Stephen Bolinski, III v. Harmony Jones

COURT OF APPEALS
DECISION NOTICE
DATED AND FILED This opinion is subject to further editing. If
published, the official version will appear in
the bound volume of the Official Reports.
June 11, 2025
A party may file with the Supreme Court a
Samuel A. Christensen petition to review an adverse decision by the
Clerk of Court of Appeals Court of Appeals. See WIS. STAT. § 808.10
and RULE 809.62.

Appeal No. 2024AP609 Cir. Ct. Nos. 2022CV172
2022CV120
STATE OF WISCONSIN IN COURT OF APPEALS
DISTRICT II

STEPHEN BOLINSKI, III,

PLAINTIFF-APPELLANT,

V.

HARMONY JONES, KATHERINE BOLINSKI, A, B, C INSURANCE
COMPANY AND X, Y, Z INSURANCE COMPANY,

DEFENDANTS,

AUTO-OWNERS INSURANCE COMPANY,

INTERVENOR-RESPONDENT.

------------------------------------------------------------

MATTHEW BOLINSKI, DECEASED,

PLAINTIFF-APPELLANT,

KATHERINE BOLINSKI,

PLAINTIFF,

V.
No. 2024AP609

HARMONY JONES AND X, Y, Z INSURANCE COMPANY,

DEFENDANTS,

AUTO-OWNERS INSURANCE COMPANY,

INTERVENOR-RESPONDENT.

APPEAL from an order of the circuit court for Kenosha County:
DAVID P. WILK, Judge. Reversed and cause remanded for further proceedings.

Before Gundrum, P.J., Neubauer, and Grogan, JJ.

Per curiam opinions may not be cited in any court of this state as precedent

or authority, except for the limited purposes specified in WIS. STAT. RULE 809.23(3).

¶1 PER CURIAM. Stephen Bolinski appeals from an order of the
circuit court granting Auto-Owners Insurance Company’s (Auto-Owners) motion
for judgment on the pleadings. The court held that Auto-Owners did not owe a
duty to defend and therefore, did not owe a duty to indemnify Harmony Jones
under her Auto-Owners’ homeowner’s insurance policy for the wrongful death
claims asserted against her by Stephen and Katherine Bolinski. Because the
allegations in Stephen’s complaint, and the reasonable inferences therefrom, do
not foreclose all possibility of recovery under the terms of the policy, we reverse
and remand for further proceedings consistent with this opinion.

2
No. 2024AP609

¶2 Stephen and Katherine Bolinski, who are divorced, filed separate
civil actions to recover for the death of their minor son, whom Katherine left in the
care of Jones on March 27, 2019.1 The Bolinskis alleged that Jones “ran a child
day care business out of her home.” The Bolinskis each asserted wrongful death
claims against Jones, alleged that she was negligent in caring for their son, and
sought insurance coverage from Jones’ insurer for her allegedly negligent acts.2

¶3 Auto-Owners, Jones’ insurer, retained merits counsel for Jones
under a reservation of rights. It also intervened in the cases and successfully
moved to bifurcate and stay merits proceedings.

¶4 Auto-Owners then filed a motion for a judgment on the pleadings,
seeking a declaration that it had no duty to defend and therefore, no duty to
indemnify Jones against the Bolinskis’ claims. In its principal and reply briefs,
Auto-Owners focused on the allegations in Stephen’s complaint and Wisconsin
law governing an insurer’s duty to defend. When Stephen sought discovery, Auto-
Owners moved for a protective order, arguing, among other things, that the only
documents relevant to the pending motion were the complaints and its policy. The
circuit court agreed. The court subsequently granted Auto-Owners’ motion for
judgment on the pleadings, declared that Auto-Owners had no duty to defend and
therefore, no duty to indemnify Jones, and dismissed it from the Bolinskis’ cases.

1
The Bolinskis’ cases were subsequently consolidated.
2
Stephen also asserted a wrongful death claim against Katherine and a claim seeking
insurance coverage against Katherine’s insurer.

3
No. 2024AP609

The court also permitted merits counsel retained by Auto-Owners to withdraw as
counsel for Jones. Stephen appeals.3

¶5 Liability insurance policies typically impose two main duties—the
duty to defend an insured against claims for damages and the duty to indemnify, or
“cover,” the insured if it is found liable. Johnson Controls, Inc. v. London Mkt.,
2010 WI 52, ¶28, 325 Wis. 2d 176, 784 N.W.2d 579. “The duty to indemnify and
the duty to defend are separate contractual obligations.” Id. “The duty to defend
is necessarily broader than the duty to indemnify because the duty to defend is
triggered by arguable, as opposed to actual, coverage.” Fireman’s Fund Ins. Co.
v. Bradley Corp., 2003 WI 33, ¶20, 261 Wis. 2d 4, 660 N.W.2d 666. An “insurer
has a duty to defend when the allegations, if proven, give rise to the possibility of
recovery under the terms of the policy,” regardless of the actual outcome of the
case. Air Eng’g, Inc. v. Industrial Air Power, LLC, 2013 WI App 18, ¶10, 346
Wis. 2d 9, 828 N.W.2d 565. Because the duty to defend is broader than the duty
to indemnify, if there is no duty to defend, it follows that there is no duty to
indemnify. Great Lakes Beverages, LLC v. Wochinski, 2017 WI App 13, ¶15,
373 Wis. 2d 649, 892 N.W.2d 333.

