UNITED STATES COURT OF APPEALS

Tenth Circuit

Byron White United States Courthouse

1823 Stout Street

Denver, Colorado 80294

(303) 844-3157

Patrick J. Fisher, Jr. Elisabeth A. Shumaker

Clerk Chief Deputy Clerk

March 9, 1998

TO: ALL RECIPIENTS OF THE CAPTIONED OPINION

RE: 96-4044, Steiner Corp. v. Johnson & Higgins

 Originally filed on January 13, 1998.

Revised and refiled on March 9, 1998.

The published opinion in this appeal has been revised and refiled. Specifically,

section “III A” of the opinion has been revised and is different from the opinion filed on

January 13, 1998. Also, appended to the revised opinion is an order addressing the petition

for rehearing.

Please find a copy attached for your convenience.

Sincerely,

Patrick Fisher

 Clerk

By: 

Keith Nelson

Deputy Clerk
F I L E D

United States Court of Appeals

Tenth Circuit

MAR 9 1998

PATRICK FISHER

Clerk

PUBLISH

UNITED STATES COURT OF APPEALS

TENTH CIRCUIT

STEINER CORPORATION, a Nevada

corporation,

Plaintiff-Counter-DefendantAppellant, 

and 

CAROL S. MCCORMICK, Administrator

of the Steiner Corporation Retirement

Plan, and STEINER CORPORATION

RETIREMENT PLAN,

Plaintiffs-Counter-Defendants,

v.

JOHNSON & HIGGINS OF

CALIFORNIA, a California corporation; 

DONALD F. REEVES and ROY J.

BERTOLDO,

Defendants-Counter-ClaimantsAppellees.

No. 96-4044

APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF UTAH

(D.C. No. 88-CV-410)
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Peter W. Billings, Jr. (Jay B. Bell, John E. S. Robson and James F. Wood with him on the

brief), of Fabian & Clendenin, Salt Lake City, Utah, for Plaintiff-Counter-DefendantAppellant.

Robert A. Lewis of McCutchen, Doyle, Brown & Enersen, San Francisco, California 

(William Carpenter of McCutchen, Doyle, Brown & Enersen, San Francisco, California,

and David A. Greenwood of Van Cott, Bagley, Cornwell & McCarthy, Salt Lake City,

Utah, with him on the brief), for Defendants-Counter-Claimants-Appellees.

Before KELLY, HOLLOWAY and BRISCOE, Circuit Judges.

HOLLOWAY, Circuit Judge.

Plaintiff Steiner Corporation, along with others not parties to this appeal, brought

this action against defendants in 1988 for professional malpractice and breach of contract. 

Defendant Johnson & Higgins (sometimes referred to herein as J & H) is the actuarial

firm which handled aspects of plaintiff’s employee retirement plan. Defendants Reeves

and Bertoldo were the individual members of Johnson & Higgins responsible for the

work on plaintiff Steiner’s matters.

After a bench trial, judgment was entered in favor of plaintiff on its claim that

defendant negligently redrafted a section of plaintiff’s plan, but plaintiff’s primary claim

for professional malpractice was rejected. Both sides appealed. We affirmed in part,

reversed in part, vacated in part and remanded. Steiner Corp. Retirement Plan v. Johnson

& Higgins, 31 F.3d 935 (10th Cir. 1994), cert. denied, 115 S. Ct. 732 (1995). In so doing

we directed that the merits of defendant Johnson & Higgins’ defenses of laches and
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contributory negligence, inter alia, be considered on remand because the district court’s

opinion before us then was silent as to these issues and they involved factual

determinations that we were unwilling or unable to make. Id. at 941.

On remand, in an unpublished Order on Remand of December 28, 1995, the

district court again ruled in defendants’ favor on plaintiff’s primary claim and entered

judgment in favor of defendants on their counterclaim for unpaid fees. Plaintiff appeals

the rejection of its malpractice claim against defendants, but has not appealed the

judgment in favor of defendants on the counterclaim. 

I

Plaintiff’s appeal from the district court’s judgment focuses on the court’s holding

that plaintiff could not recover on its actuarial malpractice claim against the defendants

under Utah’s comparative negligence statute because plaintiff’s negligence was

comparatively greater than that of defendants. Order on Remand at 8. The following

summary is primarily based on the district court’s detailed findings of fact, made

following the bench trial which preceded the first appeal. Unpublished Findings of Fact

and Conclusions of Law of January 24, 1992. Neither party specifically takes issue with

any of these findings.

