UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
No. 99-10560
Summary Calendar
POTOMAC INSURANCE COMPANY OF ILLINOIS,
Plaintiff-Counter Defendant-Appellant,
VERSUS
JAYHAWK MEDICAL ACCEPTANCE CORPORATION; ET AL.,
Defendants,
JAYHAWK MEDICAL ACCEPTANCE CORPORATION
Defendant-Counter Claimant-Appellee.
Appeal from the United States District Court
for the Northern District of Texas, Dallas Division
January 4, 2000
Before SMITH, BARKSDALE and PARKER, Circuit Judges.
Robert M. Parker, Circuit Judge:
Appellant, Potomac Insurance Company of Illinois
(“Potomac”), appeals the district court's ruling on summary
judgment that Potomac had a duty to defend Appellee, Jayhawk
Medical Acceptance Corporation (“Jayhawk”) in three lawsuits
under the terms of a comprehensive general liability insurance
policy. The specific issue on appeal is the district court's
holding that a “professional services” exclusion in the policy
did not apply to relieve Potomac of its duty to defend. Because
we find that the services performed by Jayhawk were not
“professional services,” we AFFIRM.
FACTS AND PROCEEDINGS BELOW
Jayhawk provides financing for elective surgeries and refers
clients to doctors who perform such surgeries. At all pertinent
times referred to herein, Jayhawk was insured by Potomac under a
comprehensive general liability policy. The policy provided
coverage for “bodily injury” and “property damage” caused by an
occurrence during the period covered by the policy. Claims
related to the rendition of professional services are
specifically excluded from coverage. The applicable exclusion
reads:
With respect to any professional services shown in the
Schedule, this insurance does not apply to “bodily
injury,” “property damage,” “personal injury,” or
“advertising injury” due to the rendering or failure to
render any professional service.
In 1998, Jayhawk was sued by three persons who were
dissatisfied with the results of their breast augmentation
surgeries.1 After Jayhawk submitted these claims to Potomac for
a defense, Potomac filed a declaratory judgment action in federal
1
Two of the cases were filed against Jayhawk and the doctors
who performed the surgeries. See Lasoya v. Al-Marashi, M.D., et
al., No. DV98-1835 (116th Dist. Ct., Dallas County, Texas);
Juarez v. Jayhawk Medical Acceptance Corp., et al., No. 798281
(Dist. Ct., Orange County, California). One case was initiated
by Jayhawk, but the patient filed a counterclaim. See Jayhawk
Medical Acceptance Corp. v. Sarmiento, No. CV198-423AC (7th Dist.
Ct., Clay County, Missouri).
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court.2 The district court ruled that the act of referring
patients to doctors to perform elective surgeries is not a
“professional service” so as to be excluded from coverage under
this general liability policy and that Potomac had a duty to
defend Jayhawk in the lawsuits.
The question thus becomes whether referring
patients to doctors and verifying their qualifications
to perform elective surgery are inherent to the
specialized knowledge Jayhawk brings to its business.
Jayhawk argues that it simply arranges financing for
patients and contracts with physicians. Of course, the
point of making these contracts is to put doctors on a
referral list; however, no specialized knowledge or
skill particular to the business is required once these
financial arrangements are made. Potomac has failed to
prove that referrals themselves involve anything more
than merely finding a local doctor who has arranged to
participate in the program. The Court therefore
concludes that the act of referring patients to doctors
for elective surgery is not a “professional service” in
the context of this particular case.
Based on the general allegations of negligent referrals in
each of the three complaints against Jayhawk and the fact that
the mere act of referral does not constitute a “professional
service,” the Court held that Potomac had a duty to defend
Jayhawk in the lawsuits.
STANDARD OF REVIEW
Our review of a grant of summary judgment is de novo. See
2
Jayhawk asserted counterclaims for breach of contract,
unfair claims settlement practices, breach of the duty of good
faith and fair dealing and violations of the Texas Insurance
Code. Neither party sought summary judgment regarding these
claims.
