Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca10-89-05192/USCOURTS-ca10-89-05192-0/pdf.json

Parties Involved:
Donna Freeth
Appellant
Brandie Holland
Not Party
Janice Holland
Not Party
State Farm Fire and Casualty Company
Appellee

Document Text:

,._ 

. FILio Urured States F~ -~ f .... Y-IUEr O Appeals Tenth Circuit 

UNITED STATES COURT OF APPEALS 

FOR THE TENTH CIRCUIT 

JAN 2 5 1991 

ROBERT L. HOECKER 

Clerk 

STATE FARM FIRE AND CASUALTY COMPANY, ) 

) 

Plaintiff-Appellee, ) 

) 

v. ) 

) 

DONNA FREETH, ) 

) 

Defendant, ) 

) 

and ) 

) 

BRANDIE NICHOLE HOLLAND, a Minor, by ) 

and through her Mother and Next Friend, ) 

JANICE HOLLAND, ) 

) 

Defendants-Appellants. ) 

) 

) 

No. 89-5188 

(D.C. No. 89-C-0007-E) 

(N.D. Okla.) 

STATE FARM FIRE AND CASUALTY COMPANY, 

Plaintiff-Appellee, ) No. 89-5192 

v. 

DONNA FREETH, 

• 

Defendant-Appellant, 

and 

BRANDIE HOLLAND; JANICE HOLLAND, 

Defendants. 

) (D.C. No. 89-C-0007-E) 

) (N.D. Okla.) 

) 

) 

) 

) 

) 

) 

) 

) 

) 

) 

Appellate Case: 89-5192 Document: 010110080378 Date Filed: 01/25/1991 Page: 1 
ORDER AND JUDGMENT* 

Before McKAY, McWILLIAMS, and EBEL, Circuit Judges. 

After examining the briefs and appellate record, this panel 

has determined unanimously that oral argument would not materially 

assist the determination of these appeals. See Fed. R. App. P. 

34(a); 10th Cir. R. 34.1.9. 

submitted without oral argument. 

The cases are therefore ordered 

Defendants Donna Freeth and Janice Holland, as next friend 

for a minor child, appeal from the district court's entry of 

summary judgment in favor of plaintiff State Farm Fire & Casualty 

Company. State Farm filed this declaratory judgment action 

seeking a court order that it was not obligated to provide a 

defense for or indemnity to Donna Freeth arising from a lawsuit 

which Ms. Holland filed against her. State Farm insured Ms. 

Freeth and her husband under a homeowner's policy. The district 

court held various exclusions in the policy applied to the conduct 

involved in the lawsuit and therefore State Farm was not required 

to provide coverage. 

* This order and judgment has no precedential value and shall 

not be cited, or used by any court within the Tenth Circuit, 

except for purposes of establishing the doctrines of the law of 

the case, res judicata, or collateral estoppel. 10th Cir. R. 

36.3. 

2 

Appellate Case: 89-5192 Document: 010110080378 Date Filed: 01/25/1991 Page: 2 
Background 

Sometime in early March 1986, the minor defendant was 

involved in a statutory rape. She was thirteen years old at the 

time •. On March 18, 1986, her parents took her to Broken Arrow 

Medical Center for treatment. Donna Freeth worked as a nurse in 

the Broken Arrow emergency room. However, she was not on duty 

that particular night. The next night, Ms. Freeth was on duty and 

noticed the minor defendant's name on a patient roster. The 

admission report stated she was treated for an "alleged rape." 

Ms. Freeth knew the minor defendant as a friend of her daughter. 

After work the next day, Ms. Freeth told her daughter about 

the rape. A few days later, Ms. Freeth inquired further about the 

minor defendant's condition and was informed she had contracted 

gonorrhea. Ms. Freeth also conveyed this information to her 

daughter. Pursuant to hospital rules and nursing standards, this 

information was strictly confidential and was not to be disclosed. 

During her deposition, Ms. Freeth testified that her only 

interest in conveying the information was her concern as a parent. 

