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Espenschied Transport Corp. v. Fleetwood Services, Inc.

Supreme Court of Utah

July 5, 2018

Espenschied Transport Corp., Appellant,
Fleetwood Services, Inc. and Wilshire Insurance Company, Appellees.

          On Direct Appeal Third District, Salt Lake The Honorable Paige Petersen No. 070913289

          L. Rich Humpherys, Karra J. Porter, Salt Lake City, for appellant

          Ben T. Welch, Amber M. Mettler, Michael A. Gehret, Salt Lake City, for appellee Fleetwood Services, Inc.

          Nelson 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.

          Having recused herself, Justice Petersen does not participate herein; Court of Appeals Associate Presiding Judge Michele M. Christiansen sat.




         ¶1 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.

         ¶2 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.


         ¶3 Espenschied was an interstate trucking company established in 1982. [1] 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.

         ¶4 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.

         ¶5 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.

         ¶6 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.

         ¶7 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.

         ¶8 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.

         ¶9 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 ...

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