Title: City of Laramie v. Facer

State: wyoming

Issuer: Wyoming Supreme Court

Document:

City of Laramie v. Facer1991 WY 97814 P.2d 268Case Number: 90-54Decided: 07/05/1991Supreme Court of Wyoming
THE CITY OF 
LARAMIE, WYOMING, PETITIONER,

v.

GREG T. FACER, AS FATHER 
AND NATURAL GUARDIAN OF HIS SON, SHANE J. FACER, A MINOR, AND ON HIS OWN BEHALF, 
RESPONDENT.

Bruce A. Salzburg of 
Herschler, Freudenthal, Salzburg, Bonds & 
Rideout, P.C., Cheyenne, for petitioner.

William L. Combs, Harold 
F. Buck, Nicholas Vassallo of Buck Law Offices, Cheyenne, for respondent.

Before URBIGKIT, C.J., 
and THOMAS, CARDINE, MACY, and GOLDEN, JJ.

URBIGKIT, Chief 
Justice.

[¶1.]     By appellate review, we 
are asked whether participation by local governments in a pool fund pursuant to 
W.S. 1-39-118(c)(ii) constitutes a purchase of insurance which would waive 
governmental immunity under W.S. 1-39-118(b) constituting a section of the 
Wyoming Governmental Claims Act, W.S. 1-39-101 through 1-39-120, enacted in 
1979.1 We hold that the governmental unit 
pool fund creation and participation is not the purchase of liability insurance 
coverage and no waiver of governmental immunity under that insurance coverage 
exception results.

[¶2.]     We reverse the decision 
of the district court that the City of Laramie's participation in a W.S. 
1-39-118(c)(ii) pool fund constituted insurance purchase which extended the 
municipality's tort liability to include defect in the design, construction or 
maintenance of the city's streets.

BACKGROUND

[¶3.]     W.S. 1-39-104 provides 
immunity to governmental entities and employees for any tort except as waived by 
the Act. Abelseth v. City of Gillette, 752 P.2d 430 (Wyo. 1988); Hurst v. State, 698 P.2d 1130 (Wyo. 1985). W.S. 
1-39-118(a)2 establishes the maximum liability 
for a governmental entity or employee, but under W.S. 1-39-118(b), permits the 
purchase of liability insurance. Pickle v. Board of CountyCom'rs 
of County of Platte, 764 P.2d 262 (Wyo. 1988); St. Paul Fire and Marine Ins. Co. v. Albany County School Dist. No. 1, 763 P.2d 1255 (Wyo. 1988). The W.S. 
1-39-118(b) purchase of liability insurance extends the governmental unit's 
liability to the extent covered within the liability insurance policy. Pickle, 
764 P.2d 262. The Act waived immunity for negligent operation or maintenance of 
public facilities under W.S. 1-39-111, State v. Stovall, 648 P.2d 543 
(Wyo. 1982), until 1986 when the Wyoming legislature 
repealed this waiver and enacted W.S. 1-39-120, which provided:

     (a) The liability 
imposed by W.S. 1-39-105 through 1-39-112 does not include liability for damages 
caused by:

(i) A defect in the plan 
or design of any bridge, culvert, highway, roadway, street, alley, sidewalk or 
parking area;

(ii) The failure to 
construct or reconstruct any bridge, culvert, highway, roadway, street, alley, 
sidewalk or parking area; or

(iii) The maintenance, 
including maintenance to compensate for weather conditions, of any bridge, 
culvert, highway, roadway, street, alley, sidewalk or parking area.

See White v. State, 784 P.2d 1313 (Wyo. 1989).

[¶4.]     In 1986, Natrona 
County, Laramie County and the cities of Cheyenne, Wyoming and Laramie, Wyoming 
formed a joint powers agreement to create the Wyoming Association of Risk 
Management (WARM) under the authorization of W.S. 1-39-118(c)(ii) and the 
Wyoming Joint Powers Act, W.S. 16-1-102 through 16-1-108. Three years later in 
1989, Greg T. Facer filed a personal injury suit against the City of Laramie as the father and 
natural guardian of his minor son, Shane J. Facer. The suit sought to recover 
for Shane's serious injury when his vehicle left the roadway and struck a city 
sign that had been placed at windshield height resulting in the sign shattering 
the windshield and causing his head injuries. The lawsuit was a claim of 
negligent design, construction, and maintenance. The City of Laramie, pursuant to 
W.R.C.P. 12(b)(6), moved to dismiss for the failure to state a claim upon which 
relief could be granted. The district court denied the motion in concluding that 
the City of Laramie had waived the immunity provided by 
W.S. 1-39-120 by purchasing insurance that provided coverage for "bodily 
injuries" without excluding liability for highway design. We granted a petition 
for a writ of certiorari to review this substantial issue of Wyoming municipality 
law.