Plaintiff established an employee retirement plan (the Plan) in 1958. The Plan is

subject to ERISA, the Employee Retirement Income Security Act of 1974, Pub. L.

93-406, 29 U.S.C. §§ 1001, et seq., and is a “defined benefit plan” under the Internal
- 4 -

Revenue Code. The feature of the Plan which is the focal point of this litigation is its

provision permitting a retiring employee to receive all of his or her benefits in a single,

lump sum payment as an alternative to the ordinary monthly payment of benefits. 

Although the Plan provided that the lump sum benefit was to be calculated so as to make

it the actuarial equivalent of the monthly payment option, in fact this was never the case

prior to 1986. Instead, the formula developed for calculating the amount of the lump sum

benefit resulted in that option being more valuable than the monthly payment option, as is

described in more detail in our previous opinion. 31 F.3d at 937. The formula was

created by Mr. F. J. Kane, who was plaintiff’s chief financial officer until his retirement

in 1984. Kane knew that the lump sum payment was more valuable than the monthly

payment option.

Beginning in 1977, plaintiff retained defendant Johnson & Higgins as the actuary

for the Plan, an arrangement which continued until 1988. One of the services performed

by defendants was to prepare an annual actuarial statement for the Plan, as required by

ERISA. Each annual statement included a valuation of the Plan’s assets and liabilities

and a calculation of the permissible range of employer contributions needed to maintain

solvency of the Plan. Although historically most retirees had chosen the more valuable

lump sum distribution, defendants continued each year to prepare the valuation of the

Plan on the assumption that retirees would choose the monthly payments. Consequently,
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the Plan valuations substantially understated the value of the Plan’s liabilities and the

level of contributions needed to maintain solvency.

Over the years there had been discussions between defendants and representatives

of plaintiff about the fact that the formula used to compute the lump sum benefit resulted

in that being a more valuable option. As market interest rates rose, the difference in value

of the two options became greater. Defendants specifically recommended in 1977 and

1978 that plaintiff restructure the formula to employ a fluctuating, market-based interest

rate to calculate the lump sum benefit, and thereby eliminate the disparity in the value of

the two options. Mr. Kane, acting for plaintiff, did not follow this advice.

Kane retired in 1984 and Kevin Steiner replaced Kane on July 1, 1984, as

plaintiff’s chief financial officer. Unlike Kane, Mr. Steiner did not know that the lump

sum benefit was more valuable than the monthly payment option. Order on Remand at 3,

Aplt. App. at 80. Also in 1984 or 1985, plaintiff became aware that the Plan would have

to be amended by October 31, 1985, to comply with the Retirement Equity Act and other

laws and regulations. The most significant change in the governing law required for the

first time that

a single formula for calculating optional benefits be selected and written

into the Plan. This was a new requirement in federal pension law -- that the

factors used to determine <actuarial equivalence’ of optional benefits should

become fixed and be written into the Plan.

Finding of Fact ¶ 24, Aplt. App. at 64. The new laws and regulations included a deadline

of October 31, 1985, for making all conforming amendments to the Plan.
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In February 1985, Kevin Steiner met for the first time with representatives of

Johnson & Higgins to discuss the Plan and the amendments which would have to be

made. Mr. Steiner was told at this meeting that the value of accrued benefits, the amount

reported on plaintiff’s annual financial statements, was calculated on the assumption that

all retiring employees would choose the monthly payment form of distribution. Mr.

Steiner asked if it would make a difference if instead the calculation were to be done on

the assumption that all retirees would elect the lump sum. He was told that this would

have to be calculated. Mr. Steiner requested that this calculation be done, and defendants

agreed to do so. More than once after this February meeting, Mr. Steiner followed up on

his request, eventually asking for a rough or “ballpark” estimate of liabilities based on the

assumption that all employees would elect to take the lump sum. Finding of Fact ¶ 28,

Aplt. App. at 66.

Defendants failed to provide plaintiff any information or comparative calculations

in response to these requests prior to the critical date of October 31, 1985. Id. Instead,

defendants prepared amendments to the Plan which sufficed to achieve compliance with

the new requirements of the controlling law, but did so by incorporating the old formula

for lump sum options into the Plan document. Defendants did so without advising

plaintiff, as specifically requested, about the magnitude of the difference in the value of

the lump sum distribution versus the monthly payment option. Defendants did not advise

plaintiff of the corresponding under funding of the Plan since its inception due to having
1The district judge made this finding of fact: 

In early 1986, defendants informed Steiner and provided calculations

that the value of accrued benefits for 1985 using the lump sum election

assumption would be $14,564,243.00 instead of $5,046,536.00 using the

annuity election assumption.

