Palmer v. Allstate Insurance

2022 UT App 4

THE UTAH COURT OF APPEALS

CAMERON PALMER,
Appellant,
v.
ALLSTATE FIRE AND CASUALTY INSURANCE COMPANY,
Appellee.

Opinion
No. 20200568-CA
Filed January 13, 2022

Third District Court, Salt Lake Department
The Honorable Richard E. Mrazik
No. 180909114

Emily Adams, Cherise Bacalski, Sara Pfrommer, and
Eric Vogeler, Attorneys for Appellant
Mark L. Anderson and Jill L. Dunyon,
Attorneys for Appellee

JUDGE GREGORY K. ORME authored this Opinion, in which
JUDGES DAVID N. MORTENSEN and RYAN D. TENNEY concurred.

ORME, Judge:

¶1 Appellant Cameron Palmer challenges the district court’s
ruling that the statute of limitations barred his underinsured
motorist coverage claim against Appellee Allstate Fire and
Casualty Insurance Company. We reverse.
Palmer v. Allstate

BACKGROUND1

¶2 In March 2012, Palmer, who was insured by Allstate, was
involved in an accident caused by another driver who was also
insured by Allstate. Allstate agreed to pay the at-fault driver’s
policy’s limit of $30,000 if Palmer would release his claims
against the at-fault driver. On May 15, 2015,2 Allstate issued a
$30,000 check to Palmer’s attorney and transmitted it to the
attorney along with a general release of claims against the
at-fault driver. Allstate instructed the attorney to hold the funds
in trust “until the release had been properly executed by
[Palmer].” The attorney deposited the check in his trust account
on May 19, 2015. Palmer signed the release eight days later on
May 27.

¶3 Palmer eventually sought to recover underinsured
motorist (UIM) benefits under his own policy with Allstate.
Palmer and Allstate were unable to reach a settlement on
Palmer’s UIM claim, and Palmer sent a letter to Allstate on May
24, 2018, demanding that the case be arbitrated. Allstate denied
Palmer’s arbitration demand, asserting that the applicable
statute of limitations barred the demand because he was
required to file it “within three years after the inception of the
loss.” See Utah Code Ann. § 31A-21-313(1)(a) (LexisNexis Supp.

1. “On appeal from a motion to dismiss, we review the facts only
as they are alleged in the complaint. We accept the factual
allegations as true and draw all reasonable inferences from those
facts in a light most favorable to the plaintiff. We recite the facts
accordingly.” Peck v. State, 2008 UT 39, ¶ 2, 191 P.3d 4 (quotation
simplified).

2. There is some confusion about whether the check was issued
and/or posted on May 14 or May 15, but because that
discrepancy is inconsequential, we use May 15 in this opinion—
the date favored by the parties in their appellate briefs.

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Palmer v. Allstate

2021).3 Allstate explained that the “inception of the loss” is
statutorily defined as “the date of the last liability policy
payment.” See id. § 31A-22-305.3(5). In Allstate’s view, this was
May 19, 2015, the day on which Palmer’s attorney deposited the
settlement check into the trust account—a date more than three
years prior to Palmer’s arbitration demand on May 24, 2018.

¶4 In response, Palmer filed a complaint in district court
seeking declaratory relief from the court “[t]hat the term ‘last
policy payment’ set forth in Utah Code Ann. § 31A-22-305.3(5)
. . . means May 27, 2015, the date the liability settlement funds
were authorized to be paid and disbursed to [Palmer] by
Palmer’s execution of the liability release[.]” Thus, Palmer asked
the court to declare that his “election of arbitration of his UIM
claim was timely” on May 24, 2018, because the statute of
limitations did not run until three days later, on May 27.

¶5 In response, Allstate filed a motion to dismiss, reasserting
its position that the statute of limitations barred Palmer’s May 24
arbitration demand. In resisting the motion, Palmer argued that
a “last liability policy payment” could be made only if “a
settlement agreement [is] reached,” which was not done until
May 27, 2015, when he signed the release of claims.

