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Nature of Suit Code: 110
Nature of Suit: Insurance
Cause of Action: 

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TENTH CIRCUIT JUL211992 

ROBERT L. HOECKER 

Clerk 

OLAF T. STEVENSEN, JR. and 

BARBARA ANN STEVENSEN, 

Plaintiffs-Appellants, 

v. 

THE HOME INSURANCE COMPANY, 

a foreign corporation, 

Defendant-Appellee. 

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No. 90-4192 

(D.C. No. BBC-1113 S) 

(D. Utah, Central Div.) 

ORDER AND JUDGMENT* 

Before HOLLOWAY and MCWILLIAMS, Senior Circuit Judges, and 

SEYMOUR, Circuit Judge. 

By an amended complaint filed in the United States District 

Court for the District of Utah, Olaf T. Stevensen, Jr. and his 

wife, Barbara Ann Stevensen, residents and citizens of Utah, 

brought suit against the Home Insurance Company (Home), a corporation incorporated in the State of New Hampshire, on a policy of 

insurance issued by Home to the Salt Lake Athletic Club (SLAC) and 

the Wasatch Health Partnership. In their first claim, the 

Stevensens sought $2,000,000 as compensatory damages for damage 

done to a building in which they had a security interest, which 

* This order and judgment has no precedential value and shall 

not be cited, or used by any court within the Tenth Circuit, except for purposes of establishing the doctrines of the law of the 

case, res judicata, or collateral estoppal. 10th Cir. R. 36.3. 

Appellate Case: 90-4192 Document: 010110270453 Date Filed: 07/21/1992 Page: 1
sum also included damages arising from economic loss caused by 

business closure. In a second claim, the Stevensens sought 

$2,500,000 as punitive damages for Home's bad faith denial of 

their insurance claim. Jurisdiction was based on 28 U.S.C. § 

1332. By answer, Home denied any liability to the Stevensens under the policy. 

After discovery, the Stevensens moved for partial summary 

judgment, and Home moved for summary judgment. After hearing, the 

district court denied the Stevensens' motion and granted Home's 

motion. In so doing, the district court held that Stevensens' 

claim under the policy was barred by the suit limitation provision 

in the policy which required all suits based on the policy be 

brought within one year after the loss. 1 The district court further indicated that Stevensens' claim was also barred by a threeyear statute of limitations provided for in Utah Code Ann.§ 31A21-313(1) (1986). The Stevensens appeal. We affirm. 

The background facts are not really in dispute and resolution 

of the issue before us turns on the provisions of the insurance 

policy on which the Stevensens brought suit. In April, 1980, by a 

written installment agreement, the Stevensens sold their interest 

in SLAC, including both real and personal property, to the Panos 

Investment Company, which, in turn, sold its interest in 1983 to 

three individuals, Raymond Goodsen, James Foulger, and Richard 

Danley, hereinafter referred to as the owners or the purchasers. 

1 Stevensens' second claim based on bad faith denial of their 

claim was dismissed and is not involved in this appeal. Apparently the Stevensens never did present a proof of loss to Home. 

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Under the 1980 sale agreement, the buyer was required to maintain 

insurance on the premises and deliver a copy of such insurance 

policy to the Stevensens. The agreement also constituted an assignment of the insurance to the Stevensens. · On April 1, 1983, 

the then new purchasers obtained from Home the policy here involved. 

On April 14, 1984, the SLAC premises were damaged by construction activities originating on adjacent property. The accident occurred during excavation on the adjacent property when a 

drill bored diagonally into SLAC property underneath the building. 

The owners of SLAC apparently made no claim against Home for the 

damages thus done SLAC, and instead made claim against the insurance carrier for the drilling contractor who had caused the damage. That claim was settled for $4,769.00. 

The Stevensens commenced their action against Home on November 28, 1988, and Home initially argues that since the loss occurred on April 14, 1984, Stevensens' claim is barred by the suit 

limitation provision in the policy which Home issued in 1983 to 

the owners of SLAC. 2 The one-year suit limitation appears in 

2 The Stevensens apparently did not immediately learn of the 

damage done SLAC premises, or the cause thereof, although they 

concede that they did learn of such no later than July, 1985. 

Home, on the other hand, argued that the Stevensens learned of the 

damage prior to July 1985, relying on deposition testimony that 

Mr. Stevensen visited the SLAC premises immediately after the accident. That deposition testimony, however, is not in the record 

before us. Be that as it may, in summer 1985 the Stevensens commenced foreclosure proceedings against the SLAC in the Third Judicial District Court, County of Salt Lake, State of Utah, styled 

Olaf T. Stevensen, Jr. & Barbara Ann Stevensen, et al. v. Raymond 

L. Goodson, et al., Civil Action No. C-85-5265. This action was 

stayed during bankruptcy of one of the SLAC owners and remained 

pending at the time of this appeal. 

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paragraph 21 under "Conditions Applicable to Section I 113 and reads 

as follows: 

21. Suit. No suit shall be brought on 

this policy unless the Named Insured has complied with all the policy provisions ·and has 

commenced the suit within one year after the 

loss occurs. 

