Title: CITY OF POWELL v. BUSBOOM

State: wyoming

Issuer: Wyoming Supreme Court

Document:

CITY OF POWELL v. BUSBOOM2002 WY 5844 P.3d 63Case Number: 01-85Decided: 04/12/2002

APRIL TERM, A.D. 2002

 

                                                                                                            

 

THE 
CITY OF POWELL, an

incorporated 
municipality in

Park 
County, Wyoming, 

Appellant(Defendant),

 

v.

 

ARDYCE 
BUSBOOM and

LAMOINE 
BUSBOOM,

residents 
of Park County, Wyoming, 

Appellees(Plaintiffs).

 

 

Appeal 
from the District Court of Park County

The 
Honorable John C. Brackley, Judge

 

Representing 
Appellant:

Stuart 
R. Day and Susan Chapin Stubson of Williams, Porter, Day & Neville, P.C., 
Casper, Wyoming  

Representing 
Appellees:

Glenn E. 
Smith of Glenn E. Smith & Associates, Cheyenne, Wyoming; and Steven A. 
Hanson of Hanson Law Office, Billings, Montana 

 

Before 
LEHMAN, C.J., and GOLDEN, HILL, KITE, and VOIGT, JJ.

 

            
KITE, Justice. 

[¶1]      Ardyce Busboom 
was employed by the City of Powell, and her husband, Lamoine Busboom, was 
self-employed.  They were both 
covered by the City of Powell's health benefits plan which excluded coverage for 
work-related injuries including those arising from self-employment.  Over a period of years, the City of 
Powell and its agent, Mountain States Administration Company (MSA), paid several 
of Mr. Busboom's work-related claims because the claim forms identified the 
injuries as being nonwork related.  
The Busbooms contended the City of Powell was estopped from denying Mr. 
Busboom's latest claim because it had covered prior similar claims and the 
Busbooms relied upon that coverage.  
The district court granted a summary judgment in favor of the Busbooms on 
the grounds of promissory estoppel, and the City of Powell appealed.  We conclude the City of Powell's action 
did not, as a matter of law, establish a clear and definite promise so as to 
permit the Busbooms to recover under the promissory estoppel theory.  We reverse the summary judgment in favor 
of the Busbooms and remand for the entry of a summary judgment in favor of the 
City of Powell.

 

 

 

[¶2]      The City of 
Powell presents the following issue for our review:

 

            
A.  Did the district court err in its finding that Appellees 
Ardyce and Lamoine Busboom were entitled to judgment as a matter of law based on 
the uncontroverted facts contained in the record as to Plaintiffs' First Claim 
for Relief against the City of Powell alleging Promissory 
Estoppel?

 

The 
Busbooms accept the City of Powell's statement of the 
issue.

 

 

FACTS

 

[¶3]      Mrs. Busboom has 
been an employee with the City of Powell since 1977.  In 1989, the City of Powell adopted a 
partially self-funded health benefits plan (the plan).  It contracted with MSA, a third-party 
administrator for employee health plans, to make all decisions regarding 
coverage for individuals covered under the plan.  MSA's decision-making power was based 
exclusively on the language provided in the plan, and it was not given a 
discretionary function.  Since 1989, 
three different versions of the plan have been in existence.  The initial plan contained an exclusion 
from coverage for "[t]reatment or services due to accidents which are COVERED 
UNDER WORKER'S COMPENSATION or similar legislation, or for any accident or 
illness which occurs while engaged in an occupation for wage or profit with any 
employer."  Every time the City of 
Powell adopted a new plan, it gave a new employee benefits booklet to each 
employee.  The City of Powell 
adopted a new plan in 1996 which likewise contained an exclusion from coverage 
for:

 

2.  Expenses 
for or in connection with any Injury or Illness which arises out of or in the 
course of any occupation for wage or profit or for which the Covered 
Person would be entitled to compensation under any Worker's Compensation Law or 
occupational disease law or similar legislation.  