DISCUSSION

[¶5.]     That issue addresses 
whether a governmental entity by participation in the pool fund arrangement 
through a joint powers agreement under W.S. 1-39-118(c)(ii) results in the 
purchase of insurance waiver of immunity under W.S. 1-39-118(b) (insurance 
waiver section). If W.S. 1-39-118(c)(ii) creates insurance, the scope of 
resulting liability under subsection (b) will then be determined by interpreting 
the joint powers agreement and its operational documents.3 Conversely, if W.S. 1-39-118(c)(ii) 
is merely a funding mechanism to defray costs created by the exceptions to 
immunity under W.S. 1-39-105 through 1-39-112 or exclusion of immunity under 
federal law, specifically 42 U.S.C.A. § 1981, then liability of the fund is 
determined by statutory interpretation and not by joint power agreement 
documents.

[¶6.]     Our established rules 
of statutory construction control the question of whether the governmental 
pooling provision of W.S. 1-39-118(c)(ii) is a statutory funding mechanism or is 
a purchase of insurance under W.S. 1-39-118(b). To ascertain the intent of the 
legislature, Stovall, 648 P.2d 543, we give effect to every word, clause and 
sentence and construe all components of a statute in pari materia. 
SeeState ex rel. Wyoming 
Workers' Compensation Div. v. Brown, 805 P.2d 830, 843 (Wyo. 1991) and Britton v. Bill Anselmi Pontiac-Buick-GMC, 
Inc., 786 P.2d 855, 864 (Wyo. 1990). Applying our standard rules of 
construction, Kelsey v. Taft, 72 Wyo. 210, 263 P.2d 135 (1953); Houghton Bros. 
v. Yocum, 40 Wyo. 57, 274 P. 10 (1929),4 we hold that W.S. 1-39-118(c)(ii) 
serves the legislative purpose of providing an alternative funding mechanism for 
the governmental unit to defray costs created by the exceptions to immunity 
under W.S.1-39-105 through 1-39-112, but more significantly from non-immunized 
liabilities created by federal law. See 42 U.S.C.A. § 1981 and other variant 
United 
States statutes which may create liabilities 
for local governmental entities or their employees.

[¶7.]     Our analysis of the 
internal structure of W.S. 1-39-118 leads clearly to that conclusion. Subsection 
(a) provides a liability limitation and subsection (b) constitutes a first 
alternative for funding by permitting the acquisition of insurance which both 
covers the liability imposed and extends liability to the amount of policy 
limits provided by the policies which the entity has purchased to protect it 
citizenry. Pickle, 764 P.2d 262. Subsection (c) constitutes the second general 
alternative which establishes four optional categories of self-payment coverage 
systems leaving flexibility and choice to the entity of government:

1. (i) - put aside money 
as an accrual fund;

2. (ii) - join with other 
units of government to set aside funds as a deposit and reassessment 
system;

3. (iv) - with loss to 
utilize an installment payment arrangement; or

4. (v) - deposit of funds 
into a state actuarial determined account as a pool fund maintained by the 
state.

[¶8.]     Not only does this 
internal statutory structure cause rejection of interpretively changing W.S. 
1-39-118(c)(ii) pooled funds into W.S. 1-39-118(b) insurance, but any other 
conclusion would operate against the intent of the WARM participants. Those 
governmental entities seek to limit liability and protect against claim loss and 
not to extend liability exposure.5 We find an interpretation of the 
statutes to be self-defeating and inappropriate if the result were to require 
participants such as WARM to extend liability by joining together or to presume 
knowledgeable intent to assure unnecessary liability in addition to what 
is otherwise created by non-immunized activities included within W.S. 1-39-105 
through 1-39-112 or provided by federal civil rights statutes, 42 U.S.C.A. § 
1981, and other similar federally created rights of recovery where state 
governmental immunity is not necessarily a bar to relief. Monell v. Department 
of Social Services of City of New York, 436 U.S. 658, 98 S. Ct. 2018, 56 L. Ed. 2d 611 (1978); Scheuer v. Rhodes, 416 U.S. 232, 94 S. Ct. 1683, 40 L. Ed. 2d 90 (1974).

