Opinion
20210090-CA
12-22-2022
Shawna Zubiate, Appellant, v. American Family Insurance Company, Appellee.
Emily Adams and Sara Pfrommer, Attorneys for Appellant Evan S. Strassberg, Attorney for Appellee
Eighth District Court, Vernal Department The Honorable Edwin T. Peterson No. 200800068
Emily Adams and Sara Pfrommer, Attorneys for Appellant
Evan S. Strassberg, Attorney for Appellee
Judge Ryan M. Harris authored this Opinion, in which Judge Michele M. Christiansen Forster concurred. Justice Jill M. Pohlman concurred in part and dissented in part, with opinion.
Justice Jill M. Pohlman began her work on this case as a member of the Utah Court of Appeals. She became a member of the Utah Supreme Court thereafter and completed her work on this case sitting by special assignment as authorized by law. See generally Utah R. Jud. Admin. 3-108(4).
HARRIS, JUDGE
¶1 About a year after purchasing a life insurance policy, a man (Father) emailed his insurance agent and instructed him to change the secondary beneficiary on his policy from his mother-in-law (Mother-in-Law) to his children (the Children). Sometime later, after Father and his wife both died in an accident, the insurance company paid the insurance proceeds to Mother-in-Law. The Children (through a conservator) then sued the insurance company, but the district court dismissed their entire lawsuit. The Children now appeal that decision. We affirm the dismissal of two of their four stated causes of action, but we reverse the dismissal of the other two, and remand the case to the district court for further proceedings.
"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." Lewis v. U.S. Bank Trust NA, 2020 UT App 55, ¶ 2 n.1, 463 P.3d 694 (quotation simplified). Thus, we recite the facts as set forth in the complaint and assume the truth of those facts for purposes of our analysis.
¶2 In 2014, Father purchased a $1,000,000 life insurance policy (the Policy) from American Family Insurance Company (American Family). At the time he purchased the Policy, Father named his wife as the primary beneficiary and Mother-in-Law as the secondary beneficiary.
¶3 The following year, Father took steps to change the secondary beneficiary under the Policy. In particular, he emailed his insurance agent (Agent)-an agent of American Family-and instructed him to remove Mother-in-Law as the secondary beneficiary and to replace her with the Children, and then to install his mother, Shawna Zubiate, as a "tertiary beneficiary" in line behind the Children. However, Agent or American Family did not make the changes as Father had requested.
¶4 Four years later, in May 2019, Father and his wife-the primary beneficiary under the Policy-both died in an accident. Shortly thereafter, and apparently believing that Mother-in-Law was still the secondary beneficiary, American Family paid the insurance proceeds to Mother-in-Law.
¶5 In June 2020, the Children (through Zubiate, in her capacity as their conservator) filed this lawsuit against American Family and Mother-in-Law, generally alleging that the company had failed to follow Father's instructions to change the named secondary beneficiary, and then had failed to pay the insurance proceeds to the proper parties. The complaint asserted four separate causes of action: (1) "Failure to Change Beneficiary According to Decedent's Wishes," (2) mutual mistake and reformation, (3) unilateral mistake, and (4) negligence.
¶6 Mother-in-Law filed a motion to dismiss the complaint, asserting that the Children's various claims were untimely and/or failed to state a claim. In particular, she asserted that the Children's first cause of action was not a cognizable claim for relief, and that the Children had "failed to give any indication of what that claim might be." With regard to the other claims, Mother-in-Law asserted that the Children had failed to state valid claims for mistake or negligence, but that even if they had, those claims were time-barred under applicable statutes of limitation. American Family joined in Mother-in-Law's motion.
¶7 In opposition to the motion, the Children asserted that none of their claims were time-barred, and that they had stated valid claims for mistake and negligence. In addition, they included an introductory section in their memorandum in which they set forth their main legal theory: that Father had at least substantially complied with the requirements for changing the secondary beneficiaries of the Policy, that Father's changes rendered them third-party beneficiaries under the insurance contract, and that they could therefore "sue on a contract dispute as intended third party beneficiaries of the life insurance contract." The Children did not, however, specifically express an intention for the district court to construe their first cause of action-for "Failure to Change Beneficiary According to Decedent's Wishes"-as a claim for breach of contract as third-party beneficiaries.
¶8 The district court ultimately granted the motion, dismissing the Children's complaint against both American Family and Mother-in-Law in its entirety, with prejudice and on the merits. It first concluded that their first cause of action was not a cognizable claim for relief. Given the way the complaint was drafted and the way the motion arguments had been postured, the court found it "unclear as to whether [that claim] sound[ed] in tort, contract, statute, or another area of law." Next, the court concluded that the Children's mistake claims were barred by the applicable three-year statute of limitation, determining that the statute began to run when Father requested the change in beneficiary, which was five years before the complaint was filed. And finally, the court concluded that the Children could not sue American Family for negligence, reasoning that any such claim "would have to be pursued by" Father.
ISSUES AND STANDARD OF REVIEW
¶9 The Children now appeal the district court's dismissal of their complaint against American Family. We review the district court's determination for correctness. See Young Res. Ltd. P'ship v. Promontory Landfill LLC, 2018 UT App 99, ¶ 9, 427 P.3d 457 ("The grant of a motion to dismiss pursuant to rule 12(b)(6) presents a question of law that this court reviews for correctness. Similarly, the determination that a statute of limitations has expired is also a question of law which we review for correctness, giving no particular deference to the lower court's determination." (quotation simplified)).
The Children do not appeal the dismissal of their claims against Mother-in-Law.
ANALYSIS
¶10 We begin our analysis with a brief discussion of the standards governing notice pleading and dismissal of complaints for failure to state a claim. We then engage in an analysis of the district court's dismissal order, and we do so in three parts. First, we assess whether the district court correctly dismissed the Children's mistake claims. Second, we assess whether the court correctly dismissed the Children's claim for "Failure to Change Beneficiary." And finally, we assess whether the court correctly dismissed the Children's negligence claim.
I
¶11 Utah has adopted the concept of "notice pleading," see Mack v. Utah State Dep't of Com., 2009 UT 47, ¶ 17, 221 P.3d 194, which is defined as "[a] procedural system requiring that the pleader give only a short and plain statement of the claim showing that the pleader is entitled to relief, and not a complete detailing of all the facts," Notice Pleading, Black's Law Dictionary (11th ed. 2019). This concept is embodied in rule 8 of the Utah Rules of Civil Procedure, which requires only that a complaint contain "a short and plain . . . statement of the claim showing that the party is entitled to relief" and a "demand for judgment for specified relief." See Utah R. Civ. P. 8(a). Under this standard, a complaint is sufficient if it provides "fair notice of the nature and basis or grounds of the claim and a general indication of the type of litigation involved." See Mack, 2009 UT 47, ¶ 17 (quotation simplified). A plaintiff's complaint will be deemed adequate under this standard as long as the defendant knows "what is being claimed and how to defend" against it. See Youngblood v. Auto-Owners Ins. Co., 2007 UT 28, ¶ 22, 158 P.3d 1088.
