UMIA Ins., Inc. v. Saltz

515 P.3d 406

UMIA INSURANCE, INC., Appellant/Cross-Appellee,

v.Renato SALTZ, M.D. and Saltz Plastic Surgery, P.C., Appellees/Cross-Appellants.

No. 20200008

Supreme Court of Utah.

Heard: October 18, 2021

Filed June 9, 2022

Rehearing Denied June 30, 2022

Troy L. Booher, Beth E. Kennedy, Taylor P. Webb, Salt Lake City, Mark D. Malloy, Steven L. Miracle, Milwaukee, for appellant/cross-appellee

Julianne P. Blanch, Alan S. Mouritsen, Salt Lake City, for appellees/cross-appellants

Associate Chief Justice Lee authored the opinion of the Court in which Chief Justice Durrant, Justice Pearce, Justice Hagen^* , and JUDGE POHLMAN joined.

Associate Chief Justice Lee, opinion of the Court:

¶1 Renato Saltz is a plastic and reconstructive surgeon who was sued by a former patient for releasing her pre- and post-surgery photographs to a news outlet. Saltz turned over his legal defense to his malpractice insurance provider, UMIA Insurance, Inc. UMIA initially defended Saltz but eventually filed its own declaratory judgment suit, claiming that Saltz lacked insurance coverage for the former patient's claims. Saltz countersued. He claimed he had coverage under the plain language of his UMIA policy and under principles of waiver and promissory estoppel. He also sought compensatory and punitive damages under a claim that UMIA had breached its duty of good faith.

¶2 The district court found that Saltz was not covered under the plain language of the policy and dismissed his claim for waiver and his request for punitive damages. But it denied UMIA's motion for judgment as a matter of law and allowed Saltz's promissory estoppel and breach of the duty of good faith claims to go to a jury. Over UMIA's objections, the court also allowed evidence from a settlement negotiation to be presented to the jury. The jury found for Saltz on both claims.

¶3 We affirm in part, reverse in part, and remand for further proceedings on Saltz's requests for punitive damages and for attorney fees incurred on appeal. The district court properly allowed Saltz's claims for promissory estoppel and breach of the duty of good faith to go to the jury, and the court was correct to deny UMIA's motion for a new trial on the claim for breach of the duty of good faith. As for UMIA's assertion that the district court improperly admitted evidence from the 2017 settlement talks, we affirm the district court on the ground that UMIA failed to carry its burden of persuasion on appeal. The district court erred, however, in dismissing Saltz's claim for waiver and request for punitive damages. Because Saltz successfully established that he was covered under his UMIA policy by promissory estoppel, we do not reach the question of whether Saltz has a viable waiver claim or was covered under the plain language of the policy.

I

¶4 Dr. Renato Saltz has practiced plastic and reconstructive surgery in Utah for thirty years.¹ UMIA Insurance provided Dr. Saltz a $1,000,000 malpractice insurance policy. At various times, news outlets featured stories highlighting Dr. Saltz's work and opinions on plastic surgery. And these interactions between Saltz and the press are what ultimately led to the case before us.

¶5 In 2006, Saltz performed an abdominoplasty on Conilyn Judge. As part of that procedure, Judge gave written consent for a nurse to take nude pictures of her before and after the operation. This was standard practice in the plastic surgery field.

¶6 A year after the procedure, a local Fox News affiliate interviewed both Saltz and Judge for a story on plastic surgery. After the interviews, but before the broadcast, Fox requested some before and after photos of Judge. And without her consent, Saltz gave Fox unredacted photos of Judge—without any instructions on how the photos should be displayed in the broadcast. Fox then aired edited photos in the beginning of 2008, showing Judge's body from her neck to her upper thigh, with black bars placed over her breasts and groin.

¶7 A month later, Saltz received a letter from Judge's attorney complaining about the release of the photos to Fox. And in early 2009, Judge filed a civil suit against both Fox and Saltz, asserting various tort claims and seeking millions of dollars in damages (the "Judge Lawsuit").

¶8 After receiving Judge's initial letter, Saltz contacted Mike Imbler, a claim consultant at UMIA who had worked with Saltz for over five years. Imbler retained the law firm Richards Brandt Miller Nelson ("RBMN") to represent Saltz. A few months later, RBMN contacted Saltz and advised him to ask Hartford—his general liability insurance carrier—if it would cover the Judge Lawsuit. Hartford denied coverage. Satisfied with his coverage under his UMIA policy, Saltz did not challenge Hartford's denial.

