Interstate Fire & Cas. Co. v. Apartment Mgmt. Consultants LLC (328 F. Supp. 3d 1242, 2018)

ALAN B. JOHNSON, UNITED STATES DISTRICT JUDGE

This matter comes before the Court on a number of pending motions for summary judgment, including:

1. Interstate Fire & Casualty Company and Fireman's Fund Insurance Company's Motion for Summary Judgment" (Doc. 141), and Apartment Management Consultants LLC's and Sunridge Partners, LLC's opposition thereto (Doc. 143).

2. Apartment Management Consultants LLC's and Sunridge Partners LLC's Motion for Partial Summary Judgment # 1 Regarding Contractual Damages Pursuant to FRCP Rule 56" (Doc. 139) and Interstate Fire & Casualty Co. and Fireman's Fund Insurance Co's opposition thereto (Doc. 144).

3. Apartment Management Consultant LLC's and Sunridge Partners LLC's "Motion for Partial Summary Judgment # 2 Regarding Attorneys' Fees and Interest under Wyo. Stat. § 26-15-124 Pursuant to FRCP Rule 56" (Doc. 138) and Interstate Fire & Casualty Co. and Fireman's Fund Insurance Co.'s opposition thereto (Doc. 148).

4. Interstate Fire & Casualty Company and Fireman's Fund Insurance Company's Motion for Partial Summary Judgment (Doc. 78) and Apartment Management Consultant LLC's and Sunridge Partners LLC's opposition thereto (Doc. 79).

The Court has reviewed the motions, all matters of record and the materials offered in support of the parties' respective submissions, the applicable law and is fully advised. For the reasons stated below, the Court FINDS and ORDERS as follows:

Background

The following background is derived from the parties' pleadings, the record, and the parties' various submissions and all supporting materials that have been filed in this action. This is not an exhaustive recitation of the background, but is sufficient to set out the underlying facts and issues that have been raised for consideration now.

1. Interstate Fire & Casualty Company ("Interstate") issued a Comprehensive General Liability Insurance policy to Commercial Industrial Building Owner's Alliance, Inc. d/b/a CIBA, policy number SGL 1002220 ("Primary Policy"), for a two year term, March 31, 2010 to March 31, 2012, with a $1,000,000 per occurrence and a $2,000,000 General Aggregate limit for the policy term. Doc. 6, Amended Complaint, ¶ 12. Amended Complaint; also at Doc. 143, Ex. A.

2. The Primary Policy contains a "Named Insured Endorsement" identifying CIBA as a named insured, as well as any associate of CIBA "to whom an Evidence or Certificate of Insurance has been issued and which describes the specific location coverage is limited to." Doc. 6, ¶ 13.

3. CIBA issued Certificates of Insurance to Sunridge and AMC, identifying them as named insureds under the Primary Policy. Doc. 6, ¶ 14.

4. The Primary Policy includes an exclusion relied upon by the plaintiffs in the Amended Complaint, which states:

EXCLUSION -- PUNITIVE OR EXEMPLARY DAMAGES

This insurance does not apply to fines, penalties, punitive damages, exemplary damages, treble damages or the multiplication of compensatory damages.

Doc. 6, ¶ 36.

5. Interstate issued an Excess Liability Policy (which is in excess of the Primary Policy) to CIBA, bearing policy number PFX73097172 ("Interstate Excess Policy"), for a two year term, from March 31, 2010 to March 31, 2012, with a limit of $10,000,000 per occurrence, with a $10,000,000 aggregate for the policy term. Doc. 6, ¶ 15.

6. The Interstate Excess Policy contains a "Schedule of Named Insureds" identifying, among others, CIBA as a named insured, as well as any associate of CIBA "to whom an Evidence or a Certificate of Insurance has been issued and which describes the specific location coverage is limited to." Doc. 6, ¶ 16.

7. Sunridge and AMC are considered named insureds under the Interstate Excess Policy. Doc. 6, ¶ 17.

8. Fireman's Fund issued an Excess Liability Policy (which is in excess of the Interstate Excess Policy) to "CIBA, et al as per First Underlying Insurance," bearing policy number SHX-000-7262-3879 ("Fireman's Fund Excess Policy") for a two-year term, from March 31, 2010 to March 31, 2012, with a limit of $15,000,000 per occurrence, with a $15,000,000 aggregate for the policy term. The Fireman's Fund Excess Policy identifies "underlying insurance" as the Interstate Excess Policy. Doc. 6, ¶ 18, and n. 1.

9. As Sunridge and AMC are named insureds under the Interstate Excess Policy, they are also considered named insureds under the Fireman's Fund Excess Policy. Doc. 6, ¶ 20.

10. The Primary Policy, the Interstate Excess Policy, and the Fireman's Fund Excess Policy have been collectively referred to as the "Insurance Policies" in the plaintiffs' amended complaint. Doc. 6, ¶ 20.

11. Sunridge Partners, LLC ("Sunridge") owns the Sunridge Apartments in Casper, Wyoming and from at least February 2011 to the present, Robert Ctvrlik has been the Managing Member of Sunridge. Doc. 6, ¶ 6, Doc. 51, Ex. B (Robert Ctvrlik affidavit); Doc. 143, Ex. B.

12. Apartment Management Consultants, LLC ("AMC") operates and manages these Wyoming apartments. Doc. 6, ¶ 8. From July 2010 to present, Martha Knudson has served as the General Counsel for AMC. Doc. 51, Ex. C (Knudson affidavit); Doc. 143. Ex. C.

13. Amber Lompe was a tenant in the Sunridge Apartments, Apartment # 436, in Casper, Wyoming. Doc. 6, ¶ 10.

14. On May 2, 2012, Amber Lompe filed a Complaint naming AMC and Sunridge as defendants in a lawsuit filed by Amber Nicole Lompe in the United States District Court for the District of Wyoming, Case No. 12-CV-88-J, Amber Nicole Lompe v. Sunridge Partners, LLC and Apartment Management Consultants, LLC ("Lompe action"). In her complaint, Lompe alleged she was poisoned by carbon monoxide gas in her apartment in Casper, Wyoming causing her serious injuries and damages. The complaint alleged the defendants were negligent, grossly negligent, reckless, willful and wanton acts and omissions directly, legally, and proximately caused serious injuries to plaintiff Lompe. It also disclosed and stated that she sought to recover, in addition to other compensatory damages, exemplary and punitive damages, "in a reasonable amount to be proved at trial, sufficient to adequately punish the defendants and to serve as a deterrent and warning against future conduct of the type alleged in this complaint[.]" 12-CV-88, Doc. 1.

