Utah Transit Authority v. Greyhound Lines, Inc.

This opinion is subject to revision before final
publication in the Pacific Reporter
2015 UT 53IN THE
SUPREME COURT OF THE STATE OF UTAH
UTAH TRANSIT AUTHORITY, a Utah public transit district,
Appellee,
v.
GREYHOUND LINES, INC., a Delaware corporation,
Appellant.
No. 20131076
Filed July 10, 2015
Third District, Salt Lake
The Honorable Randall N. Skanchy
No. 090915370
Attorneys:
Scott M. Petersen, David N. Kelley, Salt Lake City, for appellee
Karra J. Porter, Sarah E. Spencer, Salt Lake City, for appellant
CHIEF JUSTICE DURRANT authored the opinion of the Court, in which
ASSOCIATE CHIEF JUSTICE LEE, JUSTICE DURHAM, JUSTICE
PARRISH, and JUSTICE HIMONAS joined.
CHIEF JUSTICE DURRANT, opinion of the Court:
Introduction
¶1 We have long strictly construed contractual provisions that
call for one party to indemnify another, requiring that such
provisions clearly and unequivocally manifest the intent to do so. In
this case, we are asked to consider whether we should also strictly
construe a contractual provision requiring one party to procure
insurance for the benefit of another.
¶2 We conclude that while an agreement to indemnify is
similar in some respects to an agreement to procure insurance, the
policy we have identified as supporting strict construction of the
former does not apply with equal force to the latter; and we decline,
UTA v. GREYHOUND
Opinion of the Court
for reasons that we will describe, to require that an agreement to
procure insurance be strictly construed.
¶3 This case involves a lease (Lease Agreement) between
Greyhound Lines, Inc. (Greyhound), the lessee, and Utah Transit
Authority (UTA), the lessor, for a section of UTA‟s intermodal
transportation facility (Intermodal Hub). The dispute focuses on
whether the insurance procurement provision of the Lease
Agreement (section 10), which required Greyhound to purchase
commercial general liability insurance covering UTA, required that
this insurance cover UTA‟s negligent acts. Greyhound argues that
under our caselaw a rule of strict construction applies to an
agreement to provide insurance for another‟s benefit. But UTA
argues that our caselaw does not require that we strictly construe
such insurance procurement provisions. UTA also claims that under
traditional contractual interpretation principles, section 10 required
Greyhound to purchase insurance to cover UTA‟s negligent acts.
Greyhound failed to purchase the required insurance, and thus UTA
asserts that Greyhound breached the contract.
¶4 The dispute between UTA and Greyhound arises in the
context of a slip-and-fall personal injury claim that resulted from
UTA‟s negligence. A Greyhound passenger, Alma Bradley, was on
an interstate Greyhound bus trip when she stopped for a layover at
the Intermodal Hub. During her layover, she walked outside the
building and fell from a concrete pedestrian ramp. She sustained
serious injuries. UTA admitted negligence in not installing a
handrail on the pedestrian ramp. The injured passenger
subsequently submitted a claim to UTA to recover for her injuries.
UTA ultimately settled the claim for $50,000 and an agreement to
satisfy any resulting Medicare liens. UTA requested that Greyhound
reimburse it for the cost of the claim under section 10 of the Lease
Agreement. Greyhound again refused and this litigation resulted.
¶5 The district court issued a memorandum decision and a
subsequent order on the parties‟ cross motions for summary
judgment. In this order, the district court held (1) that the insurance
procurement provision of the Lease Agreement is not subject to strict
construction under Utah law; (2) that UTA was required under the
Lease Agreement to secure insurance that covered UTA‟s negligent
acts; (3) that Ms. Bradley‟s personal injury claim triggered
Greyhound‟s duty to provide insurance under the Lease Agreement;
and (4) that Greyhound breached the contract by not securing
insurance. The court entered judgment against Greyhound,
awarding UTA damages for the breach. These damages included
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recovery for all of Ms. Bradley‟s settlement and UTA‟s attorney fees
and costs.
¶6 Greyhound has appealed the district court‟s decision on
summary judgment and now asks us to review three issues:
(1) whether under Utah law, an agreement to procure insurance for
the benefit of another must be strictly construed; (2) whether the
district court erred when it concluded that Ms. Bradley‟s claim
triggered Greyhound‟s duty to procure insurance; and (3) whether
the district court abused its discretion in awarding UTA‟s attorney
fees. We affirm the district court‟s decision on all issues. We clarify
that under Utah law, an agreement to procure insurance for the
benefit of another is not subject to strict construction. Also, we
conclude that under the traditional rules of contractual
interpretation, Greyhound‟s duty to provide insurance to UTA was
triggered, and this duty included the duty to provide insurance that
covered UTA‟s negligent acts. As a result, we uphold the district
court‟s finding that Greyhound breached the Lease Agreement.
Finally, we uphold the district court‟s attorney fee award because it
is reasonable and based on sufficient evidence in the record.
Background
¶7 Greyhound and UTA entered into a Lease Agreement on
August 2, 2005.1 Greyhound leased a portion of UTA‟s Intermodal
Hub, located in downtown Salt Lake City, as a passenger bus
terminal for its interstate bus service. This case involves the
interpretation of the Lease Agreement‟s indemnity and insurance
procurement provisions as they relate to a slip-and-fall accident that
occurred on the leased premises. UTA has admitted that the slip-
and-fall accident resulted from its own negligence.
¶8 On March 18, 2008, Ms. Alma Bradley was on a Greyhound
bus trip between California and Idaho when she stopped for a
layover at the Intermodal Hub. During her layover, Ms. Bradley
walked outside the building, in the common area covered by the
Lease Agreement, and fell from a concrete pedestrian ramp. She
sustained serious injuries. UTA has admitted that it was negligent in
not installing a handrail on the pedestrian ramp. Ms. Bradley
subsequently submitted a claim to UTA to recover for her injuries.
1 We note that, while Greyhound was an original party to the
lease, UTA took an assignment of the rights and obligations of the
Lease Agreement from the prior facility owner, Salt Lake City, on
March 12, 2007.
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UTA requested that Greyhound “defend, indemnify and hold UTA
harmless” from Ms. Bradley‟s claim. Greyhound refused. UTA
ultimately settled the claim for $50,000 and an agreement to satisfy
any of Ms. Bradley‟s resulting Medicare liens. After the settlement,
UTA requested that Greyhound reimburse it for the cost of
Ms. Bradley‟s claim. UTA sought reimbursement under section 10 of
the Lease Agreement, the insurance procurement provision.
Greyhound again refused and UTA filed a complaint in September
2009, claiming breach of contract, breach of the duty of good faith
and fair dealing, and breach of fiduciary duty.
¶9 The parties‟ dispute focuses on the proper interpretation of
the Lease Agreement‟s indemnity and insurance procurement
provisions. Greyhound argues that the insurance procurement
provision did not require it to purchase insurance to cover UTA for
liability arising from its own negligent acts (or provide such
coverage through self-insurance); and therefore, it did not breach the
contract by failing to purchase insurance from a third party or failing
to self-insure. Greyhound argues that it did not have a duty to
provide insurance for UTA‟s negligence, because the insurance
procurement provision did not clearly and unequivocally state that
the insurance Greyhound was to provide necessarily covered UTA‟s
negligent acts. Greyhound argues that our caselaw, which requires
strict construction of indemnity provisions, should apply with equal
force to insurance procurement provisions. Further, Greyhound
claims that even if we decline to apply strict construction and instead
apply traditional rules of contractual interpretation, it still did not
have a duty under the Lease Agreement to provide insurance for
UTA‟s negligence. Greyhound asserts that reading the insurance
procurement provision to require that the insurance cover UTA‟s
negligent acts renders the indemnity provision, in which UTA
indemnifies Greyhound for UTA‟s negligent acts, superfluous.
