District Court, Salt Lake Department The Honorable Denise P.
Lindberg No. 110903573
Rich Humpherys and J.D. Lauritzen, Attorneys for Appellants
M. Morse, Kenneth L. Reich, and Brian A. Mills, Attorneys for
Gregory K. Orme authored this Opinion, in which Judges
Michele M. Christiansen and Kate A. Toomey concurred.
Only days before Appellants Michael and Holly Uzelac were
scheduled to close on a permanent mortgage for their new,
custom-built vacation home, they learned that vandals had
broken into the home and caused extensive damage. The Uzelacs
submitted several claims to their insurer, Appellee Fire
Insurance Exchange (FIE), and FIE made payments to cover most
of the necessary repairs. Nevertheless, believing they were
entitled to more, the Uzelacs filed suit against FIE to
obtain additional compensation. The parties proceeded to
litigate, and ultimately the district court entered summary
judgment in favor of FIE. The Uzelacs now appeal. For the
reasons discussed below, we affirm the district court's
decision in part and reverse it in part, and we remand the
case for further proceedings.
In February 2008, having received word that the construction
and interior decoration of their new vacation home had
finally been concluded, the Uzelacs set out to view the
completed home for the first time. The home, set in the
mountains above Fruitland, was large and luxurious, with
lavish, custom-designed furnishings. Upon arriving, they were
horrified to find that their expensive new home was in
Vandals had forced their way into the home; torn apart the
walls and ceiling; smashed exterior windows; and ripped the
plumbing from the framework, flooding the structure with hot
water. Combined with the frigid winter temperatures, the
water continued to wreak havoc upon the home even after the
vandals departed. Hardly a square foot of the home was left
The Uzelacs immediately filed a homeowner's insurance
claim with FIE, claiming extensive damage to the home and its
contents. Soon after, an FIE representative visited the scene
to inspect the home and inventory the damaged personal
property. FIE arranged for a third party, ServiceMaster, to
conduct mitigation and remediation services, the bulk of
which consisted of drying out the home and its contents and
boxing up and storing the Uzelacs' furniture and
belongings. FIE never took the position that the
Uzelacs' policy was not in effect when the vandalism
occurred or that vandalism did not fall within the scope of
the policy's coverage.
FIE received and processed numerous claims from the Uzelacs
in connection with the vandalism. Nearly all of the claims
were approved, some on the same day they were received.
Indeed, altogether, FIE disbursed over $900, 000 to cover
repairs to the home and over $100, 000 to cover damage to the
Uzelacs' personal property. But FIE did reject some of
the Uzelacs' claims.
In particular, the Uzelacs assert they made three requests
that FIE wrongfully rejected. The first request involved an
attempt to recoup certain unanticipated financing expenses
that arose as a consequence of the vandalism. Although the
Uzelacs had found a lender willing to provide permanent
mortgage financing for their new home before construction was
completed, closing was contingent on the Uzelacs' first
obtaining a certificate of occupancy for the home. As a
result of the extensive vandalism, the Uzelacs were unable to
obtain the certificate, and they therefore had no choice but
to secure a "bridge loan" during the interim
reconstruction period. In response to the Uzelacs'
inquiry, FIE informed them that the additional expenses
flowing from the bridge loan's higher interest rate were
not recoverable under the policy.
The second request involved the question of whether and on
what terms the Uzelacs' policy would cover the expense of
substitute accommodations. In a declaration attached to the
Uzelacs' opposition to FIE's motion for summary
judgment, Mr. Uzelac averred that shortly after the vandalism
occurred, he contacted FIE to inquire whether his policy
would cover the expense of renting a substitute vacation home
while theirs was being rebuilt. According to him, an FIE
representative informed him that it would not. For its part,
FIE has conceded that the policy would have covered the
expense of renting a second home, but only if the Uzelacs had
actually incurred that expense. In turn, Mr. Uzelac stated in
his declaration that the only reason he and his wife did not
rent a second home is that FIE led them to believe the
expense would not be covered.
Finally, the third request involved the malfeasance of
ServiceMaster. In November 2009, as the repairs to the home
neared completion, ServiceMaster retrieved the Uzelacs'
salvaged personal property from storage and delivered the
items back to the home. To the Uzelacs' dismay, many of
the items were returned in a ruined condition. For example,
mattresses were rotten and mildewed, and the pages of books
and photograph albums were stuck together in brittle clumps.
The property apparently had not been properly dried out
before being placed in storage, and as a result much of it
was beyond repair. The Uzelacs submitted a claim for this
damage, but FIE denied it, explaining that the Uzelacs would
need to pursue their claim against ServiceMaster directly.
