Cannon v. Travelers Indem. Co., 980246-CA.

• Decision Date: 27 January 2000
• Docket Number: No. 980246-CA.,980246-CA.
• Citation: 2000 Utah Ct. App. 010,994 P.2d 824
• Parties: Carla CANNON, Plaintiff and Appellant, v. The TRAVELERS INDEMNITY COMPANY, Defendant and Appellee.
• Court: Utah Court of Appeals

994 P.2d 824

2000 Utah Ct. App. 010

Carla CANNON, Plaintiff and Appellant, v. The TRAVELERS INDEMNITY COMPANY, Defendant and Appellee.

No. 980246-CA.

Court of Appeals of Utah.

January 27, 2000.

L. Rich Humpherys and Nathan D. Alder, Christensen & Jensen P.C., Salt Lake City, for Appellant.

Terry M. Plant and John N. Braithwaite, Plant, Wallace, Christensen & Kanell, Salt Lake City, for Appellee.

Before BENCH, JACKSON, and WILKINS,¹ JJ.

OPINION

JACKSON, Judge:

¶ 1 Carla Cannon appeals from the trial court's grant of summary judgment to Travelers Insurance Company (Travelers). We affirm.

BACKGROUND

¶ 2 "In reviewing a grant of summary judgment, we consider the facts in the light most favorable to the nonmoving party, here the appellant[]." Parker v. Dodgion, 971 P.2d 496, 496-97 (Utah 1998).

¶ 3 On August 16, 1992, Cannon went to the home of her relatives, Scott and Jesselie Anderson (the Andersons). Cannon's ten-year-old niece, Heidi Anderson, greeted Cannon by jumping up on her, putting her arms around Cannon's neck and her legs around Cannon's waist. Cannon contends Heidi's actions caused her immediate back pain and injury. Cannon then went to her parents' home, told them about the injury, and went to bed, unable to move normally. Cannon did not mention the injury to the Andersons, nor did Jesselie Anderson notice anything amiss when Heidi greeted Cannon. Further, Cannon's mother strongly urged Cannon not to tell the Andersons about the injury because she was concerned about unrelated litigation, involving the estate of a deceased family member, in which the Andersons were expected to testify.

¶ 4 By late November 1992, Cannon's condition had worsened and needed medical attention. When her physician recommended surgery, Cannon told the Andersons about the injury and asked them about possible coverage under their homeowners insurance policy. The Andersons checked with their agent, who told them that Travelers would not pay Cannon's medical expenses.

¶ 5 Cannon had back surgery on December 9, 1992. The surgery was only partially successful, and she still has nerve pain, leg problems, and other disabilities. On December 21, 1992, Cannon submitted a claim to Travelers to have her medical bills paid under the medical payment coverage of the Andersons' homeowners policy. Travelers contends it did not receive the December 21 letter until January 5, 1993. Travelers's adjustor, Tom Day, then contacted the Andersons, who said they did not learn about the claim until December 1992, and that they thought Cannon might have injured her back in a sporting event or by lifting her invalid father.

¶ 6 Day initially concluded that Cannon's injuries were not sustained on the insured premises. By the end of January 1993, Cannon had signed a medical release to allow Travelers to obtain her medical records. By mid-February, Cannon gave Travelers a statement from her physician, which stated that the August 1992 incident could have led to the later disc rupture and need for surgery. Travelers rejected Cannon's claim on the ground that there was no medical certainty that Cannon's injury occurred on the insured premises. Although Cannon said her parents and other witnesses could verify that the injury occurred on the day in question, Day did not contact Cannon's parents or the other witnesses.

¶ 7 On April 21, 1993, Travelers took a recorded statement from Cannon. On June 14, 1993, Day offered to settle for a portion of Cannon's medical payments claim, on the condition that she release her potential liability claim against the Andersons. Cannon did not accept Travelers's offer, stating that she would only accept the medical payment benefits unconditionally. Thereafter, in August 1993, Travelers sent Cannon two checks totaling $352.20, which Cannon cashed.

¶ 8 Cannon contends that even though she repeatedly tried to communicate with Travelers, the company's only response after June 1993 was to send the two checks in August. Accordingly, Cannon retained counsel. On October 4, 1994, Cannon filed a complaint alleging four causes of action. She argued: (1) she was an unnamed insured and thus entitled to receive a copy of the Andersons' policy from Travelers; (2) Travelers breached the express and implied terms of the policy by failing to pay Cannon the medical payments policy limit; (3) Travelers breached its duty of good faith and fair dealing; and (4) Travelers breached insurance regulation statutes and rules, industry standards, and its own internal policies. About two months after Cannon filed this complaint, Travelers gave her a copy of the Andersons' insurance policy.

