In the

United States Court of Appeals
              For the Seventh Circuit

No. 07-2719

M ARK L UCTERHAND ,
                                                           Plaintiff,
                                v.

G RANITE M ICROSYSTEMS, INCORPORATED
and D ANIEL A RMBRUST,
                                 Defendants-Appellants,
                           v.


F EDERAL INSURANCE C OMPANY and
V IGILANT INSURANCE C OMPANY,
                                            Intervenors-Appellees.


            Appeal from the United States District Court
               for the Eastern District of Wisconsin.
             No. 05 C 1047—J.P. Stadtmueller, Judge.



     A RGUED F EBRUARY 14, 2008—D ECIDED A PRIL 28, 2009




  Before R IPPLE, S YKES, and T INDER, Circuit Judges.
  S YKES, Circuit Judge. Granite Microsystems, Inc. and its
president were sued by a former employee for inten-
tional infliction of emotional distress, false imprisonment,
2                                               No. 07-2719

and wrongful employment termination. They were
insured under two liability policies providing defense-and-
indemnity coverage for bodily injury caused by an “occur-
rence,” which was defined in the policies as an “accident.”
A third liability policy provided coverage for bodily
injury caused “by accident.” At issue in this appeal is
whether the former employee’s allegations trigger
coverage under these policies. The district court said “no,”
and we agree. The insurance policies cover liability for
accidental, not intentional, injuries; the employee’s law-
suit alleged only intentional, not accidental, injuries. We
therefore affirm the judgment of the district court.


                      I. Background
  Granite Microsystems, a Wisconsin corporation, makes
custom-integrated computers and computer-related prod-
ucts. Daniel Armbrust is president of Granite Microsys-
tems, and Mark Lucterhand was its Director of Global
Operations. In the fall of 2004, Lucterhand ruptured his
quadriceps while walking down a flight of stairs at work.
Armbrust witnessed the injury, but despite Lucterhand’s
obvious agony and inability to walk on his own power,
Armbrust “forcibly transported” him “against his will” to
a scheduled business meeting where for two hours he
endured excruciating pain. Several hours after his
injury, Lucterhand was finally transported to the
hospital where he underwent surgery and received
postsurgical care for five days. Armbrust called him at
the hospital “at least twice” to “hasten his discharge.”
When Lucterhand returned to work, Armbrust accused
him of “milking” his injuries and soon fired him.
No. 07-2719                                               3

  Lucterhand sued Granite Microsystems and Armbrust1
in federal court for intentionally terminating his employ-
ment in retaliation for exercising his rights under the
Family and Medical Leave Act (“FMLA”). See 29 U.S.C.
§ 2615. Lucterhand also asserted state-law claims for
intentional infliction of emotional distress and false
imprisonment.
  Granite Microsystems tendered the lawsuit to its insur-
ers, Federal Insurance Company and Vigilant Insurance
Company, for defense and indemnity. Federal insured the
company under a Commercial General Liability (“CGL”)
policy and a Workers Compensation and Employers
Liability (“Workers Compensation”) policy during the
relevant time period. Vigilant insured the company under
a Commercial Excess and Umbrella Insurance (“Excess &
Umbrella”) policy. Two of the policies—the CGL policy
and the Excess & Umbrella policy—provided defense-and-
indemnity coverage against liability for damages for bodily
injury and property damage caused by an “occurrence,”
defined in the policies as an “accident.” The Workers
Compensation policy covered liability for benefits re-
quired by workers compensation law for “bodily injury
by accident.”
  The insurance companies declined the tender and
intervened in the lawsuit, seeking a declaratory judg-
ment that the policies did not cover the damages alleged


1
  For brevity, we refer to Granite Microsystems and Armbrust
collectively as “Granite Microsystems” unless the context
requires otherwise.
4                                                No. 07-2719

by Lucterhand. On cross-motions for summary judg-
ment, the district court agreed with the insurers, con-
cluding that there was no coverage because Lucterhand’s
lawsuit against Granite Microsystems did not even argu-
ably allege damages from an “accident.”


