Medical Protective Company, The v. Haefner

Background

The Medical Protective Company (MedPro) insured Jon Haefner and Green Lake Chiropractic, P.A., from July 1, 2020, through July 1, 2021. The policy covered amounts resulting from a covered wrongful act in providing professional services, but required that the act occur during the policy period. It also excluded claims arising from dishonest, fraudulent, criminal, malicious, or intentionally wrongful conduct.

Jennie-O Turkey Store, Inc., sued Haefner and Green Lake in Minnesota state court. Jennie-O alleged common-law fraud, negligent misrepresentation, tortious interference with an employment relationship, and tortious interference with a business expectancy based on Haefner’s alleged issuance of false employee-excuse notes. MedPro filed this federal declaratory-judgment action seeking rulings about its duties to defend and indemnify Haefner and Green Lake. In its summary-judgment motion, MedPro conceded that it had a duty to defend and did not appear to dispute coverage for nonfraudulent conduct occurring during the policy period.

Analysis

Summary judgment is a decision entered when the evidence shows that no material fact is genuinely disputed and the moving party is entitled to judgment under the law. The court applied Minnesota law to interpret the insurance policy.

The court granted summary judgment on MedPro’s claim concerning conduct outside the policy period. The policy plainly required the wrongful act to occur during the policy period, and Haefner and Green Lake did not dispute that limitation. MedPro therefore had no duty to indemnify them for conduct proven to have occurred outside July 1, 2020, through July 1, 2021.

The court also granted summary judgment to the extent MedPro sought a declaration that it had no duty to indemnify Haefner or Green Lake for fraudulent or intentionally wrongful misconduct. The policy excluded such conduct from coverage.

The court denied summary judgment on MedPro’s broader claim that it had no duty to indemnify Haefner or Green Lake for any conduct alleged in Jennie-O’s lawsuit. MedPro argued that negligent misrepresentation was a type of fraud. The court rejected that argument, explaining that fraud is intentional and requires proof of the defendant’s knowledge of the wrongdoing, while negligent misrepresentation does not require that showing. The court therefore concluded that MedPro had a duty to indemnify Haefner and Green Lake for liability arising from a successful negligent-misrepresentation claim.

Disposition

The court granted in part and denied in part MedPro’s motion for summary judgment. It granted the motion regarding conduct outside the policy period and fraudulent or intentionally wrongful misconduct. It denied the motion regarding MedPro’s request for a declaration excluding all conduct alleged in the underlying lawsuit. Because MedPro was not entitled to that broader declaration as a matter of law, the court dismissed the remaining claims with prejudice and directed that judgment be entered.