ST. PAUL FIRE AND MARINE INSURANCE COMPANY, a Minnesota Corporation, Plaintiff and Appellant, v. Gary ENGELMANN, Defendant, Natasha Baloun, Natalie Bertsch, Brian Bertsch, Nancy Froning, Greg Froning, Audra K. Martinmaas, Defendants and Appellees, 639 N.W.2d 192

KONENKAMP, Justice (on reassignment). [¶ 1.] In this declaratory judgment action brought to contest medical malpractice insurance coverage, the circuit court granted

summary judgment against the insurer, reasoning that the general verdict in the doctor’s malpractice trial was conclusive on the coverage question. The jury in that trial heard two tort theories, one that would permit coverage and another that would not. Because the insurer reserved its right to contest coverage and a question of fact remains on what, if any, part of the damages are allocable to the covered acts of the doctor, coverage must be decided in a separate trial. We affirm in part, reverse in part, and remand for trial. A. Background [¶ 2.] The events leading to this appeal began in Miller, South Dakota.

Gary En-gelmann practiced medicine there at the Hand County Clinic. In July 1994, he performed a pelvic examination on Natasha Baloun. During the exam, she became suspicious of his unusual motions and his closeness to her. When she abruptly sat up, she saw his penis. She fled the room and later contacted the police. After her experience became public, other women came forward. Plaintiffs Audra Martin-maas, Natalie Bertsch, and Nancy Froning lodged similar complaints against Engel-mann.

He was charged with multiple counts of raping his patients. [¶ 3.] In an agreement with the prosecutor, Engelmann pleaded guilty to one count of second degree rape, but before sentencing, he sought to withdraw his plea. The circuit court refused his request. He appealed. In State v. Engelmann, 541 N.W.2d 96 (S.D.1995), we reversed, concluding that he had a nonfrivolous reason to withdraw his plea because at the time he entered it his thought processes were blunted by prescription medications and severe depression. He proceeded to trial.

A jury acquitted him of all charges. [¶ 4.] Plaintiffs Martinmaas, Bertsch, and Froning brought civil actions against Engelmann. After a consolidated trial, the jury awarded $450,000 damages to each plaintiff and $50,000 each to Bertsch’s and Froning’s husbands. We affirmed in Martinmaas v. Engelmann, 2000 SD 85, 612 N.W.2d 600. There, a majority of this Court held that Engelmann’s improper sexual contact constituted “malpractice” because it breached the physician’s duty to use care and skill in the practice of medicine. Id. at ¶ 31. Natasha Baloun also sued. Her case is still awaiting trial. [¶ 5.] St.

Paul Fire & Marine Insurance Company insures Engelmann and the Hand County Clinic under two different policies: a commercial general liability policy and a professional liability policy. In this declaratory judgment action, St. Paul contends that it has no duty to indemnify Engelmann for the jury verdict in the consolidated trial and no duty to defend or indemnify him in the pending Baloun case. After both sides moved for

summary judgment, the circuit court agreed that rape and sexual exploitation are not covered, but held nonetheless that the insurer had not “shown that the facts found by the jury as the basis of the award [were] the alleged rape and/or sexual abuse.... ” Concluding that the tort verdict was susceptible to two different constructions, and that one was sustainable for coverage purposes, the court ruled that St. Paul failed as a matter of law in its burden of proving noncoverage and was therefore obligated to indemnify Engelmann for the entire verdict. Lastly, the court held that St.

Paul must defend the pending Baloun suit against Engelmann and the Clinic, but declined to decide before the verdict in that case whether St. Paul must indemnify En-gelmann and the Clinic for any award Bal-oun may obtain. [¶ 6.] St. Paul appeals on the following issues:

(1) Are the damages awarded in the consolidated trial covered under the St. Paul policies?

(2) Is St. Paul obligated to defend Engelmann against the Bal-oun action?

(3) Is St. Paul obligated to defend the Clinic against the Baloun action under the professional liability policy?

