                   United States Court of Appeals
                        FOR THE EIGHTH CIRCUIT
                                  ___________

                                  No. 98-1921
                                  ___________


United Fire & Casualty Company,        *
                                       *
             Appellee,                 *
                                       *
      v.                               *
                                       *
Eddie Gravette; Eddie Gravette, doing *
business as Southwest Sanitation,      *
                                       *
             Defendants.               * Appeal from the United States
                                       * District Court for the
Douglas DeMerritt; Tyler Dale          * Western District of Missouri
DeMerritt; Mirah Dawn DeMerritt,       *
minors, Sherrie Ellen Barnett,         *
                                       *
      Defendants-Appellants.           *
                                       *
Geraldine DeMerritt; Southwest City,   *
Mo., a municipality,                   *
                                       *
      Defendants.                      *
                                  ___________

                          Submitted: November 18, 1998

                               Filed: July 2, 1999
                                ___________
                                    ____________

Before McMILLIAN, WOLLMAN1 and HANSEN, Circuit Judges.
                         ___________

McMILLIAN, Circuit Judge.

       Appellants, the survivors of Douglas DeMerritt, appeal from a final order entered
in the United States District Court2 for the Western District of Missouri granting
summary judgment in favor of appellee, United Fire & Casualty Co. (United Fire) on
its declaratory judgment action. United Fire & Casualty Co. v. Gravette,
No. 97-5039-CV-SW-3 (W.D. Mo. Mar. 4, 1998). The district court found that the
policy was not ambiguous and that coverage was excluded by the employee exclusion.
See slip op. at 3. For reversal, appellants argue that the district court erred in finding
that none of the exceptions to the employee exclusion applied and that the policy
covered Joyce Gravette but not Eddie Gravette. For the reasons discussed below, we
affirm the order of the district court.

                                   JURISDICTION

       The district court had subject matter jurisdiction under 28 U.S.C. § 1332(a)
(diversity of citizenship). The notice of appeal was timely filed under Fed. R. App. P.
4(a), and this court has appellate jurisdiction under 28 U.S.C. § 1291.




      1
       The Honorable Roger L. Wollman became Chief Judge of the United States
Court of Appeals for the Eighth Circuit On April 24, 1999.
      2
        The Honorable Ortrie D. Smith, United States District Judge for the Western
District of Missouri.

                                           -2-
                                       FACTS

       On June 5, 1995, Eddie Gravette, who had a contract with Southwest City for
trash pickup, and Douglas DeMerritt were picking up residential trash in Southwest
City, Missouri. DeMerritt was employed as a pick-up man by Eddie Gravette's
unincorporated business, Southwest Sanitation. Eddie Gravette was driving the
garbage truck and accidentally ran over DeMerritt, fatally injuring him.

       In December 1995, appellants filed a wrongful death action in state court against
Eddie Gravette, Eddie & Joyce Gravette doing business as Southwest Sanitation, and
the city of Southwest City. Joyce Gravette is Eddie Gravette's mother. Appellants
claimed that Eddie Gravette was not the sole owner of Southwest Sanitation and
instead was doing business with his mother, Joyce Gravette. They alleged that Eddie
Gravette had been negligent in the operation of the garbage truck. They later amended
their petition to add a negligence claim against the city of Southwest City, alleging
vicarious liability for the negligence of Eddie Gravette.

       United Fire is an insurance company incorporated in Iowa. It issued a
commercial automobile liability policy to Eddie and Joyce Gravette doing business as
Southwest Sanitation, effective from October 15, 1994, through October 15, 1995. The
policy provided in part that United Fire will pay damages for injuries incurred as a
result of an accident “resulting from the ownership, maintenance or use of a covered”
motor vehicle. Section B(4) of the policy provided that coverage will not apply to any
bodily injuries suffered by employees arising out of and in the course of their
employment. That section further provided that the exclusion will not apply to
domestic employees or liability assumed by the insured under an “insured contract.”
The policy does not define the term “domestic employee.” The policy does define the
term “insured contract” to include the term “sidetrack agreement,” but does not further
define “sidetrack agreement.” The policy also defined “insured contract” to include


                                          -3-
      [t]hat part of any contract or agreement pertaining to your business
      (including an indemnification of a municipality in connection with work
      performed for a municipality) under which you assume the tort liability of
      another to pay for “bodily injury” or “property damage” to a third party
      or organization. Tort liability means a liability that would be imposed by
      law in the absence of any contract or agreement.


