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Parties Involved:
Aetna Life and Casualty Insurance Company
Appellee
Kenneth McHenry
Appellant

Document Text:

• FILED 

United States Court of Appeals 

Tenth Circuit 

UNITED STATES COURT OF APPEALS 

FOR THE TENTH CIRCUIT 

FEB 2 7 1991 

ROBERT L. HOECK.ER 

Clerk 

KENNETH MCHENRY, 

Plaintiff-Appellant, 

v. 

AETNA LIFE AND CASUALTY INSURANCE 

COMPANY, 

Defendant-Appellee. 

) 

) 

) 

) 

) No. 90-4006 

) (D.C. No. 88-C-771J) 

) (D. Utah) 

) 

) 

) 

ORDER AND JUDGMENT* 

Before LOGAN, MOORE, and BALDOCK, Circuit Judges. 

After examining the briefs and appellate record, this panel 

has determined unanimously that oral argument would not materially 

assist the determination of this appeal. See Fed. R. App. P. 

34(a); 10th Cir. R. 34.1.9. 

submitted without oral argument. 

The case is therefore ordered 

Plaintiff McHenry appeals from the district court's entry of 

summary judgment in favor of defendant Aetna Life and Casualty 

Insurance Company. McHenry contends that the district court erred 

in concluding that McHenry's claims were barred by the relevant 

* 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: 90-4006 Document: 010110028886 Date Filed: 02/27/1991 Page: 1 
statute of limitations and therefore no genuine issue of material 

fact existed as to Aetna's alleged liability for the events giving 

rise to McHenry's complaint. 

We review the district court's entry of summary judgment de 

novo and will affirm if, after reviewing the record in the light 

most favorable to the non.moving party, there is no genuine issue 

of material fact and the moving party is entitled to judgment as a 

matter of law. See Osgood v. State Farm Mut. Auto Ins. Co., 848 

F.2d 141, 143 (10th Cir. 1988); Ewing v. Amoco Oil Co., 823 F.2d 

1432, 1437 (10th Cir. 1987). 

This case arises from McHenry's claim that his defense in a 

medical malpractice action was not properly conducted by counsel 

provided by Aetna, his malpractice insurer, and that Aetna was 

negligent in failing to provide him with competent counsel. The 

medical malpractice action was settled within policy limits and 

approved by the court on September 27, 1983. The circumstances 

surrounding the medical malpractice suit are irrelevant to our 

analysis. However, it is necessary to reconstruct the history of 

the various pleadings filed by McHenry in his action against 

Aetna. A chronology follows: 

November 21, 1985 

November 22, 1985 

November 20, 1987 

November 20, 1987 

Civil No. 71192, McHenry v. Stott, 

Aetna, et al., District Court, Utah 

County; 

Civil No. 71172, McHenry v. Stott, 

et al., amended complaint deleting 

Aetna; 

Civil No. 71172, McHenry v. Stott, 

Aetna, et al., second amended 

complaint adding Aetna; 

Summons issued and served 

individual attorneys and Aetna; 

2 

on 

Appellate Case: 90-4006 Document: 010110028886 Date Filed: 02/27/1991 Page: 2 
November 23, 1987 

December 9, 1987 

December 14, 1987 

August 30, 1988 

July 10, 1989 

Civil No. 87-2591, McHenry v. Aetna, 

Utah County District Court; 

Civil No. 71192, McHenry v. Stott, 

A=e~t=n=a~,----'e~t;a__a=l~., action voluntarily 

dismissed by McHenry through 

counsel; 

Order of dismissal signed by the 

court; 

Civil No. 88-771J, McHenry v. Aetna, 

United States District Court for the 

District of Utah; 

Civil No. 87-2591, McHenry v. Aetna, 

dismissed for failure to prosecute. 

We first consider the appropriate statute of limitations 

applicable to McHenry's claim. Utah's statute of limitations 

governing contract disputes provides a six-year period in which to 

bring suit. Utah Code Ann.§ 78-12-23. However, actions grounded 

in legal malpractice and negligence are governed by Utah Code Ann. 

§ 78-12-25, providing a four-year period in which to bring suit. 