 

 [¶4]     Yet again, the City of 
Powell adopted a new plan in 1998.  
As had occurred in the past, it distributed an employee benefits booklet 
to all employees.  Mrs. Busboom 
certainly was aware of the new plan because, as part of her employment duties, 
she witnessed the mayor's signature on the adoption of the new plan.  The new plan specified that injuries 
incurred in connection with self-employment were excluded from coverage as being 
work-related and, therefore, would not cover: 

 

2.  Expenses 
for or in connection with any Injury or Illness which arises out of or in the 
course of any occupation for wage or profit (including self-employment) 
or for which the Covered Person would be entitled to compensation under 
any Worker's Compensation Law or 
occupational disease law or similar legislation.

 

The only 
difference between this version and the previous version was the addition of the 
parenthetical language which specifically referenced  self-employment.

 

[¶5]      At all times 
material to this cause of action, Mr. Busboom was a self-employed 
contractor.  In 1989, 1995, and 
1997, Mr. Busboom, a covered dependent, suffered three work-related injuries for 
which he submitted claims under his wife's plan.  The previous claims administrator 
approved his 1989 claim for work-related benefits as MSA had not yet been 
retained.  There are no facts in the 
record to explain on what basis the claims administrator provided coverage to 
Mr. Busboom for that work-related claim.  
However, the last two times he was injured, a box on the claim forms was 
checked which indicated his injuries were not work-related.  The record confirms the medical 
providers erroneously completed and submitted the forms and the Busbooms did not 
see or have an opportunity to change the checked box on the forms.  Based upon those forms, MSA approved 
both claims for benefits. 

 

[¶6]      In 1998, Mr. 
Busboom suffered another serious injury in the course of his 
self-employment.  On this occasion, 
MSA received accurate information that the injury was work-related and denied 
Mr. Busboom's claim for benefits pursuant to the clear language in the 
plan.  The Busbooms appealed the 
decision to MSA to no avail.  On May 
31, 2000, the Busbooms filed a complaint in the district court against the City 
of Powell asserting promissory estoppel and a violation of the duty of good 
faith and fair dealing.  They also 
sought attorney fees.  The City of 
Powell moved for a summary judgment.  
The district court granted a summary judgment in favor of the City of 
Powell on the duty-of-good-faith-and-fair-dealing claim, which the Busbooms did 
not appeal, and both parties stipulated to the dismissal with prejudice of the 
claim for relief requesting attorney fees.  
The district court granted a summary judgment in favor of the Busbooms, 
the nonmoving party, on the grounds of promissory estoppel.  See Leithead v. American Colloid Company, 
721 P.2d 1059, 1064 (Wyo. 1986) (recognizing the district court can a grant 
summary judgment to a nonmoving party).  
The City of Powell appealed.

 

 

STANDARD 
OF REVIEW

 

[¶7]      Summary judgment 
is appropriate when no genuine issue as to any material fact exists and the 
prevailing party is entitled to have a judgment as a matter of law.  Eklund v. PRI Environmental, Inc., 2001 
WY 55, ¶10, 25 P.3d 511, ¶10 (Wyo. 2001); see also W.R.C.P. 56(c).  A genuine issue of material fact exists 
when a disputed fact, if it were proven, would have the effect of establishing 
or refuting an essential element of the cause of action or defense which the 
parties have asserted.  Williams Gas ProcessingWamsutter Company v. 
Union Pacific Resources Company, 2001 WY 57, ¶11, 25 P.3d 1064, ¶11 (Wyo. 
2001).  We examine the record from 
the vantage point most favorable to the party who opposed the motion, and we 
give that party the benefit of all favorable inferences which may fairly be 
drawn from the record.  Id.  We evaluate the propriety of a summary 
judgment by employing the same standards and by using the same materials as were 
employed and used by the lower court.  Scherer Construction, LLC v. Hedquist 
Construction, Inc., 2001 WY 23, ¶15, 18 P.3d 645, ¶15 (Wyo. 2001).  We do not accord any deference to the 
district court's decisions on issues of law.  Id.  

 

 

 

[¶8]      Relying on the 
doctrine of promissory estoppel, the Busbooms argue the previous payments of 
work-related claims estop the City of Powell from denying coverage for Mr. 
Busboom's injuries.  To succeed on a 
promissory estoppel claim, a claimant must show 

 

(1) the 
existence of a clear and definite promise which the promisor should reasonably 
expect to induce action by the promisee; (2) proof that the promisee acted to 
its detriment in reasonable reliance on the promise; and (3) a finding that 
injustice can be avoided only if the court enforces the 
promise.