       United Fire believed that appellants' claim against Eddie Gravette fell squarely
within the employee exclusion because it was undisputed that at the time of the
accident DeMerritt was an employee of Southwest Sanitation and sustained his fatal
injuries in the course of his employment. However, United Fire believed that Joyce
Gravette was in a different position. According to the policy declaration, Eddie and
Joyce Gravette were partners in Southwest Sanitation. Appellants also described Eddie
and Joyce Gravette in their wrongful death complaint as doing business together as
Southwest Sanitation. However, Eddie Gravette in his answer denied that Joyce
Gravette was doing business with him as Southwest Sanitation and stated that he was
the sole owner and operator of Southwest Sanitation. The garbage truck was owned
by Joyce Gravette.

       United Fire investigated the underlying facts and decided that DeMerritt was
employed by Southwest Sanitation and Eddie Gravette but not by Joyce Gravette.
Thus, United Fire decided that the employee exclusion would not apply to Joyce
Gravette and agreed to defend Joyce Gravette without a reservation of rights. United
Fire also offered to defend Eddie Gravette with a reservation of rights; however, Eddie
Gravette refused the offer.

      Subsequently, appellants voluntarily dismissed Joyce Gravette without prejudice
from their wrongful death action in state court. Eddie Gravette agreed to arbitration of
the wrongful death action. One of the issues to be determined was the nature of the
business relationship, if any, between Eddie and Joyce Gravette. However, neither


                                          -4-
Joyce Gravette nor Southwest City agreed to arbitration and neither participated nor
presented any evidence in the arbitration proceeding. The arbitrator found in favor of
appellants and against Eddie Gravette doing business as Southwest Sanitation and
awarded appellants damages in the amount of $631,881.45. The arbitrator also found
that Joyce Gravette was engaged in a partnership or joint venture or both with Eddie
Gravette in the operation of Southwest Sanitation. In October 1997 the state court
affirmed the award of the arbitrator and entered judgment against Eddie Gravette doing
business as Southwest Sanitation. No judgment was entered against Joyce Gravette
because she was no longer a party to the wrongful death action.

       In April 1997 United Fire filed this action for declaratory judgment against
appellants, Eddie Gravette, Eddie Gravette doing business as Southwest Sanitation, and
the city of Southwest City, to determine whether the policy covered Eddie Gravette and
moved for summary judgment. Appellants and Eddie Gravette asserted that Joyce
Gravette was the partner of Eddie Gravette. Appellants filed a motion for summary
judgment, contending Eddie Gravette was covered either under the policy or because
his partner, Joyce Gravette, was covered because United Fire had agreed to defend her
without a reservation of rights in the wrongful death action in state court.

       The district court decided that although Joyce Gravette was not an indispensable
party in the declaratory judgment action, it would not decide whether the policy
covered Eddie Gravette without also deciding whether the policy covered Joyce
Gravette and required United Fire either to add Joyce Gravette to the declaratory
judgment action or file an unconditional declaration that Joyce Gravette would receive
a defense and coverage. Thereafter, United Fire, in compliance with the district court's
order, filed an amended declaration stating that it would provide both a defense and
coverage for Joyce Gravette for the wrongful death claim.

      The district court granted summary judgment in favor of United Fire and denied
appellants' motion for summary judgment. The district court found that the policy was

                                          -5-
not ambiguous and that coverage was excluded by the employee exclusion because it
was not disputed that DeMerritt was an employee of Eddie Gravette at the time of the
accident and that the accident occurred during and in the scope of that employment.
See slip op. at 3. The district court rejected appellants' argument that three possible
exceptions to the employee exclusion applied: "domestic employee," "sidetrack
agreement," or "insured contract." Appellants argued that the term "domestic
employee" was ambiguous, the policy did not define the term "domestic employee,"
and that DeMerritt may have been a "domestic employee," and thus not excluded from
coverage, because he was neither an alien nor a foreign national. The district court
found that appellants' interpretation of the term "domestic employee" was not
reasonable and therefore not ambiguous. See id. at 4-5. The district court further
found that the word "domestic" reasonably referred to the type of employment, that is,
one who performs services of a household nature in or about a private home, and not
the employee's nationality. See id. at 5.

