913 F.3d 977
10th Cir.2019Background
- Clemens Coal (bankrupt) was required by federal law to carry black-lung endorsement coverage; Dennis Woolman was the company’s last president and was exposed to potential personal liability if coverage was absent.
- Woolman delegated insurance procurement to consultant James Worley; Worley purchased a cheaper Liberty Mutual workers’ compensation policy (11/1/1996–11/1/1997) that explicitly excluded federal occupational-disease (black-lung) claims.
- Liberty Mutual’s agent Deborah Smith had no coal-industry experience and did not recall receiving Clemens’ prior Hartford policy; key documentary evidence (the prior Hartford policy and the insurance application) was largely unavailable at trial.
- Former employee Clayton Spencer later filed a federal black-lung claim; Liberty Mutual denied coverage and sought a declaratory judgment that the policy excluded black-lung claims; Woolman counterclaimed for breach of a duty to procure proper coverage and asserted equitable and promissory estoppel defenses.
- A jury awarded Woolman damages on the breach-of-duty claim, but the district court set the verdict aside under Rule 50 and entered judgment for Liberty Mutual, concluding Liberty Mutual owed no duty to Woolman and that estoppel defenses failed for lack of representation and reasonable reliance.
- The Tenth Circuit affirmed: no contractual or tort duty owed to Woolman as an individual; judicial estoppel and estoppel-based expansion of coverage were rejected on the record.
Issues
| Issue | Plaintiff's Argument (Woolman) | Defendant's Argument (Liberty Mutual) | Held |
|---|---|---|---|
| Did Liberty Mutual owe Woolman a contractual duty to procure black-lung coverage? | Woolman argues Liberty Mutual undertook to procure insurance for him (either directly or as an intended third-party beneficiary) and thus owed a contractual duty. | Liberty Mutual contends its client was Clemens Coal, not Woolman personally; no mutual assent, consideration, or evidence of intent to benefit Woolman. | Held: No contractual duty to Woolman; insufficient evidence of assent or intent to make Woolman a beneficiary. |
| Did Liberty Mutual owe Woolman a tort (fiduciary/negligence) duty to exercise care in procuring coverage? | Woolman says foreseeability of personal liability makes him a foreseeable plaintiff, creating a tort duty. | Liberty Mutual asserts tort duty arises only from an agent’s contractual undertaking to a client; absent contract duty, no tort duty. | Held: No tort duty; contract duty lacking means no basis for tort duty under Kansas law. |
| Should Liberty Mutual be judicially estopped from denying it owed Woolman a duty? | Woolman says Liberty Mutual took inconsistent positions and gained unfair advantage by not contesting duty earlier. | Liberty Mutual argues it never took an inconsistent position; any earlier language did not concede a duty and Woolman had burden to prove duty regardless. | Held: Judicial estoppel not warranted; no clear inconsistency, no showing of prejudice or unfair advantage. |
| Are equitable/promissory estoppel or equitable expansion available to force coverage or rewrite the policy? | Woolman contends agent promised (or silence implied) duplication of prior coverage; estoppel should supply/expand coverage because he relied and it would be unjust otherwise. | Liberty Mutual argues there was no representation or reasonable reliance; the policy expressly excluded black-lung claims and estoppel may not expand coverage. | Held: Estoppel defenses fail—no actionable representation and reliance unreasonable; court properly refused to expand policy to include excluded coverage. |
Key Cases Cited
- Marshel Invs., Inc. v. Cohen, 634 P.2d 133 (Kan. Ct. App. 1981) (defines agent’s exercise-of-care duty to client in failure-to-procure claims)
- Marker v. Preferred Fire Ins. Co., 506 P.2d 1163 (Kan. 1973) (general contract-formation rules apply to agreements to procure insurance)
- Casas v. Farmers Ins. Exch., 130 P.3d 1201 (Kan. Ct. App. 2006) (standards for implied agreement to procure insurance and information required)
- New Hampshire v. Maine, 532 U.S. 742 (2001) (framework for judicial estoppel analysis)
- Heinson v. Porter, 772 P.2d 778 (Kan. 1989) (rare Kansas instance where estoppel expanded policy coverage; articulated multi-factor approach)