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).

Utah and OSHA

Ever wonder to what extent Utah adopts or recognizes the federal occupational safety and health administration’s standards (OSHA)? If so, this blog post is right up your alley. The Utah Supreme Court has held that federal OSHA standards may be relied on in establishing the standard of reasonable care employers should be operating by. The court has also held, however, that when a conflict exists between the federal and state OSHA standards, Utah’s OSHA standards will be followed.

 

Standard of Care

“Because [federal] OSHA standards are so widely known, understood, and followed, they constitute a legitimate source for determining the standard of reasonable care, and we hereby approve of their use.” Slisze v. Stanley-Bostitch, 1999 UT 20, ¶ 18, 979 P.2d 317, 321. In Slisze, the court found that federal OSHA standards were admissible as government standards established for an industry, which created rebuttable presumption of non-defectiveness in products liability action against manufacturer of pneumatic nailer. Id.

 Conflict in Statutes

Where a conflict between the federal OSHA and Utah OSHA exist, Utah OSHA will be followed. Hughes Gen. Contractors, Inc. v. Utah Labor Comm’n, 2014 UT 3, ¶ 23, 322 P.3d 712, 717.  In this case the Utah Supreme Court was asked to determine the viability of the so-called multi-employer work site doctrine under the Utah Occupational Safety and Health Act (UOSHA). The doctrine makes a general contractor responsible for the occupational safety of all workers on a work site—even those who are not the contractor’s employees. Id. at 714. Federal OSHA regulations adopted this doctrine, and federal courts have upheld it as consistent with the governing federal statute. Id.  Justice Lee, writing for a unanimous court, held that the Utah OSHA standards were distinguishable, and, as a result, the federal OSHA standard did not apply. Id. at 716–17.

Contract Law Governs CC&Rs

In a recent decision from the Utah Supreme Court, the court clarified an up-til-then opaque aspect of property law. The case is Fort Pierce v. Shakespeare, and it involves a question over the interpretation of CC&Rs ("covenants, conditions, and restrictions") in a newly developing industrial park. A property owner applied to the Board for permission to build a cellphone tower in the industrial park. When the Board denied the proposal, the property owner went ahead anyway with the construction of the cell phone tower. When the Board learned of the insubordination, they brought suit.

The district court held that the Board's denial was "unreasonable and arbitrary" and held that "[t]he tower is approved and allowed to remain."  In so holding, the district court presumed that restrictive covenants like CC&Rs are disfavored and should be “strictly construed in favor of the free and unrestricted use of property." On direct appeal to the Utah Supreme Court, the court reversed.

The Utah Supreme Court rejected the strict construction of restrictive covenants and held that "restrictive covenants should be construed under the same principles used to interpret contracts." Fort Pierce v. Shakespeare, 2016 UT 28, ¶ 11. Utah property attorneys, municipal law attorneys, and contract lawyers should read this decision carefully to learn of its implications on their practice. Utah law is now unequivocal in this area: CC&Rs are to be interpreted under the same principles as contracts. Other restrictive covenants are also controlled by contract law.

 Next time you draft CC&Rs, remember that they are governed by contract law principles.

Next time you draft CC&Rs, remember that they are governed by contract law principles.

Our New Website

Plant Christensen & Kanell has renovated their website and today the changes are live. Everything but the URL has been updated (the URL is still pckutah.com).

With a refreshing new look and intuitive navigation, the new site is set up to move users through with seamless clarity and functionality. In addition to all the pages the site used to have, the website now features a "Newsroom" page where legal news and blog-posts like this are featured. Each page now has a contact form and links to Plant Christensen & Kanell's social media pages. There is also an interactive Google Map in the footer to help users find the firm. The new features to the site are innumerable, but perhaps the most important is that the site is now mobile friendly. Every page on the site will adjust to whatever screen you're viewing it on, and no functionality is lost when using the site on your mobile device.

Visit the site today and add it to your bookmarked pages.

 

 

 

Utah is Bridging the Justice Gap

On December 14, 2015, the Utah Supreme Court approved the creation of a new category of legal professionals called “limited paralegal practitioners,” (LPPs) who are authorized to help clients fill out and file documents, but are not allowed to appear in court. Blake Edwards, Coming Soon to Utah: A New Type of Legal Professional, BLOOMBERG BNA (Dec. 16, 2015), https://bol.bna.com/coming-soon-to-utah-a-new-type-of-legal-professional/.

Utah Supreme Court Justice Constandinos “Deno” Himonas, who chaired the Utah task force committee that explored whether LPPs could help Utahns have better access to courts, spent seven months with the committee examining what was successful in other states and common-law jurisdictions. Jessica Miller, A New Kind of Paralegal is Coming to Help Utahns Navigate the Court System, THE SALT LAKE TRIBUNE (4:09pm, Dec. 14, 2015). LPPs will be required to have either a law degree or an associate’s degree with a paralegal certificate. Id. LPPs will also need to be experienced paralegals and complete additional courses in their desired practice area. Id. The Utah State Bar will oversee licensing and disciplinary concerns for the newly formed program. Id. Now that the Utah Supreme Court has approved creation of LPPs, a committee will be appointed to implement the program and establish what educational requirements will be needed and what the exact limitations will be. Id. Rick Schwermer, the assistant administrator for the Utah State Office of the Courts, said the new profession is “changing the landscape of how [Utah] provide[s] access to legal services,” and although we are at the beginning of eliminating Utah's justice gap, “we’ve done the most difficult part, which is getting everyone to agree that we need to do something and coming up with at least the framework for doing it.” Id.

 

Tesla Before the Utah Supreme Court

After a failed attempt earlier this year to change Utah's dealer-protectionist laws, Tesla has taken its case to the Utah Supreme Court. The auto manufacturer argues that Utah's present law regarding auto sales (Utah Code Title 43 Chapter 3 "Motor Vehicle Business Regulation Act") violates Utah State's Constitution which provides for a free-market economy. Utah's Solicitor General rebutted that "In essence, Tesla argues it has a constitutional right to sell cars any way that Tesla prefers. But that's not the law no matter how strenuously Tesla UT tries to cloak its preferred business plan in constitutional garb." See Respondant's Brief filed with the Utah Supreme Court. Tesla submitted its briefs to the Utah Supreme Court on Monday, May 9, 2016.

Tesla is anxious to stock its new $3 million showroom in Salt Lake City with inventory, but the current Utah law only allows Tesla to repair vehicles on their property. They may also sell used Teslas, and provide test drives in used Teslas. Tesla hopes Utah will revise its dealer-protectionist laws by the time their new Model X and Model 3 become available for consumers. Tesla claims that it can't sell cars through traditional third-party dealers because those dealers don't have the incentive or the knowledge to sell sophisticated electric vehicles. Instead, Tesla claims, third-party dealers are incentivized to encourage consumers to purchase combustion engine vehicles instead of their electric cars.

Telsa's dominance will continue to grow, and Utah has an opportunity to host this blossoming company. However, if Utah's lawmakers continue to bow to lobbyist pressure from auto-dealers, Utah will miss out on an opportunity to be part of the Tesla revolution.

Insurers Need to Rethink Subrogation

The Utah Court of Appeals recently held that insurers do not have standing to sue when their insured still has a potential claim. In Wilson v. Educators Mutual Insurance, the court stated that when the "insured or the insured's estate retains some interest in the potential damages, an insurance company cannot pursue a subrogation action in its own name." 2016 UT App. 38, 12.