¶6 Whether an insurer has a duty to defend is determined through
application of the four-corners rule, whereby the circuit court is limited to
comparing “the four corners of the underlying complaint to the terms of the entire
insurance policy.” Water Well Sols. Serv. Grp., Inc. v. Consolidated Ins. Co.,

3
Katherine did not file a notice of appeal and she advised this court that she did not
intend to participate in Stephen’s appeal. Accordingly, we only address Stephen’s appeal.
Neither party has developed any argument regarding the effect of this decision on Katherine’s
claim, and we offer no opinion. See, e.g., State v. Pettit, 171 Wis. 2d 627, 647, 492 N.W.2d 633
(Ct. App. 1992) (we decline to address undeveloped arguments).

4
No. 2024AP609

2016 WI 54, ¶15, 369 Wis. 2d 607, 881 N.W.2d 285. Here, when Auto-Owners
moved for judgment on the pleadings, the only evidence it submitted was the
insurance policy. As noted above, Auto-Owners’ arguments turned on application
of the four-corners rule to the allegations in the complaint. Auto-Owners also, in
its reply brief, argued that a denial of its motion would not preclude it from
submitting extrinsic evidence and litigating the issue of coverage later in the case.
The court determined that Auto-Owners had no duty to defend the allegations of
the complaint, and therefore, it followed that it had no duty to indemnify.
Accordingly, we confine our analysis to Auto-Owners’ duty to defend.4

4
We note that Auto-Owners retained merits counsel to defend Jones under a reservation
of rights pending its motion for judgment on the pleadings. When an insurer defends under a
reservation of rights, it can submit extrinsic evidence and seek a ruling with respect to its duty to
indemnify. See 5 Walworth, LLC v. Engerman Contracting, Inc., 2023 WI 51, ¶13, 408 Wis. 2d
39, 992 N.W.2d 31 (stating that where insurer tenders a defense and seeks summary judgment as
to coverage, courts base their analysis “on the full record, not just the complaint”). However,
Auto-Owners did not avail itself of that option. It did not submit extrinsic evidence (other than
the insurance policy) in support of its motion, and its arguments in its principal brief and reply
brief were grounded exclusively on the duty to defend based on the four corners of the complaints
and the policy. In addition, the circuit court’s conclusions in its order granting Auto-Owners’
motion tracked the duty to defend analysis under Wisconsin law because the court concluded that
“[a]pplying the plain language of the policy to the facts alleged in the complaint, there is an
initial grant of coverage which is then excluded pursuant to the exceptions to coverage.”
(Emphasis added.) In sum, the briefs and order make it apparent that the court analyzed and
concluded that Auto-Owners did not have a duty to defend Jones, and that the absence of such a
duty led to the conclusion that it also did not have a duty to indemnify her. See Great Lakes
Beverages, LLC v. Wochinski, 2017 WI App 13, ¶15, 373 Wis. 2d 649, 892 N.W.2d 333. On
appeal, Stephen invokes the “four corners” rule in his briefs and focuses his arguments on
whether the court correctly applied that rule in granting Auto-Owners’ motion for judgment on
the pleadings. Accordingly, as do Auto-Owners and Stephen, we limit our analysis to the duty to
defend.

While the dissent makes much of Jones’ default, resulting in her admission to the
allegations of the complaint, this is of little practical significance here because, in analyzing an
insurer’s duty to defend, we must assume that the allegations of the complaint will be proven true.
See id. (“An insurer has a duty to defend its insured if the allegations contained within the four
corners of the complaint would, if proved, result in a covered loss.” (emphasis added)).

5
No. 2024AP609

¶7 The interpretation of an insurance policy to determine the scope of
an insurer’s duty to defend is a question of law that is subject to our de novo
review. See West Bend Mut. Ins. Co. v. Ixthus Med. Supply, Inc., 2019 WI 19,
¶9, 385 Wis. 2d 580, 923 N.W.2d 550 (citing Water Well, 369 Wis. 2d 607, ¶12).5

¶8 Our analysis proceeds in three steps. First, we determine if “the
policy language grants initial coverage for the allegations set forth in the
complaint.” West Bend, 385 Wis. 2d 580, ¶11 (quoting Water Well, 369 Wis. 2d
607, ¶16); 5 Walworth, LLC v. Engerman Contracting, Inc., 2023 WI 51, ¶16,
408 Wis. 2d 39, 992 N.W.2d 31; American Fam. Mut. Ins. Co. v. American Girl,
Inc., 2004 WI 2, ¶24, 268 Wis. 2d 16, 673 N.W.2d 65. If it does not, our analysis
ends; if it does, we then analyze whether any exclusions preclude coverage. West
Bend, 385 Wis. 2d 580, ¶11; 5 Walworth, 408 Wis. 2d 39, ¶16. Finally, if an
exclusion applies, we consider “whether any exception to that exclusion reinstates
coverage.” 5 Walworth, 408 Wis. 2d 39, ¶16 (citation omitted).

¶9 The circuit court “must liberally construe the allegations contained
in the underlying complaint, assume all reasonable inferences from the allegations
made in the complaint, and resolve any ambiguity in the policy terms in favor of
the insured.” Water Well, 369 Wis. 2d 607, ¶15.

