COURT OF APPEALS DECISION DATED AND RELEASED December 23, 1996 |
NOTICE |
A party may file with the
Supreme Court a petition to review an adverse decision by the Court of
Appeals. See § 808.10 and
Rule 809.62, Stats. |
This opinion is subject to
further editing. If published, the
official version will appear in the bound volume of the Official Reports. |
No. 95-3154
STATE
OF WISCONSIN IN COURT OF
APPEALS
DISTRICT I
R.A. Zehetner &
Associates, Inc.,
d/b/a Bell Ambulance,
a Wisconsin
Corporation,
Plaintiff-Respondent,
v.
St. Paul Fire and
Casualty
Insurance Company, a
Wisconsin
Corporation,
Defendant-Appellant,
The Laub Group, Inc.,
a
Wisconsin Corporation,
Defendant.
APPEAL from a judgment
of the circuit court for Milwaukee County:
JOHN E. McCORMICK, Judge. Affirmed.
Before Wedemeyer, P.J.,
Fine and Schudson, JJ.
PER CURIAM. St. Paul Fire and Casualty Insurance Company
appeals from a trial court judgment declaring that St. Paul breached its duty
to defend its insured, R.A. Zehetner & Associates, Inc. d/b/a Bell Ambulance. Because it was “fairly debatable” whether,
in light of the facts alleged in the complaint, coverage existed despite an
employer's liability exclusion, we affirm.
This case arises out of
a federal-court action against Bell Ambulance filed by Christine Stefanski, a
Bell employee, which alleged, among other things, sexual harassment. Bell tendered the defense to its insurer,
St. Paul, which denied coverage and refused to defend. Bell then filed this state-court declaratory
judgment action, seeking to require St. Paul to defend and indemnify Bell
against all losses or expenses incurred as a result of Stefanski's
federal-court action. Bell subsequently
settled the federal-court suit, and this state-court action continued.
The Stefanski complaint
alleged that on December 30, 1992, Bell employee Joseph A. Wehner, along with
the president of Bell and other Bell employees, left the Bell premises to
“visit one or more restaurants and/or taverns” where they consumed alcoholic
beverages. They returned several hours
later. The complaint alleged that
“Wehner has subsequently claimed that he was so impaired as a result of his
consumption of alcohol ... that he cannot accurately recall his actions on the
Bell Ambulance premises following his return ....” The complaint alleged that Wehner: touched and attempted to staple Ms. Stefanski's breasts, made a
variety of sexual remarks to her, discharged a fire extinguisher soaking Ms.
Stefanski below her waist, demanded sexual favors from her, and sexually
assaulted another Bell employee.
The St. Paul CGL policy
provides that St. Paul has the duty to defend any claim or suit alleging a
covered “bodily injury” or “personal injury.”
The trial court[1]
concluded that the complaint alleged no “personal injury,” but that it did
allege “bodily injury” that was not excluded by the policy's employer's
liability exclusion.
St. Paul argues that it
owed Bell no duty of defense based on the policy's employer's liability
exclusion, which in part stated:
We
won't cover bodily injury to any employee arising out of and in the course of
his or her employment.
St.
Paul concedes that Stefanski suffered “bodily injury” but argues that the
injury “ar[ose] out of and in the course of” Stefanski's employment and,
therefore, was excluded from coverage under the policy.
When reviewing a trial
court's decision whether to grant summary judgment, we apply the standard set
forth in § 802.08(2), Stats.,
in the same manner as the trial court. See
Transportation Ins. Co. v. Hunzinger Constru. Co., 179 Wis.2d
281, 289, 507 N.W.2d 136, 139 (Ct. App. 1993).
Summary judgment methodology has been recited in many cases, see Hunzinger,
179 Wis.2d at 289-292, 507 N.W.2d at 139-140, and need not be repeated
here. Our review is de novo. Id. at 289, 507 N.W.2d at 139.
Whether an insurer has a
duty to defend presents a question of law that this court independently
reviews. Kenefick v. Hitchcock,
187 Wis.2d 218, 231, 522 N.W.2d 261, 266 (Ct. App. 1994). The duty to defend is broader than the
separate duty to indemnify because the duty to defend is triggered by arguable,
as opposed to actual, coverage. Newhouse
by Skow v. Citizens Sec. Mut. Ins. Co., 176 Wis.2d 824, 834-835, 501
N.W.2d 1, 5 (1993). “Although an
insurance company that ‘declines to defend does so at [its] peril,’ it is not
liable to its insured unless there is, in fact, coverage under the policy or
coverage is determined to be ‘fairly debatable.’” Production Stamping Corp. v. Maryland Casualty Co.,
199 Wis.2d 322, 326-327, 544 N.W.2d 584, 586 (Ct. App. 1996); see also Hamlin
Inc. v. Hartford Accident & Indemn. Co., 86 F.3d 93, 96 (7th Cir.