                        II. Analysis
  Wisconsin law governs this suit, which was filed under
the court’s diversity jurisdiction. In Wisconsin, as else-
where, a liability insurer must defend a suit against its
insured if the allegations in the underlying complaint
raise the possibility of coverage under the terms of the
insurance policy. See Estate of Sustache v. Am. Family Mut.
Ins. Co., 

, ¶ 20, 

, ¶ 20, 

, ¶ 20 (“The insurer’s duty to defend is . . . broader
than its duty to indemnify insofar as the former
implicates arguable, as opposed to actual, coverage.”);
Fireman’s Fund Ins. Co. of Wis. v. Bradley Corp., 

,
¶¶ 19-20, 

, ¶¶ 19-20, 

, ¶¶ 19-20.
The issue, then, is whether the allegations in Lucterhand’s
complaint fall potentially within the coverages of the
CGL, Excess & Umbrella, and Workers Compensation
policies. Sustache, 

, ¶ 20 (“An insurer’s duty
to defend its insured is determined by comparing the
allegations of the complaint to the terms of the insurance
policy.”).2 Our standard of review is de novo. First Nat’l


2
  In Sustache the Wisconsin Supreme Court discussed the “four
corners rule” and explained a particular procedural context in
                                                (continued...)
No. 07-2719                                                     5

Bank of Manitowoc v. Cincinnati Ins. Co., 

, 976
(7th Cir. 2007).
  The complaint alleged that Granite Microsystems
intentionally terminated Lucterhand’s employment in
retaliation for exercising his FMLA rights, intentionally
inflicted emotional distress, and falsely imprisoned him.
The last two claims are intentional torts; the first is a
statutory claim under the FMLA, and the complaint
alleged that Armbrust intentionally fired Lucterhand in
violation of his rights under the statute. It is well estab-


2
   (...continued)
which the rule does not apply. The court noted that ordinarily
“[t]he duty to defend is triggered by the allegations contained
within the four corners of the complaint.” Sustache, 

,
¶ 20. This is the four-corners principle, and it remains the
general rule in duty-to-defend cases in Wisconsin. When an
insurer contests coverage but invokes its option to provide a
defense to the insured under a reservation of rights, see 

(citing Baumann v. Elliott, 

, ¶ 8, 

,
¶ 8, 

, ¶ 8), it remains entitled to a determination
of its defense obligation separate from a determination on the
merits, 

(citing 2 A RNOLD P. A NDERSON , W ISCONSIN
I NSURANCE L AW §§ 7.51-.52 (5th ed. 2004)). This option is
typically exercised when the underlying complaint states an
arguably covered claim. In that situation, where the insurer
has satisfied its initial duty to defend by providing counsel to
its insured and seeks a judicial determination of its continued
defense obligation, Wisconsin permits introduction of extrinsic
evidence where appropriate to the resolution of the coverage
question. 

This case falls within the general four-
corners rule.
6                                                 No. 07-2719

lished that liability policies generally do not cover losses
that are intentionally caused. “Insurance transactions are
predicated on the general proposition that coverage is
provided for fortuitous losses, and not for intended
consequences.” R OBERT E. K EETON & A LAN I. W IDISS,
INSURANCE L AW: A G UIDE TO F UNDAMENTAL P RINCIPLES,
L EGAL D OCTRINES, AND C OMMERCIAL P RACTICES, § 5.4(a), at
497 (practitioner’s ed. 1988). The transferred risk is the
defense against and payment of damages for which
the insured becomes responsible because of an accident.
   To reflect this fortuity principle, insuring agreements in
liability policies typically specify that the insurer will
pay damages for which the insured becomes legally
responsible “because of an accident,” 

or, as in
the CGL and Excess & Umbrella policies at issue in this
case, damages for bodily injury or property damage
“caused by an occurrence,” with “occurrence” defined as
“an accident.” 

at 544; see also 16 H OLMES, E RIC
M ILLS, H OLMES’ A PPLEMAN ON INSURANCE 2 D § 117.4(A)(1),
at 297 (2000) (“[T]he occurrence concept preserves the
fortuity principle and requirements recognized under the
earlier accident test.”). Similarly, the Workers Compensa-
tion policy at issue here covers “bodily injury by accident.”
Although the term “accident” is not defined in any of the
policies, Wisconsin uses several alternative but similar
definitions to demarcate its meaning. An “accident” as
that term is used in liability insurance is “[a]n unexpected,
undesirable event or an unforeseen incident which is
characterized by a lack of intention.” Everson v. Lorenz, 

, ¶ 15, 

, ¶ 15, 

, ¶ 15
(citations and internal quotation marks omitted). And:
No. 07-2719                                                  7

“ ’The word “accident,” in accident policies, means an
event which takes place without one’s foresight or expecta-
tion. A result, though unexpected, is not an accident; the
means or cause must be accidental.’ ” Am. Family Mut. Ins.
Co. v. Am. Girl, Inc., 

