IN THE SUPREME COURT, STATE OF WYOMING

2014 WY 26

 OCTOBER TERM, A.D. 2013

February 21, 2014

LEWIS HOLDING COMPANY, INC., a 

Wyoming Corporation,

Appellant

(Plaintiff),

v.

FORSBERG ENGERMAN COMPANY, a 

Colorado Corporation, NTA, INC., an Indiana 

Corporation, and LEXINGTON INSURANCE 

COMPANY,

Appellees

(Defendants).

No. S-13-0093

Appeal from the District Court of Sheridan County

The Honorable John G. Fenn, Judge

Representing Appellant:

James P. Castberg, Castberg Law Office, Sheridan, Wyoming.

Representing Appellee, Forsberg Engerman Company:

Weston W. Reeves and Anna M. Reeves Olson, Park Street Law Office, Casper, 

Wyoming. Argument by Ms. Olson.

Representing Appellees, NTA, Inc. and Lexington Insurance Company:

Jason A. Neville and David E. Shields, Williams, Porter, Day & Neville, P.C. 

Casper, Wyoming. Argument by Mr. Shields.
Before KITE, C.J., and HILL, VOIGT*, BURKE, and DAVIS, JJ.

*Justice Voigt retired effective January 3, 2014.

NOTICE: This opinion is subject to formal revision before publication in Pacific Reporter Third. Readers 

are requested to notify the Clerk of the Supreme Court, Supreme Court Building, Cheyenne, Wyoming 

82002, of any typographical or other formal errors so that correction may be made before final publication in 

the permanent volume.
1

BURKE, Justice.

[¶1] In this insurance coverage dispute, the district court granted summary judgment in 

favor of defendants Lexington Insurance Company, NTA, Inc., and Forsberg Engerman 

Company, and against plaintiff Lewis Holding Company, Inc. Lewis Holding challenges 

that ruling on appeal. We will affirm.

ISSUES

[¶2] Lewis Holding presents two issues:

1. Did the trial court err in granting the defendants’ 

motions for summary judgment on the issue of estoppel?

2. Did the trial court err in granting the defendants’ 

motions for summary judgment on the issue of breach of the 

covenant of good faith and fair dealing?

FACTS

[¶3] Lewis Holding is a Wyoming corporation engaged in the trucking business. 

Lexington is an insurance company, and NTA provides insurance adjusting services to 

Lexington. Forsberg is the insurance agency that helped Lewis Holding purchase 

insurance from Lexington.

[¶4] In October, 2010, one of Lewis Holding’s side-dump trailers was damaged while 

unloading. Details of the incident are unclear, but it is undisputed that the trailer partially 

turned over and its back wheels were lifted off the ground. Lewis Holding filed an 

insurance claim, which Lexington paid.

[¶5] In April, 2011, another of Lewis Holding’s side-dump trailers was damaged. 

Again, details are unclear, but it is undisputed that this trailer did not turn over and its 

wheels never left the ground. As before, Lewis Holding filed an insurance claim. NTA’s 

adjuster examined the trailer. Based on his report, NTA issued a reservation of rights 

letter on Lexington’s behalf, indicating that the damage may not be covered by the policy 

because it was due to mechanical failure or wear and tear. After the trailer was inspected 

a second time, Lexington denied the insurance claim on the basis that the damages were 

not the result of an upset or collision, but rather “the result of improper welding from 

previous repairs.”

[¶6] Lewis Holding filed suit against Lexington, NTA, and Forsberg. It claimed that 

the damage was covered by the insurance policy. It further claimed that the defendants 

had breached the covenant of good faith and fair dealing by failing to pay the claim.
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[¶7] Lexington and NTA moved for summary judgment, pointing out that the insurance 

policy covered loss or damage caused by “upset,” but excluded coverage for loss or 

damage “resulting from wear and tear” or “mechanical . . . failure.” They explained that 

Lexington paid the 2010 claim because the wheels of the trailer were off the ground, 

which constituted an “upset.” They asserted that coverage was properly denied for the 

2011 incident because the damage was due to “wear and tear” and “mechanical 

breakdown.” Forsberg also moved for summary judgment on the basis that it was not a 

party to the insurance contract between Lewis Holding and Lexington. Forsberg asserted 

that it could not be liable for the insurance claim because it was only an agent, not the 

insurer. 