In particular, she was concerned about the implications of sexual 

activity at such a young age. She stated she specifically told 

her daughter not to tell anyone. However, despite her mother's 

admonition, her daughter did tell a friend about the rape and the 

venereal disease. This information spread all over school, and 

the minor defendant suffered great humiliation as a result. She 

was so distressed she became physically ill. 

On September 23, 1986, Ms. Holland filed suit against Donna 

Freeth in state district court alleging claims for intentional and 

3 

Appellate Case: 89-5192 Document: 010110080378 Date Filed: 01/25/1991 Page: 3 
negligent infliction of emotional distress and invasion of 

privacy. That court granted Ms. Holland's motion for partial 

sUDD11ary judgment on the invasion of privacy claim. It ruled Donna 

Freeth was not acting within the scope of her employment when she 

told her daughter the confidential information. 

At the time of these incidents, Ms. Freeth and her husband 

were covered by a State Farm homeowner's insurance policy. The 

personal liability portion of the policy stated: 

COVERAGE L-PERSONAL LIABILITY 

If a claim is made or a suit is brought against an 

insured for damages because of bodily injury or property 

damage to which this coverage applies, we will: 

1. pay up to our limit of liability for the damages for 

which the insured is legally liable; and 

2. provide a defense at our expense by counsel of our 

choice. We may make any investigation and settle any 

claim or suit that we decide is appropriate. Our 

obligation to defend any claim or suit ends when the 

amount we pay for damages resulting from the occurrence 

equals our limit of liability. 

The policy also contained three exclusions which are relevant 

to this case. They state: 

Coverage Land M do not apply to: 

a. bodily injury or property damage which is expected 

or intended by an insured; 

b. bodily injury or property damage arising out of __ b__ u__ s__ i._n .... e ... s .... s___.p...,u=r==s--u __ i __ t __ s__ o .... f ____ a __ n _____ 1. __ • n __ s __ u=r __ e=d or the rental or holding 

for rental of any part of any premises by an 

insured. • • • 

c. bodily injury or property damage arising out of the 

rendering or failing to render professional services; 

(Emphasis added.) 

4 

Appellate Case: 89-5192 Document: 010110080378 Date Filed: 01/25/1991 Page: 4 
• 

After the Holland lawsuit was filed, Ms. Freeth tendered the 

defense to State Farm under the personal liability section of her 

homeowner's policy. Relying on the policy exclusions, State Farm , 

filed· this declaratory judgment action seeking a court order that 

the company was not obligated to provide coverage. The parties 

filed cross motions for summary judgment and the district court, 

relying on all three exclusions, granted State Farm's motion. 

Discussion 

On appeal, Ms. Freeth argues the exclusions do not apply to 

her conduct, which she asserts was not intended to harm the minor 

defendant and was not within the scope of her employment. State 

Farm counters that the policy was not meant to cover the type of 

conduct at issue here. We '. address these issues below. 

A. Standard of Review1 

We review the granting of a motion for summary judgment in 

the same manner as the district court. Abercrombie v. City of 

Catoosa, 896 F.2d 1228, 1230 (10th Cir. 1990). Summary judgment 

is appropriate only where there are no genuine issues of fact, and 

one party is entitled to judgment as a matter of law. Anderson v. 

Liberty Lobby, Inc., 477 U.S. 242, 250 (1986); Fed. R. Civ. P. 

56(c). In our review, the evidence must be viewed in the light 

most favorable to the nonprevailing party. See Schalk v. 

Gallemore, 906 F.2d 491, 494 (10th Cir. 1990). Here, we view the 

facts favorably to Donna Freeth. In this diversity case, we 

1 We note at the outset that neither party 

Cir. R. 28.2(c), which requires them to 

standard of review in their briefs. 

5 

complied with 10th 

state the applicable 

Appellate Case: 89-5192 Document: 010110080378 Date Filed: 01/25/1991 Page: 5 
review the legal issues under Oklahoma law. 

