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

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F LED 

UNITED STATES COURT OF APPEALS United Stattf (Au t of Appeals 

TENTH CIRCUIT 

THE HOME INSURANCE COMPANY OF INDIANA, ) 

an Indiana Corporation, ) 

) 

Plaintiff-Appellee, ) 

) 

v. ) 

) 

EDWARD L. BURTON, III, ) 

) 

Defendant-Appellant. ) 

ORDER AND JUDGMENT* 

Tenth Circuit 

FEB 15 1 

.ROBERT L. HOECKER 

Clerk 

No. 89-4138 

(D.C. No. 89-C-229S) 

(Dist. of Utah) 

Before HOLLOWAY and BARRETT, Circuit Judges, and BROWN,** United 

States District Judge. 

Edward L. Burton, III (Burton) appeals from an order of the 

district court granting summary judgment in favor of The Home 

Insurance Company of Indiana (HICI). The relevant facts are not 

in dispute and may be briefly summarized. 

On January 16, 1989, HICI issued to Burton, a practicing 

attorney, a professional liability insurance policy. The cover of 

the policy included a declaration which stated in part: 

"IMPORTANT NOTICE. THIS IS A CLAIMS MADE POLICY, PLEASE READ 

* 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 estoppel. 10th Cir. R. 36.3. 

** The Honorable Wesley E. Brown, Senior Judge, United States 

District Court for the District of Kansas, sitting by designation. 

Appellate Case: 89-4138 Document: 010110099996 Date Filed: 02/15/1991 Page: 1 
CAREFULLY. II The policy included a "Prior Acts Exclusion 

Endorsement," signed by Burton, which provided: 

In consideration of the premium charged, it is 

hereby understood and agreed that this policy 

specifically excludes loss resulting from claims made 

against any insured arising from any acts, errors, 

omissions or personal injuries occurring or alleged to 

have occurred prior to 1-16-87. 

On January 23, 1989, the Federal Deposit Insurance 

Corporation (FDIC) sued Burton and a number of other former 

directors of Utah Firstbank. The FDIC alleged that the directors 

ha d negligently managed the affairs of the bank from August 17, 

1978, until January 24, 1986, resulting in its closure by state 

banking authorities. Burton contacted HICI and requested that it 

defend him. HICI declined to assume Burton's defense, citing the 

policy's prior acts exclusion endorsement, supra, which excluded 

claims made for any acts, errors, omissions or injuries which 

occurred prior to January 16, 1987. 

On March 10, 1989, HICI filed a complaint seeking a 

declaratory judgment that its policy did not provide any coverage 

for Burton in the FDIC suit. Within his answer, Burton alleged 

that the prior acts exclusion endorsement was: without 

consideration, void, and unenforceable; inconsistent with a claimsmade policy; and invalid and unenforceable. He specifically 

alleged that since the endorsement form had not been filed with 

the Utah Insurance Commissioner prior to its use in accordance with 

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Appellate Case: 89-4138 Document: 010110099996 Date Filed: 02/15/1991 Page: 2 
§ 31A-21-201 Utah Code Ann. (1986) 1 , it was void and unenforceable. 

Thereafter, Burton moved for summary judgment. 

On April 14, 1989, HICI filed its revised prior acts 

exclusion endorsement form with the Insurance Commissioner of Utah. 

On July 31, 1989 the magistrate issued his report and 

recommendations, finding, inter alia: the prior acts exclusion 

endorsement attempts to exclude from coverage certain acts which 

occurred prior to January 16, 1987; it is undisputed that the acts 

complained of in FDIC's action occurred prior to January 16, 1987; 

if the endorsement applies, there is no coverage; although the 

prior acts exclusion endorsement form used in Burton's policy was 

not on file with the Utah Insurance Commissioner at the time it was 

attached to his policy, another and almost identical form was on 

file; the operative language of the form on file with the 

commissioner was identical to the form in Burton's policy; the only 

difference in the two forms was that the form in Burton's policy 

had a space for the insured to acknowledge by signature the 

endorsement; it is conceded that the signature of the insured is 

not required by statute or regulation. The magistrate concluded 

that the non-filing of the form in Burton's policy did not void the 

endorsement. The magistrate also found that HICI's policy complied 

with§ 31A-22-204 of the Utah Code, which states that an insurer 

may not limit coverage to claims that are first made while the 

policy is in force "unless the policy contains a conspicuous 

statement that the coverage of the policy is limited in that way." 

1 Hereinafter, all statutory citations are to Utah Code Ann. 

(1986). 

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Burton objected to the magistrate's report and 

recommendation. Subsequent thereto, the district court adopted 

the magistrate's report and recommendation and entered summary 

judgment in favor of HICI and against Burton. 