15. Shortly after being served with the complaint in the Lompe action, AMC tendered defense of the matter to its insurer, Interstate, "one of the Fireman's Fund Companies." 12-CV-88, Doc. 51, Ex. C, Knudson Affidavit; 13-CV-278, Doc. 143, Ex. C.

16. By letter dated April 12, 2012 addressed to Knudson and the LLC Members, Kelly Lemoine, Senior Coverage Analyst, "on behalf of Interstate Fire and Casualty Company, one of the Fireman's Fund Companies" wrote:

On behalf of Interstate Fire and Casualty Company (hereafter IFCC), one of the Fireman's Fund Companies, Claims Adjusting Group handles claims in connection with the Commercial Industrial Building Owner's Alliance Insurance Program. This correspondence shall serve to confirm receipt of the lawsuit entitled Lompe v. Sunridze Partners, et al. Marie Schwarz v. BRC Real Estate et al. , filed in Wyoming District Court, case number 12CV88J.

CIBA Insurance Services, via a policy written through IFCC, has agreed to participate in the defense of Sunridge Partners, LLC and Apartment Management Consultants, LLC. The case has been referred to Peter Dusbabek of Montgomery, Kolodny, Amatuzio & Dusbabek. Mr. Dusbabek's office is located at 2625 Redwing Road, Suite 200 in Fort Collins, CO 80526. You may reach Dusbabek telephonically at 970-221-2800.

We would also like to take this opportunity to advise you that your liability policy carries a $1,000 per loss deductible that applies to this loss.

Should you have any questions or concerns regarding any of the above, please feel free to contact me at 818-638-8534.

13-CV-278, Doc. 141, Ex. 8; Doc. 143, Ex. E. This letter did not expressly include any reservation of rights, disclosure of any exclusions, or assert any other basis for denying or limiting coverage.

17. Peter Dusbabek wrote Bob and Jeff Ctvrlik and Martha Knudson on May 21, 2012, regarding the complaint that had been filed. Dusbabek had been engaged by the insurer to represent AMC and Sunridge in the Lompe litigation. In that letter he states:

The insurance information we have for Sunridge indicates that there is a $1 million per occurrence primary liability limit with $75 million in excess liability (schedule attached). These limits are far in excess of any anticipated damages in this case. Whether the damage claim presents an exposure that would exceed the primary $1 million limit is unknown, however, any excess carrier whose policy may come into play should be placed on notice of the claim immediately. Notably, the complaint contains a punitive damage claim. We do not view this as a punitive damage case, but liability policies generally do not cover punitive damages.

Doc. 141, Ex. 13. In that letter, Dusbabek, after explaining the risks of dual representation of both AMC and Sunridge, requested that the defendants both consent to dual representation of Sunridge and AMC. There is no reservation of rights with respect to punitive damages referenced by Dusbabek nor is there anything that suggests he would have had any authority to make such a reservation at the time he was actively defending AMC and Sunridge at Interstate's behest.

18. On March 25, 2013, Dusbabek, for Sunridge and AMC, filed a motion for summary judgment in 12-CV-88, Doc. 27, seeking judgment in defendants' favor on all claims asserted against them. In that motion, the defendants simply said the following with respect to punitive damages:

Plaintiff asserts that she is entitled to an award of various forms of damages including punitive damages. A claim for punitive damages is not a separate cause of action and cannot stand without an underlying claim. See, e.g. Barham v. Town of Greybull , [2011 WL 2710319] 2011 U.S. Dist. LEXIS 74484 (W. Wyo. July 11, 2011) para. 52, aff'd 483 Fed. Appx. 506, 2012 U.S. App. LEXIS 11306 (10th Cir. 2012). Accordingly, summary judgment for the Defendants on the Plaintiff's negligence claim disposes of her entire claim for relief.

12-CV-88, Doc. 27.

19. Correspondence was exchanged between Dusbabek and counsel for Lompe in early 2013. Lompe's counsel stated that he thought the case could be settled within the $1,000,000 policy limits. Doc. 141, Ex. 17. Dusbabek followed this with a letter to Baker, the CAG adjuster, with a case evaluation and litigation plan which included a scheduled mediation on March 26, 2013. Doc. 141, Ex. 19. The estimated settlement value was established to be in the range of $225,000-$337,500. Id.

20. The parties engaged in mediation in the Lompe action on March 26, 2013. They were unable to reach a mutually agreed upon resolution of the case. Doc. 141, Ex. 20.

21. May 17, 2013, in a letter to Baker, Knudson wrote on behalf of AMC and Sunridge:

I am writing on behalf of AMC, LLC and our client, Sunridge Partners, LLC. We are in receipt of Mr. Dusbabek's May 16, 2013 status letter addressed to you that discusses the opinions of plaintiff's experts, and I have reviewed their disclosures. Our review has raised serious concerns that the economic risk to both AMC and Sunridge Partners from this case is greater than our initial evaluation.

We appreciate and understand our defense counsel's opinion and assessment of these expert disclosures. However, it is AMC and Sunridge that are the ones at risk for an excess judgment in this case, and the detrimental effects that any judgment would have on our business reputation and credit rating.

AMC and Sunridge Partners want to make sure that you understand, as our carrier, that it is our position that the only reasonable course of action is for this case to be settled within policy limits. As there has already been a settlement demand from the plaintiffs that is within the policy limits, we urge CIBA to settle this case.

Doc. 141, Ex. 25.

22. Knudson wrote Baker again on October 24, 2013:

I am writing on behalf of AMC, LLC and our client, Sunridge Partners, LLC. We have been monitoring this case very closely, and our concerns about the economic risk to both AMC and Sunridge Partners have only increased since my letter to you of May 17, 2013.

We are aware that plaintiff made a prior demand within policy limits. Accordingly, we made a demand on May 17, 2013 that this case be settled. Nevertheless, this did not happen and we are now rapidly approaching trial and the risk of a punitive damages award. While we appreciate and understand our defense counsel's opinion and assessment of Ms. Lompe's credibility and liability issues in this matter, it is AMC and Sunridge that are the ones at risk for a punitive damage and an excess judgment in this case. I don't think that I need to explain to you the detrimental effects that any such judgment would have on our business reputation and credit rating.

AMC and Sunridge Partners want to make sure that you understand, as our carrier, that it is our position that the only reasonable course of action is for this case to be settled. As there has already been a settlement demand from the plaintiffs that is within the policy limits, we urge CIBA to settle this case.

Doc. 141, Ex. 32.

23. On October 25, 2013, this Court entered its Order Denying Motion for Summary Judgment, finding there were genuine issues of material fact to be determined by the jury at trial. 12-CV-88, Doc. 77; 13-CV-278, Doc. 141, Ex. 34.

