Youngblood, II v. Auto-Owners Insurance, Co.

2007 UT 28
This opinion is subject to revision before final
publication in the Pacific Reporter.
IN THE SUPREME COURT OF THE STATE OF UTAH
----oo0oo----
Robert L. Youngblood, II, No. 20050400
Plaintiff and Respondent,
v.
Auto-Owners Insurance Company, F I L E D
a corporation,
Defendant and Petitioner. March 23, 2007
---
Third District, Salt Lake
The Honorable William B. Bohling
No. 010911647
Attorneys: Peter C. Collins, Salt Lake City, for plaintiff
Robert R. Wallace, Salt Lake City, for defendant
---
On Certiorari to the Utah Court of Appeals
WILKINS, Associate Chief Justice:
¶1 Mr. Youngblood seeks to extend the coverage of an
insurance policy under the doctrine of equitable estoppel. He
admits that the language of the policy does not extend coverage
under these circumstances, but relies on representations of the
scope of coverage made by the insurance agent in selling him the
policy. On summary judgment, the district court held him to the
language of the policy, but on appeal, the court of appeals
agreed in principle and reversed on the basis of material issues
of fact precluding summary judgment.
¶2 On certiorari, we have agreed to review the court of
appeals’ legal conclusion that an insured may rely upon
principles of equitable estoppel to enlarge the scope of an
insurance policy’s coverage where the company’s agent materially
misstates the scope of coverage prior to the purchase of the
policy. We conclude that estoppel may apply under some factual
circumstances and remand for further action in the district
court.

1 The policy states, in pertinent part,
(a) We will pay compensatory damages any
person is legally entitled to recover:
(1) from the owner or operator of an
underinsured automobile;
(2) for bodily injury sustained while
occupying an automobile that is covered
by SECTION II – LIABILITY Coverage of
the policy.
(b) If the first named insured in the
Declaration is an individual, this coverage
is extended as follows:
(1) We will pay compensatory damages you
are legally entitled to recover:
(a) from the owner or operator of
any underinsured automobile;
(b) for bodily injury you sustain:
(1) when you are a pedestrian;
or
(2) while occupying an
(continued...)
No. 20050400 2
BACKGROUND
¶3 Mr. Youngblood was struck by an automobile as he walked
across the parking lot of a medical plaza. The driver, Ms.
Cooksey, carried $50,000 in available liability insurance and
settled Mr. Youngblood’s claim for the $50,000 policy limit. He
claims, however, that his damages exceed $50,000 and accordingly
seeks additional coverage pursuant to the underinsured driver
provisions of his own insurance policy from Auto-Owners Insurance
Co. (“Auto-Owners”).
¶4 Youngblood purchased the insurance policy, known as
underinsured motorist (“UIM”) coverage, in the name of his
corporation, Youngblood Home Improvement, Inc., rather than in
his individual name. He contends that the insurance company’s
sales agent orally guaranteed him that the UIM coverage being
offered from Auto-Owners would also extend to him as an
individual pedestrian in the event of an underinsured motorist
claim.
¶5 Auto-Owners, on the other hand, argues that the
policy’s language clearly precludes Youngblood from recovering
under the UIM provisions and that, therefore, the agent’s
statements are legally irrelevant. The insurance company relies
entirely upon the specific language of the policy. Under the
policy language,1 a person is eligible for UIM coverage in only