¶10 Exclusions “are narrowly construed against the insurer.” Day v.
Allstate Indem. Co., 2011 WI 24, ¶29, 332 Wis. 2d 571, 798 N.W.2d 199. “The
insured bears the burden of showing an initial grant of coverage, and if that burden

5
Auto-Owners asserts that we are to review the circuit court’s findings of fact for clear
error, but no such findings were made here. To the contrary, in its oral ruling, the court applied
the relevant policy language to the allegations in the Bolinskis’ complaints. The court made no
findings of fact to which the deferential clear error standard would apply.

6
No. 2024AP609

is met the burden shifts to the insurer to show that an exclusion nevertheless
precludes coverage.” Id., ¶26.

¶11 Under the homeowners’ policy at issue, Auto-Owners agreed to “pay
all sums any insured becomes legally obligated to pay as damages because of or
arising out of bodily injury or property damage caused by an occurrence to
which this coverage applies.” Auto-Owners also agreed to defend any claim or
suit for damages covered under the policy. The policy contains an exclusion for
“bodily injury or property damage because of or arising out of a business owned
or financially controlled by an insured ….” The policy defines “business” to
include “home day care services provided by an insured” but not if the services
are provided “on an infrequent and irregular basis” or “on a mutual exchange
basis.”

¶12 Auto-Owners does not challenge the circuit court’s determination
that the complaints give rise to an initial grant of coverage because they allege
bodily injury caused by an occurrence. Auto-Owners contends that the Bolinskis’
identical allegations that Jones “ran a child day care business out of her home”
trigger the exclusion for bodily injury “because of or arising out of a business
owned or financially controlled by an insured.” This was the ground upon which
the court found no duty to defend.

¶13 Because we focus on an exclusion in the policy, Auto-Owners bears
the burden of proving that it bars coverage and thus extinguishes Auto-Owners’
duty to defend. See Day, 332 Wis. 2d 571, ¶26. Here, Auto-Owners argues that
the exclusion applies because the only reasonable inference that can be drawn
from the Bolinskis’ allegation that Jones “ran” a day care business in her home is
that she “owned or financially controlled” it. Stephen disagrees, arguing that the

7
No. 2024AP609

allegation that Jones “ran” a day care business does not necessarily mean that she
“owned or financially controlled” it, but instead could also mean that she merely
managed it and that all reasonable inferences must be construed in favor of the
insured.

¶14 We need not address this argument because of other language in the
policy. Specifically, the policy defines the term “business” not to include home
day care services an insured provides “on an infrequent and irregular basis” or “on
a mutual exchange basis.” This portion of the definition is not, as the circuit court
believed, an exception to the business exclusion. It defines a term in the
exclusion. Auto-Owners again argues that the only reasonable inference that can
be drawn from the Bolinskis’ allegations is that Jones “provided regular day care
services in her own home for her own profit.”6

¶15 We do not agree. Auto-Owners moved for judgment on the
pleadings and argued that it had no duty to defend based solely on the allegations
in the complaints and the terms of its insurance policy.7 So, to prevail, Auto-
Owners must show that the allegations unambiguously trigger the exclusion. See
Day, 332 Wis. 2d 571, ¶4. Here, the complaints do not clearly show that Jones ran

6
Auto-Owners also argues that Stephen forfeited any argument grounded in the policy
language carving out home day care services provided “on an infrequent and irregular basis” or
“on a mutual exchange basis” from the definition of “business” because he did not raise it below.
Not so. Stephen did argue in a brief filed after the circuit court held a hearing on Auto-Owners’
motion that his complaint “does not state that any day care center ‘run’ by Harmony Jones was
run on a frequent/infrequent or regular/irregular basis.” Moreover, the court rejected this
argument in its oral ruling, concluding that this carve out was not “operative under the facts of
this case.” This was sufficient to preserve the argument for our review.
7
Although it did not do so, even if Auto-Owners had sought a declaration on the duty to
indemnify, given that it defended under a reservation of rights, it would be Auto-Owners’ burden
to show that the exclusion applies. See Day v. Allstate Indem. Co., 2011 WI 24, ¶29, 332
Wis. 2d 571, 798 N.W.2d 199. On this record, Auto-Owners would not have carried that burden.

8
No. 2024AP609

a “business” as defined by the policy—that is, a home day care that provided
services on a frequent and regular basis and not on a mutual exchange basis.
Nothing in the complaints suggests how frequent or regular the day care business
was or whether Jones provided day care services on a mutual exchange basis. The
complaints provide no insight on these points, either way. The consequence of
this lack of clarity falls on Auto-Owners, who chose to rely only on the complaints
and its policy to argue that there is no duty to defend. Absent allegations that
unambiguously show that Jones’ day care business falls within the policy’s
definition of “business,” Auto-Owners has failed to establish that there is no
possibility of coverage. Accordingly, the circuit court erred in granting judgment
on the pleadings.8

By the Court.—Order reversed and cause remanded for further
proceedings.

This opinion will not be published. See WIS. STAT.
RULE 809.23(1)(b)4 (2023-24).9

8
The dissent complains that our decision leaves the parties at sea about how the case
may proceed on remand. We do not share that concern. We have determined that the circuit
court erred in concluding that Auto-Owners had no duty to defend Jones and, on that basis, no
duty to indemnify her. Nothing in our decision precludes Auto-Owners on remand from seeking
a declaration concerning its duty to indemnify.

