Cyprus Federal Credit Union v. Cumis Insurance Society

Filing 144

MEMORANDUM DECISION and Order- denying 134 Motion for Judgment as a Matter of Law or Alternatively for a New Trial. See Order for details. Signed by Judge David Sam on 2/11/15. (jmr)

THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF UTAH
CENTRAL DIVISION
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CYPRUS FEDERAL CREDIT UNION,
Plaintiff,

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Case No. 2:10CV00550-DS

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vs.

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CUMIS INSURANCE SOCIETY, INC.,
Defendant.

MEMORANDUM DECISION
AND ORDER

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I. INTRODUCTION
Plaintiff Cyprus Federal Credit Union (“Cyprus”) moves the Court for Judgment
as a Matter of Law, or alternatively, for a New Trial. For the reasons that follow, the
Motion (Doc. #134) is denied.
The full history of this matter is set forth in the many pleadings filed and will not
be repeated here. A jury trial was held on October 8, 2014 to October 10, 2014.
Cyprus made a motion for judgment as a matter of law on October 10, 2014, at the
close of the evidence. That motion was denied and the case submitted to the jury. A
jury verdict was returned in favor of CUMIS Insurance Society, Inc. (“CUMIS”).

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II. DISCUSSION
A. Special Verdict1
Cyprus contends that question 1 of the Special Verdict, related to the
contractual period of limitations, “should not have been allowed because it
misrepresents the applicable law.” Mot. at 5.
1. contractual limitations period
As a preliminary matter, CUMIS asserts that Cyprus waived any objection to the
use of the verdict form question because it “failed to object to the question after the
discussion in Chambers on October 9, 2014, during which the jury instructions and
special verdict form were finalized”, and because “Cyprus failed to make any motion
concerning the jury verdict form, including an initial motion under Rule 50.” Mem. Opp’n
at 2. See also Id., Ex. 1, Ex. 2. Without citation to authority, Cyprus responds, in part,
that “[t]he rules do not allow for judgment as a matter of law with respect to a special
verdict form.” Reply Mem. at 2.
If accurate, Cyprus’ response begs the question why it raises that very issue in
its present motion for judgment as a matter of law. In any event, the Court agrees with
CUMIS that because Cyprus failed to include any special verdict issue in its Rule 50
motion for judgment as a matter of law at the close of evidence, it is precluded from

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Question 1 of the Special Verdict Form asked:

1. When did Cyprus discover the loss?
______ before June 1, 2007. (If checked, please stop your deliberations, have your
foreperson sign the verdict form and advise the Court Clerk.)
______ before October 31, 2007. (If checked, please move on to question #2.)
______ on or before February 7, 2008. (If checked, please move on to question #3.)
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doing so in its present motion.2
Even assuming there was no waiver by Cyprus, its arguments with respect to the
contractual period of limitations fail. Cyprus first asserts that question 1 of the Special
Verdict Form and CUMIS’s argument to the jury misstates the law related to the
applicable limitations period. It’s position is that because “[a]n insurance policy may
not ... limit the time for beginning an action on the policy to a time less than that
authorized by statute”3, the minimum statute of limitations permitted on a first party
insurance claim is “three years after the inception of the loss”4. Cyprus contends that
because the Bond’s contractual limitations period is three years after discovery of loss,
it improperly shortens the time authorized by statute. Cyprus urges this is so because
the inception of loss was the point in time when CUMIS denied Cyprus’ claim.
Cyprus’ position, that the Bond’s contractual limitations period of three years
after discovery of loss does not apply because it improperly shortens the time
authorized by statute, has been previous rejected by the Court and it is again rejected
for the reasons previously stated. Because inception of loss begins the moment that
the loss was incurred or began to accrue, a three-year contractual period of limitations

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See, e.g., Brillhart v. Philips Electronics North America Corp., 179 F.3d 1271,
1275 (10th Cir. 1999) (failure to move for judgment as a matter of law at the close of
evidence forecloses such a motion post-trial); Okland Oil Co. v. Knight, 92 Fed. Appx.
589, 598 (10th Cir. 2003)(“issues not raised in an initial Rule 50(a) motion may not be
asserted in a subsequent post-trial motion for judgment as a matter of law under Rule
50(b)”).
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Utah Code Ann. § 31A-21-313(3)(a).

