                                                                                 F I L E D
                                                                         United States Court of Appeals
                                                                                 Tenth Circuit

                                                                                 DEC 30 1997
                       UNITED STATES COURT OF APPEALS

                                     TENTH CIRCUIT                           PATRICK FISHER
                                                                                      Clerk


 CHARLES P. ADAMS, SANDRA
 GREEN, and BLAIR GREEN, as
 guardian ad litem for Brandon Green and                      Nos. 96-4190
 Stuart Green,                                                and 96-4195

                Plaintiffs - Appellants,
           v.                                                    (D. Utah)
 GENERAL ACCIDENT ASSURANCE                              (D.C. No. 92-CV-516)
 COMPANY OF CANADA,

                Defendant - Appellee.


                               ORDER AND JUDGMENT*


Before SEYMOUR, Chief Judge, ANDERSON, and HENRY, Circuit Judges.




       On January 17, 1986, Charles Adams, Sandra Green, Brandon Green, and Stuart

Green (collectively, “plaintiffs” herein)1 were injured when a trailer carrying a load of



       *
        This order and judgment is not binding precedent, except under the doctrines of
law of the case, res judicata, and collateral estoppel. The court generally disfavors the
citation of orders and judgments; nevertheless, an order and judgment may be cited under
the terms and conditions of 10th Cir. R. 36.3.

       Blair Green is acting as guardian ad litem for the children, Brandon and Stuart
       1

Green, and is included in the collective term “plaintiffs.”
steel trusses overturned in Salt Lake County, Utah. The tractor pulling the trailer was

owned by Western Farms, a Canadian company, driven by John T. Hofer, a citizen of

Canada,2 and insured by defendant General Accident, a Canadian company. The

plaintiffs filed suit against Hofer and his brother, James Hofer, in the Utah courts and

obtained default judgments of approximately one million dollars each to the Greens in

January 1991 and to Adams in December 1991.3 After unsuccessfully attempting to

recover on the judgment, Adams brought this diversity action against General Accident

and others, asserting, under various theories, a right to insurance proceeds under the

policy between General Accident and the Hofers/Western Farms.4 The Greens

intervened. Subsequently, the district court granted General Accident’s motion for

summary judgment on the ground that plaintiffs could not recover against General

Accident under Alberta or Utah law or under the insurance policy.

       On appeal, plaintiffs argue that the district court erred for the following reasons:

(1) as interpreted by Alberta law, an insurance policy between an insurer and its insured


       At the time of the accident, John Hofer was driving the tractor with the permission
       2

of Western Farms. Insurance coverage on the trailer was the subject of a separate action,
addressed by this court in Adams v. Royal Indem. Co., 99 F.3d 964 (10th Cir. 1996).

      Western Farms, the Hofers’ business entity and owner of the tractor, was not
       3

named as a defendant in the state court action.
       4
         The only claims at issue on appeal are those involving defendant General
Accident. Two other insurance companies that were named in the action, Wilshire
Insurance Company and Occidental Fire and Casualty Company of North Carolina, are
not involved in this appeal. Appellants’ Br. at 2 n.1. Several other actions have been
filed in Canada and are still pending.

                                             -2-
allows a judgment creditor of the insured to pursue a direct action against the insurer; (2)

Utah statutes and common law allow a judgment creditor to pursue a direct action against

a tortfeasor’s vehicle insurer for policy proceeds, and no express provision in the policy is

required in addition to the third-party status; and (3) Fed. R. Civ. P. 69 and Utah R. Civ.

P. 64D entitle a judgment creditor to garnish the judgment debtor’s right to performance

of the policy. For the reasons set forth below, we are unpersuaded by these arguments

and conclude that the district court did not err. Accordingly, we affirm.



                                      DISCUSSION

       We review de novo the district court’s grant of summary judgment. Taylor v.

Meacham, 82 F.3d 1556, 1559 (10th Cir.), cert. denied, 117 S. Ct. 186 (1996). Because

this is a diversity action, we apply “the substantive law, including choice of law rules, of

the forum state.” Barrett v. Tallon, 30 F.3d 1296, 1300 (10th Cir. 1994); see also

Mountain Fuel Supply v. Reliance Ins. Co., 933 F.2d 882, 887-88 (10th Cir. 1991) (citing

Klaxon v. Stentor Elec. Mfg. Co., 313 U.S. 487, 491 (1941)). There is no dispute about

what law applies; each party argues that under Alberta or Utah law the result is the same.

