The Value of Proper Construction Contract Drafting

Plant Christensen & Kanell recently defeated a subrogation claim of over $500,000, demonstrating the value and necessity of properly drafted subrogation waivers in construction contracts.

Plant Christensen and Kanell (PCK) recently represented a contractor whose contract became a pivotal element of a lawsuit against the contractor. The contractor was hired by homeowners to remodel their home. The contractor and the owners entered into a contract that detailed the owner's and the contractor's responsibilities. One of the owners' responsibilities was to provide property insurance for the work at the site. The contract also contained a subrogation waiver, waving each of the parties' rights against the other to the extent the damages were covered by insurance. The contractor then began the remodeling.

Then the house burned down.

The owners made a claim to their pre-existing homeowners insurer, who paid policy limits for the damages caused by the fire. The owners' insurer then brought a subrogation action action against the contractor, claiming the contractor caused the fire. The owners' insurer brought a subrogation action for the money the insurer paid on the homeowners' insurance claim. "Subrogation" is "a doctrine conceived in equity that allows a person or entity that pays the loss or satisfied the claim of another under a legally cognizable obligation or interest to step into the shoes of the other person and assert that person's rights." Bakowski v. Mountain States Steel, Inc., 2002 UT 62, ¶ 22, 52 P.3d 1179, 1185 (internal quotation marks omitted) (citations omitted). Although, subrogation rights are based in equity, they may be modified by contract. See Wasatch Bank of Pleasant Grove v. Sur. Ins. Co. of California, 703 P.2d 298, 300 (Utah 1985). "Accordingly, an insured can generally waive an insurer's subrogation rights against a particular third party through a pre-loss agreement with that third party in which the insured agrees to exculpate the third party from any liability for which the insurer may seek subrogation." 52 P.3d at 1186. Which is what occurred here when the homeowner and the contractor entered into their contract.

The contractor's liability insurer hired Plant Christensen & Kanell to defend the contractor against the homeowners' insurer's subrogation action. PCK immediately sought to have the subrogation claim dismissed based on the subrogation waiver in the contract. PCK argued to the court that the insurer had no right to bring a claim in the first place because the owners had waived any subrogation rights.

By arguing that the subrogation waiver was broad enough to include the owner's insurer, PCK persuaded the court to rule in favor of the contractor, and was awarded summary judgment against the owner's insurer. This successful defense saved the contractor from potential damages of over $500,000. This illustrates the immense importance of subrogation waivers in construction contracts. While PCK was eventually able to obtain summary judgment, the case was made more difficult by ambiguities in the subrogation waiver.

At Plant Christensen & Kanell, the firm's attorneys are experienced in litigating subrogation waivers and know many of the pit-falls that can occur by using many of the do-it-yourself contracts, or even well-respected form contracts. Contractors should have their contracts drafted and reviewed by experience attorneys, like those at PCK. PCK can provide a review of contractors' contracts to ensure that the subrogation waivers are drafted broadly enough to avoid litigation. Before your next project, contact PCK for a review of your contract so you can be protected and the project can be completed with minimal interruption.

Utah's Statutes of Limitations

If you have suffered damages and are considering bringing a case in Utah's Courts, you should know about these limitations periods.

Almost every potential lawsuit has an expiration date. The courts want to be sure litigants are bringing their cases in a timely manner so that evidence is still available, and so that all parties associated with the incident can rest easy after a certain amount of time. These expiration dates are called "limitations periods." After a certain period of time, a people are limited in their ability to bring a lawsuit. The limitation periods are set by certain statutes, statutes that set these time limits are referred to as "statutes of limitations." The statutory period in which to bring any given suit depends on the type of lawsuit. For example, if you have received a personal injury in a car accident, you have a four year limitation period in which to bring your lawsuit against them, per Utah Code Section 78B-2-307. But if you suffered only property damage, you only have three years to bring you claim. Here are common statutory limitation periods in Utah:

 

Personal Property Damage: 3 Years. Utah Code Ann. § 78B-2-305(1) (West 2016).

Trespass: 3 Years. Id. § 78B-2-305(1).

Personal Injury and Death: 4 Years. Id. § 78B-2-307(3).

Action Against Police Officer or Other Public Official: 2 Years. § 78B-2-304.

Action Against the State or State Employees: 2 Years. § 78B-2-304.

Wrongful Death: 2 Years. Id. § 78B-2-304.

Medical Malpractice: 2 Years. Id. §§ 78B-2-304(2), 78B-3-404.

Breach of Written Contract: 6 Years. Id. § 78B-2-309(2).

Breach of Oral Contract: 4 Years. Id. § 78B-2-307(1)(a).

Breach of Contract for the Sale of Goods: 4 YearsId. § 70A-2-725.

Breach of Warranty, Personal Injury: 4 Years. Id. § 78B-2-307(3).

Product Liability, Personal Injury: 2 Years. Id. § 78B-6-706.

Product Liability, Property Damage: 2 Years. Id. § 78B-6-706.

 

This list reports the limitations contained in Utah's code, and is not meant to be a substitute for legal advice. If you are considering filing a lawsuit, please contact our attorneys today to discuss potential representation.

PCK's 2017 Utah Legal Elite

Three of Plant Christensen & Kanell's attorneys are listed by Utah Business as Utah Legal Elite.

Each year, Utah Business lists the top lawyers in the state, as voted by their peers. Lawyers are listed in 26 categories, ranging from arbitration to worker's compensation. There is no way to buy placement on this list. Utah Business receives thousands of votes each year, and this year three of PCK's attorneys were voted as Utah's legal Elite.