We also disagree with the dissent that we are returning the parties to the circuit court with
nothing for Auto-Owners to defend Jones against given that the court has granted Stephen’s and
Katherine’s motions for default. Depending on the proceedings relating to the duty to indemnify,
perhaps damages and perhaps an appeal could be at issue. Neither party has addressed this issue
and we offer no opinion. See, e.g., Pettit, 171 Wis. 2d at 647 (we decline to address undeveloped
arguments).
9
All references to the Wisconsin Statutes are to the 2023-24 version.

9
No. 2024AP609(D)

¶16 GROGAN, J. (dissenting). The Majority concludes, based on
application of the four-corners rule, see Water Well Solutions Service Group, Inc.
v. Consolidated Insurance Co., 2016 WI 54, ¶15, 369 Wis. 2d 607, 881 N.W.2d
285, that Auto-Owners Insurance Company (Auto-Owners) owed its insured,
Harmony Jones, a duty to defend. If this appeal involved only a decision on the
duty to defend based on reviewing the four corners of the Complaint, the Majority
would be correct. But that is not what is before us. The circuit court, in granting
Auto-Owners’ motion for declaratory judgment on the pleadings, concluded not
only that there was no duty to defend but also that there was no duty to indemnify
and that the policy did not provide coverage. The Majority, however, omits
entirely any discussion of the court’s conclusion that there was no coverage under
the policy despite the fact that it is reversing the grant of judgment on the
pleadings as a whole.1 To that end, I set forth the relevant procedural history—
including that which the Majority omits—and explain why I would conclude that
although Auto-Owners owed its insured an initial duty to defend (which it
satisfied), there nevertheless was no coverage under the terms of the policy issued.
The circuit court’s decision should be affirmed.

1
The Majority asserts that in moving for judgment on the pleadings, Auto-Owners
argued only “that it had no duty to defend based solely on the allegations in the complaints and
the terms of its insurance policy,” and states that Auto-Owners did not seek “a declaration on the
duty to indemnify[.]” Majority, ¶15 & n.7. Auto-Owners’ motion, however, explicitly stated it
was seeking an order that its insurance policy “does not provide insurance coverage for the claims
and/or damages alleged” and that it “has no duty to defend or indemnify Harmony Jones in this
litigation[.]” (Emphasis added.)
No. 2024AP609(D)

¶17 Auto-Owners filed a motion in June 2022 seeking to intervene in this
action based on its having issued a homeowners insurance policy to defendant
Harmony Jones. In the motion, Auto-Owners further asserted it had “promptly
conducted an investigation of the claim” upon being notified of the lawsuit and
that after it “notified Jones of its coverage position, [it] issued a reservation of
rights letter, and filed the instant motion[,]” which also asked that the circuit court
bifurcate and stay the proceedings to address the coverage issue prior to
addressing liability and damages. The court granted the motion, including the
request for a bifurcation and stay.

¶18 The Appellant eventually sought a default judgment against Jones,
Auto-Owners’ insured, in June 2022, which the circuit court granted in March
2023.2 Auto-Owners shortly thereafter filed a motion for declaratory judgment on
the pleadings that specifically requested a court order stating, as relevant, that the
policy it issued to “Jones does not provide insurance coverage for the claims
and/or damages alleged” and that it therefore had “no duty to defend or
indemnify” Jones. The motion further stated that it was “supported by the
pleadings and proceedings heretofore on file with the Court together with the
Brief and in support of the motion.” (Emphases added.)

¶19 The Consolidated Court Automation Programs (CCAP)3 record for
this matter reflects that the circuit court held a hearing on Auto-Owners’ motion

2
Auto-Owners filed a brief opposing Appellant’s motion for default judgment against
Jones.
3
“CCAP is a case management system provided by [the] Wisconsin Circuit Court
Access program[.]” State v. Bonds, 2006 WI 83, ¶6, 292 Wis. 2d 344, 717 N.W.2d 133. CCAP
“provides public access online to reports of activity in Wisconsin circuit courts[.]” Id.

2
No. 2024AP609(D)

on January 29, 2024, and issued its oral ruling a few weeks later. The transcript
from the February 2024 oral ruling hearing also reflects that the court heard
argument from the parties regarding Auto-Owners’ motion: “Auto-Owners filed a
motion seeking a declaration that the aforementioned policy did not provide
coverage for the alleged occurrences. The matter was thoroughly briefed and
argued[.]” (Emphases added.) We do not know, however, what the parties
specifically argued at the hearing because the Appellant did not include the
transcript from that motion hearing in the appellate Record, and instead identified
only the “Declaratory Judgment Hearing, 02/22/2024” in his “Statement on
Transcript”4 as being necessary for appellate purposes.5 See Gaethke v. Pozder,
2017 WI App 38, ¶36, 376 Wis. 2d 448, 899 N.W.2d 381 (“It is the appellant’s

4
Shortly thereafter, the Appellant filed an “Amended Statement on Transcript”
indicating that “[a]ll transcripts necessary for this appeal are already on file[.]”
5
The Majority refuses to acknowledge that we simply do not know what Auto-
Owners—or any party for that matter—argued at the motion hearing because the Appellant failed
to include the transcript of that hearing in the appellate Record. Instead, the Majority willingly
dons its blinders and states only that Auto-Owners’ briefs in support of its motion, which were
filed prior to the motion hearing, “were grounded exclusively on the duty to defend based on the
four corners of the complaints and the policy.” Majority, ¶6 n.4. Be that as it may, it is pure
speculation that Auto-Owners made no other argument whatsoever at the motion hearing. And,
because the Appellant failed to include the transcript from that hearing in the appellate Record,
we must assume the transcript supports the circuit court’s coverage decision. See Gaethke v.
Pozder, 2017 WI App 38, ¶36, 376 Wis. 2d 448, 899 N.W.2d 381 (“It is the appellant’s
responsibility to ensure completion of the appellate record and ‘when an appellate record is
incomplete in connection with an issue raised by the appellant, we must assume that the missing
material supports the trial court’s ruling.’” (emphasis added; quoted source omitted)).

