Drew v. Pacific Life Insurance Company, 496 P.3d 201

Background

LaMar and LaRene Drew (retirees) purchased life-insurance policies after relying on advice from R. Scott National, Inc. (RSN) that the policies could be resold on the secondary market; RSN also advised using a reverse mortgage to pay premiums. The resale profits never materialized and the policies lapsed.
Pacific Life had appointed RSN as an insurance producer (appointment notice Dec. 20, 2008; Producer’s Contract Jan. 5, 2009). The written contract authorized solicitation but contained express restrictions (e.g., no promises about policies, no solicitation of unsuitable products, compliance with law, no binding promises).
The Drews sued RSN and Pacific Life for fraud, negligent misrepresentation, and related claims. The district court granted summary judgment to Pacific Life, finding RSN lacked actual and apparent authority.
The Utah Court of Appeals reversed in part, holding RSN was Pacific’s agent under Utah Code § 31A‑1‑301(88)(b) and that RSN’s conduct fell within the scope of authority (the court relied on scope-of-employment/respondeat superior principles).
The Utah Supreme Court granted certiorari, held (1) RSN was Pacific’s "appointed licensee" under the Insurance Code (§ 31A‑23a‑115/405), (2) the court of appeals erred by defining agency under § 31A‑1‑301(88) and by importing respondeat superior tests into § 31A‑23a‑405(2), (3) RSN lacked actual (express or implied) authority because its conduct violated express contractual and legal prohibitions, but (4) RSN did have apparent authority (Pacific supplied policy forms; the Drews reasonably believed RSN represented Pacific), so the Drews were entitled to partial summary judgment on apparent authority and the presumption in § 31A‑23a‑405(2).

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether RSN was an "agent" of Pacific Life for purposes of insurer liability	RSN was Pacific’s agent because it was a "producer for the insurer" (compensated by Pacific) and Pacific appointed RSN	Pacific: agency is a common-law question; § 31A‑1‑301(88) is not the controlling test for insurer liability under § 31A‑23a‑405(2)	Court: RSN was Pacific’s "appointed licensee" under § 31A‑23a‑115/405(2); court of appeals erred to hinge agency on § 31A‑1‑301(88)
Proper legal test for insurer liability under Utah Code § 31A‑23a‑405(2)	Drews: statute should be read broadly to hold insurers accountable; court of appeals' scope approach appropriate	Pacific: liability under § 405(2) depends on actual or apparent authority, not respondeat superior	Court: § 405(2) expressly ties being "bound" to acts within actual (express or implied) or apparent authority; court of appeals erred by applying respondeat superior/scope-of-employment tests
Whether RSN had actual (express or implied) authority to make the challenged representations	Drews: soliciting and describing Pacific’s products is within the Producer’s Contract, so actual authority exists	Pacific: Producer’s Contract contains express prohibitions (no promises, no solicitation of unsuitable products, no acts contrary to law) that negate actual authority	Court: RSN lacked actual express and implied authority as a matter of law because its conduct violated explicit contractual and legal limits
Whether RSN had apparent authority and whether Drews entitled to partial summary judgment	Drews: Pacific’s supply of application forms and RSN’s conduct made a reasonable third-party belief that RSN represented Pacific, so apparent authority exists	Pacific: Drews dealt only with RSN; mere use of Pacific forms is insufficient; no direct Pacific manifestations to Drews	Court: Pacific’s provision of policy forms and the undisputed record (Drews saw forms and reasonably believed RSN represented Pacific) satisfy apparent-authority elements; Drews entitled to partial summary judgment on that ground

Key Cases Cited

Zions First Nat. Bank v. Clark Clinic Corp., 762 P.2d 1090 (Utah 1988) (discusses express and implied actual authority principles)
Luddington v. Bodenvest Ltd., 855 P.2d 204 (Utah 1993) (sets three-element test for apparent authority)
Burdick v. Horner Townsend & Kent, Inc., 345 P.3d 531 (Utah 2015) (explains apparent vs actual authority; reliance and reasonableness standards)
M.J. v. Wisan, 371 P.3d 21 (Utah 2016) (discusses respondeat superior/scope-of-employment factors)
Wardley Better Homes & Gardens v. Cannon, 61 P.3d 1009 (Utah 2002) (employer vicarious liability discussion)
Burlington Indus. v. Ellerth, 524 U.S. 742 (1998) (Supreme Court discussion of scope-of-employment and vicarious liability)
Bodell Constr. Co. v. Stewart Title Guaranty Co., 945 P.2d 119 (Utah Ct. App. 1997) (cases distinguishing indicia-of-authority fact patterns)
Drew v. Pacific Life Ins. Co., 447 P.3d 1257 (Utah Ct. App. 2019) (court of appeals opinion reversed in part for misapplying agency tests)