John Braithwaite has been voted as one of Utah's top construction attorneys for the eighth time. Mr. Braithwaite was first voted onto the list in 2009, and has been consecutively ranked as one of Utah's Legal Elite since 2011. Mr. Braithwaite represents and counsels architects, engineers, surveyors, general contractors, and subcontractors in design/construction contracts, risk management, alternative dispute resolution, and litigation. This work has included representation of design professionals on many significant construction projects and cases in the state of Utah, including claims involving structural failures, geotechnical problems, shoring failures, delay claims, and other alleged design errors.

Daniel Young and Joel Taylor were also voted as two of Utah's Legal Elite, with both of them being listed as elite up and coming attorneys ("up and coming" referring to attorneys who have been practicing for less than eight years). Both Mr. Young and Mr. Taylor's practice areas are diverse, and specialize in insurance defense litigation. 

Plant Christensen and Kanell has a history of award winning attorneys as a result of the firm's commitment to client satisfaction and dedication to detail.

Utah Statutory Amendments Affecting Municipalities

The Utah State Legislature has introduced a bill in Utah's 2017 General Session that will impact state and local governments.

House Bill 399, Governmental Immunity Amendments, seeks to improve governmental immunity in some areas, and expand the rights of claimants in other circumstances. The long title of the bill provides that House Bill 399:

  • provides that governmental immunity is preserved for an injury arising out of or in connection with, or resulting from, certain conduct or conditions even if immunity would otherwise be waived;

  • enacts language specifying the relationship between an injury and certain conduct or conditions in determining whether immunity applies;

  • allows a claimant to begin an action after the applicable time limit if a previous timely action failed or was dismissed, other than on the merits, and other conditions are met; and

  • modifies language relating to a plaintiff's undertaking in an action against a governmental entity.

If you or someone you know is a state or municipal agent or employee, give our municipal law attorneys a call to see how these changes affect your liability. The basic underpinnings of governmental immunity continue to apply (which is to say that government actors cannot be sued personally for actions they took as part of their government position). But these changes will impact when claimants can bring lawsuits, and in what circumstances state or municipal agents can defend themselves.

Click here to view the bill in its entirety.

PCK's Local, Experienced, Specialized Lawyers

Whether you're looking local or national, Plant Christensen & Kanell's attorneys will provide professional competence and dedicated service to your legal issue.

Plant Christensen & Kanell has been in the legal industry long enough to garner the patronage of Utah's top insurance providers and prominent businesses, but many of the law firm's clients are local individuals with first-time legal issues. From long-term to first-time, the firm works with clients with a variety of experience working with lawyers.

PCK's practice areas span from auto accidents and personal injury to insurance litigation and workers compensation, and most areas in between. The attorneys at Plant Christensen & Kanell have developed a broad range of specialized expertise, and the firm's collaborative environment ensures that every case is handled with an eye toward developing new insights and discovering nuanced detail.

So if you have recently found yourself Googling "lawyer near me," give us a call. We are the lawyers near you that are excited to get to work. Contact us today to discuss representation for your legal issue.

Plant Christensen & Kanell's Latest Publication

An article written by Plant Christensen & Kanell's law clerk (yours truly) was selected for publication by the Utah Law Review.

The article is titled "Growth and Legal Implications of Energy Storage Technologies." Here is a link to the article: http://dc.law.utah.edu/onlaw/vol2017/iss1/3/.

As stated in the abstract, the energy storage industry is growing at burgeoning rates and new technologies are lowering the cost and improving the efficiency of energy storage devices. But with widespread adoption comes a myriad of legal issues. When states are creating their own legal frameworks to encourage or discourage investment in energy storage, the industry is hampered by inconsistency and a lack of predictability. By implementing broad federal regulations, the federal government can remove uncertainty and encourage growth and development of energy storage technologies. Thanks to companies like Tesla who are making energy storage more appealing and affordable, demand for behind-the-meter energy storage is increasing. The world is at the cusp of an energy storage revolution, and the United States has an opportunity to lead in that revolution by passing legislation that spurs on the rapid growth of energy storage.

Here at Plant Christensen & Kanell our attorneys and staff recognize the value of contributing to the development of the law; whether that be through litigating cases, or publishing academic articles.

The Colorado River Doctrine

The Colorado River Doctrine provides a means for courts to avoid trying the same case in two separate courts simultaneously.

Occasionally, litigants will bring a case in both the federal court system and the state court system. The reasons for doing so are usually strategic based on the judges and jurisdictions in the federal and state system. In those instances, federal courts have found that when the simultaneous litigation of the claims would be duplicative or otherwise inefficient they may stay the action pending the outcome of the state court case. This principle has come to be known as the Colorado River Doctrine. 

The Colorado River doctrine allows a federal court to dismiss or stay a federal action in deference to pending parallel state court proceedings, based on “considerations of wise judicial administration, giving regard to conservation of judicial resources and comprehensive disposition of litigation.” Colorado River Water Conservation Dist. v. United States, 424 U.S. 800, 817 (1976) (citation omitted) (internal quotation marks omitted); see also Rienhardt v. Kelly, 164 F.3d 1296, 1302 (10th Cir. 1999) (“In other words, the Colorado River Doctrine was adopted to avoid duplicative litigation.”).