¶9 UMIA controlled how the Judge Lawsuit was handled and negotiated. During the first two years of the case, UMIA unsuccessfully offered Judge $50,000 to drop her claims, and Fox settled separately for $300,000. After the Fox settlement, Judge and Saltz went into mediation. UMIA controlled the mediations, authorizing RBMN to offer up to $150,000 to settle. But mediation was unsuccessful and litigation resumed. Judge was willing to accept an $800,000 settlement offer, but UMIA offered only $100,000.

¶10 RBMN filed a motion for summary judgment, asserting that Judge had consented to the photo release when she signed a preoperation consent form. That motion was granted. And UMIA then instructed RBMN to withdraw the $100,000 settlement offer. In response, Judge appealed the district court's grant of summary judgment.

¶11 The parties litigated that appeal for the next five years. During that time, settlement discussions were suspended. This appellate process culminated in our decision in Judge v. Saltz Plastic Surgery , P.C., 2016 UT 7, 367 P.3d 1006, where we reversed the district court's dismissal and remanded the case for further proceedings. The case returned to the district court in 2016.

¶12 After the case returned to the district court, Judge offered to settle for $1,000,000. RBMN counseled Saltz to consider obtaining independent counsel. And he did so—retaining Parsons, Behle & Latimer ("PBL") to represent him personally. A week later, PBL asked UMIA to either settle the Judge Lawsuit for the full $1,000,000 of coverage or indemnify Saltz for any damages that might be awarded in the suit. After receiving the request, Nick Ghiselli, UMIA's general counsel, reviewed the Judge Lawsuit and raised, for the first time, the possibility that the Judge Lawsuit was not covered under Saltz's policy. Ghiselli doubted that Judge's claims were "covered by the UMIA policy," but recognized that "[i]t might be too late" for UMIA to deny coverage under the principles of promissory estoppel and waiver.

¶13 Upon this discovery, UMIA informed Saltz that it would not settle the Judge Lawsuit for policy limits, that it did not think Saltz had coverage under his UMIA policy, and that Saltz should ask Hartford to revisit its initial coverage denial. At the same time, UMIA responded to Judge's demand by offering her $200,000 to settle the case. Judge refused. PBL then sent UMIA a follow-up letter expressing concern with its sudden about-face. Ghiselli responded by characterizing the letter as containing unwarranted "threats," especially in light of UMIA's recent settlement offer. Two weeks later, UMIA sent a letter to Saltz that asserted that the Judge Lawsuit was not covered under his policy but agreeing to defend Saltz under a reservation of rights.²

¶14 Saltz's relationship with UMIA deteriorated in the wake of these events. In November 2016, UMIA filed the lawsuit that is the genesis of this appeal—a declaratory judgment action seeking to establish that the Judge Lawsuit was not covered under Saltz's insurance policy with UMIA. Saltz disputed UMIA's denial of coverage under the plain language of the policy. And he asserted several counterclaims against UMIA, contending in the alternative that he had coverage under the policy through principles of waiver and promissory estoppel. Saltz also claimed that UMIA had breached the covenant of good faith and fair dealing—a claim on which Saltz sought compensatory and punitive damages. At Saltz's request, Hartford also revisited its initial coverage denial. It agreed to defend Saltz under a reservation of rights and to contribute half of his defense costs incurred thus far.

¶15 Several weeks later, UMIA moved for summary judgment on its declaratory judgment claim, asserting that the Judge Lawsuit was not covered under the plain language of its policy with Saltz. The district court agreed, leaving only Saltz's counterclaims for breach of the duty of good faith and associated damages and his claims for coverage under the UMIA policy under theories of waiver and promissory estoppel.

¶16 The parties entered into settlement negotiations over both cases in June 2017. Hartford, UMIA, and Saltz all agreed to contribute toward a settlement offer in the Judge Lawsuit. Hartford offered $200,000, and Saltz offered $35,000. UMIA offered only $15,000—less than ten percent of its previous offer and its lowest since the Judge Lawsuit began. Judge rejected the offer. Hartford then increased its contribution to $400,000, bringing the total offer up to $450,000. UMIA informed the mediator that it would not offer more than $15,000 in any settlement offer, and Saltz stated that he would continue to pursue his claim for breach of the duty of good faith against UMIA. After UMIA left the negotiations, Hartford and Saltz settled the Judge Lawsuit for $1,000,000 in total, each contributing $500,000.

¶17 The suit between UMIA and Saltz continued, with both parties filing various pretrial motions. UMIA attempted to preclude Saltz from introducing evidence of its actions during the June 2017 settlement talks, asserting that the evidence was barred by Rule 408 of the Utah Rules of Evidence. The district court denied the motion. It held that UMIA had opened the door to the...