Finding of Fact ¶ 32, Aplt. App. at 68.

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set funding levels on the unrealistic assumption that all retirees would elect to receive

monthly payments. Defendants did not inform plaintiff that, although there was a

difference of opinion on the matter, there was a possibility that the lump sum formula

could be changed before being incorporated into the Plan document, with significant

resulting savings. Id. at 67-68. This court’s opinion on the prior appeal herein found that

Steiner in fact could have changed “the Layered Formula to make the lump sum

equivalent to the annuity, and that J & H breached its duty by failing to provide this

information by October 31, 1985.” 31 F.3d at 941.

In March 1986, defendants submitted the calculations which Kevin Steiner had

requested 13 months before. Defendants’ estimate of the value of accrued benefits for

1985, assuming retiring employees would elect the lump sum option, was some $9 million

greater than the value of accrued benefits estimated on the assumption that retiring

employees would choose to receive monthly payments.1 After plaintiff received this

report from Johnson & Higgins, the Plan was amended by the adoption of a new formula

to calculate the lump sum benefit, one which for the first time was calculated to make the
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lump sum option the actuarial equivalent of the alternative monthly distribution. If the

amendment had been made before October 31, 1985, or at least before new regulations

went into effect in January 1986, the amendment could have been made applicable to all

employees. As the district court found, however, 

due to regulations in effect after October 31, 1985, the 1986 amendment to

the plan applied only to the prospective calculation of benefits. Mr. Steiner

indicated at trial that if [defendants] had submitted the requested new report

prior to October 31, 1985, Steiner would have adopted a Plan that would

have retroactively altered the retirement plan such that the lump sum would

be rendered the actuarial equivalent of the annuity benefit for all retirees

after October 31, 1985.

Order on Remand at 4, Aplt. App. at 81.

The district judge found, following the bench trial which preceded the first appeal,

that defendants should have known that plaintiff “might want to make a change in the

long time practice of continuing the differential in value of the benefit options.” The

judge further found that defendants’ failure to provide the requested information

“amounted to conduct below the standard of care in the industry and constituted

negligence on the part of J. & H.” Finding of Fact ¶ 31, Aplt. App. at 68. Plaintiff’s

primary claim in this action, and the only one with which we are concerned in this appeal,

is based on such negligence in not providing the requested information to plaintiff which,

it is claimed, would have enabled plaintiff to amend its formula for calculating the lump

sum benefit prior to the critical date of October 31, 1985, making the amended formula
- 9 -

applicable to many more employees, with substantial resulting savings to plaintiff Steiner. 

The district court originally held, however, that plaintiff had not suffered any

damages as a result of defendants’ negligence. The judge held, before the first appeal to

this court, that any change in the formula could not have affected employees whose

benefits had already accrued because the old formula had become a part of the Plan by

custom and practice. In the first appeal, we reversed this ruling and held that according to

the explicit language of 29 U.S.C. § 1054(g)(2), the lump sum is an optional form of

benefit, and that Steiner may be said to impermissibly reduce accrued benefits “only if it

were to eliminate the lump sum.” 31 F.3d at 940 (emphasis in original). Thus Steiner

could, with timely actuarial information and advice, have arguably made substantial

savings by such changes in the formula. We remanded for the district court to consider

causation and alleged damages from defendant J & H’s negligence, and other defenses to

the negligence claim, which the judge had originally found it unnecessary to decide. 

On remand, the trial court received additional briefs and heard oral argument, but

no further evidence was presented. The judge made findings on the ultimate issues of

comparative negligence and causation, based on the underlying facts found after the

bench trial. The judge found that plaintiff Steiner was not entitled to damages because its

negligence exceeded that of defendants, barring recovery under Utah’s comparative

negligence statute, Utah Code Ann. § 78-27-38 (1996). In so holding, the judge cited
- 10 -

pre-1985 actions by plaintiff Steiner, which he found to have been negligence that

contributed to Steiner’s injury. The judge further found that such negligence by Steiner

itself was comparatively greater than that of its actuary, defendant J & H, in its

contribution to the injury suffered when the Plan was not properly adjusted in 1985,

therefore barring recovery under Utah law. Order on Remand at 8, Aplt. App. at 85. The

judge rejected defendant J & H’s laches defense, finding there was insufficient evidence

of Steiner’s alleged intentional delay of the litigation so that the laches defense failed. Id.

at 83.