We proceed to address the merits under both jurisdictions’ laws. See Schilling v.

Belcher, 582 F.2d 995, 999-1000 (5th Cir. 1978).



             I. Standing Under the Policy as Interpreted by Alberta Law


                                             -3-
       The insurance policy between Hofers/Western Farms and General Accident is the

standard policy prescribed pursuant to the Alberta Insurance Act, R.S.A. ch. I-5. The

plaintiffs are not a party to the insurance policy or directly covered by its terms, nor have

the Hofers/Western Farms assigned to the plaintiffs any rights they may have to enforce

the policy. In fact, plaintiffs do not argue that the policy itself contains a direct action

provision; rather, they argue that the Alberta Insurance Act, R.S.A. ch I-5 § 320(1),

imposes upon the policy an injured party’s right to pursue a direct action against the

insurer. Section 320(1) states:

              Any person who has a claim against an insured for which indemnity
       is provided by a contract evidenced by a motor vehicle liability policy,
       notwithstanding that that person is not a party to the contract, may, on
       recovering a judgment therefor in any province against the insured, have the
       insurance money payable under the contract applied in or towards
       satisfaction of his judgment and of any other judgments or claims against
       the insured covered by the contract and may, on behalf of himself and all
       persons having such judgments or claims, maintain an action against the
       insurer to have the insurance money so applied.

Id. (emphasis added).

       A plain reading of the section indicates that the term “province” includes provinces

of Canada and does not include states in the United States. To avoid this conclusion,

plaintiffs urge us to look at the Insurance Act as a whole, but cite to us no cases in which

Alberta courts have interpreted “province” to include “states.” They also ask us to

acknowledge that Canadian courts are starting to give more deference not only to other

provinces’ judgments but also to foreign judgments and that Alberta courts might


                                              -4-
recognize “the jurisdiction of other Canadian courts, and perhaps truly foreign courts.”

Wilson v. Hull [1995] 128 D.L.R. 4th 403 (Alta. Ct. App.).

       The Alberta Insurance Act does not support these contentions. For instance, other

provisions of the Act contain language explicitly including states within their meaning.

And § 320 itself, in subsection (4)(c), indicates that the right of a person to have

insurance money applied to his judgment or claim is not prejudiced by “any contravention

of the Criminal Code (Canada) or a statute of any province or of any state or the District

of Columbia of the United States of America by the owner or driver of the automobile.”

Thus, because we find that the meaning of “province” in § 320(1) is clear, we reject

plaintiffs’ contentions and hold that § 320(1) allows only judgments from Canadian

courts to serve as a basis for a direct action by a third party against an insurer.5



                       II. Third-Party Standing Under Utah Law

       Adams argues variously that Utah statutory, contract, and/or common law permit

the holder of a judgment against an insured to directly sue the insurer for proceeds



       5
         We also reject plaintiffs’ summary contention (raised in the opening brief only in
a footnote) that Canadian courts generally allow third parties to sue on contracts.
Appellants’ Br. at 11 n.2. Plaintiffs’ main case in support of this contention is not
directly on point and is from an Ontario lower court. See Quick-Run Courier Ltd. v.
Abbe Ins. Brokers Ltd. [1993] 18 C.C.L.I. (2d) 215 (Ont. Gen. Div.). Coronation Ins. Co.
v. Taku Air Transp. Ltd. [1991] 3 S.C.R. 622, the Canadian Supreme Court case plaintiffs
cite in support of their argument, is also inapposite because it is based on a statutory right
to sue, not on general third-party rights.

                                              -5-
available under a vehicle insurance policy. As indicated above, it is clear that the policy

between Hofers/Western Farms and General Accident does not itself confer any contract

rights on the plaintiffs, so we turn to the questions of Utah statutes and common law.



                                      A. Utah Statutes

       Utah Code Ann. § 31A-22-201 provides that liability insurance policies must

include a provision “that the bankruptcy or insolvency of the insured may not diminish

any liability of the insurer to third parties, and that if execution against the insured is

returned unsatisfied, an action may be maintained against the insurer to the extent that the

liability is covered by the policy.” Section 31A-22-202 provides:

               No insurance contract insuring against loss or damage through legal
       liability for the bodily injury or death by accident of any person, or for
       damage to the property of any person may be retroactively abrogated to the
       detriment of any third-party claimant by any agreement between the insurer
       and insured after the occurrence of any injury, death, or damage for which
       the insured may be liable. This attempted abrogation is void.