To determine whether to dismiss or stay a federal court action based on a parallel state court case, courts consider the following factors: “(1) whether either court has assumed jurisdiction over property; (2) whether the federal forum is inconvenient;[1] (3) the avoidance of piecemeal litigation; (4) the order in which the courts obtained jurisdiction and the progress of the two cases; (5) which forum’s substantive law governs the merits of the litigation; and (6) the adequacy of the state forum to protect the rights of the parties.[2]Health Care & Ret. Corp. of Am. v. Heartland Home Care, Inc., 324 F. Supp. 2d 1202 (D. Kan. 2004) (footnotes added) (citing Colorado River, 424 U.S. at 819; Moses H. Cone Mem’l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 23 (1983)).

These factors are “to be applied in a pragmatic, flexible manner with a view to the realities of the case at hand.” Moses H. Cone, 460 U.S. at 21.But before applying the Colorado River factors, the court must first determine “whether the state and federal proceedings are parallel.” Allen v. Bd. of Educ., Unified Sch. Dist. No. 436, 68 F.3d 401, 402 (10th Cir. 1995).

For example, in Heartland, Health Care and Retirement Corporation of America (“HCRCA”) filed suit against Heartland Home Care, Inc., (“Heartland”) for trademark infringement, false designation of origin, and trademark dilution under the Lanham Act. 324 F. Supp. 2d at 1203. HCRCA’s claims in the federal court came after Heartland had filed claims against HCRCA in the state district court, alleging that HCRCA was soliciting business under Heartland’s name in violation of Kansas law. Id. When HCRCA filed its claims in federal court, Heartland sought dismissal under the Colorado River doctrine based on the previously filed—and then-pending—state court action. Id. at 1204.

The Heartland court first looked to whether the two cases were sufficiently parallel by looking to the nature of the parties. Id. The court held that the parties in the state and federal cases were substantially the same, even though HCRCA’s “affiliate” and not HCRCA itself was a party in the state case. Id. HCRCA’s affiliate was arguing the same claims, was represented by the same law firm, and shared the same interests as HCRCA. Id. The court then looked to the nature of the issues. Id. at 1205. It held that although the pending claims in the state court were not the same as the pending issues in the federal court, they were substantially similar because the issues both arose out of the same set of facts. Id. Accordingly, the court held, the cases were sufficiently similar to apply the Colorado River doctrine, and applied each of the doctrine’s six factors. Id. at 1205–08.

The court determined that neither of the first two factors weighed in favor of either party. Id. at 1205–06. Then, turning to the third factor (avoidance of piecemeal litigation), the court noted that: the parties “currently are litigating virtually identical . . . claims in two courts;” inconsistent results were possible; and “if the state court enters a judgment before one is entered in the federal case, the federal action likely will be barred under res judicata principles.” Id. at 1206. Accordingly, the court held, “[a]llowing both cases to proceed to a race to judgment would cause duplicative litigation and waste the resources of the parties and the Court. Judicial economy is best promoted by staying the instant action.” Id. at 1206.

Turning to the fourth factor, the court held that because the state action had been filed some three months before the federal action, this factor also weighed in favor of staying the federal action. Id. The fifth factor weighed slightly in favor of not staying the action, because federal law governed both actions. Id. at 1207.  After considerable analysis of the sixth factor, the court held that the state forum was an adequate vehicle to protect the parties. Id. at 1207–08. After a holistic balancing of all the factors, the court concluded: “Three of the above factors favor staying the case, two factors are neutral and one factor slightly favors retaining the case. After carefully considering each factor, the Court finds that exceptional circumstances justify a stay of the instant action.” Id. at 1208.[3]

In conclusion, bringing a case in both the state and federal court systems may be a wise course of action for your case, but be prepared to have the federal case stayed if the court deems that such a stay would be in the best interest of judicial economy.

The Colorado River Doctrine bears no relation to its namesake, the Colorado River.

The Colorado River Doctrine bears no relation to its namesake, the Colorado River.

 

 

[1] “Whether the federal forum is inconvenient depends on the ‘physical proximity of the federal forum to the evidence and witnesses.’” Health Care & Ret. Corp. of Am. v. Heartland Home Care, Inc., 324 F. Supp. 2d 1202, 1206 (D. Kan. 2004) (citing Am. Bankers Ins. Co. v. First State Ins. Co., 891 F.2d 882, 885 (11th Cir.1990).

[2] The Court may enter a stay under the Colorado River doctrine only if it has “full confidence” that the parallel state litigation will end the parties’ dispute. Gulfstream Aerospace Corp. v. Mayacamas Corp., 485 U.S. 271, 277 (1988).

[3] Heartland is one of several 10th Circuit decisions to apply, or uphold the application of, the Colorado River doctrine to stay a federal proceeding. E.g., Nationwide Mut. Ins. Co. v. C.R. Gurule, Inc., 148 F. Supp. 3d 1206 (D.N.M. 2015);  D.A. Osguthorpe Family P’ship v. ASC Utah, Inc., 705 F.3d 1223 (10th Cir. 2013); Foxfield Villa Assocs., LLC v. Regnier, 918 F. Supp. 2d 1192 (D. Kan. 2013); Big O Tires, LLC v. Felix Bros., No. 10-CV-00362-PAB-KLM, 2011 WL 6181448 (D. Colo. Dec. 13, 2011); Gray v. Parry, No. 2:07-CV-113, 2008 WL 821592 (D. Utah Mar. 27, 2008); Robertson v. Red Rock Canyon Sch., LLC, No. 2:05-CV-758 TC, 2006 WL 3041469 (D. Utah Oct. 24, 2006); Blue Rhino Corp. v. Stockgrowers State Bank of Ashland, Kansas, 220 F.R.D. 369 (D. Kan. 2004); Fox v. Maulding, 16 F.3d 1079 (10th Cir. 1994).

