C.A. § 78b-5-817, includes strict liability as being under the umbrella of “fault.” See Tort Reform, supra Part I § 1.2. In light of this statute, strict liability may be viewed as “culpable conduct” within U.R.E. 407, but there is no Utah law specifically addressing this point.

In an action brought by a resident of a high-rise building destroyed by fire, trial court erred when it excluded testimony of the building manager who sought a cost estimate of a sprinkler system after the fire. Though the building was not equipped with a sprinkler system at the time of the fire, an estimate alone did not constitute a subsequent remedial measure under Rule 407. The estimate also had bearing on the feasibility of a sprinkler system. Schreiter v. Wasatch Manor, Inc., 871 P.2d 570, 573 (Utah Ct. App. 1994).

4.4 Statement of Injured Person Obtained Within Fifteen Days of Injury or While Person Is Hospitalized

Any written or oral statement obtained from an injured person within fifteen days of an occurrence or while the person is confined in a hospital or sanitarium as a result of injuries sustained in the occurrence, obtained by a person whose interest is adverse or may become adverse to the injured person, is inadmissible as evidence in any civil proceeding brought by or against the injured person as the result of the occurrence. U.C.A. § 78b-5-813. The statute provides an exception where a written verbatim copy of the statement has been left with the injured party at the time the statement was taken and the statement has not been disavowed in writing within fifteen days of the date of the statement or initial discharge from the hospital, whichever date is later. Id. This rule does not apply if at least five days prior to signing the statement the injured person signs a statement in writing indicating willingness and agreement to the statement. U.C.A. § 78b-5-814. In recent years, the Court of Appeals has recognized that Rule 803(4) partially limits the applicability of the statute. Fox v. Brigham Young Univ., 2007 UT App 406, ¶ 20, 176 P.3d 446 (concluding statute remained viable where there was no inconsistency).

4.5 Privileges

a. Privileges in General

Rule 501 states that any claim of privilege is governed by the federal and state constitutions, court rules, court decisions, and statutes not in conflict with court rules.

Because a statute giving a privilege to psychologists had the effect of creating another privilege and closing another window to the light of truth, it would be strictly construed and applied. State v. Gotfrey, 598 P.2d 1325, 1327-28 (Utah 1979); see also Burns v. Boyden, 2006 UT 14, ¶ 17, 133 P.3d 370 (concluding that the Insurance Fraud Act does not create an exception to physician-patient privilege in cases of suspected insurance fraud). The attorney-client privilege will be strictly construed. Gold Standard, Inc. v. Am. Barrick Res. Corp., 801 P.2d 909, 911 (Utah 1990). These two cases may have general application to other privileges.

Recently, the Supreme Court held U.R.C.P. 26 may be the source of evidentiary privileges. Allred v. Saunders, 2014 UT 43, ¶ 13, 342 P.3d 204. In Allred, the Supreme Court held that certain information produced during a “peer review, care review, or quality assurance process” of a health care provider under the Utah Health Care Malpractice Act may be privileged. Id.

b. Self-Incrimination Privilege

The Fifth Amendment to the U.S. Const. and Utah Const. art. I, sec. 12 prohibit a defendant in a criminal case from being compelled to give self-incriminating evidence. This privilege may be invoked in civil proceedings, including pretrial discovery. Affleck v. Third Judicial Dist. Court, 655 P.2d 665, 666 (Utah 1982). The witness must properly invoke the privilege and must demonstrate a reasonable apprehension of self-incrimination. Id. Where the privilege collides with a party’s need for testimony in a civil case, and a stay of the civil case is not practical, the privilege must prevail. Id. at 667. Where a party to a civil case invokes the privilege in the civil case, it may give rise to an adverse inference against that party at trial in the civil case. First Fed. Sav. & Loan Ass’n of Salt Lake City v. Schamanek, 684 P.2d 1257, 1267 (Utah 1984). U.C.A. § 78b-1-134(3) also gives a witness a privilege not to “give an answer which will have a direct tendency to degrade his character, unless it is to the very fact in issue or to a fact from which the fact in issue would be presumed.” The privilege is waived unless invoked. State v. Shepherd, 2015 UT App 208, ¶ 23, 357 P.3d 598..