¶6 The district court granted Allstate’s motion to dismiss. In
doing so, it stated:

Because the funds were no longer in [Allstate’s]
possession or control once Palmer’s counsel
negotiated the settlement payment draft and
deposited the funds into his trust account, the
Court determines the date of the last (and only)
liability policy payment is May 19, 2015. Before

3. Because the applicable provisions of the Utah Code in effect at
the relevant time are identical to those currently in effect, we cite
the current version of the code for convenience.

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that date, the liability policy payment had not been
made, as Allstate still had the ability to stop
payment on the draft. But as of May 19, 2015,
Allstate’s money was now in Palmer’s counsel’s
trust account, beyond the reach of Allstate. So the
Court determines the latest date that could be
considered as the “date of the last liability policy
payment” in this case is May 19, 2015.

The Court is not persuaded by Palmer’s
position that the date of the last liability policy
payment is affected by the parties’ agreement
regarding when Palmer’s counsel was permitted to
distribute the liability settlement payment funds to
Palmer. If the Utah Legislature had intended
inception of the loss in the UIM context to be
triggered by the date of the insured’s actual receipt
of the liability payment funds, or by the date on
which the insured has an unconditional right to
distribution of the liability payment funds, the
Legislature would have so stated. Rather, the plain
language of Utah Code § 31A-22-305.3(5) defines
inception of the loss in the UIM context as “the
date of the last liability policy payment.” And
under the undisputed facts of this case, that date
falls no later than May 19, 2015, which is more than
three years before the date on which Palmer
commenced an action in arbitration . . . with
Allstate for payment of UIM benefits.

¶7 Palmer now appeals.

ISSUE AND STANDARD OF REVIEW

¶8 Palmer asserts that the district court erred in dismissing
his complaint for declaratory relief on the ground that it was

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Palmer v. Allstate

barred by the statute of limitations. “We review the grant of a
motion to dismiss for correctness, granting no deference to the
decision of the district court.” Hudgens v. Prosper, Inc., 2010 UT
68, ¶ 14, 243 P.3d 1275. “Also, we review the interpretation and
application of a statute for correctness, granting no deference to
the district court’s legal conclusions.” Berneau v. Martino, 2009
UT 87, ¶ 9, 223 P.3d 1128.

ANALYSIS

¶9 Palmer contends that “under the plain language of the
UIM statute, the date of the ‘last liability policy payment’ was
the date on which [he] satisfied Allstate’s conditions for payment
and not the date on which the settlement check was
conditionally deposited in his attorney’s trust account.” The
statute of limitations on a UIM claim is found in Utah Code
section 31A-21-313(1)(a), which provides that “[a]n action on a
written policy or contract of first party insurance shall be
commenced within three years after the inception of the loss.”
Utah Code section 31A-22-305.3(5) in turn instructs that “[t]he
inception of the loss under Subsection 31A-21-313(1) for
underinsured motorist claims occurs upon the date of the last
liability policy payment.” Thus, this appeal hinges on a single
question: Was the “date of the last liability policy payment” the
date on which Palmer’s attorney deposited the $30,000 check
into the trust account—May 19, 2015—or was it the date on
which Palmer signed the release—May 27, 2015—whereupon his
attorney was authorized to disburse the proceeds to Palmer?4

4. To date, neither this court nor the Utah Supreme Court has
interpreted the phrase “the date of the last liability policy
payment.” Utah Code Ann. § 31A-22-305.3(5) (LexisNexis Supp.
2021). Additionally, this approach to starting the statute of
limitations based on the last payment by an insurer appears to
be unique to Utah, as the parties have not directed us to any
(continued…)

