              This opinion is subject to revision before final
                    publication in the Pacific Reporter

                               2013 UT 4

                                  IN THE

      SUPREME COURT OF THE STATE OF UTAH
                WORKERS COMPENSATION FUND,
                     Plaintiff and Appellee,
                                v.
              UTAH BUSINESS INSURANCE COMPANY,
                    Defendant and Appellant,

                            No. 20110744
                        Filed January 25, 2013

                     Third District, Salt Lake
                   Honorable Paul G. Maughan
                         No. 100914170

                               Attorneys:
         James R. Black, Matthew J. Black, Salt Lake City,
                          for appellee
         Michael E. Dyer, Scott R. Taylor, Salt Lake City,
                          for appellant

  JUSTICE DURHAM authored the opinion of the Court, in which
   CHIEF JUSTICE DURRANT, ASSOCIATE CHIEF JUSTICE NEHRING,
            JUSTICE PARRISH, and JUSTICE LEE joined.

JUSTICE DURHAM, opinion of the Court:
                         INTRODUCTION
   ¶1      Utah Business Insurance Company (UBIC) appeals the
district court’s order granting partial summary judgment to Workers
Compensation Fund (WCF). UBIC also appeals the denial of two
motions. We affirm and remand to the district court for resolution of
the remaining issues.
                          BACKGROUND
   ¶2      This case arises from an industrial accident that occurred
while an employer, Pioneer Roofing Company (Pioneer), was
insured under two separate workers compensation insurance
policies: one with WCF (the WCF Policy) and one with UBIC (the
UBIC Policy). Pioneer’s coverage with WCF began on April 1, 2007,
and ended on April 1, 2008. During this coverage period, Pioneer
     WORKERS COMP v. UTAH BUSINESS INSURANCE COMPANY
                   Opinion of the Court

decided to change insurers and obtained replacement workers
compensation coverage with UBIC. The UBIC Policy stated over
thirty times that its effective date was February 22, 2008,
approximately five weeks before the WCF Policy terminated. Both
policies were in effect on March 21, 2008, when Pioneer employee
Russell Antone suffered a catastrophic workplace injury. WCF was
promptly notified of Mr. Antone’s injury and has paid all of his
medical expenses and weekly compensation benefits.
   ¶3     Each policy contains the following “Other Insurance”
clause:
      We will not pay more than our share of benefits and
      costs covered by this insurance and other insurance or
      self insurance. Subject to any limits of liability that may
      apply, all shares will be equal until the loss is paid. If
      any insurance is exhausted, the shares of all remaining
      insurance will be equal until the loss is paid.
Nearly two years after the accident, WCF became aware of the
overlapping coverage and notified UBIC that it was seeking
reimbursement for UBIC’s “proportionate share of the costs incurred
to date and the future ongoing costs associated with Mr. Antone’s
March 21, 2008 industrial injury.” After further correspondence
between the two insurers, WCF served UBIC with a summons and
complaint in which it claimed that UBIC was either solely or jointly
liable for Mr. Antone’s insurance benefits.
   ¶4    After UBIC received the complaint, Pioneer president John
Stout informed UBIC that his intent was to have WCF, and not
UBIC, cover Mr. Antone’s claim. Mr. Stout asked UBIC to change the
UBIC Policy’s effective date from February 22, 2008, to March 31,
2008. UBIC president Ron Nielsen subsequently sent an internal
email instructing his staff to amend the UBIC Policy as Mr. Stout
requested and to refund Pioneer’s February and March premiums.
  ¶5      WCF filed a partial summary judgment motion asking the
court to hold UBIC jointly liable on Mr. Antone’s claim, based on the
“Other Insurance” clauses in the policies. UBIC filed a
countermotion for summary judgment, arguing that the court
should apply the so-called targeted tender doctrine, a minority rule
under which an insurer does not become liable for a loss unless the
policyholder tenders a claim to it. Under the targeted tender
doctrine, UBIC would not be liable on Mr. Antone’s claim because
Mr. Stout never tendered the claim to UBIC. In the alternative, UBIC