(4) Does public policy preclude St. Paul from defending and indemnifying Engel-mann against the Baloun action or indemnifying him against the consolidated action? We restructure these issues for better analysis, but we need not address the last question because we conclude that neither policy insures Engelmann’s intentional misdeeds. B. The Commercial General Policy [¶ 7.] The commercial general policy contains several provisions applicable here.

It covers “bodily injury” caused by an “event,” defined as “an accident, including continuous or repeated exposure to substantially the same general harmful conditions.” The policy specifically excludes coverage for “bodily injury or property damage ... expected or intended by any protected person.” More particularly, the policy does not insure Clinic employees, including Engelmann, for “bodily injury or personal injury that results from sexual abuse committed by that person .... ” In the policy, “sexual abuse means any physical, mental or moral harassment or assault of a sexual nature against any person.” Finally, the policy carries a “professional services” exclusion.

Under related circumstances, the Louisiana Supreme Court ruled that a comprehensive business liability insurance policy excluding personal injury arising out of professional services furnished no coverage for medical malpractice. McCarthy v. Berman, 668 So.2d 721, 725 (La.1996). Likewise, we conclude that St. Paul’s commercial general liability policy provides no coverage for personal injuries from sexual assaults or from rendering or failing to render professional services. Hence, medical malpractice, in any form, is not a covered occurrence. St.

Paul is under no duty to defend or indemnify Engelmann and the Clinic under this policy. C. The Professional Policy [¶ 8.] Engelmann’s professional liability policy covers “damages resulting from” the “providing or withholding of professional services.” A duty to indemnify arises only on a showing that the insured contingency occurred. Headlee v. New York Life Ins. Co., 69 S.D. 499, 504, 12 N.W.2d 313, 315 (1943). The policy does not specifically define “professional services.” For guidance on this term, we look to other jurisdictions. In Marx v.

Hartford Accident and Indemnity Company, the Nebraska Supreme Court ruled that to find whether

an act constitutes a professional service, courts look “not to the title or character of the party performing the act, but to the act itself.” 183 Neb. 12, 157 N.W.2d 870, 872 (1968). Thus, coverage encompasses “professional” acts or services, those entailing the performance of a vocation, calling, or occupation requiring learning and intellectual skill. The professional nature of

an act qualifies it as “professional service.” A physician who sexually assaults a patient on the pretense of rendering medical care performs no professional service. Many courts follow the Marx blueprint. Simply put, sexual assaults of medical patients by physicians are not covered functions contemplated within the rendering of professional services. [¶ 9.] In contrast, a minority view persists in a few courts. The lead decision in this area is St. Paul Fire & Marine Ins. Co. v. Asbury, 149 Ariz. 565, 720 P.2d 540 (Ariz.Ct.App.1986).

There, the court ruled that all tortious acts professionals commit that are intertwined and inseparable from the services provided are covered occurrences. Unlike the Marx formulation, As-bury declares that malpractice insurance covers the physician, not the conduct of the physician. In Asbury, a gynecologist improperly manipulated his patients’ clitorises during routine pelvic exams. The court found this misconduct inseparable from professional services. [¶ 10.] Although we reject the As-bury rationale because St.

Paul’s policy language speaks plainly of coverage for professional services, we believe that even Asbwry’s rule would not permit coverage here. Perhaps a doctor’s hand inappropriately touching part of a patient’s genitals may in some way be inseparable from the function of performing a pelvic examination. But a doctor’s penis in no way belongs in, much less intertwines with, a gynecological exam. All but one of the plaintiffs testified that they were raped when Engelmann inserted his penis into them.

Under the professional liability policy, injury from sexual misconduct cannot be considered as having been incurred from the “providing or withholding of professional services.” See David S. Florig, Insurance Coverage for Sexual Abuse or Molestation, 30 Tort & Ins. L.J. 699, 724 (1995). St. Paul is under no obligation to indemnify Engelmann for such acts. But our analysis does not end here. [¶ 11.] If the question were only whether Engelmann’s professional liability policy covers rapes and sexual assaults, then, as we have seen, the answer is clearly no.