[¶8] The district court granted the defendants’ motions for summary judgment. Lewis 

Holding challenges that decision in this appeal.

STANDARD OF REVIEW

[¶9] When reviewing a district court’s decision to grant summary judgment, we apply a 

familiar standard of review:

Summary judgment is appropriate when there are no genuine 

issues of material fact and the moving party is entitled to 

judgment as a matter of law. W.R.C.P. 56(c); Metz Beverage 

Co. v. Wyoming Beverages, Inc., 2002 WY 21, ¶ 9, 39 P.3d 

1051, 1055 (Wyo. 2002). “A genuine issue of material fact 

exists when a disputed fact, if it were proven, would establish 

or refute an essential element of a cause of action or a defense 

that the parties have asserted.” Id. Because summary 

judgment involves a purely legal determination, we undertake 

de novo review of a trial court’s summary judgment decision. 

Glenn v. Union Pacific R.R. Co., 2008 WY 16, ¶ 6, 176 P.3d 

640, 642 (Wyo. 2008).

Jacobs Ranch Coal Co. v. Thunder Basin Coal Co., LLC, 2008 WY 101, ¶ 8, 191 P.3d 

125, 128-129 (Wyo. 2008).

DISCUSSION

I. Estoppel

A. Claims against Lexington Insurance Company and NTA, Inc.

[¶10] In support of their motion for summary judgment, Lexington and NTA submitted 
3

a copy of the insurance agreement between Lewis Holding and Lexington. Two of the 

policy’s provisions were highlighted. The portion entitled “PERILS COVERED” 

included the following language: 

Section A. Collision or Upset.

This Section covers loss of or damage to vehicle caused by 

accidental collision of the vehicle with another object, or by 

upset, provided always that the deductible specified in the 

Schedule shall be deducted from the amount of each loss or 

damage to each vehicle.

The portion entitled “EXCLUSION” provided that coverage under the policy did not 

apply to loss or damage “resulting from wear and tear, freezing or over-heating, 

mechanical or electrical breakdown or failure, unless such damage is [a] direct result of 

perils covered under this policy.”

[¶11] Paul Lewis, a former stockholder, director, and officer of Lewis Holding, testified 

in his deposition that the trailer almost tipped over in the 2010 incident, and the rear 

wheels were off the ground. Because this incident involved an “upset,” which is covered 

under the insurance agreement, Lexington paid the claim. Mr. Lewis also testified that, 

in the 2011 incident, the wheels of the trailer remained on the ground, and during normal 

operations, some part of the trailer broke. There was no “upset,” as had occurred in the 

earlier incident. Lexington provided the report of an expert in the inspection, 

examination, and investigation of mechanical systems, who concluded that the trailer 

involved in the 2011 incident had been “compromised due to improper welding 

techniques,” and the damage was due to mechanical failure. Because the insurance 

agreement excludes damages resulting from mechanical failure, Lexington declined to 

pay the insurance claim for the 2011 incident.

[¶12] Lewis Holding does not dispute that the language of its insurance policy indicates 

that “upset” incidents are covered while “mechanical failure” is excluded. It insists, 

however, that the 2011 incident was “similar” to the 2010 incident, and because 

Lexington paid the 2010 claim, it is estopped from denying the 2011 claim. Lewis 

Holding cites several cases involving estoppel, including State Farm Mut. Auto. Ins. Co. 

v. Petsch, 261 F.2d 331, 335 (10th Cir. 1958), in which the Tenth Circuit Court of 

Appeals explained as follows:

Estoppel is governed by equitable considerations. Equitable 

estoppel is the effect of the voluntary conduct of a party 

whereby he is absolutely precluded from asserting rights 

which might otherwise have existed as against another person 
4

who has in good faith relied upon such conduct and has been 

led thereby to change his position for the worse.