Changes to the Utah Rules of Civil Procedure

The Utah Supreme Court has approved amendments to the Utah Rules of Civil Procedure. The amendments are effective May 1, 2017.

Rule 7 | Pleadings allowed; motions, memoranda, hearings, orders.

  • Addition of section “(q),” which places two new limits on applications for an order to show cause: (1) the application “shall be made only for enforcement of an existing order or for sanctions for violating an existing order;” and (2) the application must be supported by an affidavit.

o   The addition, in its entirety, is here:

(q) Limit on order to show cause. An application to the court for an order to show cause shall be made only for enforcement of an existing order or for sanctions for violating an existing order. An application for an order to show cause must be supported by an affidavit sufficient to show cause to believe a party has violated a court order. Nothing in this rule is intended to limit or alter the inherent power of the court to initiate order to show cause proceedings to assess whether cases should be dismissed for failure to prosecute or to otherwise manage the court’s docket.

  • Additionally, there is a new Advisory Committee Note, which provides:

The 2017 amendments to Rule 7 return pre-2015 paragraph (b)(2) language addressing limits on orders to show cause to new paragraph (q) and also clarify the discretion the court retains to manage its docket. Paragraph (q) is directed only at limitations on order to show cause proceedings initiated by parties.

 Rule 35 | Physical and Mental Examination of Persons

  • The 2017 amendments to Rule 35 clarify when there is overlap between a Rule 26(a)(4) expert report and when there is not. They also provide the shorter of a 60-day time frame or 7 days prior to the close of fact discovery in which the party requesting the Rule 35 examination must disclose the report to the person being examined.
  • If the party requesting the exam wishes to call the examiner as an expert witness, the party must disclose the examiner as an expert within the time prescribed in Rule 26(a)(4), but need not provide an additional report if the report provides all the information required in 26(a)(4).
  • A change to the Advisory Committee Note has removed the following sentence:

Medical examiners will be treated as other expert witnesses are treated, with the required disclosure under Rule 26 and the option of a report or a deposition.

  • The Advisory Committee Note added the following paragraph, which clarifies the intent behind the rule change:

A report must be provided for all examinations under this rule. The Rule 35 report is expected to include the same type of content and observations that would be included in a medical record generated by a competent medical professional following an examination of a patient, but need not otherwise include the matters required to be included in a Rule 26(a)(4) expert report. If the examiner is going to be called as an expert witness at trial, then the designation and disclosures under Rule 26(a)(4) are also required, and the opposing party has the option of requiring, in addition to the Rule 35(b) report, the expert’s report or deposition under Rule 26(a)(4)(C). The rule permits a party who furnishes a report under Rule 35 to include within it the expert disclosures required under Rule 26(a)(4) in order to avoid the potential need to generate a separate Rule 26 (a)(4) report later if the opposing party elects a report rather than a deposition. But submitting such a combined report will not limit the opposing party’s ability to elect a deposition if the Rule 35 examiner is designated as an expert.

Rule 45 | Subpoena

  • In conformity with Rule 84’s repeal (see below, infra), this amendment makes a technical amendment to paragraph (a)(1)(E). It also makes a technical amendment to paragraph (i) in anticipation of the prisoner mailbox rule's adoption.
  • Changes to section “(i):” instead of emphasizing actual incarceration, the changes to section “(i)” focus on the witness’s status as an inmate (e.g., “confined in jail,” has been changed to “is an inmate”).
  • See the red-lined rule here: http://www.utcourts.gov/utc/rules-approved/wp-content/uploads/sites/4/2017/03/45-legislative-format.pdf

Rule 65 | Post-Conviction Relief

Rule 84 | Forms

Law School Hopefuls, Ye Be Warned

Before staring law school, consider the statistics.

Utah is home to two law schools: The University of Utah S.J. Quinney School of Law, and the Brigham Young University J. Reuben Clark Law School. Each law school produces over 100 new graduates every year. With around 250 new lawyers entering Utah's legal market every year (not counting all the attorneys that transfer into the state), attorneys in the Beehive State need to demonstrate their competency or risk relegation.

In 2015 (the most recent year with available data), 126 people graduated from the University of Utah law school; 81 men and 41 women (4 individuals did not report their gender). Within one year of graduation, 75 of those graduates had paying jobs (or 59%), with 49 of those individuals working in the private sector. The mean starting salary of those 49 private sector attorneys is $76,531. The 26 graduates employed in the public sector make less, with a mean starting salary of $52,369.

Brigham Young University law school produced 133 law school graduates in 2015, and had similar employment numbers. In the year after graduation, 52 graduates were working in a law firm, and 36 were working in the public sector. BYU law school also employs 12 of their graduates, and 20 of their graduates went to work in business or another industry. BYU does not report salary statistics (but they tell U.S. News that their mean private sector starting salary is $72,000, and their mean public sector starting salary is $49,500).