Greyhound also argues that Ms. Bradley‟s injury did not “arise from
[Greyhound‟s] use, occupancy, maintenance, and operations under
[the] Lease,” so the insurance provision was not triggered and thus
Greyhound had no duty to insure UTA for the incident.
¶10 UTA argues that the “clear and unequivocal” interpretive
standard applies only to indemnity provisions, not to insurance
procurement provisions, and that Greyhound breached the contract
by not purchasing third-party liability insurance covering UTA‟s
negligence, or self-insuring for the same. UTA also argues that the
insurance procurement and indemnity provisions can be clearly
harmonized even if the insurance provision is read to require
coverage for its negligent acts.
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¶11 The insurance provision in section 10(h) of the Lease
Agreement provides,
[Greyhound], subject to the self-insurance provisions
above, at its own costs and expense, shall secure and
maintain during the term of this Lease, including all
renewal terms, the following insurance coverage:
(1) Third Party Liability
Commercial general liability insurance with
[UTA] named as an additional insured, in the
minimum amount of $1,000,000 per
occurrence with a $5,000,000 general
aggregate. The policy shall protect [UTA],
[Greyhound], and any subcontractor to
[Greyhound] from liabilities and claims for
damages for personal injury, bodily injury,
including accidental death, and from claims
for property damage that may arise from
[Greyhound‟s] use, occupancy, maintenance,
and operations under this Lease, whether
performed by [Greyhound] itself, any
subcontractor, or anyone directly or
indirectly employed by either of them.
(Emphasis added).
Greyhound failed to obtain commercial general liability insurance
and denied UTA‟s request that Greyhound self-insure for the claim.2
2 We note that under section 10(a) of the Lease Agreement,
[f]or any and all types of insurance required in this
Lease, [Greyhound] may satisfy its requirement
through a lawfully established self-insurance program.
Any such self-insurance program shall be subject to
[UTA‟s] right to verify the adequacy of [Greyhound‟s]
financial resources available to fund such a program on
an as needed basis. [Greyhound] shall provide [UTA]
evidence of self-insurance in a form approved by
[UTA], on an annual basis within 30 days prior to the
anniversary date of the Commencement Date.
It is unclear whether Greyhound followed the prescribed steps to
self-insure under the section 10(a) of the contract. But it is clear that
when UTA requested that Greyhound cover it for the settlement
amount, Greyhound declined.
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Opinion of the Court
¶12 The Lease Agreement also contained an indemnity
provision, set forth in section 11, providing that Greyhound would
indemnify UTA for claims arising from Greyhound‟s negligence in
certain cases and that UTA would indemnify Greyhound for acts of
UTA‟s negligence. The pertinent language describing UTA‟s
indemnification of Greyhound is as follows:
[UTA] shall indemnify, save harmless and defend
[Greyhound], its agents and employees from and against
all claims, mechanic liens, damages, actions, costs,
charges and other liabilities for property damage or
injury or death to persons, including attorney‟s fees,
arising out of or by reason of [UTA’s] negligent or willful
acts or omissions relating to any of its undertakings
hereunder. (Emphasis added).
Greyhound also points to language in sections 4, 6, and 12 of the
Lease Agreement to establish that UTA had a duty to provide a
facility that complied with applicable ordinances and regulations,3
had no adverse physical or structural conditions,4 and was properly
maintained.5 The Lease Agreement also contains language
concerning attorney fees. Section 32 states, “[i]n the event either
Party enforces the terms of this Lease by suit or otherwise, the Party
found to be at fault by a court of competent jurisdiction shall pay the
cost and expense incurred thereby, including reasonable attorney‟s
fees.”
3 Section 4 of the Lease Agreement provides in relevant part,
“[UTA] represents to [Greyhound] that the Leased Premises and
Common Area will comply with all applicable zoning requirements,
ordinances, regulations, and all applicable laws, affecting the Leased
Premises and Common Area and/or required in [Greyhound‟s] use
of the Leased Premises and Common Area including the Americans
with Disabilities Act (or other laws affecting handicapped access).”
4 Section 6(e) states, “[UTA] hereby represents to [Greyhound], to
the best of [UTA‟s] knowledge, that as of the Commencement Date . .
. there is no adverse fact relating to the physical, mechanical or
structural condition of the Leased Premises or any portion thereof
which has not been specifically disclosed to [Greyhound].”
5 Section 12(b) states that, among other maintenance
responsibilities, “[UTA] shall maintain and keep in good repair . . .
the physical integrity of . . . sidewalks and walkways.”
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¶13 The parties filed cross-motions for summary judgment. And
after a hearing, the district court held (1) that the clear and
unequivocal standard does not apply to insurance procurement
provisions under Utah law; (2) that the insurance procurement
provision in section 10(h) of the Lease Agreement required
Greyhound to obtain commercial general liability insurance to
protect UTA from claims arising from Greyhound‟s “use, occupancy,
maintenance and operations under the Lease” and included
“liabilities and claims caused by UTA‟s own negligence;” (3) that
Ms. Bradley‟s claim did “arise from” Greyhound‟s use of the facility
under the Lease Agreement; (4) that Greyhound failed to obtain
commercial general liability insurance covering UTA for
Ms. Bradley‟s claim; and (5) that this failure was a breach of the
Lease Agreement. The district court then granted UTA‟s motion for
summary judgment, denying Greyhound‟s motion.
¶14 Subsequently, the district court awarded UTA damages that
included the $50,000 UTA had paid to Ms. Bradley and ordered
Greyhound to satisfy Ms. Bradley‟s future Medicare liens, if any. The
district court also awarded UTA attorney fees and costs pursuant to
section 32 of the Lease Agreement in the amount of $48,811.55 in fees
and $610 in costs. Greyhound appeals. We have jurisdiction under
Utah Code section 78A-3-102(3).
Standard of Review
¶15 Greyhound presents three issues on appeal. First,
Greyhound argues that the district court should have held that the
insurance procurement provision was subject to strict construction
under Utah law. Second, Greyhound argues the district court erred
in holding that Ms. Bradley‟s claim “arose from [Greyhound‟s] use
occupancy, maintenance and operations” under the Lease
Agreement. “An appellate court reviews a [district] court‟s legal
conclusions and ultimate grant or denial of summary judgment for
correctness and views the facts and all reasonable inferences drawn
therefrom in the light most favorable to the nonmoving party.”6
¶16 Finally, Greyhound argues the district court abused its
discretion in awarding UTA attorney fees. “Calculation of reasonable
attorney fees is in the sound discretion of the [district] court, and will
not be overturned in the absence of a showing of a clear abuse of
6 Bingham v. Roosevelt City Corp., 2010 UT 37, ¶ 10, 235 P.3d 730(internal quotation marks omitted).
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Opinion of the Court
discretion.”7 Also, although “an award of attorney fees must be
supported by evidence in the record,” the district court “enjoy[s]
broad discretion in evaluating evidence to determine what
constitutes a reasonable fee.”8
Analysis
¶17 Below, we discuss each issue presented by Greyhound in
turn. First, we address Greyhound‟s argument for strict construction
of insurance procurement provisions. We conclude that strict
construction does not apply to an agreement to provide insurance
for another‟s benefit. We have never held that such an agreement
must be strictly construed, and overarching policy considerations
weigh in favor of not adopting such a rule. Second, we interpret the
Lease Agreement and uphold the district court‟s conclusion that Ms.