The Majority’s willingness to ignore facts and rely on speculation unequivocally calls
into question its basis for choosing to address only the question of whether Auto-Owners owed
Jones a duty to defend rather than more fully addressing the duty to indemnify and whether the
policy provided actual, as opposed to arguable, coverage. See Majority, ¶6 n.4. This is
particularly so in that Auto-Owners, in its Reply brief before the circuit court, explicitly stated it
was “clear that the motion sought a declaration that there was no coverage under either …
complaint” and asked that the court “grant the motion for declaratory judgment and declare that
the policy does not provide insurance coverage[.]” (Emphases added.)

3
No. 2024AP609(D)

responsibility to ensure completion of the appellate record and ‘when an appellate
record is incomplete in connection with an issue raised by the appellant, we must
assume that the missing material supports the trial court’s ruling.’” (emphasis
added; quoted source omitted)).

¶20 The motion hearing transcript—or lack thereof—aside, at the
February oral ruling hearing, the circuit court referenced Auto-Owners’ “motion
seeking a declaration that the aforementioned policy did not provide coverage for
the alleged occurrences.” (Emphasis added.) It then went on to explain the “well-
known and oft repeated” “three step process” for determining whether an
insurance policy provides for an initial grant of coverage, whether any exclusions
apply to preclude coverage, and whether an exception reinstates coverage. 6 The
court went on to apply those principles to the insurance policy at issue and
ultimately concluded that while the policy provided an initial grant of coverage,
the exclusion pertaining “to bodily injury arising out of a business owned by an
insured[,]” which “includes home day care services,” applied. Because no
exception reinstated coverage, the court ultimately held “that Auto-Owners owes
neither a duty to defend nor a duty to indemnify and … that there is no coverage.”
(Emphasis added.) Although the court referenced the “alleg[ations] in these

6
While the Majority is correct that this framework also tracks “the duty to defend
analysis under Wisconsin law,” Majority, ¶6 n.4, our supreme court has explained that the duty to
defend and insurance coverage analyses are largely the same: “To an extent, the three steps used
in analyzing an insurance contract are the same whether a court is determining an insurer’s duty
to defend or its duty to indemnify.” See Water Well Sols. Serv. Grp., Inc. v. Consolidated Ins.
Co., 2016 WI 54, ¶16 n.11, 369 Wis. 2d 607, 881 N.W.2d 285. There is a distinction, however,
in that “unlike duty to defend determinations, extrinsic evidence is admissible in coverage
disputes to prove (or disprove) the allegations set forth in the complaint.” Id. Here, the parties
submitted affidavits—extrinsic evidence—in support of their respective briefing before the circuit
court, and Auto-Owners’ affidavit explicitly referenced information already before the court. The
Majority’s reliance on the circuit court’s having “tracked” the duty to defend framework when it
concluded there was no duty to defend carries little weight.

4
No. 2024AP609(D)

actions[,]” it did not specifically reference the Complaint or other documents aside
from the policy itself in explaining its rationale. Likewise, it did not reference or
limit its analysis to the four-corners rule. Instead, the court focused on a plain
language policy interpretation.

¶21 The circuit court entered a written order memorializing its oral
ruling, again acknowledging Auto-Owners had “moved the court for declaratory
judgment that the Auto-Owners’ Policy does not provide coverage for the claims
and/or damages alleged in the complaint” as well as that it did not have a “duty to
defend and indemnify” its insured. The order went on to state, as relevant, that the
court “hereby ordered, adjudged, and decreed” the following:

1. The plain language of the policy does have an initial
grant of coverage.

2. The plain language of the policy contains an exclusion
for claims arising out of a home day care business.

3. Applying the plain language of the policy to the facts
alleged in the complaint, there is an initial grant of
coverage which is then excluded pursuant to the
exceptions to coverage.

4. Auto-Owners Motion for Declaratory Judgment is
granted.

5. Auto-Owners has no duty to defend or indemnify
Harmony Jones[.]

(Some formatting altered.)

¶22 Despite the clear language in both Auto-Owners’ motion and the
circuit court’s ruling regarding coverage, the Majority chooses to limit its
discussion to whether the court erred in concluding that Auto-Owners did not have
a duty to defend Jones. Specifically, the Majority claims that because “Auto-
Owners moved for judgment on the pleadings[ and] the only evidence it submitted

5
No. 2024AP609(D)

was the insurance policy[,]” it necessarily follows that the only issue before the
court on appeal is whether Auto-Owners owed Jones a duty to defend based on the
four-corners rules.7 Majority, ¶6. As explained below, I disagree.