1(...continued)
automobile you do not own which
is covered by SECTION II –
LIABILITY Coverage of the
policy.
(emphasis added).
3 No. 20050400
two circumstances: first, when one sustains bodily injury while
occupying an automobile that is insured under the UIM policy; or,
second, when one sustains bodily injury as a pedestrian or while
occupying another person’s automobile that is not insured under
the UIM policy and the first named insured in the policy is an
individual. Also of note, the policy defines “occupying” as “in
or on an automobile as a passenger or operator, or being engaged
in the immediate acts of entering, boarding or alighting from an
automobile.” A “pedestrian” is defined as “any natural person
who is not occupying an automobile.”
¶6 There is no factual dispute that Youngblood was a
pedestrian and not occupying an automobile, as defined in the
policy, at the time he was struck and injured. There is also no
factual dispute that Youngblood Home Improvement, Inc., is the
first named insured and is not an individual but rather a
corporate entity. Under a strict reading of the terms of the
policy, then, Youngblood’s injury does not qualify for UIM
coverage under the Auto-Owners policy. Youngblood concedes that
the language of the policy does not extend coverage. However, he
advances the principles of estoppel as support for his claim of
entitlement.
¶7 In his deposition, Youngblood said that an employee of
Cottonwood Insurance, acting as Auto-Owner’s agent, assured him
that he would be covered under the UIM provisions of the policy
in the event he was struck and injured while a pedestrian by a
motorist who was either underinsured or uninsured. According to
Youngblood, the agent repeatedly provided a specific scenario, to
wit, “Hey, if you’re walking down the street, you’ve got nothing
if you have–-if you don’t have underinsured and uninsured
motorist and somebody runs you over.” Throughout his sales
interaction with Youngblood, the agent repeated this scenario of
getting hit by a car while walking somewhere. The clear
implication of the agent’s hypothetical was that Youngblood would
not be covered for injuries sustained as a pedestrian if struck
by an underinsured or uninsured driver if he did not purchase the
proffered UIM and UM coverage, and that doing so would extend

2 Youngblood v. Auto-Owners, 2005 UT App 154, ¶ 27, 111 P.3d
829.
3 Laney v. Fairview City, 2002 UT 79, ¶ 9, 57 P.3d 1007.
4 First Am. Title Ins. Co. v. J.B. Ranch, Inc., 966 P.2d
834, 836 (Utah 1998).
No. 20050400 4
protection to Youngblood as a pedestrian if struck by an
underinsured (or uninsured) motorist.
¶8 After meeting with the agent and agreeing to purchase
the UIM coverage, Youngblood received his own copy of the policy
in due course. He concedes that he did not read the language of
the policy at any point prior to his injury and the rejection of
his UIM claim. Instead, he says he relied solely upon the oral
representations of coverage made by the sales representative.
¶9 Youngblood brought suit against Auto-Owners in the
district court when it declined his claim under the UIM
provisions. He argued in the district court that even though the
explicit terms of the policy do not provide coverage to him under
these circumstances, coverage should nevertheless be extended
under the doctrine of equitable estoppel. The district court
granted summary judgment in favor of Auto-Owners, finding the
terms of the insurance policy to be clear and unambiguous in not
extending coverage under these circumstances. The district court
declined to apply estoppel principles to extend the coverage.
¶10 A unanimous panel at the court of appeals reversed the
district court’s grant of summary judgment.2 We review the court
of appeals’ legal conclusion on the sole question of whether or
not an insured may apply equitable estoppel to modify the scope
of an insurance policy’s coverage when the company’s agent
misstated the scope of coverage prior to the insured’s purchase
of the policy. We have jurisdiction pursuant to Utah Code
sections 78-2-2(3)(a) and (5).
ANALYSIS
¶11 We review the decision of the court of appeals for
correctness.3 We afford no deference to conclusions of law
reached by it, or by the district court.4
¶12 Acknowledging that the plain language of the insurance
policy does not extend protection to him, Youngblood argues that
courts should extend coverage as a matter of equity under the
doctrine of equitable estoppel. However, he argues the elements

5 Nunley v. Westates Casing Servs., Inc., 1999 UT 100, ¶ 34,
989 P.2d 1077.
6 Id. (quoting 28 Am. Jur. 2d Estoppel and Waiver § 46
(2000)).
5 No. 20050400
of promissory estoppel. Our caselaw recognizes equitable
estoppel and promissory estoppel as two distinct legal
principles, one a defense and one a cause of action in most
instances. However, in insurance coverage cases like this one
the technical distinction between equitable and promissory
estoppel is of less analytic utility and approaches being
irrelevant.
¶13 Consequently, we depart from our traditional
distinctions between equitable and promissory estoppel in
evaluating the applicability of estoppel, as a general concept,
to cases of this type. As a result, it may be useful to briefly
address the primary distinctions between the two and the basis
for our decision to apply more general, “generic” principles of
estoppel in this case.
¶14 Our caselaw requires proof of three elements for
equitable estoppel: first, “a statement, admission, act, or
failure to act by one party inconsistent with a claim later
asserted”; next, “reasonable action or inaction by the other
party taken or not taken on the basis of the first party’s
statement, admission, act or failure to act”; and, third, “injury
to the second party that would result from allowing the first
party to contradict or repudiate such statement, admission, act,
or failure to act.”5
¶15 Moreover, “[a]s a general rule, absent circumstances
where application of promissory estoppel is appropriate, ‘a
representation or assurance, in order to furnish the basis of an
estoppel, must relate to some present or past fact or state of
things, as distinguished from mere promises or statements as to
the future.’”6 We typically only apply equitable estoppel to
circumstances involving misrepresentations of past or present
fact, along with the other necessary factors. Equitable estoppel
reflects circumstances where it is not fair for a party to
represent facts to be one way to get the other to agree, and then
change positions later to the other’s detriment.
¶16 Promissory estoppel, on the other hand, contemplates
circumstances where a party promises that things will be a given
way in the future, knowing at the time of the promise all of the
material facts, but is ultimately wrong, and where the other