       Next, the district court rejected appellants' argument that the contract between
Southwest Sanitation and Southwest City was a "sidetrack agreement" within the
meaning of the insured contract exception. The district court found that the term
"sidetrack agreement" was not ambiguous and was a term of art within the railroad
industry, referring to a contract governing the "construction, maintenance, use and
removal of certain spur lines and sidings." The trash hauling contract had nothing to
do with railroads or spur lines. See id. at 5-6.

       Finally, the district court rejected appellants' argument that the trash hauling
contract was an "insured contract" because the policy definition of "insured contract"
included indemnification agreements. The trash hauling contract required Eddie
Gravette to have public liability insurance and property damage insurance. The district
court found that the trash hauling contract was not an "insured contract" because the
contract was not an indemnification agreement. See id. at 6. Southwest City and
Eddie Gravette agreed in the trash hauling contract that Eddie Gravette would obtain

                                         -6-
insurance, but Eddie Gravette did not agree to indemnify Southwest City. See id. at 6-
7. In sum, the district court found that none of the exceptions to the employee
exclusion applied and that United Fire was entitled to judgment as a matter of law.
This appeal followed.

       In the meantime, in the fall of 1997, appellants filed a second action in state court
against United Fire based upon the state court judgment confirming the arbitration
award in the wrongful death action and against Joyce Gravette on the ground that, as
the partner of Eddie Gravette doing business as Southwest Sanitation, she was jointly
and severally liable for the state court judgment against Eddie Gravette doing business
as Southwest Sanitation. The state court stayed the proceedings against United Fire
pending this appeal. However, in May 1998 the state court dismissed the claim against
Joyce Gravette with prejudice. The state court found that Joyce Gravette had been
dismissed without prejudice from the wrongful death action, had not been a party to
either the arbitration proceedings or the state court judgment, and was therefore not
bound by that judgment.

                                     DISCUSSION

       This court reviews de novo the grant of summary judgment, applying the same
standard used by the district court. Thelma D. by Delores A. v. Board of Education,
934 F.2d 929, 932 (8th Cir. 1991). Summary judgment is appropriate if “the pleadings,
depositions, answers to interrogatories, and admissions on file, together with the
affidavits, if any, show that there is no genuine issue at to any material fact and that the
moving party is entitled to a judgment as a matter of law.” Fed. R. Civ. P. 56(c). The
moving party has the burden of identifying the evidence that it believes demonstrates
the absence of a genuine issue of material fact, and the facts need to be taken in favor
of the non-moving party.




                                            -7-
        For reversal, appellants argue that the district court erred in finding that the terms
of the exceptions were not ambiguous. We reject appellants' attempt to inject
ambiguity into a plainly worded contract. “The interpretation of a contract is a question
of law for the court to decide.” White Consolidated Industries, Inc. v. McGill
Manufacturing Co., 165 F.3d 1185, 1190 (8th Cir. 1999). “Language is ambiguous if
it is reasonably open to different constructions; and language used will be viewed in
light of ‘the meaning that would ordinarily be understood by the lay[person] who
bought and paid for the policy.’” Robin v. Blue Cross Hospital Service, Inc., 637
S.W.2d 695, 698 (Mo. 1982) (en banc) (citation omitted). This is an objective, not
subjective, test, and the subjective understanding of a particular insured is not
controlling. See Shearson/American Express, Inc. v. First Continental Bank & Trust
Co., 579 F. Supp. 1305, 1310 (W.D. Mo. 1984).

Domestic Employee

        Appellants first argue that the policy did not define the term "domestic
employee" and the term could have referred to someone who was an alien or foreign
national. We agree with the district court that appellants' argument is creative but failed
to demonstrate any ambiguity. A "domestic employee" is commonly understood to be
a household servant. The dictionary defines the adjective "domestic" as "belonging to
the house or home; pertaining to one's place of residence and to the family; as, domestic
life, domestic duties." Webster's New 20th Century Dictionary 543 (2d ed. 1979). The
primary definition of "domestic" as a noun is "a domestic worker; maid, cook, butler,
etc." Id.