B. Intentional Acts Exclusion 

The State Farm policy excludes coverage for acts which are 

"inten.ded or expected" by the insured. While Oklahoma courts have 

not addressed the meaning of this language specifically, they have 

interpreted the meaning of language excluding coverage for 

"intentional acts" of the insured. Lumbermen's Mut. Ins. Co. v. 

Blackburn, 477 P.2d 62, 65 (Okla. 1970). 2 

In Lumbermen's, a child was accidentally injured when a 

classmate threw a rock on a school playground. The injured child 

filed suit and ultimately sought to satisfy his judgment through 

the homeowner's insurance policy of his classmate's family. Id. 

at 63-64. The court rejected the application of the intentional 

acts exclusion, stating 

In our opinion, the majority of the better-reasoned 

opinions in cases involving insurance policy exclusion 

provisions with language like the one involved here, or 

wording of similar import, require that the intention of 

the person, whose act caused the injury, 'must be to 

inflict the injury actually inflicted and must be 

directed against' the party injured 'and not against 

another'. . • • 

Id. at 65 (quoting 45 C.J.S. Insurance S 772 nn. 53, 55 

(1955))(emphasis added); see also Allstate Ins. Co. v. Thomas, 684 

F. Supp. 1056, 1058 (W.D. Okla. 1988)(coverage is appropriately 

2 Courts are divided on whether there is a difference between 

"expected" and "intentional" acts. See generally Annotation, 

Construction and Application of Provision of Liability Insurance 

Policy Expressly Excluding Injuries Intended Or Expected By 

Insured, 31 A.L.R. 4th 957 (1984). However, the majority of 

courts have analyzed the two terms in a similar fashion. See 

United Servs. Auto. Ass'n v. Elitzky. 517 A.2d 982, 986 (Pa. 

Super. Ct. 1986), appeal denied, 528 A.2d 957 (Pa. 1987). 

Further, in light of our focus on foreseeability of harm, we do 

not believe any distinction is meaningful in this case. 

6 

Appellate Case: 89-5192 Document: 010110080378 Date Filed: 01/25/1991 Page: 6 
denied if insured intended to connnit the act and intended the 

injury which resulted). 

Using this rationale, Donna Freeth could only 

coverage under this exclusion if she intended to 

specific injury which occurred. Under Lumberman's, the 

inquiry requires distinguishing between intentional 

be denied 

cause the 

relevant 

acts and 

intentional injuries. Massachusetts Bay Ins. Co. v. Gordon, 708 

F. Supp. 1232, 1233 (W.D. Okla. 1989). There is no evidence in 

this record, nor does State Farm argue, that Ms. Freeth intended 

to cause the minor defendant humiliation or embarrassment. 

However, State Farm argues this injury was so foreseeable that an 

intent to inflict this harm can be inferred from her conduct. 

This court has held that a specific intent to injure is 

inferred when the actor could reasonably foresee that the result 

of her actions would be the injuries which occurred. See Allstate 

Ins. Co. v. Hiseley, 465 F.2d 1243, 1248 (10th Cir. 1972)(applying 

Oklahoma law); Pendergraft v. Conunercial Standard Fire & Marine 

~, 342 F.2d 427, 429 (10th Cir. 1965)(applying Oklahoma law); 

Rankin v. Farmers Elevator Mut. Ins. Co., 393 F.2d 718, 720 (10th 

Cir. 1968)(applying Kansas law). 

In Hiseley. we held a driver acted with an intent to injure 

when he chased a second car at 100 miles per hour while bumping it 

from behind, despite his counsel's assertion that he did not 

intend to run it off the road. 465 F.2d at 1246, 1248. Likewise, 

in Pendergraft, a specific intent to injure was inferred where the 

insured intentionally struck a man who then fell to the ground and 

fractured his skull. 342 F.2d at 429. 