7 Id. ¶ 35.
8 Mile High Indus. v. Cohen, 222 F.3d 845, 859 (10th Cir.
2000).
No. 20050400 6
relied on that promise in acting (or withholding action). To
make out a case of promissory estoppel necessitates a showing
that
(1) [t]he plaintiff acted with prudence and
in reasonable reliance on a promise made by
the defendant; (2) the defendant knew that
the plaintiff had relied on the promise which
the defendant should reasonably expect to
induce action or forbearance on the part of
the plaintiff or a third person; (3) the
defendant was aware of all material facts;
and (4) the plaintiff relied on the promise
and the reliance resulted in a loss to the
plaintiff.7
¶17 The distinction we have drawn between these two legal
concepts is essentially that in the case of equitable estoppel
the representation is made of an existing or previously existing
fact, and in promissory estoppel it is of a future fact. In both
situations, it is the representor of the incorrect fact who is
seeking to avoid responsibility for the error. We have treated
equitable estoppel as a defense raised by a party against whom
relief is sought when the other party misrepresented facts, and
promissory estoppel as a cause of action against the
misrepresentor when it fails to perform. Sadly, we have also
mixed and muddled this application.
¶18 Other courts have recently addressed this traditional
distinction. The Tenth Circuit recently observed that promissory
estoppel is “an affirmative cause of action or defense, which
arises in instances where no formal contract exists and the party
seeking promissory estoppel is attempting to prove the existence
of an enforceable promise or agreement.”8
¶19 Other courts, such as the Ninth Circuit, have also
explicitly distinguished between promissory estoppel and
equitable estoppel, noting that “promissory estoppel and
equitable estoppel are distinct concepts with distinct uses and

9 Humetrix, Inc. v. Gemplus S.C.A., 268 F.3d 910, 918 (9th
Cir. 2001).
10 Id.; see also Jodek Charitable Trust, R.A. v. Vertical
Net, Inc., 412 F. Supp. 2d 469, 477 (E.D. Pa. 2006) (“[T]here is
no independent cause of action for ‘equitable estoppel’ . . .
--it may only be asserted as a defense. The only sense in which
there is a cause of action for ‘equitable estoppel’ is insofar as
the phrase is sometimes used interchangeably with promissory
estoppel, a related but distinct concept.” (citations omitted));
Kolkman v. Roth, 656 N.W.2d 148, 155 n.3 (Iowa 2003) (“There is a
recognized distinction between equitable estoppel and promissory
estoppel . . . . Equitable estoppel is used as a shield to estop
a party from raising the statute of frauds when plaintiff
establishes the defendant ‘made a misrepresentation of facts,’ as
opposed to a promise of a future act, that resulted in
detrimental reliance. Thus, it is not an offensive theory that
can be used as a basis for damages. On the other hand,
promissory estoppel is a broader doctrine that can be utilized as
an alternative theory of recovery ‘in the absence of a contract’
when the plaintiff ‘detrimentally relied on a promise,’ as
opposed to a misstatement of fact.” (citations omitted) (quoting
David J. Gass, Michigan’s UCC Statute of Frauds and Promissory
Estoppel, 74 Mich. B.J. 524, 525-26 (1995))).
11 Humetrix, 268 F.3d at 918.
7 No. 20050400
effects”9 because “promissory estoppel is used to create a cause
of action, whereas equitable estoppel is used to bar a party from
raising a defense or objection it otherwise would have.”10 In
other words, “[p]romissory estoppel is a sword, and equitable
estoppel is a shield.”11 Legal treatises describe the
distinction as follows:
Promissory estoppel involves a clear and
definite promise, while equitable estoppel
involves only representations and
inducements. The representations at issue in
promissory estoppel go to future intent,
while equitable estoppel involves statement
of past or present fact. It is also said
that equitable estoppel lies in tort, while
promissory estoppel lies in contract. The
major distinction between equitable estoppel
and promissory estoppel is that the former is
available only as a defense, while promissory

