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COURT OF APPEALS
DECISION
DATED AND RELEASED
NOTICE
December 23, 1996
A party may file with the Supreme Court                              This opinion is subject to further editing.
a petition to review an adverse decision                             If  published,  the  official  version  will
by the Court of Appeals.  See § 808.10 and                           appear  in  the  bound  volume  of  the
RULE 809.62, STATS.                                                  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.




No. 95-3154
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 court1 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.
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.
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No. 95-3154
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
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No. 95-3154
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
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).
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No. 95-3154
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.
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).
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