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(…continued)
other jurisdiction, nor are we aware of any, that employs such an
approach. Rather, other jurisdictions utilize one of three other
approaches in this context. In a majority of states, the statute of
limitations on UIM and uninsured motorist claims begins to run
on the date the insurer violates its contract by refusing to pay
benefits. See, e.g., Berkshire Mutual Ins. v. Burbank, 664 N.E.2d
1188, 1190 (Mass. 1996) (holding that “the statute of limitations
for commencing an action for underinsured or uninsured
motorist benefits begins to run when the insurer violates the
insurance contract” by refusing to pay benefits, and not on the
date of the accident). Accord Blutreich v. Liberty Mutual Ins., 826
P.2d 1167, 1171 (Ariz. Ct. App. 1991); Allstate Ins. v. Spinelli, 443
A.2d 1286, 1287 (Del. 1982); Whitten v. Concord Gen. Mutual Ins.,
647 A.2d 808, 810 (Me. 1994); Lane v. Nationwide Mutual Ins., 582
A.2d 501, 507 (Md. 1990); Jacobs v. Detroit Auto. Inter-Ins. Exch.,
309 N.W.2d 627, 630 (Mich. Ct. App. 1981); Metropolitan Prop.
& Liab. Ins. v. Walker, 620 A.2d 1020, 1022 (N.H. 1993); Wille v.
GEICO Cas. Co., 2000 OK 10, ¶¶ 10–11, 2 P.3d 888; Vega v. Farmers
Ins., 918 P.2d 95, 98 (Or. 1996), superseded by statute on unrelated
grounds as recognized in Farmers Ins. v. Conner, 182 P.3d 878 (Or.
Ct. App. 2008); Webster v. Allstate Ins., 833 S.W.2d 747, 750 (Tex.
App. 1992); Safeco Ins. v. Barcom, 773 P.2d 56, 60 (Wash. 1989);
Plumley v. May, 434 S.E.2d 406, 411 (W. Va. 1993). On the other
hand, a minority of states either start the statute of limitations
from the date the accident occurred, see, e.g., Green v. Selective
Ins., 676 A.2d 1074, 1080 (N.J. 1996) (“[T]he statute of limitations
on UM/UIM claims should run from the date of an accident.”).
Accord Bayusik v. Nationwide Mutual Ins., 659 A.2d 1188, 1194
(Conn. 1995); State Farm Mutual Auto. Ins. v. Kilbreath, 419 So. 2d
632, 633 (Fla. 1982), or from the date the plaintiff has obtained a
judgment against, or entered into a settlement with, the
tortfeasor, see, e.g., Oanes v. Allstate Ins., 617 N.W.2d 401, 406
(Minn. 2000) (“We instead adopt a third option for the time a
UIM claim accrues and the statute of limitations begins to run.
This option is the date of settlement with or judgment against
(continued…)

20200568-CA 6 2022 UT App 4
Palmer v. Allstate

¶10 The statute does not define the phrase “the date of the last
liability policy payment.” See Utah Code Ann. § 31A-22-305.3(5)
(LexisNexis Supp. 2021). “Where a statute does not provide an
internal definition of a term, we interpret the statutory language
according to the plain meaning of its text.” Scott v. Benson, 2021
UT App 110, ¶ 29 (quotation simplified). And “when the words
of a statute consist of common, daily, nontechnical speech, they
are construed in accordance with the ordinary meaning such
words would have to a reasonable person familiar with the
usage and context of the language in question.” Olsen v. Eagle
Mountain City, 2011 UT 10, ¶ 9, 248 P.3d 465 (quotation
simplified). “A starting point for our assessment of ordinary
meaning is the dictionary.” State v. Bagnes, 2014 UT 4, ¶ 14, 322
P.3d 719. And in undertaking this analysis, “we presume that the
legislature used each word advisedly.” Bagley v. Bagley, 2016 UT
48, ¶ 10, 387 P.3d 1000 (quotation simplified). Here, the words
“last” and “payment” are the only words from the disputed
phrase that are relevant on appeal.

¶11 The definition of “last” that is most in line with the text
of the statute provides that the term means “following all
the rest.” Last, Merriam-Webster, https://www.merriam-
webster.com/dictionary/last [https://perma.cc/AFU4-7JS4].
“Payment” is defined as a “[p]erformance of an obligation by the
delivery of money . . . accepted in partial or full discharge of the
obligation.” Payment, Black’s Law Dictionary (11th ed. 2019).
Based on these definitions, the plain language of the phrase “the

(…continued)
the tortfeasor.”); Register v. White, 599 S.E.2d 549, 554–55 (N.C.
2004) (same). Thus, we have no authority from other
jurisdictions to guide us. The United States District Court for the
District of Utah has, however, recently dealt specifically with
Utah’s unique phraseology. See Marriott v. Allstate Ins., No.
2:18-CV-00629, 2019 WL 7761582 (D. Utah Nov. 26, 2019). While
that court’s ruling is not binding on this court, we find its
reasoning helpful. See infra ¶¶ 13–17.