Except in unusual circumstances, the privilege against self-incrimination must be invoked in response to each specific question propounded or document or other physical evidence sought, or the privilege is waived. It may not generally be asserted as a blanket response to all discovery. First Fed. Sav. & Loan Ass’n of Salt Lake City v. Schamanek, 684 P.2d 1257, 1262-63 (Utah 1984).

Threatening to revoke a defendant’s parole unless the defendant discloses past unadjudicated sex offenses constitutes compulsion for purposes of the Fifth Amendment right against self-incrimination. Bennett v. Bigelow, 2016 UT 54, ¶ 41, 387 P.3d 1016.

c. Attorney-Client Privilege

Rule 504 and U.C.A. § 78b-1-137(2) set forth the attorney-client privilege.

The mere existence of an attorney-client relationship does not ipso facto make all communications between them confidential. To rely on the attorney-client privilege, a party must establish: (1) an attorney-client relationship, (2) the transfer of confidential information, and (3) the purpose of the transfer was to obtain legal advice. S. Utah Wilderness Alliance v. Automated Geographic Reference Ctr., 2008 UT 88, ¶ 33, 200 P.3d 643.

The privilege does not apply if the communication was not intended to be confidential, or the legal advice was sought for the purpose of committing a crime or tort. In Gold Standard, Inc. v. American Barrick Resources Corp., 801 P.2d 909, 911 (Utah 1990), the Utah Supreme Court ruled that each communication must be considered separately to determine whether the communication was confidential, and thus whether the privilege applied. The court held that the privilege protects only those disclosures necessary to obtain informed legal advice which might not have been made absent the privilege and that the privilege will be strictly construed. Id. at 911; see also Munson v. Chamberlain, 2007 UT 91, ¶ 14, 173 P.3d 848.

Waiver is the intentional relinquishment of a known right. To establish waiver, a defendant must show that the plaintiff had (1) an existing right, (2) knowledge of its existence, and (3) an intent to relinquish the right. Therefore, in order to waive the privilege as to any given communication, the lawyer-client privilege must exist when the communication at issue occurred, and the holder of the privilege must consent to the disclosure. Moler v. CW Mgmt. Corp., 2008 UT 46, ¶ 17, 190 P.3d 1250.

It is not necessary to show that a client intended to waive the privilege, but only that she intended to make the disclosure. Doe v. Maret, 1999 UT 74, ¶¶ 19-20, 984 P.2d 980, overruled on other grounds by Munson v. Chamberlain, 2007 UT 91, 173 P.3d 848; see also State v. Patterson, 2013 UT App 11, ¶ 13, 294 P.3d 662, cert. denied, 304 P.3d 469 (Utah 2013). In Doe v. Maret, for example, a patient brought medical malpractice suit, alleging that release of her psychological records to ex-husband’s attorney in prior divorce action caused her to relinquish custody of children. Defendant moved to compel testimony of attorneys who represented patient in divorce. The trial court granted the motion. The Supreme Court held that the patient’s filing of a medical malpractice suit did not waive attorney-client privilege with respect to communications made during his divorce action, but by volunteering information at deposition concerning specific attorney-client communications of a substantial nature, client waived attorney-client privilege with respect to those specific communications. See generally id.

The plain language of Rule 1.6 of the Utah Rules of Professional Conduct and the policy considerations outlined in other cases weigh in favor of allowing disclosure, in a limited fashion, of confidential client information in a suit for wrongful discharge by former in-house counsel. Spratley v. State Farm Mut. Auto. Ins. Co., 2003 UT 39, ¶ 20, 78 P.3d 603.

Utah adopts the “dual-client” paradigm in recognizing an attorney-client relationship with both the insured and the insurer because it best protects all parties involved. Thus, where no actual conflict exists or is foreseeable, an attorney will ordinarily represent both the interests of the insured and the insurer. However, where actual conflict exists or is likely to arise, the attorney’s allegiance is to the insured because of an insurer’s duty to provide a defense in good faith. Id.¶ 11.

d. Spousal Privilege

Utah Const. art. I, sec. 12 states that in criminal matters a spouse may not be compelled to testify against a spouse. This gives the witness spouse a privilege. U.C.A. § 77-1-6(2)(d); State v. Benson, 712 P.2d 256, 258 (Utah 1985). This privilege is not limited to communications between the spouses. Rule 502 and U.C.A. § 78b-1-137(1) give both the testifying and non-testifying spouses a privilege regarding communications between spouses during marriage, subject to a number of exceptions. U.C.A. § 78b-12-115 renders the spouse privilege inapplicable in actions for child support. Notably, however, the spousal privilege does not extend to out-of-court statements. State v. Timmerman, 2009 UT 58, ¶ 21, 218 P.3d 590.