24. On November 20, 2013, after entry of the summary judgment motion denial on October 25, 2012, Kelly Lemoine wrote a letter addressed to Sunridge Partners, LLC, c/o AMC, LLC, to the attention of Martha Knudson, referencing the Lompe action, stating:

On behalf of Interstate Fire and Casualty Company (hereafter IFCC), one of the Fireman's Fund Companies, Claims Adjusting Group handles claims in connection with the Commercial Industrial Building Owner's Alliance Insurance Program.

As you are aware, CIBA Insurance Services, via a policy written through IFCC, has been providing a defense to Sunridge Partners, LLC and Apartment Management Consultants, LLC utilizing Peter Dusbabek of Montgomery, Kolodny, Amatuzio & Dusbabek.

Please note that the Complaint against the LLC prays for punitive damages and exemplary damages. An exclusionary provision to the IFCC policy expressly negates coverage for those types of damages. In this respect the policy provides:

"This insurance does not apply to fines, penalties, punitive damages, exemplary damages, treble damages or the multiplication of compensatory damages."

While we will continue to provide Sunridge Partners, LLC and Apartment Management Consultants, LLC with a full and complete defense, any award or judgment for punitive or exemplary damages will be the sole responsibility of Sunridge Partners, LLC and Apartment Management Consultants, LLC. As such, those entities may wish, at their own expense, to hire an attorney to represent them for that portion of the suit.

Should you have any questions or concerns regarding any of the above, please feel free to contact me at 818-638-8534.

This letter was signed by Kelly Lemoine, Senior Coverage Analyst, on behalf of Interstate Fire and Casualty Company, one of the Fireman's Fund Companies. Doc. 141, Ex. 39; Doc. 143, Ex. H.

25. Knudson wrote Kelly Lemoine on November 21, 2013 as follows:

I am in receipt of your letter dated November 20, 2013. We are aware of the exclusion for punitive damages under the policy. However, as I'm sure you understand, when you undertook defense of the above referenced matter, the duty to defend ran and continues to run to all claims both covered or uncovered. The mere presence of a claim for punitive damages does not abrogate your duty to act in good faith to protect the interests of your insureds.

Furthermore, your refusal to settle within the policy limits when you had both the opportunity and a demand from your insureds to do so is troubling. Even putting the possibility of punitive damages aside, the compensatory damage claims here present a reasonable probability that a judgment in excess of policy limits could occur. Accordingly, we renew our repeated demands that you place policy limits on the table and settle the matter.

Doc. 141, Ex. 40.

26. It cannot be meaningfully disputed that the insurers were on notice that punitive damages were being sought by Lompe from the time that May 2, 2012 complaint was filed, and that the insurers believed that the policies excluded any coverage for punitive damages. The sole reservation of rights, relying on the punitive damages exclusion, was made by the letter dated November 20, 2013. Interstate now suggests that the failure to issue any reservation of rights letter before this date was a mere oversight.

27. The Lompe jury trial commenced on December 2, 2013, 12-CV-88, Doc. 126, eleven calendar days after the untimely November 20, 2013 letter that included a notice that Interstate would continue to defend, but would not pay any judgment for punitive damages, a reservation of rights made on the eve of trial and after refusing AMC's and Sunridge's demands to settle within policy limits and after entry of the order denying Interstate's motion for summary judgment. This letter suggested that Sunridge and AMC retain separate counsel as to the punitive damages issue. This first express written reservation of rights from the insurer came nearly 19 months after the initial complaint asserting a claim for punitive damages was filed on May 2, 2012.

28. After 14 days of trial, a jury verdict in favor of Amber Lompe awarding punitive damages was returned December 20, 2013 after two and one-quarter hours of deliberation. 12-CV-88, Docs. 150, 148.

29. On December 26, 2013, this Court entered judgment in favor of Lompe and against Sunridge, in the sum of $750,000.00, punitive damages in the amount of $3,000,000.00, plus post judgment interest at the statutory rate. Judgment was also entered in favor of Lompe against AMC in the sum of $1,950,000.00, and punitive damages in the sum of $22,500,000.00, with post judgment interest at the statutory rate. 12-CV-88, Doc. 151; 13-CV-278, Doc. 139, Ex. I.

30. AMC and Sunridge filed motion for judgment as a matter of law and for new trial, (12-CV-88, Doc. 175), which was denied by the district court. 12-CV-88, Doc. 207.

31. Motions for Stay of Execution of Judgment Pending Resolution of Post Trial Motions and Appeal were filed and granted. 12-CV-88, Docs. 206, 210.

32. Interstate refused to provide bonds to stay execution of the punitive portions of the judgment and stated AMC and Sunridge would need to post the appeal bonds themselves to cover those amounts. Interstate advised that it would not post bond for any amount beyond the compensatory portion of the judgment. Doc. 139, Ex. J.

33. As to AMC, the motion for stay of execution of judgment was unopposed, because the parties had agreed to terms necessary and designed to protect Lompe's judgment against AMC. Bonds were obtained and deposits of funds were made into a joint escrow account controlled by AMC's and Lompe's escrow agent, Zions Bank. The Court approved the supersedeas bond along with the deposits to the joint escrow account. Separate supersedeas bonds were received for the compensatory damages and for punitive damages awarded by the jury at trial against AMC and Sunridge. 12-CV-88, Docs. 211, 212, 226, 227; 13-CV-278, Doc. 139, Exs. B and C.

34. The cost to Sunridge for the escrow account included a loan in the amount of $3,000,000 (the punitive damage award against Sunridge), taken from an affiliate at an interest rate of 8%. Doc. 139, Ex. B. As of September 30, 2015 interest had accrued on that loan in the amount of $284,810.19. Doc. 139, Exs. B, C, M, N.

35. The funds for the AMC escrow account came from several loans totaling $10,920,000 with interest rates ranging from 7.5% to 9.0%. Doc. 139, Ex. C. As of October 1, 2015, AMC had incurred interest on the loans in the amount of $875,740.87. Doc. 139, Exs. B, C, M, N. The terms of the AMC loans included provisions for prepayment penalties as well.

36. In their pending motions, AMC and Sunridge seek to recover the total amount of interest and prepayment penalties incurred by AMC and Sunridge as of October 1, 2015 in the amount of $1,316,355.46, as damages for breach of the insurance contract. Doc. 139, Exs. B, C.

37. Notice of Appeal as to the Lompe Judgment was filed on November 17, 2014, (12-CV-88, Doc. 213), and the Tenth Circuit Court of Appeals affirmed in part and reversed in part. 12-CV-88, Docs. 229, 230. The District Court entered judgment in accordance with the mandate of the Tenth Circuit Court of Appeals. 12-CV-88, Doc. 233. The Tenth Circuit's mandate issued June 7, 2016. A Stipulated Motion for Order of Satisfaction of Judgment and Release of Supersedeas Bonds was granted (12-CV-88, Doc. 238) on November 16, 2016.