20200568-CA 7 2022 UT App 4
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date of the last liability policy payment” occurs when a party
delivers money that is accepted in discharge of an obligation and
it comes after all other payments. Thus, the crux of this appeal is
whether Allstate’s action of sending a check to Palmer’s attorney
on May 19, 2015, with the condition that Palmer sign the release
before obtaining the funds, was therefore the delivery of money
to Palmer in discharge of Allstate’s insurance obligation and was
therefore the payment “following all the rest.” We conclude that
it was not.

¶12 Allstate sent a check to Palmer’s attorney with the
condition that it not be disbursed to Palmer “until the release
had been properly executed.” The word “until” acted as a
condition that Palmer had to satisfy to obtain the money. See
Mind & Motion Utah Invs., LLC v. Celtic Bank Corp., 2016 UT 6,
¶ 1, 367 P.3d 994 (“Conditions . . . are events not certain to occur,
but which must occur before either party has a duty to perform
under the contract.”). Had Palmer not signed the release, his
attorney would have been required to remit the money to
Allstate, even though the check had already been deposited into
the attorney’s trust account. Thus, the check being deposited into
the trust account did not qualify as a “payment” because that act
alone—the act of delivering the money to Palmer’s attorney—
did not discharge Allstate’s obligation under the UIM policy.
The delivery of the check was the first link in a chain of events
that might have culminated in Allstate’s obligation being
discharged, but it was not certain that discharge would result
because of the requirement that Palmer first sign the release. Cf.
Fitzgerald v. Corbett, 793 P.2d 356, 359 (Utah 1990) (“A mere offer
to pay generally does not constitute a valid tender.”). Thus, the
check could be considered an actual “payment” only after
Palmer signed the release and thereby became entitled to receive
the funds held in trust by his attorney.

¶13 There is some support for this determination in the
United States District Court for the District of Utah’s recent
decision in Marriott v. Allstate Insurance Co., No. 2:18-CV-00629,
2019 WL 7761582 (D. Utah Nov. 26, 2019), in which the court

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dealt with similar facts to those before us. There, in 2011, the
plaintiff, insured by Allstate, was involved in an accident with
another driver, insured by an Allstate affiliate, who caused the
accident. Id. at *1. In early December 2014, Allstate offered to
settle the plaintiff’s claim against the at-fault driver for that
driver’s policy limits. Id. The plaintiff’s attorney accepted that
offer on the plaintiff’s behalf. Id. Allstate then “sent a formal
memorialization of the settlement agreement to [the plaintiff’s
attorney] acknowledging the settlement amount and providing a
proposed release of all claims . . . for [the plaintiff] to sign.” Id.
Allstate sent the check the next day, on December 12, 2014, and
the plaintiff’s attorney received both the release of claims to be
signed by the plaintiff and the check “sometime thereafter.” Id.
The plaintiff then signed the release of claims approximately
three months later, on March 17, 2015. Id. Allstate received the
release on April 7, and the check was deposited into the
attorney’s trust account on April 13. Id. Nearly three years later,
on March 16, 2018, the plaintiff initiated an action for UIM
benefits against Allstate in the federal district court. Id.

¶14 The main issue before the district court was which date
constituted “the date of the last liability policy payment.” Id. at
*2. Allstate asserted it was December 12, 2014, when it sent the
settlement check. Id. The plaintiff, on the other hand, asserted it
was on April 7, 2015, when Allstate received the plaintiff’s
executed release of claims because his attorney was required to
hold the check in the trust account until the plaintiff signed the
release. Id.

¶15 The district court determined that the date of the last
liability policy payment occurred “on December 12, 2014 or, at
the latest, when the check was received by [the plaintiff’s]
attorney,” which was well before March 9, 2015. Id. at *3. It ruled
that this was so because the “authorization of payment was not,
as [the plaintiff] contends, conditioned on the return of the
executed Release.” Id. The court then opined:

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It is conceivable that an insurance company might
condition the cashing of a check on the return of an
executed release. An insurer could include
language to that effect in its proposed release or
settlement agreement, i.e.: “Payment will not be
made, and no check may be deposited, until
insurer has received an executed release of all
claims from the insured.” If an insurer using this
language sent the insured a check before receiving
a signed release, the “date of payment” would
arguably be the date on which the insurer received
the release. Here, however, no such language
appears.

