Appeal from the United States District Court for the Eastern District of Wisconsin. No. 05 C 1047-J.P. Stadtmueller, Judge.
The opinion of the court was delivered by: Sykes, Circuit Judge.
Before RIPPLE, SYKES, and TINDER,Circuit Judges.
Granite Microsystems, Inc. and its president were sued by a former employee for intentional infliction of emotional distress, false imprisonment, and wrongful employment termination. They were insured under two liability policies providing defense-andindemnity coverage for bodily injury caused by an "occurrence," 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.
Granite Microsystems, a Wisconsin corporation, makes custom-integrated computers and computer-related products. Daniel Armbrust is president of Granite Microsystems, 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 post-surgical 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.
Lucterhand sued Granite Microsystems and Armbrust*fn1 in federal court for intentionally terminating his employment 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 insurers, 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-andindemnity 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 required by workers compensation law for "bodily injury by accident."
The insurance companies declined the tender and intervened in the lawsuit, seeking a declaratory judgment that the policies did not cover the damages alleged by Lucterhand. On cross-motions for summary judgment, the district court agreed with the insurers, concluding that there was no coverage because Lucterhand's lawsuit against Granite Microsystems did not even argu-ably allege damages from an "accident."
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., 2008 WI 87, ¶ 20, 311 Wis.2d 548, ¶ 20, 751 N.W.2d 845, ¶ 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.,2003 WI 33, ¶¶ 19-20, 261 Wis.2d 4, ¶¶ 19-20, 660 N.W.2d 666, ¶¶ 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, 2008 WI 87, ¶ 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.").*fn2 Our standard of review is de novo. First Nat'l Bank of Manitowoc v. Cincinnati Ins. Co., 485 F.3d 971, 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 established 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." ROBERT E. KEETON & ALAN I. WIDISS, INSURANCE LAW: A GUIDE TO FUNDAMENTAL PRINCIPLES, LEGAL DOCTRINES, AND COMMERCIAL PRACTICES, § 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," id. at 498, 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." Id. § 5.4(g), at 544; see also 16 HOLMES, ERIC MILLS, HOLMES' APPLEMAN ON INSURANCE 2D § 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 Compensation 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,2005 WI 51, ¶ 15, 280 Wis.2d 1, ¶ 15, 695 N.W.2d 298, ¶ 15 (citations and internal quotation marks omitted). And:
" 'The word "accident," in accident policies, means an event which takes place without one's foresight or expectation. A result, though unexpected, is not an accident; the means or cause must be accidental.' " Am. Family Mut. Ins. Co. v. Am. Girl, Inc.,2004 WI 2, ¶ 37, 268 Wis.2d 16, ¶ 37, ...