Direct Appeal Third District, Salt Lake The Honorable Paige
Petersen No. 070913289
Rich Humpherys, Karra J. Porter, Salt Lake City, for
Welch, Amber M. Mettler, Michael A. Gehret, Salt Lake City,
for appellee Fleetwood Services, Inc.
Abbot, Provo, Robert D. Moseley, Jr., Greenville, South
Carolina, for appellee Wilshire Insurance Company
Justice Himonas authored the opinion of the Court, in which
Chief Justice Durrant, Associate Chief Justice Lee, Justice
Pearce, and Associate Presiding Judge Christiansen joined.
recused herself, Justice Petersen does not participate
herein; Court of Appeals Associate Presiding Judge Michele M.
Espenschied Transport Corp. has used Fleetwood Services, Inc.
to procure insurance since 1982. In 2003, Fleetwood obtained
an insurance policy from Wilshire Insurance Company meant to
cover all of Espenschied's vehicles and trailers; the
list of insured vehicles was based on a list of equipment
provided by Espenschied. However, Fleetwood gave Wilshire an
incorrect list not containing all the equipment Espenschied
had listed, resulting in Espenschied's believing that
certain equipment was covered by the insurance policy when,
in reality, it was not. One of the trailers that Espenschied
believed to be covered, but that was not on the policy
schedule, was involved in a deadly accident, resulting in
litigation. Wilshire refused to defend Espenschied in the
litigation, causing Espenschied to incur attorney fees and a
consent judgment; Espenschied sued Fleetwood and Wilshire
under various theories of liability.
The district court concluded that Espenschied had suffered no
damages and granted summary judgment to Fleetwood.
Additionally, the district court granted summary judgment to
Wilshire, finding that the trailer was not on Wilshire's
insurance policy and Fleetwood was not Wilshire's agent.
Additionally, the district court ruled that Wilshire could
have no vicarious liability because Fleetwood had no
liability. We affirm.
Espenschied was an interstate trucking company established in
1982.  For a majority of its existence,
Espenschied used Fleetwood to procure insurance from a
variety of insurers. In December 2003, Fleetwood procured a
commercial lines insurance policy from Wilshire to cover
Espenschied's vehicles. The policy was a scheduled
vehicle policy, meaning that a vehicle must be listed on the
policy to be covered. Espenschied intended to have all of its
vehicles covered by the policy. Wilshire listed the insured
vehicles on the policy based on a list provided by Fleetwood.
On January 1, 2005, Espenschied sold or leased almost all of
its assets to DATS Trucking, Inc. The leased assets consisted
of ninety-three trailers. As part of the lease agreement,
DATS agreed to indemnify Espenschied from and against all
claims, liability, or expenses (including attorney fees)
relating to the trailers. Espenschied did not cancel its
insurance on the trailers.
On January 30, 2005, one of the trailers Espenschied leased
to DATS killed Kimball Herrod in an accident. Mr.
Herrod's family brought a wrongful death action against
Espenschied and DATS. Espenschied submitted a claim to
Wilshire for coverage. Although the trailer was on the list
of equipment that needed to be insured that Espenschied had
provided to Fleetwood, the trailer was not listed on the
schedule for the policy Wilshire issued. After determining
that the trailer involved in the accident was not covered by
the policy, Wilshire denied the claim. Espenschied then made
a claim for coverage to Fleetwood for failing to procure
insurance, which Fleetwood also denied.
Espenschied defended itself in the wrongful death suit.
Ultimately, Espenschied entered into a settlement agreement
with the Herrods for $1.1 million; that settlement was
reduced to a judgment. By the time Espenschied entered into
the settlement agreement, it was no longer doing business,
had formally dissolved, and had no assets other than
potential claims against third parties. As part of the
settlement agreement, Espenschied assigned the Herrods any
claim it had against DATS (except for indemnification for
attorney fees) and agreed to pursue claims against Fleetwood
and Wilshire. Espenschied was not required to pay any
attorney fees up front for its lawsuit against Fleetwood and
Wilshire. Instead, any recovery from claims against Fleetwood
and Wilshire would first be used to pay the attorney fees and
costs, then the settlement amount, and any remainder would go
to Espenschied. In return, the Herrods agreed that they would
not pursue claims against the principles of Espenschied and
would withhold collection against Espenschied's assets
until the claims against Fleetwood and Wilshire were fully
resolved. Additionally, Espenschied agreed to "fully
pursue and prosecute all claims it may have" against
Fleetwood or Wilshire and to hire the Herrods' attorney
from the wrongful death suit to pursue those claims.
In defending the wrongful death suit, Espenschied incurred
approximately $93, 500 in attorney fees and costs. Based on
the indemnity agreement, DATS paid Espenschied $90, 000 for
the attorney fees. Espenschied has not paid any money toward
the settlement agreement. Additionally, at oral argument in
this matter, Espenschied's attorney conceded that the
Herrods will never be able to collect against Espenschied
unless Espenschied recovers in this case because Espenschied
is a defunct corporation with no assets.
Fleetwood and Wilshire moved for summary judgment. The
district court concluded that Fleetwood was, "at most, .
. . a contract breacher [and] . . . . would only be obligated
to pay what [Espenschied] actually had to pay. . . . [which
was] zero dollars." Because the district court
determined that Espenschied had suffered no actual damages,
it granted Fleetwood's motion for summary judgment.
The district court also granted Wilshire's motion for
summary judgment. Relevant to this appeal, the district court
concluded that Fleetwood was not acting as Wilshire's
agent, and therefore Wilshire would not be liable for
Fleetwood failing to procure insurance for the trailer.
Alternatively, the district court concluded that ...