Pending dispositive motions

There is a considerable amount of overlap in that many claims and arguments raised in the various motions for summary judgment. The claims raised by the parties in their briefs require the Court to consider issues in the following areas:

1. Whether Interstate is required to indemnify for the entire amount of the judgment against AMC and Sunridge, including the awards for punitive damages.

2. What damages, if any, are recoverable by AMC and Sunridge for breach of contract and breach of the implied covenant of good faith and fair dealing and whether such damages include loss of business opportunities and lost profits.

3. Whether AMC and Sunridge are entitled to recover as contractual damages amounts incurred to obtain supersedeas bonds and establish the joint escrow accounts for the purpose of staying execution on the Lompe judgment pending appeal.

4. Whether AMC and Sunridge are entitled to recover interest on the amounts paid to obtain supersedeas bonds and obtain loans to establish the joint escrow accounts for the punitive damages awards against AMC and Sunridge, and if so, are AMC and Sunridge entitled to recover prejudgment interest.

5. If AMC and Sunridge are entitled to recover interest on the amount paid to obtain the bonds and loans to provide security for the punitive damages awards pending appeal, whether interest should accrue at the statutory rate of interest under Wyoming law or at the interest rates in the underlying loan agreements between AMC, Sunridge and affiliates.

6. Whether AMC and Sunridge have cognizable claims for insurance bad faith, and if so, what damages can be recovered.

7. Whether AMC and Sunridge are entitled to recover attorneys' fees.

AMC and Sunridge's contentions

1. AMC and Sunridge argue they are entitled to recover as contractual damages the amounts incurred to obtain bonds and establish the joint escrow account for the purpose of staying execution pending appeal. As part of this argument, they assert they are also entitled to recover interest on the amounts paid for the bonds and escrow account relative to the punitive damage award against AMC and Sunridge, at the rates set out in the pertinent loan agreements, plus prejudgment interest at the statutory rate under Wyoming law, Wyo. Stat. § 40-14-106. Doc. 139.

2. AMC and Sunridge have asserted insurance bad faith claims against Interstate. Doc. 143. AMC and Sunridge argue that the obligation of good faith and fair dealing inherent in every insurance contract requires the insurer to give equal consideration to the insureds' interests as it would give its own. AMC and Sunridge assert that both forms of insurance bad faith recognized in Wyoming provide avenues for relief in their favor in this case. This includes (1) substantive bad faith, which requires an insurer to have a fairly debatable reason to deny a claim, and (2) procedural bad faith, implied in how an insurer investigates, handles or denies a claim. They contend Interstate is subject to bad faith liability in this case arising out of the manner in which Interstate handled and investigated the Lompe claim with respect to punitive damages. Interstate ignored its obligation to issue a reservation of rights letter within 45 days of the tender of the Lompe action and defended unconditionally for nearly 19 months, putting up only token resistance to Lompe's punitive damage claims, controlling every aspect of the litigation, and only after summary judgment was denied, on the virtual eve of trial, issued a reservation of rights letter advising the insureds that punitive damages would not be covered and that they should consider retaining separate counsel at their own expense to represent them for that portion of the Lompe action.

3. AMC and Sunridge also claim that after the jury awarded punitive damages, Interstate refused to indemnify the punitive portion of the judgment or provide a bond to stay execution for the entire judgment during the pendency of the Lompe appeal. The above captioned action was filed by Interstate shortly after the jury awarded Lompe the punitive damages award against the insureds, which in turn forced AMC to retain new counsel to pursue coverage and defend them in this action. AMC and Sunridge claim that Interstate's actions constitute triable issues of material fact on a procedural bad faith claim, arguing that the insurer's failure to try to effectuate a prompt, fair and equitable settlement in a case where liability was reasonably clear is an unfair claims settlement practice in violation of Wyo. Stat. § 26-13-124, supporting the bad faith claims. Interstate had three opportunities to settle within policy limits, but no settlement offer ever exceeded $450,000, less than half of the primary policy limits. Instead, only $425,000 was offered. The insureds demanded that the matter be settled within policy limits but Interstate did not do so. AMC and Sunridge also argue that they are entitled to recover attorneys' fees and interest pursuant to Wyo. Stat. § 26-15-124. Doc. 139. Interstate opposes this claim. Doc. 148.

Interstate's contentions

Interstate seeks summary judgment in its favor on the claims made by AMC and Sunridge against Interstate as to the following issues:

1. AMC's and Sunridge's claim that Interstate breached the covenant of good faith and fair dealing by not attempting in good faith to settle the claims brought against them by Amber Lompe in the underlying litigation, Lompe v. Sunridge Partners, LLC and Apartment Management Consultants, LLC , filed in the United States District Court for the District of Wyoming, Case No. 12-CV-88-J.

2. AMC's and Sunridge's claim that Interstate breached the covenant of good faith and fair dealing by failing to provide AMC and Sunridge with a reservation of rights upon acceptance of the tender of the defense of the underlying Lompe action.

3. AMC's and Sunridge's claim that Interstate breached the terms of the Interstate insurance policies under which AMC and Sunridge were insured by failing to provide AMC and Sunridge with a reservation of rights upon acceptance of the tender of defense of the Lompe action.

4. AMC's and Sunridge's claim that they are entitled to recover damages for breach of contract and breach of the implied covenant of good faith and fair dealing, including but not limited to the claim that they are entitled to recover damages for loss of business opportunities and loss profits. Doc. 78.

5. The claims by AMC and Sunridge for punitive damages.

In its motion for summary judgment (Doc. 141), Interstate urges that the ultimate jury verdict in the Lompe action has no bearing on whether Interstate acted in bad faith or not. Interstate argues that it acted reasonably by offering to settle the Lompe case at the amounts recommended by defense counsel for AMC and Sunridge and the CAG claims adjuster, Richard Baker. Interstate says that the third party claims adjuster was a dual agent of AMC, Sunridge and Interstate and that Interstate cannot be held liable in tort based on negligent evaluations or settlement recommendations made by that claims adjuster. Interstate argues it reasonably relied on the assessment of defense counsel for AMC and Sunridge, as well as the claims adjuster, who opined Lompe's damages claims were unrealistic, that the risk of a punitive damages award was low, and that the settlement value of Lompe's claims was well below the primary policy limit. Interstate contends it was not required to offer any additional settlement amount to eliminate the risk of a punitive damages award when the policies excluded coverage for punitive damages. Interstate claims that everyone on the defense team agreed that evidence supporting a punitive damages award was weak.