On appeal, Burton contends that: (1) HICI's failure to file 

the endorsement form included in his policy with the Utah Insurance 

Commissioner rendered the form void; (2) the fact that a similar 

form was on file did not excuse HICI's failure to file; and (3) the 

legend stamped on the cover of the policy did not comply with the 

Utah Insurance Code. 

At the outset we note that in reviewing a grant of summary 

judgment, we must determine whether any genuine issue of material 

fact pertinent to the ruling remains and, if not, whether the 

substantive law was correctly applied. Clemmons v. Bohannon, 918 

F.2d 858, 861 (10th Cir. 1990) In reviewing the district court's 

decision, we must construe all pleadings and documentary evidence 

liberally in favor of the party opposing the motion. Id. 

form 

I. 

Burton contends that HICI's failure to file 

with the Utah Insurance Commissioner 

the endorsement 

prior to its 

incorporation into his policy rendered the endorsement void. 

Burton cites to§ 31A-21-201 which provides that "No form ... may 

be used unless it has been filed with the commissioner." Burton 

argues that a form not filed with the insurance department may not 

be used in an insurance contract and that the unfiled prior acts 

exclusion endorsement form rendered the exclusion voidable at his 

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Appellate Case: 89-4138 Document: 010110099996 Date Filed: 02/15/1991 Page: 4 
option. Burton maintains that the remaining portion of the 

insurance policy was enforceable by him. 

HICI responds that the Utah Insurance Code does not render 

its new prior acts exclusion endorsement void simply because it was 

not filed pursuant to§ 31A-21-201. HICI observes that, although§ 

31A-21-201 requires insurance companies to file their forms, it 

does not provide a remedy for failure to do so. 

observes that § 31A-21-107(2) specifically 

enforceability of non-complying policies: 

HICI further 

addresses the 

Any insurance policy, rider or endorsement issued after 

July 1, 1986, and which is otherwise valid, which 

contains any condition or provision not in compliance 

with the requirements of this title, is not rendered 

invalid by this title. However, those conditions and 

provisions shall be construed and applied as if the 

policy, rider, or endorsement was in full compliance 

with this title. 

HICI argues that, inasmuch as there is no evidence to suggest 

that the new prior acts exclusion endorsement included in Burton's 

policy does not comply with the substantive requirements of the Utah 

Insurance Code, the endorsement should be enforced according to its 

terms pursuant to § 31A-21-107(2). 

Although neither party has cited, nor have we found, any Utah 

court decision addressing this precise issue, general insurance law 

and other state court decisions support HICI's position. 

Under its police powers, "a state may prescribe the form, 

terms, and conditions of policies which may be issued." Appleman, 

Insurance Law and Practice,§ 10452 at p. 344. Thus, a legislature 

may "require insurance companies to submit forms of policies 

intended to be used in the state to the Insurance Commissioner 

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Appellate Case: 89-4138 Document: 010110099996 Date Filed: 02/15/1991 Page: 5 
before using them .. II Id., § 10454 at p. 378. Prescribed 

statutory conditions regarding the form and content of policies are 

mandatory and "no departure is permitted unless it is too plain for 

doubt that the substitution is in every way as advantageous to the 

insured and as desirable as the prescribed provision." Id.,§ 7043 

at pp. 190-191. However, "[a]lthough an insurance statute may 

require the filing of policy forms used by a company the 

insured cannot reject unfavorable provisions in a policy not so 

filed and recover on the policy, but is bound by the policy as written." Id., § 7045 at p. 202. 

Similarly, the failure of a company to file a form and obtain 

its approval does not destroy the terms of the insurance contract 

it has made, since a company cannot set up its failure to comply 

with the filing statute as a defense to an action against it on its 

policy. 44 C.J.S. Insurance §253. See also Gifford v. Western 

Aviation Insurance Group, 713 P.2d 1085, 1087-1088 (Or. App. 1986) 

(failure to file an endorsement does not render it void and insurers 

cannot use failure to file as a reason for refusing to pay claims); 

Williams v. Metropolitan Life Insurance Company, 519 P.2d 1310, 1313 

(Wash. App. 1974) (where form used by insurance company differed 

from approved form only in that some of amended answers commonly 

required were preprinted, deviation did not void form). 

We hold that HICI's failure to file its new exclusion 

endorsement form with the Utah Insurance Commissioner prior to its 

utilization in Burton's policy did not render the new exclusion 

endorsement form void. Burton's coverage under HICI's policy, 

utilizing either form, would not have included coverage for any 

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acts, errors, or omissions which occurred prior to January 16, 1987. 

The only difference between the two forms was the addition of a 

signature/acknowledgment line on the new form. 

