Court Opinion

ID: 9557547
Source: CourtListenerOpinion
Date Created: 2023-08-21 16:52:14.073882+00
Date Added: 2024-06-11T09:05:58.623224
License: Public Domain

HOWE, Justice,
concurring and dissenting:
I concur except that I would allow the recovery of attorney fees by plaintiff as consequential damages only for defendant’s breach of the implied covenant of good faith and fair dealing. I would not allow fees based on any breach of the express terms of the contract.
The general rule observed in this jurisdiction is that attorney fees can be awarded to the prevailing party in litigation only where the award is predicated upon a statute or the express terms of a written instrument such as a promissory note or a contract. However, we have departed from that general rule in a few cases and upheld the recovery of fees by a successful insured in a first-party suit against his or her insurer. The fees have been awarded as an element of consequential damages for breach of the implied covenant of good faith and fair dealing inherent in every insurance policy. Zions First Nat’l Bank v. National Am. Title Ins. Co., 749 P.2d 651, 657 (Utah 1988); Beck v. Farmers Ins. Exck, 701 P.2d 795, 801-02 (Utah 1985); see also Moore v. Energy Mut. Ins. Co., 814 P.2d 1141, 1147 (Utah Ct.App. 1991). Attorney fees were also awarded to an insured suing his insurer in Canyon Country Store v. Bracey, 781 P.2d 414, 420 (Utah 1989), although it is not clear whether the fees in that case were awarded for breach of the implied covenant or for breach of the express terms of the insurance contract.
The majority in the instant case recognizes:
It would not further Beck’s, purpose of encouraging insurers to act reasonably if we were to impose the broad consequential damages allowed in Beck on every insurer who is ultimately determined by a court to have incorrectly denied coverage, regardless of how reasonable the denial. Such an insurer ought to incur no greater damage exposure than any other person breaching the express terms of a contract.
Yet despite this statement, the majority sanctions the award of attorney fees as an element of consequential damages for both the breach of the implied covenant and the express provisions of the insurance contract. With that determination I cannot agree. It does violence to our general rule that in a breach of contract action, attorney fees cannot be awarded to the successful party unless the parties have so provided in their agreement. I would award fees only for breach of the implied covenant, consistent with the majority’s holding that “the trial court erred in instructing the jury that it could award broad consequential damages for breach of either the implied covenant of good faith and fair dealing or the express terms of the insurance contract.”
RUSSON, J., concurs in Justice HOWE’s concurring and dissenting opinion.