II

A

Plaintiff Steiner argues that the district judge erred in holding that Steiner’s own

pre-1985 negligence was comparatively greater than that of its actuary, defendant J & H,

barring Steiner from recovering for J & H’s negligence. Order on Remand at 8,

Aplt. App. at 85. The judge cited four points as negligence by plaintiff: plaintiff had

been aware at times before 1985 that the lump sum benefit was more valuable than the

monthly payment option; plaintiff itself (through Mr. Kane) had created the formula

which caused the disparity; defendants had discussed the disparity with representatives of

plaintiff and, in 1977 and 1978, had recommended altering the formula to adopt a

market-based interest rate factor to calculate the lump sum, advice that was not followed; 
2Other medical malpractice cases with similar holdings include Jensen v. Archbishop

Bergan Mercy Hospital, 459 N.W.2d 178 (Neb. 1990); Cheek v. Domingo, 628 F. Supp. 149,

151-52 (D. V.I. 1986) (patient’s negligence in becoming involved in a fight in which he was

injured could not be basis for comparative negligence offsetting the fault of the treating

physician, but patient’s post-treatment negligence in failing to obtain recommended

follow-up treatment could be the basis for such a defense); and Ostrowski v. Azzara, 545

A.2d 148, 155-56 (N.J. 1988).

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and plaintiff had declined to follow defendants’ advice to have the 1984 Plan amendment

reviewed by independent legal counsel. Id. 

Plaintiff Steiner maintains that in these findings absolving its actuary, defendant

J & H, of liability, the trial judge failed to perceive the proper standard of professional

care. The basic principle relied on by Steiner is that a professional holding himself out to

serve clients or patients is liable for his negligent performance of duties undertaken and

may not be relieved of such liability by his clients’ or patients’ actions in causing or

getting involved in the very conditions which the professional was employed and

undertook to treat or remedy. Otherwise the professional would not be held responsible

for performing the very duties he assumed. We agree with plaintiff Steiner on this

principle.

The principle applies logically to professionals performing accounting services, as

in Fullmer v. Wohlfeiler & Beck, 905 F.2d 1394 (10th Cir. 1990); to physicians, as in

Sendejar v. Alice Physicians & Surgeon’s Hospital, 555 S.W.2d 879, 885 (Tex. Civ. App.

1977, writ ref’d n.r.e.)2; or to attorneys, as in McLister v. Epstein & Lawrence, P.C., 934
3Other legal malpractice cases with similar holdings include Theobald v. Byers, 13

Cal. Rptr. 864 (Dist. Ct. App. 1961); and Conklin v. Hannoch Weisman, 678 A.2d 1060,

1068-69 (N.J. 1996). See generally 2 Ronald Mallen & Jeffrey Smith, Legal Malpractice

§ 20.2 at p. 641 (4th ed. 1996) (to serve as a contributory negligence defense, “[t]he client’s

negligence must have a causal relationship to the lawyer’s error.”). 

- 12 -

P.2d 844, 846 (Colo. App. 1996)3. Under this principle McLister held that the giving of a

comparative negligence instruction was error, stating persuasively that

Although comparative negligence is a defense to a claim of legal

malpractice in Colorado, see Scognamillo v. Olsen, 795 P.2d 1357

(Colo. App.1990), the client’s alleged negligence must relate to the injury

alleged to have been caused by the attorney’s negligence and must relate to

the attorney’s representation. . . .

Here, however, the court based the instruction on plaintiff’s failure

to obtain workers’ compensation insurance in the first instance. Although

the evidence may have been relevant to the issue of causation, we agree

with plaintiff that this conduct cannot serve as the basis for a comparative

negligence instruction.

Defendants knew that plaintiff was uninsured when they agreed to

represent him. Plaintiff’s failure to obtain workers’ compensation

insurance was therefore neither contemporaneous with, nor causally linked

to defendants’ negligence in handling his case. Thus, the giving of the

instruction was error. See 2 R. Mallen & J. Smith, Legal Malpractice

§ 20.2 (1996).

To allow the attorneys to rely on the negligence of the client

preceding the attorney’s engagement would be equivalent to allowing a

physician to defend a claim for malpractice based on the negligence of the

patient in not having sought treatment sooner.

934 P.2d at 846.

We are persuaded that the trial judge violated the basic principle of the

professional standard of care, which logically applies to actuaries, and was applied in
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McLister to attorneys, and as we recognized in Fullmer, which involved accountants. 

There, as a Utah ruling, we rejected the notion of absolving the accountant of

responsibility for damage caused to his client on a theory of comparative or contributory

negligence by the client, holding:

Allowing such a defense would render illusory the notion that an accountant

is liable for the negligent performance of his duties. We hereby adopt the

rule enunciated by the National Surety and Shapiro courts, and articulated

by Hawkins and Menzel that the contributory negligence of the client is

only a defense where it has contributed to the accountant’s failure to

perform the contract and to report the truth.

