Title: St. Paul Fire and Marine Ins. Co. v. Albany County School Dist. No. 1

State: wyoming

Issuer: Wyoming Supreme Court

Document:

St. Paul Fire and Marine Ins. Co. v. Albany County School Dist. No. 11988 WY 132763 P.2d 1255Case Number: 87-88Decided: 11/04/1988Supreme Court of Wyoming
PAUL FIRE AND MARINE 
INSURANCE CO., A MINNESOTA CORPORATION, APPELLANT (DEFENDANT), HARTFORD ACCIDENT AND INDEMNITY COMPANY, A CONNECTICUT CORPORATION; 
AND C.R. MOTIS INSURANCE AGENCY, INC., A WYOMING CORPORATION, 
(DEFENDANTS),

v.

ALBANY COUNTY SCHOOL DISTRICT 
NO. 1, APPELLEE (PLAINTIFF).

Appeal from the District 
Court, AlbanyCounty, Arthur T. Hanscum, 
J.

Dan B. Riggs and 
Haultain E. Corbett of Lonabaugh and Riggs, Sheridan, for appellant.

Paul D. Schierer 
of Pence & MacMillan, Laramie, for appellee.

Before THOMAS, CARDINE, URBIGKIT and MACY, JJ., 
and GUTHRIE, J., Retired.

MACY, 
Justice.

[¶1.]     Appellant St. Paul Fire 
and Marine Insurance Co. (St. Paul) appeals from 
a summary judgment in favor of appellee Albany County School District No. 1 
(School District) in a declaratory judgment 
action construing an insurance policy. The district court declared that the 
liability insurance policy provided coverage for payment of a judgment rendered 
against the School 
District.

[¶2.]     We 
reverse.

[¶3.]     St. Paul presents three 
issues for our consideration:

1. Does the St. Paul 
Insurance Policy provide coverage to Albany County School District No. 1 for the 
claims asserted against it by Dennis Diehl?

2. Do the doctrines of 
waiver and estoppel or "reasonable expectations" operate to preclude St. Paul from denying 
insurance coverage to Albany County School District No. 1 for the claims 
asserted against it by Dennis Diehl?

3. Did the District Court 
err in granting Summary Judgment for the School District as against St. Paul, and in denying Summary Judgment for St. Paul as against the School 
District?

[¶4.]     On February 7, 1985, an 
employee of the School District, Dennis Diehl, filed a civil rights action 
pursuant to 42 U.S.C. § 1983 against the School District in the United States 
District Court for the District of Wyoming. St. 
Paul, as one of the liability insurers for the School District, agreed to defend the suit while retaining 
its "full reservation of rights" with respect to coverage. On March 7, 1986, a 
jury verdict was rendered against the School District in the amount of $33,000, 
and judgment against the School District for 
that amount was entered on March 13, 1986.

[¶5.]     Following entry of the 
judgment against the School District, St. Paul 
notified the School District that it was 
denying coverage and withdrawing its defense of the action. The School District, 
however, demanded that St. 
Paul prosecute an appeal. By letter dated May 8, 1986, 
St. Paul notified the School 
District that, while it continued to deny coverage and to maintain 
its reservation of rights, it would nevertheless provide further defense in the 
civil rights action for purposes of post-trial motions and 
appeal.

[¶6.]     On May 9, 1986, the 
instant action was commenced when the School 
District filed a Petition for Declaratory Judgment and Complaint for 
Supplemental Relief in the district court. Named as defendants in this petition 
and complaint were: St. Paul; Hartford Accident and Indemnity Company (Hartford) 
- an insurer with whom the School District had additional liability insurance; 
and C.R. Motis Insurance Agency, Inc. (Motis) - the local agency that had 
arranged the purchases and renewals of the policies of both carriers for the 
School District. In the petition and complaint, the School District sought a 
judicial declaration that the loss incurred by the School District in the civil 
rights case was covered either by the policy of St. 
Paul or the policy of Hartford or by both policies and that both 
carriers had an obligation to defend, including any appeal. In addition, the 
School District alleged a breach of the duty of 
good faith and fair dealing against all defendants, including an alleged 
misrepresentation of policy coverage by Motis, applicable only if the district 
court found no coverage under the policies. In addition to the declaratory 
relief sought, the School District requested 
compensatory damages equal to the amount of the judgment against it and punitive 
damages on the bad faith claims, plus attorney fees, interest, and 
costs.