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Canutillo v. Indep. School Dist. v. National Union Fire Ins. Co.,
99 F.3d 695, 700 (5th Cir. 1996). In addition, the district
court's interpretation of an insurance contract is reviewed de
novo. See id.; Principal Health Care v. Lewer Agency, Inc., 38
F.3d 240, 242 (5th Cir. 1994).
INSURANCE CONTRACT INTERPRETATION
In this case, Texas rules of contract interpretation
control. See Amica Mut. Ins. Co. v. Moak, 55 F.3d 1093, 1095
(5th Cir. 1995). Texas courts interpret insurance contracts
under the same rules that apply to contracts generally. See
Barnett v. Aetna Life Ins. Co., 723 S.W.2d 663, 665 (Tex. 1987).
In examining a summary judgment ruling relating to the
construction of an insurance contract, we must first determine
whether the applicable policy terms are ambiguous. See
Canutillo, 99 F.3d at 700 (citing Yancey v. Floyd West & Co., 755
S.W.2d 914, 917 (Tex. App.--Fort Worth 1988, writ denied)). If
the terms of a contract are reasonably susceptible to two
differing interpretations, then that contract is ambiguous. See
Coker v. Coker, 650 S.W.2d 391, 393 (Tex. 1983). Any ambiguity
in a contract is resolved in favor of the insured. See National
Union Fire Ins. Co. v. Hudson Energy Co., 811 S.W.2d 552, 554
(Tex. 1991). This Circuit recently spoke on the effect that a
contract's ambiguousness has on a court's construction of that
contract.
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Under Texas law, an insurance contract will be [sic] not
be construed neutrally unless it is susceptible of only
one reasonable construction. If multiple interpretations
are reasonable, the court must construe the contract
against the insurer, and this applies with special force
when exceptions to liability are examined.
Travelers Indemnity Co. v. CITGO Petroleum Corp., 166 F.3d 761,
769 (5th Cir. 1999) (citing Western Heritage Ins. Co. v. Magic
Years Learning Centers and Child Care, Inc., 45 F.3d 85, 88 (5th
Cir. 1988)). “These special rules favoring the insured, however,
are applicable only when there is an ambiguity in the policy; if
the exclusions in question are susceptible to only one reasonable
construction, these rules do not apply.” Canutillo, 99 F.3d at
701.3
Texas courts use the “eight corners” or “complaint
allegation” rule when determining whether an insurer has a duty
to defend. See Canutillo, 99 F.3d at 701; Duncanville Diagnostic
Ctr., Inc. v. Atlantic Lloyd's Ins. Co., 875 S.W.2d 788, 789
3
“Not every difference in the interpretation of an insurance
policy amounts to an ambiguity.” Maryland Casualty Co. v. Texas
Commerce Bancshares, Inc., 878 F. Supp. 939, 941 (N.D. Tex.
1995). Although the insured and the insurer take conflicting
views of coverage, neither conflicting expectations nor
dialectics are sufficient to create ambiguity. Id. (citing
Forbau v. Aetna Life Ins. Co., 876 S.W.2d 132, 134 (Tex. 1994)).
In addition, mere absence of a policy definition does not give
rise to a finding of ambiguity. See Harris Methodist Health Sys.
v. Employers Reinsurance Corp., No. 3:96-CV-0054, 1997 WL 446459,
at *5 (N.D. Tex. July 25, 1997) (noting that “Texas courts have
previously given meaning to the phrase 'professional services'
where it has not been specifically defined in an insurance
contract, reinforcing the idea that the absence of a policy
definition does not create an ambiguity”) (footnote omitted).
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(Tex. App.--Eastland 1994, writ denied) (“To determine whether an
insurer has a duty to defend its insured in a lawsuit, the
allegations in the underlying suit must be considered in light of
the provisions of the insurance policy.”). Our decision
regarding the duty to defend is not influenced by “facts
ascertained before the suit, developed in the process of
litigation, or by the ultimate outcome of the suit.” Gulf Chem.
& Metallurgical Corp. v. Associated Metals & Minerals Corp., 1
F.3d 365, 369 (5th Cir. 1993) (quoting American Alliance Ins. Co.
v. Frito-Lay, Inc., 788 S.W.2d 152, 153-54 (Tex. App.--Dallas
1990, writ dism'd)).