¶12 When considering whether to dismiss a complaint for failure to state a claim pursuant to rule 12(b)(6) of the Utah Rules of Civil Procedure, courts must keep this "notice pleading" standard in mind. See Mack, 2009 UT 47, ¶ 17 (stating that "Rule 12(b)(6) reflects Utah's adoption of notice pleading"). In particular, our supreme court has instructed that "a complaint does not fail to state a claim unless it appears to a certainty that the plaintiff would be entitled to no relief under any state of facts which could be proved in support of the claim." Id. (quotation simplified). And when applying this standard, courts are to "liberally construe" both the applicable rules of civil procedure as well as the complaint "to favor finding a pleading sufficient." See id. (stating that "courts are to liberally construe both rules 8 and 12 to favor finding a pleading sufficient," and that "when ruling on a motion to dismiss for failure to state a claim, the court must construe the complaint in the light most favorable to the plaintiff and indulge all reasonable inferences in his [or her] favor").
¶13 Complaints are therefore not to be dismissed merely due to "inartful pleading" or because a plaintiff "could have chosen a better procedural vehicle to bring [a] claim." Id. ¶ 21. To the contrary, dismissal for failure to state a claim is proper only where it is certain that the plaintiff cannot prevail under any potential set of facts. See id. ¶ 17; see also Simmons Media Group, LLC v. Waykar, LLC, 2014 UT App 145, ¶ 15, 335 P.3d 885 ("A motion to dismiss should be granted only if, assuming the truth of the allegations in the complaint and drawing all reasonable inferences therefrom in the light most favorable to the plaintiff, it is clear that the plaintiff is not entitled to relief." (quotation simplified)).
¶14 Thus, under the notice pleading standard, a plaintiff's complaint need contain only "a short and plain . . . statement of the claim showing that the party is entitled to relief" and a "demand for judgment for specified relief." See Utah R. Civ. P. 8(a). "When a complaint states a claim in general language but the factual allegations are so vague and ambiguous that the defendant cannot draft an answer, the proper course of action is to move for a more definite statement under rule 12(e), not to move for dismissal." Canfield v. Layton City, 2005 UT 60, ¶ 14, 122 P.3d 622 (quotation simplified). Indeed, "even if a complaint is vague, inartfully drafted, a bare-bones outline or not a model of specificity, the complaint may still be adequate so long as it can reasonably be read as supporting a claim for relief, giving the defendant notice of that claim." Casaday v. Allstate Ins. Co., 2010 UT App 82, ¶ 16, 232 P.3d 1075 (quotation simplified).
¶15 Other courts interpreting rules containing language substantially identical to ours have concluded that, while a plaintiff is required to allege facts supporting the claim, a plaintiff is not required to specifically describe the legal theories upon which the claim rests. See, e.g., Aaron v. Mahl, 550 F.3d 659, 666 (7th Cir. 2008) ("Under the notice pleading standard . . . a complaint need not contain legal theories."); Alvarez v. Hill, 518 F.3d 1152, 1157 (9th Cir. 2008) ("Notice pleading requires the plaintiff to set forth in his complaint claims for relief, not causes of action, statutes or legal theories."); McManus v. Fleetwood Enters., Inc., 320 F.3d 545, 551 (5th Cir. 2003) (stating that the federal version of rule 8 does "not require an inordinate amount of detail or precision," and that "[t]he plaintiff need not correctly specify the legal theory, so long as the plaintiff alleges facts upon which relief can be granted" (quotation simplified)); O'Grady v. Village of Libertyville, 304 F.3d 719, 723 (7th Cir. 2002) ("A plaintiff is not required to set forth a legal theory to match the facts, so long as some legal theory can be sustained on the facts pleaded in the complaint."); see also Lanier v. President & Fellows of Harvard College, 191 N.E.3d 1063, 1074 (Mass. App. Ct. 2022) ("For a claim to survive a motion to dismiss, the complaint need not recite that specific cause of action so long as the factual allegations are sufficient to support such a claim."); 61A Am. Jur. 2d Pleading § 148 (2022) ("Although the mere compilation of facts cannot sustain a complaint which fails to allege the invasion of a right recognized in law . . . the pleader need not allege the legal theory relied upon.").
Where applicable federal rules contain substantively identical language, Utah appellate courts often look to federal case law for guidance in interpreting our own rules. See, e.g., Arbogast Family Trust v. River Crossings, LLC, 2010 UT 40, ¶ 16, 238 P.3d 1035.
¶16 We find these federal cases persuasive, and consistent with existing Utah law. Thus, as long as the plaintiff has set forth facts that allege "a legal right, the invasion of which by defendant has caused damage to the plaintiff," see Dorney v. Dairymen's League Coop. Ass'n, 149 F.Supp. 615, 618 (D.N.J. 1957), that pleading is sufficient, see R3 Composites Corp. v. G&S Sales Corp., 960 F.3d 935, 942 (7th Cir. 2020) ("A complaint need only provide notice of a plausible claim; there is no rule requiring parties to plead legal theories or elements of a case." (quotation simplified)).
II
¶17 With these principles in mind, we turn to an examination of the district court's dismissal of the various causes of action set forth in the Children's complaint. We first examine the Children's mistake claims, and conclude that the district court erred by dismissing, at this stage of the proceedings, the Children's claim for mutual mistake, but that the court correctly dismissed the Children's claim for unilateral mistake.
A
¶18 The Children's first mistake claim alleges mutual mistake. Specifically, the Children allege that Father "informed" Agent that he wanted to change beneficiaries, and that he did so by means of an email that was "clear" and "specifically stated" his intentions. According to the complaint, and interpreting its allegations liberally, Agent replied by "asking a couple of questions," but did not indicate that Father's request was unclear or problematic, and "never said the change would not happen or that any additional information was needed to make the change." Father therefore understood that he had done what was necessary to effectuate the change in beneficiary, and believed that Agent "knew this" and shared that understanding. This allegedly shared understanding-that the beneficiaries would be changed pursuant to Father's request-did not, however, get incorporated into the Policy documents and, as a result, American Family paid the insurance proceeds to Mother-in-Law instead of to the Children. This sort of factual scenario-an alleged error in reducing an agreement or understanding to writing-can, in appropriate cases and if proven, constitute a mutual mistake. See RHN Corp. v. Veibell, 2004 UT 60, ¶ 37, 96 P.3d 935 ("Mutual mistake of fact may be defined as error in reducing the concurring intentions of the parties to writing." (quotation simplified)). As a remedy, the Children seek reformation of the Policy, asking that its terms be "changed to make effective the desires of [Father] and the intent of his contract."
The dissent reads the Children's complaint narrowly, and interprets it as not actually alleging that Agent shared Father's understanding that the beneficiaries would be changed. See infra ¶¶ 49-50. In our view, this reading runs afoul of our supreme court's mandate that complaints, at the pleading stage, must be read liberally. The core theory of the Children's entire complaint is that they are the true beneficiaries of the Policy. A liberal reading of the complaint includes at least an implied allegation that Father and Agent shared the understanding that the beneficiaries would be changed at Father's request.
¶19 The district court dismissed the Children's mutual mistake claim on timeliness grounds. That was erroneous.