McHenry argues that his claim against Aetna is for breach of the 

contract of insurance and is therefore within Utah's six-year 

period allowed for contract claims. We do not agree. Most states 

have recognized a cause of action based on bad faith of insurance 

carriers; however, there appear to be differing opinions as to the 

characterization of such claims as contract or tort. 

McCullough v. Golden Rule Ins. Co., 789 P.2d 855, 857-58 (Wyo. 

1990); Shernoff, w~, Insurance Bad Faith Litigation 1-107[2] 

(1990). McHenry cites Beck v. Farmers Insurance Exchange, 701 

P.2d 795 (Utah 1985), wherein the Utah Supreme Court held that in 

the relationship between the insurer and the insured, the duties 

3 

Appellate Case: 90-4006 Document: 010110028886 Date Filed: 02/27/1991 Page: 3 
and obligations of the parties are contractual in nature and a 

breach of duty or obligation gives rise to a contract action and 

not one in tort. Id. at 800. However, in a footnote to this 

holding, the court recognized that in breaches which are 

"independent of the contract," an action in tort may arise. Id at 

800, n.3. 

McHenry has never alleged that Aetna refused to provide him 

with a defense. In fact, the record indicates that Aetna made 

every attempt to not only provide McHenry with a defense, but to 

do so according to McHenry's demands and dictates. Aetna's duties 

and obligations under the insurance contract were fulfilled. 

McHenry's claims allege negligence and legal malpractice, are 

independent of the contract, and are thereby distinguishable from 

the situation in Beck. The district court was correct in 

determining that Utah's four-year statute of limitations, Utah 

Code Ann.§ 78-12-25, is applicable. 

We must next determine whether McHenry's action is timely. 

The record indicates that McHenry's cause of action against Aetna 

arose at the latest on September 27, 1983, when the Utah state 

court accepted the settlement of the medical malpractice claim as 

to all parties and dismissed the complaint. Therefore, the 

statute of limitations would have run, at the latest, on September 

27, 1987. McHenry did not file his complaint in federal court 

until August 30, 1988. However, we must determine whether there 

is any circumstance which tolls the statute. McHenry argues that 

4 

Appellate Case: 90-4006 Document: 010110028886 Date Filed: 02/27/1991 Page: 4 
1 Utah's saving statute, Utah Code Ann.§ 78-12-40, operates in his 

favor. In order to make a determination as to the validity of his 

argument, we must return to the chronology of McHenry's state 

court filings as previously set forth to determine whether 

McHenry's second amendment to his complaint filed November 20, 

1987, relates back to the filing of the initial complaint. 

When McHenry filed his initial complaint on November 21, 

1985, he was obviously aware that he may have a legal cause of 

action and was also aware of the parties he wished to charge. He 

named Aetna and the individual attorneys who conducted his medical 

malpractice defense. For reasons known only to McHenry, he filed 

his first amended complaint one day later on November 22, 1985, 

eliminating Aetna as a defendant. No summons was issued or served 

on any party in relation to either of these complaints. It then 

appears the action sat dormant for two years until November 20, 

1987, when McHenry filed his second amended complaint, adding 

Aetna as a defendant. Summonses were finally issued and served at 

this time. This service would have been the parties' first notice 

that any action was pending against them. 

1 78-12-40. Effect of failure of action not on 

merits. 

If any action is commenced within due time and a 

judgment thereon for the plaintiff is reversed, or if 

the plaintiff fails in such action or upon a cause of 

action otherwise than upon the merits, and the time 

limited either by law or contract for commencing the 

same shall have expired, the plaintiff, or if he dies 

and the cause of action survives, his representatives, 

may commence a new action within one-year after the 

reversal or failure. 

5 

Appellate Case: 90-4006 Document: 010110028886 Date Filed: 02/27/1991 Page: 5 
The relevant question is whether McHenry's second amended 

complaint, filed outside the four-year statute of limitations, 

relates back to the original complaint thereby perhaps allowing 

application of Utah's one-year saving statute. Utah R. Civ. P. 

15(c) (1989) governs the relation back of amendments in Utah state 

courts. 