       These statutes apply only to insurance policies, applications, and certificates that

are:

       (a) delivered or issued for delivery in this state [Utah];
       (b) on property ordinarily located in this state;
       (c) on persons residing in this state when the policy is issued; and
       (d) on business operations in this state.

Utah Code Ann. § 31A-21-101(1). The Hofers’ policy was issued and delivered in

Alberta on property ordinarily located in Alberta for persons residing in Alberta.


                                               -6-
Plaintiffs do not allege that the Hofers or Western Farms were conducting “business

operations” in Utah for purposes of subsection (d). The record indicates that Western

Farms is a grain farming business in Canada, that John Hofer had moved to Arizona

seeking work for the winter, that he was hauling a load in Utah for the first time on the

day of the accident, Appellants’ App. Vol. I at 118-19, 123, and that apparently the policy

was issued on the tractor for “farm use” within a 50-mile radius of the Alberta farm. Id.

at 46, 51, 108. These minimal operations fall under the exception provided in § 31A-21-

101(2)(c) for operations which are “incidental or subordinate” to operations outside of

Utah. Moreover, §§ 31A-22-201 and -202 do not go so far as to grant independent

standing to an injured party in the absence of such language in the policy.6 As indicated

above, even if they did, the statutes would not apply to this policy.7 Thus, Utah’s




       6
        Some states’ statutes provide for direct actions by injured parties against insurers
independent of policy language. Some statutes allow the suit prior to obtaining a
judgment against the insured tortfeasor, see, e.g., La. Rev. Stat. Ann. § 22:655; Esteve v.
Allstate Ins. Co., 351 So. 2d 117, 120 (La. 1977), and some require that judgment against
the insured be obtained before the direct action against the insurer. See, e.g., Ala. Code
§ 27-23-2; Maness v. Alabama Farm Bureau Mut. Cas. Ins. Co., 416 So. 2d 979, 981-82
(Ala. 1982). The reason for the enactment of such direct action statutes is to alter the
common law prohibition, because of a lack of privity, against suits by injured parties
based on a policy. 12A George J. Couch et al., Couch on Insurance § 45:785 (2d rev. ed.
1981).

       Although the parties do not raise the issue, the only Utah statute that applies to the
       7

Hofers’ insurance policy is Utah Code Ann. § 41-12a-301(2)(b)(i), which requires that a
non-resident owner of a vehicle that is present in Utah for less than 90 days must
“maintain the type and amount of owner’s or operator’s security required in his place of
residence.” There is no argument that the Hofers have failed to do this.

                                             -7-
statutory scheme does not permit plaintiffs to bring a direct action against General

Accident for collection of their judgments against the Hofers.



                                  B. Utah Common Law

       Plaintiffs argue that Utah case law and policy combine to provide them standing to

sue General Accident directly. They claim that, as injured parties, they are intended third-

party beneficiaries of the insurance policy and as such need not be privy to the contract in

order to sue thereon. We find scant support for this proposition.

       Plaintiffs concede that no Utah case has expressly addressed whether a third-party

judgment creditor may sue directly on a policy absent permissive policy language. In

fact, they have filed a motion to certify the issue to the Utah Supreme Court. Utah courts

have held in three related situations that injured third parties may not directly sue an

insurer. First, an injured party may not join an insurer with its insured tortfeasor in the

same underlying tort suit. See Campbell v. Stagg, 596 P.2d 1037, 1039 (Utah 1979);

Young v. Barney, 433 P.2d 846, 847-48 (Utah 1967). “In Utah, a plaintiff must direct his

action against the actual tortfeasor, not the insurer” because an injured party “has no

direct cause of action against the insurer.” Campbell, 596 P.2d at 1039. Second, the

holder of a judgment against an insured may not pursue a tort claim against the insurer

based on a wrongful denial of insurance coverage. Auerbach Co. v. Key Security Police,

Inc., 680 P.2d 740, 742-43 (Utah 1984). Third, an injured party may not sue an insurer


                                             -8-
for bad faith or breach of a covenant of good faith under either tort or contract theories.8

Savage v. Educators Ins. Co., 908 P.2d 862, 865-66 (Utah 1995); Ammerman v. Farmers

Ins. Exch., 430 P.2d 576, 577-78 (Utah 1967); Pixton v. State Farm Mut. Auto. Ins. Co.,