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moved under rule 56(f) for additional discovery in order to support
its theory that Pioneer and UBIC were mutually mistaken
concerning the policy coverage dates. When these motions were
filed, discovery had been ongoing for approximately three months.
   ¶6     The district court granted WCF’s motion for partial
summary judgment and denied UBIC’s countermotion for summary
judgment and its motion for additional discovery. UBIC timely
appealed. We have jurisdiction pursuant to Utah Code section 78A-
3-102(3)(j).
                     STANDARD OF REVIEW
   ¶7      “We review summary judgments for correctness, giving no
deference to the [district] court’s decision.” Bahr v. Imus, 2011 UT 19,
¶ 16, 250 P.3d 56. “We review the denial of a rule 56(f) motion for an
abuse of discretion. We will not reverse the district court’s decision
to grant or deny a rule 56(f) motion for discovery unless it exceeds
the limits of reasonability.” Overstock.com, Inc. v. SmartBargains, Inc.,
2008 UT 55, ¶ 20, 192 P.3d 858 (citation omitted) (internal quotation
marks omitted).
                             ANALYSIS
   ¶8     We first examine the targeted tender doctrine and
determine that it is incompatible with Utah’s statutory workers
compensation scheme. We therefore determine that UBIC is jointly
liable with WCF on Mr. Antone’s claim and that WCF is entitled to
equitable contribution from UBIC. Finally, we hold that the district
court did not abuse its discretion in denying UBIC’s motion for
additional discovery.
  I. THE TARGETED TENDER DOCTRINE IS INCOMPATIBLE
       WITH UTAH WORKERS COMPENSATION LAW
   ¶9    The targeted tender doctrine is a minority rule that has
been adopted in a few states but has never been applied in the
context of workers compensation. Under the targeted tender
doctrine, an insurer becomes liable on a claim only if the
policyholder tenders the claim to the insurer. Thus, the rule permits
a policyholder to choose which insurer, if any, covers its loss.
   ¶10 For example, Illinois and Washington have adopted the
targeted tender doctrine, though neither state has applied it to
workers compensation insurance. John Burns Constr. Co. v. Ind. Ins.
Co., 727 N.E.2d 211, 215, 217 (Ill. 2000) (holding that the insured “had
the right to choose which insurer would be required to defend and


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                   Opinion of the Court

indemnify it” and refusing to give effect to the “other insurance”
clauses in the insurance contracts); Mut. of Enumclaw Ins. Co. v. USF
Ins. Co., 191 P.3d 866, 874 (Wash. 2008) (concluding that because an
insured “chose not to tender to” one insurer, that insurer “had no
legal obligation to defend or indemnify” the insured). The federal
district court for the District of Montana has also interpreted
Montana law as recognizing the targeted tender doctrine. Cas. Indem.
Exch. Ins. Co. v. Liberty Nat’l Fire Ins. Co., 902 F. Supp. 1235, 1239 (D.
Mont. 1995) (“[W]here the insured has failed to tender the defense
of an action to its insurer, the latter is excused from its duty to
perform under its policy or to contribute to a settlement procured by
a coinsurer.”)
   ¶11 A California appeals court, on the other hand, has
explicitly rejected the targeted tender doctrine as “inconsistent with
California law,” holding that “the right to equitable contribution
exists independently of the rights of the insured.” Am. States Ins. Co.
v. Nat’l Fire Ins. Co., 135 Cal. Rptr. 3d 177, 187 n.8 (Ct. App. 2011),
review denied (internal quotation marks omitted). The court held that
“where multiple insurers . . . share equal contractual liability for the
primary indemnification of a loss or the discharge of an obligation,
the selection of which indemnitor is to bear the loss should not be left
to the often arbitrary choice of the loss claimant.” Id. (alteration in
original) (internal quotation marks omitted).
   ¶12 Without addressing the question in terms of general
insurance law, we conclude that the targeted tender doctrine is
inconsistent with Utah workers compensation law. Workers
compensation in Utah is a matter of “clear and substantial public
policy” and is “of overarching importance to the public.” Touchard
v. La-Z-Boy Inc., 2006 UT 71, ¶¶ 13, 17, 148 P.3d 945 (internal
quotation marks omitted). In fact, workers compensation law
“furthers a ‘public interest [that] is so strong” that aspects of it are
placed “beyond the reach of contract.” Id. ¶ 16 (alteration in original)
(internal quotation marks omitted). For example, an employee’s
waiver of the right to workers compensation is invalid, as is an
employee’s agreement to pay any portion of the workers
compensation insurance premium. UTAH CODE § 34A-2-108(1)–(2).
The Utah Labor Commission’s Division of Industrial Accidents
(Division) administers the state’s workers compensation program,
and maintains a database of workers compensation coverage status,
which insurers must update within thirty days of commencement of
coverage and within ten days of cancellation. See Id. § 34A-2-205.