       Missouri decisions also indicate that a "domestic employee" is a household
servant. See Piepmeyer v. Johnson, 452 S.W.2d 97, 98 (Mo. 1970) (domestic
employee "employed as a housekeeper and companion"); Shelter General Insurance
Co. v. Siegler, 945 S.W.2d 24, 25 (Mo. Ct. App. 1997) (flash fire damaged household
and caused personal injuries to homeowners' domestic employee); Watson v. Warren,

                                             -8-
751 S.W.2d 406, 409 (Mo. Ct. App. 1988) (decedent made social security payments
for domestic employees because she "refused to stay alone and paid companion to live
with her").

       Furthermore, a similar term is used in the Missouri Motor Vehicle Financial
Responsibility Law (MVFRL). See Mo. Rev. Stat. § 303.190.5(1994) ("Such motor
vehicle liability policy need not insure . . . any liability on account of bodily injury to
or death of an employee of the insured while engaged in the employment, other than
domestic, of the insured . . . ."). The policy exclusion is a paraphrase of the MVFRL:
While automobile insurers neither intended nor are required to be workers'
compensation insurers, liability insurance is to be provided to classes of employees
who traditionally have not been covered by the workers' compensation system.
Historically, household servants have not been included in the workers’ compensation
system. Mo. Rev. Stat. § 287.090.1(1) (1992) (workers' compensation insurance shall
not apply to "domestic servants in a private home"). In Northland Insurance Co. v.
Bess, 869 S.W.2d 157 (Mo. Ct. App. 1993), the insurance policy contained a similar
employee exclusion and an exception for “domestic employees not entitled to workers’
compensation benefits.” The employer and the employee’s family argued that the
employee exclusion violated the MVFRL. The court disagreed, holding that the
MVFRL did not require coverage in all situations and that the employee exclusion did
not violate the public policy embodied in the MVFRL. See id. at 158-59. The court
interpreted the term “domestic” as used in the MVFRL and the policy to refer to the
type of employment by comparing employees covered by the workers’ compensation
law with domestic employees. See id.

       Finally, cases in other jurisdictions support the conclusion that DeMerritt was
not a domestic employee. See Richoux v. Callais & Sons, Inc., Civ. A. No. 85-4161,
1987 WL 10457, at *3 (E.D. La. May 6, 1987) (holding "the term 'domestic employee'
is unambiguous and carries its generally accepted meaning of one who performs
services of a household nature in or about a private home"); Spain v. Travelers

                                           -9-
Insurance Co., 332 So. 2d 827, 829-30 (La. 1976) (similar domestic employee
exclusion is not ambiguous).

       The widely accepted, common understanding of the term "domestic employee"
as referring to a household servant is the reasonable construction of the term and has
nothing to do with the employee's nationality as suggested by appellants. Therefore,
we hold the term "domestic employee" is not ambiguous and refers to the type of
employment and not the employee's nationality. DeMerritt was not a "domestic
employee" within the meaning of the exception to the employee exclusion.

Insured Contract

      Next, appellants argue that the "insured contract" exception was ambiguous.
This argument is misplaced.

       In the wrongful death action against Eddie Gravette, appellants alleged in both
their original and amended petitions that Eddie Gravette was negligent in the operation
of the garbage truck. The arbitration award found Eddie Gravette was negligent and
that award was affirmed by the state court. Thus, the state court judgment against
Eddie Gravette was based on negligence, not contract. For this reason, the "insured
contract" exception to the employee exclusion simply does not fit the facts of the
present case. Appellants also argue that the trash hauling contract should be considered
an "insured contract" because the definition of the term in policy included agreements
to indemnify third parties. The trash hauling contract required Eddie Gravette to obtain
public liability insurance and property damage insurance. Obviously, this is not an
indemnification agreement and appellants seem to concede this point. However, they
argue that the city included this requirement because the city did not want to be
exposed to vicarious liability for any negligence on the part of Eddie Gravette doing
business as Southwest Sanitation. The flaw in this argument is that the trash hauling
contract just did not contain an indemnification agreement. The trash hauling contract

                                         -10-
only required Eddie Gravette to obtain insurance; it did not require Eddie Gravette to
in any way indemnify the city.

