Equine Assisted Growth & Learning Ass'n v. Carolina Casualty Insurance Co.
2011 UT 49
| Utah | 2011Background
- Kersten resigned as CEO/trustee of EAGALA (Mar 2005) and was terminated (Nov 16, 2005); he filed a miscaptioned suit in EAGALA's name the day after termination, obtaining a TRO and causing costs for EAGALA and its board.
- EAGALA notified its insurer, Carolina Casualty, of Kersten's complaint; policy covers Costs of Defense and defines Claim, but excludes claims made against an Insured by, on behalf of, or in the right of the Insured Entity.
- Carolina Casualty denied coverage, arguing the suit was brought by/on behalf of EAGALA due to caption; district court refused extrinsic evidence and applied an eight-corners analysis, granting judgment on the pleadings.
- EAGALA appealed; court of appeals reversed, holding extrinsic evidence is admissible when contract terms tie the duty to defend to facts outside the complaint (not solely the face of the complaint).
- Utah Supreme Court granted certiorari; it held extrinsic evidence is necessary to determine the duty to defend when the policy conditions the duty on information outside the complaint, and remanded for further proceedings.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether extrinsic evidence may be used in the duty-to-defend analysis. | EAGALA argues extrinsic evidence is permitted because the policy ties the duty to defend to facts outside the complaint. | Carolina Casualty argues eight-corners suffices; extrinsic evidence is immaterial and would undermine discovery. | Extrinsic evidence is necessary to determine duty to defend. |
| Does the policy’s exclusion and caption control despite unauthorized filing? | The complaint was filed in EAGALA's name; the exclusion applies only if the claim is by/on behalf of EAGALA. | The captioning and authority issues determine the claim’s status under the exclusion. | Eight-corners analysis insufficient; extrinsic evidence relevant to whether claim was brought by/on behalf of EAGALA. |
| Is the court bound to rely solely on the complaint when the contract terms tie the duty to other facts? | Courts should consider only the face of the complaint if policy language is clear. | Contractual terms may condition the duty on facts outside the complaint. | Policy terms controlling require consideration of extrinsic evidence. |
| What is the outcome given extrinsic-evidence relevance? | District court erred by not considering extrinsic evidence. | No extrinsic review was needed once eight corners were viewed. | Affirm appellate decision; remand for further proceedings consistent with extrinsic-evidence framework. |
Key Cases Cited
- Fire Ins. Exch. v. Estate of Therkelsen, 2001 UT 48 (Utah 2001) (duty to defend depends on contract terms; extrinsic evidence may be used when necessary)
- Equine Assisted Growth & Learning Ass'n v. Carolina Cas. Ins. Co., 2009 UT App 200, 216 P.3d 971 (Utah App. 2009) (extrinsic evidence admissible if policy ties duty to outside-the-complaint facts)
- Deseret Fed. Sav. & Loan Ass'n v. U.S. Fid. & Guar. Co., 714 P.2d 1143 (Utah 1986) (insurer must make good-faith defense determination based on all reasonably discoverable facts)