Rape and sexual exploitation in the course of a pelvic exam are intentional acts situated well outside the ambit of failure to use due care and skill in providing professional services.

Here, however, there were two theories of recovery given to the jury in the medical malpractice trial: (1) “negligence” by “engaging in improper sexual contact with each plaintiff during her gynecological examination,” and (2) “negligence” by performing “gynecological examinations [using] improper positions, procedures and methods in conducting those examinations.” The first theory affords no legitimate basis for coverage, but what of the second theory? [¶ 12.] A liability policy that provides protection for professional services contemplates coverage for “improper or incorrect medical treatment of a physical ailment by the insured doctor.” Smith v.

St. Paul Fire & Marine Ins. Co., 353 N.W.2d 130, 132 (Minn.1984). The act in question must be a “medical or dental act, not

an act or service that requires no professional skill.” Lindheimer v. St. Paul Fire & Marine Ins. Co., 643 So.2d 636, 638 (Fla.Dist.Ct.App.1994). [¶ 13.] We think the second theory allows for coverage in that the medical experts for Martinmaas, Bertsch, and Fron-ing testified that Engelmann’s unorthodox methods, such as his “gauze procedure,” fell below the standard of care for physicians. His acts under the second theory, although medically unsuitable, lie within the scope of professional services and thus are covered under his professional liability policy. Yet St.

Paul contends that the plaintiffs’ own renditions of fact belie the second theory, since the plaintiffs described Engelmann’s acts as intentional sexual assaults. The question is not that simple. Much of the plaintiffs’ observations were circumstantial because they could not see what Engelmann was doing. The jury may have doubted part of their testimony, but still accepted enough of it to undergird the experts’ opinions that En-gelmann’s acts fell below the standard of care. We see this as a factual issue.

Supporting this conclusion is the fact that the “knee-chest” position Froning had to assume for a pelvic exam, though not medically indicated in her circumstance, involved no offensive contact. Martinmaas, 2000 SD 85, ¶ 15, 612 N.W.2d at 605. Froning never claimed that she was sexually assaulted. Martinmaas, 2000 SD 85, ¶ 31 n. 6, 612 N.W.2d at 608 n. 6. [¶ 14.] The second theory allows for coverage, but we do not know which theory in the malpractice action the jury adopted or whether it adopted both. Although the circuit court ruled that the tort judgment did not collaterally estop St.

Paul to assert noncoverage, the court nonetheless used the jury’s general verdict against the insurer as the basis for finding coverage. The court granted

summary judgment against St. Paul, reckoning that the tort verdict was subject to two different constructions, and one was sustainable for coverage purposes. In our view, neither side was entitled to

summary judgment on this issue. What part of the victims’ damages can be allocated to the covered second negligence theory must be litigated as a question of fact in this declaratory action. [¶ 15.] A court faces a conceptually impossible task in ruling on a

summary judgment motion based on facts decided in another case in which multiple theories were presented and only a general verdict was rendered. Here, the verdict in the liability .case is susceptible of at least two reasonable

interpretations.

Summary judgment can be granted only when “there is no genuine issue as to any material fact.” SDCL 15-6-56(c). Not only must the facts be not in issue, but also there must be no genuine issue on the inferences to be drawn from those facts. Wilson v. Great N. Ry. Co., 83 S.D. 207, 212, 157 N.W.2d 19, 21 (1968). That both sides move for

summary judgment does not mean that there are no genuine issues, obliging a court to grant judgment for one side or the 'other. American Fidelity & Casualty Co. v. London & Edinburgh Ins. Co., 354 F.2d 214 (4thCir.1965). Both motions must be denied if the court detects genuine issues of fact or genuine issues regarding the inferences to be drawn from the facts. Hindes v. United States, 326 F.2d 150, 152 (5thCir.1964), cert. denied, 377 U.S. 908, 84 S.Ct. 1168, 12 L.Ed.2d 178; 3 Barron and Holtzoff § 1239 (Wright ed. 1958). D.

