NOT FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

EDMARK AUTO, INC., an Idaho 

corporation; and CHALFANT CORP., an 

Idaho corporation, 

Plaintiffs-Appellees, 

 v. 

ZURICH AMERICAN INSURANCE 

COMPANY, a New York corporation; and 

UNIVERSAL UNDERWRITERS SERVICE 

CORPORATION, a Delaware corporation, 

Defendants-Appellants.

No. 21-35231

Case. No. 1:15-cv-00520-BLW

MEMORANDUM*

Appeal from the United States District Court

for the District of Idaho

B. Lynn Winmill, District Judge

Argued and Submitted March 7, 2022

Seattle, Washington

Before: NGUYEN, MILLER, and BUMATAY, Circuit Judges.

Idaho car dealership groups Edmark Auto, Inc. and Chalfant Corporation

(“Dealers”) filed an action against insurance companies Universal Underwriters

Service Corporation and Zurich American Insurance Company (“Zurich”), alleging 

* This disposition is not appropriate for publication and is not precedent 

except as provided by Ninth Circuit Rule 36-3.

FILED

MAR 17 2022

MOLLY C. DWYER, CLERK

U.S. COURT OF APPEALS
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breach of contract, various tort and fraud theories, and unfair business practices 

under the Idaho Consumer Protection Act. After an 11-day trial, a jury found in 

favor of the Dealers and awarded them damages for breach of contract, 

disgorgement, and punitive damages. Zurich now appeals the non-contract verdicts,

alleging a variety of errors. We have jurisdiction under 28 U.S.C § 1291, and we 

affirm.

1. We affirm the jury’s verdict on the breach of fiduciary duty. Under 

Idaho law, whether a fiduciary relationship exists is a question of law. Beaudoin v. 

Davidson Tr. Co., 263 P.3d 755, 759 (Idaho 2011). We review the district court’s 

determination that a fiduciary relationship existed between Dealers and Zurich under 

Idaho law de novo. See Judd v. Weinstein, 967 F.3d 952, 955 (9th Cir. 2020). 

“Fiduciary relationships are commonly characterized by one party placing property 

or authority in the hands of another, or being authorized to act on behalf of another.” 

Beaudoin, 263 P.3d at 760 (simplified). “A fiduciary relationship does not depend

upon some technical relation created by or defined in law, but it exists in cases where

there has been a special confidence imposed in another who, in equity and good

conscience, is bound to act in good faith and with due regard to the interest of one

reposing the confidence.” Jones v. Runft, Leroy, Coffin & Matthews, Chartered, 873

P.2d 861, 868 (Idaho 1994) (simplified). “Generally speaking, where one party is

under a duty to act or to give advice for the benefit of the other upon a matter within
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the scope of the relation, a fiduciary relationship exists.” City of Meridian v. Petra 

Inc., 299 P.3d 232, 248 (Idaho 2013) (simplified).

Under Idaho law, a fiduciary duty does not ordinarily arise between parties to 

an arm’s length business transaction. High Valley Concrete, L.L.C. v. Sargent, 234 

P.3d 747, 752 (Idaho 2010). But certain relationships, even contractual 

relationships, do give rise to a fiduciary duty. “Examples of relationships from 

which the law will impose fiduciary obligations on the parties include when the 

parties are: members of the same family, partners, attorney and client, executor and 

beneficiary of an estate, principal and agent, insurer and insured, or close friends.”

Id. (quoting Mitchell v. Barendregt, 820 P.2d 707, 714 (Idaho Ct. App. 1991)).

We conclude that Zurich owed a fiduciary duty to Dealers. Dealers “plac[ed]

property . . . in the hands” of Zurich in the form of $80 per vehicle service contract 

(“VSC”), and Zurich was “authorized to act on behalf of [Dealers]” by refunding 

customers who cancelled their VSCs. Beaudoin, 263 P.3d at 760. Dealers also 

reposed a “special confidence” in Zurich to steward the funds, calculate future 

liabilities, periodically report on the account’s health, and make sure the program 

remained solvent. Jones, 873 P.2d at 868. Further, Zurich was “under a duty to act 

or to give advice for the benefit” of Dealers because Dealers relied on Zurich’s 

expertise in calculating future liabilities, managing large-dollar accounts, and 
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modifying the per-VSC deposit if necessary to maintain the account’s solvency.

Meridian, 299 P.3d at 248. 

We reject Zurich’s argument that the relationship mirrors that of a bank and 

depositor, which is not a fiduciary relationship. See Palmer v. Idaho Bank & Tr. of 

Kooskia, 603 P.2d 597, 600 & n.2 (Idaho 1979) (analogizing the bank/depositor 

relationship to that of debtor/creditor). As described above, Zurich owed more 

obligations to Dealers than to merely safeguard funds. The uniqueness of the 

program and Zurich’s close relationship with Dealers distinguishes this case from a 

garden variety debtor/creditor relationship. For these reasons, we affirm the district 

court’s conclusion that a fiduciary relationship arose between Zurich and Dealers. 

Because the jury found that Zurich breached its fiduciary duties, its award of $4 

million in disgorgement damages is appropriate. Parkinson v. Bevis, 448 P.3d 1027, 

1033 (Idaho 2019) (Under Idaho law, “[a] breach of fiduciary duty claim is an 

equitable claim for which a defendant may have to disgorge compensation received 

during the time the breach occurred, even if the plaintiff cannot show actual 

damages.”). We also uphold the jury’s award of punitive damages. See Rockefeller 

v. Grabow, 39 P.3d 577, 587 (Idaho 2001) (upholding jury’s award of punitive 

damages in a breach of fiduciary duty case). 

2. Because the breach of fiduciary duty claim independently supports the 

award of disgorgement and punitive damages, we need not reach Zurich’s other 
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arguments. See Webb v. Sloan, 330 F.3d 1158, 1167 (9th Cir. 2003) (When a jury 

specifies on what claims it bases liability, “there is no danger that the jury found 

liability only on a legally defective theory.”). 

AFFIRMED.