In construing the above 
sections of the statute some general rules of construction should be borne in 
mind. Statutes should, of course, be construed with a view to effecting the 
legislative intent, and such intent must be ascertained from the statute or 
statutes. However, a literal construction of the words used will not be 
sanctioned, when such construction would defeat the evident purpose of the 
Legislature. * * * And a construction producing unjust or absurd results will 
not be adopted, unless the terms of the statute preclude any other 
construction.

Houghton Bros., 274 P.  at 
11.

[¶9.]     The decision of the 
trial court is reversed.

FOOTNOTES

1 For a history of the Act 
and detailed comments about its provisions, see State v. Stovall, 648 P.2d 543 
(Wyo. 1982) 
and Comment. Wyoming's Governmental Claims Act: Sovereign 
Immunity With Exceptions - A Statutory Analysis, XV Land & Water L.Rev. 619 
(1980). See also White v. State, 784 P.2d 1313 (Wyo. 1989), Urbigkit, J., 
dissenting.

2 W.S. 1-39-118 
provides:

     (a) Except as provided 
in subsection (b) of this section, in any action under this act, the liability 
of the governmental entity, including a public employee while acting within the 
scope of his duties, shall not exceed:

     (i) The sum of two 
hundred fifty thousand dollars ($250,000.00) to any claimant for any number of 
claims arising out of a single transaction or occurrence; or

     (ii) The sum of five 
hundred thousand dollars ($500,000.00) for all claims of all claimants arising 
out of a single transaction or occurrence.

     (b) A governmental 
entity is authorized to purchase liability insurance coverage covering any acts 
or risks including all or any portion of the risks provided under this act. 
Purchase of liability insurance coverage shall extend the governmental entity's 
liability as follows:

     (i) If a governmental 
entity has insurance coverage either exceeding the limits of liability as stated 
in this section or covering liability which is not authorized by this act, the 
governmental entity's liability is extended to the coverage;

     (ii) Notwithstanding paragraph (i) 
of this subsection, if a governmental entity acquires coverage in an amount 
greater than the limits specified in this section for the purpose of protecting 
itself against potential losses under a federal law and if the purpose of the 
coverage is stated as a part of or by an amendment to the insurance policy, the 
increased limits shall be applicable only to claims brought under the federal 
law.

     (c) In addition to the 
procurement of insurance under subsection (b) of this section a local 
governmental entity may:

     (i) Establish a 
self-insurance fund against the liability of the governmental entity and 
its officers and employees;

     (ii) Join with other 
governmental entities, by joint powers agreements under W.S. 16-1-102 through 
16-1-108, or otherwise, to pool funds and establish a self-insurance fund 
or jointly purchase insurance coverage. Pooled funds may be deposited 
with the state treasurer for disbursement as participating governmental entities 
direct or may be deposited as provided by the terms of the joint powers 
agreement;

     (iii) Repealed by Laws 
1981, ch. 142, § 2.

     (iv) Pay the judgment 
or settlement, with interest thereon, in not to exceed ten (10) annual 
installments in cases of undue hardship and levy not to exceed one (1) mill per 
year on the assessed value of the governmental entity for such 
purpose;

     (v) Enter into 
contracts with the purchasing and property control division of the department of 
administration and fiscal control for the payment of assessments by the local 
government in such amounts as determined by the division to be sufficient, on an 
actuarially sound basis, to cover:

     (A) The potential 
liability, or any portion of potential liability, of the local government and 
its public employees as provided by this act;

     (B) Costs of 
administration;

     (C) Payment by the 
division of claims against the local government and its public employees acting 
within the scope of their duties which have been settled or reduced to final 
judgment.

     (d) No judgment 
against a governmental entity shall include an award for exemplary or punitive 
damages, for interest prior to judgments or for attorney's fees.