Lewis Holding argues that Lexington’s payment of the 2010 claim, “plus its failure to 

notify [Lewis Holding] that this type of loss might not be covered” are sufficient to 

establish Lewis Holding’s claim of estoppel.

[¶13] A careful reading of the State Farm decision reveals that it does not support Lewis 

Holding’s claim. Following its explanation of equitable estoppel, the court continued to 

say that “the coverage of an insurance policy may not be extended by waiver or estoppel. 

This is in accord with general law.” State Farm, 261 F.2d at 335. It is also in accord 

with Wyoming law:

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 
5

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 [v. New Hampshire Ins. Co.], 

721 P.2d 1081 [(Wyo. 1986)], 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).

St. Paul Fire & Marine Ins. Co. v. Albany County Sch. Dist., 763 P.2d 1255, 1261-1262 

(Wyo. 1988).

[¶14] In the current case, the insurance agreement between Lewis Holding and 

Lexington plainly and unambiguously excludes coverage for damages due to mechanical 

failure. The doctrine of estoppel cannot be used to extend the insurance coverage to

include risks that are expressly excluded by the policy. The district court did not err in 

granting summary judgment in favor of Lexington and NTA.

B. Claim against Forsberg Engerman Company

[¶15] The factual basis for Lewis Holding’s claims against Forsberg is that Lewis 

Holding “dealt solely with Forsberg,” and made its insurance payments to Forsberg. The 

insurance policy had been mailed to Lewis Holding from Forsberg’s office. While 

acknowledging that Lexington issued the insurance policy at issue, Lewis Holding 

contends that it had no direct dealings with Lexington. Lewis Holding has not, however, 

presented any legal authority that supports its claim that these facts are sufficient to 

render Forsberg liable under an insurance contract between Lewis Holding and 

Lexington.

[¶16] Forsberg, in contrast, cites cases from several jurisdictions applying the rule that 

an insurance agent who is not a party to an insurance contract cannot be held liable for 

insurance claims. For example, in Shrewsbery v. National Grange Mut. Ins. Co., 395 

S.E.2d 745, 748 (W.Va. 1990), the West Virginia court stated that an insurance agent “is 

not party to a contract with the insured; rather, he helps the company procure and service 

the company’s contract with the insured.” Forsberg also quotes Hogan v. Postin, 695 

P.2d 1042, 1045 (Wyo. 1985), for the principle that, “Absent an agreement to assume 
6

liability for nonperformance of a contract, an agent is not personally liable.” Hogan did 

not involve an insurance agent, but it provides general support for Forsberg’s assertion

that an insurance agent cannot be held liable under an insurance contract to which it is not 

a party.

[¶17] We agree with Forsberg’s assertion. Forsberg was the agent who helped Lewis 

Holding obtain its insurance, but it is not a party to that insurance policy. Lewis Holding 

does not contend that Forsberg agreed to assume liability under the insurance policy, and 

it offers no other factual basis or legal theory for holding Forsberg liable under the 

insurance policy. The district court correctly granted Forsberg’s motion for summary 

judgment.

II. Covenant of Good Faith and Fair Dealing

[¶18] Lewis Holding also asserted claims against Lexington, NTA, and Forsberg for 

breach of the covenant of good faith and fair dealing. In the insurance context, we have 

held that “[t]o prove a claim for bad faith, a plaintiff must demonstrate (1) the absence of 

a reasonable basis for denying benefits of the policy and (2) the defendant’s knowledge 

or reckless disregard of the lack of a reasonable basis for denying the claim.” Matlack v. 

Mountain West Farm Bureau Mut. Ins. Co., 2002 WY 60, ¶ 19, 44 P.3d 73, 81 (Wyo. 

2002). We have previously concluded that Lexington, NTA, and Forsberg were not 

liable to Lewis Holding under the insurance policy. This conclusion also establishes that 

these parties had reasonable bases for denying Lewis Holding’s claim. We therefore 

affirm the district court’s grant of summary judgment in their favor on Lewis Holding’s 

claim for breach of the covenant of good faith and fair dealing.