Bradley‟s claim arose out of Greyhound‟s use of the premises and
that the indemnification and insurance procurement provisions can
be harmonized. Finally, we uphold the attorney fee award because
the district court found the attorney fees reasonable and necessary,
and it based this finding on sufficient evidence in the record.
I. An Agreement to Procure Insurance Is Distinguishable From an
Agreement to Indemnify and Is Not Subject to a
Strict Construction Rule
¶18 We affirm the district court‟s holding that a contractual
obligation to procure insurance for the benefit of another is not
subject to strict construction. Contrary to Greyhound‟s assertion, we
have never required strict construction of such provisions, and
important policy considerations support not adopting such a rule.
Below, we first review our caselaw, concluding that we have not
adopted a rule of strict construction in this context. We then discuss
why we decline to adopt such a rule.
A. We Have Not Adopted a Rule of Strict Construction in the
Insurance Procurement Context
¶19 Although the parties highlight tension in Utah caselaw
regarding the application of the rule of strict construction to
insurance procurement provisions, we now clarify that we have not
adopted such a rule. Greyhound points to language in Freund v. Utah
7 2 Ton Plumbing, L.L.C. v. Thorgaard, 2015 UT 29, ¶ 53, 345 P.3d
675 (internal quotation marks omitted).
8 Id. (internal quotation marks omitted).
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Power & Light Co.,9 along with federal caselaw, to support the
application of strict construction to agreements to provide insurance
for the benefit of another. But UTA points to the rule announced by
the Utah Court of Appeals in Pickhover v. Smith’s Management Corp.10
and applied in subsequent appeals court cases to argue that strict
construction does not apply to insurance procurement provisions.
The Pickhover court held that “an agreement to provide insurance for
another‟s benefit, while analogous in some respects to an agreement
to indemnify another for the consequences of its own negligence, is
not subject to the strict construction rule.”11 In Freund, we did not
directly confront and analyze the issue now before us, and we
decline to apply a rule of strict construction based on this case.
Instead, we conclude that insurance procurement provisions are
distinguishable from indemnity provisions and are not subject to
strict construction.
¶20 As a starting point, both parties recognize, “[i]n a long line
of cases spanning more than fifty years, we have repeatedly held
that an indemnity agreement which purports to make a party
respond for the negligence of another should be strictly construed.”12
The rule of strict construction requires that if a party intends to
“assume ultimate financial responsibility for negligence of another,”
then that intention must be “clearly and unequivocally expressed.”13
The main policy rationale for this rule is that transferring liability for
one‟s negligence “would tend to encourage carelessness and would
not be salutary either for the person seeking to protect himself or for
those whose safety may be hazarded by his conduct.”14
¶21 We have not adopted a rule of strict construction of
insurance procurement provisions. As discussed below, we did not
announce a rule of strict construction in Freund and the court of
appeals, the only Utah court to fully analyze the issue, held that
strict construction does not apply to an agreement to provide
9 793 P.2d 362, 372−73 (Utah 1990).
10 771 P.2d 664 (Utah Ct. App. 1989).
11 Id. at 667.
12 Freund, 793 P.2d at 370.
13 Id. (internal quotation marks omitted).
14Union Pac. R.R. Co. v. El Paso Natural Gas Co., 408 P.2d 910, 913
(Utah 1965).
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Opinion of the Court
insurance for another‟s benefit.15 In Freund, the Tenth Circuit Court
of Appeals certified several questions to this court, including
whether it is a correct interpretation of Utah law that
an agreement to purchase insurance to cover a third
party‟s own negligence is governed by the same rule of
construction as an indemnification agreement to
indemnify a third party for its own negligence
according to the Tenth Circuit‟s decision in Kennecott
Copper Corp. v. General Motors Corp.16
¶22 Kennecott Copper involved a purchase order for the lease of
dump trucks between General Motors (the lessor) and Kennecott
Copper (the lessee).17 The purchase order stated that “Kennecott will
provide liability and property insurance related to possession and
operation of the units.”18 Kennecott purchased insurance, and
subsequently one of the trucks sustained extensive damage due to
General Motors‟ negligence.19 Kennecott and the insurance company
paid for the damages and then instituted a claim against General
Motors.20 General Motors argued that it was a beneficiary of the
policy and thus immune from the claim.21 The court held that under
Utah law agreements to purchase insurance for another‟s benefit
were strictly construed.22 The court then concluded that the purchase
order language did not clearly and unequivocally require the lessee
to purchase design insurance. Therefore, the court reasoned,
Kennecott did not owe General Motors insurance for this accident.23
¶23 In Freund, we briefly discussed the rule announced by the
Tenth Circuit in Kennecott Copper and the holding in that case. We
15 Pickhover, 771 P.2d at 667.
16 Freund, 793 P.2d at 364.
17 Kennecott Copper Corp. v. Gen. Motors Corp., 730 F.2d 1380, 1381
(10th Cir. 1984).
18 Id. (internal quotation marks omitted).
19 Id.20 Id.21 Id. at 1382.
22 Id. at 1382−83.
23 Id. at 1383.
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then stated that “[w]e have no quarrel with that result.”24 But we did
not apply a rule of strict construction to the insurance procurement
provision in Freund. Instead, we concluded that because the
indemnification provision in the contract at issue clearly and
unequivocally covered the other party‟s negligence, the insurance
procurement provision in that contract should be interpreted under
traditional rules of contractual interpretation.25 We also stated that
“[a] heightened rule of construction is not warranted” and cited
Pickhover favorably. And as explained below, Pickhover clearly states
that a rule of strict construction does not apply to agreements to
procure insurance for the benefit of another under Utah law.26
¶24 Our decision in Freund does not announce a rule of strict
construction of agreements to provide insurance for another‟s
benefit. Greyhound argues that our statement that we have “no
quarrel” with the result in Kennecott Copper endorsed the rule stated
therein, requiring strict construction of insurance procurement
provisions under Utah law. We decline to read Freund in this manner
for several reasons. First, we did not directly state support for a rule
of strict construction of insurance procurement provisions in Freund,
but merely stated that “[w]e have no quarrel with that result” when
discussing the outcome of Kennecott Copper. While this language
supports the result of Kennecott Copper, it does not adopt the rule of
strict construction stated therein.
¶25 Second, in Freund, we did not apply a rule of strict
construction to the insurance procurement provision. Instead, we
concluded that because the indemnification provision clearly
covered the indemnitee‟s negligence, the insurance procurement
clause would be “construed as any other contractual language.”27
24Freund, 793 P.2d at 372 (holding that “a further provision in that
agreement to fund that indemnification by purchasing insurance
should be construed as any other contract language” when the
indemnification provision expressed a clear and unequivocal intent
to cover the other party‟s negligence).
25 Id.
26 Id. at 373; see Pickhover, 771 P.2d at 667, 670 (stating that “[t]he
Utah cases referred to by the Tenth Circuit in Kennecott Copper do not
support its conclusion that contracts to provide insurance are subject
to the strict construction rule” and later announcing that “the rule [of
strict construction] applies only to indemnity provisions”).