     (e) Except as 
hereafter provided, no judgment authorized by this act may be enforced by 
execution or attachment of property of a governmental entity but shall be paid 
only as authorized by this section and W.S. 1-39-113. A judgment authorized by 
this act may be enforced by execution or attachment of the property of a 
governmental entity to the extent coverage of the liability has not been 
obtained under subsection (b) or (c) of this section or W.S. 1-39-115 unless the 
judgment is otherwise satisfied by the governmental entity.

     (f) [Property damage 
provision relating to damage in amounts less than $500.00.]

3 Also, if W.S. 
1-39-118(c)(ii) creates insurance, then it could be argued that the state is 
also operating an insurance fund through usage of the text of W.S. 
1-39-118(c)(v) by conversion of a debt funding concept into an implied insurance 
arrangement provided by the state. Basic liability of both the governmental 
entity and the state fund would consequently be comprehensively 
extended.

4 A concise statement of a 
realistic and comprehensive statutory interpretation and application standard is 
provided in the case of State v. Burnett, 227 Neb. 351, 417 N.W.2d 355, 357 
(1988):

     One of the fundamental 
principles of statutory construction is to attempt to ascertain the legislative 
intent and give its effect. * * * Also, in construing a statute, this court must 
look at the statutory objective to be accomplished, the problem to be remedied, 
or the purpose to be served, and then place on the statute a reasonable 
construction which best achieves the purpose of the statute, rather than a 
construction defeating the statutory purpose.

5 We also doubt that the 
legislative intent included making Wyoming attorneys who prepare joint powers 
agreements into experts on insurance policy draftsmanship. See, for example, St. 
Paul Fire and Marine Ins., 763 P.2d 1255.

CARDINE, Justice, specially 
concurring and dissenting.

[¶10.]  I join with the majority in its holding 
that Shane Facer's suit for negligent design, construction and maintenance of 
the city street is barred under the Wyoming Governmental Claims Act. However, in 
resolving that issue, the opinion of the court's analysis of W.S. 1-39-118 fires 
the wrong arrow in the wrong direction. The question this court should have 
resolved is not whether the city of Laramie had insurance. It did. Rather, we 
should have decided whether the city's insurance provided coverage for Shane 
Facer's injuries.

[¶11.]  The premise of the majority is that self 
insurance is no insurance. This premise is unfounded. There is "no insurance" 
only when there is no funding of a reserve to pay losses. The absurdity of the 
majority opinion is illustrated by reference to W.S. 1-39-118(c), which provides 
that in addition to the procurement of insurance under W.S. 1-39-118(b), a 
governmental entity may:

"(i) Establish a 
self-insurance fund against the liability of the governmental entity and 
its officers and employees;

"(ii) Join with other 
governmental entities, by joint powers agreements under W.S. 16-1-102 through 
16-1-108, or otherwise, to pool funds and establish a self-insurance fund 
or jointly purchase insurance coverage. * * *

* * * * * *

"(iv) Pay the judgment or 
settlement, with interest thereon, in not to exceed ten (10) annual installments 
in cases of undue hardship * * *." W.S. 1-39-118(c) (emphasis 
added).

Only subparagraph (iv) 
describes a no insurance provision, for there is no fund established that 
is committed to the payments of losses.

[¶12.]  The opinion of the court construes W.S. 
1-39-118(c)(ii) by shying away from use of the word "insurance." The majority's 
aversion to that term is surprising since the statute allows governmental 
entities to join together to "establish a self-insurance fund or jointly 
purchase insurance coverage." W.S. 1-39-118(c)(ii) (emphasis added). 
Instead, while invoking the well-accepted rules of statutory construction 
including giving "effect to every word, clause and sentence," maj. op. at 270, 
the opinion of the court substitutes for the word "insurance" such euphemisms as 
"governmental unit pool fund creation and participation" and "a funding 
mechanism for the governmental unit to defray costs created by the exceptions to 
immunity." Maj. op. at 268, 271. Sadly, the quoted language describes insurance. 
Therefore, I dissent to the court's ignoring the plain language of the statute 
and to its resulting conclusion that insurance is not insurance.