AMC and Sunridge disagree with Interstate's position. They asked more than once for settlement to be made within the primary policy limits; Interstate refused to do so. AMC and Sunridge characterize Interstate's, their defense counsel's, and the adjuster's erroneous valuations of the case to be a calculated gamble by the insurer, which was a bet only the insureds could lose. They also disagree with Interstate's arguments that CAG, the adjuster, was a dual agent for Interstate, AMC and Sunridge. The contract with CAG and the insurer, Interstate, delegated various servicing tasks, including claims handling and evaluation to CAG; it did not establish a dual agency sufficient to negate bad faith. The Wyoming mediation privilege does not serve Interstate well either, in AMC's and Sunridge's view, in that the privilege can only be claimed by a party to the mediation (AMC, Sunridge or Lompe). They assert the Wyoming statute does not always bar mediation information and communications from admissibility, and in cases where insurer conduct is challenged for failure to settle or when the insurer's conduct is at issue, it is evidence admissible in most courts across the country. The mediation privilege does not shield an insurer from claims of bad faith. AMC and Sunridge assert that Interstate repeatedly disregarded the insureds' exposure in the Lompe action and challenge the manner in which Interstate dealt with punitive damages and the failure to settle the action within the policy limits when presented with reasonable opportunities to do so.

Standard of Review

Rule 56(a) of the Federal Rules of Civil Procedure provides that summary judgment may be granted if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law. See also Yousuf v. Cohlmia , 741 F.3d 31, 37 (10th Cir. 2014). Because this is a diversity case, the Court must apply the substantive law of the state of Wyoming. 28 U.S.C. § 1332 ; Mid-Continent Casualty Company v. Circle S Feed Store, LLC , 754 F.3d 1175, 1178 (10th Cir. 2014). See also Macon v. United Parcel Service, Inc. , 743 F.3d 708, 713 (10th Cir. 2014).

This Court's previous "Pendleton/Cornhusker" ruling (Doc. 131):

In the Court's earlier Order, entitled "Order Granting Apartment Management Consultants, LLC's, and Sunridge Partners, LLC's Motion for Partial Summary Judgment Pursuant to FRCP Rule 56 and Order Denying Interstate Fire & Casualty Company and Fireman's Fund Insurance Company's Motion for Judgment on the Pleadings Pursuant to Federal Rule of Civil Procedure 12(c)," entered September 1, 2015 (Doc. 131), this Court granted the motion for partial summary judgment filed by AMC and Sunridge and found that Interstate and Fireman's Fund Insurance Company may not assert noncoverage as a defense to the claim and that they are precluded from raising the punitive damages exclusion as a means of avoiding or denying indemnity. The Court found that AMC and Sunridge were entitled to coverage and indemnification for the entire amount of the claim, including punitive damages. Interstate unconditionally defended AMC and Sunridge in the Lompe case without a reservation of rights and with knowledge of grounds for noncoverage and believing there was no coverage for punitive damages.

Interstate argued, and argues again here, that estoppel cannot be used to expand coverage under the policy. The Court disagrees. Whenever the insurer assumes defense of an action knowing grounds which would permit it to deny coverage, it may be later estopped from raising the defense of noncoverage in certain circumstances. The arguments by Interstate in the current motions contend that it cannot be estopped to deny liability in this case when the policy excluded coverage for punitive damages and are essentially the same as previously considered and ruled upon in earlier proceedings. Those arguments were rejected and the exception to the general rule precluding the use of the estoppel doctrine to expand coverage under an insurance policy, as discussed in Cornhusker Casualty Company v. Skaj , 786 F.3d 842 (10th Cir. 2015) and Pendleton v. Pan Am. Fire & Cas. Co. , 317 F.2d 96 (10th Cir. 1963), was found to apply. See also Braun v. Annesley , 936 F.2d 1105 (10th Cir. 1991).

The Court persists in this ruling (the prior " Pendleton / Cornhusker ruling" for purposes of this Order). In Brecek & Young Advisors, Inc. v. Lloyds of London Syndicate 2003 , the Tenth Circuit stated "where an insurer, though in fact not obligated to provide coverage, without asserting policy defenses or reserving the privilege to do so, undertakes the defense of the case, in reliance on which the insured suffers the detriment of losing the right to control its own defense, in such circumstances, though coverage as such does not exist, the insurer will not be heard to say so." 715 F.3d 1231, 1240 (10th Cir. 2013) (applying New York law). This is not unlike the language used in the Cornhusker v. Skaj decision, 786 F.3d 842 (10th Cir. 2015) and Pendleton v. Pan Am. Fire & Cas. Co. , 317 F.2d 96 (10th Cir. 1963) (discussing the insurer's conduct operating as estoppel to later contest action on the policy), which were discussed at length in this Court's September 2015 decision. That September 2015 decision found that Interstate is estopped from denying coverage for the punitive damages claim asserted against AMC and Sunridge in the underlying Lompe litigation. This earlier decision will not be addressed again here, except to note the authority and line of cases holding that an insurer should bear a specific consequence where it defends and controls litigation in the absence of a reservation of rights even when the claimant is arguably not covered. As the Pendleton court noted,

'Estoppel by conduct arises: Where a party has been induced by the conduct of another to do, or forbear doing, something he would not have, or would have, done but for such conduct; when disadvantage results from such forbearance or action. State ex rel. Fitzhugh v. City Council of City of Hot Springs , 56 N.M. 118, 241 P.2d 100.'( [Porter v. Butte Farmers Mut. Ins. Co. , 68 N.M. 175] 360 P.2d [372] at 376 [ (1961) ].)

Moreover, it has been held that the insurer's conduct in the type of situation we have here operates as an estoppel to later contest an action upon the policy even though the facts may have been within the knowledge of the insured equally as well as within the knowledge of the insurer. Tozer v. Ocean Accident & Guarantee Corp. , 94 Minn. 478, 103 N.W. 509 [ (1905) ] ; Humes Const. Co. v. Philadelphia Casualty Co. , 32 R.I. 246, 79 A. 1 [ (1911) ]. We conclude that the insurer is estopped to now deny liability upon the insurance policy in question.

Pendleton v. Pan Am. Fire & Cas. Co. , 317 F.2d 96, 100-01 (10th Cir. 1963), amended, 326 F.2d 760 (10th Cir. 1964). Accord Evanston Insurance Company v. Law Office of Michael P. Medved, P.C. , 890 F.3d 1195 (10th Cir. 2018) (finding in declaratory judgment action that insurer did not have a duty to defend, having done so under a reservation of rights; discussing estoppel doctrine and the general rule that estoppel cannot be used to create coverage for risks falling outside of the policy; recognizing exception to the general rule's limitation on estoppel, which includes proof of three facts: (1) the insurer knew of the coverage; (2) the insurer assumed defense of the action without a reservation of rights, and (3) the insured relied to its detriment on the insurer's defense.) ) Id. , 890 F.3d at 1200-1201.