905 F.2d at 1398 (quoting Lincoln Grain, Inc. v. Coopers & Lybrand, 216 Neb. 433, 345

N.W.2d 300, 307 (1984)).

We held further in Fullmer that

Allowing either a comparative negligence or contributory negligence

defense would tend to “render illusory the notion that an accountant is liable

for the negligent performance of his duties,” which is a result rejected by

Lincoln Grain, 345 N.W.2d at 307 . . . . The basic reasoning was stated in

National Surety Corporation v. Lybrand, 9 N.Y.S.2d at 563: “[W]e see no

reason to hold that the accountant is not liable to his employer in such cases. 

Negligence of the employer is a defense only when it has contributed to the

accountant’s failure to perform his contract and to report the truth.”

905 F.2d at 1398-99. We remain convinced of the soundness of the professional liability

principle followed in National Surety which involved the accountant’s responsibility to

his clients.
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We are convinced that here we should observe the same parameter of professional

responsibility for the actuary, J & H, as we did for the similar professional accountant in

Fullmer:

[W]e are persuaded that the more fundamental principle is that the

accountant should not be absolved of the duty undertaken by him to one

reasonably relying on his audit unless the plaintiff’s negligence contributed

to the auditor’s misstatement in his reports.

905 F.2d at 1399 (emphasis added).

B

We turn now to defendant J & H’s arguments seeking to escape liability under the

professional malpractice principle discussed above. 

At the outset we note that one argument of defendant J & H has been firmly

rejected in the controlling Supreme Court decision in Salve Regina College v. Russell,

499 U.S. 225 (1991), which the parties here have not recognized. J & H cites earlier

decisions of this court and contends that great deference is owed to the view of the federal

district judge here who is familiar with Utah law. Brief of Appellees at 18-19. That

notion of deference to the local expertise of the district judge is clearly wrong since Salve

Regina College was decided, and our consideration of the Utah law questions before us

must be de novo. Salve Regina College firmly instructed us that “the obligation of

responsible appellate review and the principles of a cooperative judicial federalism

underlying Erie require that courts of appeals review the state-law determinations of

district courts de novo.” Id. at 239. 
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One of defendants’ primary arguments against application of the principle of

National Surety and its progeny, including Fullmer, is that these cases have been rejected

by a number of courts. Defendants cite, inter alia, Halla Nursery v. Baumann-Furrie &

Co., 454 N.W.2d 905 (Minn. 1990); Scioto Memorial Hospital Ass’n v. Price

Waterhouse, 659 N.E.2d 1268 (Ohio 1996); and Capital Mortgage Corp. v. Coopers &

Lybrand, 369 N.W.2d 922 (Mich. App. 1985). We find these cases unpersuasive. For the

most part, their analysis is essentially premised on noting that National Surety was

decided under, and sought to avoid, the harsh rule of contributory negligence, concluding

that under modern comparative negligence statutes, the holding of National Surety is

unnecessary to permit a plaintiff to recover when its negligence has been relatively slight. 

We rejected this rationale in Fullmer, 905 F.2d at 1398-99. Our analysis above is not

based on the differences between comparative and contributory negligence but focuses on

the specific injury alleged by the plaintiff and the specific duties undertaken by the

defendants. We are convinced that under either a comparative or contributory negligence

regime, the acts of the client in getting into the circumstances, which he employs the

professional to remedy, may not be asserted to avoid liability for the professional’s own

subsequent negligence. Therefore, the cases rejecting National Surety are unpersuasive.

J & H argues further that the principle applied to accountants in Fullmer, National

Surety, Lincoln Grain, and other cases, should not apply to actuaries. The argument is

presented without any convincing rationale or supporting authorities defending the notion
- 16 -

that actuaries should not be subject to the same principle. We are not persuaded by

J & H’s contention. It has been noted that “[t]he general law of malpractice has been

applied to actuaries in a manner similar to that of other professions.” William D. Hager

and Paul Noel-Chretien, The Emerging Law of Actuarial Malpractice, 31 Drake Law

Review 831, 842 (1982). The actuary holds himself out to the public as a specialized

expert, and he undertakes employment to perform his professional services in the same

manner as the other professionals -- lawyers, physicians and accountants, for example. 