In an action for negligence fraud filed by purchasers of new construction against real estate broker and agent, independent evidence that developer and his real estate agent wife aided one another in committing a tort involving the sale of property was sufficient to overcome spousal privilege. Wife was present on site (owned by husband) when land defects were readily visible, and large percentage of real estate sold by wife was owned by her husband. Hermansen v. Tasulis, 2002 UT 52, ¶ 37, 48 P.3d 235.

e. Doctor-Patient Privilege

Rule 506 states that a patient has a right to withhold information relating to treatment obtained in a doctor/mental health therapist-patient relationship unless the information is relevant to a claim or defense in the case. U.C.A. § 78b-1-137(4) states a doctor cannot, without the consent of the patient, be examined in a civil action as to any information acquired in attending the patient which was necessary to enable the doctor to prescribe or act for the patient. The privilege is waived in an action where the patient places his medical condition at issue as an element or factor of his claim or defense. Id.

The driving force behind the doctor-patient privilege is not whether a patient voluntarily consulted a physician, but rather whether the information communicated between the two was for the purpose of treatment or therapy. Debry v. Goates, 2000 UT App 58, ¶ 18, 999 P.2d 582.

The Court of Appeals has consistently held that the trial court must make a determination of whether the patient actually suffers from a qualifying condition when determining whether the privilege applies. McCloud v. State, 2013 UT App 219, ¶¶ 10-11, 310 P.3d 767.

If Rule 506 in any way conflicts with U.C.A. § 78b-1-137(4), U.R.E. 506 supersedes the conflicting aspects of the statutory provision. Wilson v. IHC Hospitals, Inc., 2012 UT 43, ¶ 83 n. 23, 289 P.3d 369. Revisiting a similar issue, however, the Supreme Court recently held that language within U.R.C.P. 26(b)(1) creates an evidentiary privilege for certain medical documents created in the context of a peer review, care review, or quality assurance process for a health care provider. Allred v. Saunders, 2014 UT 43, ¶ 19, 342 P.3d 204.

f. Clergy Privilege

U.R.E. 503(b) states that a person has the right “to refuse to disclose, and to prevent another from disclosing, any confidential communication made to a cleric in the cleric’s religious capacity and necessary and proper to enable the cleric to discharge the functions of the cleric’s office according to the usual course of practice or discipline.” U.C.A. § 78b-1-137(3) states, “A member of the clergy or priest cannot, without the consent of the person making the confession, be examined as to any confession made to either of them in their professional character in the course of discipline enjoined by the church to which they belong.”

Father sued by daughter in sexual abuse civil action sought protective order barring discovery of records of his meetings with his church’s bishop. The record was clear that the meetings were not for the purpose of confession or seeking forgiveness. The Utah Supreme Court nevertheless held that nonpenitential communications are privileged under Utah law if they are intended to be confidential and are made for the purpose of seeking spiritual counseling, guidance, or advice from a cleric acting in his or her professional role and pursuant to the discipline of his or her church. Scott v. Hammock, 870 P.2d 947, 949 (Utah 1994); see also State v. Patterson, 2013 UT App 11, ¶ 14-15, 294 P.3d 662 (discussing clergy-penitent privilege and waiver in context of criminal trial).

g. Executive Privilege

U.C.A. § 78b-1-137(5) states, “A public officer cannot be examined as to communications made in official confidence when the public interests would suffer by the disclosure.” The party claiming the privilege must aid the trial court by providing a specific designation and description of each item or material for which the privilege is claimed, as well as precise and certain reasons for preserving the confidentiality of each item. Madsen v. United Television, Inc., 801 P.2d 912, 916 (Utah 1990). The Government Records Access and Management Act (GRAMA) may also limit access to materials otherwise covered by the executive privilege. See, e.g., Schroeder v. Utah Attorney General’s Office, 2015 UT 77, ¶ 55, 358 P.3d 1075.

h. Sexual Assailant Counselor-Victim Privilege

U.C.A. § 78b-1-137(6) states that a sexual assault counselor, as defined by the Confidential Communications for Sexual Assault Act, U.C.A. §§ 77-38-201 to -204, cannot be examined without the consent of the victim in a civil or criminal proceeding as to any “confidential communication,” as defined by the Act, made by the victim.