27 Freund, 793 P.2d at 372.
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After applying the rule above, we stated, “[a] heightened rule of
construction is not warranted” and cited favorably to Pickhover,
which clearly states that a rule of strict construction does not apply
to insurance procurement provisions.28
¶26 Finally, in Freund we narrowed the rule of strict construction
for indemnification agreements by recognizing the “growing trend
to relax some of the strictness of the rule of construction when
indemnity arises in a commercial context.”29 We found it appropriate
to “evaluat[e] the indemnification agreement according to the
objectives of the parties and the surrounding facts and
circumstances”—such as whether the parties are sophisticated
commercial entities contracting at arm‟s length.30 Thus, a close
reading of Freund shows that we did not state a broad rule of strict
construction for insurance procurement provisions that required
coverage of another‟s negligence.
¶27 The only Utah court to fully analyze the issue now before us
is the court of appeals in Pickhover. There, the court directly
addressed the issue and was “convinced that an agreement to
provide insurance for another‟s benefit, while analogous in some
respects to an agreement to indemnify another for the consequences
of its own negligence, is not subject to the strict construction rule.”31
In that case, the court was construing a contract with an insurance
procurement provision, but no indemnification provision. The
parties had executed a purchase agreement where the purchaser,
Young Electric Sign Company (YESCO), agreed to provide insurance
to the purchasee, Marveon.32 The purchase agreement stated,
[YESCO] agrees . . . to provide, at its expense,
insurance coverage adequate to fully protect [Marveon]
against property damage . . . or personal injury or
death claims arising out of the ownership,
maintenance, use, service, transportations [sic], or
28 Id. at 373.
29 Id. at 370.
30 Id.
31 771 P.2d at 667.
32 Id. at 665−66.
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installation of [signs] in a minimum amount of One
Million Dollars ($1,000,000.00).33
YESCO failed to provide the insurance.34 Subsequently,
Mr. Pickhover was killed when a sign installed by Marveon fell on
him.35 Mr. Pickhover‟s estate filed a wrongful death suit against
YESCO, Marveon, and additional defendants.36 It was eventually
established that Marveon had negligently installed the sign.37 The
district court ruled that Marveon was entitled to indemnification by
YESCO for up to $1 million, the amount specified in the insurance
provision.38
¶28 The issue presented to the court of appeals was whether the
insurance procurement provision of the contract “require[d] YESCO
to provide an insurance policy covering the financial consequences
of Marveon‟s own negligence.”39 YESCO argued, as Greyhound does
here, that under Utah law an agreement to procure insurance is
analogous to an indemnification provision and “therefore, the same
standard of strict interpretation is applicable.”40 YESCO went on to
argue that the insurance procurement provision failed to meet the
strict standard and thus it should not be liable to Marveon when
Marveon‟s negligence caused the injury.41
¶29 The court then fully analyzed whether strict construction
applies to agreements to procure insurance for the benefit of another
under Utah law. The court examined federal caselaw, including the
strict construction rule announced in Kennecott Copper, and
concluded that “Kennecott Copper misconstrues Utah law.”42 The
court then announced that indemnification and insurance
33Id. at 665−67 (alterations in original) (internal quotation marks
omitted).
34 Id. at 666.
35 Id.
36 Id.
37 Id. at 666 n.1.
38 Id. at 666.
39 Id.
40 Id.
41 Id.
42 Id. at 667.
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procurement provisions are distinguishable. It held that strict
construction was not warranted in the insurance procurement
context.43 The court found support for this rule from the modern
trend of limiting application of strict construction in favor of
freedom of contract, in shifting policy considerations, and in
supportive caselaw from other jurisdictions.44 UTA also cites to two
additional cases from the court of appeals that apply the rule
announced in Pickhover.45
B. Agreements to Procure Insurance for Another’s Benefit Are Not
Subject to Strict Construction Under Utah Law
¶30 Having concluded that Freund does not require a broad rule
of strict construction, we decline to extend strict construction to
insurance procurement provisions because key differences between
indemnity and insurance procurement provisions make strict
construction less appropriate in the insurance procurement context.
¶31 Strict construction is a limitation on the parties‟ freedom to
contract. Instead of applying traditional rules of construction aimed
at determining what the parties intended by the contractual
language, the court imposes a requirement that certain language
must be used to clearly and unequivocally show the parties‟ intent.
A rule of strict construction could, therefore, hinder a party‟s ability
to freely contract and allocate risk. In general, courts are loath to
interfere with parties‟ ability to contract freely.46 We have recognized
that “[i]t is not [the court‟s] prerogative to step in and renegotiate the
43 Id. at 670.
44 Id. at 667−70.
45 See Christiansen v. Holiday Rent-A-Car, 845 P.2d 1316, 1322 (Utah
Ct. App. 1992) (“Applying the principles of Pickhover and Richmond
to the instant facts, we conclude that [the lessee] is liable to the
[sublessor] for any amount that [the lessee‟s insurance company]
would have been obligated to pay on behalf of [the lessee] under the
terms of the policy which should have been procured by [the
lessee].”); Fashion Place Inv., Ltd. v. Salt Lake Cnty., 776 P.2d 941, 944
(Utah Ct. App. 1989) (holding that “[s]ince [the plaintiff] agreed to
provide insurance for the benefit of its tenant, Salt Lake County, we
hold that the strict construction rule does not apply, but instead, we
follow the modern trend and conclude that the lease clearly imposes
the responsibility for providing fire insurance on the landlord”).
46See Commercial Real Estate Inv., L.C. v. Comcast of Utah II, Inc.,
2012 UT 49, ¶ 38, 285 P.3d 1193.
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contract of the parties.”47 “Instead, unless enforcement of [the
contract] would be unconscionable, we should recognize and honor
the right of persons to contract freely and to make real and genuine
mistakes when dealings are at arms‟ length.”48 Further, “[a] contract
functions in part to apportion risk of future events between the
contracting parties. . . . [and] parties are free to allocate the risk of
future events between them however they wish.”49
¶32 In essence, the bargained-for-exchange in an insurance
procurement provision puts the economic burden of obtaining
insurance on the procuring party in order to shift the risk to a third-
party insurer.50 As the court of appeals stated, “[a]n agreement to
provide insurance merely allocates an economic burden on one party
to make a payment to protect another after the parties have
ultimately decided to shift the risk of loss . . . upon an insurer.”51
Because a commercial general liability policy, such as the one
referenced in the Lease Agreement, typically includes coverage for
the named parties‟ negligence,52 applying strict construction could
undermine the bargained-for-exchange of the parties.
47 Id. (internal quotation marks omitted).
48 Id. (internal quotation marks omitted).
49Deep Creek Ranch, LLC v. Utah State Armory Bd., 2008 UT 3, ¶ 19,
178 P.3d 886.
50 See Pickhover, 771 P.2d at 668.
51 Id. (second alteration in original) (internal quotation marks
omitted).
52 Black‟s Law Dictionary defines a “commercial general-liability
policy” broadly as “[a] comprehensive policy that covers most
commercial risks, liabilities, and causes of loss. This type of policy
covers both business losses and situations in which a business is
liable to a third party for personal injury or property damage.”
BLACK‟S LAW DICTIONARY 877 (9th ed. 2009). Others have noted that
commercial general liability insurance is a “type[] of negligence
liability insurance,” which generally covers the insured‟s negligence.
