422 P.3d 829
Utah2018Background
- Espenschied Transport used Fleetwood (an insurance broker) to procure vehicle insurance from Wilshire beginning in 2003; the policy was a scheduled-vehicle policy that covered only vehicles listed on the schedule.
- Fleetwood submitted an incorrect equipment list to Wilshire that omitted certain trailers; Espenschied believed those trailers were insured.
- On Jan. 30, 2005, a trailer (omitted from the schedule) was involved in a fatal accident; Wilshire denied coverage because the trailer was not scheduled.
- Espenschied defended and settled the wrongful-death suit for $1.1 million (reduced to judgment); Espenschied assigned certain claims to the plaintiffs and agreed to pursue claims against Fleetwood and Wilshire; DATS indemnified Espenschied for $90,000 of the roughly $93,500 in defense fees.
- Fleetwood and Wilshire moved for summary judgment. The district court granted both: (1) finding Espenschied had no compensable damages against Fleetwood (thus no liability), and (2) finding Wilshire not vicariously liable (and independently granting Wilshire summary judgment on other grounds). Espenschied appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Espenschied suffered compensable damages from Fleetwood's failure to procure insurance | Espenschied: incurred defense costs and entered a settlement/judgment — these are damages attributable to Fleetwood's failure | Fleetwood: any defense costs were indemnified by DATS; the settlement/judgment caused no actual, monetizable injury because Espenschied is defunct and has no assets | Court: Espenschied had at most $3,400 net in unpaid attorney fees (after DATS indemnity) but conceded that amount was not worth pursuing; no other monetizable harm shown — summary judgment affirmed for Fleetwood |
| Whether the settlement judgment (unexecuted against an insolvent insured) is compensable harm against an insurance broker | Espenschied: Ammerman II policy reasons should allow recovery even if judgment unexecuted; loss of claims in settlement is harm | Fleetwood/Wilshire: Ammerman II applies to insurers’ fiduciary duty to defend, not to brokers/agents; unexecuted judgment must be monetizable with concrete harm | Court: refused to extend Ammerman II to brokers; an unexecuted judgment can be monetized but plaintiff must plead specific monetizable harm (credit, lost business, bankruptcy). Espenschied failed to do so |
| Whether Wilshire is vicariously liable for Fleetwood’s failure to procure insurance | Espenschied: there is dispute of fact as to agency and Wilshire should be vicariously liable; alternatively Wilshire is bound by Espenschied’s reasonable reliance on Fleetwood | Wilshire: no agency relationship shown; and because Fleetwood has no liability, Wilshire cannot be vicariously liable; independent bases support summary judgment | Court: Espenschied failed to contest district court’s alternative ground that Fleetwood had no liability; without Fleetwood liability, vicarious liability fails; reasonable-reliance/direct-liability argument was not adequately pursued on appeal — summary judgment affirmed for Wilshire |
| Whether indemnification by DATS (collateral source) precludes recovery of defense costs from Fleetwood | Espenschied: indemnity from DATS does not eliminate Fleetwood’s liability for defense fees | Fleetwood: DATS indemnity offsets Espenschied’s fees; collateral-source argument inadequately briefed | Court: did not accept collateral-source argument (insufficiently briefed); offset applied, leaving ~$3,400 in fees — but Espenschied declined to pursue only that sum |
Key Cases Cited
- Heslop v. Bear River Mut. Ins. Co., 390 P.3d 314 (Utah 2017) (summary-judgment standards; view facts in favor of nonmovant)
- Harris v. Albrecht, 86 P.3d 728 (Utah 2004) (insurance agent may be liable for failure to procure insurance by contract or tort)
- Ammerman v. Farmers Ins. Exch., 450 P.2d 460 (Utah 1969) (Ammerman II) (insurer may be liable for excess uncollected judgments; policy rationales for allowing recovery despite uninsured insolvency)
- Steele v. Hartford Fire Ins. Co., 788 F.2d 441 (7th Cir. 1986) (an unexecuted judgment can cause monetizable injury)
- Trans-Western Petroleum, Inc. v. U.S. Gypsum Co., 379 P.3d 1200 (Utah 2016) (breach-of-contract damages require actual injury)
- TruGreen Cos., L.L.C. v. Mower Bros., 199 P.3d 929 (Utah 2008) (recognition of efficient breach and damages analysis)