court michael young on behalf of jacob dock stater the appellant in this case i appreciate the opportunity to address the court and as i was preparing for argument today as is often the case reviewing and sort of reading and rereading the pleadings and then it specifically reviewing the precedent and sort of the utah law on the issue i think the issue can be distilled down to a fairly simple proposition and defend this is a duty independent and separate from any contractual duties that may exist or emanate from the insurance contract that issue and what's critical about this observation is that those duties then provide certain obligations and requirements on the part of the insurer to what the utah supreme court has coined or has stated to zealously guard the interests of the  is a again a requirement in the duty that is separate and distinct from any st party duties that can be found in the insurance the operative insurance agreement itself and that that the do share it do you require a certain con so let me ask the question so generally in the insurance the been syria there are two duties the duty to defend and the duty to condemn the firing correct and they can exist independently of each other for example you might have a question about the duty to indemnify but that doesn't relieve you of the rights to provide a defense if you're the insurer absolutely yes so which one of those categories do you put the settlement dollars and are they part of that in the indemnity or are they part of the defense i don't see how they can be in both places without making a reservation of rights illusory so and if i understand your honour's question correctly is is how how then is an insurance company supposed to adequately evaluate offers of settlement given that they have both a duty to identify and a duty to defend is that  fair characterization of your question not exactly i want you to put the settlement dollars in a category either defense or indemnity ok so so i think that the the settlement dollars themselves would be considered part of the indemnification duty that an insurer has consideration of settlement and evaluation of whether to accept or deny or decline settlement extends from the duty to defend and in fact if you look i think it's in the from the insurer you have billeted to negotiate and to articulate a potential settlement right so they have taken that that opportunity away from its insured and is now in soon assumed by the insure so part and parcel to that duty to defend then is a specific requirement to consider settlement offers in the context of how such offers may affect the insur specifically whether or not rejecting such offers would expose the insurer to excess liability beyond that which is kept for the insurance company with respect to its duty t the dollars itself while they are i guess constrained by the policy limits which are outlined in the duty to and to indemnify or constrained by that duty to indemnify the obligation to consider settlement offers and to settle is an extension of the fiduciary duty to defend which as outlined in campbell and then later i think expressly sort of described in  altman is a requirement that the insurer consider the obligation the zealously guard or consider the exposure the insured may have if that if that makes sense you know what if you have a case where there's no settlement offer and the insurance companies picking up the defense and they go to trial and lose and the insured have a three hundred thousand dollars judgment against them and the insurance company then says but i'm not paying  because i picked up this defense under reservation of rights ok how does that how is that different then this case because there was no offer of settlement there was no opportunity for the insurer to limit the exposure of the insured or to guard the insurance interests within the context of that offers i have kind of follow up to that i mean your your position boils down to the proposition that the insurance company has a i do sherry duty to settle a reasonable settlement or to accept reasonable settlement offers even if they're paying now for non covered claims right in their view yes and it seems to me that that position requires t no i don't think i actually don't think that's necessarily the case and so part of the dynamic at issue here is an inch an insurer can in fact go out and seek a declaratory judgment finding that there is no coverage to protect them from in fact paying out offers that it shouldn't have because there is no coverage was going on here right yes the problem is is that owners did not seek declaratory judgment until the year after the case of been going on and so the underlying personal injury matter had sort of reached a point where settlement offers were being exchanged where an investigation of the underlying facts of the case had had revealed that settlement was in  fact wasn't back appropriate and likely if you look at that if you look at the settlement letters that were exchanged between the parties there is no dispute of liability and there's no dispute that the potential injuries to the initial plaintiff would exceed the policy limits the only question was whether there was coverage under the policy policy and of the duty of indemnity essentially what auto owners is asking this court to do is to offload the essentially the price of its own delay in seeking declaratory judgment offloading the price the the cost of that the lay with respect to determining whether or not there was coverage to its  and in fact with the law says and this is this is where i think the finding in campbell is particularly informative on this issue and that is you can after the facts just as in campbell where the insurer offer to pay the excess money that came from the judgment although they have disputed their their obligation to do so for three years finally the insurer comes back and says you know what we will pay the excess costs of the of the judgment so no harm no foul and what the court and campbell said was no that's not that's not accurate because if we allow for absolution in retrospect whether it's through paying of the excess verdict or here it's a determination that there is no coverage we are not encouraging our insurers to follow through on that but you share a duty to the leslie guard their insureds interests when th interim of the company's remedy if they end up paying covered non coverage claims then they can seek reimbursement from their insured if there's anything i've learned so they could relinquish the defense that could turn the defense back over to the insured but the reality is none of that candidly is before this court the real question before this court is whether or not a and i thought part of the argument was that under utah law insurance companies are told that it is totally proper for them when they have a question as regards coverage  declaratory judgment action and so onerous that i thought they were saying we're going to hear we did that we have utah law requires us to do and you're saying oh not so fast you have to do more than that you can just lean back and let things happen that's part of your problem absolutely and that's and that's where i think the current the durhams concurrence in altman is instructive because she expressed we know that yes it is within the purview of the insurance companies rights to seek a declaratory judgment regarding coverage but simply doing so does not absolve them of their obligation or their duty to defend during the pendency of that action and because there are still obligations under the duty to defend of which include a duty to settle and sue and to consider settlement opportunities in the in the interest of the insurer your not absolved of that duty simply because