355 P.3d 947
Utah2015Background
- Greyhound leased part of UTA’s Intermodal Hub; Lease (2005) required Greyhound to secure commercial general liability insurance naming UTA as additional insured (or self-insure) and contained mutual indemnity clauses.
- Passenger Alma Bradley, while on a Greyhound layover at the Hub, fell on a ramp and suffered serious injuries; UTA admitted negligence (failure to install a handrail).
- UTA settled Bradley’s claim for $50,000, then sought reimbursement from Greyhound under the Lease’s insurance-procurement clause; Greyhound refused.
- District court granted summary judgment to UTA, holding: (1) insurance-procurement provisions are not strictly construed; (2) the Lease required Greyhound to obtain coverage that would protect UTA for claims arising from Greyhound’s use of the premises, including UTA’s negligence; (3) Greyhound breached by failing to procure such insurance; (4) UTA awarded damages and attorney fees under the Lease.
- Greyhound appealed, raising three issues: whether insurance-procurement clauses must be strictly construed like indemnity clauses; whether Bradley’s claim triggered Greyhound’s duty to procure insurance; and whether the attorney‑fee award was an abuse of discretion.
Issues
| Issue | UTA's Argument | Greyhound's Argument | Held |
|---|---|---|---|
| Whether insurance‑procurement clauses are subject to the strict‑construction rule applied to indemnity clauses | Strict construction applies only to indemnity clauses; insurance clauses should be interpreted under ordinary contract rules | Insurance‑procurement clauses are analogous to indemnities and thus must be strictly construed to require clear, unequivocal language to cover another’s negligence | Not subject to strict construction; traditional contract interpretation applies |
| Whether the Lease’s insurance clause required coverage for claims caused by UTA’s negligence | The commercial general liability requirement (additional insured) ordinarily covers negligence and the clause’s “arise from” language encompasses such claims | The clause doesn’t clearly require coverage of UTA’s own negligence; applying strict construction would bar that result | Clause required Greyhound to procure coverage that would protect UTA for claims arising from Greyhound’s use, including claims involving UTA’s negligence |
| Whether Bradley’s claim “arose from” Greyhound’s use, occupancy, maintenance, and operations under the Lease (i.e., whether the clause was triggered) | Bradley was a Greyhound passenger injured in the leased/common area during a layover — her injury flowed from Greyhound’s use of the premises | UTA’s negligence was an independent, intervening cause; thus the claim did not “arise from” Greyhound’s use and was not covered | Bradley’s injury arose out of Greyhound’s use of the premises; the insurance clause was triggered |
| Whether the district court abused its discretion awarding UTA attorney fees for the litigation and remand for appellate fees | The Lease entitles the party “found to be at fault” to recover fees; UTA prevailed and fees were reasonable based on invoices and counsel declarations | Some billed work related to unsuccessful motions; insufficient detail for some timekeepers makes the full award improper | District court did not abuse discretion; UTA was prevailing party and fee award was supported by the record; remand to determine appellate fee amount |
Key Cases Cited
- Freund v. Utah Power & Light Co., 793 P.2d 362 (Utah 1990) (discusses relationship between indemnity and insurance clauses and rejects blanket strictness for insurance procurement in that context)
- Pickhover v. Smith’s Mgmt. Corp., 771 P.2d 664 (Utah Ct. App. 1989) (holds insurance‑procurement agreements are distinguishable from indemnities and not subject to strict construction)
- Kennecott Copper Corp. v. Gen. Motors Corp., 730 F.2d 1380 (10th Cir. 1984) (Tenth Circuit applied strict construction to an insurance‑procurement clause — cited and discussed but not adopted)
- Union Pacific R.R. Co. v. El Paso Natural Gas Co., 408 P.2d 910 (Utah 1965) (applies causal‑connection requirement to scope of indemnity provisions; distinguished on facts)
- National Farmers Union Prop. & Cas. Co. v. Western Cas. & Sur. Co., 577 P.2d 961 (Utah 1978) (interprets “arising out of” in insurance context as broad and requiring some causal relationship)