12 28 Am. Jur. 2d Estoppel and Waiver § 35 (2004).
13 See, e.g., Davis v. Davis, 855 P.2d 342, 348 (Wyo. 1993)
(“The doctrines of promissory estoppel and equitable estoppel are
(continued...)
No. 20050400 8
estoppel can be used as the basis of a cause
of action for damages.12
¶20 Ultimately, the distinctions make little difference in
the matter of insurance coverage disputes between an insured who
was told he would be covered for certain injuries, and an
insurance agent and company denying coverage after the injury has
occurred. It is difficult to see any real distinction between an
agent representing that a policy will cover a particular peril (a
“clear and definite promise”), and an agent representing that the
policy provision covers the peril (a “representation” and
“inducement” based upon a material and existing fact–-the policy
provisions existing in the policy to be sold). Under these
circumstances, what useful purpose is served by continuing the
distinction between the traditional “sword” and “shield”?
¶21 We see none.
¶22 However, it appears that Youngblood intended to bring a
claim under the theory of promissory instead of equitable
estoppel. His legal arguments neatly fit those elements
described under promissory estoppel. Were we to hold fast to the
distinctions between promissory and equitable estoppel, and if we
were also to conclude that the agent’s misrepresentations or
promises were as to future facts, Youngblood would be barred
under our prior caselaw from bringing a claim. Such an exalting
of form over substance, while not unknown in our caselaw, is to
be avoided when possible. Our rules of pleading require that a
cause be made out, but not necessarily that it always be
correctly labeled. In Youngblood’s case, and in others of the
same type, the defendant insurance company is denied nothing in
terms of knowing what is being claimed and how to defend. We
therefore conclude that estoppel, an equitable principle under
the court’s common law equitable powers, is a sufficient
description of such an action.
¶23 We are not alone in this approach. Facing this
question, some courts either apply the same elements to both, as
we now propose to do, or treat promissory estoppel as a subset of
equitable estoppel,13 something we find no less confusing than

13(...continued)
closely related and . . . they often have been invoked together
and interchangeably, without the benefit of clear distinction.”).
14 3 Eric Mills Holmes, Corbin on Contracts, § 8.11 (1996).
9 No. 20050400
treating them separately. Overall, however, the difference
between equitable and promissory estoppel has become
inconsequential particularly in insurance cases. We agree with
Corbin on Contracts, that when a
party asks an insurance agent if a particular
matter is covered by a certain kind of
insurance policy[,] [and] . . . the agent
responds: “We’ve got you covered” or “We
cover you for $7,500, and you are fully
covered” or similar assurances[,] [d]id the
insurance agent make a representation of fact
or a promise regarding coverage? In reality,
it makes little difference so long as
estoppel is affirmatively applied to enforce
the agent’s statement. Thus, whereas earlier
decisions applied defensive equitable
estoppel, modern decisions, felicitously
following the principles of good faith,
conscience, and equity underpinning estoppel,
apply promissory estoppel as an affirmative
cause of action to validate and enforce the
agent’s promise.14
The distinction between equitable and promissory estoppel has
become muddled in insurance cases over the decades, and courts
have applied either form when choosing to enforce an agent’s
statement. Therefore, although our prior caselaw may have made a
distinction between equitable estoppel and promissory estoppel,
we must modify that position. In this case, and in other similar
insurance coverage claims, it is unnecessary to decide whether
the agent’s misrepresentations are to past or to future facts.
Consequently, we will apply basic principles of estoppel to these
cases.
¶24 In this case, Auto-Owners, as the Petitioner and
Defendant, would have us interpret Utah law to prohibit any form
of estoppel under circumstances where agents misrepresent
insurance coverage and the insured reasonably relies on those
misrepresentations. Under Auto-Owner’s analysis, an insured is