The facts that remain before this Court disclose that Interstate controlled the defense of this litigation in its entirety through trial to the prejudice of AMC and Sunridge, knowing that the policy contained language excluding coverage for punitive damages and notwithstanding AMC's and Sunridge's several demands to settle the litigation within the primary policy limits. See also Cornhusker Cas. Co. v. Skaj , 786 F.3d 842, 853-857 (10th Cir. 2015) ;

Brecek & Young Advisors, Inc. v. Lloyds of London Syndicate 2003 , 715 F.3d at 1241 (stating that "[C]ourts have found prejudice for purposes of estoppel in circumstances in which the insurer's control of the insured's defense has been significantly less extensive, citing Bluestein & Sander v. Chicago Ins. Co. , 276 F.3d 119, 123 (2d Cir. 2002) (concluding prejudice established when insurer controlled defense "almost to the close of disco very"); and Boston Old Colony Ins. Co. v. Lumbermens Mut. Cas. Co. , 889 F.2d 1245, 1248 (2d Cir. 1989) (stating that "[e]ven if Lumbermans had disclaimed liability ten months earlier, on the morning of trial, the disclaimer would still have been prejudicial ... because the Bodians had already taken actions that could not be undone."). It stated that "[u]nder the district court's interpretation of New York law, it is difficult to conceive how any insured could ever establish a valid claim for estoppel. We therefore conclude the district court's determination that BYA failed to establish prejudice is manifestly unreasonable and amounts to a clear error of judgment Clark [v. State Farm Mut. Auto. Ins. Co. ], 433 F.3d [703] at 712 [ (10th Cir. 2005) ].") 715 F.3d at 1241. Here, Interstate did control the litigation to the detriment and prejudice of AMC and Sunridge. The Court's prior decision regarding estoppel and the related issues need not, and will not, be revisited.

The Court finds and concludes that Interstate under the Primary Policy must provide coverage and indemnification, having failed to defend with a timely reservation of rights, for all sums the insureds are legally obligated to pay, which encompasses compensatory and punitive damages. If policy limits under the Primary Policy are exhausted, the excess insurers' obligations are triggered under the applicable "follow form" policies and the excess insurers must provide the agreed-upon excess liability coverage. The excess policies contain no specific exclusion that is applicable to the facts here. Interstate and the excess insurers (if necessary) must provide coverage and indemnification, as previously ordered.

This prior ruling does not address the related claims asserted by AMC and Sunridge regarding the companion claims that Interstate had an obligation to post a supersedeas bond or other security for the entire amount of the judgment to stay execution of the judgment against insureds or whether Interstate's conduct supports AMC's and Sunridge's insurance bad faith claims against Interstate. The Court will address AMC's and Sunridge's claims regarding the refusal to post a security bond as (AMC and Sunridge Motion for Partial Summary Judgment # 1 Regarding Contractual Damages, Doc. 139) in the context of the prior Cornhusker estoppel ruling and then AMC's and Sunridge's insurance bad faith claims will be addressed separately, below.

AMC's and Sunridge's contentions regarding post-judgment bond and security pending appeal

AMC and Sunridge contend that the Court's ruling which found that Interstate was estopped from denying coverage in the absence of an effective reservation of rights and that Interstate was required to indemnify for the whole amount of the judgment for all damages also dictates that Interstate, in performing its contractual obligation and duty to defend, was required to post a supersedeas bond or other security to stay Lompe's execution on the judgment. Because Interstate failed to satisfy this duty, even though Interstate did appoint appellate counsel, its refusal to post bond for the punitive portions of the judgment put AMC and Sunridge at risk of execution on the large judgment. Because of that risk, AMC and Sunridge assert they were left with little choice other than obtaining large loans to establish security escrow accounts, to avoid seeking bankruptcy relief and perceived potential injuries to their credit rating. They seek to recover, as contractual consequential damages, in addition to the costs of obtaining the security bond and escrow accounts to stay execution on the judgment as to punitive damages, the interest and penalties that accrued on that loan pursuant to the terms of the applicable loan agreements, as well as prejudgment interest as provided by Wyoming law.

Interstate's response

Interstate maintains that it had no duty to cover the punitive damages AMC and Sunridge seek in this action and that it had no duty to post a supersedeas bond or other security for the punitive portions of the judgment. Factually, no one has disputed that Interstate did appeal, provided appellate counsel, and continued to defend AMC and Sunridge through appeal. AMC and Sunridge limited their appeal to the Tenth Circuit to a challenge to the award of punitive damages; the compensatory damages portion of the award was not appealed. Doc. 144, Ex. 9. Interstate asserts that there is no policy provision requiring the insurers to obtain or post appeal bonds. It notes that Interstate did, however, obtain bonds to stay enforcement of the compensatory damage awards, the only portion of the judgment it believed to be covered by the policies. Interstate disagrees with AMC's and Sunridge's arguments that Interstate is estopped from relying on the policy's punitive damage exclusion to deny coverage and refuse to provide appeal bonds as to the punitive damage awards. Interstate contends that it is well settled that "while equitable estoppel operates to prevent one party to a contract from enforcing the terms of the contract, it does not alter the terms of the contract." Doc. 144, 1.

Discussion

AMC argues that Interstate had a duty to appeal and to provide security or a supersedeas bond to prevent the plaintiff from executing on the judgment pending appeal. Although Interstate did provide defense, the only portion of the judgment for which it provided the supersedeas bond was the compensatory damages portion of the judgment; no bond or other security intended to stay execution of the judgment for the punitive damages portion of the judgment against AMC and Sunridge was provided or obtained by Interstate. This presents issues regarding the obligation of the insurer to provide a supersedeas bond or other security for portions of the judgment outside the Primary Policy (in the absence of the Pendleton / Cornhusker ruling). The policy at issue here provides that as part of any suit it defends it will also pay premiums on bonds to release attachments and for appeal bonds in bond amounts up to the limit of [Interstate's] liability under this coverage, litigation costs taxed against the insured, and interest on a judgment as required by law until the insurer offers the amount due under this coverage. Doc. 144, at Ex. 1, JX032-026. The Court must now ask whether, after the estoppel determination has been made finding the insurer cannot deny coverage under the policy, this ruling concomitantly encompasses an obligation to obtain a supersedeas bond for the entire amount of the judgment, including both compensatory and punitive damages. The Court finds that it does not.