, ¶ 37, 

, ¶ 37,

, ¶ 37 (quoting B LACK’S L AW D ICTIONARY
15 (7th ed. 1999)).
  In addition, liability policies will often contain a
specific exclusion for intentional or expected injuries.
K EETON & W IDISS, supra, § 5.4(a), at 499. An intentional-acts
exclusion embodies the same “fortuity” principle as the
policy language granting coverage only for injuries
caused by “an accident” (or an “occurrence” defined as “an
accident”). The CGL and Excess & Umbrella policies
contained intentional-acts exclusions specifically ex-
cluding coverage for “bodily injury . . . arising out of an
act that: is intended by the insured; or would be ex-
pected from the standpoint of a reasonable person in the
circumstances of the insured, to cause bodily injury.”
Similarly, the Workers Compensation policy specifically
excluded coverage for “bodily injury intentionally
caused or aggravated by you.”
  In addressing the coverage question in this case, the
district court first focused on the term “accident,” which
appears in the coverage-granting language in all three
policies. See Am. Girl, 

, ¶ 24 (describing the
sequential analytical steps in an insurance-coverage
dispute). The court concluded that coverage under each
policy depended not on whether the damage Armbrust was
alleged to have caused was accidental but whether
8                                                  No. 07-2719

“Armbrust’s actions themselves” were accidental. Because
the complaint alleged that Armbrust’s actions were
intentional, the court concluded that coverage was not
even arguable under any of the policies.
  Granite Microsystems claims this analysis is backward.
The company argues that the focus instead should be
on whether the damage alleged in the complaint was
intended or accidental, not whether Armbrust’s actions
alone were intentional. Granite Microsystems main-
tains that even if Armbrust is alleged to have engaged
in intentional acts, if the alleged injury was not inten-
tional, then the complaint seeks damages for an “acci-
dent” and the claims are covered.
  This intentional-acts/intentional-injury distinction
makes no difference in this case, for reasons we will
explain in a moment. We note, however, that in cases in
which the distinction might make a difference, the law is
not well settled. Courts nationwide have struggled to
sketch the contours of the term “accident” (or “occurrence”
defined as an “accident”), and because the cases present
in such a wide variety of factual settings, it is difficult to
discern a general doctrinal consensus. See generally C OUCH
ON INSURANCE §§ 129:3 & n.11, 139.20 & 139.23 (Lee R. Russ
& Thomas F. Segalla eds., 3d ed. 2005) (discussing distinc-
tion between accidental means and accidental re-
sults/injury); 16 H OLMES, E RIC M ILLS, supra, § 117.4; K EETON
& W IDISS, supra, § 5.4(d)(2). As one treatise has noted, “the
requirement that for a particular type of insurance to
provide coverage a loss must be ‘fortuitous’ or ‘accidental’
has produced a substantial body of appellate decisions.
No. 07-2719                                                      9

The judicial opinions in these cases are a medley . . . .”
K EETON & W IDISS, supra, § 5.4(a), at 499.
  While some courts have adopted the position
advanced by Granite Microsystems—that an intentional
act qualifies as an “accident” if the particular damage
that resulted was unintended—others have adopted the
approach taken by the district court, holding that intent
to cause injury is irrelevant when the causal acts in ques-
tion were intentional. Compare Frankenmuth Mut. Ins. Co. v.
Masters, 

, 839 (Mich. 1999) (intentional
causal act and intent to injure are required for a claim to
be “nonaccidental,” but a claim does not allege an “acci-
dent” merely because the alleged harm exceeded the
harm that was intended), with Blue Ridge Ins. Co. v.
Stanewich, 

, 1148 (9th Cir. 1998) (“accident”
refers to “the happening of the event itself and not the
consequences of that act”; event is not an accident if
insured “intended all the acts that resulted in the
victim’s injury” even though he “did not intend to
cause the injury”) (California law).3




3
  See also Park Univ. Enters., Inc. v. Am. Cas. Co. of Reading, PA,

, 1246 (10th Cir. 2006) (distinguishing “intent to
act” and “intent to injure”) (Kansas law); Lyons v. State Farm
Fire & Cas. Co., 

, 723 (Ill. App. Ct. 2004) (“The
focus of the inquiry in determining whether an occurrence is
an accident is whether the injury is expected or intended by the
insured, not whether the acts were performed intentionally.”);
Transamerica Ins. Servs. v. Kopko, 

, 1285 (Ind.
1991) (complaint alleges accident if “there is an element of
negligence to be determined”).
10                                                   No. 07-2719

  This ongoing debate is reflected in the Wisconsin Su-
preme Court’s two most recent opinions construing the
term “occurrence” in liability policies. In Stuart v. Weisflog’s
Showroom Gallery, Inc., 