Vickie Bajtelsmit & Paul D. Thistle, The Reasonable Person Negligence
Standard and Liability Insurance, 75 J. RISK & INS. 815, 816 (2008); see
also James E. Joseph, Indemnification and Insurance: The Risk Shifting
Tools (Part II), 80 PA. B. ASS‟N.Q. 1, 11 (2009) (“The purpose of
commercial general liability insurance is to protect a business against
unforeseen third-party liability. Generally, this covers personal
injury and property damage caused by the negligence of the insured
(Continued)
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Opinion of the Court
¶33 The differences between an insurance procurement
provision and indemnity provision make strict construction less
appropriate in the insurance provision context. Indemnification
typically imposes a broad “duty to make good any loss, damage, or
liability incurred by another.”53 This expansive duty, which usually
contains no limits or bounds, exposes the indemnitor to potentially
enormous liability from the actions of the indemnitee. In contrast, an
insurance procurement provision is normally limited in substantive
ways. A party obligated to procure commercial general liability
insurance assumes much less risk than it would if it was
indemnifying the other party for its negligence. The party that
agreed to procure insurance need only pay the premium and the
insurer then assumes the risk of loss, within the limits of the policy.
¶34 Even in the self-insurance context insurance procurement is
distinguishable from indemnity. We recognize that a contract could
include a broad self-insurance provision that would be
indistinguishable from an indemnity provision, but that is not the
contract before us. Here, the contract allows the procuring party to
self-insure but the self-insurance is limited in the same way
insurance policies are typically limited—with a maximum benefit
and limited coverage.54 Because an agreement to indemnify is
broader, potentially exposing the indemnitor to unlimited liability, a
rule of strict construction is more appropriate in that setting. But in
the narrower context of an insurance procurement provision, where
the procuring party‟s only obligation is to purchase insurance, the
need for strict construction is less. This is especially true when
business.”); Christina Ross et al., Limiting Liability in the Greenhouse:
Insurance Risk-Management Strategies in the Context of Global Climate
Change, 26A STAN. ENVTL. L.J. 251, 283 (2007) (“The standard
Commercial General Liability insurance line (CGL) covers a range of
risks that businesses impose on third parties, including negligent
conduct and other conduct that poses risks to others‟ health, life,
business operations, or property.”).
53 BLACK‟S LAW DICTIONARY 837 (9th ed. 2009) (defining
“indemnity”).
54Section 10 provides that the policy will include “the minimum
amount of $1,000,000 per occurrence with a $5,000,000 general
aggregate” and provides coverage for “damages for personal injury,
bodily injury, including accidental death, and from claims for
property damage that may arise from Tenant‟s use, occupancy,
maintenance and operations under this Lease.”
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viewed in the context of the countervailing policy of limiting judicial
interference with the parties‟ ability to contract freely.
¶35 Because of these distinctions, the policy rationale for strictly
construing agreements to indemnify has less applicability to
agreements to procure insurance. The main policy support for strict
construction of indemnity agreements is that relieving the
indemnitee of liability for negligence “would tend to encourage
carelessness and would not be salutary either for the person seeking
to protect himself or those whose safety may be hazarded by his
conduct.”55 This policy does not apply with the same force to
insurance procurement provisions.56 Insurance contracts typically
have a deductible, a maximum limit, and a limit on the types of
claims covered. Because an insurance policy covering liability is
narrower than an indemnity provision, the policy argument we
advanced in Union Pacific Railroad with respect to indemnity
provisions is significantly weaker when applied to insurance
procurement provisions.
¶36 Finally, in declining to extend strict construction to
insurance procurement provisions, we note the trend under Utah
law to limit the scope of the strict construction rule even in the
indemnity context. Over the past seventy-five years, we have
moderated our construction of indemnity provisions. In 1936, we
stated that “[i]t is very doubtful that defendant could relieve itself by
contract from its own negligence. Ordinarily such contracts are
contrary to public policy.”57 Two decades later, we applied a rule of
strict construction to indemnity provisions, rather than deeming
them to be void as against public policy. 58 Finally, in 1990, in Freund,
we favorably noted the “growing trend to relax some of the
55 Union Pacific R.R., 408 P.2d at 913.
56 See James M. Fischer, The Presence of Insurance and the Legal
Allocation of Risk, 2 CONN. INS. L.J. 1, 6 (1996) (“It is generally
conceded today that such loss spreading by insurance is socially
beneficial and does not undermine any remaining deterrence or
penal aspects of liability law.”). See generally Gary T. Schwartz, The
Ethics and the Economics of Tort Liability Insurance, 75 CORNELL L. REV.
313, 313−14 (1990) (analyzing “the relationship between liability
insurance and tort law‟s fairness and deterrence objectives”).
57 Jankele v. Texas Co., 54 P.2d 425, 427 (Utah 1936).
58Walker Bank & Trust Co. v. First Sec. Corp., 341 P.2d 944, 947
(Utah 1959).
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Opinion of the Court
strictness of the rule of construction when the indemnity arises in a
commercial context.”59 We found it appropriate when strictly
construing an indemnity provision to consider the “objectives of the
parties and the surrounding facts and circumstances”—such as
whether the contract was made at arm‟s length between
sophisticated commercial entities.60 We went on to hold that, while
the indemnity provision did not “specifically mention the effect of
any negligence,” “the broad sweep of the language employed by the
parties clearly cover[ed] those instances in which the licensor may be
negligent.”61 Our trend to limit the harshness of strict construction of
indemnity provisions supports our decision today not to extend
strict construction to insurance procurement provisions.
¶37 Because we conclude that strict construction does not apply
to the insurance procurement provision in this case, we uphold the
district court‟s determination that Greyhound breached section 10 of
the Lease Agreement. While the insurance provision does not
mention negligence, it clearly states that “[Greyhound], subject to the
self-insurance provisions above, at its own cost and expense, shall
secure and maintain . . . the following minimum coverage: . . .
Commercial general liability insurance with [UTA] named as an
additional insured.” The plain language of this provision requires
Greyhound either to self-insure or to obtain the specified commercial
general liability insurance from a third party. Further, commercial
general liability insurance is usually understood to cover the
insured‟s negligence.62 In refusing to either procure insurance or
reimburse UTA for the money UTA paid in the settlement of
Ms. Bradley‟s claim, Greyhound breached the Lease Agreement.
II. The Indemnification Provision and the Insurance Procurement
Provision Can Be Harmonized and Ms. Bradley‟s Claim Arose Out of
Greyhound‟s Use of the Premises
¶38 Greyhound argues that even if we apply traditional rules of
contractual interpretation, rather than strict construction, it did not
breach the insurance procurement provision. First, Greyhound
argues that if the contract is read to require it to provide insurance
for UTA‟s negligence, other sections of the Lease Agreement become
59 793 P.2d at 370.
60 Id. (analyzing Niagara Frontier Transp. Auth. v. Tri-Delta Constr.
Corp., 487 N.Y.S.2d 428, 430 (1985)).
61 Id. at 371.
62 See supra, note 52.
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meaningless. These sections include the provisions that require UTA
to indemnify Greyhound for UTA‟s negligence, follow applicable
ordinances, provide a physically sound facility, and maintain the
common area. Second, Greyhound argues that because Ms. Bradley‟s
claim did not “arise from [Greyhound‟s] use, occupancy,
maintenance and operations,” it was not required to procure
insurance, as the insurance procurement provision was not
triggered.