¶20 Mistake claims are subject to a three-year statute of limitation, see Utah Code Ann. § 78B-2-305(3) (LexisNexis 2018), and the district court correctly noted that the Children's claim was filed more than three years after Father instructed Agent to make the change. But the applicable statute of limitation contains an internal discovery rule, which provides that a cause of action for mistake "does not accrue until the discovery by the aggrieved party of the facts constituting the . . . mistake." See id. (emphasis added).
¶21 Here, the Children allege that they are the aggrieved parties, and they assert that they could not have reasonably discovered, and did not actually discover, the existence of the mistake until they learned that American Family had paid the insurance proceeds to Mother-in-Law. Indeed, in their complaint, the Children note that they were "very young" at the time of the relevant events, and assert that Father himself did not learn of the mistake prior to his death. American Family paid the proceeds to Mother-in-Law in May 2019, and this lawsuit was filed in June 2020, well within three years of the payout. Under these facts, the allegations in the complaint are sufficient to survive a motion to dismiss on the question of whether the aggrieved parties discovered the mistake within three years of filing the complaint.
Even aside from the application of the statutory discovery rule, any statute of limitation may have also been tolled due to the Children's minority. See Utah Code Ann. § 78B-2-108(2) (LexisNexis Supp. 2022) ("During the time that an individual is underage . . . the statute of limitations for a cause of action other than for the recovery of real property may not run."); see also Zilleruelo v. Commodity Transporters, Inc., 2022 UT 1, ¶ 39, 506 P.3d 509 ("Indeed, the Tolling Statute . . . has been interpreted to toll the statute of limitations for a minor during minority, without regard to whether the minor has a legal guardian."); Bonneville Asphalt v. Labor Comm'n, 2004 UT App 137, ¶ 5, 91 P.3d 849 ("The sweeping scope of this [statutory] language requires that all statutes of limitation be tolled during minority unless the legislature enacts a specific exemption." (quotation simplified)).
¶22 American Family nevertheless invites us to affirm the district court's dismissal of the mutual mistake claim on alternative grounds. See Olguin v. Anderton, 2019 UT 73, ¶ 20, 456 P.3d 760 (stating that "[i]t is within our discretion to affirm a judgment on an alternative ground if it is apparent in the record" (quotation simplified)). Specifically, American Family points out that the mistake alleged in the complaint had nothing to do with the original formation of the insurance contract between Father and American Family, and contends that any valid claim of mistake "must relate to the formation of an actual contract."
¶23 It is certainly true that, for a mutual mistake claim to succeed, a plaintiff must show that, "at the time the contract is made, the parties make a mutual mistake about a material fact, the existence of which is a basic assumption of the contract." See Rocky Ford Irrigation Co. v. Kents Lake Reservoir Co., 2020 UT 47, ¶ 73 n.29, 469 P.3d 1003 (quotation simplified). But mutual mistakes can occur during the formation of an amendment or modification to a contract in the same way that they can occur during the formation of the original contract; that is, claims for mutual mistake are not limited to mistakes that occurred at the time the original contract was entered into. After all, an agreement to amend or modify a contract operates as the creation of a new contract. See Lewis v. Edwards, 554 S.E.2d 17, 23 (N.C. Ct. App. 2001) ("The effect of a modification to a contract is the production of a new agreement."); see also Beacon Terminal Corp. v. Chemprene, Inc., 429 N.Y.S.2d 715, 717-18 (App. Div. 1980) (stating that "[t]he modification of a contract results in the establishment of a new agreement between the parties"); Marnon v. Vaughan Motor Co., 194 P.2d 992, 1015 (Or. 1948) ("An agreement, when changed by the mutual consent of the parties, becomes a new agreement, which takes the place of the old, and consists of the new terms and as much of the old agreement as the parties have agreed shall remain unchanged . . . . The new contract supersedes the first to the extent that the two will be unable to stand together." (quotation simplified)). And "[c]hanging a beneficiary on a life insurance contract effects an amendment to the existing contract and is itself the making of a new contract." Rawlings v. John Hancock Mutual Life Ins. Co., 78 S.W.3d 291, 296 n.1 (Tenn. Ct. App. 2001); see also Moore v. New York Life Ins. Co., 146 S.E.2d 492, 498 (N.C. 1966) ("The exercise by an insured of his right under the policy to change the beneficiary thereof, effects an amendment of the former contract and is, itself, the making of a contract . . . ."); cf. New York Life Ins. Co. v. Baum, 707 F.2d 870, 872 (5th Cir. 1983) (stating that a party made an "amendment to the insurance contract" by "changing the name of the beneficiary"); Kirschbaum v. Wennett, 806 N.E.2d 440, 443 (Mass. App. Ct. 2004) (stating that a party "amended the document by changing the beneficiary"). On this basis, we reject American Family's argument that an actionable mutual mistake can occur only at the time of formation of an original contract, and not at the time of formation of an amended contract.
¶24 In sum, the Children's claim for mutual mistake is not subject to dismissal, at least not at this stage of the proceedings, on statute of limitation grounds. And we decline American Family's invitation to affirm the dismissal of the mutual mistake claim on the asserted alternative ground. We therefore reverse the district court's dismissal of this claim, although we express no opinion as to its ultimate validity, or as to whether the Children- as putative third-party beneficiaries not named in the insurance contract-can properly assert a claim for mutual mistake and reformation.
B
¶25 In their other mistake claim, the Children allege that Father made a unilateral mistake "in that he believed that [a] change had occurred" to the secondary beneficiary of the Policy and that there was not "anything additional that he needed to do" to effectuate that change. As with the mutual mistake claim, the remedy the Children seek on their unilateral mistake claim is reformation: to change the secondary beneficiaries under the Policy. The district court dismissed the unilateral mistake claim for the same reason that it dismissed the claim for mutual mistake-on timeliness grounds. However, that decision was erroneous for the same reasons the dismissal of the mutual mistake claim was erroneous; after all, the same statute of limitation-complete with an internal discovery rule-applies to both types of mistake claims. See Utah Code Ann. § 78B-2-305(3).
¶26 But we elect to affirm, on alternative grounds, the district court's dismissal of the Children's unilateral mistake claim. Under our law, a unilateral mistake provides a basis for reformation only "where one party makes a mistake either as the result of the other party's fraud or with the knowledge of the other party who then attempts to take advantage of the mistake." Red Bridge Cap. LLC v. Dos Lagos LLC, 2016 UT App 162, ¶ 15, 381 P.3d 1147 (quotation simplified). The Children, however, make no allegation of fraud or other intentional behavior, nor do they allege that American Family attempted to take advantage of any unilateral mistake Father might have made. And absent "fraud or inequitable conduct of the other remaining parties," see Thompson v. Smith, 620 P.2d 520, 523 (Utah 1980), the Children's only available remedy would be rescission-and not reformation-of the Policy, see id. (stating that "reformation is an improper remedy where there has been no meeting of the minds (and hence no contract)"); Briggs v. Liddell, 699 P.2d 770, 772 (Utah 1985) ("Reformation is frequently sought in cases arising under insurance contracts when there is a dispute over who is the intended beneficiary. The cases uniformly hold that a unilateral mistake will not support reformation."). But the Children do not seek rescission of the entire Policy; in fact, they would almost certainly prefer that American Family pay the proceeds to Mother-in-Law-with the hope that some of the money would eventually reach them indirectly-as opposed to nobody at all. And rescission of the asserted amended Policy-thus leaving in place the original Policy-is precisely the outcome the Children sought to avoid by filing their complaint.