An insurer must defend an insured only when facts alleged in
the complaint, if taken as true, “potentially state a cause of
action within the terms of the policy.” Canutillo, 99 F.3d at
701 (quoting Gulf Chem., 1 F.3d at 369). As long as the
complaint states at least one cause of action within the policy's
coverage, the duty to defend attaches. See Rhodes v. Chicago
Ins. Co., 719 F.2d 116, 119 (5th Cir. 1983).
DISCUSSION
Pursuant to the “eight corners rule” we will examine each
of the three complaints in the underlying lawsuits involving
Jayhawk in light of the general liability policy and the
“professional services” exclusion contained therein to
determine whether Potomac is obligated to defend Jayhawk. As
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the district court noted, the patients all generally alleged
negligent referrals on the part of Jayhawk; however, only two
two plaintiffs allege that Jayhawk made specific
representations as to the competency of the doctors who
performed the surgeries.
The Sarmiento Case.
Julia Sarmiento alleged negligent referral and negligent
investigation of Dr. John Baeke's qualifications against
Jayhawk in a counterclaim. In her negligent referral
allegation, Ms. Sarmiento fails to allege that Jayhawk did
anything beyond merely referring her to Dr. Baeke. Because
mere referrals are administrative, or ministerial tasks that
do not fall within the exclusion for “professional services,”
we affirm the district court's ruling the Potomac must defend
Jayhawk in the lawsuit brought by Ms. Sarmiento.
The mere act of referring a person to a doctor does not
constitute a “professional service” as the phrase is defined
in Texas. Recently, the Texas Court of Appeals held that an
attorney's solicitation letter sent to a prospective client,
which does not include any legal advice, did not fall within
an insurance policy exclusion exempting “designated
professional services.” See Atlantic Lloyd's Ins. Co. v.
Susman Godfrey, 982 S.W.2d 472, 478 (Tex. App. 1998--Dallas,
writ denied). The Court of Appeals gave the following
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statement regarding “professional service”:
[I]t is clear that a professional must perform more
than an ordinary task to perform a professional
service. To qualify as a professional service, the
task must arise out of the acts particular to the
individual's specialized vocation. We do not deem an
act a professional service merely because it is
performed by a professional. Rather, it must be
necessary for the professional to use his specialized
knowledge or training.
Susman Godfrey, 982 S.W.2d at 476-77 (citations omitted). See
also Duncanville, 875 S.W.2d at 790 (“In some sense, of
course, a profession involves labor, skill, education, special
knowledge and compensation or profit.”). It is clear that the
mere act of referring a patient to a doctor, without more,
does not constitute a professional service. Therefore, we
affirm the district court's ruling with respect to Ms.
Sarmiento. Potomac must defend Jayhawk in this suit.
The Lasoya and Juarez Cases
The remaining two complaints against Jayhawk, allege more
than mere referrals in their negligent referral claims. The
Lasoya complaint and the Juarez complaint allege that Jayhawk
made specific statements regarding the competency of the
doctors to whom Ms. Lasoya and Ms. Juarez were referred.
Although an allegation that Jayhawk represented that these
doctors were competent goes beyond a mere referral, such an
allegation does not constitute the performance of a
“professional service” as defined by Texas courts.
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“To qualify as a professional service, the task must
arise out of the acts particular to the individual's
specialized vocation. . . . [I]t must be necessary for the
professional to use his specialized knowledge or training.”
Susman Godfrey, 982 S.W.2d at 476-77 (citations omitted).
Jayhawk is not in a profession. It provides financial
assistance to persons seeking elective operations not
otherwise covered by insurance. In addition, Jayhawk's
knowledge relates to financial matters, not to doctor
qualifications. Therefore, a referral that represents that a
particular doctor is qualified does not constitute a
“professional service” under the facts of this case. Potomac
has a duty to defend Jayhawk in these two cases as well.
CONCLUSION
For the above-stated reasons, we AFFIRM the district
court's ruling that Potomac has a duty to defend Jayhawk in
the three lawsuits filed by Ms. Sarmiento, Ms. Lasoya and Ms.
Juarez.
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