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   ¶13 Our workers compensation law creates rights on the part
of employees and corresponding duties on the part of employers and
insurers. “‘[A]n employee . . . who is injured . . . by accident arising
out of and in the course of the employee’s employment’ is entitled
to compensation.” Touchard, 2006 UT 71, ¶ 8 (second and third
alterations in original) (quoting UTAH CODE § 34A-2-401(1)). This
right to compensation is absolute, and if an employer has failed to
provide insurance, the injured employee can recover from the
Uninsured Employers’ Fund. Id. ¶ 15 (citing UTAH CODE § 34A-2-
208(1)). Additionally, the statute allows injured employees to bring
claims against insurers in their own names. UTAH CODE § 31A-22-
1004.
   ¶14 Employers have a corresponding statutory duty to “secure
the payment of workers’ compensation benefits for [their] employees
by . . . insuring, and keeping insured, the payment of this
compensation with the Workers’ Compensation Fund,” with an
authorized private insurer, or through an approved form of self-
insurance. Id. § 34A–2–201. The Act “imposes criminal penalties on
employers who fail to comply.” Touchard, 2006 UT 71, ¶ 12 (citing
UTAH CODE § 34A–2–209).
   ¶15 Insurers have a statutory duty to honor all claims brought
within their coverage period, which continues “until the policy is
canceled.” UTAH CODE § 31A-22-1002(1). Cancellation may be by
“agreement between the Division . . . , the insurer, and the employer;
or [by] . . . notice by the insurer to the employer . . . and . . . the
Division.” Id. Insurers may not cancel coverage without the consent
of or notice to the Division and the employer. “Failure to notify the
division . . . results in the continued liability of the carrier until the
date that notice of cancellation is received by the division.” Id. § 34A-
2-205(1)(c). Thus, insurers cannot retroactively cancel coverage, as
UBIC attempted to do at Mr. Stout’s request by changing the policy
coverage dates. See supra ¶ 4.
   ¶16 Under this statutory scheme, an insurer becomes liable on
a claim as soon as an employee informs an employer of an accident.
Utah Code section 31A-22-1006 provides that
      [e]very workers’ compensation policy or contract shall
      contain a provision that, as between the employee and
      the insurer, notice to or knowledge of the occurrence of the
      injury on the part of the employer is considered to be notice
      or knowledge to the insurer. This provision shall also state
      that the insurer is bound by and subject to the orders,

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                    Opinion of the Court