So how does Utah's 59% and BYU's 46% compare to national statistics? In 2015, 39,984 people graduated from law schools across the United States. Of those, 17,959 were working as attorneys ("Bar Passage Required"), and 2,478 were working in professions where their juris doctorate degrees gave them an "advantage." That is a 51% employment rate. The mean national private sector salary for first year associates is $105,000, and the mean public sector salary is $55,556. Although Utah's two law schools are ranked well (according to U.S. News, both schools are Tier 1 law schools, with Utah ranked at number 44 and BYU ranked at number 46 out of the 197 accredited law schools in the nation), starting private sector salaries are close to 30% less than the national average.

This translates into a competitive legal market in Utah. Attorneys in Utah recognize that sub-par work will lead to their prompt replacement, as there is no shortage of highly-trained law students waiting in the wings. And the surplus of graduating law students allows law firms to hire exclusively students from the top of their classes. So although it is a difficult time to be a law school graduate, it is an ideal time to be a client. Individuals receiving legal services can be confident that law firms in Utah are hiring the cream of the crop, and the existing attorneys in the firm have track records of legal and professional competency. 

Audio of PCK's Supreme Court Argument

Did we mention we were in the Utah Supreme Court recently?

On January 11, 2017, Joel Taylor argued in Utah's highest court on behalf of Fire Insurance Exchange. Although the Utah Supreme Court does not allow cameras in the courtroom, every oral argument is recorded and available to the public. To listen to Mr. Taylor's argument before the court, click here, then select "listen" next to "Fire Ins Exchange v. Oltmanns 20160304."

Case Anthology: Use of Indictments to Impeach a Witness

Cross examination can be a tricky business.

The Federal Rule of Evidence Rule 608(b) allows specific instances of conduct "to be inquired into if they are probative of the character for truthfulness or untruthfulness." This means that attorneys can grill witnesses about their past in an attempt to discredit their testimony. Chances are you have seen this in the last courtroom drama you watched. 

Most states (including Utah), have a virtually identical Rule 608 that allows attorneys to ask witnesses about their past. But there is a difference of opinion among the states (and circuits) about what amount of past conduct can be inquired into. Specifically, jurisdictions disagree over whether attorneys should be allows to ask the witness about pending indictments. (If the indictment has resulted in a conviction, then the conviction can be introduced through Rule 609.)

The majority of jurisdictions that have addressed the matter have concluded that indictments may not be used to impeach a witness's character for truthfulness. Utah has not addressed the issue directly, but has permitted the use of "conduct not resulting in a conviction." Robinson v. Taylor, 2015 UT 69,  16, 356 P.3d 1230, 1234. Here is how the caselaw stacks up:

Impeachments may (though the courts have not expressly stated so) be used to impeach a witness:

United States v. Staples, 410 F.3d 484, 489 (8th Cir. 2005) (acknowledging and not overturning the use of an indictment to impeach a witness); United States v. Martinez, No. 16-10062-JTM, 2016 WL 4399185, at *2 (D. Kan. Aug. 18, 2016) (recognizing in dicta, without disapproval, the government’s intent to use and indictment to impeach a witness); Robinson v. Taylor, 2015 UT 69, ¶ 16, 356 P.3d 1230, 1234 ("Conduct not resulting in a conviction may be inquired into on cross-examination under rule 608 . . . ."). But see Utah R. Evid. 608, Advisory Committee Note (stating that an "attack upon a witness's credibility by specific instances of character other than conviction of a crime is inadmissible under current Utah law") (citing Bullock v. Ungricht, 538 P.2d 190, 192 (Utah 1975)).

Impeachments may not be used to impeach a witness:

Brown v. Coating Specialists, Inc., 465 F.2d 340, 341 (5th Cir. 1972) (“[A] witness who was under indictment . . . could not be impeached by evidence of the pending indictment.”); Jenkins v. Gen. Motors Corp., 446 F.2d 377 (5th Cir. 1971), cert. denied, 405 U.S. 922 (1972); United States v. Baker, 494 F.2d 1262, 1266 (6th Cir. 1974) (a witness’ credibility generally cannot be impeached by showing arrest, indictments or other acts of misconduct not resulting in a conviction); Steinhouse v. W.C.A.B. (A.P. Green Servs.), 783 A.2d 352, 356 (Pa. Commw. Ct. 2001) (“[A]s a general rule, prior bad acts not resulting in a conviction are not admissible to impeach a witness’ credibility.”) (quoting Commonwealth v. Smith, 467 A.2d 1120, 1125–26 (Pa. 1983)); George S. May Int’l Co. v. Int’l Profit Assocs., 628 N.E.2d 647 (Ill. App. 1993) (“Specific acts of misconduct by witness not resulting in criminal conviction may not be used to impeach, including arrests, indictments, charges, or actual commissions of offenses.”) (citing Knowles v. Panopoulos, 363 N.E.2d 805, 858 (Ill. 2d 1977)); State v. Morgan, 541 S.W.2d 385, 389 (Tenn. 1976) (citing with approval cases holding that charges, accusations and indictments may not be used to impeach a witness); In re Miller, No. 16-50532, 2016 WL 7115865, at *4 (Bankr. E.D. Ky. Dec. 6, 2016) (“It is not usually permissible to impeach a witnesses' credibility through an indictment not resulting in a conviction.”); People v. Sosa, No. 2-09-0514, 2011 WL 10099324, at *4 (Ill. App. Ct. Apr. 11, 2011) (“[A]n indictment, or a complaint is not usually admissible to impeach a witness.”).

Commercial Property Owners: Clear Your Walkways and Remove Your Icicles

Operating a brick and mortar business in the winter comes with its fair share of risks. Mitigate those risks by staying on top of snow and ice removal.

