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Scott Gizer and Sophia Lau successfully prevailed in Banner Bank v. First American. In the attached published opinion (click “Download PDF”), the 10th Circuit reversed the district court’s ruling on summary judgment with instructions to enter judgment in favor of Early Sullivan client First American finding that one of the nations’s largest title companies had no duty to defend or indemnify its insured, Banner Bank, in an action that alleged that the Bank’s deed of trust was the subject of a fraudulent transfer.

The district court has previously held that First American had a duty to defend and indemnify Banner, breached the implied covenant of good faith and fair dealing, and was responsible for attorneys’ fees by focusing on a single allegation in the complaint against the Bank stating that the Bank’s deed of trust was invalid. This resulted in an award of damages ($675,000) plus attorneys’ fees in an underlying lawsuit ($159,288), and consequential damages of attorneys’ fees in this case ($130,411.50).

The 10^th Circuit reversed finding that the district court erred by reading this single allegation in isolation, instead of reading the complaint as a whole as required when determining the duty to defend.  When the complaint was read as a whole, the 10^th Circuit noted that First American reached the correct legal conclusion that it did not owe a duty to defend or indemnify; it reached this conclusion after complying with its duty to “diligently investigate the facts to enable it to determine whether a claim is valid,” “fairly evaluate the claim,” and “act promptly and reasonably in rejecting or settling the claim.” Prince v. Bear River Mut. Ins. Co., 56 P.3d 524, 533 (Utah 2002).