      findings, decisions, and awards rendered against the
      employer for the payment of compensation on account
      of compensable accidental injuries or occupational
      disease disability.
(Emphasis added.) Thus, an insurer is liable for accidents occurring
during the coverage period whether or not an employer formally
“tenders” a claim to the insurer. The insurer’s liability attaches when
the employer is informed of the injury.
   ¶17 The workers compensation statutes have one central
purpose: to ensure that employees are covered in the event of an
accident. To this end, the statutes create a highly regulated workers
compensation scheme with bright-line rules: (1) insurers of record
are liable until coverage is cancelled by agreement with or notice to
the employer and the Division and (2) insurers are liable for injuries
reported to employers regardless of whether employers formally
tender claims to the insurers.
   ¶18 The targeted tender doctrine is premised on the right of the
insured to choose whether and to whom to tender a claim. See John
Burns, 727 N.E.2d at 215 (holding that the insured “had the right to
choose which insurer would be required to defend and indemnify
it”); Mut. of Enumclaw, 191 P.3d at 874 (concluding that because an
insured “chose not to tender to” one insurer, that insurer “had no
legal obligation to defend or indemnify” the insured). No such right
exists under the Utah workers compensation regime. All insurers on
record with the Division are automatically liable for claims reported
to employers. The statutory scheme therefore precludes us from
adopting the targeted tender doctrine in the context of workers
compensation.1
           II. UBIC IS JOINTLY LIABLE WITH WCF ON
                      MR. ANTONE’S CLAIM
   ¶19 “The doctrine of ‘equitable contribution’ permits an insurer
[that] has paid a claim[] to seek contribution directly from other
insurers who are liable for the same loss.” Cas. Indem. Exch. Ins. Co.
v. Liberty Nat’l Fire Ins. Co., 902 F. Supp. 1235, 1237 (D. Mont. 1995).
  1
      UBIC advances several policy justifications for the targeted
tender doctrine (that it allows policyholders to avoid premium
increases, to preserve policy limits for other claims, to safeguard
their relationship with their current insurer, and to avoid insurers
with whom they have had a bad experience), none of which have
relevance or application in the workers compensation context.

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The doctrine of equitable contribution governs disputes in Utah
between co-insurers who are liable for a common obligation. Sharon
Steel Corp. v. Aetna Cas. & Sur. Co., 931 P.2d 127, 137–38 (Utah 1997).
   ¶20 We noted in Sharon Steel that equitable contribution is
buttressed by two policy considerations. First, it prevents the
“inequitable result” of forcing one insurer to bear more than its share
of losses. Id. at 138. Second, equitable contribution furthers this
court’s “policy of encouraging [insurers to make] prompt payments
to the insured, leaving disputes concerning coverage to be
determined later.” Id. Insurance companies who know they can sue
co-insurers for contribution will be more likely to pay claims
promptly, as WCF did here.
   ¶21 UBIC contends that equitable contribution should not be
available to WCF because WCF and UBIC are not “liable for the
same loss.” UBIC argues that it is not liable on Mr. Antone’s claim
because Pioneer did not tender the claim to UBIC. However, as
discussed above, supra ¶ 18, we reject the targeted tender doctrine in
the context of workers compensation. The liability of a workers
compensation insurer is triggered when an employee reports an
accident to a covered employer. Therefore, UBIC and WCF are
indeed “liable for the same loss.”
    ¶22 We conclude, as did the Arkansas Supreme Court in
another case involving dual workers compensation coverage, that
“[t]he only equitable and fair way to apportion the loss is to divide
it equally.” City of Waldo v. Poetker, 628 S.W.2d 329, 333 (Ark. 1982).
“Where multiple [workers compensation] insurance carriers insure
the same insured and cover the same risk, each insurer has
independent standing to assert a cause of action against its
coinsurers for equitable contribution when it has undertaken the
defense or indemnification of the common insured.” Am. States Ins.
Co. v. Nat’l Fire Ins. Co. of Hartford, 135 Cal. Rptr. 3d 177, 183 (Ct.
App. 2011) (internal quotation marks omitted). WCF’s claim against
UBIC for equitable contribution is independent of the actions of
Pioneer. UBIC is liable to WCF for half of the reasonable past and
future benefits paid on Mr. Antone’s claim. We therefore affirm the
district court’s grant of partial summary judgment for WCF and its
denial of summary judgment for UBIC.