[¶7.]     All defendants 
answered, and St. 
Paul counterclaimed for declaratory relief regarding the 
coverage of its policy. All parties then submitted motions for summary judgment 
with accompanying affidavits, exhibits, and memoranda. A hearing on the several 
motions was held on January 16, 1987. In its subsequent decision letter, the 
district court said that St. Paul had "lulled the School District into a 
justifiable belief that the Diehl firing would be a covered occurrence" and held 
that, "[w]hether on contract grounds, estoppel grounds, application of the 
doctrine of `reasonable expec[ta]tions' - or just common sense, St. Paul Fire 
and Marine should pay the judgment." Anticipating appeal, the district court 
further determined that, should this Court disagree regarding the St. Paul policy coverage, the Hartford secondary coverage policy also covered the 
judgment against the School District, subject 
to a deductible. The district court additionally decided that, should this Court 
hold that neither policy covered the loss, a litigable issue would then exist 
with respect to the School District's bad 
faith/negligent misrepresentation claim against Motis. An order was entered 
granting summary judgment to the School District as against St. Paul and Hartford and denying the cross-motions of those 
defendants. In addition, the order denied the School 
District's motion for summary judgment against Motis, and Motis' 
cross-motion, because of the contingent negligence claim against Motis. Finally, 
the district court certified its order as a final judgment pursuant to W.R.C.P. 
54(b) so that an appeal could be taken. St. Paul brought the instant appeal. Hartford did not appeal, 
and the order was not appealable as to Motis, because the denial of a motion for 
summary judgment is not an appealable order. Kimbley v. City of Green River, 663 P.2d 871 (Wyo. 1983).1

[¶8.]     A proper grant of 
summary judgment depends upon the dual findings that there are no genuine issues 
of material fact and that the prevailing party is entitled to judgment as a 
matter of law. Teton Plumbing and Heating, Inc. v. Board of Trustees, Laramie 
County School District Number One, 763 P.2d 843 (Wyo. 1988); Whipple v. Northern 
Wyoming Community College Foundation of Sheridan, 753 P.2d 1028 (Wyo. 1988); 
Farr v. Link, 746 P.2d 431 (Wyo. 1987). Where, as in this case, the facts are 
not in dispute and the questions presented are strictly ones of law, we accord 
no special deference to and are not bound by the district court's decision. 
Teton Plumbing and Heating, Inc., 763 P.2d 843; Farr, 746 P.2d 431; State Board 
of Control v. Johnson Ranches, Inc., 605 P.2d 367 (Wyo. 
1980).

[¶9.]     St. 
Paul's first issue concerns the coverage provided by the insurance 
policy issued to the School District. 
Resolution of this issue requires that we examine the policy and apply our 
established rules of interpretation and construction. An insurance policy is a 
contract, and the general rules of contract construction apply to insurance 
agreements. State Farm Fire and Casualty Company v. Paulson, 756 P.2d 764 
(Wyo. 1988); Compass Insurance Company v. 
Cravens, Dargan and Company, 748 P.2d 724 (Wyo. 1988). The interpretation of a written 
contract is done by the court as a matter of law. Ricci v. New Hampshire 
Insurance Company, 721 P.2d 1081 (Wyo. 1986); 
Farrell v. Hursh Agency, Inc., 713 P.2d 1174 (Wyo. 1986). An exception to construing 
insurance policies as other contracts has been observed by this Court where the 
language of the policy is ambiguous, in which case the policy must be strictly 
construed against the insurer. Paulson, 756 P.2d 764; Worthington v. State, 598 P.2d 796 (Wyo. 1979). Ambiguity, 
however, is not generated by a subsequent disagreement between the parties as to 
the meaning of the policy. Ricci, 721 P.2d 1081; Marcam Mortgage Corporation v. 
Black, 686 P.2d 575 (Wyo. 1984). Further, the language of an 
insurance policy will not be "tortured" in order to create an ambiguity. 
Paulson, 756 P.2d 764; McKay v. Equitable Life Assurance Society of 
United States, 421 P.2d 166 
(Wyo. 
1966).