¶23 As an initial matter, I do agree with the Majority insofar as it
explains that determining whether an insurer initially owes its insured a duty to
defend is covered by the four-corners rule. I part ways, however, because I
disagree with its contention that the only issue before this court on appeal is
whether Auto-Owners owed its insured a duty to defend based on the four-corners
rule. I disagree because, here, Auto-Owners provided a defense to Jones under a
reservation of rights and thereafter sought to intervene and bifurcate the
proceedings to address coverage. As our supreme court explained in Olson v.
Farrar, “the purpose of the four-corners rule has been served once the insurer has
elected to provide a defense pending a final determination on coverage[,]” at
which point “[t]he four-corners rule is not further implicated, and the court
proceeds to a determination of coverage.” 2012 WI 3, ¶34, 338 Wis. 2d 215, 809
N.W.2d 1 (emphasis added). Stated differently:

Where the insurer has provided a defense to its insured,
a party has provided extrinsic evidence to the court, and the
court has focused in a coverage hearing on whether the

7
Despite acknowledging in his appellate brief that the “standard of review on a
declaratory judgment determining insurance coverage involves the interpretation of an insurance
policy[, which] is a question of law that the appellate court reviews de novo[,]” the Appellant
similarly errs in focusing only on the applicability of the four-corners rule despite the clear and
simple fact that the scope of this appeal exceeds the question of Auto-Owners’ duty to defend.
(Emphasis added.) In acknowledging that the Appellant focuses on the applicability of the four-
corners rule, the Majority seems to view the Appellant’s decision to do so as justifying its own
tunnel vision. See Majority, ¶6 n.4. However, as our supreme court has explained, “[t]he right to
a determination on coverage in the circuit court would often be empty if … the court’s inquiry
were limited by the four-corners rule.” Olson v. Farrar, 2012 WI 3, ¶37, 338 Wis. 2d 215, 809
N.W.2d 1.

6
No. 2024AP609(D)

insured’s policy provides coverage for the plaintiff’s claim,
it cannot be said that the proceedings are governed by the
four-corners rule. The insurer’s duty to continue to defend
is contingent upon the court’s determination that the
insured has coverage if the plaintiff proves his case.

Estate of Sustache v. American Fam. Mut. Ins. Co., 2008 WI 87, ¶29, 311
Wis. 2d 548, 751 N.W.2d 845. A review of the procedural history confirms we
are at that point here, and consequently, neither the circuit court nor the appellate
court is bound to consider only the Complaint and the insurance policy—in other
words, we need not apply the four-corners rule at this juncture—particularly given
that Auto-Owners filed a motion for judgment on the pleadings, which is governed
by WIS. STAT. § 802.06(3).

¶24 Pursuant to WIS. STAT. § 802.06(3), “[a]fter issue is joined between
all parties … any party may move for judgment on the pleadings.” Section
802.06(3) further provides that “[i]f, on a motion for judgment on the pleadings,
matters outside the pleadings are presented to and not excluded by the court, the
motion shall be treated as one for summary judgment and disposed of as provided
in [WIS. STAT. §] 802.08[.]”8

¶25 Auto-Owners filed an affidavit in support of its motion for
declaratory judgment, and that affidavit attached its responses to some of
Appellant’s discovery requests and a partial copy of its insurance policy, and the
affidavit specifically noted and referenced the “multiple copies” “of the insurance
8
This clear statutory language further highlights the Majority’s error in concluding that
because Auto-Owners “only” submitted the insurance policy in support of its motion for
judgment on the pleadings, the issue on appeal is limited to a determination of whether
Auto-Owners owed its insured an initial duty to defend based on the four-corners rule. See
Majority, ¶6. As WIS. STAT. § 802.06(3) makes clear, judgment on the pleadings is based only on
the pleadings, and when any additional evidence—such as an insurance policy—is introduced in
support of the motion, the motion is effectively treated as one for summary judgment.

7
No. 2024AP609(D)

policy” already “contained within the Court’s file.”9 The circuit court clearly
considered the insurance policy referenced in the supporting affidavit in
concluding the policy did not provide coverage, thereby effectively rendering
Auto-Owners’ motion one for summary judgment.10 Summary judgment “shall be
rendered if the pleadings, depositions, answers to interrogatories, and admissions
on file, together with the affidavits, if any, show that there is no genuine issue as to
any material fact and that the moving party is entitled to a judgment as a matter of
law.” WIS. STAT. § 802.08(2); see also Talley v. Mustafa, 2018 WI 47, ¶12, 381
Wis. 2d 393, 911 N.W.2d 55.11 We review a circuit court’s grant or denial of
summary judgment de novo. Wisconsin Prop. Taxpayers, Inc. v. Town of
Buchanan, 2023 WI 58, ¶8, 408 Wis. 2d 287, 992 N.W.2d 100. Whether the
circuit court erred here requires review of the court’s interpretation of the
insurance policy, which is also a question appellate courts review de novo. See
American Fam. Mut. Ins. Co. v. American Girl, Inc., 2004 WI 2, ¶23, 268
Wis. 2d 16, 673 N.W.2d 65.