(c) Relation back of amendments. Whenever the claim or 

defense asserted in the amended pleadings arose out of 

the conduct, transaction, or occurrence set forth or 

attempted to be set forth in the original pleading, the 

amendment relates back to the date of the original 

pleading. 

The Utah Court of Appeals has held that, as a general rule, 

"Rule lS(c) does not apply to amendments which substitute or add 

new parties to those brought before the court by the original 

pleadings." Vina v. Jefferson Ins. Co. of N.Y., 761 P.2d 581, 586 

(Utah App. 1988); see also Perry v. Pioneer Wholesale Supply Co., 

681 P.2d 214, 217 (Utah 1984). However, the court in Vina 

articulated an exception if the old and new parties are found to 

have an "identity of interest," Vina, 761 P.2d at 586, such that 

"notice of the action against one serves to provide notice of the 

action to the other." Perry, 681 P.2d at 217. Since the 

individual attorneys named in the original state complaint, were 

not served with notice of the state action until November, 1987, 

we do not need to reach the question of whether these parties have 

the requisite identity of interest to allow McHenry's second 

amended complaint to relate back. Notice cannot be charged to 

Aetna through notice to the attorneys. Therefore, McHenry's 

untimely federal action cannot be salvaged by the saving statute. 

6 

Appellate Case: 90-4006 Document: 010110028886 Date Filed: 02/27/1991 Page: 6 
On November 23, 1987, McHenry filed an additional complaint 

arising out of the same facts, Civil No. 87-2591. The parties do 

not dispute that service in this action was accomplished. 

However, this action also falls outside the applicable statute of 

limitations and cannot work to save McHenry's claim. 

McHenry also contends that the court erred in refusing to 

consider an affidavit, opposing Aetna's motion for summary 

judgment, filed one day prior to the summary judgment hearing. 

The district court concluded this document was not in compliance 

with Rule S(e), Civil Rules of Practice of the United States 

District Court for the District of Utah. 2 Fed. R. Civ. P. 83 

allows each United States district court the latitude to 

promulgate its own rules regarding its practice as long as these 

local rules do not conflict with the federal rules. This court 

has upheld this authority. See Hernandez v. George, 793 F.2d 264, 

266 (10th Cir. 1986). We have also recognized the court's 

2 

(e) Memoranda of authorities 

A memorandum in opposition to a motion for summary 

judgment shall begin with a section that contains a 

concise statement of material facts as to which the 

party contends a genuine issue exists. Each fact in 

dispute shall be numbered, shall refer with 

particularity to those portions of the record upon which 

the opposing party relies, and, if applicable, shall 

state the number of the movant's fact that is 

disputed .... 

A memorandum opposing 

within fifteen (15) days 

motion .... 

7 

a motion shall 

after service 

be filed 

of the 

Appellate Case: 90-4006 Document: 010110028886 Date Filed: 02/27/1991 Page: 7 
discretion in applying its own local rules. Smith v. Fort Motor 

Co., 626 F.2d 784, 796 (10th Cir. 1980)(citing Martinez v. Thrifty 

Drug & Discount Co., 593 F.2d 992, 994 (10th Cir. 1978)), cert. 

denied, 450 U.S. 918 (1981). We have examined the subject 

affidavit and conclude that there was no abuse of discretion in 

the district court's determination that the affidavit was 

unacceptable as to format and content in light of the requirements 

of Rule 5(e). As to McHenry filing his affidavit one day before 

trial, 3 McHenry has offered no reasonable explanation or excuse 

which would lead us to conclude that the district court's 

discretion to grant a waiver of the timeliness requirement was 

necessary. The district court did not abuse its discretion in 

refusing to consider McHenry's affidavit. 

We have considered McHenry's additional arguments and find 

them to be without merit. We GRANT McHenry's petition to proceed 

on appeal in forma pauperis. We DENY McHenry's request for 

sanctions pursuant to Fed. R. Civ. P. 38 and Aetna's request for 

an award of attorney's fees. The judgment of the United States 

District Court for the District of Utah is AFFIRMED. 

Entered for the Court 

John P. Moore 

Circuit Judge 

3 The record indicates that Aetna's motion for summary judgment 

was mailed to McHenry on August 30, 1989. McHenry submitted his 

affidavit to the court on November 8, 1989. 

8 

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