¶27 In other words, even taking the Children's allegations of unilateral mistake at face value-as we must at this procedural stage-the Children are not entitled to the relief they seek (reformation) on that claim. Accordingly, even though the district court erred by dismissing the unilateral mistake claim on timeliness grounds, we affirm its dismissal of the claim on an alternative basis, because the claim as pleaded fails on the merits.
III
¶28 Next, we turn to the claim that the Children captioned "Failure to Change Beneficiary According to Decedent's Wishes." The district court dismissed this claim, stating that it was "unclear as to whether it sounds in tort, contract, statute, or another area of law," and determining that the claim "does not provide [American Family with] fair notice of the nature and basis of the claim asserted and a general indication of the type of litigation involved." But dismissal of this claim, at this procedural stage, was erroneous, because if this claim is construed liberally, in accordance with notice pleading standards, it states facts that (if true) could allow recovery on a claim sounding in contract.
The district court dismissed this claim on its merits, and not on timeliness grounds. And American Family does not ask us to affirm the dismissal of this claim on any timeliness-related alternative basis.
¶29 As noted above, at this procedural stage-when considering the propriety of a motion to dismiss for failure to state a claim-we are obligated to interpret the Children's complaint liberally. See Mack v. Utah State Dep't of Com., 2009 UT 47, ¶ 17, 221 P.3d 194 (stating that courts "must construe the complaint in the light most favorable to the plaintiff and indulge all reasonable inferences in his favor"). The governing rule requires a plaintiff to set forth only "a short and plain . . . statement of the claim showing that the party is entitled to relief." See Utah R. Civ. P. 8(a). And "[a] plaintiff is not required to set forth a legal theory to match the facts, so long as some legal theory can be sustained on the facts pleaded in the complaint." See O'Grady v. Village of Libertyville, 304 F.3d 719, 723 (7th Cir. 2002). In short, "a complaint does not fail to state a claim unless it appears to a certainty that the plaintiff would be entitled to no relief under any state of facts which could be proved in support of the claim." See Mack, 2009 UT 47, ¶ 17 (quotation simplified).
¶30 For example, in Alvarez v. Hill, the plaintiff filed a complaint seeking redress for alleged governmental violations of his right to exercise his religious beliefs. See 518 F.3d 1152, 1154- 55 (9th Cir. 2008). Although he mentioned the First Amendment in his complaint, he neglected to mention the Religious Land Use and Institutionalized Persons Act (RLUIPA), a federal statute that provides "heightened protection"-beyond that provided by the First Amendment-for violation of one's religious rights. See id. at 1156. Because the plaintiff made no mention of the statute in his complaint, the district court dismissed the complaint without "tak[ing] account of" RLUIPA. Id. But the appellate court reversed the dismissal, offering its view that the defendants, by seeking dismissal, were "exalt[ing] form over substance," and it rejected as "entirely meritless" the defendants' "contention that [the] complaint's omission of a citation to RLUIPA precludes [the plaintiff] from advancing legal arguments based on that statute." Id. at 1157-58. The court noted that the plaintiff, in subsequent filings, had identified RLUIPA as a potential source of relief, and stated that the plaintiff's complaint "contained factual allegations establishing a plausible entitlement to relief under" that statute. Id. (quotation simplified). The court therefore concluded that, under the circumstances, it was "conclusively establish[ed] that [the defendants] had fair notice that a statutory religious exercise claim also was being presented to the district court." Id. at 1158.
¶31 In Aaron v. Mahl, the plaintiff filed a complaint to enforce and collect on a previous judgment. 550 F.3d 659 (7th Cir. 2008). But the complaint was not artfully drafted, and the "precise legal theory of recovery was unclear." Id. at 661. In the complaint, the plaintiff did not use the word "replevin," and "appeared to be asking the court to enforce [a] writ of execution." Id. at 665-66. At the outset, "the district court construed [the plaintiff's] complaint as requesting that the court enforce the writ of execution and require [the defendant] to turn over the funds to which [the plaintiff] was entitled." Id. at 662. Later, however, after a state court quashed the writ of execution to which the plaintiff had referred in his complaint, see id., the defendant moved to dismiss the complaint on the ground that the "only theory of recovery espoused in the . . . complaint was [now] frivolous," and that the court should not allow a new and unstated theory to "tip-toe in through the side door." Id. at 665-66 (quotation simplified). The court denied that motion, determining that-even though the complaint did not mention a replevin-based legal theory-the plaintiff had stated facts sufficient to support relief under that unstated theory:
[The plaintiff's] complaint, admittedly more focused on the writ of execution, also named [the defendant] as a defendant, alleged that he had a judgment against her, and claimed to be entitled to the accounts [in question]. [The defendant] wants the case to be dismissed because [the plaintiff's] complaint did not state a claim-he did not use the word "replevin" or identify any other workable legal theory. Under the notice pleading standard, of course, a complaint need not contain legal theories. . . . [The plaintiff's] complaint gave [the defendant] notice that he had a judgment against
Id. at 666 (quotation simplified); see also McManus v. Fleetwood Enters., Inc., 320 F.3d 545, 551 (5th Cir. 2003) (allowing a claim to proceed even though the plaintiff had pleaded the wrong version of a statute, noting that "the most natural reading of [his] broadly-worded complaint would include some version of that claim").her and he believed that he was legally entitled to the money in her . . . accounts. Even though the writ of execution should not have been issued, [the plaintiff's] claim was not frivolous from the outset, and the district court did not err by considering [the plaintiff's] claim under another theory.
¶32 These same principles apply here, and indicate that the district court should not have dismissed the Children's first claim for relief, at least not at this procedural stage. The Children have, as part of this claim, set forth facts that, if true, would entitle them to relief on a breach of contract theory. In particular, they have alleged that Father "made it clear" to Agent, in writing, that "he did not want [Mother-in-Law] to be the contingent beneficiary" of the Policy, that he wanted to replace her with the Children, and that, at a minimum, his request was substantially compliant with the requirements for changing the beneficiary of the Policy. The Children therefore contend that, as a result of Father's request, they became (or should have become) the secondary beneficiaries under the Policy, and that they-and not Mother-in-Law-should have received the insurance proceeds following Father's death. These facts are sufficient to give American Family "fair notice" that the Children claim to be the true secondary beneficiaries of the Policy and that they seek relief as putative third-party beneficiaries of that insurance contract. See Mack, 2009 UT 47, ¶ 17 (quotation simplified) (stating that applicable rules require only that a complaint "provide fair notice of the nature and basis or grounds of the claim and a general indication of the type of litigation involved" (quotation simplified)); see also O'Grady, 304 F.3d at 723; McManus, 320 F.3d at 551 (stating that "the plaintiff need not correctly specify the legal theory, so long as the plaintiff alleges facts upon which relief can be granted").