[¶13.]  Only by stilted construction and ignoring 
other legislation does this court clear the hurdle of saying self-insurance is 
not insurance at all. This becomes particularly clear when one compares W.S. 
1-39-118(c)(ii) with a related self-insurance statute, W.S. 1-39-118(c)(v). In 
1986, the legislature amended W.S. 1-39-118 to add subsection (c)(v) allowing 
governmental entities to join a state-administered insurance program. 1986 
Wyo. Sess. 
Laws ch. 81 § 2. Wyoming statute 1-39-118(c)(v) 
states:

"[a local governmental 
entity may] [e]nter into contracts with the purchasing and property control 
division of the department of administration and fiscal control for the payment 
of assessments by the local government in such amounts as determined by the 
division to be sufficient, on an actuarially sound basis, to cover:

"(A) The potential 
liability, or any portion of potential liability, of the local government and 
its public employees as provided by this act;

"(B) Costs of 
administration;

"(C) Payment by the 
division of claims against the local government and its public employees acting 
within the scope of their duties which have been settled or reduced to final 
judgment."

The statutes governing 
the administration of this state-run program are contained in W.S. 1-42-101 
through -112. Wyoming statute 1-42-112 provides:

"Self-insurance provided 
under this act shall not be considered a purchase of insurance coverage and 
shall not be deemed an increase of the limits of liability under W.S. 
1-39-118(b)."

[¶14.]  The legislature obviously recognized the 
danger that the self-insurance provided in W.S. 1-39-118(c)(v) could expand 
liability under the Governmental Claims Act. Therefore, it included the 
disclaimer. No such disclaimer, however, is provided for the self-insurance 
provision involved in this case. The W.A.R.M. agreement was established pursuant 
to W.S. 1-39-118(c)(ii):

"[The governmental entity 
may] [j]oin with other governmental entities, by joint powers agreements under 
W.S. 16-1-102 through 16-1-108, or otherwise, to pool funds and establish a 
self-insurance fund or jointly purchase insurance coverage."

[¶15.]  There is a presumption in the law that 
where particular words or terms appear in one provision, but not in another 
related provision, the omission is intentional. See Longfellow v. State, 803 P.2d 1383, 1387 (Wyo. 1991). We can say the same for a 
disclaimer which is effective as to one statute but not to another related 
statute. Had the legislature intended to say that self-insurance under W.S. 
1-39-118(c)(ii) is not "insurance," it would have done so. I conclude from the 
legislature's silence that W.S. 1-39-118(c)(ii) self-insurance constitutes 
"insurance" for purposes of expanding liability under the Governmental Claims 
Act.

[¶16.]  Having established that "self-insurance" 
under W.S. 1-39-118(c)(ii) is "insurance," I now focus on the facts in this 
case. An agreement was entered into between W.A.R.M. and the board's 
participants which specified the required cash payments of each participant and 
the coverage provided. The only logical conclusion that can be drawn from 
reading the W.A.R.M. agreement, by-laws and memorandum of coverage together is 
that this is insurance. Insurance is

"a contract in which one 
undertakes to indemnify another against loss, damage or liability arising from 
determinable hazards or fortuitous occurrences or to pay or allow a specified 
amount or determinable benefit in connection with ascertainable risk 
contingencies." W.S. 26-1-102(a)(xv) (Cum.Supp. 1990). See also 1 Rhodes, Couch on Insurance 2d (Rev. ed. 1984) § 
1:2.

[¶17.]  The City of Laramie joined with Laramie 
County, Natrona County and the City of Cheyenne to form W.A.R.M. in July 1986 
pursuant to the authority granted under W.S. 1-39-118(c). The purpose of 
W.A.R.M. is to seek "the prevention of or reduction of liability exposures which 
could lead to casualty and property losses to political subdivisions." Under 
W.A.R.M.'s bylaws, coverage includes claims for general liability, public 
official liability and automobile liability up $250,000 per claimant and 
$500,000 per occurrence. A "Memorandum of Liability Coverage" states that 
W.A.R.M. will pay a loss by reason of liability imposed by law or assumed by 
contract for damages because of bodily injury, property damage, public official 
errors and omissions, and personal injury. Thus, a contract exists between 
W.A.R.M. and its members. This insurance contract requires W.A.R.M. to indemnify 
its members for described risks and liability. If it looks like a duck, walks 
like a duck, and quacks like a duck, it must be a duck. And so it is with this 
"duck"; it must be insurance.