[¶10.]  If the policy language is clear and 
unambiguous, the rule of strict construction against the insurer does not apply, 
and the policy must be interpreted in accordance with the ordinary and usual 
meaning of its terms. Paulson, 756 P.2d 764; Worthington, 598 P.2d 796. The parties to an 
insurance contract are free to incorporate within the policy whatever lawful 
terms they desire, and the courts are not at liberty, under the guise of 
judicial construction, to rewrite the policy. Worthington, 598 P.2d 796; State Farm Mutual Automobile 
Insurance Company v. Farmers Insurance Group, 569 P.2d 1260 (Wyo. 
1977).

[¶11.]  With the above precepts in mind, we look 
to the St. Paul policy issued to the School District to determine the issue of coverage. St. 
Paul contends that the policy is not ambiguous and that, in accordance with its 
terms, it does not cover the School District as an entity except to the extent 
that the School District is required to indemnify its employees or the 
individual members of the board of trustees. We agree.

[¶12.]  The policy is entitled "BOARD OF 
EDUCATION LIABILITY POLICY Including School District Reimbursement." The 
coverage terms of the policy provide as follows:

I. 
COVERAGE

This Policy shall, 
subject to its terms, conditions and limitations, pay on behalf 
of:

A. INSUREDS' LIABILITY - 
The Insureds as defined in Insuring Agreement IIA for "Loss" as defined in 
Insuring Agreement IIB caused by any negligent act, any error, any omission or 
any breach of duty while acting in their capacity as such or any matter claimed 
against them solely by reason of their holding such designated 
positions.

B. SCHOOL DISTRICT 
INDEMNIFICATION - The school district named in Item 1 of the Declarations for any amount it is required or permitted 
to pay as indemnity to any person insured under the applicable Coverage Plan 
designated in Insuring Agreement IIA for "Loss" as defined in Insuring Agreement 
IIB because of claims made against such Insureds caused by any negligent act, 
any error, any omission or any breach of duty while acting in their capacity as 
such or any matter claimed against them solely by reason of their holding such 
designated positions.

 

(Emphasis 
added.) The School District selected a coverage 
plan under which "the insureds" were defined as follows:

II. 
DEFINITIONS

A. Based upon the 
Coverage Plan designed by [X] under Item 4 of the Declarations the word 
"Insured" shall mean:

PLAN A - BROAD FORM - All 
persons who were, now are or shall be elected or appointed members of the Board 
of Education, Trustees or School Directors of the School District and shall also 
include all persons, who were, now are or shall be employed by the School 
District, including student teachers.

[¶13.]  The School 
District asserts that coverage exists under the policy for the loss 
it suffered by the judgment rendered against it in the civil rights case. St. 
Paul, however, maintains that the policy did not insure the School District 
except to the extent the School District was required or permitted to indemnify 
school board members or school district employees; i.e., the named insureds. A 
reading of the above provisions convinces us that the terms of the policy 
sustain St. 
Paul's position.

[¶14.]  The policy provisions respecting coverage 
and defining the insureds are not ambiguous. The policy provides liability 
coverage for loss, resulting from negligent acts, breach of duty, et cetera, for 
specifically designated individuals - members of the board of education, 
trustees or school directors of the School District, and all employees of the 
School District, including student teachers. 
The policy additionally provides coverage to the School 
District to the extent it is required or permitted to indemnify any 
of the insured persons named in the policy. This is the express limit of the 
School District's coverage under the policy. As 
pointed out by St. Paul, the judgment in the 
civil rights case was against the School District and not against the individual 
members of the board of trustees or School 
District employees. Neither the individual board members nor anyone 
else employed by the School District is personally liable for the judgment 
against the School District. Therefore, as 
correctly argued by St. Paul, since the board 
members are not individually liable to satisfy the judgment against the School 
District, the School District has no need to indemnify those persons, and 
consequently the policy provides no coverage for the School 
District in this situation.