7 

Appellate Case: 89-5192 Document: 010110080378 Date Filed: 01/25/1991 Page: 7 
In Pendergraft, the insured argued that although he intended 

to inflict injury in the form of a blow to the face, he did not 

intend the specific injury of a fractured skull. Id. at 428. 

Noting the universal rule that every person is presumed to intend 

the natural and probable consequences of his intentional acts, the 

court held the insured "could reasonably foresee that the probable 

result of his assault and battery upon appellant would be the very 

injuries sustained." Id. at 429. As a consequence, the 

intentional act exclusion of the insurance policy applied. 

We reject State Farm's assertion that these cases somehow 

alter the rule set forth in Lumberman's. Instead, they are 

examples of cases in which the court found, as a matter of law, 

that the intentional acts· exclusion applied because the activity 

involved was so likely to produce the resulting injury. In each 

of these cases the specific harm which occurred was foreseeable. 

See Pendergraft, 342 F.2d at 429 ("We would be most 

reluctant ••• to put our stamp of approval upon a rule that 

would be based on subjective, rather than objective, intent.") 

In this case, the foreseeability of the harm is not so 

apparent. While Ms. Freeth clearly intended to disclose the 

confidential information, it is not clear that she intended, or 

foresaw, any injury to the minor defendant. In fact, the evidence 

in the record is to the contrary. Unlike the case where a person 

strikes another, or a driver chases a car at 100 miles per hour, 

the conduct in this case is not so reckless that the resultant 

harm is obviously foreseeable. Whether the harm was reasonably 

foreseeable is a question for the jury. See Long v. Ponca City 

8 

Appellate Case: 89-5192 Document: 010110080378 Date Filed: 01/25/1991 Page: 8 
Hosp •• Inc., 593 P.2d 1081, 1087 (Okla. 1979)(foreseeability is a 

jury question). 

The specific issue which must be decided is whether it was 

reasonably foreseeable that Donna Freeth's disclosure would result 

in the specific injuries which occurred. Unlike the Pendergraft 

and Hiseley cases, the facts in this case do not present a clear 

probability of harm to a third party. Here, Ms. Freeth had no 

direct contact with the minor defendant. While it may be 

foreseeable that a thirteen-year old girl would disclose this 

information, with this injury resulting, we believe this is a 

question of fact. On the record before us we cannot say, as a 

matter of law, that Donna Freeth either intended that the minor 

defendant sustain injury or that it was reasonably foreseeable 

that these injuries would occur. 

Normally this ruling would require remand to the district 

court. However, the trial court based its summary judgment order 

on all three policy exclusions. Because the application of any 

one of them is sufficient to deny coverage, we will address all 

three. 

C. Business Pursuits Exclusion 

The business pursuits exclusion applies to deny coverage 

where the insured becomes liable to a third party for injuries 

resulting from her business activities. ,Sn Maryland Casualty Co. 

v. Farmers Alliance Mut. Ins. Co., 566 P.2d 168, 169-70 (Okla. Ct. 

App. 1977). Under Oklahoma law, the pertinent inquiry is whether 

Donna Freeth was acting within the scope of her employment as a 

nurse when the activity took place. See id. at 169. We hold as a 

9 

Appellate Case: 89-5192 Document: 010110080378 Date Filed: 01/25/1991 Page: 9 
) 

matter of law that she was not, and that the district court erred 

in failing to grant summary judgment in favor of Donna Freeth and 

Ms. Holland on this issue. 

The parties do not dispute the factual course of events in 

this case. Donna Freeth did not treat the minor defendant, nor 

did she negligently perform any act as a nurse at Broken Arrow 

Medical Center. The acts giving rise to the injuries occurred in 

Ms. Freeth's home during a discussion with her daughter. She was 

not performing any nursing duties at the time. 

The injury complained of resulted from a series of events 

culminating in her daughter's 

classmate. Although Ms. 

disclosure of 

Freeth gained 

information to a 

the confidential 

information at work, the breach was her personal decision to 

disclose it to her daughter. While this fact does not lessen the 

impact of the breach, it does take it outside the scope of her 

employment and outside the reach of the business pursuits 

exclusion. Accordingly, we hold summary judgment in favor of Ms. 