Insurer’s Right to Litigate Coverage [¶ 16.] Generally, an insurer who defends an insured waives the right to assert policy defenses unless it first notifies the insured that it disclaims liability under the policy. See 7 C.J. Appleman, Insurance Law & Practice § 4694 p. 336 (Bendal ed. 1979) [hereinafter Appleman].

Under South Dakota law, if an insurer has a duty to defend its insured, it is bound— absent a reservation of rights — under the doctrine of collateral estoppel by those facts decided in the action against the insured that aré essential to the judgment of liability, whether the insurer elects or refuses to defend. Ziegler v.

Ryan, 66 S.D. 491, 285 N.W. 875, 880 (S.D.1939). [¶ 17.] On the other hand, if the insurer’s interest in defending the claim while restricting its obligation to the terms of the policy creates a conflict of interest between the insured and the insurer, there can be no estoppel from litigating in a later proceeding those issues on which there was a conflict of interest. As the California Supreme Court explained, “if the insurer adequately reserves its right to assert the noncoverage defense later, it will not be bound by the judgment” against the insured. Gray v. Zurich Ins.

Co., 65 Cal.2d 263, 279, 419 P.2d 168, 178, 54 Cal.Rptr. 104, 114 (1966). By reserving the noncoverage issue, a conflict of interest will be avoided and the interests of the insured and the insurer in defending against the injured claimant will be identical. Likewise, the Arizona Supreme Court, declaring it the better rule, held that “where there is a conflict of interest between an insured and [an] insurer, the parties will not be estopped [to] litigat[e] in a subsequent proceeding those issues as to which there was a conflict of interest....” Farmers Ins. Co. of Ariz. v.

Vagnozzi, 138 Ariz. 443, 675 P.2d 703, 708 (1983) (faced with a potential coverage defense, the insurer properly reserved its right to later assert the policy’s intentional act exclusion); see also Restatement (Second) of Judgments § 58 (1982); St. Paul Fire & Marine Ins. Co. v. Crosetti Bros., Inc., 256 Or. 576, 475 P.2d 69, 71 (1970). [¶ 18.] Insurers are obliged to keep separate the independent duty to defend from the obligation to indemnify their insureds.

A conflict of interest “exists when the injured person’s claim against the [insured] is such that it could be sustained on different grounds, one of which is within the [insurer’s] obligation to indemnify and another of which is not.” Restatement, Judgments § 58. These principles and the problems they create are explained in the comment to the Restatement, Judgments § 58: On the one hand, the [insurer] has a duty to defend the [insured] even if the claim advanced in the action by the injured party is outside the scope of the indemnity obligation.

In carrying out this duty, the [insurer] must seek to protect the [insured] even though in doing so it must take positions on the [insured]’s behalf that are contrary to its own interest. For example, the [insured] may be charged alternatively with having acted negligently and intentionally.

In such a situation, it is to the [insured]’s interest that the claim, if sustained at all, be sustained on the basis of negligence because the loss will then fall on the [insurer], but it is to the [insurer’s interest that the claim of negligent wrongdoing be resisted because liability on that basis would fall with the obligation to indemnify. On the other hand, the [insurer] has a right to its day in court on whether the [insured]’s liability is within the scope of the indemnity obligation.

A corollary of this right is that the [insurer] should not be estopped by steps or positions that the [insurer] may have taken in the course of performing its duty to defend the [insured]. Hence, the usual rule that an [insurer] is precluded by the determination of issues which he litigates on behalf of an [insured], stated in § 57, should not apply to an [insurer] who defends, under the compulsion of an independent duty to defend, an [insured] with whom he has a conflict of interest.

The only way to reconcile these duties is to recognize that an [insurer] who has an independent duty to defend the [insured] in effect has two legal capacities with regard to the [insured]. In his capacity as insurer against the [insured]’s risk of being sued on claims that “might be found to be” within the indemnity obligation, the [insurer] has a responsibility to provide counsel and supporting assistance to defend the [insured] without regard to the [insurer’s interests, essentially as a guardian for a ward.