The case law is not entirely clear as to the damages that are recoverable when the Court finds that Pendleton / Cornhusker estoppel doctrine requires an insurer to provide coverage in the absence of an effective reservation of rights. The parties have pointed to no especially persuasive authority that helps resolve this issue. Several principles will guide this Court's decision. As a general rule, contract damages should put injured parties in the same position that they would have been in but for the breach of the contract, less proper deductions. It is that which compensates for the loss which full performance of the contract would have prevented. Numerous cases can be cited to support this general proposition, although none of the cases cited by the parties are precisely on point. See e.g., Reynolds v. Tice , 595 P.2d 1318, 1323 (Wyo. 1979) (breach of contract for the purchase and sale of an oil and gas business); Zitterkopf v. Roussalis, M.D. , 546 P.2d 436, 438 (Wyo. 1976) (breach of agreement to remodel a family room by cabinetmaker); Robert W. Anderson Housewrecking and Excavating, Inc. v. Board of Trustees, Sc. Dist. No. 25, Fremont County, Wyoming , 681 P.2d 1326, 1333 (Wyo. 1984) (breach of contract action between school district and the demolition company hired to demolish an old school building); JBC of Wyoming Corp. v. City of Cheyenne , 843 P.2d 1190, 1194-1195 (Wyo. 1992) (arbitration award arising out of contractual construction dispute); UNC Teton Exploration Drilling, Inc. v. Peyton , 774 P.2d 584 (Wyo. 1989) (employment dispute, implicating ERISA law, in which employees after being discharged were denied wage continuation benefits); Reposa v. Buhler , 770 P.2d 235, 238 (Wyo. 1989) (owners of mobile home destroyed in transit sued transportation company; measure of damages for the loss of the personal property ordinarily is market value, to be proven with a reasonable degree of certainty, and damages cannot be remote, conjectural or speculative). This body of law, AMC and Sunridge suggest, also allows them to recover incidental or consequential damages caused by the alleged breach. They contend these damages include the costs of obtaining their own bonds or other security pending appeal, plus interest at the rates agreed to in the pertinent loan agreements with the affiliate lenders, plus any prepayment penalties, and prejudgment interest at the statutory rate under Wyoming law. Interstate disagrees and urges the Court to determine that AMC and Sunridge have not provided a basis for an award of such damages and are not entitled to recover prejudgment interest at all, whether at the rate in the loan agreements or prejudgment interest at the statutory rate under Wyoming law, 7% per annum.

The Court recognizes the well established proposition that the insurer's duty to defend is broader than its duty to indemnify. See e.g., Lawrence v. State Farm Fire and Cas. Co. , 133 P.3d 976, 980 (Wyo. 2006) ; Matlack v. Mountain West Farm Bureau Mut. Ins. Co. , 44 P.3d 73, 80 (Wyo. 2002) ; United Fire & Cas. Co. v. Shelly Funeral Home, Inc., 642 N.W.2d 648, 656-657 (Iowa 2002). But the issues in this case go beyond issues related to the duty to defend. This Court has already determined that Interstate is estopped from denying coverage and indemnification for the entire amount of the judgment, having failed to defend under an effective, timely reservation of rights and controlling the whole course of the litigation through trial. The effect of this determination, through application of the estoppel doctrine, is to expand coverage under the policy to require coverage for and indemnification for the punitive damages portion of the judgment in addition to the compensatory damages portion of the judgment However, the Pendleton / Cornhusker decision applying the exception to the general rule that estoppel cannot be used to extend or change coverage under an insurance policy is based on equitable considerations and not on the contractual terms of the insurance policy. AMC and Sunridge assert they are seeking to recover contractual damages for the failure to post a supersedeas bond for the punitive portion of the Lompe judgment after Interstate defended the underlying litigation unconditionally without a reservation of rights. The arguments being advanced by AMC and Sunridge are based in contract law, rather than equitable principles. But those arguments are unavailing when their claims would not be cognizable in the absence of the earlier Pendleton / Cornhusker decision based on equitable principles. Those equitable principles were the foundation of the decision that Interstate could not avoid coverage and indemnification for all damages, compensatory and punitive.

Estoppel is a doctrine originating in principles of equity. Mullinnix LLC v. HKB Royalty Trust , 126 P.3d 909, 922-923 (Wyo. 2006).

"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 who has in good faith relied upon such conduct and has been led thereby to change his position for the worse. Equitable estoppel arises only when a party, by acts, conduct, or acquiescence causes another to change his position. The elements of equitable estoppel are a lack of knowledge, reliance in good faith, and action or inaction that results in an injury."

Id. , quoting Parkhurst v. Boykin , 2004 WY 90, ¶ 21, 94 P.3d 450, 460 (Wyo.2004) (citations omitted). The doctrine of equitable estoppel has the effect of precluding an individual from asserting his rights against another person who relied, to his detriment, on the voluntary conduct of the former. Knori v. State, ex rel. Dept. of Health, Office of Medicaid , 109 P.3d 905, 908 (Wyo. 2005). In Knori , the Wyoming Court stated:

As traditionally viewed, equitable estoppel is embodied by the following concept:

[O]ne who by his acts or representations intentionally or through culpable negligence induces another to believe certain facts to exist, and the latter, not knowing the facts, acts on such belief to his substantial prejudice, the former is, in equity, estopped to deny the existence of such fact.

Department of Family Services v. Peterson , 957 P.2d 1307, 1311 [ (Wyo. 1998) ] (quoting Seaman v. Big Horn Canal Association , 29 Wyo. 391, 398, 213 P. 938 (1923) ). In its current form, equitable estoppel requires "some misrepresentation and is generally applied to prevent fraud, either constructive or actual." Id. at 1311-12 (citations omitted).

Knori , 109 P.3d at 908.

Related principles are also identified in Wyoming. Parties to a contract are presumed to enter into the agreement in light of existing principles of law. O'Donnell v. Blue Cross Blue Shield of Wyoming , 76 P.3d 308 (Wyo. 2003), quoting Union Pacific Resources Company v. Texaco, Inc. , 882 P.2d 212, 222 (Wyo 1994), in turn citing Black & Yates, Inc. v. Negros-Philippine Lumber Company , 32 Wyo. 248, 231 P. 398, 401 (1924). In O'Donnell , the insured sued the insurer for payment of medical bills under a health policy. The insured argued that certain endorsements incorporated into the policy after it had been issued which modified the definition of preexisting condition changed the policy terms so as to require the insurer to pay the claim. The modifications were made to comply with HIPAA law, and the modified definition did not affect the existing policy waiver excluding coverage for the insured's preexisting cervical spinal condition. The insured argued this later endorsement rendered the policy at issue uncertain and ambiguous as to coverage for insured conditions and required application of the "reasonable expectations" doctrine and a liberal interpretation of the policy in favor of the insured. When the policy was initially issued, it expressly excluded coverage for preexisting conditions of the insured's cervical spinal condition. The later modification of the definition of preexisting conditions did not render that existing express provision excluding coverage for the cervical spine condition superfluous or ambiguous. The definition of "preexisting condition" was simply irrelevant to the validity of the waiver of coverage for that condition. The language of the contract and waiver of coverage was unambiguous and the insured's argument asserting that a "reasonable expectations" doctrine should be applied was unavailing. The Wyoming Court stated:

Where insurance contract terms are clear and unambiguous, the "reasonable expectations" of the contracting parties are irrelevant to contract construction issues. A rule of construction that considers the reasonable expectations of the parties is of no assistance where the policy terms are clear and unambiguous. We hold that the contract terms here are clear and unambiguous, and rules of construction such as the doctrine of reasonable expectations are inapplicable.

