IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

No. 10-41131

NATIONAL FIRE INSURANCE COMPANY OF HARTFORD, ET AL,

Plaintiffs

v.

RADIOLOGY ASSOCIATES, L.L.P., ET AL,

Defendants

AMERICAN PHYSICIANS INSURANCE COMPANY,

Third Party Defendant - Appellant

v.

RADIOLOGY ASSOCIATES, L.L.P., 

Third Party Plaintiff - Appellee

Appeal from the United States District Court 

for the Southern District of Texas 

USDC No. 2:09-CV-76

Before JONES, Chief Judge, and HIGGINBOTHAM and SOUTHWICK, Circuit

Judges. 

PER CURIAM:*

United States Court of Appeals

Fifth Circuit

F I L E D

August 8, 2011

Lyle W. Cayce

Clerk

The court has determined under 5TH CIR. R. 47.5, that this opinion should not be

*

published and is not precedent except under the circumstances set forth in 5TH CIR. R. 47.5.4.

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Radiology Associates filed a declaratory judgment action against American

Physicians Insurance Company, claiming it had a duty to defend Radiology

Associates against claims stemming from an employee’s sexual misconduct. The

district court granted summary judgment in favor of Radiology Associates. 

Because the claims alleged against Radiology Associates are excluded from

coverage under the policy, we REVERSE.

STATEMENT OF FACTS

Radiology Associates and its former employee, Brian K. Riley, were sued

in Texas state court by Marie and Daniel Pecore, who alleged that Riley sexually

assaulted Marie Pecore when he performed an unauthorized vaginal

examination at Radiology Associates’ facility. The Pecores specifically alleged

that Radiology Associates negligently failed to provide a chaperone during the

examination, failed to post notices informing patients of the right to a chaperone,

and failed to monitor its employees properly. Upon receipt of the Pecores’

complaint, Radiology Associates requested a defense from its professional

liability insurer, American Physicians Insurance Company (“American

Physicians”), as well as its standard and umbrella insurers. All three insurers

refused to defend. 

Radiology Associates subsequently filed a third-party complaint against

American Physicians, seeking a declaratory judgment and alleging a breach of

contract claim for refusing to defend. 

Radiology Associates’ policy with American Physicians (“the Policy”)

provided coverage for claims resulting “from professional services which you

provided or which you should have provided to your patients . . . .” The Policy

listed exclusions for certain claims. The relevant exclusions are as follows:

(2) Exclusion for sexual misconduct. We will not cover any claims

made against you, whether the injury or damage itself was intended

or not, which arises out of any sexual act. 

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(3) Exclusion for violation of law. We will not cover any claims

against you, whether the injury or damage was intended or not,

which arises out of an act or omission in violation of the penal code

or criminal statutes in the jurisdiction in which the act occurred.

. . . 

(14) Exclusion for intentional acts. We will not cover any claims

made against you for any injury or damage, whether the injury or

damage itself was intended or not, which in whole or in part, arises

out of an intentional tort.

The district court held it to be unclear whether any of these exclusions

applied to Riley’s actions as described in the complaint. Accordingly, American

Physicians had a duty to defend. American Physicians timely appealed.

DISCUSSION

This court reviews a grant of summary judgment de novo. Gonzalez v.

Denning, 394 F.3d 388, 391 (5th Cir. 2004). Interpretation of an insurance

contract is a question of law that we also review de novo. Principal Health Care

of La., Inc. v. Lewer Agency, Inc., 38 F.3d 240, 242 (5th Cir. 1994). Jurisdiction

in this case is founded on diversity; accordingly, Texas rules of contract

interpretation control. Canutillo Indep. Sch. Dist. v. Nat’l Union Fire Ins., 99

F.3d 695, 700 (5th Cir. 1996). “Under Texas law, the interpretation of insurance

contracts is governed by the same rules that apply to contracts generally.” Id.

(citation omitted). The policy is viewed in its entirety, with a goal of discerning

the parties’ intent at the time of the contract. Provident Life & Accident Ins. Co.

v. Knott, 128 S.W.3d 211, 216 (Tex. 2003) (citations omitted).

“Although the insured bears the burden of showing that the claim against

it is potentially within the policy’s coverage, the insurer bears the burden of

establishing that an exclusion in the policy constitutes an avoidance of or

affirmative defense to coverage.” Canutillo, 99 F.3d at 701 (citations omitted). 

If an insurer successfully asserts an exclusion, “the burden shifts back to the

insured to show that an exception to the exclusion brings the claim” back within

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the scope of coverage. Harken Exploration Co. v. Sphere Drake Ins. PLC, 261

F.3d 466, 471 (5th Cir. 2001) (citations omitted).

American Physicians contends that the district court erred when it held

that American Physicians had a duty to defend Radiology Associates in the

Pecore lawsuit. The Texas “eight-corners rule provides that when an insured is

sued by a third party, the liability insurer is to determine its duty to defend

solely from terms of the policy and the pleadings of the third-party claimant. 