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      WORKERS COMP v. UTAH BUSINESS INSURANCE COMPANY
                    Opinion of the Court

          III. THE DISTRICT COURT DID NOT ABUSE ITS
            DISCRETION IN DENYING UBIC’S MOTION
                   FOR ADDITIONAL DISCOVERY
  ¶23 As an alternative to its motion for summary judgment,
UBIC moved for additional discovery under rule 56(f) of the Utah
Rules of Civil Procedure. Rule 56(f) provides as follows:
      Should it appear from the affidavits of a party opposing
      the motion [for summary judgment] that the party
      c n of rrao ssae pee tb afd vtf csesni lt j siyt ep ryso p sto ,t ec utm yr f s t e
       a n t o e s n t td rsn y fi a i at se ta outf h at ’ p oii n h o r a eue h
application for judgment or may order a continuance to permit
affidavits to be obtained or depositions to be taken or discovery to
be had or may make such other order as is just.
Although we have encouraged district courts to “liberally grant rule
56(f) motions,” Crossland Sav. v. Hatch, 877 P.2d 1241, 1243 (Utah
1994), we will not reverse a district court’s ruling on a rule 56(f)
motion unless it “exceeds the limits of reasonability,” Overstock.com,
Inc. v. SmartBargains, Inc., 2008 UT 55, ¶ 20, 192 P.3d 858 (intermal
quotation marks omitted).
        The “limits of reasonability” standard is based on the
        specific circumstances of each case—there is not a
        “bright line” test for determining whether the district
        court abused its discretion. Some of the relevant factors
        in determining whether a rule 56(f) motion is warranted
        include, but are not limited to: (1) an examination of the
        party’s rule 56(f) affidavit to determine whether the
        discovery sought will uncover disputed material facts
        that will prevent the grant of summary judgment or if
        the party requesting discovery is simply on a “fishing
        expedition,” (2) whether the party opposing the
        summary judgment motion has had adequate time to
        conduct discovery and has been conscientious in
        pursuing such discovery, and (3) the diligence of the
        party moving for summary judgment in responding to
        the discovery requests provided by the party opposing
        summary judgment.
Id. ¶ 21 (citation omitted).
   ¶24 UBIC stated in its memorandum accompanying its rule
56(f) motion that if additional discovery were permitted, it expected
to discover the following information: “(1) the intent of Pioneer
Roofing and UBIC at the time the policy was entered into with

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respect to the coverage period for the policy; (2) communications
between Pioneer and WCF with respect to coverage, and payment
of the claim; and (3) that the medical expenses were unreasonable
and the indemnity benefits were overpaid.” Only the first point is
relevant to opposing WCF’s motion for partial summary judgment.
Communications between Pioneer and WCF have no bearing on
UBIC’s liability in light of our decision not to apply the targeted
tender doctrine. And the issue of “the reasonableness of the past
benefits and administrative costs already paid by WCF” was left
“pending . . . and subject to further discovery by the parties,”
according to footnote 3 of the district court’s order. Therefore, we
consider only whether the district court abused its discretion in
denying additional discovery regarding the intent of Pioneer and
UBIC as to the coverage period.
   ¶25 UBIC attached to its motion affidavits by its president, Ron
Nielsen, and by Pioneer’s president, John Stout.2 Mr. Nielsen
affirmed that “[u]ntil WCF made its demand for reimbursement,
UBIC did not know that its 2008 policy allegedly overlapped with
the WCF policy” and that “[d]ue to a mistake in coverage dates, a
new policy was written for Pioneer and the erroneously collected
premiums were credited to Pioneer’s account.” Mr. Stout affirmed:
      On February 22, 2008, I met with Shawn Morin, the
      agent for the policy that was ultimately underwritten by
      [UBIC]. At that time, I made it clear that Pioneer wanted
      the new policy to begin following the expiration of the
      WCF policy.
      Upon receipt of the policy from UBIC I reviewed it, but
      did not notice that coverage mistakenly began on the
      date I met with the agent (February 22, 2008), not after
      the expiration of the WCF policy.




  2
    The parties dispute the admissibility of these affidavits and other
parol evidence that may have been produced during further
discovery. We do not resolve this dispute because UBIC has not
suggested that these affidavits are sufficient to show mutual mistake
and because the district court had other grounds for denying
additional discovery.