Sidetrack Agreement

       Appellants also argue that the term "sidetrack agreement" is not defined in the
policy and is ambiguous. Appellants argue that this ambiguity requires giving them the
benefit of the doubt in favor of coverage and that the trash hauling contract is, or at
minimum might be, a "sidetrack agreement."

       The policy, in its definition section, provides several examples of an "insured
contract." One of them is a "sidetrack agreement." The term "sidetrack agreement" is
not further defined in the policy. The dictionary definition of "sidetrack" refers to a
railroad track or siding:

      Sidetrack, n.; a track at the side of the main line; a railroad siding.

      Sidetrack, v.t.; sidetracked (-trackt), pt., pp.; sidetracking, ppr. 1. to
      shunt, to shift, as a train, from the main line to a siding. 2. to divert from
      the main course or issue; as, he sidetracked the measure in the Senate.

      Sidetrack, v.i. 1. to shift a train to a siding. 2. to turn away from the
      main course or issue.

Webster's New 20th Century Dictionary 1686 (2d ed. 1979).


      Thus, the common understanding of "sidetrack agreement" would be an
agreement regarding a railroad track or siding. Here, the trash hauling contract had
nothing to do with railroads. It was not a "sidetrack agreement" and therefore was not
an "insured contract" under the policy. See Mount Vernon Fire Insurance Co. v.



                                          -11-
William Monier Construction Co., No. 95 CIV-0645, 1996 WL 44774, at 4 & n.3
(S.D.N.Y. Aug. 7, 1996).

Coverage

      Finally, appellants argue that the district court erred in allowing United Fire to
deny coverage for Eddie Gravette but to admit coverage for Joyce Gravette without
becoming obligated to furnish coverage for all of the named insureds. The policy
named as insureds Eddie and Joyce Gravette doing business as Southwest Sanitation
and described the business as a partnership. Appellants argue that coverage for Eddie
Gravette was created because United Fire provided a defense and coverage for his
mother, Joyce Gravette.

       Under Missouri law, “[t]he duty of a liability insurer to defend pursuant to its
policy is determined by comparing the [policy] language . . . and the allegations of the
petition in the action brought by the person injured or damaged.” Standard Artificial
Limb, Inc. v. Allianz Insurance Co., 895 S.W. 2d 205, 210 (Mo. Ct. App. 1995).
“However, a liability insurer's duty to defend does not depend alone upon the
allegations of the petition filed against the insured.” Id. “The insurer cannot ignore
safely actual facts known to it or which could be known from reasonable investigation.”
Id. Thus, “an insurer has an obligation to look beyond the allegations made in the
[petition] against its insured to facts known by the insurer or facts which can be
discovered through a reasonable investigation,” before declining to defend. Columbia
Union National Bank v. Hartford Accident & Indemnity Co., 669 F.2d 1210, 1215 (8th
Cir. 1982).

       Appellants' wrongful death complaint in state court named both Eddie Gravette
and Joyce Gravette as defendants, and appellants alleged each was liable for personal
injuries and death of DeMerritt. United Fire conducted an investigation and found that
DeMerritt was the employee of Eddie Gravette, doing business as Southwest

                                         -12-
Sanitation, and that DeMerritt died from injuries sustained in the scope of and in the
course of his employment. Thus, appellants' complaint and United Fire's investigation
indicated that the employee exclusion applied to the claim against Eddie Gravette,
excluding insurance coverage for him.

      The claim again Joyce Gravette, however, was an entirely different matter.
Eddie Gravette, through his personal attorney, stated in his answer in state court that
he was the sole owner of Southwest Sanitation, and that no one else, i.e., his mother,
Joyce Gravette, was doing business with him. Similarly, Joyce Gravette consistently
maintained that she was not the partner of her son, Eddie Gravette, which meant that
she was not the employer of DeMerritt. United Fire's investigation indicated that Joyce
Gravette was not a partner in Southwest Sanitation and was not the employer of
DeMerritt. Thus, in the same wrongful death action, United Fire faced a situation in
which one named insured (Eddie Gravette) fell squarely within the employee exclusion,
while another named insured (Joyce Gravette) did not.