, 

, 

(“Stuart II”),4 the court considered whether a
CGL policy defining “occurrence” as an “accident” pro-
vided coverage for a claim based on a violation of a State
deceptive-practices regulation. The regulation pro-
hibited the making of any “false, deceptive or misleading
representation in order to induce any person to enter into
a home improvement contract.” 

n.7 (quoting W IS.
A DMIN. C ODE ATCP § 110.02(11) (2008)). The insured
building contractor had p erform ed substantial
remodeling work on a home, and the homeowner later
discovered numerous significant defects in the work. The
homeowner sued the contractor for (among other things)
violating the deceptive-practices regulation, and the
contractor sought coverage for the claim.
  In determining whether the claim involved damages
caused by an “occurrence”—that is, an “accident”—a five-
justice majority of the court said it would focus on
“whether the occurrence giving rise to the claim[] was an
unintentional act in the sense that it was not volitional.” 

This is somewhat cryptic; the court did not



4
  We refer to this decision as “Stuart II” because the court
resolved other issues in the case in an earlier opinion, see
Stuart v. Weisflog’s Showroom Gallery, Inc., 

, 

, 

, which the court referred to as “Stuart I.”
Stuart II, 

, ¶ 3.
No. 07-2719                                             11

explain whether there is any difference between an
“unintentional” act and one that is “not volitional,” and
if the terms essentially mean the same thing, we are
simply back where we started. The court did, however,
appear to focus its attention on whether the act that led
to the damage—the “causal event,” as opposed to the
injury itself—was unintentional. The contractor contended
that because it had not intended the specific property
damage that resulted from the construction defects, it
was entitled to coverage under the policy. The court
rejected this argument, concluding that “[i]t does not
matter whether [the insured] intended a specific result;
what matters is whether the cause of the damage was
accidental.” 

Although the deceptive-practices
regulation was silent on the actor’s intent to deceive, it
did contain a purposive element; it prohibited false
representations made “in order to induce” the making of
a home-improvement contract. This “inducement” require-
ment made a difference to the court’s majority. Because the
false representations made by the contractor were “voli-
tional” and made “for the purpose of inducing” the home-
improvement contract, the court held there was no
“accident” and therefore no “occurrence” within the
meaning of the policy. 

of the five-justice majority wrote sepa-
rately to explain their view that the sole relevant
question was “whether the injury or damages are unex-
pected and unintentional.” 

1 (Bradley, J., joined
by Abrahamson, C.J., concurring). Justice Bradley and
Chief Justice Abrahamson thus joined the majority
opinion only insofar as it could be read to equate the
12                                               No. 07-2719

regulatory violation with a claim for intentional misrepre-
sentation, and because damages caused by intentional
misrepresentation are not accidental, they agreed the
claim was not covered. 

  Two other justices concurred in the result only, writing
separately to express still a different view. 

Although they agreed with the majority opinion that the
relevant question was whether the acts leading to the
injury were intentional or accidental, they significantly
narrowed the scope of the inquiry. 

(Roggensack, J., and Ziegler, J., concurring). The disagree-
ment centered on the proper interpretation of the court’s
volitional-act requirement. While the majority thought
the false representations in question were sufficiently
volitional (and therefore nonaccidental) because they
were made “in order to induce” the contract, Justices
Roggensack and Ziegler focused simply on whether the
mere act of making the representations was itself volitional.

Because the contractor’s act of making the repre-
sentations was volitional, these concurring justices con-
cluded there was no accident. 

end, then, while
the Stuart II court unanimously concluded there was no
coverage, it was split 3-2-2 on the rationale.
  On the same day that Stuart II was released, the court
issued a second case construing similar “occurrence”
language in a homeowner’s policy, and this time the
court was far less fractured. Estate of Sustache v. Am. Family
Mut. Ins. Co., 

, 

, 

. In Sustache the court considered whether a home-
owner’s policy provided coverage for a battery claim
No. 07-2719                                                 13

stemming from a fight in which the homeowner’s son
punched a partygoer in the face. The victim later died
from his injuries. The homeowner’s son defended his
actions in part based on a claim of self-defense; he also
claimed (and there was no dispute) that he did not
intend his punch to be fatal. As in Stuart II, the insurance
policy covered damages caused by an “occurrence,”
defined as “an accident.” The court held that the allega-
tions of intentional battery—that the son intentionally
caused bodily injury by punching the victim—“evince a
degree of volition inconsistent with the term ‘accident.’ ”

That is, there were allegations of both an inten-
tional act and intent to cause injury. 