In his capacity as [insurer], he has a responsibility to indemnify for such liability as may be within the indemnity obligation. In the latter capacity, he should not be bound by determinations in an action in which he participated in the former capacity if there is conflict of interest between the two. See § 36. The [insurer] may be required to manifest this differentiation by a reservation of its right qua [insurer] when it assumes the defense of the [insured]. [¶ 19.] As Engelmann’s insurer, St. Paul defended him under a reservation of rights.

A reservation of rights is a notice to the insured that the insurer will defend the insured but that the insurer is not waiving any defenses it may have under the policy. By this method, insurers can provide the insured a defense to liability and reserve for later the question whether the policy provides coverage.

As in most jurisdictions, acting under a “reservation of rights” is an established procedure in South Dakota. “An insurer is not estopped notwithstanding participation in defense of an action against insured to assert noncoverage if timely notice was given to the insured that it has not waived benefit of its defense under the policy.” Connolly v. Standard Cas. Co., 76 S.D. 95, 73 N.W.2d 119, 122 (S.D.1955). See also Appleman § 4692 at 297. [¶20.] St. Paul provided Engel-mann with a splendid defense in his malpractice trial.

Indeed, the jury’s verdict is so structured as to create at least an arguable issue whether the judgment is within the scope of insurance coverage. Counsel for Engelmann could have breached the obligation of fealty to the insured if he had advocated for special interrogatories or separate verdicts on the rape and sex abuse allegations. We must reflect now, though, that the insurer’s right to challenge coverage for Engelmann’s sexual misconduct was not decided in the tort trial and could not have been decided there. St.

Paul cannot be foreclosed from proceeding with its challenge to coverage in this declaratory action. [¶ 21.] Because the insurer is entitled to contest the noncoverage question, we remand this case for the parties to litigate the factual issue of what part of the victims’ damages, if any, are allocable to the covered second negligence theory. We affirm the circuit court’s denial of the insurer’s motion for

summary judgment on the issue of providing a defense to Engel-mann and the Clinic in Baloun’s malpractice suit. Correspondingly, we agree with the circuit court that a ruling on

summary judgment on the indemnity issue in Bal-oun’s case is premature. As with the others, she may be able to establish a theory equivalent to the second theory offered in the earlier malpractice trial. [¶ 22.] Affirmed in part, reversed in part, and remanded for trial. [¶ 23.] AMUNDSON, Justice, concurs in part and concurs specially in part. [¶ 24.] DOBBERPUHL, Circuit Judge, concurs specially. [V 25.] GILBERTSON, Chief Justice and MILLER, Retired Chief Justice, dissent. [¶ 26.] DOBBERPUHL, Circuit Judge, sitting for SABERS, Justice, disqualified. .

Listed among the exclusions is the following: "We won't cover injury or damage or medical expenses that result from the perfor-manee of or failure to perform health care professional services.” . Hirst v. St. Paul Fire & Marine Ins. Co., 106 Idaho 792, 683 P.2d 440, 444 (1984) (intentional sexual assault not within professional services for insurance coverage purposes); St. Paul Fire & Marine Ins. v. Quintana, 165 Mich.App. 719, 419 N.W.2d 60, 63 (1988) (damages arising out of performance of professional services do not include damages for sexual assault); Niedzielski v. St.

Paul Fire & Marine, 134 N.H. 141, 589 A.2d 130, 133 (1991) (sexual assault does not fall within the meaning of professional dental services); N.M. Physicians Mut. Liability v. LaMure, 116 N.M. 92, 860 P.2d 734, 739 (1993) (sexual acts committed under pretense of medical care not professional services in the context of malpractice insurance coverage); Cluett v. Med. Protective Co., 829 S.W.2d 822, 829 (Tex. App.- Dallas 1992), (writ denied) (a pediatrician's sexual relationship with a patient was not a professional service); Smith v. St. Paul Fire & Marine Ins.