¶33 Moreover, like the plaintiff in Alvarez, see 518 F.3d at 1157- 58, the Children provided at least some additional clarity in filings subsequent to their complaint-in the Children's case, in their memorandum opposing the motion to dismiss. That memorandum-like the complaint itself-is not a model of clarity, and it would certainly have been better if the Children had more specifically asked the court to construe this particular cause of action as a claim for breach of contract by third-party beneficiaries. But as noted, in the introductory section of that memorandum, the Children did-at least in a general sense-set forth exactly this legal theory: they asserted that Father had at least substantially complied with the requirements for changing the secondary beneficiaries of the Policy, that Father's changes were sufficient to make them third-party beneficiaries under the Policy, and that they "can sue on a contract dispute as intended third party beneficiaries of the life insurance contract." And later in that same memorandum, the Children argued as follows: "It is alleged in the complaint that [the Children] should be the beneficiaries of the contract and that their father, the insured, had listed them as the beneficiaries of the insurance contract and as such are intended third-party beneficiaries to that contract."
In our view (unlike the dissent's, see infra ¶ 56 n.15), the Children made this same argument-though again far from artfully-in their opening brief on appeal. In that brief, they set forth the same general theory that they set forth in their memorandum before the district court: that they were "the intended third-party beneficiaries of the life insurance policy," and that "[i]ntended beneficiaries can sue for a breach of the defendant's obligation to them" and may "make a claim under contract or policy of insurance." We agree with the dissent that it certainly would have been better if the Children had more directly asserted, as they eventually did in their reply brief, that they were asking for their "failure to change beneficiary" claim to be recognized as a contract-based third-party-beneficiary claim. But in our view, the dissent's framing of the Children's arguments in their opening brief on appeal is unduly restrictive.
This legal theory should not be unfamiliar to any life insurance company. Putative third-party beneficiaries of a life insurance policy-assuming they can prove that status-have long been held to have the right to sue the insurance company on a claim sounding in contract. See, e.g., Wentworth v. Equitable Life Assurance Society, 238 P. 648, 653-54 (Utah 1925) (sustaining a claim by a putative third-party beneficiary of a life insurance contract); see also Bergen v. Travelers Ins. Co. of Ill., 776 P.2d 659, 661 (Utah Ct. App. 1989) (adjudicating a contract-based dispute between two putative beneficiaries to a life insurance contract). See generally SME Indus., Inc. v. Thompson, Ventulett, Stainback & Assocs., 2001 UT 54, ¶ 47, 28 P.3d 669 ("Third-party beneficiaries are persons who are recognized as having enforceable rights created in them by a contract to which they are not parties and for which they give no consideration." (quotation simplified)).
¶34 It remains to be seen, of course, whether the Children will be able to support their third-party beneficiary claim for breach of contract with sufficient proof. After all, to succeed on this claim, the Children will need to prove that they are in fact third-party beneficiaries of the Policy; to do so, they must-among other things-demonstrate that Father at least substantially complied with all of the requirements for changing the beneficiaries of the Policy. See Bergen v. Travelers Ins. Co. of Ill., 776 P.2d 659, 663 (Utah Ct. App. 1989) (stating that "an insured must only substantially comply with the policy requirements for making a change of beneficiaries," and that "a change-of-beneficiary is effective when it is clear that the insured intends a change, has a right to make a change, and takes reasonable steps to bring about a change" (quotation simplified)). The Children's complaint does not quote from or attach a copy of the Policy and, in addition, describes only in fairly general terms the nature of Father's communications with Agent; under these circumstances, we of course cannot meaningfully (and should not in any event) comment on the relative merit of this claim. But at this procedural stage, it is enough that the Children have set forth facts that could, if proven, support a claim for relief. And they have done so with regard to their first cause of action.
¶35 Accordingly, the district court erred by dismissing the Children's first cause of action at this procedural stage. We therefore reverse the court's order dismissing that claim.
IV
¶36 The Children's final cause of action alleges negligence on the part of Agent. Specifically, they contend that Agent-acting on behalf of American Family-held a "duty as an insurance agent on behalf of his clients and their interests." That duty- according to the complaint-was to "ensure that [Father's] intentions were seen through." The district court, after noting that the complaint does "not allege that [Agent or American Family] owed [the Children] a duty of care," concluded that the Children could not state a valid claim for negligence. We agree with the district court's conclusion. The Children's avenue, if any, for redress against American Family-whether claimed directly against the company or based on a sort of respondeat superior theory, through Agent-lies in contract and not in tort.
¶37 At root, the Children's claims for relief are based on the notion that Father made them beneficiaries of the Policy. As discussed above, the Children have stated valid contract-based claims as putative third-party beneficiaries and for mutual mistake and reformation. The facts they allege in their complaint, if proven, indicate that American Family may have breached contractual duties to them as third-party beneficiaries.
¶38 But these duties, as described in the complaint, all arise from the Children's claimed status as beneficiaries under the Policy. That is, what the Children allege is that they have a contract-based relationship with American Family. And that relationship is, by definition, a "first-party" relationship, because the claims are based on breach of contractual terms. See, e.g., Design Pros. Ins. Co. v. Chicago Ins. Co., 454 F.3d 906, 912 (8th Cir. 2006) (stating that "a beneficiary who seeks to collect the proceeds of a deceased loved one's life insurance policy . . . is a first-party claimant because a contingency or loss has occurred that allows him or her to make a claim under the policy"); Tolman v. Reassure Am. Life Ins. Co., 2017 OK CIV APP 15, ¶ 11, 391 P.3d 120 ("The claim by a life insurance beneficiary against the life insurance company is generally regarded as a first-party claim and the relationship between the insured and the insurer is one that rests in contract"); see also Elizabeth Williams, Cause of Action to Obtain Punitive Damages Against Insurer for Refusal to Settle or Pay Claim, 56 Causes of Action 2d 465 § 2 (2022) ("First party claims also include claims made by the beneficiary under a life insurance policy."); cf. Harper v. Fidelity & Guar. Life Ins. Co., 2010 WY 89, ¶¶ 31-35, 234 P.3d 1211 (treating a putative beneficiary under a life insurance contract as a "first-party" claimant and allowing her to bring a bad faith claim against the insurer, although it dismissed that claim on its merits).
This is true despite the fact that beneficiaries of life insurance contracts are sometimes referred to as "third-party" beneficiaries. In the insurance context, "third-party claims" generally refer to tort claims (for instance, arising out of auto accidents) brought against insureds by strangers to the insurance contract. See Beck v. Farmers Ins. Exch., 701 P.2d 795, 798 n.2 (Utah 1985) ("We use the term 'first-party' to refer to an insurance agreement where the insurer agrees to pay claims submitted to it by the insured for losses suffered by the insured . . . . In contrast, a 'third-party' situation is one where the insurer contracts to defend the insured against claims made by third parties against the insured and to pay any resulting liability, up to the specified dollar limit."). That is not the sort of claim the Children bring here.