809 P.2d 746, 749-50 (Utah Ct. App. 1991).

       General principles of Utah law that apply to contracts, including insurance

policies, Phoenix Indem. Ins. Co. v. Bell, 896 P.2d 32, 35 (Utah Ct. App. 1995), do not

aid plaintiffs’ argument either. The Utah Supreme Court has applied the Restatement

(Second) of Contracts § 302 to give intended beneficiaries standing to sue on a contract

where the intentions of the parties to the contract, as determined by the contract’s terms

and the surrounding facts and circumstances, Tracy Collins Bank & Trust v. Dickamore,

652 P.2d 1314, 1315 (Utah 1982); Ron Case Roofing & Asphalt Paving, Inc. v.

Blomquist, 773 P.2d 1382, 1386 (Utah 1989), indicate that they “clearly intended to

confer a separate and distinct benefit upon the third party.” Broadwater v. Old Republic

Sur., 854 P.2d 527, 536 (Utah 1993). However, plaintiffs do not qualify as intended

beneficiaries under § 302, which provides:

       (1) Unless otherwise agreed between promisor and promisee, a beneficiary
       of a promise is an intended beneficiary if recognition of a right to
       performance in the beneficiary is appropriate to effectuate the intention of
       the parties and either



       Although plaintiffs appear to have dropped these bad faith contentions on appeal,
       8

see Reply Br. at 2-3, they were included as the first and fourth causes of action both in
Adams’ Amended Complaint, see Appellants’ App. Vol. I at 4-6, and in the Greens’
Complaint in Intervention. See id. at 24-26.

                                             -9-
              (a) the performance of the promise will satisfy an obligation of the
       promisee to pay money to the beneficiary; or
              (b) the circumstances indicate that the promisee intends to give the
       beneficiary the benefit of the promised performance.
       (2) An incidental beneficiary is a beneficiary who is not an intended
       beneficiary.

Restatement (Second) of Contracts § 302 (1979).

       While it is true that injured parties may benefit from an automobile insurance

policy between the tortfeasor and its insurer if the insurer pays, the intent of the parties to

the policy is to protect the financial well-being of the insured, not to benefit the injured

party. This intent is reflected in the Hofers/Western Farms policy, where General

Accident agrees to pay and to defend its insured, not an injured party. See Appellants’

App. Vol. I at 54. Thus, the benefit flows to the injured party only incidentally. See

Restatement (Second) of Contracts § 302, cmt. b, illus. 3, cmt. c, illus. 8 (1979); 12A

George J. Couch et al., Couch on Insurance §§ 45:784, 45:785 (2d rev. ed. 1981); W.

Page Keeton et al., Prosser and Keeton on the Law of Torts § 82, at 586 (5th ed. 1984).

       One example of this intentional/incidental distinction under Utah law arises in the

context of a contractual promise by one party to indemnify the other contractual party.

The existence of this indemnification clause—and the potential benefit that flows to third

parties as a result of the indemnification—is not sufficient to confer intended beneficiary

status. Ron Case Roofing, 773 P.2d at 1387; Gordon v. CRS Consulting Eng’rs, Inc., 820

P.2d 492, 493 (Utah Ct. App. 1991). The Alberta Standard Automobile Policy between

General Accident and Hofers/Western Farms provides:

                                             -10-
               The Insurer agrees to indemnify the Insured and, in the same manner
       and to the same extent as if named herein as the Insured, every other person
       who with his consent personally drives the automobile, or personally
       operates any part thereof, against the liability imposed by law upon the
       Insured or upon any such other person for loss or damage arising from the
       ownership, use or operation of the automobile and resulting from bodily
       injury to or death of any person or damage to property.

Appellants’ App. Vol. I at 54. Although the Hofers/Western Farms policy is not strictly

an indemnity policy, the benefits of the policy are intended to flow directly to the insured,

not to an injured party.

       Our inclination upon review of general contract principles that injured parties in

Utah are not intended beneficiaries of insurance policies is consistent with the Utah

Supreme Court’s decision in Dairyland Ins. Corp. v. Smith, 646 P.2d 737 (Utah 1982).

There, the court rejected an injured party’s reliance on Shingleton v. Bussey, Fla., 223 So.

2d 713 (Fla. 1969), which “held that an injured party should be treated as a third-party

beneficiary under the tortfeasor’s insurance contract. That is not the law in this

jurisdiction . . . .” Dairyland, 646 P.2d at 740. This case, in which an injured party

counterclaimed against an insurer who brought a suit seeking a declaratory judgment as to

its liability on an automobile policy, while not dispositive, certainly adds another brick to

the wall restraining injured third parties from directly suing insurers.