Co., 353 N.W.2d 130, 132 (Minn. 1984) (sexual assault by medical doctor on three minor boys during the course of treatment not covered by professional liability insurance as doctor's acts were only "for the satisfaction of [his] prurient interests” and thus "involved neither the providing nor withholding of professional services”); Washington Ins. Guar. Ass’n v. Hicks, 49 Wash.App. 623, 744 P.2d 625, 627-28 (1987) (chiropractor's sexual conduct not part of medical treatment); Standard Fire & Ins. Co. v.

Blakeslee, 54 Wash.App. 1, 771 P.2d 1172, 1176-78 (1989) (dentist's act of fondling drugged patient's breasts not covered by insurance policy as sexual assault was not part of professional services). . Baloun testified that she saw Engelmann’s penis during the exam when she sat up. Bertsch "felt like she was having sex.” Mar-tinmaas "felt as if she was having intercourse.” Froning is the only plaintiff in the original action that did not claim Engelmann was having intercourse with her. Whether the jury believed they were raped remains unknown. .

See also Annotation, Liability Insurance: Insurer’s Assumption of or Continuation in Defense of Action Brought Against the Assured as Waiver or Estoppel as Regards Defense of Non-coverage or Other Defense Existing at Time of Accident, 38 A.L.R.2d 1148 (1954). . See also Pendleton v. Pan American Fire & Casualty Co., 317 F.2d 96, 99 (10thCir.1963); Hartford Acc. and Indem. Co. v. Villasenor, 21 Ariz.App. 206, 517 P.2d 1099, 1102 (1974). . See also Snodgrass v. Baize, 405 N.E.2d 48 (Ind.Ct.App.1980) (insured entitled to litigate coverage in supplemental proceeding). .

Because attorneys representing insureds on behalf of carriers owe an undeviating fealty to the insureds, attorneys act unethically if they attempt to preserve the insurer’s noncoverage claim while purporting to represent the best interests of the insureds. State Farm Mut. Auto. Ins., Co. v. Amstrong Extinguisher Serv., Inc., 791 F.Supp. 799, 802 (D.S.D.1992). .

South Dakota’s UCC also grants recognition to reservations of rights: A party who, with explicit reservation of rights, performs or promises performance or assents to performance in a manner demanded or offered by the other party does not thereby prejudice the rights reserved. SDCL 57A-1-207. . In connection with alternative theories of recovery, some courts have stated that insurance defense counsel should not request that special interrogatories be propounded to the jury for the purpose of delineating which part of the verdict is covered under the policy.

Gray, 65 Cal.2d at 279 n. 18, 54 Cal.Rptr. 104, 114 n. 18, 419 P.2d at 178 n. 18 ("special verdict might present a potential conflict of interest”); Cowan v. Insurance Co. of N. Am., 22 Ill.App.3d 883, 897, 318 N.E.2d 315, 326 (1974). In these circumstances, counsel hired by the insurer owes an enhanced obligation of good faith to the insured. Tank v. State Farm Fire & Casualty Co., 105 Wash.2d 381, 715 P.2d 1133, 1137 (1986). . The dissent mischaracterizes our ruling as a remand to decide on which theory of recovery the Martinmaas jury rendered its decision. That, of course, is absurd, as the dissent recognizes.

Indeed, the dissenting Justice who authored the opinion in the malpractice appeal acknowledged there that "we do not pass judgment on whether Engelmann's actions would be indemnified under a medical malpractice insurance policy.” Martinmaas at ¶ 33. Perhaps it needs repeating that the law distinguishes between an insurer’s duties to defend and to pay. An insurer must defend claims potentially not covered, including those that are groundless, false, or fraudulent. See. Appleman § 4684, at 80-87. St. Paul fulfilled its duty to defend. It now has the right to litigate the duty to pay.

The fact finder in this declaratory action will decide whether the injuries the plaintiffs suffered were the result of uncovered intentional acts or covered "negligence” by performing "gynecological examinations [using] improper positions, procedures and methods in conducting those examinations.” See Vagnozzi, 675 P.2d at 710 (trial court erred in granting

summary judgment to insurer in declaratory action because whether acts that caused injury were intentional or reckless or negligent were jury questions).