Before considering the suit limitation provision in the 

policy, we should first mention other policy provisions that have 

possible bearing on the matter before us. 

The policy is a "Business Owner's Policy" issued by an authorized agent for Home. The "Declarations" constitute the first 

pages of the policy, giving pertinent details as to the term, premium, and coverage, and naming the various parties insured. The 

policy then goes on to state that the "Named Insured" was the SLAC 

and the Wasatch Health Partnership, consisting of five named partners. On an additional declaration page the Stevensens, along 

with F.M.A. Leasing Company, were listed as "Additional Insureds 

As Their Interest May Appear." Later an endorsement showing a 

change in the Stevensens' home address stated that the endorsement 

was "Amending Additional Insured To," followed by the Stevensens' 

name and new address, but omitting the "as their interest may appear" language. By non-premium endorsement, American Savings & 

Loan "and/or its successors or assigns" was named as being the 

mortgagee. 

A policy provision involved in the present controversy is the 

3 The policy contains three sections: Section I for the building and personal property; Section II for comprehensive general 

liability; and Section III for employee dishonesty. 

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so-called standard mortgage clause appearing in paragraph 11 in 

the "Conditions Applicable to Section I," which reads as follows: 

11. Mortgage Clause--Applicable Only to 

Buildings: this clause is effective if a 

mortgagee is named in the Declarations. The 

word "mortgagee" includes "trustee." Loss to 

buildings shall be payable to the named mortgagee as interest may appear, under all 

present or future mortgages on the buildings 

described in the Declarations in order of precedence of mortgages on them. 

As it applies to the interest of any mortgagee 

designated in the Declarations, this insurance 

shall not be affected by any of the following: 

(a) any act or neglect of the mortgagor or 

owner of the described buildings: (emphasis 

added) 

Paragraph 16 of "Conditions Applicable to Section I" concerns 

a mortgagee or lien holder not covered by the standard mortgagee 

clause, but conceivedly covered as an appointee of loss proceeds. 

That paragraph reads as follows: 

16. Privilege to Adjust With Owner: (a) 

Except as provided in (b) below, or unless 

another payee is specifically named in this 

policy, loss, if any, shall be adjusted with 

and payable to the Named Insured. The Named 

Insured may, at his option designate a representative in the adjustment and may authorize 

payment to others (emphasis added). 

At the outset we reject any suggestion that under the policy 

the Stevensens are mortgagees and accordingly are entitled to the 

benefit of the so-called standard mortgage clause appearing in 

paragraph 11. That clause provides that it is to be effective "if 

a mortgagee is named in the Declarations." There was a mortgagee 

named in the policy, but it was not the Stevensens. Rather, the 

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American Savings & Loan was named in the policy as being the mortgagee. So, no matter what the nature of Stevensens' retained interest in the SLAC premises, they were simply not named as a mortgagee in the policy. Another party was named as· mortgagee. 

Stevensens were not designated in the declarations as being a 

named insured. SLAC and the Wasatch Health Partnership were designated as the named insureds. However, the Stevensens were designated as additional insureds. We do not regard the language "as 

their interest may appear" to be of any particular significance. 

The Utah courts have yet to construe a suit limitation provision 

in the context here presented in any reported opinion. Absent 

authority to the contrary, we are not inclined to disturb the district court's holding that, as an additional insured, the 

Stevensens come within the ambit of the suit limitation provision, 

which, as indicated, provides that "no suit may be brought on this 

policy" unless the named insured himself complies with all policy 

provisions and commences suit within one year after the loss. "No 

suit" means "no suit. 114 

An inescapable fact is that the Stevensens did not commence 

the present action until four years, seven months, and fourteen 

4 Our interpretation of the suit limitation provision is in 

accord with paragraph 16 of the "Conditions Applicable to Section 

I" which provides that "loss ... shall be adjusted with and payable to the named insured" absent any designation by the named 

insured authorizing payment to another. Further, as indicated,, 

the installment sales agreement between the Stevensens and Panos 

provided that the latter would obtain insurance on the premises 

and also constituted an assignment of said insurance to the 

Stevensens. In such circumstance, it would seem that the suit 

limitation imposed by the insurance policy on the named insured 

would apply with equal force to the named insured's assignee. 

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days after the loss occurred. Further, the Stevensens concede 

that they learned of the loss no later than July, 1985, and accordingly they did not commence the present action until three 

years and four months after actual knowledge of the loss. Under 

either approach, there was non-compliance with the suit limitation 

provision. 

In view of our understanding of the suit limitation provision, we need not here consider the applicability of a three-year 

statute of limitations for bringing suits on insurance policies 

enacted by the state legislature of Utah in 1986. Utah Code Ann. 

§ 31-A-231-313 ( 1) ( 1986). 

Judgment affirmed. 

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Entered for the Court 

Robert H. Mcwilliams 

Senior Circuit Judge 

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