15 See, e.g., Lee v. Burkhart, 991 F.2d 1004, 1009 (2d Cir.
1993) (“The elements of estoppel are (1) material representation,
(2) reliance and (3) damage.”).
No. 20050400 10
responsible to read and understand the contract. They urge that
the policy language, if unambiguous, remains unmodifiable by any
form of parole evidence.
¶25 We disagree, as did the court of appeals. Estoppel may
be applied to modify terms of an insurance policy when (1) an
agent makes material misrepresentations to the prospective
insured as to the scope of coverage or other important policy
benefits, (2) the insured acts with prudence and in reasonable
reliance on those misrepresentations, and (3) that reliance
results in injury to the insured.15 With this rule of law in
mind, we address the consequences to Youngblood and Auto-Owners
in this case.
I. AUTO-OWNERS’ AGENT MISREPRESENTED THE POLICY’S SCOPE OF
COVERAGE
¶26 Our first inquiry is whether the agent’s oral
statements constituted misrepresentations of the policy’s scope
of coverage or other benefits. Youngblood argues that the agent
made two such misrepresentations: (1) that the policy also
covered Youngblood as an individual, even though Youngblood Home
Improvement, Inc., was the named insured on the document, and (2)
that the policy would cover Youngblood if he were struck by a car
while walking down the street.
¶27 We agree that these statements are misrepresentations
of the policy’s coverage. When parsed with great care, the
policy terms do not include coverage of Youngblood when struck by
a car while a pedestrian. Under provision 2(a), a person may
recover from the owner of an underinsured automobile for bodily
injuries sustained while occupying an automobile covered by the
policy. Youngblood was on foot at the time of the injury.
¶28 Youngblood was walking through a medical plaza parking
lot when struck and injured. He was not in or on an automobile
as a passenger or operator, nor was he entering an automobile at
the time. Thus, under the policy, he was not “occupying” an
automobile at the time of the accident.
¶29 Under provision 2(b), when the first named insured in
the Declaration is an individual, the coverage extends to those

16 It appears the agent continued to believe this incorrect
representation even after the injury. After the accident, when
Youngblood called Cottonwood Insurance to report his claim as a
pedestrian, the agent allegedly told him, “Once you get
everything out of [the driver of the automobile that struck you],
then you have to come to me, but you’ve got to get everything out
of her first and then I can pay your claim.”
17 Nunley v. Westates Casing Servs., 1999 UT 100, ¶ 36, 989
P.2d 1077 (“A party claiming estoppel must present evidence
showing that an offer or promise was made on which the party
(continued...)
11 No. 20050400
bodily injuries sustained as a pedestrian. Here, the first named
insured on the policy is Youngblood Home Improvement, Inc., a
corporate business entity, not an individual. This language
precludes coverage for Youngblood as a pedestrian because the
coverage does not apply if the first named insured (the
corporation in this case) is not an individual.
¶30 The language of the policy classifies Youngblood as
neither a covered “pedestrian” nor “occupying” his automobile at
the time of the accident, as required for Youngblood to benefit
from the coverage provided by the policy.
¶31 Youngblood testified, however, that the agent provided
a scenario under which the policy would cover Youngblood under
these exact circumstances as a pedestrian. In his deposition,
Youngblood testified that the agent said, “Hey, if you’re walking
down the street, you’ve got nothing if you have–-if you don’t
have underinsured and uninsured motorist [coverage] and somebody
runs you over.” Or “[y]ou could be sitting at your desk or
walking down the street and if you don’t have the coverage,
you’ve got nothing.”16 These statements are in direct conflict
with the language of the policy, which does not extend coverage
to Youngblood under the given circumstances. Consequently, the
agent made misrepresentations about the policy’s coverage and
other benefits.
II. DID YOUNGBLOOD REASONABLY RELY ON THE AGENT’S
MISREPRESENTATIONS
¶32 Having established that an agent made material
misrepresentations regarding the policy’s coverage, a plaintiff
must next demonstrate that he acted prudently and reasonably
relied on those misrepresentations.17 When a party knows or