9
The Appellant likewise submitted an affidavit with supporting papers in support of his
response to Auto-Owners’ motion for declaratory judgment on the pleadings.
10
Procedurally, a party may seek judgment on the pleadings after issue has been joined.
WIS. STAT. § 802.06(3). Here, the circuit court entered a default judgment against Jones, the
insured, which occurs where “no issue of law or fact has been joined[.]” WIS. STAT. § 806.02(1)
(emphasis added). The practical effect of a default judgment, however, is to render the
allegations set forth in a complaint as true, which is arguably tantamount to a pleading. See
Estate of Otto v. Physicians Ins. Co. of Wis., Inc., 2008 WI 78, ¶42, 311 Wis. 2d 84, 751
N.W.2d 805 (“when a defendant is determined to be in default, the factual allegations against the
defendant, except those relating to the amount of damages, are ordinarily deemed true”).
11
The standard for judgment on the pleadings is substantially similar: “A judgment on
the pleadings is essentially a summary judgment decision without affidavits and other supporting
documents.” Southport Commons, LLC v. DOT, 2021 WI 52, ¶18, 397 Wis. 2d 362, 960
N.W.2d 17. “Whether judgment on the pleadings should be granted is a question of law”
appellate courts review de novo. Id.; see also Wisconsin Elections Comm’n v. LeMahieu, 2025
WI 4, ¶11, 414 Wis. 2d 571, 16 N.W.3d 469.

8
No. 2024AP609(D)

¶26 To determine whether Auto-Owners’ policy provides coverage, we
must “interpret and apply the language of the insurance policy.” See 5 Walworth,
LLC v. Engerman Contracting, Inc., 2023 WI 51, ¶31, 408 Wis. 2d 39, 992
N.W.2d 31. Interpreting an insurance policy requires that we “determine and give
effect to the intent of the contracting parties[,]” and we will construe the insurance
policy “as [it] would be understood by a reasonable person in the position of the
insured.” American Girl, Inc., 268 Wis. 2d 16, ¶23. We give the insurance policy
language its “common and ordinary meaning[,]” and we construe ambiguous
language “in favor of coverage.” Danbeck v. American Fam. Mut. Ins. Co., 2001
WI 91, ¶10, 245 Wis. 2d 186, 629 N.W.2d 150. Language in an insurance policy
“is ambiguous ‘if it is susceptible to more than one reasonable interpretation.’”
Folkman v. Quamme, 2003 WI 116, ¶13, 264 Wis. 2d 617, 665 N.W.2d 857
(quoting Danbeck, 245 Wis. 2d 186, ¶10).

¶27 It is undisputed that Auto-Owners’ insurance policy provides for an
initial grant of coverage; thus, the next question is whether an exclusion to
coverage applies. See American Girl, Inc., 268 Wis. 2d 16, ¶24. “Exclusions are
narrowly or strictly construed against the insurer if their effect is uncertain[,]” and
“[w]e analyze each exclusion separately[.]” Id. If an exclusion applies, we then
look to whether an exception to the exclusion reinstates coverage. Id. Where
there is an initial grant of coverage under the policy’s terms, the insurer bears the
burden of establishing “that an exclusion nevertheless precludes coverage.” Day
v. Allstate Indem. Co., 2011 WI 24, ¶26, 332 Wis. 2d 571, 798 N.W.2d 199.

¶28 Pursuant to the policy’s terms, Auto-Owners “will pay all sums any
insured becomes legally obligated to pay as damages because of or arising out of
bodily injury or property damage caused by an occurrence to which this
coverage applies.” The policy defines “occurrence” as “an accident that results in

9
No. 2024AP609(D)

bodily injury or property damage and includes, as one occurrence, all
continuous or repeated exposure to substantially the same generally harmful
conditions.” The policy also provides that “Coverage E - Personal Liability and
Coverage F - Medical Payments to Others do not apply” to, inter alia, “bodily
injury or property damage because of or arising out of a business owned or
financially controlled by an insured or by a partnership or joint venture of which
an insured is a partner or member. This exclusion does not apply to activities of
an insured ordinarily incident to nonbusiness pursuits.” In turn, the policy defines
“business” as including “home day care services provided by an insured[.]”
However, “[b]usiness does not include[,]” as relevant:

a. home day care services:

(1) any insured provides on an infrequent and irregular
basis;

(2) provided part time by a relative who is under 21
years of age;

(3) provided to a relative by any insured; nor

(4) provided on a mutual exchange basis[.]

Auto-Owners relied on the “home day care business exclusion” in asserting that it
was entitled to a ruling that it had neither a duty to defend nor indemnify and that
there was no coverage under the policy’s terms.

¶29 As previously explained, the practical effect of the default judgment
entered against Jones, the insured, is that she is deemed to have admitted that she
“ran a child day care business out of her home[,]” that the deceased child was left
in her care on the date of his death, and that the deceased child “suffered
significant and painful injuries … that ultimately caused [his] death” while in
Jones’ care. (Emphasis added.) Jones’ admission that she ran a business from her

10
No. 2024AP609(D)

home necessarily precludes any reasonable interpretation that the day care
business she admits to having operated out of her home was something she
“provide[d] on an infrequent and irregular basis” or was “[p]rovided on a mutual
exchange basis[.]” See, e.g., Preisler v. General Cas. Ins. Co., 2014 WI 135, ¶18,
360 Wis. 2d 129, 857 N.W.2d 136 (“We interpret insurance policy language
according to its plain and ordinary meaning as understood by a reasonable
insured.”). Jones’ admission that she ran the business and that the deceased child
was left in her care also belies any reasonable suggestion that this was a “home
day dare service[]” “provided part time by a relative who is under 21 years of
age[.]” There is also no indication that Jones was related to the deceased child.
Simply put, this was a typical homeowner’s insurance policy, which does not
cover business liability. If Jones wanted coverage for her business, she needed to
notify Auto-Owners that she was running a business and pay a premium for that
coverage.