 

Roussalis 
v. Wyoming Medical Center, Inc., 4 P.3d 209, 253 (Wyo. 2000).  The 
party who is asserting promissory estoppel has the burden of establishing each 
element of the doctrine under a strict proof standard.  Id.  Whether elements one and two exist are 
questions for the finder of fact.  
Id.  Whether element three exists is decided 
as a matter of law by the court.  Id.  

 

 

 

Existence 
of a Clear and Definite Promise

 

[¶9]      The Busbooms 
assert a clear and definite promise was formed through the City of Powell's 
prior approval of three different claims for injuries that occurred in the 
course of Mr. Busboom's self-employment.  
They contend this prior conduct resulted in an affirmative representation 
that future injuries arising in the course of his self-employment would be 
covered under the plan.  According 
to the Busbooms, the City of Powell should have reasonably expected that the 
payments made on separate occasions would induce forbearance on their part; 
i.e., they did not purchase additional insurance to adequately protect Mr. 
Busboom.  

 

[¶10]   The existence of a clear and 
definite promise is a fundamental element of promissory estoppel.  A promise has been defined as a 
manifestation of intention to act or to refrain from acting in a specified way 
made so as to justify a promisee in understanding that a commitment has been 
made.  Restatement (Second) of 
Contracts § 2(1) (1981); see also 1 
Richard A. Lord, Williston on Contracts § 1:2 (4th ed. 1990); 28 Am. Jur. 2d Estoppel and Waiver § 55 (2000).  "Drawing heavily from the Restatement's 
definition of promise, it has been suggested that [a] promise may be stated in 
words, either orally or in writing, or may be inferred wholly or partly from 
conduct. . . . Both language and conduct are to be understood in the light of 
the circumstances.'" State Bank of 
Standish v. Curry, 500 N.W.2d 104, 108 (Mich. 1993) (quoting Farber & 
Matheson, Beyond promissory estoppel: 
Contract law and the "Invisible Handshake," 52 U. Chi. L. Rev. 903, 932 and 
n.104 (1985)).  This court has held 
promissory estoppel provides relief for an "injury arising from actions or declarations which have 
been acted on in good faith and which would be inequitable to permit a party to 
retract.'" Davis v. Davis, 855 P.2d 342, 347-48 (Wyo. 1993) (quoting Jankovsky v. Halladay Motors, 482 P.2d 129, 132 (Wyo. 1971)) (emphasis added); see also Worley v. Wyoming Bottling Company, 
Inc., 1 P.3d 615, 623 (Wyo. 2000).  
However, conduct that is not specifically demonstrative of an intention 
respecting future conduct cannot serve as a foundation for a clear and definite 
promise.  State Bank of Standish, 500 N.W.2d  at 
108.

 

[¶11]   The Busbooms correctly recognize 
that our promissory estoppel jurisprudence has been primarily focused in the 
employment realm.  However, in Doctors' Company v. Insurance Corporation of 
America, 864 P.2d 1018 (Wyo. 1993), we embraced the application of the 
promissory estoppel doctrine to instances involving insurance contracts.  In that case, the insured successfully 
asserted promissory estoppel to preclude an insurer from denying coverage when 
the insurer's retroactive coverage, without express exclusionary language, was 
an affirmative representation that coverage would be provided for the potential 
claim at issue.  The insured, a 
doctor, specifically informed the insurer in his application for insurance 
coverage of the circumstances surrounding a potential medical malpractice claim 
that could arise.  The insurer 
responded by issuing a policy with retroactive coverage and, in doing so, failed 
to expressly exclude coverage for the potential claim.  864 P.2d  at 1029-30.  That case is easily distinguishable from 
the instant case wherein the plan specifically includes express exclusionary 
language for work-related injuries and inaccurate information was provided to 
MSA regarding the claims upon which it relied to authorize payments.  In Doctors' Company, we explained that, if 
an unambiguous promise is made in circumstances calculated to induce reliance 
and the promise does so, the promisee may recover damages.  864 P.2d  at 1029.  The requirement that the promise be 
calculated to induce reliance is the death knell of the Busbooms' 
argument.

