Utah State Court Applying California Law Narrowly Interprets “Related” Claims
By David A. Gauntlett*
Introduction
In Hitchman Fiduciaries, LLC v. Dominion Ins. Servs., No. 250404260, 2026 Utah Dist. LEXIS 2 (2026), a Utah State court evaluated several aspects of California coverage law in adjudicating whether various claims over several years were “Related” and therefore restricted to the limits of liability under a single policy. The underlying actions arose from alleged breaches of fiduciary duty (among other allegations) by Bruce and Lee Ann Hitchman (the “Hitchmans”)—trustees of the Beverly C. Morgan Family Trust.
Claims Were Not “Related”
All parties agreed that the underlying actions asserted at least one potentially covered claim that triggered the insurer’s duty to defend. The dispute was over whether all claims “ar[ose] out of the same, continuing or related Professional Services,” which would have made them “Related” and subject to the limits of a single policy. Formal litigation began with a 2018 probate suit seeking three forms of relief: (1) an order suspending and removing the Hitchmans as interim co-trustees, (2) review of accounting and surcharges, and (3) damages for breach of fiduciary duty.
The insurer argued that subsequent claims alleged in 2019 and 2020 were “Related,” but the court disagreed. The court highlighted several distinctions among the claims in each year:
The "Claims" brought in each year seek distinct forms of redress based on distinct legal theories. The "Claims" triggering each year's policy are also brought by different entities (or, in the case of 2018 vs. 2019, the same entity acting in different capacities). These differences are more than enough to distinguish this case from Morden [v. XL Specialty Ins., 903 F.3d 1145 (10th Cir. (Utah) 2018)] and avoid falling within the "inconsequential" variations standard adopted there. While the present facts do match Morden and the Brecek case analyzed therein in that the underlying allegations are asserted against the "same entity," this is not a case in which all the "Claims" feature the "same victims" or "use[d] the same techniques." Morden, 903 F.3d at 1152-53.[1]
Court’s Conclusion Was Founded on Narrow Construction of “Arising out of”
Despite the Ninth Circuit’s clear determination in My Choice Software, LLC v. Travelers Cas. Ins. Co. of Am., 823 F. App'x. 510, 512 (9th Cir. (Cal.) Aug. 19, 2020) that “arising out of” must be interpreted narrowly in any limitation on coverage, insurers continue to argue that California law allows for the phrase to be read broadly when used in an exclusion. The Hitchman court directly addressed this issue, dedicating an entire section of its decision to this point.
The court traced the lineage of My Choice to the original source of authority for that court’s determination: State Farm Mut. Auto. Ins. Co. v. Partridge, 10 Cal. 3d 94, 103 (1973). The court quoted the California Supreme Court’s holding in Partridge that:
Whereas coverage clauses are interpreted broadly so as to afford the greatest possible protection to the [citations], exclusionary clauses are interpreted narrowly against the insurer. [citations] . . .