      Under Missouri law, an insurer can provide a defense to a liability insured and
reserve its right to later deny coverage, if the insurer provides adequate notice to the
insured and the insured accepts the defense of the action without protest and with full
knowledge that the insurer maintains the right to assert the coverage defense. See
Atlanta Casualty Co. v. Stephens, 825 S.W.2d 330, 333 (Mo. Ct. App. 1992).
However, under Missouri law, an insurer cannot force an insured to accept a
reservation of rights defense. See Ballmer v. Ballmer, 923 S.W.2d 365, 369 (Mo. Ct.
App. 1996).

       When an insured exercises the right to reject a defense with reservation of rights
by the insurer, an insurer can proceed in one of only three ways: first, represent the
insured without a reservation of rights; second, withdraw from representing the insured
altogether; or, lastly, file a declaratory judgment action to determine the scope of the
policy's coverage. See id. at 369. However, an insurer's decision to file a declaratory

                                          -13-
judgment action, rather than to simply drop the reservation of rights and defend without
any reservation, is treated as a refusal to defend the insured. See id. Further, if the
insurer attempts to reserve coverage issues and the insured rejects the defense, the
insurer has no right to insist upon controlling the defense, as is otherwise its right under
the insurance policy. See Butters v. City of Independence, 513 S.W.2d 418, 425 (Mo.
1974). The insured would then be released from the policy prohibitions against
incurring expenses and negotiating and settling claims on its own accord. If the
underlying claim settled by the insured is in fact covered under the policy, and a
settlement is made by the insured in good faith and is not collusive, the insurer would
be obligated to pay the settlement. See id.

      In the present case United Fire offered to defend Eddie Gravette with a
reservation of rights. Eddie Gravette refused, and United Fire then filed a declaratory
judgment action, which is the current action now on appeal.

        Under Missouri law, United Fire had a difficult choice to make regarding the
claim against Joyce Gravette. If United Fire denied coverage because Joyce Gravette
was, in fact, the partner of Eddie Gravette, and thus the employer of DeMerritt, or if
it offered a defense under a reservation of rights that would likely be refused by Joyce
Gravette, or if it sought a declaratory judgment on the issue of coverage for Joyce
Gravette, United Fire faced the possibility that Joyce Gravette would simply "give up,"
regardless of the merits of her case, and concede liability to appellants, who would then
garnish the insurance policy. In such a garnishment action, United Fire would be faced
with a judgment against Joyce Gravette, a named insured, without a clearly applicable
coverage exclusion.

      More importantly, Joyce Gravette was a named insured, facing a liability claim
that was not clearly excluded under the policy, and therefore, she should receive a
defense. Under these circumstances applicable to Joyce Gravette, and different from
those of Eddie Gravette, United Fire agreed to defend Joyce Gravette without

                                           -14-
reservation of rights in the wrongful death action in state court. Thus, the different
positions of United Fire regarding coverage for Eddie Gravette and Joyce Gravette,
each a named insured, are the results of their very different circumstances, in the
context of Missouri law governing the duty to defend and reservations of rights by an
insurer.

       “Missouri law regards insurance policies as contracts to which the rules of
contract construction apply.” Sargent Construction Co. v. State Auto Insurance Co.,
23 F.3d 1324, 1326 (8th Cir. 1994). “If the policy is not ambiguous, the court cannot
construe it, but must enforce the express terms of the policy as it is written.” Id. n.2.
Because contract law applies to an insurance policy, “any claim or suit by either party
must be based upon the policy issued.” Gabriel v. Shelter Mutual Insurance Co., 897
S.W.2d 119, 120 (Mo. Ct. App. 1995). Here, the district court properly looked within
the four corners of the insurance policy to determine whether United Fire owed
coverage to Eddie Gravette. United Fire's decision to provide coverage for Joyce
Gravette has no bearing upon whether the terms of the policy obligated United Fire to
provide coverage for Eddie Gravette. No policy provision tied coverage for Eddie
Gravette to coverage for Joyce Gravette. In fact, the policy specifically included a
severability clause that separated coverage for each insured: “[e]xcept with respect to
the limits of insurance, the coverage afforded applies separately to each insured who
is seeking coverage or against whom a claim or a suit is brought.” Such a severability
clause means that “when applying the coverage to any particular insured the term
‘insured’ is deemed to refer only to the insured who is claiming coverage under the
policy with respect to the claim then under consideration.” Baker v. DePew, 860
S.W.2d 318, 320 (Mo. 1993) (en banc). Accordingly, the severability clause required
the issue of coverage for Eddie Gravette to be addressed separately from coverage for
Joyce Gravette.

