Court Opinion

ID: 3018839
Source: CourtListenerOpinion
Date Created: 2015-10-13 22:19:52.597539+00
Date Added: 2024-06-11T11:47:12.526033
License: Public Domain

UNITED STATES COURT OF APPEALS

                         FOR THE EIGHTH CIRCUIT
                              _____________

                                 No. 96-3908
                                _____________

Greater Hoyt School               *
District No. 61-4,                *
                                  *
     Appellant,                   *    Appeal from the United States
                                  *    District Court for the
           v.                     *    District of South Dakota
                                  *
National Union Fire Insurance     *    NOT FOR PUBLICATION
Company of Pittsburgh,            *
Pennsylvania,                          *
                                  *
     Appellee.                    *

                      _____________________

                      Submitted: June 12, 1997
                          Filed: July 31, 1997
                      _____________________

Before MURPHY, HEANEY and NORRIS,1 Circuit Judges
                      _____________________

NORRIS, Circuit Judge.

     David and Cathy Maynard, assignees of rights held by plaintiff

Greater Hoyt School District No. 61-4 ("Hoyt") against its insurer,

National Union Fire Insurance Company of Pittsburgh ("National Union"),

appeal summary judgment in favor of National Union in their action for

coverage and for breach of duty to

      1
           The Honorable William A. Norris, United States Circuit
 Judge for the Ninth Circuit, sitting by designation.

                                      -1-
defend.   The Maynards argue that four of the causes of action brought by

them in a prior lawsuit against Hoyt did not "aris[e] out of . . . [an]

invasion of any right of privacy" within the meaning of an exclusion

clause in Hoyt's insurance policy.   The Maynards further argue that even

if their claim for coverage on these four counts ultimately must fail,

National Union breached its duty to defend by failing to investigate

Hoyt's claim for coverage at the pleading stage of the prior lawsuit.

We affirm.

     In this diversity action, the rules for construing insurance

policies are controlled by state law.   St. Paul Fire and Marine

Insurance Co. v. Missouri United School Insurance Council, 98 F.3d 343,

345 (8th Cir. 1996).   Accordingly, we review the trial court's

construction of the insurance contract de novo.   State Farm Mutual Auto

Insurance Co. v. Vostad, 520 N.W.2d 273, 275 (S.D. 1994).

     Hoyt's insurance policy with National Union excluded coverage for

"claims arising out of . . . invasion of any right of privacy."    The

Maynards argue that this language, when read with the "wrongful entry or

eviction" language that immediately precedes it, is somehow limited to

physical invasions of privacy.   We disagree.   Although it is certainly

true that we construe ambiguous language liberally in favor of the

insured and strictly

                                  -2-
against the insurer, Klatt v. Continental Insurance Co., 409 N.W.2d 366,

368-69 (S.D. 1987), the exclusion clause in the instant case is anything

but ambiguous:   coverage is excluded for claims arising from invasions

of any right of privacy.

     In the Maynards' underlying lawsuit against Hoyt, Count I alleged

violations of the Family Educational Rights Privacy Act ("FERPA"), 20

U.S.C. § 1232g (1994), which regulates the manner in which federally

funded educational institutions may release information about students.

Specifically, the Maynards complained that Hoyt had "releas[ed]

personally identifiable information [regarding their son] to the general

public"; and that it had "participat[ed] with the news media in

disseminating inaccurate information" about him.   Appellee's Appendix at

4.

     Although on its face this claim seems to be in essence one of

invasion of privacy, the Maynards attempt to distinguish between two

different types of conduct alleged in Count I:   the release of

information about their son, versus the inaccurate representation of

that information.   Importantly, however, FERPA is concerned solely with

the release of information about students, not with the accuracy of the

information released, and any alleged misrepresentation therefore added

nothing to the Maynards' FERPA claim.   Accordingly, the district court

did not

                                  -3-
err by ruling that there was no coverage with respect to Count I.

     Count II alleged that Hoyt conspired in violation of 42 U.S.C. §

1985(3) to deprive the Maynards' son of, inter alia, a free and

appropriate education guaranteed by the Individuals with Disabilities

Education Act ("IDEA"), 20 U.S.C. § 1400 et seq..     The Maynards argue

that the alleged conspiracy did not arise out of an invasion of privacy

because the release of information was merely a "tool" in the plan to

drive them from the community.   We disagree.    The essence of the

conspiracy allegation was that school officials entered into an

agreement to try to oust the Maynards from the school district.       The

only "tool" the Maynards alleged was used in furtherance of the plan was

"the release of personally identifiable and inaccurate information"

about their son.   Appellee's Appendix at 5.    The conduct that

constituted the alleged conspiracy was thus the release of information.

As such, the alleged conspiracy necessarily "arose" from an invasion of

privacy.

     The Maynards' claims for coverage with respect to Counts III and

IV, which alleged intentional and negligent infliction of emotional

distress in the commission of the alleged conspiracy, necessarily rise

or fall with their claim for coverage on the conspiracy count.

Consistent with our holding that any alleged

                                  -4-
conspiracy arose from an invasion of privacy, any emotional distress

caused either intentionally or negligently by the conspiracy necessarily

arose from the same invasion of privacy.    Accordingly, the District

Court did not err in denying coverage on Counts III and IV.

     The Maynards also contend that the district court erred in

entering summary judgment against them on their duty to defend claim.

They argue that National Union had a duty to defend Hoyt

in the underlying lawsuit even if there ultimately was no coverage for

the Maynards' claims.   We recognize that the coverage and duty to defend

issues need not necessarily be resolved in the same manner because

"[t]he duty to defend is much broader than the duty to pay a judgment

against the insured."   State Farm Mutual Automobile Insurance Co. v.

Wertz, 540 N.W.2d 636, 638 (S.D. 1995).    The insurer has a duty to

defend if it is clear or even arguably appears from the face of the

pleadings in the underlying action that the alleged claim would, if

proved, fall within the policy's coverage.   Bayer v. Employers

Reinsurance Corporation, 383 N.W.2d 858, 860-61 (S.D. 1986);

Hawkeye-Security Insurance Co. v. Clifford, 366 N.W.2d 489, 491-92 (S.D.

1985).   Here, the nature of the claims in the Maynards' action against

the school district, as evidenced and expressed in the complaint itself,

did not even arguably fall

                                  -5-
within the coverage of the policy.   Therefore, National Union had no

duty to defend.

     The judgment of the district court is AFFIRMED.

     A true copy:

           Attest:

           Clerk, U.S. Court of Appeals, Eighth Circuit.

                                 -6-