¶39 In any "first-party" insurance relationship, "the duties and obligations of the parties are contractual rather than fiduciary" and, "[w]ithout more, a breach of those implied or express duties can give rise only to a cause of action in contract, not one in tort." Beck v. Farmers Ins. Exch., 701 P.2d 795, 800 (Utah 1985). These principles are further embodied in what is known as the economic loss rule, which "places limits on tort claims for purely economic losses." Hayes v. Intermountain GeoEnvironmental Services, Inc., 2021 UT 62, ¶ 16, 498 P.3d 435. When a duty is created by contract, a plaintiff is generally limited to suing for breach of that duty in contract, and not in tort. See Reighard v. Yates, 2012 UT 45, ¶ 14, 285 P.3d 1168 ("The economic loss rule prevents recovery of economic damages under a theory of tort liability when a contract covers the subject matter of the dispute."). "Under such circumstances, the contract is the exclusive means of obtaining economic recovery." Id. ¶ 20. In other words, "when a conflict arises between parties to a contract regarding the subject matter of that contract, the contractual relationship controls, and parties are not permitted to assert actions in tort in an attempt to circumvent the bargain they agreed upon." Id. (quotation simplified). Thus, any claim that the Children-as putative beneficiaries of the insurance contract-have against American Family directly must sound in contract, and not in tort.
¶40 And the Children may not circumvent these legal principles by attempting to state their tort claim against Agent, rather than directly against American Family. Under Utah law, a client of an insurance agent can sue the agent in tort for failure to procure insurance as requested. See Espenschied Transport Corp. v. Fleetwood Services, Inc., 2018 UT 32, ¶ 14, 422 P.3d 829 (stating that "[a]n insurance agent may be obligated to procure insurance by contract or by duty" and an "agent who fails to procure insurance may be liable for breach of contract or negligence"); see also Harris v. Albrecht, 2004 UT 13, ¶ 30, 86 P.3d 728 (stating that a "contract to procure insurance may arise when the agent has definite directions from the insured to consummate a final contract" and that a "duty to procure insurance may arise when an agent accepts an application . . . [or] lulls the other party into believing a contract has been effected through promises"). But the Children were not-and do not claim to have been-clients of Agent. Only Father was. And insurance agents typically do not owe tort duties to non-clients-individuals who are not in privity with the agent and with whom they do not deal. See, e.g., Vestal v. Pontillo, 124 N.Y.S.3d 441, 447 (App. Div. 2020) (stating that "[a]n insurance agent ordinarily does not owe a duty of care to a nonclient," at least in the absence of evidence of privity); Henry v. American Church Group of Arizona, LLC, No. 2 CA-CV 2019-0042, 2020 WL 1650642, at *2 (Ariz.Ct.App. Apr. 2, 2020) (stating that an insurance agent does not owe a duty to "insureds generally, but rather . . . they owe a duty to their insured clients"); Jones v. Hyatt Ins. Agency, Inc., 741 A.2d 1099, 1108-09 (Md. 1999) (stating that "the tort duty owed by an [insurance] agent to the principal would not extend to third parties"); Brannan Paving GP, LLC v. Pavement Markings, Inc., 446 S.W.3d 14, 26 (Tex. App. 2013) ("An insurance agent, however, generally does not owe a duty unless there is privity.").
The district court correctly noted that any tort duty owed by Agent in this situation would have been owed to Father, and not to the Children. In dicta, and in the absence of any pending claim by Father's estate or any actual motion to amend the complaint on the part of any party to the lawsuit, the court then mused that any such claim by Father's estate would in any event be time-barred. We are of course aware that Zubiate purports to be not only the Children's conservator but also the personal representative of Father's estate. But Zubiate filed no documents with the district court in this case in her capacity as personal representative of Father's estate. We recognize that there was some discussion, at oral argument on the motion to dismiss, of Zubiate's inchoate intention to perhaps file some sort of motion or claim on behalf of Father's estate in the event the district court dismissed the Children's claims. But no such motion or claim was ever filed; Father's estate was never a party (or even a putative party) to the district court lawsuit, and is not a party to this appeal. In view of these rather unique facts, we (unlike the dissent, see infra ¶ 60) believe the better reading of the record is to consider the district court's comments about the timeliness of an as-yet-unfiled claim by Father's estate to be mere musings, offered in dicta, rather than an actual ruling; in this situation, we think it best-especially in light of our decision herein to reinstate two of the Children's claims, an event that renders decidedly remote the possibility of Father's estate ever filing any claim-to offer no opinion on the validity or timeliness of any potential tort claim that might someday be filed by Father's estate against Agent.
¶41 In this context, we find persuasive the court's analysis in Mims v. Western-Southern Agency, Inc., a case involving circumstances strikingly similar to those presented here. See 226 S.W.3d 833 (Ky. Ct. App. 2007). In Mims, the plaintiff sued an insurance agent, complaining that he had "negligently failed to effectuate her late father's intent to make her the sole contingent beneficiary of his life insurance policy." Id. at 834. The court dismissed the plaintiff's tort claim against the agent, agreeing with the agent that the cause of action was a "breach of contract claim disguised as a negligence claim." Id. at 836. The court noted that, in order to succeed on a negligence-based claim, the plaintiff would "bear the burden of proving that her father intended to change his contingent beneficiaries" but that the agent acted negligently in failing to effectuate that request. Id. But, the court noted, if the plaintiff was "able to meet [that] burden of proof, she would in effect also be proving that [her father] substantially complied with the provisions of his insurance policy," and in that event she would have "a recognized cause of action," sounding in contract, against the insurance company. Id. In this situation, "[t]he threshold inquiry under either a negligence or contract theory is essentially identical." Id. The court thus saw no need to impose or recognize a tort duty on the part of the agent in favor of the putative beneficiary. Id. at 836-37.
¶42 As noted above, the economic loss rule prevents recovery in tort when that same recovery is available in contract. See Reighard, 2012 UT 45, ¶ 14; see also Grynberg v. Questar Pipeline Co., 2003 UT 8, ¶ 52, 70 P.3d 1 (stating that "failure to properly perform a duty assigned by the contract is a breach of that contract and nothing more"). Therefore, if the Children can prove that Father substantially complied with the requirements for changing the beneficiaries under the Policy and that American Family breached the terms of the Policy by not paying them, then they will succeed on one or both of their contract-based claims. If they cannot, they will not be entitled to recovery under any theory. Under these circumstances, the law does not permit us to recognize a tort duty owed by Agent to the Children.
The Children rely heavily on Pitts v. Farm Bureau Life Insurance Co., a case in which the court allowed a putative beneficiary of a life insurance contract, under certain circumstances, to state a tort claim against an insurance agent. See 818 N.W.2d 91, 105 (Iowa 2012). That case distinguished Mims on the basis that Iowa's "substantial compliance doctrine is not as liberal as Kentucky's," a fact that led the court to conclude that "merely establishing that the plaintiff was the intended beneficiary of the policy would not satisfy the substantial compliance doctrine as it exists in Iowa." Id. But we find the rationale in Mims to be more persuasive than Pitts because, as noted, Utah's "substantial compliance" rules-to amend the terms of a life insurance policy-are relatively forgiving, as they are in Kentucky. See Bergen, 776 P.2d at 663 (requiring only that an insured take "reasonable steps to bring about a change" in the policy (quotation simplified)); see also Wentworth, 238 P. at 654 (citing various exceptions to "strict compliance" with the terms of a policy when a party does all that they can to make the change but for some reason that change does not occur). In other words, if the Children can show that Father- Agent's client-substantially complied with the Policy's requirements for changing beneficiaries, then they will have a valid claim sounding in contract, which means that-under economic loss principles-they do not also have a remedy in tort.