[¶15.]  The School District, however, contends 
that an ambiguity is created by references in the title of the policy and in 
other related documents, including an endorsement, a renewal certificate, and a 
payment invoice, which indicate that the School 
District is an insured. St. Paul, on 
the other hand, argues that these designations do not create an ambiguity, 
because the School District is in fact an 
insured under the terms of the policy, but only to the extent that it may be 
required or permitted to indemnify "persons" covered by the policy. We agree 
with St. Paul in 
this respect, and further, in the face of the clear policy terms describing 
coverage, we will not strain or "torture" the language of the policy to create 
an ambiguity. Paulson, 756 P.2d 764.

[¶16.]  The School 
District additionally relies on W.S. 21-3-111(a)(i) in making its 
ambiguity argument. We have said that laws in existence at the time and place of 
the making of a contract, and where it is to be performed, enter into the 
contract and become part of it as though they were expressly referred to and 
incorporated in its terms. Tri-County Electric Association, Inc. v. City of 
Gillette, 584 P.2d 995 (Wyo. 1978); Hagood v. Texas Pacific Coal and Oil Company, 356 P.2d 135 
(Wyo. 1960). 
W.S. 21-3-111(a)(i) provides: "The board of trustees in each school district 
within the state may: (i) [s]ue and be sued in the name by which the district is 
designated." The School District argues that, since the School District and the board of trustees are essentially 
interchangeable for purposes of suit, a liability policy protecting individual 
board members is somehow transformed into a school district liability policy. 
This contention obviously cannot be sustained. The statute does not make each 
individual board member the equivalent of the board itself, and a judgment 
against the board or the district is not a judgment against the individual board 
members. Correspondingly, an insurance policy covering board members 
individually is not transformed by operation of the statute into a policy 
covering a school district. The cited statute does not inject any ambiguity into 
the policy. We conclude, therefore, that the insurance policy was not ambiguous 
and that, pursuant to its terms, it did not provide coverage to the School 
District for the judgment against it in the underlying civil rights 
case.

[¶17.]  The School District further asserts, 
however, that the interpretation of the policy urged by St. Paul and now adopted 
by this Court is against public policy. The School 
District premises this argument upon W.S. 1-39-104(b) of the Wyoming 
Governmental Claims Act as that section existed in relation to this claim. That 
section provided:

When liability is alleged 
against any public employee, if the governmental entity determines he was acting 
within the scope of his duty, whether or not alleged to have been committed 
maliciously or fraudulently, the governmental entity shall provide a defense at 
its expense. A governmental entity shall save harmless, and indemnify its public 
employees against any tort claim or judgment arising out of an act or omission 
occurring within the scope of their duties.

The School District, in making this argument, additionally 
relies on a final sentence added to the statute by amendment in 1986.2 The added sentence 
provides:

At the time a judgment is 
rendered against a public employee pursuant to this subsection, the governmental 
entity shall assume the judgment.

The 1986 
amendment, however, became effective after judgment was entered in the 
underlying civil rights case. 1986 Wyo. Sess. Laws ch. 19, sec. 2. Thus, the 
amendment is inapplicable with respect to the judgment against the School District.

[¶18.]  The School District's argument, if we 
understand it correctly, is that, pursuant to the above statute, the School 
District is required to indemnify the board members for any claim or judgment 
rendered against them for their acts occurring within the scope of their duties, 
and therefore the School District, by purchasing a policy providing individual 
coverage to board members, who will in each instance be indemnified by the 
School District, is paying for a risk contingency that cannot occur. Further, 
the School District, relying on the language in the amendment, contends that, 
because the statute requires that any judgment rendered against a board member 
on a tort claim shall be assumed by the governmental entity, i.e., the School 
District, it must follow that any judgment against a board member is a judgment 
against the School District and that, under the terms of the policy as 
interpreted by St. Paul, the policy will never pay off. As a result, according 
to the School District, the policy as 
interpreted is contrary to public policy.