Resort to evidence outside the four corners of these two documents is generally

prohibited.” GuideOne Elite Ins. Co. v. Fielder Rd. Baptist Church, 197 S.W.3d

305, 307 (Tex. 2006). “If a petition does not allege facts within the scope of

coverage, an insurer is not legally required to defend a suit against its insured.” 

Nat’l Union Fire Ins. Co. v. Merchants, 939 S.W.2d 139, 141 (Tex. 1997)

(citations omitted). When reviewing a complaint, “the court must focus on the

factual allegations that show the origin of the damages rather than on the legal

theories alleged.” Id. (quotation marks and citation omitted). The duty to

defend arises only when the facts in the complaint, “if taken as true, potentially

state a cause of action within the terms of the policy.” Gulf Chem. &

Metallurgical Corp. v. Assoc. Metals & Minerals Corp., 1 F.3d 365, 369 (5th Cir.

1993) (applying Texas law) (quotation marks and citation omitted).

The district court reasoned that the facts alleged by the Pecores potentially

stated a claim for negligence because Riley may have negligently thought he was

entitled to administer a vaginal exam, or that in the course of performing the

authorized ultrasound, he negligently and inappropriately touched Pecore. The

district court concluded that because it was unclear whether the alleged facts fit

into an exclusion, American Physicians had a duty to defend. The complaint,

though, makes no allegation that Riley may have negligently believed his actions

were authorized. A court should not “imagine factual scenarios which might

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trigger coverage.” Gore Design Completions, Ltd. v. Hartford Fire Ins. Co., 538

F.3d 365, 369 (5th Cir. 2008) (quotation marks and citation omitted).

Because the court may consider only the facts as set out in the complaint

to determine the duty to defend, the question is whether the Pecore complaint

potentially states a claim within the scope of coverage triggering American

Physicians’ duty to defend. The complaint described Riley’s conduct as “a sexual

assault” and also alleged that the acts of Riley were an intentional tort. This

court must focus, though, on the facts asserted, not the legal theories presented. 

Merchants, 939 S.W.2d at 141. Based on the actual facts in the complaint,

Riley’s conduct constituted unauthorized sexual conduct. His acts were sexual

in nature and not authorized by Pecore’s treating physician. 

Riley was not an insured party under the Policy. Therefore, any coverage

issues relate solely to the claims against Radiology Associates. Because the

Policy excludes injury or damage that “arises out of any sexual act,” we now

must decide whether the claims against Radiology Associates arose out of Riley’s

excluded actions. The Texas Supreme Court “has held that ‘arise out of’ means

that there is simply a ‘causal connection or relation,’ which is interpreted to

mean that there is but for causation, though not necessarily direct or proximate

causation.” Utica Nat’l Ins. Co. of Tex. v. Am. Indem. Co., 141 S.W.3d 198, 203

(Tex. 2004) (citations omitted). Likewise, in applying Texas law, we have held

that “when an exclusion prevents coverage for injuries ‘arising out of’ particular

conduct, ‘[a] claim need only bear an incidental relationship to the described

conduct for the exclusion to apply.’” Sport Supply Group, Inc. v. Columbia Cas.

Co., 335 F.3d 453, 458 (5th Cir. 2003) (citations omitted).

The Pecore complaint alleges that Radiology Associates negligently failed

to provide a chaperone, failed to post notices informing patients of the right to

a chaperone, and failed to monitor its employees properly. These claims “arise

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out of” Riley’s unauthorized sexual conduct. But for Riley’s improper conduct,

Pecore would have no claims against Radiology Associates. 

Radiology Associates urges that in analyzing the duty to defend, this court

must interpret the allegations in the complaint from the standpoint of the

insured. In other words, because Radiology Associates is the insured, we should

focus on its alleged acts or omissions and not Riley’s. Radiology Associates

reasons that because the complaint does not allege that Radiology Associates

committed sexual misconduct, an intentional tort, or violated a criminal code,

American Physicians must defend it against the lawsuit.

The cases Radiology Associates relies on to support its “standpoint of the

insured” argument are inapposite. See King v. Dall. Fire Ins. Co., 85 S.W.3d

185, 188 (Tex. 2002); Roman Catholic Diocese of Dall. v. Interstate Fire & Cas.

Co., 133 S.W.3d 887, 890 (Tex. App.–Dallas 2004, pet. denied); Acceptance Ins.

Co. v. Lifecare Corp., 89 S.W.3d 773, 777 (Tex. App.–Corpus Christi 2002, no

pet.). Those cases analyzed whether there had been a policy “occurrence,” not

whether an exclusion applied. Radiology Associates has not cited, nor have we

found, a Texas case extending this “standpoint of the insured” position to the

application of exclusions. Instead, the TexasSupreme Court has made clear that

the use of the insured’s perspective is limited to defining occurrences. See King,

85 S.W.3d at 191-92.

Even though the Pecore complaint alleges Radiology Associates was

negligent, those claims all arise out of Riley’s excluded conduct, therefore falling

outside the policy coverage and relieving American Physicians of its duty to

defend. The judgment of the district court is REVERSED and RENDERED.

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