¶30 It would be similarly unreasonable to conclude—despite the
Appellant’s contention to the contrary—that someone who runs a business out of
her home nevertheless does not “own[]” or otherwise “financially control[]” the
business. I would therefore conclude that in light of the deemed admissions
arising from the insured’s default, the only reasonable interpretation of the
policy’s coverage—the guidepost of insurance policy construction—under the
circumstances present here is that the “home day care business exclusion” applies,
and the circuit court did not err in determining there was no coverage.

¶31 As a final matter, the Majority leaves additional questions
unanswered. First, the Majority fails to clarify the impact of its reversal of the
circuit court’s grant of judgment on the pleadings—specifically, whether its
reversal simply means that Auto-Owners has a duty to defend and indemnify its

11
No. 2024AP609(D)

insured and that it nevertheless can seek an additional ruling on coverage or rather,
instead, whether the reversal is in and of itself the dispositive coverage
determination. The order the Majority reverses explicitly declared that Auto-
Owners had no duty to indemnify—and the Majority reverses the order in whole.
Clarification is important given that: (1) Auto-Owners’ motion for judgment on
the pleadings sought not only a ruling that it had no duty to defend or indemnify
but also a ruling that its “policy … does not provide insurance coverage for the
claims and/or damages alleged”; and (2) in granting the motion, the circuit court
“declare[d] that there is no coverage” and additionally stated “that the policy
provides an initial grant of coverage that is subsequently excluded under the policy
language and unreinstated by any applicable exceptions” and that there was
therefore “neither a duty to defend nor a duty to indemnify[.]” (Emphases added.)
Because the court’s language confirms that its ruling implicated not only the duty
to defend and indemnify but also whether the policy provided coverage at all, the
Majority’s decision reverses a coverage decision—not only a decision as to
whether Auto-Owners owed its insured a duty to defend.12

¶32 The Majority also fails to explain who or what Auto-Owners is
required to defend on remand. Although the Majority suggests I “make[] much of
Jones’ default[] resulting in her admission to the allegations of the complaint,”
Majority, ¶6 n.4, the simple fact of the matter is that the default judgment and the
deemed admissions are the law of the case, and the duty to defend is premised
upon there being an insured to defend as it relates to whether or not that party is

12
Even assuming Auto-Owners can file an additional coverage motion on remand, it
makes little sense—and is contrary to judicial economy—to reverse and remand this matter to the
circuit court for further proceedings on a coverage issue that can be determined as a matter of law
now.

12
No. 2024AP609(D)

liable for the conduct alleged. See, e.g., Johnson Controls, Inc. v. London
Market, 2010 WI 52, ¶28, 325 Wis. 2d 176, 784 N.W.2d 579 (insurance contracts
“typically impose two main duties—the duty to indemnify the insured against
damages or losses, and the duty to defend against claims for damages” (emphasis
added)).

¶33 Here, the circuit court entered a default judgment against Jones,
therefore establishing her liability for the claims alleged, and there are, therefore,
no remaining claims against which to defend Auto-Owners’ insured Jones.
Accordingly, because Jones’ liability had already been established prior to Auto-
Owners having filed its motion, the Majority’s focus on whether Auto-Owners
owed a duty to defend in this case is, put simply, misplaced entirely.

¶34 After the default judgment, the only remaining question was whether
Auto-Owners, based on the policy’s terms, must pay the damages for which Jones
is liable. The circuit court concluded there was no coverage—that Auto-Owners
did not have a duty to indemnify. The Majority reverses that decision but insists it
is really saying only that Auto-Owners has a duty to defend an insured who has
already been found liable. Fortunately—at least for the status of the law in
Wisconsin—the Majority commits this faux pas in a per curiam opinion rather
than a published decision. Second, the Majority also fails to clarify whether
Katherine Bolinski is bound by its decision. Rather than addressing the point
raised in the briefing, the Majority ducks the issue altogether by noting that
“Katherine did not file a notice of appeal[.]” Majority, ¶6 n.4. Auto-Owners
asked this court to acknowledge that Katherine is bound by this court’s decision
despite not having joined in or participated in this appeal of the coverage decision.
The Majority, however, fails to answer this question, which will lead to
unnecessary confusion on remand. Does the Majority’s failure to address this

13
No. 2024AP609(D)

issue mean it agrees with Auto-Owners’ assertion? Is it saying the circuit court
should address this on remand? No one knows, and apparently it’s anybody’s
guess.

¶35 When parties appeal to this court and wait months—in this case,
more than a year from the date the Notice of Appeal was filed—for an appellate
decision, we should clearly answer the questions raised in the appeal. The
Majority, however, leaves the aforementioned questions unanswered, and its
failure to answer these questions will lead to unnecessary confusion, the waste of
scarce judicial resources, and additional costs and litigation to the parties.

¶36 The circuit court’s decision that there is no coverage under the terms
of this policy was correct, and I would affirm. Accordingly, I respectfully dissent.

14