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Utah Code Ann. § 31A-21-313(1).
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that begins upon discovery of the loss does not shorten the statutory minimum period
providing that no limitations period can be less than three years after the inception of
the loss. See Memorandum Decision and Order at 3-4 (and authorities cited therein)
( Doc. #85) .
The Court also rejects Cyprus’ similar argument relating to Utah Code Ann §
31A-21-313(4)5. After discussing how that statute establishes further limitations on
bringing a first party insurance claim, Cyprus urges that because Utah Code Ann § 31A21-314 provides that an insurance policy may not contain any provision limiting the right
of action against the insurer to less than three years from the date the cause of action
accrues, and because “[a]s a general rule a cause of action accrues when a plaintiff
could have first filed and prosecuted an action to successful completion”6, the
contractual limitation period of three years from discovery of loss impermissibly reduces
the limitations period to less than the date the cause of action accrues. Cyprus
contends that these statutes and relevant case law “make clear [that the] applicable
time frame is 3 years from when the cause of action accrues.” Mot. at 10.
The Court agrees with CUMIS that Cyprus ignores the link between “inception of

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The relevant portions of that statute require an insured to wait to file suit until the
earlier of 60 days after proof of loss has been furnished, or denial of full payment.
Cyprus contends that under § 31A-21-313(4)(a) the statute of limitations begins to run
from proof of loss and not from discovery of loss. Cyprus states that because it
provided proof of loss in August 2008, its cause of action did not accrue until
September 30, 2008, after which it had until September 30, 2011 to file suit.
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State v. Huntington-Cleveland Irrigation Co., 52 P.3d 1257, 1262 (Utah
2002)(quoting DOIT, Inc. v. Touch, Ross & Co., 926 P.2d 835, 843 (Utah 1996)(internal
quotation marks omitted).
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loss” and “accrual”. See Memorandum Decision and Order at 3-4 (and authorities cited
therein)

( Doc. #85) . The Court further agrees with CUMIS that Cyprus’ “delay in

providing notice and a proof of loss to CUMIS does not render the contractual period of
limitations null or the statute requiring Cyprus to file its lawsuit within three years of
inception of the loss obsolete.” Mem. Opp’n at 6.
Indeed, if Cyprus’s interpretation that “accrual” and “inception” meant
different things and triggered different timelines, Utah Code Ann § 31A21-313, which requires Cyprus to file its lawsuit within three years of the
“inception of the loss,” would directly conflict with Utah Code Ann. § 31A21-314, which says an insured’s right of action cannot be limited to “less
than three years from the date the cause of action accrues.” Courts
presume that legislatures actually pass laws that make sense and avoid
absurd results and, so, Cyprus’s nonsensical interpretation fails. See, e.g.
Griffin v. Ocianic Contractors, 458 U.S. 564, 575 (1982)(citations omitted).
Id. (emphasis in original).
B. Prejudice
Cyprus also asserts that it is entitled to judgment as a matter of law with respect
to the late notice defense because CUMIS failed to present any evidence regarding
prejudice. See Utah Code Ann. § 31A-21-312(2) ( “Failure to give notice or file a proof
of loss as required by (1)(b) does not bar recovery under the policy if the insurer fails to
show it was prejudiced by the failure”).
The Court, agrees with CUMIS that because the jury did not reach the issue of
prejudice, Cyprus’ position is moot. See Verdict Form at 2 (Doc. #129). And contrary
to Cyprus’ position, that “the issue of prejudice should have been decided by the Court
when properly raised by Cyprus in its oral motion after the close of evidence”, the Court
ruled that CUMIS had elicited evidence from Cyprus’ witnesses on the issue of whether

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it was prejudiced. See Mem. Opp’n, Ex. 1 at 5-6. Moreover, the Court previously
rejected Cyprus’ argument when it denied Cyprus’ motion in limine (Doc. #102). See
(Doc. #121) (order denying motion).
Cyprus’ final position that CUMIS was required to have an expert testify about
the standard necessary to show prejudice or discovery of loss is also rejected. As
CUMIS notes,
Cyprus’ own witnesses provided testimony from which the jury could
conclude that those witnesses and, therefore, Cyprus “bec[a]me aware of
facts which would cause a reasonable person to assume that a loss of a
type covered under this Bond has been or will be incurred, regardless of
when the act or acts causing or contributing to such loss occurred. The
exact amount of details of loss may not be known at the time of
discovery.”
Mem. Opp’n at 7 (citing Mot. at 12-13 (quoting CUMIS Bond)). Under the facts
presented, an expert was not required to determine how a reasonable person would
act.
III. CONCLUSION
For the reasons stated, as well as generally for the reasons set forth by CUMIS
in its opposing pleading, Cyprus’ Motion for Judgment as a Matter of Law or
Alternatively for a New Trial (Doc. #134) is Denied.
IT IS SO ORDERED.
DATED this 11th day of February, 2015.
BY THE COURT:

DAVID SAM
SENIOR JUDGE
UNITED STATES DISTRICT COURT
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