Zubiate v. Am. Family Ins. Co.
| Docket Number | 20210090-CA |
| Decision Date | 22 December 2022 |
| Citation | 524 P.3d 148 |
| Parties | Shawna ZUBIATE, Appellant, v. AMERICAN FAMILY INSURANCE COMPANY, Appellee. |
| Court | Utah Court of Appeals |
Emily Adams and Sara Pfrommer, Park City, Attorneys for Appellant
Evan S. Strassberg, Cottonwood Heights, Attorney for Appellee
1
¶1 About a year after purchasing a life insurance policy, a man (Father) emailed his insurance agent and instructed him to change the secondary beneficiary on his policy from his mother-in-law (Mother-in-Law) to his children (the Children). Sometime later, after Father and his wife both died in an accident, the insurance company paid the insurance proceeds to Mother-in-Law. The Children (through a conservator) then sued the insurance company, but the district court dismissed their entire lawsuit. The Children now appeal that decision. We affirm the dismissal of two of their four stated causes of action, but we reverse the dismissal of the other two, and remand the case to the district court for further proceedings.
¶2 In 2014, Father purchased a $1,000,000 life insurance policy (the Policy) from American Family Insurance Company (American Family). At the time he purchased the Policy, Father named his wife as the primary beneficiary and Mother-in-Law as the secondary beneficiary.
¶3 The following year, Father took steps to change the secondary beneficiary under the Policy. In particular, he emailed his insurance agent (Agent)—an agent of American Family—and instructed him to remove Mother-in-Law as the secondary beneficiary and to replace her with the Children, and then to install his mother, Shawna Zubiate, as a "tertiary beneficiary" in line behind the Children. However, Agent or American Family did not make the changes as Father had requested.
¶4 Four years later, in May 2019, Father and his wife—the primary beneficiary under the Policy—both died in an accident. Shortly thereafter, and apparently believing that Mother-in-Law was still the secondary beneficiary, American Family paid the insurance proceeds to Mother-in-Law.
¶5 In June 2020, the Children (through Zubiate, in her capacity as their conservator) filed this lawsuit against American Family and Mother-in-Law, generally alleging that the company had failed to follow Father's instructions to change the named secondary beneficiary, and then had failed to pay the insurance proceeds to the proper parties. The complaint asserted four separate causes of action: (1) "Failure to Change Beneficiary According to Decedent's Wishes," (2) mutual mistake and reformation, (3) unilateral mistake, and (4) negligence.
¶6 Mother-in-Law filed a motion to dismiss the complaint, asserting that the Children's various claims were untimely and/or failed to state a claim. In particular, she asserted that the Children's first cause of action was not a cognizable claim for relief, and that the Children had "failed to give any indication of what that claim might be." With regard to the other claims, Mother-in-Law asserted that the Children had failed to state valid claims for mistake or negligence, but that even if they had, those claims were time-barred under applicable statutes of limitation. American Family joined in Mother-in-Law's motion.
¶7 In opposition to the motion, the Children asserted that none of their claims were time-barred, and that they had stated valid claims for mistake and negligence. In addition, they included an introductory section in their memorandum in which they set forth their main legal theory: that Father had at least substantially complied with the requirements for changing the secondary beneficiaries of the Policy, that Father's changes rendered them third-party beneficiaries under the insurance contract, and that they could therefore "sue on a contract dispute as intended third party beneficiaries of the life insurance contract." The Children did not, however, specifically express an intention for the district court to construe their first cause of action—for "Failure to Change Beneficiary According to Decedent's Wishes"—as a claim for breach of contract as third-party beneficiaries.
¶8 The district court ultimately granted the motion, dismissing the Children's complaint against both American Family and Mother-in-Law in its entirety, with prejudice and on the merits. It first concluded that their first cause of action was not a cognizable claim for relief. Given the way the complaint was drafted and the way the motion arguments had been postured, the court found it "unclear as to whether [that claim] sound[ed] in tort, contract, statute, or another area of law." Next, the court concluded that the Children's mistake claims were barred by the applicable three-year statute of limitation, determining that the statute began to run when Father requested the change in beneficiary, which was five years before the complaint was filed. And finally, the court concluded that the Children could not sue American Family for negligence, reasoning that any such claim "would have to be pursued by" Father.
¶9 The Children now appeal the district court's dismissal of their complaint against American Family.3 We review the district court's determination for correctness. See Young Res. Ltd. P'ship v. Promontory Landfill LLC , 2018 UT App 99, ¶ 9, 427 P.3d 457 ( .
¶10 We begin our analysis with a brief discussion of the standards governing notice pleading and dismissal of complaints for failure to state a claim. We then engage in an analysis of the district court's dismissal order, and we do so in three parts. First, we assess whether the district court correctly dismissed the Children's mistake claims. Second, we assess whether the court correctly dismissed the Children's claim for "Failure to Change Beneficiary." And finally, we assess whether the court correctly dismissed the Children's negligence claim.
¶11 Utah has adopted the concept of "notice pleading," see Mack v. Utah State Dep't of Com. , 2009 UT 47, ¶ 17, 221 P.3d 194, which is defined as "[a] procedural system requiring that the pleader give only a short and plain statement of the claim showing that the pleader is entitled to relief, and not a complete detailing of all the facts," Notice Pleading , Black's Law Dictionary (11th ed. 2019). This concept is embodied in rule 8 of the Utah Rules of Civil Procedure, which requires only that a complaint contain "a short and plain ... statement of the claim showing that the party is entitled to relief" and a "demand for judgment for specified relief." See Utah R. Civ. P. 8(a). Under this standard, a complaint is sufficient if it provides "fair notice of the nature and basis or grounds of the claim and a general indication of the type of litigation involved." See Mack , 2009 UT 47, ¶ 17, 221 P.3d 194 (quotation simplified). A plaintiff's complaint will be deemed adequate under this standard as long as the defendant knows "what is being claimed and how to defend" against it. See Youngblood v. Auto-Owners Ins. Co. , 2007 UT 28, ¶ 22, 158 P.3d 1088.
¶12 When considering whether to dismiss a complaint for failure to state a claim pursuant to rule 12(b)(6) of the Utah Rules of Civil Procedure, courts must keep this "notice pleading" standard in mind. See Mack , 2009 UT 47, ¶ 17, 221 P.3d 194 (). In particular, our supreme court has instructed that "a complaint does not fail to state a claim unless it appears to a certainty that the plaintiff would be entitled to no relief under any state of facts which could be proved in support of the claim." Id. (quotation simplified). And when applying this standard, courts are to "liberally construe" both the applicable rules of civil procedure as well as the complaint "to favor finding a pleading sufficient." See id. ().
¶13 Complaints are therefore not to be dismissed merely due to "inartful pleading" or because a plaintiff "could have chosen a better procedural vehicle to bring [a] claim." Id. ¶ 21. To the contrary, dismissal for failure to state a claim is proper only where it is certain that the plaintiff cannot prevail under any potential set of facts. See id. ¶ 17 ; see also Simmons Media Group, LLC v. Waykar, LLC , 2014 UT App 145, ¶ 15, 335 P.3d 885 .
¶14 Thus, under the notice pleading standard, a plaintiff's complaint need contain only "a short and plain ... statement of the claim showing that the party is entitled to relief" and a "demand for judgment for specified relief." See Utah R. Civ. P. 8(a). "When a complaint states a claim in general language but the factual allegations are so vague and ambiguous that the defendant cannot draft an answer, the proper course of action is to move for a more definite statement under rule 12(e), not to move for dismissal."
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