Moreover, Burton, a practicing attorney, apparently knowingly 

and voluntarily signed the new form, specifically affirming his 

understanding and agreement wi th the policy's exclusion of coverage 

for any acts, errors or omissions which occurred prior to January 

16, 1987. We further observe that nothing in the record indicates, 

nor has Burton alleged, that the addition of the signature/ 

acknowledgment line on the new form would have precipitated the Utah 

Insurance Commissioner's disapproval of the form under § 31A-21-

201(2)(a).2 

Although not relied upon by the magistrate or the district 

court, we believe that the similarity between the RICI form on file 

and that used in Burton's policy is sufficient to satisfy the 

"substantial compliance" doctrine. As it relates to a statute, 

"substantial compliance" means actual compliance in respect to the 

2 § 31A-21-201(2)(a) provides: 

The commissioner may at any time disapprove a form upon a 

finding that: 

(i) it is inequitable, unfairly discriminatory, misleading, 

deceptive, obscure, or encourages misrepresentation; 

(ii) it provides benefits or contains other provisions that 

endanger the solidity of the insurer; 

(iii) in the case of the basic policy, though not applicable 

to riders and endorsements, it fails to provide the exact 

name of the insurer and the full address of its home or 

regional office; or 

(iv) it violates a statute or a rule adopted by the 

commissioner, or is otherwise contrary to law. 

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s ubstance essential to every reasonable objective of the statute. 

City of Lenexa v. City of Olathe, 660 P.2d 1368 (Kan. 1983); Otero 

v. Zouhar, 697 P.2d 493 (N.M. App. 1984); Jones v. Short, 696 P.2d 

665 (Alaska 1985). Because the only difference between the form 

filed and that used in Burton's policy involved a signature/ 

acknowledgment box, the filing of the prior form served the purpose 

of the Utah Insurance Code. The addition of the signature/ 

acknowledgment box could not have led to the disapproval of the form 

used in the Burton policy pursuant to§ 31A-21-201(2)(a). 

II. 

Burton contends that the exclusion form which HICI had on file 

with the Utah Insurance Commissioner did not excuse HICI's failure 

to file the new form prior to its use in his policy. Although we 

agree, the issue is moot. Having affirmed the district court's 

finding that HICI's failure to file the new form prior to its use 

in Burton's policy did not render it void, we need not now consider 

whether the filing of the old form excused HICI's failure to file 

the new form. 

III. 

Burton contends that the language stamped on the cover of the 

policy did not comply with§ 31-A-22-204, which provides: 

No insurer may limit coverage under a policy insuring 

against legal liability to claims that are first made 

against the insured while the policy is in force, unless 

the policy contains on the cover page, a conspicuous 

statement that the coverage of the policy is limited in 

that way. 

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The cover page of the Burton policy included a declaration 

which stated in part: "IMPORTANT NOTICE. THIS IS A CLAIMS MADE 

POLICY, PLEASE READ CAREFULLY." The declaration page contained the 

following language: 

This is a claims made Policy. Please review the policy 

carefully. 

The Policy is limited to liability for only those claims 

that are first made against the insured during the policy 

period. 

Burton contends that the magistrate ignored the cover page and 

erroneously looked to the declaration page in finding that the policy 

contained conspicuous language limiting the coverage of the policy to 

a particular period of time. Burton argues that, although "there are 

provisions, conditions and statements in the body of the policy that 

explain the limitations of coverage[,] . 

the statute[§ 31A-22-204] [which] 

[t]hat does not satisfy 

. specifically says that 

a conspicuous statement limiting coverage must appear on the cover." 

(Appellant's Brief at p. 16). Burton reasons that, inasmuch as the 

policy did not comply with the statute, HICI's attempt to exclude 

certain claims is invalid. 

HICI responds that the language on the cover and on the 

declarations page of the policy clearly and conspicuously indicates 

that the policy is a claims made policy in compliance with§ 31A-22-

204. 

Inasmuch as the cover page of the policy stated that 

"IMPORTANT NOTICE. THIS IS A CLAIMS MADE POLICY, PLEASE READ 

CAREFULLY," and inasmuch as the declaration page of the policy stated 

that the policy was "limited to liability for only those claims that 

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are first made against the Insured during the policy period," we hold 

that the district court did not err in adopting the magistrate's 

report and recommendation that the policy complied with§ 31A-22-204. 

Moreover, as previously noted, Burton, a practicing attorney, 

signed the prior acts exclusion endorsement form contained within the 

policy, thereby confirming his understanding and agreement that the 

policy excluded coverage for any acts, errors, or omissions which 

occurred prior to January 16, 1987. 

AFFIRMED. 

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Entered for the Court: 

James E. Barrett, 

Senior United States 

Circuit Judge 

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