you filed a dec action in filing it that action does not essentially hit pause and allow you to pursue that action without zealously guarding the the interests of the insur as to coverage and there was no you tall case law stating that insurer has a duty to accept coverage has a duty to accept a settlement during the pendency of a decorative reaction or bapi it would ensue and the reason why be proceeding and you're ending up obviously in this case with a judgment that's pretty high that somebody is going to have to pay and meanwhile the duty to do the duty to defend is just is not happening nothing's mr cox that are on their behalf mr doctor had his own personal attorney owner's insurance company hired experts on his behalf to rebut the allegations of his injuries in fact if you look at the record and the  seek reimbursement there is a right i mean obviously that's why the other alternative that he mentioned was that at that an insurance company should seek right but advancing brooks's arguments would guarantee that any injury plaintiff no matter how egre restitution through an extra two contractual claim instead insurers right to reimbursement from ensured must be expressly prohibits provided for between the insurance policy between the parties and mr brooks noted in his reply brief the owners don't as i have that in their exceed the policy limits bad faith would ensue the insurance policy ceases to be an agreement between the insurance company and its insurer where the insurance company assumes defined risk encountered by its insurer instead of the policy becomes merely a road bap basically the policy would be bring her meaningless and insurance compel to settle all claims covered or otherwise under its duty to death then needless to say utah insurance and utah be either unavailable or predictably expensive well don't you have per person fifty thousand for accident and the essentially gambled their insurance interest and said that there was no liability in the underlying lawsuit they were taking the position that there was not liable in the utah supreme court said look if there's a substantial likelihood there's no coverage if you can't gamble your interests but it's important to know that utah supreme court noted in the ammerman versus farmers insurance exchange that it indicated that it's true that a company cannot properly gamble with  sacrifice the insurance interests in play to protect itself by the same token it's neither practical nor reasonable to expect it to subvert its own interests and that's exactly what brooks is asking asking owners insurance company to do you t no coverage we won't get a five hundred thousand if you guys want to continue on with the litigation then great if you want to i think i think that's old that's a different question so it sounds to me like you're trying to push off all the risk on your insured there if you win the the if you win the deck action you win no bad faith and if you lose the deck action and there was an underlying indemnity obligation you win because you said i want to get it decided i doesn't seem to me you can have it both ways it seems that maybe you were playing a little roulette yourself and that if you lost the deck action and there is coverage then the bad d faith claim perhaps has legs is certainly out of the weight in the court did recognize that in the fire and springsteen versus omens when insurers don't take the duty to defend that utah supreme court and you tucker appeals have indicated that look if there if it's if it's discovered that there's coverage know there's an excess then you might be responsible for that excess amount of money so if it turns out that you only have eight hundred and fifty zero our policy in the excess is one million you might be on the hook for that one million if you don't have if you're not if anyone controlling this i'm going to go sheesh and so if there's ever a asked this court to create a new law that under utah law ensure a must accept is that of an offer within the policy limits regardless of whether the claim is covered whenever the insurers defending the lower court did rule that the actions of mr doc said or were not accidental as a matter of law broken or docs that he has appealed that issue and so for purposes of this appeal the actions were not covered there is no compelling reason nor legal support for expanding the law to require insurer to pay admittedly on cover it claims soley because it's chosen to fulfill it legal and contractual obligations to defend the insured recommendations outlined specifically by the utah supreme court in summer he's in call to suggest otherwise would destroy the contract between the parties and turn control over to the contract the plaintiff's attorneys with an incentive to expand coverage far beyond the parties intent and i think at the outset it's important to clarify one issue and that is nowhere in the appeal or the underlying motive the underlying papers has have we advanced the position that owners must settle when presented with a settlement offer in fact the case law is pretty clear that you have to do the test in terms of whether you are fulfilling your fiduciary duty to defend and as a corollary your duty to settle the test there is reasonable is what we are arguing here is that if he is that upon receiving a settlement offer for policy limits in the face of a situation where the exposure to the insurer far exceeds those policy limits it is not reasonable to reject that settlement offer on the basis that coverage is being litigated in a separate action and i think the facts of this case actually really highlight the issue here and why in altman the court said that even during the pendency of its clarity or a judgment action you have an obligation to zealously guard to guard the insurance interests is because the settlement offer was given to the attorney that owners had hired on behalf of mr dox to this attorney ostensibly was supposed to be working in mr doctor's interests that attorney then takes the settlement offer sends it to the insurance company and says here you go with no assessment of the facts where the liability is contested or not the only thing that the attorney says is of course coverage is an issue that attorney who was a stent simply working on behalf of jacob docs that are then proposes for the plaintiff a heads i win tell you lose proposition hate coverage is being contested will pay policy limits if it turns out the coverage applies but we're not go pay if we win the dac action there was absolutely no consideration in terms of protecting the interests of mr cox that are at the point that settlement overture was made in fact the only consideration made by the insurance company was whether or not they could protect themselves from exposure to the claim and it in that respect that state farm i think is informative and really instructs the court to have a finding that there was no consideration of or there was no fulfillment of the obligation to perform their duties in good faith and that's because state farm and i guess i would take issue with councils characterization of the state farm finding their coverage was contested for three years state farm said we do not have an obligation nor will we pay the excess monies of the judgment be on the policy limits at the end of the case state farm came forward and said ok you know what we were wrong on that we will pay excess limits as a result no harm no foul we did not violate our fiduciary duty to defend their the court said no we are not going to merge the of the good faith obligation simply by paying at the end or in this case winning it declaratory action finding no coverage absent any further questions i'm happy to to be quiet and let smarter minds deal with this i