Utah courts have held that "commercial property owners are not insurers of the safety of those who come upon their property, even though they are business invitees."  Martin v. Safeway Stores Inc., 565 P.2d 1139, 1140 (Utah 1977) (the liability of a business is created only when the condition complained of has existed for a long enough time that the owner should have known about it and corrected it, or has had actual knowledge of the condition complained of). However, tenants are liable "for any dangerous condition on the premises which he [or she] creates or permits to come into existence after he [or she] has taken possession.” Dahlstrom v. Nass, 2005 UT App 433, ¶ 10, 126 P.3d 773, 774 (emphasis added) (citing Stephenson v. Warner, 581 P.2d 567, 568–69 (Utah 1978).

One such dangerous condition that inevitably "comes into existence" this time of year is ice. Ice on walkways (or, in attorney jargon, paths of ingress and egress) often creates a slippery surface area. The ice alone is dangerous enough, but when the slightest bit of snow falls on the ice, the ice- and snow-covered walkway becomes slicker than an ice rink and substantially more dangerous. Patrons who slip and fall on the walkways can receive serious injuries (or death).

An equally dangerous condition this time of year is ice climbing off the edges of roofs. Icicles could fall at any time, and pose a serious threat of bodily injury. Icicles should be cleared away promptly—and carefully. The United States Department of Labor reports that there have been 16 fatalities in the last ten years from individuals clearing snow and ice from roofs.

So, if you are a business with a physical location, be sure to keep your walkways dry and your roofs clear. Investment in a snow shovel and a few bags of salt will be much less than the later cost of defense attorneys in your subsequent personal injury negligence case.

Utah's Economic Loss Rule

Utah has expressly adopted the economic loss rule.

See SME Indus., Inc. v. Thompson, Ventulett, Stainback & Associates, Inc., 2001 UT 54, ¶ 32, 28 P.3d 669 modified, Sunridge Dev. Corp. v. RB & G Eng’g, Inc., 2010 UT 6, 230 P.3d 1000.

Under the economic loss rule, a party suffering only economic loss from the breach of an express or implied contractual duty may not assert a tort claim for such a breach absent an independent duty of care under tort law. Id.

In English, that means that when, say, a home buyer contracts with a builder to build a home, the home buyer’s rights to sue the builder for construction defects with the home are defined by the contract. A home buyer would not be able to bring a negligence claim against the builder, rather, the home buyer would need to bring a breach of contract claim and allege that the sub-par construction breached the home building contract.

That said, there are exceptions to the economic loss rule. One of which being for home builders. The court in W. v. Inter-Fin., Inc., 2006 UT App 222, ¶ 12, 139 P.3d 1059, 1063, noted that an exception to the economic loss rule exists if an independent duty of care exists. That is to say, special relationships like attorney-client, patient-physician, or home builder-buyer, create a duty independent of the contract that may be breached.

So in the home builder example above, a home buyer would be able to sue the builder for negligence because courts have found that home builders owe a special duty of care to home buyers. E.g. Davencourt at Pilgrims Landing Homeowners Ass’n v. Davencourt at Pilgrims Landing, LC, 2009 UT 65, 221 P.3d 234. However, the independent duty exception should not be relied on. The general rule is that when parties enter into a contract, cases arising out of what was contracted for are confined to contract actions.

Before the Utah Supreme Court

Plant Christensen & Kanell has another case before the Utah Supreme Court.

As the parties to the litigation prepare their briefs, here is some background on the case.

Ten years ago Mr. Oltmanns was injured while operating a Honda F-12 AquaTrax personal watercraft on a lake in southern Utah. About a year after the injury, Mr. Oltmanns was sued by his cousin-in-law for injuries caused by the watercraft accident. Then, two years after that, in 2009, Mr. Oltmanns sought defense of the claims under his homeowner’s policy (generally, if coverage exists, insurers have a duty to defend insureds in lawsuits). When his insurer, Fire Insurance Exchange, reviewed the policy, they decided that they needed the rights, responsibilities, and obligations of the parties decided by the court regarding one term. The term in question: jet skis.

Jet ski?

Jet ski?

Mr. Oltmanns policy excluded coverage for bodily injury resulting from “the ownership, maintenance, use, loading or unloading of . . . jet skis and jet sleds.” Fire Insurance consulted with its counsel about whether to deny coverage based on the presence of the term "jet skis." Their counsel then provided a "quite thorough coverage opinion, [wherin] counsel expressed the view that the term "jet ski" as used in Oltmanns's policy most likely would be construed as referring to the broad category of motorized personal watercraft such that, in counsel's opinion, 'Fire Insurance had a 75% chance of prevailing in a declaratory relief action.'" Fire Ins. Exch. v. Oltmanns, 2016 UT App 54, ¶ 4, 370 P.3d 566, 567.

Fire Insurance’s counsel advised them to file the declaratory judgment action to determine its rights and obligations under the insurance contract. The insurance company asked the courts to determine whether coverage existed.