The court
concluded that regardless of the son’s claim of self-defense
and his lack of specific intent to cause the harm that
ultimately resulted (the victim’s death), the alleged con-
duct was part of “a pattern of volitional action” and
therefore was not “accidental.” 

56. As in Stuart II,
Justice Bradley concurred, criticizing the majority for its
“shifting rationales”; in her view, the only relevant ques-
tion was whether injury was intended. 

(Bradley, J., concurring). Because the son allegedly “in-
tended harm to [the victim] when he threw the punch,”
Justice Bradley said, “there is no accident here.” 

0.
  Sustache is closer to our case than Stuart II, and
although the case did not purport to resolve the court’s
analytical disagreement (it didn’t need to), its no-coverage
conclusion is informative here. Accordingly, we don’t
need to reconcile the justices’ competing interpretations of
14                                                   No. 07-2719

the term “occurrence” in order to decide this case.5
Lucterhand’s complaint alleged not just intentional acts
but also injuries intentionally caused, so under any of the
Wisconsin Supreme Court’s possible approaches, there
is no coverage.
   In the first count, Armbrust is accused of intentionally
firing Lucterhand and intentionally violating the Family
and Medical Leave Act, both of which caused Lucterhand
to lose wages and employment benefits. As Granite
Microsystems conceded at oral argument, the allegations
in this count suggest both an intent to act and an intent to
injure. When an employer fires a worker, it goes without


5
  Though we need not reach the question of the intentional-acts
exclusion, we note for completeness that Wisconsin law inter-
preting intentional-acts exclusions in liability policies appears
to be more settled on the question of whether there is any
distinction between intended acts and intended injuries. “In
Wisconsin, an intentional-acts exclusion precludes insurance
coverage only where the insured acts intentionally and intends
some harm or injury to follow from the act.” Loveridge v. Chartier,

, 150 (1991). An insured “intends to injure or
harm another if he ‘intend[s] the consequences of his act, or
believe[s] that they are substantially certain to follow.’ ” 

v. Republic Ins. Co., 

, 710 (Wis.
1979)). Thus, an intentional-acts exclusion applies “where an
intentional act is substantially certain to produce injury,” and
this is so “even if the harm that occurs is different in character
or magnitude from that intended by the insured.” 

As we have noted, intentional-acts exclusions in liability
policies function in much the same way as the “accident”
limitation contained in the coverage-granting language.
No. 07-2719                                                 15

saying that it intends for the worker to lose his salary and
benefits. Cf. Jespersen v. U.S. Fid. & Guar. Co., 

,
532 (N.H. 1988) (loss of wages and emotional distress
are not accidental because they are the “natural conse-
quence” of intentional discharge). Thus, an employment
termination qualifies as both an intentional or “volitional”
act and an intentional injury.
  The same is true of the second count, in which the
defendants are accused of intentionally inflicting
emotional distress. Intentional infliction of emotional
distress requires the defendant to have intended to cause
injury. Rabideau v. City of Racine, 

, ¶¶ 33-36, 

, ¶¶ 33-36, 

, ¶¶ 33-36. And while
Lucterhand’s legal theory isn’t dispositive—it is the facts
alleged in the complaint that matter, see Stuart II, 

, ¶ 36; Am. Girl, 

, ¶ 41—it is apparent
that he is claiming that Armbrust’s conduct, which he
characterizes as “intentionally unlawful,” was delib-
erately calculated to cause him emotional injury.
  Finally, in the third count, Lucterhand seeks compensa-
tion for false imprisonment and intentional withholding
of medical treatment, which allegedly caused him “pain
and suffering,” “emotional distress,” and “humiliation[,]
embarrassment and degradation.” The complaint specifi-
cally alleges that Armbrust witnessed Lucterhand’s injury
and then “forcibly transported” him “against his will” to a
business meeting despite observing his “incapacity” and
“extraordinary level of pain.” It would be hard to under-
stand these allegations as describing an injury that hap-
pened accidentally. At a minimum, the complaint alleges
16                                          No. 07-2719

that Armbrust acted intentionally and that he realized
his actions were prolonging Lucterhand’s pain and dis-
tress, which is enough to remove them from the realm of
an accident regardless of which understanding of “acci-
dent” is adopted.
  The parties have briefed a number of other issues,
including whether the policies’ intentional-acts or
“employment-related practices” exclusions preclude
coverage. But given our conclusion that none of the
allegations even arguably trigger coverage under the
policies’ initial grant of coverage, there is no need to
resolve these other issues.
                                             A FFIRMED.




                         4-28-09