[¶19.]  Although this is an artful and intriguing 
argument, we cannot agree that the statute defeats coverage under the insurance 
policy. Even assuming, arguendo, that the amendatory language of the statute was 
applicable, the statute, by requiring the governmental entity to assume the 
judgment, does not convert a judgment against a public employee into a judgment 
against the governmental entity. The governmental entity is simply required to 
indemnify the employee, and the subject insurance policy in this case would 
cover the School District in that situation. 
Additionally, we perceive that the insurance policy provides broader protection 
to a board member than does the statutorily mandated indemnification. The policy 
does not contain the "scope of his duty" limitation found in the statute nor is 
the policy expressly limited to tort claims as is the statute. It seems to us 
that the policy is tailor-made to cover the risks to the School District that 
are inherent in the mandatory indemnification requirements of the statute and to 
guarantee to board members and district employees that they will have coverage 
regardless of whether the School District is required to indemnify them. The 
policy as interpreted is not against public policy.

[¶20.]  St. Paul, 
in its second issue, argues that the district court erred to the extent that it 
relied on the grounds of estoppel and waiver or the doctrine of reasonable 
expectations to overcome the clear terms of the insurance policy and to enter 
judgment for the School District. We 
agree.

[¶21.]  We first address the estoppel and waiver 
claims as asserted by the School District in 
the action below and reiterated before this Court. These claims are premised on 
certain acts or omissions of Motis as the representative of St. Paul (the estoppel claim) and of St. Paul itself (the 
waiver claim). On May 27, 1983, Motis sent a letter to Leonard Hall, the School 
District's assistant superintendent for business services, regarding coverage 
under the St. Paul and Hartford policies. The 
letter stated in part:

As per our telephone 
conversation on Monday of this week, please be advised of the following as 
cla[ri]fication on the questions that were raised concerning the coverages: * * 
*

St. 
Paul Policy # 
583JJ8503

This policy names as an 
insured in the declarations page, AlbanyCountySchool District # 1. Too, 
the individual board members are provided the protection as respects their 
exposure while serving in their capacity as board members.

The School 
District contends that this letter contained misrepresentations of coverage, on 
which it relied to its detriment, and that therefore St. Paul should be 
estopped from denying coverage. St. Paul, 
however, urges that the School District is an 
insured under the policy, but only to the extent described, and that 
consequently the letter is not misrepresentative. St. 
Paul further suggests that the question of the letter's alleged 
misrepresentation is a contingent question of material fact not properly before 
this Court, as demonstrated by the district court's denial of the cross-motions 
for summary judgment between the School 
District and Motis. We agree that the alleged misrepresentative 
nature of the letter is a factual question, but we further agree with St. Paul that the question is immaterial in resolving the 
issue of whether St. 
Paul is estopped from denying 
coverage.

[¶22.]  In the case of Sowers v. Iowa Home Mutual 
Casualty Insurance Company, 359 P.2d 488 (Wyo. 1961), the insured made estoppel and 
waiver arguments against the insurer on the basis of representations that had 
been made by the insurer's agent. In that case we held, citing extensive 
authority, that conditions going to coverage could not be extended by acts of 
the insurer or its agent under the doctrines of estoppel and waiver. In stating 
this rule, we quoted "16 Appleman, Insurance Law and Practice, pp. 629, 630 
(1944)" at length, including the following passages:

"It has been broadly 
stated that the doctrines of waiver and estoppel cannot be used to extend the 
coverage of an insurance policy or create a primary liability, but may only 
affect rights reserved therein. * * * [U]nder no conditions can the coverage or 
restrictions on coverage be extended by waiver or estoppel. * * 
*

"While a for[]feiture of 
benefits contracted for in an insurance policy may be waived, the doctrine of 
waiver or estoppel cannot create a liability for benefits not contracted for. 
Nor may a contract, under the guise of waiver, be reformed to create a liability 
for a condition specifically excluded by the specific terms of the policy. * * 
*

"The doctrine of implied 
waiver or estoppel is not available to bring within the coverage of an insurance 
policy risks that are not covered by its terms or that are expressly excluded 
therefrom * * *."