Id. The court then explained that while the plaintiff “was
contractually obligated to sign the release, his performance had
no bearing on the date of payment” because there was no
“conditional language suggesting that [the plaintiff’s] return of
the executed release was anything other than an ordinary
covenant” rather than a “condition precedent” to receiving the
funds. Id.

¶16 While we are, of course, not bound by this decision, its
logic is persuasive. Indeed, the case before us is the very case the
federal district court envisioned when it opined that if an
insurance company conditioned the payment on receiving a
signed release, the date of the last liability policy payment would
arguably be when the release was received because such a
release would not be an “ordinary covenant” but a “condition
precedent” to the payment.

¶17 “The distinction between covenants and conditions
precedent is significant.” McArthur v. State Farm Mutual Auto.
Ins., 2012 UT 22, ¶ 28, 274 P.3d 981. “A contractual covenant is a
promise between the parties to the contract about their mutual
obligations.” Id. (quotation simplified). “Conditions precedent
are different. A condition is an event, not certain to occur, which

20200568-CA 10 2022 UT App 4
Palmer v. Allstate

must occur before performance under a contract becomes due.”
Id. ¶ 29 (quotation simplified). Here, Palmer’s attorney was
presented with both a check and a release of claims, and Palmer
was informed that he could not obtain the funds unless and until
he signed the release. Thus, execution of the release of claims
was a condition precedent to Palmer receiving the funds, and
only after the release was signed, and Palmer’s attorney was at
liberty to disburse the proceeds to Palmer, could the “last
liability policy payment” occur. Had Palmer refused to sign the
release, he would never have been entitled to receive the money,
and at some point his attorney would have been duty-bound to
return it to Allstate. Accordingly, no “payment” happened in
this case until May 27, 2015, when Palmer satisfied the condition
precedent by signing the release.

¶18 The principal rationale on which the district court relied
to determine that the last liability policy payment occurred on
May 19, 2015, was that “the funds were no longer in [Allstate’s]
possession or control once Palmer’s counsel negotiated the
settlement payment draft and deposited the funds into his trust
account.”5 This was incorrect. While Palmer’s attorney deposited

5. The district court also reasoned that had the Legislature
“intended inception of the loss in the UIM context to be
triggered by the date of the insured’s actual receipt of the
liability payment funds, or by the date on which the insured has
an unconditional right to distribution of the liability payment
funds, the Legislature would have so stated.” But when
interpreting a statute, simply stating that the Legislature could
have been “more explicit” “is unhelpful” because “it will almost
always be true that the legislature could have more clearly
repudiated one party’s preferred construction.” Craig v. Provo
City, 2016 UT 40, ¶ 39, 389 P.3d 423 (quotation simplified). Thus,
“[t]he legislature’s failure to speak [more] clearly merely frames
the context of a problem of statutory interpretation for our
courts” and “does not yield an answer to that problem,” see id.
¶ 40, as the district court assumed here.

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the funds to his trust account, Allstate still retained some control
over the funds because it required a signed release before those
funds could be disbursed, and Palmer’s attorney would have
been required to return the money to Allstate had Palmer not
satisfied Allstate’s condition. Cf. B.T. Moran, Inc. v. First Sec.
Corp., 24 P.2d 384, 387 (Utah 1933) (holding that an “offer may be
withdrawn at any time before it has been accepted”).

¶19 “[T]he date of the last liability policy payment” therefore
occurred on May 27, 2015, when Palmer satisfied Allstate’s
condition and became entitled to receive the funds. Thus, the
district court erred in determining that the three-year statute of
limitations began to run on May 19, 2015, thereby precluding
Palmer from submitting his arbitration demand on May 24, 2018.

CONCLUSION

¶20 The district court erred in ruling that the statute of
limitations barred Palmer’s arbitration demand and in granting
Allstate’s motion to dismiss. We therefore reverse and remand
for further proceedings consistent with this opinion.

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