Title: Michie v. Board of Trustees of Carbon County School Dist. No. 1,

State: wyoming

Issuer: Wyoming Supreme Court

Document:

Michie v. Board of Trustees of Carbon County School Dist. No. 1,1993 WY 28847 P.2d 1006Case Number: 92-161Decided: 03/01/1993Supreme Court of Wyoming
Dr. 
David F. MICHIE and Betsy Michie, 

Appellants 
(Plaintiffs),

v.

The 
BOARD OF TRUSTEES OF CARBON COUNTY SCHOOL DISTRICT NO. 1,

 Appellee (Defendant).

Appeal 
from District Court, Carbon County, Larry L. Lehman, J.

Nicholas 
Vassallo and Harold F. Buck of Buck Law Offices, Cheyenne, for the 
appellants.

Dan 
B. Riggs and Haultain E. Corbett of Lonabaugh and Riggs, Sheridan, and John E. 
Stanfield of Smith, Stanfield and Scott, Laramie, for the 
appellee.

Before 
MACY, C.J., THOMAS, CARDINE and TAYLOR, JJ., and BROWN, J. 
(Ret.)

MACY, 
Chief Justice.

[¶1]      Dr. and Mrs. 
David F. Michie appeal from a district court order which granted a summary 
judgment adverse to their claim that the Board of Trustees of Carbon County 
School District No. 1 should be estopped from terminating their coverage under 
the school district's group health insurance plan.

[¶2]      We 
affirm.

[¶3]      The Michies raise 
a single issue for our consideration:

     Is an enforceable 
contractual obligation a necessary element of a claim for promissory 
estoppel?

[¶4]      Dr. Michie served 
as an elected member of the Board of Trustees from 1981 to December 1988. In the 
fall of 1984, the Board of Trustees requested the school superintendent to 
investigate whether the board members could legally participate in the school 
district's insurance plan. The superintendent contacted the school attorney for 
a legal opinion.

[¶5]      At a Board of 
Trustees meeting held on October 11, 1984, the school attorney opined that the 
board members could participate in the insurance plan without violating Wyo. 
Stat. § 21-3-107 (1992)1 as long as each participant paid 
his own premium. The superintendent also informed the board members that 
participation in the insurance plan would not be limited to their terms on the 
Board of Trustees. The minutes reflect that the Board of Trustees took the 
following action:

Smith 
then moved to allow board members to be put on the group insurance program at 
their own expense. Motion seconded by Michie and carried.

Dr. 
Michie canceled his family's health insurance policy shortly after the 
aforestated action was taken and enrolled under the school district's insurance 
plan effective December 1, 1984. John Smith enrolled sometime later.

[¶6]      Dr. Michie and 
Mr. Smith did not serve on the Board of Trustees after 1988. On March 23, 1989, 
the then-elected Board of Trustees voted unanimously to disallow participation 
by all board members, past or present, in the school district's insurance plan. 
The school district's business manager subsequently informed Dr. Michie and Mr. 
Smith of the Board of Trustees' action. Dr. Michie informed the Board of 
Trustees by letter that he intended to seek "redress and relief."

[¶7]      The Michies filed 
a complaint against the Board of Trustees in the United States District Court 
for the District of Wyoming on April 3, 1991. They advanced four claims by way 
of this complaint. First, the Michies asserted that the Board of Trustees 
breached an alleged contract to allow them to participate in the insurance plan 
until they were eligible for Medicare. Second, the Michies claimed that they 
should be allowed to continue to participate in the insurance plan under the 
principle of promissory estoppel because Mrs. Michie, a diabetic, had been 
unable to procure adequate insurance privately. Third, the Michies stated a 
claim under 42 U.S.C. § 1983 for the deprivation of property without due 
process. Finally, the Michies requested that punitive damages be awarded for the 
Board of Trustees' alleged willful and wanton misconduct.

[¶8]      The Board of 
Trustees moved for a summary judgment after it answered the complaint and 
conducted discovery. At the hearing on this motion, the Board of Trustees 
argued, among other things, that any obligation undertaken by the 1984 Board of 
Trustees was not enforceable against a subsequent Board of Trustees as a matter 
of public policy unless it could be shown that the obligation was "reasonably 
necessary or of a definable advantage" to the school district. Mariano & 
Associates, P.C. v. Board of County Commissioners of County of Sublette, 737 P.2d 323, 332 (Wyo. 1987).

[¶9]      The federal 
district court ruled in its summary judgment order that the Michies could not 
maintain their 42 U.S.C. § 1983 action because they possessed no property right, 
under either contract law or equity, to continue to participate in the school 
district's insurance plan. The court made this ruling upon determining: (1) that 
the 1989 Board of Trustees effectively voided the alleged contract because the 
Michies failed to demonstrate that it was either "reasonably necessary or of a 
definable advantage" to the school district; and (2) that equitable remedies, 
being discretionary in nature, do not give rise to legal rights cognizable under 
42 U.S.C. § 1983. The court accordingly granted a summary judgment in favor of 
the Board of Trustees on the Michies' breach-of-contract and 42 U.S.C. § 1983 
claims. It also dismissed the Michies' promissory estoppel and punitive damages 
claims, without prejudice, for lack of subject matter jurisdiction.

[¶10]   The Michies renewed their 
promissory estoppel claim against the Board of Trustees by filing a complaint in 
state district court on January 13, 1992. Once again, the Board of Trustees 
moved for a summary judgment after answering the complaint. The court heard 
argument on this motion on April 27, 1992, and thereafter issued its decision 
letter. In its decision letter, the court explained that the Board of Trustees 
was entitled to a judgment as a matter of law because the Michies failed to 
demonstrate "the existence of a contract or enforceable promise under which 
estoppel could be grounded." The court subsequently filed an order of summary 
judgment from which this appeal is taken.