Early in 2011, the Uzelacs filed suit against FIE and
ServiceMaster, asserting breaches of contract and the implied
covenant of good faith and fair dealing. In support, they
alleged that FIE had "failed and refused . . . to pay
[the Uzelacs] the moneys owing to them, despite demand
therefor, " and that FIE had "engaged . . . in a
course of conduct to further its own economic interest . . .
in violation of its obligations to [the Uzelacs]." Yet
the complaint contained few specifics, and the Uzelacs'
initial disclosures did not clarify matters much. In their
disclosures, under the heading "Computation of Damages,
" the Uzelacs claimed they were seeking "[t]he
amounts that would be owing under the policy as set forth in
the complaint" in addition to "[g]eneral and
consequential damages, " "[e]xemplary and punitive
damages, " and costs and attorney fees. The Uzelacs'
"computation" did not make direct reference to any
itemized list of expenses or specific dollar figures.
Somewhat perplexed by the Uzelacs' reluctance to state
their damages with specificity, FIE asked Mr. Uzelac at his
deposition just what it was that he wanted FIE to cover that
had not already been paid:
Q. Okay. Before we get into this I want to make sure I
understand a couple of things. First, this list of damaged
items [of personal property that you provided to us, which I
have marked Exhibit 6], is this the extent of your damages in
this case? I understand that there's on page 4 of Exhibit
1 also a list of some items . . . . So the list that you made
in Exhibit 6 and the final page of Exhibit 1, is that the sum
total of everything . . . that you think [FIE] ought to
Q. Okay. What else are we talking about?
. . . .
A. . . . [T]he bridge loan that we had to get.
deposition exhibits to which FIE's counsel directed Mr.
Uzelac's attention each contained a list of expenses that
the Uzelacs had submitted to FIE for reimbursement. The
first, Exhibit 6, identified certain items of personal
property that had been damaged during the vandalism, and the
second, Exhibit 1, itemized reconstruction services,
including snow-removal services, the costs for which exceeded
$50, 000. Notably, during his deposition Mr. Uzelac did not
indicate that he and his wife intended to pursue a claim
relating to the costs of substitute vacation accommodations.
Shortly after the Uzelacs settled their claims against
ServiceMaster, resulting in its dismissal from this action,
FIE moved for summary judgment. In its supporting memorandum,
FIE explained that Mr. Uzelac had "identified in his
deposition only two issues as the basis for his litigation
against FIE. First, [the Uzelacs] believed that FIE did not
compensate [them] for certain personal property items that
were damaged during the vandalism of their cabin." FIE
explained that the items in question were the items listed in
Exhibit 6 and other items that were allegedly mishandled by
ServiceMaster. "Next, [the Uzelacs] believed FIE should
have to pay for the interest on a 'bridge loan'
[they] obtained." FIE then devoted the bulk of its
motion to arguing that it was entitled to judgment as a
matter of law on these two issues, without mentioning the
reconstruction expenses identified in Exhibit 1.
In their opposition, the Uzelacs began by defending the
validity of the claims Mr. Uzelac raised in his deposition
and then identified a number of additional factual issues
they believed should preclude summary judgment. Chief among
these was their claim that FIE made misrepresentations
regarding the scope of their policy coverage, thereby leading
them to believe, incorrectly, that the expense of renting a
substitute vacation home would not be covered. In connection
with that claim, the Uzelacs asserted-for the first time
during the proceedings before the district court-that they
would be seeking the reasonable value of the expenses they
would have incurred in renting a comparable vacation home if
they had been properly informed about the policy's
coverage for this expense. In addition, the Uzelacs
maintained that summary judgment was inappropriate because a
factual issue remained as to whether FIE should be held
vicariously liable for the property damage caused by
ServiceMaster-to the extent, presumably, that these losses
remained unpaid after the Uzelacs' settlement with
After hearing oral arguments on FIE's motion, the
district court orally entered its ruling, granting the motion
in part and denying it in part. With respect to the
Uzelacs' claim for the damaged items of personal
property, the court concluded that judgment should be
rendered in FIE's favor because there was no genuine
dispute that the Uzelacs had been adequately reimbursed for
those expenses, albeit in a somewhat smaller amount than they
had hoped for. The court further concluded that FIE was
entitled to judgment as a matter of law on the Uzelacs'
claims for the additional bridge loan expenses and the
substitute accommodations expenses, as the former expense
category was not recoverable under the terms of their policy
and the latter was recoverable only if the expenses had
actually been incurred. The court did, however, determine
that a genuine issue of fact remained as to whether a
principal-agent relationship existed between FIE and
ServiceMaster, such that FIE might be ...