17(...continued)
based his or her reliance.”); see Restatement (Second) of
Contracts § 90 (1979).
18 Perkins v. Great-West Life Assurance Co., 814 P.2d 1125,
1130 (Utah Ct. App. 1991) (quoting Larson v. Wycoff Co., 624 P.2d
1151, 1155 (Utah 1981)).
19 We presume Youngblood suggests that the “nature” of
insurance agents and insurance contracts is not to be seen as
good.
20 Larson, 624 P.2d at 1155.
No. 20050400 12
should have known reliance would be in error, the party cannot
reasonably rely on the misrepresentation as a matter of law. In
this case, the question is whether Youngblood should have known
that reliance would be in error.
¶33 Under our caselaw, “‘[a] party claiming an estoppel
cannot rely on representations or acts if they are contrary to
his knowledge of the truth or if he had the means by which with
reasonable diligence he could ascertain the truth.’”18
Youngblood argues that because we have not previously dealt with
this particular fact pattern--an agent making oral
misrepresentations upon which an insured relied in purchasing his
policy–-our estoppel analysis should allow more leniency to the
insured in his reliance, given the “nature of insurance agents
and insurance contracts.”19 Although we are sympathetic toward
those who rely on an agent’s misrepresentations, recovery can be
permitted only when that reliance is reasonable. To do otherwise
would allow too much room for sympathy, passion, and error, and
drastically diminish the predictability needed by insureds and
insurers in the marketplace.
¶34 On the other hand, the determination of reasonableness
is not based “on the subjective state of mind of the person
claiming he was misled, but rather is to be based on an objective
test, i.e., what would a reasonable person conclude under these
circumstances.”20 This reasonable person standard, known for
centuries in the law, is the safest way to protect those who
would be unduly taken advantage of, be it insured or insurer.
¶35 Reliance upon an agent’s material misrepresentations
regarding coverage may or may not be reasonable, depending upon
the facts of the individual case. The policy of the law is not

13 No. 20050400
only to protect consumers from fraudulent sales and from agents
who misrepresent provisions to make a sale, but also to deter
unscrupulous insureds from fabricating agent’s statements in
order to receive additional coverage or benefits after an injury
has occurred.
¶36 The law holds insurance agents to accurately
representing policy provisions and honestly answering consumer
questions. Agents who are not trained to act with complete
honesty and integrity in their interactions with consumers, or
who simply refuse to do so, place themselves and their principals
at risk. The law will hold both principal and agent liable for
misrepresentations upon which consumers reasonably rely.
¶37 Correspondingly, insurance purchasers fail to make the
effort to read and understand the content of their insurance
policies at their peril. When the language is clear, direct,
understandable to ordinary people, and complete, it will be more
difficult to prove reasonable reliance on contrary oral promises.
On the other hand, when the language is unintelligible,
incomplete, or simply too complex to be understood by persons of
reasonable intelligence, reliance on an agent’s “plain language”
explanations and representations of what the policy covers
becomes easier to establish. In addition, the reasonableness of
reliance may be affected by the ease, or lack of it, that
confronts a person of ordinary intelligence in discovering the
whereabouts of otherwise clear, direct, and understandable terms
within an insurance contact. A conclusion that an insurance
contract term is unambiguous, while certainly relevant to the
issue of whether reliance on a contradictory representation is
reasonable, is not the end of the inquiry. A perfectly clear
insurance term is of no use if it cannot be located.
¶38 In this case, the question of whether or not
Youngblood’s reliance on the agent’s misrepresentations of the
scope of coverage under the policy was reasonable is unresolved.
It is one of fact. Youngblood may not recover under the doctrine
of estoppel if his reliance on the agent’s statements was not
reasonable. A material question of fact remains to be resolved
by the trier of fact, and we therefore remand for proceedings
consistent with this opinion.
CONCLUSION
¶39 A party may recover under the doctrine of estoppel when
an insurance agent makes material misrepresentations as to the

No. 20050400 14
policy provisions, the party reasonably relies on those
misrepresentations in buying the coverage, and that reliance
results in legal injury to the party. In this case, the agent
made material misrepresentations regarding the policy’s coverage.
Nonetheless, Youngblood has the burden to establish that his
reliance was reasonable under the facts of the case.
¶40 Affirmed, and remanded for proceedings consistent with
this opinion.
---
¶41 Justice Durrant, Justice Parrish, Justice Nehring, and
Judge Hadley concur in Associate Chief Justice Wilkins’ opinion.
¶42 Having disqualified herself, Chief Justice Durham does
not participate herein; District Judge Scott M. Hadley sat.