Ahrenholtz v. Time Insurance Company , 968 P.2d 946, 950 (Wyo.1998) (quoting Pribble v. State Farm Mutual Automobile Insurance Company , 933 P.2d 1108, 1113-14 (Wyo.1997) ).

Id. , 76 P.3d at 315. Clear and unambiguous contract terms should be given effect. This is one of the primary lessons taught by the Wyoming Court in O'Donnell and many other opinions discussing insurance contracts.

The Court finds that the arguments advanced by AMC and Sunridge asserting that Interstate had an obligation to provide an appeal bond, relying on the coattails of the previous Pendleton / Cornhusker ruling, fail under a contract analysis and fail under the equitable estoppel doctrine that supported the decision requiring Interstate to defend and indemnify for the entire judgment including compensatory and punitive damages. First, the insurance contract itself addresses the insurer's responsibilities with respect to appeal bonds. The policy at issue here provides that as part of any suit it defends it will also pay premiums on bonds to release attachments and for appeal bonds in bond amounts up to the limit of [Interstate's] liability under this coverage, litigation costs taxed against the insured, and interest on a judgment as required by law until the insurer offers the amount due under this coverage. Doc. 144, at Ex. 1, JX032-026. The policy itself limits the insurer's obligation to pay for appeal bonds up to the limit of liability under the coverage of the policy. The language is clear and is not ambiguous.

As to the argument that the doctrine of equitable estoppel, as it has been applied by the Court in this case earlier as to coverage and indemnification also encompasses the duty to provide the appeal bond for the entire amount of the judgment, the Court finds the doctrine does not provide the relief AMC and Sunridge request. The elements of equitable estoppel are lack of knowledge, reliance in good faith, and action or inaction that results in an injury. Mullinnix LLC v. HKB Royalty Trust , 126 P.3d at 923 ; Elworthy v. First Tennessee Bank , 391 P.3d 1113, 1122 (Wyo. 2017). Interstate made no representation to AMC or Sunridge regarding appeal bonds other than it would provide an appeal bond solely for the compensatory portion of the judgment.

The action or conduct of Interstate underlying the Court's decision to apply the Pendleton / Cornhusker exception to find coverage under the policy for compensatory and punitive damages and requiring it to indemnify for all damages was Interstate's continued defense and control of the litigation through trial without a reservation of rights. AMC and Sunridge relied upon Interstate's conduct to their detriment. It was Interstate's conduct - defending without a reservation of rights and controlling the litigation - that led to the decision that Interstate is estopped from denying coverage and indemnification under the policy. The earlier Pendleton / Cornhusker ruling discusses Interstate's conduct leading to the finding that Interstate must provide coverage for compensatory and punitive damages, notwithstanding the policy provision excluding coverage for punitive damages.

However, the analysis in the earlier order does not go so far as to find that Interstate's conduct was the type of egregious conduct justifying an expansion of all policy provisions. There was no discussion about appeal bonds by anyone - including Interstate, AMC, or Sunridge. There was no misrepresentation by Interstate regarding appeal bonds that suggests application of the equitable estoppel doctrine should also dictate a finding that Interstate is required to provide an appeal bond on terms other than as set forth under the policy. The element of AMC's and Sunridge's reliance on representations made by Interstate is absent. There is no evidence that either AMC or Sunridge lacked knowledge of the policy terms as to bonds or that they relied on anything that Interstate did or said in that regard. They are presumed to have understood and known the terms of the contract and related principles of law.

Where a contract provision is modified by application of the estoppel doctrine, which was this Court's earlier finding requiring Interstate to provide coverage and pay for compensatory and punitive damages, the remaining provisions of the contract remain intact. Contracts are interpreted as a whole; each provision should be read in light of the other provisions and in a way that does not make other provisions inconsistent or meaningless. Memorial Hospital of Sweetwater County v. Menapace , 404 P.3d 1179, 1182 (Wyo. 2017) ; Bear Peak Resources, LLC v. Peak Powder River Resources, LLC , 403 P.3d 1033, 1041-1042 (Wyo. 2017). Contracts are interpreted using an objective approach. Id. Contract review begins by looking at the plain language of the contract and the words used in the contract are afforded the plain meaning a reasonable person would give to them. Bear Peak Resources, LLC , 403 P.3d at 1040-1041.

The Court finds that the estoppel doctrine, as applied previously by this Court in its Pendleton / Cornhusker ruling, does not encompass a corresponding tagalong obligation to provide an appeal bond for the entire judgment, compensatory and punitive damages, pending appeal. Interstate did obtain an appeal bond for the compensatory portions of the judgment, consistent with the terms of the policy. There are no facts that suggest AMC and Sunridge relied on any representation or misrepresentations by Interstate to their detriment. There is no evidence about Interstate's acts or representations regarding appeal bonds that could have induced AMC and Sunridge to believe it would provide appeal bonds for the entire amount of the judgment, including punitive damages. There are no facts that indicate AMC or Sunridge relied on any representation about appeal bonds by Interstate. The only representations or statements made by Interstate were that it would not provide an appeal bond for the punitive damages portion of the judgment, under the express and unambiguous terms of the policy. There are no facts suggesting that AMC or Sunridge did not know of the policy provisions or should have had any expectation that Interstate would provide an appeal bond on terms other than those set forth in the policy. The Court finds the motion of AMC and Sunridge contending that Interstate should have provided and paid for an appeal bond for the punitive damages portion of the judgment must be denied. They will not be entitled to recover amounts claimed to have been incurred or expended to obtain an appeal bond or provide other security to prevent execution on the judgment during the pendency of the Lompe appeal. This includes the request for an award of prejudgment interest at any rate and the request for attorneys' fees.

Bad faith claims

As noted earlier in this Order, Wyoming law recognizes substantive and procedural insurance bad faith claims and causes of action against insurers. This is the law that governs the decision on AMC and Sunridge's insurance bad faith claims.

Wyoming recognizes both substantive and procedural bad faith in the insurance context. S