 

[¶12]   The evidence fails to establish the 
City of Powell made a clear and definite promise calculated to induce 
reliance.  A determination of 
whether a clear and definite promise exists requires inquiry into the 
circumstances surrounding the making of the asserted promise.  State Bank of Standish, 500 N.W.2d  at 
108-09.  The record verifies the 
City of Powell, through its agent, was under the mistaken belief that Mr. 
Busboom's injuries were not work-related based upon the submitted claim 
forms.  When Mrs. Busboom was asked 
whether she knew of any information or evidence which would have alerted MSA 
that Mr. Busboom's previous injuries were work-related, she replied "no."  Nothing in the record indicates the City 
of Powell should have reasonably known the claims in the past actually involved 
payment for work-related injuries.  
The Busbooms imply the City of Powell, through its agent, should have 
investigated further to determine whether the information provided was 
accurate.  However, they do not 
direct this court to any authority for the proposition that an insurer has the 
duty to investigate all information provided to it prior to paying a claim and, 
if it does not, it is bound to pay future claims which are expressly excluded 
under the terms of the insurance contract.  
"Where the conduct or representation of the party sought to be estopped 
is due to ignorance founded upon an innocent mistake, no estoppel will 
arise."  28 Am. Jur. 2d Estoppel and Waiver § 48 at 477 
(2000).1  Therefore, given the City of Powell's 
lack of knowledge as a result of a mistake, it could not have calculated to 
induce the Busbooms to rely on past payments to assure all future claims clearly 
excluded from coverage would be paid.  
The mere expectancy of a continued course of conduct is not enough to 
fall within the umbrella of the promissory estoppel doctrine, even in situations 
where the disappointment of expectations results in a heavy financial loss.  Tauber v. Jacobson, 293 A.2d 861, 867 
(D.C. Cir. 1972).  

 

[¶13]   Furthermore, the Busbooms disregard 
the import of the language in the plan which unambiguously excludes 
self-employment-related injuries.  
The City of Powell cannot be forever bound by erroneously providing 
coverage in the past based solely on another's mistake.  This is especially true considering the 
City of Powell exercised its right to revise the plan by inserting very specific 
exclusionary language for self-employment-related injuries.2  Therefore, even if the City of Powell's 
prior conduct arguably could have induced reliance, that conduct must be viewed 
in light of all the circumstances including the amendment to the plan which 
unequivocally referenced self-employment and was in effect at the time of Mr. 
Busboom's 1998 injury.  

 

[¶14]   Finally, the Busbooms rely on 
various statements and conversations that occurred between Mrs. Busboom and City 
of Powell employees to reinforce and support the nature of the clear and 
definite promise.  However, the 
Busbooms concede these statements and conversations alone cannot establish a 
clear and definite promise.  
Moreover, the conversations with the city employees occurred after Mr. 
Busboom was injured and were nothing more than sympathetic words of support from 
co-workers.  Therefore, they cannot 
form the basis of a clear and definite promise made before the injury occurred 
which is sufficient to overcome the effect of an express exclusion in the 
plan.  

 

[¶15]   We conclude, as a matter of law, 
there is no support in the record for a finding of a clear and definite promise 
calculated to induce reliance.  
Given this holding, the first criteria of the Busbooms' promissory 
estoppel claim has not been satisfied.  
Failure to satisfy one element defeats a promissory estoppel claim; 
therefore, we do not need to consider the two remaining elements.  Hulse v. First Interstate Bank of 
Commerce-Gillette, 994 P.2d 957, 959 (Wyo. 2000).  

 

[¶16]   We recognize our holding may impose 
a financial hardship on the Busbooms.  
However, we cannot let our sympathy for their circumstances govern our 
decision as a matter of law.  In the 
summary judgment context, we generally either affirm the district court's order 
or reverse and remand for further proceedings.  Leithead, 721 P.2d  at 1063.  However, there are certain instances, 
such as in this case, in which we reverse and remand with instructions to the 
district court to enter summary judgment in favor of the unsuccessful 
party.  721 P.2d  at 1063-64.  We hold that entry of a summary judgment 
in favor of the City of Powell is appropriate.

 

[¶17]   Reversed and 
remanded.

 

FOOTNOTES

1This section falls generally under the 
theory of equitable estoppel.  
However, we cannot perceive any countervailing arguments why it should 
not equally apply in the context of promissory estoppel as both theories are 
founded on concepts of equity.

 

  
2A provision in 
the plan permitted it to be amended at any time.