We have already recognized the principle of liability and the limitation on the

contributory or comparative negligence defense for sound reasons expressed in Fullmer,

which is now applied by us as part of the rubric of Utah law. Defendant J & H presents

no persuasive authority that Utah is prepared to go down another road, limiting the relief

that persons employing actuaries are entitled to under the professional malpractice rules.

Our decision in F.D.I.C. v. Ferguson, 982 F.2d 404 (10th Cir. 1991), is not to the

contrary. In that case, the client’s negligence consisted of failing to perform tasks it had

specifically undertaken to perform itself, in connection with the transactions on which the

defendant attorney undertook to perform other discrete tasks, such as drafting documents. 

982 F.2d at 407. Ferguson held only that comparative negligence may be a defense in

legal malpractice cases and was a proper defense in the circumstances presented there; 

the court had no occasion to examine what limits might apply to the defense in other

circumstances. In connection with the comparative negligence defense, we held in
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Ferguson that in “asserting this defense, the attorney has the burden to prove that his

client was negligent in failing to act or disclose information to the attorney.” Id. at 407

(emphasis added). We see no support for J & H’s position in Ferguson, which actually

lends support to Steiner’s position.

Nor is the Utah case of Western Fiberglass, Inc. v. Kirton, McConkie and

Bushnell, 789 P.2d 34 (Utah Ct. App. 1990), contrary to this analysis. There the client did

not keep the attorneys apprised of the negotiations for the subject transaction or of the

closing, and ignored the lawyers’ advice to have counsel present at the closing of the

transaction. Instead, the client “proceeded to finalize the deal on its own and relied on

[the other party’s] counsel to complete the paperwork. As a result, [the client’s] financing

statements were not filed and its security interest . . . was not perfected.” 789 P.2d at 36. 

Thus, the actions of the client which formed the basis for the comparative negligence

defense were not the very subject for which the client had sought legal representation, and

the client effectively precluded the attorneys from undertaking the tasks which could have

prevented the loss, much like the client in Ferguson. Western Fiberglass is not

inconsistent with our analysis of the professional’s responsibility.

An analogy to the facts of the instant case may be helpful. Suppose that plaintiff

had consulted attorneys regarding the legal requirements for its employee retirement plan

under ERISA and the Internal Revenue Code. Suppose further that the plaintiff had

negligently set up the plan originally without following legal advice. We think it beyond
4

In Harline v. Barker, 912 P.2d 433, 439-42 (Utah 1996), a legal malpractice action,

summary judgment for the defendant attorney was proper because under the facts, the

attorney’s conduct could not have caused the injury.

- 18 -

argument that if the attorneys undertook to bring the plan into compliance with the law,

but failed to do so due to failure to exercise the level of professional care of an ordinarily

prudent attorney practicing in this area of the law, the client’s prior negligence would not

be a shield against the attorney’s liability, although it would be relevant to determine the

nature and extent of the injury, and the damages available. Because of the way that the

client’s injury is defined in our hypothetical, the client’s prior negligence could not have

caused the injury.4

We believe that the same principles must apply to the actuary defendants in the

circumstances presented here. We hold that plaintiff Steiner’s negligence, found by the

trial judge, in setting up the Plan and in not following previous advice to restructure the

formula for computing the lump sum, may not be asserted to shield the defendant actuary

from its liability for subsequent negligence in performing its professional duties. The

district judge specifically found that defendants should have known that plaintiff might

want to restructure the formula in 1985. The judge also found that Kevin Steiner at a

February 1985 meeting with representatives of J & H requested an analysis from the

defendants as to the magnitude of the difference of the cumulative lump sum benefits

available to participants in the Plan under the formula the plaintiff had been using as

compared to the revised formula that defendants had previously recommended. The
5Although the district court found that plaintiff, through officers such as Kane, had

always known that the lump sum benefit was more valuable to a retiring employee than the

monthly installment payout, the judge did not find, and nothing in his findings suggests,

either that plaintiff knew the cumulative magnitude of the difference for the Plan as a whole

or that plaintiff had the ability to estimate the cumulative effect by actuarial methods. In any

event, the material point is that, according to the district judge’s findings, defendants

specifically agreed to make the calculations but failed to do so within a reasonable time.

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judge further found that Mr. Steiner requested defendants to make those calculations and

the J & H representatives agreed to do so. Finding of Fact ¶ 27, Aplt. App. at 66. Steiner

followed up more than once after the February 1985 meeting, asking for a “ballpark

estimate” of liabilities based on the assumption that all the employees would elect a lump

sum benefit. Defendants failed to provide the information before October 31, 1985. Id.