¶43 For these reasons, the Children can state no valid tort claim against American Family, either directly or through Agent. On this basis, we affirm the district court's dismissal of the Children's fourth cause of action.
CONCLUSION
¶44 In their complaint, the Children have not set forth facts that-even construed liberally-could entitle them to relief on claims for unilateral mistake or negligence. We therefore affirm the district court's order dismissing the Children's third and fourth causes of action. But the Children have alleged facts that, if true, could entitle them to relief on claims for breach of contract (as third-party beneficiaries) and mutual mistake. We therefore reverse the district court's order dismissing the Children's first and second causes of action, and remand this case for further proceedings consistent with this opinion.
POHLMAN, Justice (concurring in part and dissenting in part):
¶45 I concur in part and respectfully dissent in part.
¶46 Part II.A: Mutual Mistake. I agree with the majority's conclusion in Part II.A that the district court erred in concluding that the Children's claim for mutual mistake was time-barred. See supra ¶¶ 18-21. But unlike the majority, I would affirm the dismissal of the mutual mistake claim for failure to state a claim.
¶47 As the majority notes, a contract may be reformed if a plaintiff "show[s] that, 'at the time the contract is made, the parties make a mutual mistake about a material fact, the existence of which is a basic assumption of the contract.'" Supra ¶ 23 (quoting Rocky Ford Irrigation Co. v. Kents Lake Reservoir Co., 2020 UT 47, ¶ 73 n.29, 469 P.3d 1003); see also E & H Land, Ltd. v. Farmington City, 2014 UT App 237, ¶ 25, 336 P.3d 1077. American Family argues that the Children cannot make this showing because, among other things, the alleged mutual mistake was not made at the time of contracting-that is, when the policy was created in 2014. The majority rejects this argument, concluding that the purported change in beneficiaries created a new contract in 2015 and thus the Children have sufficiently alleged that the claimed mutual mistake occurred at the time of contracting. Supra ¶ 23. But even if the majority is correct that a change in beneficiaries creates a new contract, I cannot agree with my colleagues' ultimate assessment because it overlooks that the instrument the Children seek to reform is the 2014 contract. Indeed, there is no other instrument to reform. Thus, I fail to see how the Children can succeed on their claim as stated.
¶48 Further, I believe the Children's claim for reformation fails for the additional reason that they have not alleged that the parties (whether in 2014 or 2015) made a mutual mistake about a material fact. Although we generally construe complaints liberally, "[r]eformation of a contract is an equitable remedy which must be pled with particularity." Lloyd's Unlimited v. Nature's Way Mktg., Ltd., 753 P.2d 507, 511 (Utah Ct. App. 1988); see also Briggs v. Liddell, 699 P.2d 770, 772 (Utah 1985) ("[B]ecause courts are reluctant to change contractual obligations and rights, the party seeking reformation must plead the circumstances constituting the mistake with particularity."); Utah R. Civ. P. 9(c) ("In alleging fraud or mistake, a party must state with particularity the circumstances constituting fraud or mistake."). I do not believe the complaint meets this standard.
¶49 The Children allege that Father informed Agent that he would like to change his beneficiary designation, that Father "thought that he had done enough to make the change," and that "[Agent] knew this." They further allege that Agent "failed to" change the beneficiaries and that Father and Agent "were mutually mistaken as to what the beneficiaries were after this conversation." The majority interprets the Children's allegations as suggesting that Agent understood "that the beneficiaries would be changed pursuant to Father's request." Supra ¶ 18. Even if such a belief about a future event could be considered a material fact, I do not agree that the Children have made such an allegation.
¶50 At most, the Children allege Agent understood that Father wanted to change his beneficiary designation and understood that Father believed he had taken the necessary steps to make that change. But the Children do not allege Agent or American Family understood or agreed that the change had been or even would be made. See Mabey v. Kay Peterson Constr. Co., 682 P.2d 287, 290 (Utah 1984) (explaining that a finding of this kind of mutual mistake "must . . . pivot on a common intent by the parties to agree to one thing"). In fact, in defending their mutual mistake claim in the district court, the Children identified the mutual mistake as either (1) Father and Agent's shared belief that Mother-in-Law "would use the [insurance] proceeds for the care of the children and would not misappropriate the funds" or (2) Father's mistaken belief that "the beneficiary change had been accomplished" while Agent "mistakenly believed that the change did not need to happen." The Children did not purport to have alleged that Father and Agent were mutually mistaken that the beneficiaries had been or even would be changed. And without such an allegation, the Children cannot prove mutual mistake.
¶51 Part II.B: Unilateral Mistake. I concur in Part II.B of the lead opinion in its entirety.
¶52 Part III: Failure to Change Beneficiary According to Decedent's Wishes. I disagree with the majority's conclusion that the district court erred in dismissing the Children's claim for "Failure to Change Beneficiary According to Decedent's Wishes." My disagreement is not with the majority's well-placed view that "we are obligated to interpret the Children's complaint liberally." See supra ¶ 29. Rather, I part ways with my colleagues on this issue because the Children advocated-both in the district court and on appeal-for a different cause of action from the one the majority sustains. In other words, it's not necessarily the absence of a claim for breach of contract in the complaint that warrants dismissal. I would affirm the district court's dismissal because the Children did not even purport to state a claim for breach of contract until their reply brief on appeal.
¶53 Here, the Children elected to bring a claim that they identified as a "failure to change" claim. In stating that claim, the Children did not identify a contract, identify themselves as third-party beneficiaries of that contract, or allege a breach of that contract. See America West Bank Members, LC v. State, 2014 UT 49, ¶ 17, 342 P.3d 224 (stating that, "at a minimum," a claim for breach of contract "must include allegations of when the contract was entered into by the parties, the essential terms of the contract at issue, and the nature of the defendant's breach"). Instead, their claim recited the email exchange between Father and Agent, asserted that Father "substantially conformed to the requirements [of the Policy] to change a beneficiary," and asserted that the beneficiaries were not changed.
¶54 Then, when American Family expressly challenged the validity of such a claim in its motion to dismiss, the Children did not invite the court to liberally construe their claim as stating a third-party beneficiary claim for breach of contract. Instead, the Children argued that "failures to change a beneficiary designation is a cause of action" recognized by Utah law. (Emphasis added.) The Children argued that "[c]ase law and equity both allow for a cause of action for behavior such as this."
¶55 Because the Children did not articulate a tort or contract basis for their "failure to change" claim, the district court took them at their word that they intended to assert a claim independent of those frameworks. After all, "a core component of our adversary system [is] the notion that the plaintiff is the master of the complaint." Utah Stream Access Coal. v. VR Acquisitions, LLC, 2019 UT 7, ¶ 36, 439 P.3d 593; see also id. ¶ 41 ("We judges are neutral arbiters-not advocates. To police that distinction we keep ourselves out of the business of second-guessing the pleading decisions of the parties."). But unable to discern "whether [the claim] sounds in tort, contract, statute, or another area of [the] law," the district court concluded that the claim, as it had been alleged and argued, did not provide American Family "fair notice of the nature and basis of the claim asserted and a general indication of the type of litigation involved." (Quoting Gudmundson v. Del Ozone, 2010 UT 33, ¶ 40, 232 P.3d 1059.)
