Summary
The Utah Supreme Court held that a contractual agreement to procure insurance for another’s benefit is not subject to the strict-construction rule applicable to certain indemnity provisions. Applying ordinary contractual interpretation, the court concluded that Greyhound’s lease required it to obtain insurance covering Utah Transit Authority’s negligent acts and that a passenger’s slip-and-fall claim triggered that duty. The court affirmed the judgment for UTA, including damages and attorney fees.
Topics
Practice areas
Questions Presented
- Whether an agreement to procure insurance for another's benefit is subject to Utah's strict-construction rule applicable to indemnity provisions.
- Whether Bradley's personal-injury claim arose from Greyhound's use, occupancy, maintenance, or operations under the lease so as to trigger Greyhound's insurance-procurement obligation.
- Whether the lease's indemnity and insurance-procurement provisions could be harmonized while requiring insurance coverage for UTA's negligence.
- Whether the district court abused its discretion in determining that UTA was the prevailing party and awarding it attorney fees and costs.
Holdings
- Under Utah law, a contractual obligation to procure insurance for another's benefit is not subject to the strict-construction rule applicable to indemnity agreements.
- The lease required Greyhound either to obtain commercial general liability insurance naming UTA as an additional insured or to self-insure in accordance with the lease, and that obligation included coverage for UTA's negligent acts.
- Bradley's claim arose from Greyhound's use of the premises, triggering Greyhound's obligation to provide insurance covering UTA's negligence.
- The district court did not abuse its discretion by finding UTA to be the prevailing party, awarding all of its reasonable attorney fees and costs under the lease, and relying on the evidence submitted to determine reasonableness and necessity.
Key quotations
“we decline, for reasons that we will describe, to require that an agreement to procure insurance be strictly construed.” (¶ 2)
“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.” (¶ 27)
“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.” (¶ 53)
Factual background
Greyhound leased part of UTA's intermodal transportation facility for use as an interstate bus terminal. The lease required Greyhound to procure commercial general liability insurance naming UTA as an additional insured, or to satisfy the obligation through an approved self-insurance program. Greyhound passenger Alma Bradley fell from a concrete pedestrian ramp in a common area during a layover; UTA admitted that its negligence in failing to install a handrail caused the accident and settled Bradley's claim for $50,000 plus an agreement to satisfy Medicare liens. Greyhound refused UTA's requests for reimbursement or coverage, leading to UTA's breach-of-contract action.
Procedural history
UTA sued Greyhound after Greyhound refused to procure insurance or reimburse UTA for the settlement of a personal-injury claim arising from an accident at UTA's transportation facility. The parties filed cross-motions for summary judgment, and the district court ruled that Greyhound's insurance-procurement obligation covered UTA's negligence, that the claim triggered the obligation, and that Greyhound breached the lease. The district court awarded UTA $50,000 in settlement damages, future Medicare liens, attorney fees, and costs. The Utah Supreme Court affirmed and remanded for determination of attorney fees and costs incurred on appeal.
Remand instructions
Remanded to the district court to determine the proper amount of UTA's reasonable attorney fees and costs incurred on appeal.