These failures were specifically found to be conduct below the standard of care in the

industry and constituted negligence by J & H. Id. at 68.5

In these circumstances, the injury was the loss of the opportunity to change the

formula, and we hold that the plaintiff’s prior conduct is not a defense for the defendants’

failure to perform the professional tasks it undertook. The only negligence on plaintiff’s

part found by the trial judge which was temporally concurrent with defendants’

negligence was the failure to consult an independent attorney. However, defendants have

not suggested how that negligence could have contributed to plaintiff’s injury, which was

caused by defendants’ failure to provide the actuarial information necessary for plaintiff

to evaluate the true exposure of the Plan and the adequacy of its funding.
6

In the pretrial order the parties agreed that after October 31, 1985, the formula could

not have been changed to have any retroactive effect. Pretrial Order, ¶ M, Aplt. App. at 46.

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In sum, we hold that the trial judge erred in barring recovery by Steiner for the

negligent failure of J & H to perform the professional duties it agreed to undertake for

Steiner. Order on Remand at 8, Aplt. App. at 85. The basis for the comparative

negligence finding against Steiner was wrongly grounded on Steiner’s prior acts that had

placed it in the difficulty which J & H specifically undertook to analyze and advise upon.

III

A

We now proceed to consider alternative grounds for affirmance urged by

defendants. First, defendants assert that plaintiff has suffered no injury. Defendants

contend that this is so because when plaintiff amended the Plan in 1986 by revising the

formula for calculating the lump sum option, after defendants had belatedly responded to

Kevin Steiner’s request for information, plaintiff could have made the amended formula

fully retroactive, as the panel in the previous appeal held could have been done had the

amendment been made prior to October 31, 1985. Plaintiff contends, inter alia, that this

argument is contrary to the defendants’ stipulations in the district court.6 We do not think

that defendants can be said to be estopped from raising this argument, nonetheless,

because the argument is based on this court’s decision in the previous appeal. We do not

agree with defendants’ interpretation of that decision, however.
- 21 -

The gist of defendants’ argument is that the previous panel’s holding meant that

plaintiff could have revised the formula in any way it wished “both before and after” the

formula was incorporated into the Plan by the amendments made on October 31, 1985. 

We disagree with this reading of the previous panel’s opinion. We have very carefully

studied that opinion and have particularly noted the reference to October 31, 1985, as the

“critical” time, 31 F.3d at 940, and numerous similar references throughout the opinion. 

We conclude that the previous opinion cannot be read as defendants advocate. We

conclude, instead, that the holding in the first appeal, which is now the law of the case,

was that the lump sum formula could have been revised to have retroactive effect if, but

only if, that revision had been effected by October 31, 1985.

Accordingly, we reject defendants’ argument that plaintiff has suffered no injury. 

B

Defendants advance two arguments addressed to causation. First, defendants

contend that the district court’s finding that plaintiff’s negligence was the predominant

cause of the injury is an implied finding that defendants’ conduct did not cause the injury,

and that this finding cannot be overturned unless clearly erroneous. The district court

found “that J&H’s negligence was at least a partial cause of Steiner’s failure to change

the actuarial formula in the Plan.” Aplt. App. at 82. However, the judge further found

that “Steiner’s own negligence was the dominant cause.” Id.
- 22 -

On this record and our legal analysis, we hold that the district court’s finding that

plaintiff’s own negligence was the “predominant cause” of its injury must be set aside as

clearly erroneous. This was based on an erroneous view of the law, erroneously

permitting Steiner’s pre-1985 acts to serve as grounds of comparative negligence. As we

have discussed, the negligent acts identified by the district judge were improperly

determined to be the basis for the comparative negligence defense because those acts did

not “relate to the injury alleged to have been caused by the [professional’s]

negligence. . . .” McLister, 934 P.2d at 846.

Defendants also assert that plaintiff failed to prove that defendants’ negligence

caused the injury. This argument is basically an attack on the sufficiency of the evidence. 

Defendants do not specifically take issue with any of the district court’s findings, but

instead urge, in essence, that plaintiff never proved that it would have acted to avoid the

injury, had defendants performed their undertaking to provide the requested actuarial

information and advice in a timely fashion. There was at least a substantial factual

showing by Steiner disputing defendants’ position on this point. Our prior opinion noted

that Mr. Steiner testified at trial that if J & H had submitted the requested calculations

before October 31, 1985, then Steiner would have adopted a new formula that would have

retroactively affected retirees’ benefits such that the lump sum would have been equal to

the annuity benefit for anyone retiring after October 31. 31 F.3d at 938.
- 23 -

We conclude that the prudent course is to leave this issue of causation of injury for

the district judge to address in the first instance on remand, along with his determination

of damages.