¶39 When interpreting a contract “[t]he underlying purpose . . .
is to ascertain the intentions of the parties to the contract.”63 To do
so, “we look to the plain meaning of the contractual language, and
we consider each contract provision . . . in relation to all the others,
with a view toward giving effect to all and ignoring none.”64 Below,
we first discuss how the indemnification and insurance procurement
provisions can be harmonized, even if the procurement provision is
read to require insurance that covers UTA‟s negligence. Next, we
discuss why Ms. Bradley‟s claim arose from Greyhound‟s use of the
leased property and so was covered by the insurance procurement
provision.
A. The Indemnification Provision and the Insurance Procurement
Provision Can Be Harmonized
¶40 Greyhound argues that the district court‟s interpretation,
requiring it to procure liability insurance for UTA‟s negligence, “is
wrong because it . . . renders meaningless the indemnification
provision in Paragraph 11 requiring UTA to indemnify Greyhound
for claims arising from UTA‟s negligen[ce]” and “ultimately relieves
UTA of its express obligations in Paragraphs 4, 6, and 12 to provide a
safe, compliant, and sound physical premises.” In other words,
Greyhound argues that if the insurance provision is read to require it
to provide insurance to cover UTA‟s negligence, it would not make
sense to also have UTA indemnify Greyhound for the same
negligent acts. We see the matter differently.
¶41 The insurance procurement provision in section 10, if read
to include negligence, requires Greyhound to procure liability
insurance with a minimum coverage limit of $1 million per
occurrence, with a $5 million general aggregate. The policy must
protect UTA against “claims for damages for personal injury, bodily
63Osguthorpe v. Wolf Mountain Resorts, L.C., 2013 UT 12, ¶ 10, 332
P.3d 620 (internal quotation marks omitted).
64 Id. (alteration in original) (internal quotation marks omitted).
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Opinion of the Court
injury, including accidental death, and from claims for property
damage that may arise from [Greyhound‟s] use, occupancy,
maintenance and operations under this Lease,” including claims that
result from UTA‟s negligence. Next, in section 11 UTA indemnifies
Greyhound against “all claims . . . for property damage or injury or
death to persons . . . arising out of or by reason of [UTA‟s] negligent
or willful acts or omissions relating to any of its undertakings
hereunder.” On first reading, this language does appear to cover
precisely the same claims—those claims for property damage,
personal injury, or wrongful death that result from UTA‟s
negligence. Greyhound points to this overlap and asks why the
indemnity provision is necessary if UTA‟s negligence will be covered
by the insurance provision.
¶42 But if we consider the ways in which an indemnification
provision and the insurance procurement provision differ, and the
relationship between the parties, the independent utility of both
provisions becomes apparent. In the section above, we discussed the
distinctions between an insurance procurement provision and an
indemnity provision. Typically, the insurance coverage obtained
through an insurance procurement agreement is narrower than a
general indemnification. For instance, insurance may carry a
deductible or have a maximum limit. In this case, the maximum
coverage provided, if Greyhound procured the least expensive
insurance option, would have been $1 million per occurrence and $5
million in aggregate. Therefore, if a personal injury or wrongful
death claim exceeded the limits of the insurance policy, then the
parties would have to cover the remaining costs.
¶43 The indemnity provision, by contrast, does not have limits
or deductibles and so is much broader. Any amount not covered by
insurance would fall under the indemnity provision. By way of
illustration, if a single wrongful death claim for $3 million arose out
of UTA‟s negligence, the first $1 million would be covered by the
insurance policy and the next $2 million would be covered by the
indemnity provision. Thus, UTA would be required to indemnify
Greyhound for the $ 2 million in excess of the insurance policy. The
indemnity provision, in essence, is a mechanism to allocate the risk
that remains beyond the insurance limits.
¶44 Even if Greyhound chose to self-insure under the Lease
Agreement, the insurance procurement provision and the indemnity
provision can be harmonized. If Greyhound chose to self-insure,
then section 10(a) of the Lease Agreement required it to do so under
a “lawfully established self-insurance program”; and UTA retained
the “right to verify the adequacy of [Greyhound‟s] financial
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resources available to fund such a program on an as needed basis.”
Section 10(a) also required Greyhound to provide UTA with
“evidence of self-insurance in a form approved by [UTA], on an
annual basis.” This section allowed UTA to take steps to ensure that
Greyhound was financially able to cover claims of up to $1 million
per occurrence or $5 million general aggregate, the agreed upon
minimum insurance coverage amounts. This is distinct from the
indemnity provision, which provides no opportunity for UTA to
verify Greyhound‟s financial ability to indemnify. Therefore, the
insurance procurement provision, in the self-insurance context, gave
UTA more and different rights than the indemnity provision. The
insurance procurement provision, with its language allowing UTA to
verify Greyhound‟s financial health, would have provided UTA
greater confidence that the most likely claims, those for less than the
prescribed insurance limits, would be covered either by Greyhound
as a self-insurer or through a third-party insurance company.
¶45 The relationship between the parties also supports this
reading of the contract. Since the parties are in a long-term business
relationship (the Lease Agreement runs through 2045), it is
reasonable to assume that in negotiating the contract the parties
would try to reduce direct conflict between them. If Greyhound and
UTA are both covered by the same commercial general liability
policy, then they would not be adverse parties, at least as related to
the third-party who is pursing the claim. Also, if the parties were not
on the same insurance policy, it is likely they would each obtain
independent insurance policies. These policies may cover similar
acts and cause redundant insurance coverage. This would be
inefficient and could increase litigation between the parties.
¶46 Greyhound also points to the provisions in the Lease
Agreement requiring UTA to provide a facility that meets local
regulations and ordinances (in section 4), to deliver a structurally
sound facility (in section 6), and to adequately maintain the facility
(in section 12). Greyhound argues that if UTA is insured for its own
negligence, then it is essentially relieved from the non-negligent
performance of these duties. This is not the case. If Greyhound
provided insurance and UTA breached a duty detailed in the Lease
Agreement, Greyhound could sue UTA for breach and recover any
damages that resulted. These damages could include any amount
not covered by insurance, such as insurance deductibles, increases in
insurance premiums, and attorney fees.
¶47 We also note that Greyhound has another option under the
Lease Agreement to deal with UTA‟s negligent maintenance of the
facility. Section 30 of the agreement states that if either party fails to
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Opinion of the Court
perform its duties under the lease then the other party “may at its
option, after sixty (60) days prior written notice . . . , make
performance for the other” and submit a bill for the work performed.
B. Ms. Bradley’s Claim Arose Out of Greyhound’s Use of the Premises
¶48 Having concluded that the provisions of the contract can be
harmonized even if read to require Greyhound to insure UTA
against its own negligence, we now address whether Ms. Bradley‟s
claim triggered Greyhound‟s duty to provide insurance. Greyhound
argues that the plain language of the contract‟s insurance
procurement provision does not require coverage of Ms. Bradley‟s
claim, because her claim did not “arise from [Greyhound‟s] use,
occupancy, maintenance and operations under this Lease.” Instead,
it argues, “UTA‟s negligence was an independent and intervening
cause that is wholly independent from Greyhound‟s activities under
the Lease Agreement.” Greyhound admits that it was the but-for
cause of Ms. Bradley‟s presence at the Intermodal Hub, but asserts
that UTA‟s negligence is the proximate cause of her injury. In doing
so, Greyhound urges us to read tort causation principles into the
contract. But we conclude that under the plain language of the Lease
Agreement, Ms. Bradley‟s claim arose from Greyhound‟s use of the
premises.