Freeth and Ms. Holland is mandated on this issue. 

D. Professional Services Exclusion 

Finally, we must consider whether the injury in this case 

arose out of the "rendering or failure to render professional 

services." See generally Torres v. Sentry Ins., 558 P.2d 400, 401 

(Okla. 1976)(action alleging physician malpractice arose out of 

failure to render professional services and therefore was excluded 

under policy). Because we believe this exclusion raises genuine 

issues of material fact, we must remand the case to the district 

court. 

10 

Appellate Case: 89-5192 Document: 010110080378 Date Filed: 01/25/1991 Page: 10 
' 

In Marx v. Hartford Accident & Indem. Co., 157 N.W.2d 870 

(Neb. 1968), the court defined professional services for purposes 

of applying this exclusion. It stated, "[a] 'professional' act or 

service is one arising out of a vocation, calling, occupation, or 

employment involving specialized knowledge, labor, or skill, and 

the labor or skill involved is predominantly mental or 

intellectual, rather than physical or manual." Id. at 872. The 

court went on to state, "[i]n determining whether a particular act 

is of a professional nature or a 'professional service' we must 

look not to the title or character of the party performing the 

act, but to the act itself." Id. 

This exclusion exempts coverage for actions constituting the 

"rendering or failure to ·render" professional services. · We have 

already concluded that Ms. Freeth was not rendering treatment when 

this breach occurred. Therefore, our inquiry must focus on the 

scope of Ms. Freeth's nursing duties and whether this breach 

constitutes a failure to render services. That is, whether a 

breach of recognized nursing rules regarding confidentiality bring 

Ms. Freeth's actions within the exclusion. 

This question necessarily requires interpretation of the term 

"professional services", as it is used in this insurance contract. 

In particular, the focus must be on the meaning of "professional 

services" in the nursing context. This inquiry requires 

determining whether a failure to keep information confidential can 

constitute a failure to render services. Specifically, if this 

language is defined to include the total relationship between a 

nurse and any patient in the hospital, the failure to keep this 

11 

Appellate Case: 89-5192 Document: 010110080378 Date Filed: 01/25/1991 Page: 11 
' 

information confidential could constitute the failure to render 

professional services. The parties do not dispute that nursing 

rules require complete confidentiality. 

However, if the term is limited in scope to patient 

treatment, and the physical actions encompassed in nursing, this 

exclusion does not apply. Donna Freeth never treated the minor 

defendant. She was not acting in a nursing role when she 

disclosed the confidential information. She was acting as a 

parent. We believe this potential conflict in the meaning of the 

term "professional services" in the insurance contract raises 

factual questions more appropriately addressed in the district 

court. Therefore, the granting of summary judgment was 

inappropriate. On remand, expert testimony may be necessary to 

resolve this conflict. Consequently, we reverse the ruling of the 

district court on this exclusion. 

E. Conclusion 

A question of fact exists whether Donna Freeth intended to 

cause the specific injuries which occurred in this case so as to 

trigger the "intended and expected" exclusion in the policy. 

Further, factual issues prohibit granting State Farm summary 

judgment on the professional services exclusion. We remand these 

issues to the district court. We also hold the district court 

erred in failing to enter summary judgment in favor of Donna 

Freeth and Ms. Holland on the business pursuits exclusion and 

direct it to do so on remand. 

12 

Appellate Case: 89-5192 Document: 010110080378 Date Filed: 01/25/1991 Page: 12 
i 

Accordingly, the judgment of the United States District Court 

for the Northern District of Oklahoma is VACATED and the case 

REMANDED for further proceedings consistent with this opinion. 

ENTERED FOR THE COURT 

PER CURIAM 

13 

Appellate Case: 89-5192 Document: 010110080378 Date Filed: 01/25/1991 Page: 13