C

Defendants contend that plaintiff’s claim should be barred by laches. They claim

that plaintiff deliberately delayed filing suit until after Mr. Kane had died, allegedly

because plaintiff knew that Kane’s testimony concerning his knowledge about the value

of the lump sum option would have been damaging to plaintiff’s case. The defense fails

as a matter of law. Under Utah precedent, limitations but not laches, govern the

timeliness of an action at law like this. DOIT, Inc. v. Touche, Ross & Co., 926 P.2d 835,

845 (Utah 1996) (citing United States v. Mack, 295 U.S. 480, 489 (1935)). DOIT rejected

a laches notion under circumstances involving the death of one witness and dispersal of

others -- circumstances like those relied on by J & H here.

D

Finally, defendants argue that the judgment should be affirmed because

contributory negligence, not comparative negligence, should control. Under the

traditional common law doctrine of contributory negligence, of course, any fault on the

part of the plaintiff which led to the injury would bar recovery, even if defendants’ fault

were much greater.
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Defendants base their argument on the wording of the comparative negligence

statute which was in effect in Utah from its enactment in 1973 until 1986, after the events

on which plaintiff’s claim is based. That statute provided, in pertinent part: 

Contributory negligence shall not bar recovery in an action by any person or

his legal representative to recover damages for negligence or gross

negligence resulting in death or injury to person or property, if such

negligence was not as great as the negligence or gross negligence of the

person against whom recovery is sought, but any damages allowed shall be

diminished in the proportion to the amount of negligence attributable to the

person recovering.

Utah Code Ann. § 78-27-38 (repealed 1986) (emphasis added). From the emphasized

language, defendants argue that the statute does not apply to this action, in which

damages are sought for economic injury only. 

Defendants have cited no Utah case construing the particular language on which

they rely, and plaintiff made no substantive response to this argument in its reply brief,

only remarking that the argument “merits no response.” Defendants’ suggested

construction of the statutory language appears plausible, but we conclude that we need

not determine the scope of this repealed statute because under our analysis it is immaterial

whether comparative or contributory negligence principles apply. As we have explained,

none of the instances of negligence by plaintiff which were identified by the district judge

could have contributed to the injury for which plaintiff seeks to recover. Accordingly,

even if we were to apply contributory negligence, rather than comparative negligence, our

result would be the same.
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Conclusion

Accordingly, we REVERSE the district court’s judgment and findings rejecting

the plaintiff Steiner’s malpractice claim against defendants and REMAND for a

determination, consistent with this opinion, of causation of injury to plaintiff and the

damages, if any, sustained by plaintiff Steiner on that claim, and for entry of judgment in

accordance with those determinations. The judgment in favor of defendants on their

counterclaim for fees was not appealed and is not disturbed.
UNITED STATES COURT OF APPEALS

TENTH CIRCUIT

STEINER CORPORATION, a Nevada

corporation,

Plaintiff-Counter-DefendantAppellant, 

and 

CAROL S. MCCORMICK, Administrator

of the Steiner Corporation Retirement

Plan, and STEINER CORPORATION

RETIREMENT PLAN,

Plaintiffs-Counter-Defendants,

v.

JOHNSON & HIGGINS OF

CALIFORNIA, a California corporation; 

DONALD F. REEVES and ROY J.

BERTOLDO,

Defendants-Counter-ClaimantsAppellees.

No. 96-4044

ORDER ON PETITION FOR REHEARING

Filed March 9, 1998

Before KELLY, HOLLOWAY and BRISCOE, Circuit Judges.
- 2 -

On consideration of defendants-appellees’ timely petition for rehearing, the court

has determined that the opinion filed herein on January 13, 1998, was in error in one

respect. In their brief, defendants argued as an alternative basis for affirmance that

plaintiff/appellant Steiner had suffered no injury. (See part IIIA, supra.) In part IIIA of

the opinion as filed on January 13, 1998, we stated that appellees had failed to show that

they had raised this issue in the district court. This was wrong. Appellees had cited in

their brief to the portion of the record showing that the issue had been raised below. 

Accordingly, we grant the petition for rehearing in part, and we have revised part IIIA. 

We have removed the erroneous statement that the issue had not been shown to have been

raised below and instead have addressed the issue on its merits.

In all other respects the petition for rehearing is denied. The clerk is directed to

append this order to the revised opinion filed today and to cause it to be published along

with that opinion.

ENTERED FOR THE COURT

Patrick Fisher

 Clerk

 By:

 Keith Nelson

Deputy Clerk