       In support of their third-party beneficiary argument, plaintiffs cite Ellis v. Gilbert,

429 P.2d 39 (Utah 1967), and Peterson v. Western Cas. & Sur. Co., 425 P.2d 769 (Utah

1967). Peterson does state that “[a]s a member of the public injured by the insured,


                                             -11-
plaintiff became a third-party beneficiary of the policy,” 425 P.2d at 771. However in

Peterson, the injured party was granted standing to sue the insurer by virtue of a provision

in the policy itself, not by operation of law. Peterson, 425 P.2d at 770. And Ellis, 429

P.2d at 41-42, merely repeats the Peterson language in granting the plaintiff’s request that

the tortfeasor disclose any existing insurance policy that might contain a provision

granting the injured party the right to sue the insurer directly.

       Plaintiffs also rely on Montgomery v. Preferred Risk Mut. Ins. Co., 411 P.2d 488

(Utah 1966), and AOK Lands, Inc. v. Shand, Morahan & Co., 860 P.2d 924 (Utah 1993).

These cases are distinguishable as well. In Montgomery, the Utah Supreme Court, in

allowing a suit by the injured party against the insurer, says only that the action is

“brought on an automobile insurance policy” and does not indicate whether the policy

itself provided for the direct action. 411 P.2d at 489. Similarly, in AOK Lands the court

mentions in a footnote that “nothing would have prohibited [the injured party, suing to

collect on an errors and omissions policy,] from recovering under the Policy as a third-

party beneficiary if the Policy’s provisions were met.” 860 P.2d at 927 n.14. Again, the

court does not say what provisions the policy included but implies that those provisions

would have to exist for the suit to be allowed.

       In sum, we are convinced that Utah law does not grant injured parties such as

plaintiffs standing to directly sue an insurer.




                                             -12-
                           III. Garnishment Under Utah Law

       Finally, plaintiffs argue that they are entitled to garnish the judgment debtor’s right

to performance of the insurance policy under Fed. R. Civ. P. 69, which incorporates

Utah’s garnishment procedures, Utah R. Civ. P. 64D.9 The district court did not address

this contention in its memorandum order granting summary judgment for defendant, and

General Accident claims the issue was not adequately raised below. Plaintiffs respond by

pointing to their complaints and to a section of their memorandum in opposition to

summary judgment, which states: “Mr. Adams does have a judgment against General

Accident’s insured. Moreover, Mr. Adams does claim that General Accident holds

property which belongs to John Hofer and/or Mr. Adams.” Appellants’ App. Vol. II at

241.

       We agree with General Accident that the issue is waived for two reasons. First,

nowhere before the district court do plaintiffs set forth the argument that they have here

with respect to Fed. R. Civ. P. 69 and Utah R. Civ. P. 64D. Second, the burden is on the

party seeking to have the court rule in its favor to bring the basis for such a ruling to the

court’s attention, and plaintiffs have not met that burden. Consequently, we decline to



       9
         Plaintiffs argue that Alberta law also permits garnishment of the judgment
debtor’s right to policy proceeds. We decline to address this contention as well because,
in addition to not adequately raising the issue before the district court, plaintiffs have
failed to support their broad assertion on appeal with relevant authority. See American
Airlines v. Christensen, 967 F.2d 410, 415 n.8 (10th Cir. 1992); Phillips v. Calhoun, 956
F.2d 949, 953 (10th Cir. 1992); Fed. R. App. P. 28(a)(6).

                                             -13-
address the plaintiffs’ argument because the issue was raised below only “in a vague and

ambiguous way,” Lyons v. Jefferson Bank & Trust, 994 F.2d 716, 722 (10th Cir. 1993),

and was not pursued in the trial court. See Cavic v. Pioneer Astro Indus., 825 F.2d 1421,

1425 (10th Cir. 1987); see also O’Connor v. City & County of Denver, 894 F.2d 1210,

1214 (10th Cir. 1990).



                                    CONCLUSION

      For the foregoing reasons, the district court’s grant of summary judgment is

AFFIRMED. The motion for certification to the Supreme Court of Utah is DENIED.

                                                 ENTERED FOR THE COURT


                                                 Stephen H. Anderson
                                                 Circuit Judge




                                          -14-