¶49 Under the plain language of the contract, Ms. Bradley‟s
claim “arose out of” Greyhound‟s use of the facility. Greyhound uses
the facility as a passenger bus terminal.65 At the time of her injury,
Ms. Bradley was on a layover during an interstate bus trip. And she
was walking directly outside the facility, in the common area
described in the Lease Agreement, when she fell. Therefore, her
presence and use of the Intermodal Hub flow directly from
Greyhound‟s use of the facility as a passenger bus terminal.
¶50 Greyhound disagrees, relying heavily on Union Pacific
Railroad v. El Paso Natural Gas Co.66 In Union Pacific, we interpreted a
broad indemnity agreement in which El Paso indemnified Union
Pacific for “any and all liability . . . of whatsoever nature” that in any
way “ar[ose] because of the existence of [El Paso‟s] pipeline.”67 The
65 Section 5 of the Lease Agreement states that “[Greyhound] and
its affiliates or [Greyhound] carriers shall use the Leased Premises
exclusively for the occupancy and operation of an inter-city bus
terminal and the handling of passengers,” among other related uses.
66 408 P.2d 910 (Utah 1965).
67 Id. at 912.
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indemnification agreement was the result of the negotiation of an
easement by El Paso, over Union Pacific land, to allow El Paso‟s gas
pipeline to run adjacent to Union Pacific‟s tracks.68 We held that the
personal injury of an El Paso employee, who was struck by a
negligently-driven Union Pacific train while on his way to perform
maintenance on the pipeline, was not within the scope of the
provision.69 We concluded instead that “damages guaranteed
against [in the indemnity provision] should have at least some causal
connection with the construction, existence, maintenance or
operation of the pipeline other than an incident which happened
merely coincidental to its existence.”70
¶51 Union Pacific is clearly distinguishable from the case before
us. Ms. Bradley‟s injury is much more closely related to Greyhound‟s
use of the Intermodal Hub as a passenger bus terminal than the car
accident was to El Paso‟s use of the easement for a gas pipeline. The
personal injury in Union Pacific was caused by a train colliding with
a car carrying an El Paso employee a mile and a half away from the
pipeline.71 We found that a car accident a mile and a half from the
pipeline did not have a causal connection to the construction,
existence, maintenance, or operation of the pipeline.72
¶52 By contrast, in Ms. Bradley‟s case the causal connection
between the object of the insurance procurement provision and the
incident is much more closely linked. Here, the object of the
insurance procurement provision is the use of the facility by
Greyhound, including its use of the facility to handle passengers of
its bus service. Ms. Bradley was a passenger of Greyhound‟s and she
was injured while walking in the common area covered by the Lease
Agreement. This creates a much stronger causal connection than
found in Union Pacific. We therefore conclude that Union Pacific does
not alter our reading of the plain language of the contract at issue
here.
¶53 Also, our reading of the plain language is informed by our
broad interpretation of similar “arising out of” language in the
insurance context. In National Farmers Union Property & Casualty Co.
68 Id.69 Id. at 914.
70 Id.
71 Id. at 912.
72 Id. at 914.
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Opinion of the Court
v. Western Casualty & Surety Co., we discussed this broad
interpretation:
As used in a liability insurance policy, the words
“arising out of” are very broad, general and
comprehensive. They are commonly understood to
mean originating from, growing out of, or flowing
from, and require only that there be some causal
relationship between the injury and the risk for which
coverage is provided.73
Here, there is certainly some causal relationship between
Ms. Bradley‟s injury and Greyhound‟s use of the Intermodal Hub as
a passenger bus terminal. Greyhound has argued that caselaw
interpreting insurance contracts should not be applied in this
context. We disagree. Both parties were sophisticated and were
directly contemplating insurance coverage when they crafted the
“arise from” language in section 10(h)(1). Further, if Greyhound had
chosen to self-insure, the language in section 10(h)(1) would
effectively have been the insurance contract. It is therefore
appropriate to look to our caselaw construing insurance policies
when interpreting this contract provision.
¶54 Under the plain language of the contract, Ms. Bradley‟s
injury arose from Greyhound‟s use of the leased premises—she was
Greyhound‟s passenger, on a layover during her Greyhound bus
trip, and was injured directly outside Greyhound‟s bus terminal.
Because we conclude that Ms. Bradley‟s injury arose out of
Greyhound‟s use of the premises, we hold that the Lease
Agreement‟s insurance procurement provision was triggered and
Greyhound was thus required to provide insurance covering UTA‟s
negligence.
III. We Affirm the District Court‟s Attorney Fee Award
¶55 The final issue presented is whether the district court
abused its discretion in awarding UTA its attorney fees. After
holding that the insurance procurement provision was not subject to
strict construction and the Lease Agreement required Greyhound to
purchase commercial general liability insurance that would cover
UTA‟s negligence, the district court held Greyhound to be in breach
of the Lease Agreement. Subsequently, the district court awarded
UTA damages, including attorney fees as the prevailing party
577 P.2d 961, 963 (Utah 1978) (quoting Lawver v. Boling, 238
73
N.W.2d 514, 518 (Wis. 1976)).
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pursuant to section 32 of the Lease Agreement. The court awarded
UTA $48,811.55 in fees and $610 in costs. In its appeal, Greyhound
argues that the district court abused its discretion in awarding UTA
its attorney fees. Specifically, it argues the district court abused its
discretion because the court awarded UTA attorney fees for claims
for which UTA was not the prevailing party. Greyhound also argues
the court did not have an adequate evidentiary basis to conclude that
the attorney fees were reasonable. Under these theories, Greyhound
challenges $10,503.50 of the $48,811.55 fee award. We conclude that
the district court did not abuse its discretion in awarding attorney
fees to UTA as the prevailing party and find the district court‟s
decision had an adequate evidentiary basis.
¶56 “In Utah, attorney fees are awardable only if authorized by
statute or contract.”74 Here, the parties included a provision in their
contract, section 32, that stated, “[i]n the event either Party enforces
the terms of this Lease by suit or otherwise, the Party found to be at
fault by a court of competent jurisdiction shall pay the cost and
expense incurred thereby, including reasonable attorney‟s fees.”
Below we discuss both why the district court did not abuse its
discretion by determining UTA was the prevailing party, and why
there is sufficient evidence in the record to support the district
court‟s attorney fee award.
A. The District Court Did Not Abuse Its Discretion by Holding
That UTA Was the Prevailing Party
¶57 Greyhound argues that, although UTA ultimately prevailed
on its breach of contract claim, it did not prevail on all of its motions
and causes of action. Greyhound contends that UTA should not have
received $10,503.50 of its attorney fee award, because these fees were
based on an unsuccessful motion and claim.
¶58 We have recognized both the “need for a flexible and
reasoned approach to deciding in particular cases who actually is the
„prevailing party‟”75 and that determining the prevailing party
“depends, to a large measure, on the context of each case.”76 Also,
we have stated that the district court must base its decision on a
number of factors, including “the language of the contract or statute
that forms the basis for the attorney fees award, the number of
74R.T. Nielson Co. v. Cook, 2002 UT 11, ¶ 17, 40 P.3d 1119 (internal
quotation marks omitted).