1996) (The duty-to-defend test in Wisconsin is “whether the complaint arguably
asserts a form of liability covered by the policy.”) (Posner, J.).
In determining whether
an insurer has a duty to defend, the allegations within the four corners of the
complaint must be compared with the terms of the insurance policy. Newhouse, 176 Wis.2d at 835,
501 N.W.2d at 5; School Dist. of Shorewood v. Wausau Ins. Cos.,
170 Wis.2d 347, 364-365, 488 N.W.2d 82, 87-88 (1992). Further, policy exclusions are to be narrowly construed against
the insurer and any ambiguity regarding coverage is resolved in favor of the
insured. Smith v. Atlantic Mut.
Ins. Co., 155 Wis.2d 808, 811, 456 N.W.2d 597, 598 (1990).
Seeking to apply the
employer's liability exclusion, St. Paul argues that “all the injuries claimed
in the Stefanski complaint plainly arose out of and in the course of
Stefanski's employment with Bell.” St.
Paul points to the fact that the complaint alleges that the offensive conduct
occurred at the work place while Stefanski was employed by Bell, and that it adversely
affected the conditions of her subsequent employment at Bell. St. Paul cites Garriguenc v. Love,
67 Wis.2d 130, 137, 226 N.W.2d 414, 418 (1975), which Bell concedes governs
here, in support of its argument that only “some causal connection” is required
in order for an act “to arise out” employment.[2]
We agree that the
Stefanski complaint alleged bodily injury “arising out of ... her
employment.” The exclusion in this
policy, however, encompasses bodily injury “arising out of and in the course
of ... her employment.” (Emphasis
added.) The Stefanski complaint does
not clarify whether she suffered bodily injury “in the course of ... her
employment.” It does not allege that
Stefanski was on-duty or was on the premises for some employment-connected
purpose at the time she was assaulted.
Thus, strictly construing the exclusion, we conclude that coverage for
Ms. Stefanski's bodily injury is “fairly debatable” under the specific facts
alleged in her complaint. Accordingly,
St. Paul had a duty to defend. See
United States Fire Ins. Co. v. Good Humor Corp., 173 Wis.2d 804,
818-819, 496 N.W.2d 730, 734 (Ct. App. 1993).[3]
By the Court.—Judgment
affirmed.
This opinion will not be
published. See Rule 809.23(1)(b)5, Stats.
[1] Reserve Judge Willis J. Zick made the oral rulings regarding summary judgment. Judge John E. McCormick signed the final order dated March 30, 1995.
[2] In Garriguenc,
a spectator at a demolition derby brought suit against the track lessor,
lessees, and their insurers for personal injuries sustained when a car left the
track and struck the plaintiff, who had been watching from an infield
enclosure. The insurer for the track
lessor sought to apply a policy exclusion that excluded coverage for “bodily
injury ... arising out of ... [a]utomobile or motorcycle racing or
stunting.” Id. at
132-133, 226 N.W.2d at 416 (emphasis added).
The Wisconsin Supreme Court rejected the plaintiff's argument that the
exclusion was not meant to apply to such indirect conduct as viewing a sporting
event, and stated:
The words “arising out of” in
liability insurance policies are very broad, general and comprehensive; and are
ordinarily understood to mean originating from, growing out of, or flowing
from. All that is necessary is some
causal relationship between the injury and the event not covered. That relationship exists in this case.
Id. at 137, 226 N.W.2d at 418; see also Bartel, 127 Wis.2d 310, 379 N.W.2d 864 (attaching trailer to van owned by a “road band” by insured who was manager and member of the band satisfied “arising out of” standard for “business pursuits” exclusion of insured's homeowner's liability policy).
[3] Because we conclude that St. Paul breached its duty to defend for “bodily injury” prior to obtaining a coverage determination with regard to the employer's liability exclusion, we need not address the parties' arguments regarding coverage for “personal injury.” See Gross v. Hoffman, 227 Wis. 296, 300, 277 N.W. 663, 665 (1938) (only dispositive issue need be addressed).