[¶11]   The Michies concede on appeal that 
the federal district court determined that they did not have an enforceable 
contract with the school district because any contract which might have existed 
was effectively voided by the 1989 Board of Trustees. They contend, however, 
that the state district court erred as a matter of law by granting a summary 
judgment on their promissory estoppel claim, apparently on this basis. The 
Michies argue that an enforceable contractual obligation is not an element of a 
promissory estoppel claim.

[¶12]   We agree that a claim for 
promissory estoppel is not dependent upon the existence of a promise which is 
enforceable under traditional contract principles. See McDonald v. Mobil Coal 
Producing, Inc., 789 P.2d 866 (Wyo. 1990), on reh'g, 820 P.2d 986 (Wyo. 1991). 
By definition, promissory estoppel is an equitable remedy for detrimental 
reliance upon a promise which does not rise to the level of a formal contract. 
As explained in RESTATEMENT (SECOND) OF CONTRACTS § 90(1) (1981):

     A promise which the 
promisor should reasonably expect to induce action or forbearance on the part of 
the promisee or a third person and which does induce such action or forbearance 
is binding if injustice can be avoided only by enforcement of the promise. The 
remedy granted for breach may be limited as justice 
requires.

[¶13]   This Court has recognized that 
promissory estoppel may be used as an affirmative cause of action. Hanna State 
& Savings Bank v. Matson, 53 Wyo. 1, 77 P.2d 621 (1938). The elements which 
must be proved in a promissory estoppel action are:

"(1) 
a clear and definite agreement; (2) proof that the party urging the doctrine 
acted to its detriment in reasonable reliance on the agreement; and (3) a 
finding that the equities support the enforcement of the agreement."

Inter-Mountain 
Threading, Inc. v. Baker Hughes Tubular Services, Inc., 812 P.2d 555, 559 (Wyo. 
1991) (quoting Provence v. Hilltop National Bank, 780 P.2d 990, 993 (Wyo. 
1989)). See also Lavoie v. Safecare Health Service, Inc., 840 P.2d 239 (Wyo. 
1992). Whether elements one and two exist are questions for the finder of fact. 
See McDonald, 789 P.2d  at 870. Whether element three is satisfied is decided as 
a matter of law by the court. Inter-Mountain Threading, Inc., 812 P.2d  at 
560.

[¶14]   In the instant case, the Michies 
contend that they presented evidence to satisfy each promissory estoppel 
element. We agree, however, with the state district court that the Michies 
failed to demonstrate "the existence of a contract or enforceable promise." We 
do not believe that the court was confused about the law of promissory estoppel 
as argued by the Michies. Rather, we understand the court's summary judgment 
order to be founded upon simple deductive reasoning: If it is against public 
policy to enforce an extended-term governmental contract, it is also against 
public policy to enforce an extended-term governmental promise embodied in the 
contract.

[¶15]   In Mariano & Associates, P.C., 
this Court directly addressed the issue of whether extended-term governmental 
contracts are voidable as a matter of public policy. The Sublette County 
Commissioners entered into a two-year written contract with Mariano & 
Associates for accounting services. After one year, the subsequently-elected 
Commissioners canceled the contract and entered into a contract with another 
accountant. Mariano & Associates sued the County for breach of contract and 
lost on summary judgment. On appeal, this Court stated:

[A]n 
agreement extending beyond the term of the contracting authority . . . may be 
voidable by the government or void upon attack by a third party if, under the 
facts and circumstances, the agreement is not reasonably necessary or of a 
definable advantage to the city or governmental body. The issue when raised is 
decided as a matter of law, and the burden of evidence of the actual facts 
defining convenience and necessity devolve either upon the non-governmental 
contracting party when attacked by the government or upon the third party who 
separately might attack the validity of the contract.

737 P.2d  at 331-32.

[¶16]   We more recently addressed this 
issue in Keabler v. City of Riverton, 808 P.2d 205 (Wyo. 1991). There, the 
Riverton City Council voted to terminate a self-funded employee insurance 
program. The city employees sued the City for breach of contract on the basis of 
representations made in the personnel policies and procedures manual. On appeal 
from a summary judgment, this Court held:

[T]he 
City is entitled to summary judgment as a matter of law since the employees 
failed to present any material fact which would demonstrate that it was 
reasonably necessary or of a definable advantage to the City to extend the 
insurance coverage beyond the term of the Riverton City Council which adopted 
the personnel policies and procedures manual providing such 
insurance.

808 P.2d  at 207.

[¶17]   The public policy underlying the 
rule first articulated in Mariano & Associates, P.C. and later applied in 
Keabler is straightforward: A governing body should not be able to deprive its 
successor in interest of discretion to act for the public good. Mariano & 
Associates, P.C., 737 P.2d  at 329. We believe that this policy applies not only 
to extended-term governmental contracts but also to extended-term governmental 
promises which do not constitute formal contracts. Accordingly, both are 
voidable absent a showing of reasonable necessity or definable advantage. The 
Michies were not able to satisfy this requirement in federal court and are 
collaterally estopped from attempting to do so now. The equities of this case do 
not support the application of the doctrine of promissory estoppel against the 
Board of Trustees. The Board of Trustees was entitled to a summary judgment as a 
matter of law.

[¶18]   Affirmed.

FOOTNOTES

1 
Section 21-3-107 provides:

The 
members of the boards of trustees of each school district shall serve without 
compensation; provided, that the members may receive mileage to and from board 
meetings at a rate not to exceed the maximum allowed by law for state 
employees.