Let’s get some background on the legal issue here. Generally, when insurance policy language is ambiguous, the policy is construed in favor of finding insurance coverage. See United States Fidelity & Guar. Co. v. Sandt, 854 P.2d 519, 521-22 (Utah 1993). This is because insurance agreements are considered contracts of adhesion, where the insurer has greater control over the contract language. Id. When faced with ambiguity in a written contract, courts do not interpret the provision to comport with what they think is most sensible or is most likely what one of the parties "really" meant or is what leads to the fairest result. Fire Ins. Exch. v. Oltmanns, 2012 UT App 230, ¶ 7, 285 P.3d 802, 805. Rather, they recognize the need to consider extrinsic evidence in an effort to resolve the ambiguity. See Wilburn v. Interstate Electric, 748 P.2d 582, 584-85 (Utah Ct. App. 1988). If the extrinsic evidence is not conclusive, then the last resort in contract interpretation is to construe the provision against the drafter. Id. Disputed terms in the policy are generally given their plain and ordinary meaning unless the parties have expressed a contrary intent. Estes v. St. Paul Fire & Marine Ins. Co., 45 F. Supp. 2d 1227, 1229 (D. Kan. 1999). It was against this legal backdrop that the parties entered into litigation.

In December 2009, Fire Insurance filed a declaratory relief action to have the court determine the rights and responsibilities of the parties as they related to the language in Mr. Oltmanns’ homeowners insurance policy. In that preceding, Fire Insurance moved for summary judgment, arguing that accident was not covered by the homeowners insurance policy. The trial court granted summary judgment in favor of Fire Insurance, concluding that the term “jet skis” in Mr. Oltmanns’ homeowners insurance policy included the Honda F-12 AquaTrax which Mr. Oltmanns was operating when the accident occurred. Mr. Oltmanns appealed the summary judgment to the Utah Court of Appeals. Concluding the term "jet skis" was ambiguous, the Utah Court of Appeals found that the provision should be construed against the drafter (i.e., the insurer), and hence coverage should exist. The court reversed and remanded to the Utah Second District Court. Thereafter, Fire Insurance immediately accepted coverage and settled the lawsuit.

Then, in 2013, Mr. Oltmanns filed a counterclaim against Fire Insurance seeking an award of attonrey's fees and costs from defending the declaratory judgment action. Fire Insurance filed a motion for summary judgment, claiming that Mr. Oltmanns’ claim was fairly debatable as a matter of law. The trial court agreed, and granted Fire Insurance’s Motion for summary judgment, concluding that Mr. Oltmanns’ claim was fairly debatable as a matter of law. Mr. Oltmanns appealed the trial court’s order on October 20, 2014, and the court of appeals affirmed the trial court’s order. The court held that meaning of ambiguous term “jet ski” was fairly debatable thus precluding any claims of liability for bad faith. Fire Ins. Exch. v. Oltmanns, 2016 UT App 54, 370 P.3d 566, cert. granted, 370 P.3d 566 (Utah 2016). Mr. Oltmanns then petitioned the Utah Supreme Court for certiorari (meaning they appealed the finding of the Utah Court of Appeals). The Utah Supreme Court granted the petition for certiorari. 

Now, Plant Christensen & Kanell is preparing to argue the case before the Utah Supreme Court. Stewart Harman and Joel Taylor are on the case and are presently preparing briefs for the Utah Supreme Court. We will keep you posted on the findings of Utah's highest court. In the mean time, remember to err on the side of caution and provide plenty of descriptive language in your contracts.

One fun day on the lake; ten not-so-fun years of litigation.

One fun day on the lake; ten not-so-fun years of litigation.

Tort Liability in Utah

Let's face it, the days are getting shorter and the nights are cooling down.

Shortly after the leaves fall, blankets of snow and sheets of ice will creep across the northern hemisphere once more. Which means roads and walkways will no longer be dry, sun-basked paths. Without plenty of shoveling and buckets of salt, walkways will soon become slippery injury-traps ripe for lawsuits.

From the perspective of municipalities and businesses, this potentially means defending against slip and fall lawsuits. The cause of action will likely be the tort of negligence. The plaintiff will claim that the government or business had a duty to keep the walkway clear of hazards like ice, that the entity breached that duty,  that the breach of that duty caused them to injure themselves, and that as a result, the plaintiff has a damages claim. See Gonzalez v. Russell Sorensen Const., 2012 UT App 154, 279 P.3d 422. If you are a Utah municipality or business, you should take these claims seriously and consult attorneys at the first sign of trouble.

However, this does go both ways. If you are an individual who slips and falls as a result of the negligence of another, we are here to help. Our personal injury practice is polished and precise.

So stay safe this coming winter. And when litigation is looming, give us a call.

Utah's Governmental Immunity Act in Action

Utah's Governmental Immunity Act has recently been held to foreclose the applicability of Utah's Savings Statute.

This new doctrine comes from the recent Utah Supreme Court case Craig v. Provo City, 2016 UT 40. The holding of Craig v. Provo City upholds the presumption in favor of government immunity, and clarifies an important issue of municipal law.

In January of 2010, a former Miss Utah and two others were arrested for allegedly stealing Nu Skin personal care products. Eventually, after the charges were dismissed, the three individuals sued Provo City for false arrests, malicious prosecution, conversion, and tortious interference with prospective business relations. However, because the plaintiffs had failed to file a necessary $300 bond required by the Governmental Immunity Act, their complaint was dismissed.

                              The Utah Supreme Court.