75 Id. ¶ 24.
76 Id. ¶ 25.
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Opinion of the Court
claims brought by the parties, the importance of each of the claims
relative to the entire litigation, and the amounts awarded on each
claim.”77 This type of evaluation allows the district court to apply a
case-by-case approach to determining the prevailing party and gives
the district court the “flexibility to handle circumstances where both,
or neither, parties may be considered to have prevailed.”78 We have
also stressed that because the identity of the prevailing party
“depends, to a large measure, on the context of each case,” “the
[district] court is in a better position than we are as an appellate
court to decide” this question.79 Thus, we employ an abuse of
discretion standard when reviewing a district court‟s prevailing
party determination.80
¶59 We conclude that the district court did not abuse its
discretion in determining that UTA was the prevailing party and
awarding it the entirety of its attorney fees. The district court based
its decision on factors we have recognized as appropriate when
determining the prevailing party—including the contract language,
the importance of the claim won by UTA, and the amount of the
judgment awarded in its favor. The language of the contract appears
to contemplate one prevailing party when it states that “the Party
found to be at fault” shall pay attorney fees. It does not appear from
the language of the contract that the parties contemplated a detailed
analysis of each motion or claim, but instead a broad decision of
which party was “at fault.” Further, under a prevailing party
analysis the district court correctly notes that UTA prevailed on the
underlying claim and received a judgment in the amount of its claim.
While the district court recognized that “UTA did not prevail on
every Motion it filed,” the court deemed UTA the prevailing party,
as it had ultimately won the breach of contract claim and obtained a
judgment in the full amount sought. Therefore, we uphold the
district court‟s determination that UTA was the prevailing party and
its decision to award UTA all of its attorney fees.
77 Neff v. Neff, 2011 UT 6, ¶ 70, 247 P.3d 380.
78 Id. (internal quotation marks omitted).
79 R.T. Nielson, 2002 UT 11, ¶ 25.
80 See Neff, 2011 UT 6, ¶ 70.
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B. The District Court Did Not Abuse Its Discretion in Basing Its
Attorney Fee Award on the Affidavits and Invoice
Submitted by UTA
¶60 Greyhound also claims that the district court abused its
discretion when it concluded that UTA had presented sufficient
evidence of the reasonableness and necessity of its attorney fees.
Greyhound claims that the district court abused its discretion by
relying on information that did not include “any evidence to show
who those people are [who are named on the invoice], what their
qualifications are, or why their hourly rates are appropriate.”
Greyhound also faulted the district court for relying on billing
information that “did not include any foundational evidence
regarding the reasonable hourly rates of the eight time keepers.”
Greyhound further claims that many of the tasks that UTA billed for
were unnecessary—including UTA‟s rule 56(f) motion and its
motion for judgment on the pleadings.
¶61 We have long recognized that the district court has “broad
discretion in determining what constitutes a reasonable fee, and we
will consider this determination [under] an abuse-of-discretion
standard.”81 We have also recognized a well-established method for
calculating attorney fees. The district court is to consider the
following:
1. What legal work was actually performed?
2. How much of the work performed was reasonably
necessary to adequately prosecute the matter?
3. Is the attorney‟s billing rate consistent with the rates
customarily charged in the locality for similar
services?
4. Are there circumstances which require
consideration of additional factors, including those
listed in the Code of Professional Responsibility?82
The district court addressed these factors in its memorandum
decision responding to UTA‟s Motion for Award of Damages and
Entry of Final Judgment. In its decision, the district court stated that
(1) “the work was actually performed,” (2) “the work was reasonably
81 R.T. Nielson, 2002 UT 11, ¶ 20 (quoting Dixie State Bank v.
Bracken, 764 P.2d 985, 991 (Utah 1988)).
82 Burdick v. Horner Townsend & Kent, Inc., 2015 UT 8, ¶ 59,
345 P.3d 531 (quoting Dixie State Bank v. Bracken, 764 P.2d 985, 990
(Utah 1988)).
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Opinion of the Court
necessary to prosecute the matter,” and (3) “the billing rates are
consistent with rates customarily charged in the community for
similar services.” The district court did not address any factors listed
in the Utah Code of Professional Responsibility.
¶62 Greyhound claims that the district court abused its
discretion in coming to these conclusions because it relied on
incomplete information. But Greyhound fails to acknowledge the
declaration of UTA attorney Scott M. Petersen, which speaks to the
reasonableness of the attorney fees. In this declaration, Mr. Petersen
states that he has been a litigator for seventeen years and that his
hourly rate is reasonable based on his experience, the complexity of
the case, and the prevailing hourly rate in Salt Lake City. Mr.
Petersen also addresses the qualifications and hourly rates of several
attorneys working under him at Fabian & Clendenin. Greyhound is
correct in arguing that there is little evidence as to the qualifications
for four of the persons on Fabian & Clendenin‟s invoice. But these
individuals combined billed only 4.85 hours out of the total of 194.45
hours billed on the case. While ideally more information would have
been provided regarding these billing individuals, this deficiency
does not make the district court‟s decision to award attorney fees an
abuse of discretion.
¶63 Greyhound also challenges the district court‟s decision that
“the work was reasonably necessary to prosecute the matter” and
points to specific actions that it contends were unnecessary on the
part of UTA. The district court found the work was necessary based
on a detailed invoice from Fabian & Clendenin. This invoice
provided a description of all the work done on the case and the
hours required to perform the described task down to the tenth of an
hour. It was not an abuse of discretion for the district court to find
that the work was necessary.
¶64 As a final matter, we address UTA‟s request for an award of
attorney fees and costs on appeal. We have recognized in the context
of statutory attorney fee awards that “when a party is entitled to
attorney fees below and prevails on appeal, that party is also entitled
to fees reasonably incurred on appeal.”83 We see no reason to deviate
from this practice here given that the contract used expansive
language in its attorney fee award provision, stating “[i]n the event
either Party enforces the terms of the Lease by suit or otherwise, the
Party found to be at fault by a court of competent jurisdiction shall
83 Dillon v. S. Mgmt. Corp. Ret. Trust, 2014 UT 14, ¶ 61, 326 P.3d 656(internal quotation marks omitted).
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Cite as: 2015 UT 53Opinion of the Court
pay the cost and expense incurred thereby, including reasonable
attorney‟s fees.” We remand to the district court to determine the
proper attorney fee award for the appeal.
Conclusion
¶65 We fully affirm the district court‟s decision on summary
judgment. First, we have never strictly construed insurance
procurement provisions, and we decline to do so here. Thus, we
affirm the district court‟s holding that traditional principles of
contractual interpretation should be used in assessing an agreement
to procure insurance. Second, we affirm the district court‟s holding
that under these traditional rules of contractual interpretation, the
insurance procurement provision of the Lease Agreement required
Greyhound to provide insurance to UTA for liability arising from
UTA‟s own negligent acts; that Greyhound‟s duty to procure
insurance for UTA was triggered in this case; that the various
provisions of the Lease Agreement can be harmonized; and
therefore, that Greyhound breached the Lease Agreement by failing
to procure insurance to cover UTA‟s negligence. Finally, we uphold
the district court‟s attorney fee award under section 32 of the Lease
Agreement because the court did not abuse its discretion by finding
UTA the prevailing party and finding the fee reasonable and
necessary based on the evidence before it. We conclude that UTA is
entitled to attorney fees and costs associated with its appeal and
remand to the district court to determine the amount of the award.
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