Lewis v. Forsberg (Wyoming 2014)

Facts: There were four entities. Lewis Holding was a trucking business in Wyoming. Lexington was an insurance company. NTA was an insurance adjuster that provided insurance adjusting services for Lexington. Forsberg was the insurance agency that helped Lewis buy insurance from Lexington. In 2010, one of Lewis's trailers partially turned over and its back wheels lifted off the ground. Lewis filed an insurance claim. Lexington paid. In 2011, another trailer was damaged. It did not turn over and its wheels did not leave the ground. Lewis filed an insurance claim again. NTA examined the incident. NTA concluded that the 2011 incident was due to mechanical failure or improper welding, not covered by the policy. Lexington did not pay. 

Procedural History: Lewis brought suit against Lexington, NTA, and Forsberg. Lewis claimed that (1) the damage was covered by the policy; and (2) that Lexington had breached the covenant of good faith and fair dealing. Lexington and NTA moved for summary judgment, arguing that the policy covered the 2010 incident because it was an 'upset', but not the 2011 incident, because the latter was due to wear and tear. Forsberg also moved for summary judgment, arguing that as it was not a party to the insurance contract between Lewis and Lexington, it had no liability to Lewis. The district court granted the defendants' motions for summary judgment. Lewis appeals.

Result: Summary judgment affirmed. The policy had a section describing what events would be covered. These included trailer upsets. The policy had a different section describing exclusions. These included mechanical failure and wear and tear. Lexington provided the report of an expert, which said the 2011 incident was due to improper welding techniques and mechanical failure. Lewis asserts that estoppel applies. Lewis says the 2011 incident was sufficiently similar to the 2010 incident, such that Lewis came to rely on the fact that Lexington would pay if such an incident were to occur again. Therefore, Lexington should be estopped from refusing to pay. Both federal law and Wyoming law reject the concept that estoppel applies in insurance contracts to extend coverage to events not expressly covered by the policy. An insurance agent is not liable to a plaintiff where it did not agree to assume liability, as Forsberg did not agree to do so here. There was no breach of the covenant of good faith and fair dealing, which, in an insurance context, is (1) absence of a reasonable basis for denying benefits under a policy; and (2) knowledge or reckless disregard of a lack of a reasonable basis to deny benefits. Here, there was a reasonable basis to deny the claim, as the damage in the 2011 incident fell under the exclusions section of the policy.

The opinion can be read here.