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WORKERS COMP v. UTAH BUSINESS INSURANCE COMPANY
              Opinion of the Court

I never intended to have overlapping workers’
compensation insurance coverage. The policies were
always intended to be successive, not concurrent.




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                       Opinion of the Court

    ¶26 To succeed in a rule 56(f) motion, a party must show why
it “cannot for reasons stated” defend against the motion for summary
judgment without additional discovery. UTAH R. CIV. P. 56(f)
(emphasis added). Here, the only “reason” set forward by UBIC is
insufficient time. UBIC argues that “[d]uring these three, short,
holiday-filled months, the parties only exchanged one set of
discovery requests, and UBIC was still awaiting responses to its
discovery requests from WCF . . . . UBIC was still evaluating the
information it had gathered to determine who should be deposed
and what questions should be asked.” We find these arguments
unpersuasive because the mutual mistake alleged by UBIC did not
involve WCF; it was between UBIC and Pioneer, UBIC’s cooperative
former policyholder. UBIC has not given “reasons” why it could not,
within three months, obtain information from its own records and
its own employees and from Pioneer. Accordingly, the district court
could have determined that UBIC “had adequate time to conduct
discovery.” Overstock.com, 2008 UT 55, ¶ 21.
   ¶27 The district court could also have determined that UBIC
“failed to identify any [information yet to be discovered] that would
have provided a material factual dispute to preclude summary
judgment.” Id. ¶ 27. This is because the “mistake” alleged by UBIC,
even if proven through further discovery, would not qualify under
the doctrine of mutual mistake. Mutual mistake occurs when, “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.” Deep Creek Ranch, LLC v. Utah State Armory Bd., 2008 UT 3,
¶ 17, 178 P.3d 886 (internal quotation marks omitted); see also
RESTATEMENT (SECOND) OF CONTRACTS § 152(1) (1981) (“Where a
mistake of both parties at the time a contract was made as to a basic
assumption on which the contract was made has a material effect on
the agreed exchange of performances, the contract is voidable by the
adversely affected party[.]”).
   ¶28 A mistake is “material” and goes “to a basic assumption of
the contract” only if it affects an element of the parties’ bargain.
Here, UBIC and Pioneer bargained for UBIC to provide workers
compensation coverage to Pioneer and for Pioneer to pay premiums
to UBIC. The fact that the UBIC workers compensation policy
overlapped with another policy did not alter this bargain.
  ¶29 Furthermore, even if the “mistake” amounted to a mutual
mistake, UBIC would not have a claim for reformation because it
was not the adversely affected party. See RESTATEMENT (SECOND) OF


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                   Opinion of the Court

CONTRACTS § 152(1) (1981) (stating that a remedy is available only to
“the adversely affected party”). To determine whether a party has
been adversely affected, we look to the effect of the mutual mistake
at the time the contract is entered. Here, when the contract was
entered, double coverage actually benefited UBIC by allowing it to
collect full premiums from Pioneer while sharing liability with WCF.
Only in retrospect—after Mr. Antone’s accident—is contract
reformation desirable to UBIC.
   ¶30 Because of the host of grounds for denying UBIC’s rule
56(f) motion, the district court acted well within “the limits of
reasonability,” and therefore did not abuse its discretion.
Overstock.com, 2008 UT 55, ¶ 20 (internal quotation marks omitted).
                          CONCLUSION
   ¶31 The UBIC Policy and the WCF Policy were both in effect at
the time of Mr. Antone’s accident. Because we decline to apply the
targeted tender doctrine in the workers compensation context, we
hold that both insurers are liable for Mr. Antone’s claim. WCF is
therefore entitled to equitable contribution from UBIC for reasonable
past and future costs associated with the claim.
  ¶32 We affirm the district court’s granting of WCF’s motion for
partial summary judgment and its denial of UBIC’s motion for
summary judgment and motion for additional discovery. We
remand to the district court for resolution of the remaining issues.




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