Sowers, 359 P.2d  
at 493. We have applied this principle in the more recent cases of Ricci, 721 P.2d 1081, and Tadday v. National Aviation Underwriters, 660 P.2d 1148 (Wyo. 
1983). See also State Farm Mutual Automobile Insurance Company v. Petsch, 261 F.2d 331 (10th Cir. 1958) (insurer's agent's express representation to insured 
that policy fully protected the insured against an employee's claim did not 
estop the insurer from denying coverage where it was plainly excluded by the 
policy); and 16B J.A. Appleman and J. Appleman, Insurance Law and Practice § 
9090 (1981) (reciting and describing the general rule). In the instant case, 
St. Paul is not trying to claim a forfeiture of 
existing coverage, a situation in which waiver and estoppel may apply, but, 
rather, St. Paul 
is simply asserting that coverage never existed. We have previously determined 
that the policy did not cover the School 
District in this case. Therefore, in accordance with the cited 
cases, the coverage afforded by the policy cannot be expanded by estoppel or 
waiver on the basis of the representations of Motis.

[¶23.]  The above principle is equally applicable 
to the School District's contention that St. Paul waived its coverage defense by failing 
to raise the defense in its initial response to the claim. In a letter to the 
School District dated March 8, 1985, St. Paul 
advised that it conditionally agreed to provide a defense for the School District in the underlying case. In this letter 
St. Paul also 
stated: "Furthermore we have advised you that The St. Paul is reserving all its 
rights as to the issues of coverage * * * under the terms and conditions of your 
policy." St. Paul, in this letter, further advised the School District of 
several possible grounds upon which it might deny coverage, stating that, "in 
the event that a judgment is rendered against the Albany County School District 
No. 1 which is based upon non-covered or exclud[ed] grounds, including but not 
limited to the foregoing, the judgment will not be paid by The St. Paul." Waiver 
is the intentional relinquishment of a known right manifested in an unequivocal 
manner. Baldwin v. Dube, 751 P.2d 388 (Wyo. 1988). It is readily apparent from the 
letter that St. 
Paul did not intentionally relinquish a known right by 
failing to specify the coverage defense. St. Paul's agreement to accept the defense of 
the case with "a full reservation of rights" negates any intent to waive any 
objection to coverage. In any event, the principle that the doctrines of 
estoppel and waiver cannot be employed to expand policy coverage is controlling. 
Sowers, 359 P.2d 488. See also State Farm Mutual Automobile Insurance Company v. 
Hartford Accident & Indemnity Company, 646 S.W.2d 379 (Mo. App. 1983) 
(coverage not included in a policy may not be included upon the basis of waiver 
or estoppel for failure to timely assert that defense); and Insurance Company of 
North America v. Coffman, 52 Md. App. 732, 451 A.2d 952 (1982) (defenses founded 
upon lack of basic coverage may not be waived merely by the company's failure to 
specify them in its initial response to the claim, for the effect of that would 
be to expand the policy to create a risk not intended to be undertaken by the 
company). The reliance by the district court upon the doctrines of estoppel and 
waiver in finding coverage for the School 
District was misplaced.

[¶24.]  The district court, in its decision 
letter, also referred to the doctrine of reasonable expectations as justifying 
its decision in favor of the School District. 
St. Paul argues, however, and the School District concedes, that this Court has never 
expressly adopted that doctrine.