       Appellants argue that United Fire waived its rights or should be estopped from
asserting its right to deny coverage for Eddie Gravette because, as discussed above, it

                                          -15-
provided a defense and coverage for Joyce Gravette. We note, however, that neither
waiver nor estoppel is available to bring risks within the coverage of an insurance
policy that are not covered by its terms or that are excluded from the policy. See Koch
Engineering Co. v. Gibraltar Casualty Co. , 878 F. Supp. 1286, 1289 (E.D. Mo. 1995),
aff’d, 78 F.3d 1291 (8th Cir. 1996); Holland Corp. v. Maryland Casualty Co. , 775
S.W.2d 531, 534-35 (Mo. Ct. App. 1989); Macalco, Inc. v. Gulf Insurance Co. , 550
S.W.2d 883, 891 (Mo. Ct. App. 1977). “[N]either the doctrines of waiver nor estoppel
may be used to create a new contract for the parties.” Holland Corp. v. Maryland
Casualty Co., 775 S.W.2d at 535. No estoppel exists on the facts of this case. Here,
appellants offer no argument, and the record contains no evidence, that Eddie Gravette
detrimentally relied on or was prejudiced by United Fire's denial of coverage, because,
as discussed above, Eddie Gravette never had coverage under the policy on appellants'
wrongful death claim against him.

       United Fire's decision to provide coverage for Joyce Gravette improved
appellants’ position by giving them the ability to reach the proceeds of the policy,
regardless of the employee exclusion, if they successfully litigated the merits of Joyce
Gravette's alleged wrongful death liability. However, appellants have never sought a
trial on the merits of Joyce Gravette's alleged liability for the wrongful death of
DeMerritt. The record shows that appellants voluntarily dismissed Joyce Gravette in
the wrongful death action and proceeded with an arbitration proceeding that could
never be binding upon Joyce, because she was not a party to the case. Later, appellants
sued Joyce Gravette in state court based on the judgment affirming the arbitration
award. Appellants argued that Joyce Gravette was bound by the judgment, even though
she had been voluntarily dismissed and she was no longer a party at the time of the
arbitration and the judgment. The state court dismissed appellants' second lawsuit
against Joyce Gravette with prejudice. See Barnett v. United Fire & Casualty Co.,
No. CV397-490CC (Mo. Cir. Ct. Lawrence County May 11, 1998) (judgment of
dismissal with prejudice), aff'd, No. 22358 (Mo. Ct. App. Apr. 16, 1999).


                                         -16-
       Finally, appellants argue that Joyce Gravette's status as a "partner" of Eddie
Gravette created coverage for Eddie Gravette, despite the terms of the policy.
However, no judgment binding upon Joyce Gravette found that she was a partner of
Eddie Gravette. Even assuming for purposes of analysis that Joyce Gravette and Eddie
Gravette were partners and that the declaration pages of the policy that referred to them
as partners were binding, Joyce Gravette would have been the employer of DeMerritt.
The employee exclusion would apply, resulting in neither Eddie nor Joyce Gravette
being covered under the policy.

      We hold that the district court correctly granted summary judgment in favor of
United Fire. None of the exceptions to the employee exclusion applied and coverage
for Eddie Gravette was excluded by the employee exclusion. Accordingly, the
judgment is affirmed.



      A true copy.

             Attest:

                 CLERK, U.S. COURT OF APPEALS, EIGHTH CIRCUIT.




                                          -17-