¶ 9 On June 9, 1995, Cannon submitted a settlement proposal to Travelers. The proposal included affidavits from Cannon's parents and her sister, explaining why Cannon did not complain to the Andersons for several months, and providing evidence that Cannon had told her parents about the incident and had complained of back pain on the evening of the incident. Shortly thereafter, on July 18, 1995, Travelers paid Cannon the full medical payments limit of $10,000.

¶ 10 Travelers moved for summary judgment on July 14, 1997. Travelers argued that there was no further claim for breach of the express contract terms after payment of the medical expenses, that there was no claim for breach of an implied covenant of good faith and fair dealing because Cannon had no contractual privity with Travelers, and that the validity of Cannon's claim was fairly debatable. A hearing on the motion was held on November 10, 1997. The court ruled that the first and third causes of action of Cannon's first amended complaint would be dismissed on the ground that Cannon lacked contractual privity with Travelers and was not defined as an insured in the policy. Further, the court ruled that the right to sue for medical benefits, without contractual privity, did not give rise to the covenant of good faith and fair dealing that exists between parties to the contract.

¶ 11 The court also dismissed Cannon's fourth cause of action, ruling that alleged violations of the Utah Unfair Claim Settlement Practices statutes and rules do not give rise to a private cause of action. On Cannon's second cause of action, for breach of the express policy terms, the court ruled that the broad consequential damages sought were not available for breach of the express terms. It denied the motion to the extent that Cannon sought attorney fees and litigation expenses incurred in pursuing her claim for reimbursement of medical expenses, and further sought interest on the medical expenses up to the point when they were paid.

¶ 12 The court's order granting partial summary judgment was entered on December 10, 1997. Cannon and Travelers later settled the remaining part of the second cause of action. The parties therefore stipulated to an Order of Dismissal with prejudice on the remaining claim, and the Order of Dismissal was entered by the court on April 30, 1998.

ISSUES AND STANDARD OF REVIEW

¶ 13 Cannon presents four issues on appeal. First, she argues the trial court erred when it ruled that she was a third-party insured, and not a first party insured under the Andersons' policy. Second, she argues the trial court erred when it ruled that Travelers did not owe her a duty of good faith and fair dealing in regard to her medical payments claim. Third, she contends the trial court erred when it ruled that there was no private cause of action arising from statutes, regulations, industry standards, and Travelers's own internal standards. Finally, she argues the trial court erroneously ruled that Cannon could not recover consequential and other damages.

¶ 14 "`Summary judgment is appropriate only when no genuine issue of material fact exists and the moving party is entitled to judgment as a matter of law.'" Parker v. Dodgion, 971 P.2d 496, 497 (Utah 1998) (citation omitted). "We view the facts and inferences in a light most favorable to the losing party[,]" and we will affirm the judgment only "where there is no genuine dispute as to a material fact or where, viewing the facts as contended by the losing party, the moving party is entitled to judgment as a matter of law." Pixton v. State Farm Mut. Auto. Ins. Co., 809 P.2d 746, 748 (Utah Ct.App.1991). "Because the question of whether summary judgment is appropriate is a question of law, we accord no deference to the trial court." Parker, 971 P.2d at 497.

ANALYSIS

I. Whether Cannon is an Insured Under the Policy

¶ 15 Cannon first takes issue with the trial court's determination that she was not an insured under the policy. Instead, she contends she is a first-party insured. We disagree. "`We use the term "first party" to refer to an insurance agreement where the insurer agrees to pay claims submitted to it by the insured for losses suffered by the insured.'" Sperry v. Sperry, 990 P.2d 381, 1999 UT 101, ¶ 8, 381 Utah Adv. Rep. 27 (quoting Beck v. Farmers Ins. Exch., 701 P.2d 795, 798 n. 2 (Utah 1985)). Cannon does not argue that she was a party to the contract, nor does she contend that she was in contractual privity with a party to the contract. Rather, she contends that (1) the policy language is ambiguous and militates in favor of a finding that she is an insured, (2) she should be considered an insured in light of industry practice, and (3) public policy weighs in favor of finding her an insured under the policy.

¶ 16 "Insurance policies are merely contracts and should thus be interpreted under the same rules governing ordinary contracts." Village Inn Apartments v. State Farm Fire & Cas. Co., 790 P.2d 581, 582 (Utah Ct.App.1990). "Whether a contract is ambiguous is a question of law," which we review for correctness. Id. "If a contract is determined to be unambiguous, its interpretation is also a question of law." Id.

¶ 17 We conclude the policy is unambiguous regarding Cannon's purported status as a first-party insured. Nothing in the policy's language...