[¶25.]  The doctrine of reasonable expectations 
is essentially a rule of construction that acknowledges the usual disparity of 
bargaining power between an insurer and the insured and the fact that insurance 
contracts are generally contracts of adhesion. See Corgatelli v. Globe Life 
& Accident Insurance Company, 96 Idaho 616, 533 P.2d 737 (1975), wherein the 
Idaho Supreme Court described the doctrine and applied it in a split decision, 
and Casey v. Highlands Insurance Company, 100 Idaho 505, 600 P.2d 1387 (1979), 
in which that same court disavowed and refused to adopt the doctrine. Under the 
doctrine, "the court will uphold the insured's reasonable expectations as to the 
scope of coverage, provided that the expectations are objectively reasonable." 2 
G. Couch, Cyclopedia of Insurance Law 2d § 15:16 at 172 (Rev. ed. 1984). 
Professor Keeton describes the operation of the doctrine in this 
fashion:

The objectively 
reasonable expectations of applicants and intended beneficiaries regarding the 
terms of insurance contracts will be honored even though painstaking study of 
the policy provisions would have negated those 
expectations.

R. Keeton, Basic 
Text on Insurance Law § 6.3(a) at 351 (1971). Cases from other jurisdictions 
applying the doctrine include Corgatelli, 533 P.2d 737; National Indemnity 
Company v. Flesher, 469 P.2d 360 (Alaska 1970); and Harr v. Allstate Insurance 
Company, 54 N.J. 287, 255 A.2d 208 (1969).

[¶26.]  The School District contends that, while 
this Court has never expressly adopted the doctrine, the underpinnings of the 
doctrine have been accepted by this Court as reflected in the cases of Sinclair 
Oil Corporation v. Columbia Casualty Company, 682 P.2d 975 (Wyo. 1984), and 
Wilson v. Hawkeye Casualty Co., 67 Wyo. 141, 215 P.2d 867 (1950). We agree that 
those cases, particularly Sinclair Oil Corporation, could be read as approving 
concepts embodied in the doctrine of reasonable expectations. We do not believe, 
however, that it is appropriate in the instant case to evaluate the merits of or 
adopt the doctrine. We have held that the policy in this case is clear and 
unambiguous with respect to coverage. A rule of construction that considers the 
reasonable expectations of the parties is of no assistance where the policy 
terms are clear and unambiguous. We will not absolve the parties to an insurance 
policy from the duty to read the policy. Thus, we decline to adopt or apply the 
doctrine of reasonable expectations in this case, and we hold that it was error 
for the district court to rely upon this doctrine in finding policy coverage.3

[¶27.]  In conclusion, we hold, as a matter of 
law, that under the terms of the insurance policy the School District was not afforded coverage for the judgment 
against it in the underlying case and further that the doctrines of estoppel and 
waiver cannot be employed to extend the policy coverage. Finally, we hold that 
this is not an appropriate case in which to consider adopting or applying the 
doctrine of reasonable expectations. Accordingly, the grant of summary judgment 
in favor of the School District and against St. Paul is reversed. Our holding that, as a 
matter of law, the insurance policy does not cover the School District in this case effectively disposes of the 
controversy between these parties, and there is no need for further proceedings. 
Thus, it is appropriate for us to reverse and remand with instructions that 
summary judgment be entered in favor of St. Paul. See Leithead v. American Colloid 
Company, 721 P.2d 1059 (Wyo. 1986).

[¶28.]  Reversed and remanded for entry of 
summary judgment in favor of St. 
Paul.

FOOTNOTES

1 As noted by St. 
Paul in its brief, since Hartford did 
not appeal, a decision by this Court in favor of St. 
Paul will not deprive the School 
District of insurance coverage for the judgment. The district court 
ruled that Hartford's policy provided coverage, subject to 
a deductible.

2 W.S. 1-39-104(b) was further 
amended in 1988, effective as of June 9, 1988.

3 In the context of the School 
District's reasonable expectations argument, we note the following provision 
located prominently in the policy renewal application signed and acknowledged by 
Leonard Hall on behalf of the School District 
in March of 1984:

5. Is it understood that the 
coverage provided the District applies only to its obligation to indemnify Board 
Members and district employees, and no coverage is provided for suits brought 
directly against the District?   X  
 Yes ____ 
No