Horton v. Gem State Mut. of Utah

• Decision Date: 03 July 1990
• Docket Number: No. 890565-CA,890565-CA
• Citation: 794 P.2d 847
• Parties: Ronald M. HORTON, Plaintiff and Appellee, v. GEM STATE MUTUAL OF UTAH, Defendant and Appellant.
• Court: Utah Court of Appeals

Page 847

794 P.2d 847

Ronald M. HORTON, Plaintiff and Appellee, v. GEM STATE MUTUAL OF UTAH, Defendant and Appellant.

No. 890565-CA.

Court of Appeals of Utah.

July 3, 1990.

Rehearing Denied Aug. 29, 1990.

Jeffrey R. Oritt (argued), Tibbals, Howell, Moxley & Wilkins, Salt Lake City, for defendant and appellant.

John Preston Creer (argued), Jack L. Schoenhals, Salt Lake City, for plaintiff and appellee.

Before DAVIDSON, BILLINGS and GARFF, JJ.

GARFF, Judge:

Gem State Mutual of Utah (Gem State) appeals from a judgment rendered by the trial court in a non-jury trial. We note at the outset that the record does not contain a transcript of the proceedings. We affirm in part and reverse in part.

A brief overview of the facts shows that, in December of 1983, Horton sustained serious injuries in an automobile accident which ultimately resulted in debilitating, chronic pain. Horton later took a teaching position at a violin-making school owned by Peter Paul Prier.

Prier contracted with Gem State for a group health insurance policy for his employees, in which Horton enrolled on November 1, 1984. Because Horton suffered chronic pain from his injuries, he entered the Pain Clinic at the University of Utah Medical Center on February 16, 1986. Although Gem State pre-authorized treatment, it later refused to pay the medical bills, asserting that Horton was not actually employed by Prier, and subsequently cancelled Horton's coverage. Even though Horton's condition was substantially improved by treatment at the Pain Clinic, he subsequently experienced a relapse in his condition which he attributed to Gem State's failure to pay his medical bills. Horton sued for breach of contract and breach of implied covenant of good faith and fair dealing. The trial court found in favor of Horton and awarded $11,754 for medical expenses, $15,000 for attorney fees, $5,000 as additional consequential damages, and $1,790 for taxable costs. The taxable costs included expert witness fees of $750 and transportation expenses of $996 for Dr. John Heil, and $50 for a jury fee. Horton, at oral argument, conceded that the witness fees were inappropriate.

Gem State argues that the trial court's findings of fact are based upon insufficient evidence and that there was no justification for the award of consequential damages.

In its finding number 14, the trial court attributed Horton's relapse in his physical condition to the cancellation of insurance coverage by Gem State, which caused additional medical expenses and "other consequential damages," including attorney fees. In findings numbers 15 and 16, the court found that Gem State did not act reasonably in investigating, processing and paying Horton's claims, and that it breached both the express terms of the insurance contract and the implied covenant of good faith and fair dealing.

Gem State also asserts that there was no justification to award consequential damages because such damages must be contemplated by the parties and be ascertainable. In Beck v. Farmers Ins. Exch., 701 P.2d 795 (Utah 1985), the Utah Supreme Court stated that damages for breach of contract include both general and consequential damages, consequential damages being defined as "those reasonably within the contemplation of, or reasonably foreseeable by, the parties at the time the contract was made." Id. at 801. The Beck court pointed out that an insured is often placed in a catastrophic position if claims are not paid within a reasonable period of time, that insurance is purchased not...