It is true that in the Children's memorandum in opposition to the motion to dismiss, they argued that they were intended third-party beneficiaries to the Policy between Father and American Family. See supra ¶ 33. But that assertion was made in response to a challenge to the Children's standing. Had the Children intended the court to construe their "failure to change" claim as a claim for breach of contract, it would have been easy enough for them to reference their earlier standing discussion as support for such a construction. But they didn't. Instead, they continued to defend their "failure to change" claim as a stand-alone claim.
¶56 The Children then appealed, framing the issue as follows: "Did the district court err when it concluded that the failure-to-change-beneficiary claim was not a cognizable claim in Utah?" In summarizing their argument, the Children did not assert that the court misconstrued their claim. Instead, the Children argued that "Utah courts-and other courts around the country-have recognized" a "failure-to-change-beneficiary claim" and that the court erred in concluding otherwise. Similarly, in the body of their opening brief, the Children repeated, "Because caselaw in Utah allows a policy holder to change a beneficiary and a beneficiary can sue an insurance company for not making such a change, the claim of failure to change a beneficiary is a cognizable claim in Utah." It was only in reply that the Children argued that their claim could sound in contract.
The cases cited by the Children in support of their assertion have recognized rights of putative beneficiaries to insurance policies to bring legal action seeking declaratory relief relating to their rights under such policies, but they neither establish a "failure to change" claim nor recognize a third-party cause of action for damages for breach of contract. See Bergen v. Travelers Ins. Co. of Ill., 776 P.2d 659, 662 (Utah Ct. App. 1989) (declaring the effectiveness of a purported change of beneficiaries); Wentworth v. Equitable Life Assurance Society, 238 P. 648, 650 (Utah 1925) (declaring which beneficiary had superior rights in the policy).
The majority construes the Children's statement in their opening brief that they were intended third-party beneficiaries of the Policy as an argument in support of a claim for breach of contract. See supra note 8. But that assertion was made in support of their argument that the district court had "improperly dismissed the negligence claim" for lack of standing. I do not agree that it is unduly restrictive to construe the Children's statement as intended to apply to the argument to which it is attached.
¶57 I am not confident that the Children could, as purported third-party beneficiaries, successfully state a claim for breach of contract. My uncertainty is due, at least in part, to the fact that the only argument the Children make in support of such a claim is a limited one appearing for the first time on reply. But regardless of whether the claim could succeed, the Children simply waited too long to assert it. Absent exceptional circumstances, we do not consider issues raised for the first time on appeal as they are not properly preserved for our review. See Turley v. Childs, 2022 UT App 85, ¶ 32, 515 P.3d 942 (declining to consider theories that were "not presented to the district court and are therefore not preserved for appellate review"). Rather, a party seeking to raise an issue must first present it to the district court "in such a way that the court has an opportunity to rule on it." State v. Johnson, 2017 UT 76, ¶ 18, 416 P.3d 443 (quotation simplified). Further, an appellant must raise an issue in its opening brief on appeal or we will consider it waived. See Brown v. Glover, 2000 UT 89, ¶ 23, 16 P.3d 540.
¶58 The Children did not argue to the district court, or to this court in their opening brief on appeal, that their complaint should be construed to state a claim for breach of contract. Rather, they insisted that Utah law recognizes a stand-alone claim for "failure-to-change-beneficiary." As the master of their complaint (and of their appeal), the Children are entitled to assert the claims they believe, in their judgment, are most likely to succeed. But having made that choice, the Children cannot now argue, for the first time on appeal (and only in reply), that their complaint means something else. And while district courts must construe complaints liberally, I do not understand that obligation as requiring them to independently identify claims that the plaintiff does not purport to bring.
The case law the majority cites, see supra ¶¶ 30-31, does not compel a different result. For example, in Alvarez v. Hill, 518 F.3d 1152 (9th Cir. 2008), the plaintiff's "subsequent filings refined the factual allegations and legal theories supporting his . . . claims," by describing "at length" the appropriate legal standards. Id. at 1158. In other words, even if the plaintiff's complaint did not articulate the correct legal theory, his subsequent filings clearly did. Further, unlike the Children here, Alvarez involved a pro se plaintiff, and under Ninth Circuit authority, the district court was required to "afford him the benefit of any doubt in ascertaining what claims he raised in his complaint and argued to the district court." Id. (quotation simplified). Similarly, in McManus v. Fleetwood Enters., Inc., 320 F.3d 545 (5th Cir. 2003), the appellate court construed the plaintiffs' complaint liberally to include the claim advocated for on appeal because the claim was considered by the trial court and because the defendant had not argued to the trial court that the claim had not been properly pleaded. Id. at 551. Had the district court construed the Children's complaint as seeking a claim for breach of contract or had American Family raised the adequacy of the Children's pleading for the first time on appeal, I would view this issue differently.
¶59 Part IV: Negligence. Finally, I agree with the majority's analysis regarding the Children's negligence claim. I disagree, however, with its assessment of the district court's treatment of the negligence claim asserted on behalf of Father's estate. See supra note 11.
¶60 The majority recognizes that the district court opined that a tort claim by Father's estate against American Family would be time-barred. But it does not address the correctness of that determination because it considers the court's statements to be dicta or musings. Supra note 11. Respectfully, I read the record differently.
¶61 The complaint in this case was brought by Shawna Zubiate as conservator for the Children. But in response to standing arguments made in American Family's motion to dismiss, Zubiate argued that if the district court were to conclude that the Children do not have standing to assert certain claims, "it would not be difficult to add Ms. Zubiate as both guardian and personal representative [of Father's estate]." Zubiate then asked the court for "leave to file a motion to amend the complaint should it so decide." And when the issue of standing arose again during oral argument on the motion, Zubiate's counsel twice advised the court that Zubiate would be "fine [with] amending the complaint . . . to just add her other titles," stating, "[I]t is the same person. She's a guardian. She's the personal representative."
¶62 The court took the matter under advisement and, in its written ruling, explained that any negligence claim arising out of Agent's alleged failure to change the beneficiaries "would be [Father's] claim" and "would have to be pursued by [Father's] representative on behalf of his estate." The court then stated that because Zubiate "is the personal representative of [Father's] estate," it would "amend the complaint to indicate the real party in interest is the estate of [Father]" rather than dismiss the claim for lack of standing. The court then concluded that the negligence claim was barred by the applicable statute of limitations and dismissed the claim on that basis.
¶63 On appeal, Zubiate challenged the district court's ruling, arguing that if Father's estate is the proper party, the claim is timely. The parties briefed the issue and neither one asserted that the court erred in amending the complaint, as Zubiate requested, to expand her role so as to include a negligence claim on behalf of Father's estate.
¶64 Had one of the parties challenged the court's amendment of the complaint to expand Zubiate's role in this litigation, it is possible that we would have concluded that the complaint was not properly amended. But neither party challenges the amendment that the court expressly ordered. Thus, based on that order, I view the complaint to have been amended to assert a claim for negligence on behalf of Father's estate, and I accordingly would have addressed the merits of Zubiate's challenge to the dismissal of that claim.