Sexual assault counselor-victim privilege prevented the court from conducting an in-camera review of documents from Rape Crisis Center. State v. Gomez, 2002 UT 120, ¶¶ 14-15, 63 P.3d 72.

i. Marriage or Family Counselor-Patient Privilege

U.C.A. §§ 58-60-113 and -114, in conjunction with U.R.E. 506, make communications to a marriage or family counselor privileged, subject to a small number of exceptions. See U.R.E. 506(d).

j. Psychologist-Patient Privilege

U.C.A. § 58-60-113 provides that the “[e]videntiary privilege for mental health therapists regarding admissibility of any confidential communication in administrative, civil, or criminal proceedings is in accordance with Rule 506 of the Utah Rules of Evidence.” Rule 506 identifies several exceptions to the privilege, including where the patient’s mental condition is an element of a claim or defense. U.R.E. 506(d)(1). In State v. Gotfrey, 598 P.2d 1325, 1327-28 (Utah 1979), the court held that because this statute had the effect of creating another privilege and closing another window to the light of truth, it would be strictly construed and applied (regarding previous version of statute). See also Burns v. Boyden, 2006 UT 14, ¶ 17, 133 P.3d 370.

k. Employer Drug and Alcohol Testing

U.C.A. §§ 34-38-1 to -15 allows employers to establish mandatory drug and alcohol testing. All information, interviews, reports, statements, memoranda, or test results received by the employer through his drug or alcohol testing program are confidential and may not be used or received in evidence, obtained in discovery, or disclosed in any public or private proceeding, except actions relating to discipline resulting from the testing or damage to reputation from publishing a false test result. U.C.A. § 34-38-13.

l. Intercepted Communication Privilege

Under U.C.A. § 77-23a-9(4), a communication intercepted in violation of or in conformance with the Interception of Communications Act, U.C.A. §§ 77-23a-1 to -16, “does not lose its privileged character.” U.C.A. § 77-23a-9(4).

4.6 Witnesses

a. Opinion Testimony of Lay Witnesses

Testimony of lay witnesses is limited to those opinions or inferences which are rationally based on the perception of the witnesses and helpful to a clear understanding of the witness’ testimony or the determination of a fact in issue. U.R.E. 701. The text of Utah’s rule is the federal rule verbatim. The fact that a question might be capable of scientific determination does not make lay opinion inadmissible if the provisions of the rule are met. State v. Ellis, 748 P.2d 188, 191 (Utah 1987); State v. Christensen, 2014 UT App 166, ¶ 22, 331 P.3d 1128; but see State v. Rothlisberger, 2004 UT App 226, ¶ 13, 95 P.3d 1193, aff’d, 2006 UT 49, 147 P.3d 1176 (noting that certain subjects could be considered so intrinsically specialized that only expert witnesses could testify regarding them).

b. Opinion of Experts Generally

Rule 702 was amended in 2007 in order to preserve and clarify the differences between the Utah and federal standards for expert testimony. The new Utah rule indicates that “a witness who is qualified as an expert by knowledge, skill, experience, training, or education may testify in the form of an opinion or otherwise if the expert’s scientific, technical, or other specialized knowledge will help the trier of fact to understand the evidence or to determine a fact in issue.” Paragraphs (b) and (c) of the Utah rule require only a “threshold showing” that the methods applied “are reliable,” “based upon sufficient facts or data, and” “have been reliably applied to the facts” or “if the underlying principles and methods…are generally accepted by the relevant expert community.” This rule supersedes the old test outlined in State v. Rimmasch, 775 P.2d 388, 398 (Utah 1989). State v. Maestas, 2012 UT 46, ¶ 121 n. 134, 299 P.3d 892; see also State v. Jones, 2015 UT 19, ¶ 21 n.14, 345 P.3d 1195 (noting subsequent amendments in 2011 were stylistic only and did not result in a change in the standard).

The advisory committee notes to Rule 702 make clear that the Rule assigns to trial judges a gatekeeper responsibility to screen out unreliable expert testimony–not just scientific expert testimony. When applying the new Rule 702, judges should approach expert testimony with “rational skepticism.