[T]he fact that an accident has been found to "arise out of the use" of a vehicle for purposes of an automobile policy is not necessarily determinative of the question of whether that same accident falls within a similarly worded exclusionary clause of a homeowner's policy.[2]
The Hitchman court also considered and dismissed the contrary holding in Cont'l Cas. Co. v. Richmond, 763 F.2d 1076 (9th Cir. 1985). As the court noted, the decision “adopted legal analysis inconsistent with Partridge,” which is binding authority on any court purporting to apply California law.[3]
The court also addressed the analysis in Morden v. XL Specialty Ins., 903 F.3d 1145, 1153 (10th Cir. (Utah) 2018), which featured similar policy language to that before the court. In Morden, the court considered whether various "Wrongful Acts" were "interrelated" based on analogous policy language. Claims were defined as "interrelated" if they were "based on, arising out of, directly or indirectly resulting from, in consequence of, or in any way involving any of the same or related or series of related facts, circumstances, situations, transactions or events." In that case, the court sided with the insurer because "the Wrongful Acts relating to Vermillion were committed by the same entity (Belsen Getty), against the same victims (the Mordens and other clients), using the same techniques (understating risk, overstating upside potential, and concealing financial interests of the advisers), during the same time frame (2005-2009)."[4]
The same was not true in the present case. As the court noted, the claims against the Hitchmans “alleg[ed] a multitude of conduct that arose in three different years and involv[ed] different parties (beneficiary, trustee, and strangers) brought on different theories and based on entirely separate sets of factual allegations.”[5] The court noted that these distinctions were not “inconsequential” or “minor variations” as prior Tenth Circuit case authority had characterized claims the court determined were related.[6]
“Split Retroactive Date” Did Not Limit Coverage
Two of the three policies at issue contained language stating “General Change Endorsement: Split Restroactive Date of 2019-01-01 for Higher Limits of $2,000,000/$4,000,000”[7] The insurer argued that this language “provides liability limits of $1,000,000 per claim / $2,000,000 aggregate for claims arising before January 1, 2019, and $2,000,000 per claim / $4,000,000 aggregate for claims arising after January 1, 2019.”[8]
The court began its analysis of this issue by noting that this term “is not defined, explained, or used anywhere else in the policies.”[9] It continued:
Under Utah law, Underwriters cannot unilaterally "explain" a term in the contract many years later in a way that is favorable in the current litigation. Even if Underwriters could establish that their policy was not intended to be an integration, they still cannot use a letter sent in 2021, nearly three years later, to explain the intended meaning of their unambiguously inapplicable 2019 policy term. . . . It cannot retroactively reduce limits.[10]
Court Denied Insurer’s Insistence That Discovery Was Necessary
In briefing, the insurer argued that discovery should be allowed prior to a final ruling on the issues before the court. The court again disagreed with the insurer’s view, noting that “[t]he Hitchmans’ motion presents only pure legal issues.”[11] The court was also quick to point out that any uncertainty that would potentially be clarified through discovery was of no moment. Under California law, such factual ambiguity is sufficient to compel an insurer’s duty to defend.[12]
Conclusion
The Hitchman court’s willingness to embrace the policyholder-friendly tenets of California case law should be applauded. All too often, courts are quick to embrace the easy path of concluding that some exclusionary language applies to limit potential coverage. Especially so when a court is forced to work outside its comfort zone by applying the laws of another state.
*David A. Gauntlett is a principal of Gauntlett & Associates and represents policyholders in insurance coverage disputes regarding intellectual property, antitrust, and business tort claims, as well as in the underlying actions. Mr. Gauntlett can be reached at (949) 514-5662 or dag@gauntlettlaw.com. For more information, visit Gauntlett & Associates at www.gauntlettlaw.com.
[1]Hitchman Fiduciaries, 2026 Utah Dist. LEXIS 2 at *25–26.
[2]Partridge, 10 Cal. 3d at 101.
[3]Hitchman Fiduciaries, 2026 Utah Dist. LEXIS 2 at *21 (citing Rosen v. State Farm Gen. Ins. Co., 30 Cal. 4th 1070, 1076 (2003) ("It is a well-established rule that an opinion is only authority for those issues actually considered or decided."))
[4]Morden, 903 F.3d at 1152.
[5]Hitchman Fiduciaries, 2026 Utah Dist. LEXIS 2 at *32.
[6]Id. at *23 (citing Morden, 903 F.3d at 1152–53 (“We held that the wrongful acts alleged in three separate arbitration proceedings were interrelated because of several common facts: the same alleged culprits, roughly the same time period (‘from the late 1990s to the mid 2000s’), and similar alleged fraud-selling ‘unsuitable investment products including various types of annuities’ and churning or flipping investment accounts. Id. at 1238. The minor variations in the arbitration claims were inconsequential.”) (emphasis added)).
[7]Id. at *42.
[8]Id.
[9]Id. at *41 (emphasis in original).
[10]Id. at *43–44.
[11]Id. at *50.
[12]Align Tech. v. Federal Ins. Co., 673 F. Supp. 2d 957, 972 (N. D. Cal. 2009) ("Since a factual dispute does not completely eliminate the possibility of coverage, it does not relieve Federal of its duty to defend.")