The plaintiffs refiled their complaint with the bond money, but the second complaint was filed after the one-year statute of limitations had run. Provo City moved to dismiss their complaint, arguing that it was barred by the statute of limitations. In response, the plaintiffs pointed to the Savings Statute—a Utah statute that extends the statute of limitations when cases are dismissed for procedural problems (like (say) failing to include a $300 bond with the complaint). The issue of whether the Governmental Immunity Act forecloses the operation of the Savings Statute was appealed to Utah's highest court, which held:

"We interpret the Governmental Immunity Act to foreclose the applicability of the Savings Statute . . . . [In so holding,] [f]irst, we set forth our understanding of the text and structure of the Governmental Immunity Act, explaining the basis for our conclusion that the Act speaks comprehensively on the procedure and requisite timing of a claim filed against the government, in a manner foreclosing the applicability of the Savings Statute. Second, we respond to two specific points . . . the notion that the Savings Statute can be applied without undermining the purpose of the Governmental Immunity Act, and the purported requirement of a 'plain statement' of the legislature’s intent to foreclose the Savings Statute." Craig v. Provo City, 2016 UT 40, ¶ 18.

The Utah Supreme Court's holding makes clear that the Governmental Immunity Act provides detail on the manner of filing claims against municipalities, and that other statutes do not undermine the procedures set forth in the Act. The court stated: "The Governmental Immunity Act's filing and timing standards are presented in such detail that we view them as occupying the field—as stating the all encompassing standards that dictate the timeliness of a claim asserted against the government." Id. at ¶ 26

The holding supports the presumption in favor of government immunity, and it emphasizes that the Governmental Immunity Act reigns supreme when it comes to filing actions against government entities. 

 

The Difference Between Conditions and Covenants in Utah Contracts

Contracts contain a myriad of promises that two or more parties agree to be bound by.

These promises can be separated into two categories: conditions and covenants. The difference between the two was recently clarified by the Utah Supreme Court in Mind & Motion Utah Investments, LLC v. Celtic Bank Corp., 2016 UT 6, ¶ 1, 367 P.3d 994, 997.

In Mind & Motion, the Utah Supreme Court analyzed a real estate purchase contract (or "REPC") to determine whether a provision requiring recording of the deed was a covenant or a condition. Mind & Motion had entered into a REPC with Celtic Bank to buy a large plat of land. The contract required Celtic Bank to record the deed by a specified date, but provided that Mind & Motion could extend the deadline at their discretion. When the first deadline arrived, Celtic Bank had failed to record, and Mind & Motion agreed to extended the recording deadline. When Celtic Bank missed the second deadline, Mind & Motion declined to extend the deadline a second time and sued Celtic Bank for breach of contract. Celtic Bank argued that its ability to record the deed depended on when county officials decided to approve its application, so it should not be liable for breach of contract.  

A covenant here, a condition there.

The Utah Supreme Court was asked to determine whether the recording provision was a condition or a covenant. The court stated that because conditions and covenants create qualitatively different obligations under the contract, the distinction between the two would be dispositive of the case.

"A covenant," the court stated, "is a promise between the parties to the contract about their mutual obligations. In essence, covenants are the core bargained-for exchange of an agreement. They create specific legal duties, the violation of which gives rise to remedies for breach of contract." On the other hand,  “A condition is an event, not certain to occur, which must occur before performance under a contract becomes due."

The court then provided three principle differences between conditions and covenants:

1) The parties to the contract have no duty to perform until a condition is fulfilled, so the failure of a condition relieves the parties of all of their contractual duties.

2) The parties have no remedy for breach of contract if a condition is not fulfilled, because at that point there is simply no contract to breach.

3) Conditions typically fall outside the control of the parties to the contract, often requiring some environmental trigger (such as "weather permitting") or action by a third party (such as "upon the lender's approval") for the contract to begin.

"Stated differently, even if one of the parties has some influence over the fulfillment of a condition, its incidence usually is a matter of fate or of the decision of one or more third parties. Covenants, by contrast, are almost always within the control of the contracting parties."

By applying this analysis to the case, the Utah Supreme Court held that Celtic Bank's recording obligation was a covenant, not a condition. As a result, the court found that Celtic Bank breached the contract by failing to timely record. Because a covenant, and not a condition, was violated, Mind & Motion was able to recover damages because the contract was still in force. 

If You've Signed It, the Court Says You've Read It

Utah Citizens will have a pretty tough time getting out of being bound by their signature.

In Utah, a party’s signature carries with it the presumption that the party “knew that they obligated themselves to perform the conditions of the written agreement.” Bennett v. Bowen, 238 P. 240, 245 (Utah 1925); see also State v. Saunders, 699 P.2d 738, 743 (Utah 1985) (where the court held that a signature on affidavit raises presumptions of voluntariness and knowledge of elements and nature of charge).

Be careful what you sign for.

Be careful what you sign for.

This time-tested principle states that a signee wishing to set aside and annul a written instrument has “the entire burden . . . to overcome, by clear, unequivocal, convincing testimony, the strong presumption arising in favor of the written instrument signed by the party.” Wilson v. Cunningham, 67 P. 118, 122 (Utah 1901). The written instrument will be held to express the intention of the parties unless the presumption is overcome by “clear, plain, and convincing” evidence “beyond a reasonable controversy.” Id. This means that if you're the one trying to get out of the contract, your attorney will have their hands full.

Even if the written instrument is considered a contract of adhesion which the signee admits to having not read, the contract will generally still be enforceable against the signee. See Berry v. Greater Park City Co., 2007 UT 87, ¶¶ 15–24, 171 P.3d 442, 446–48 (finding that although particular rules may apply to particular factual and legal scenarios, a contract of adhesion signed by the plaintiff was enforceable despite the plaintiff stating that they had not read the contract before signing).

This is where transactional attorneys make their hay. Suffice it to say, it is a good idea to read whatever you're signing before you sign it (or before you don't sign it).