[¶18.]  However, for Shane Facer, the fact that 
the City of Laramie had insurance does not mean that his 
claim is covered by insurance. W.A.R.M.'s by-laws provide that:

"It shall not be implied 
* * * that [W.A.R.M.] shall pay any claims in excess of the limits of liability 
set forth in W.S. 1-39-101 et seq. or that it waives any immunities or 
privileges granted or retained in the statute except as directed by the Supreme 
Court of the State of Wyoming." (emphasis added)

[¶19.]  The W.A.R.M. agreement was entered into 
July 1, 1986. Prior to that time, on March 19, 1986, W.S. 1-39-120 became 
effective. 1986 Wyo. Sess. Laws ch. 89 § 4. Wyoming statute 1-39-120 
specifically excludes liability for negligent street design, construction and 
maintenance from coverage under the Governmental Claims Act:

"(a) The liability 
imposed by W.S. 1-39-105 through 1-39-112 does not include liability for damages 
caused by:

"(i) A defect in the plan 
or design of any bridge, culvert, highway, roadway, street, alley, sidewalk or 
parking area;

"(ii) The failure to 
construct or reconstruct any bridge, culvert, highway, roadway, street, alley, 
sidewalk or parking area; or

"(iii) The maintenance, 
including maintenance to compensate for weather conditions, of any bridge, 
culvert, highway, roadway, street, alley, sidewalk or parking area."

[¶20.]  The laws in existence at the time of the 
formation of the W.A.R.M. agreement enter into it and become part of it as 
though they were expressly incorporated therein. See, St. Paul Fire and Marine 
Ins. Co. v. Albany County School Dist. No. 1, 763 P.2d 1255, 1258-59 (Wyo. 
1988). The trial court noted the lack of any exclusion for highway safety in the 
W.A.R.M. agreement and concluded that W.A.R.M. covers highway safety claims. 
However, W.S. 1-39-120, which was in effect at the time W.A.R.M. was adopted, 
specifically excludes such claims. W.A.R.M. does not purport to extend liability 
beyond that contained in the Governmental Claims Act. The trial court's 
conclusion was, therefore, wrong. It should be reversed, not because the 
W.A.R.M. agreement was not insurance, but because by its terms it did not expand 
liability beyond that provided in the Governmental Claims Act, including W.S. 
1-39-120.

[¶21.]  Beyond the legal reasoning applicable in 
this case, I have other concerns about the result the majority reaches. If 
self-insurance is not insurance, what is it? What is the coverage? How are 
claims made? How are they paid? I agree that the noninsurance approach to 
non-liability resolves this particular case, but I foresee a multitude of 
problems in future cases. Wyoming statute 1-42-105(c) authorized the creation of 
a board to establish policies, rules and regulations for the state-run local 
governmental insurance program because the program was not subject to the state 
insurance laws. W.S. 1-42-109. If self-insurance under W.S. 1-39-118(c)(ii) is 
not insurance, then is the W.A.R.M. or any other self-insurance board 
unregulated?

[¶22.]  I am compelled to make one final comment. 
The majority opinion contains the following footnote:

"We also doubt that the 
legislative intent included making Wyoming attorneys who prepare joint powers 
agreements into experts on insurance policy draftsmanship." Maj. op., n. 
5.

The statement implies 
that Wyoming 
attorneys lack the competence to draft insurance policies. Such criticism is 
surely undeserved. Wyoming attorneys are called upon to draft 
many types of agreements and contracts and do so very well. There is no reason - 
and the majority offers none - to support a suggestion that Wyoming attorneys lack 
the competence to draft an insurance policy. It may be this kind of myopic 
thinking that causes the state of Wyoming to frequently employ outside counsel, 
often out-of-state counsel, to represent it in important affairs and 
litigation.

[¶23.]  I would hold that there was insurance 
under W.S. 1-39-118(c)(ii). However, the W.A.R.M. agreement does not extend 
liability to negligent street design, construction and maintenance because 
immunity is provided under W.S. 1-39-120, and the W.A.R.M. agreement of 
appellant provided that it did not "waive any immunities * * * granted or 
retained in the statute [Governmental Claims Act]."

[¶24.]  I would reverse on the bases stated in 
this specially concurring and dissenting opinion.