Jeffrey Lane was employed by Memtek, Inc., at its Arby’s Restaurant. He was being trained as a cook. After 11:00 one evening, Lane finished work and clocked out. He remained in the restaurant’s lobby, however, because he was waiting for the manager to complete her duties. As Lane waited, friends of other restaurant employees came to a door of the restaurant. Lane and the other employees became involved in a conversation with these persons, who included John Taylor. Lane told Taylor that he could not enter the restaurant because it was closed. Taylor did not attempt to force his way into the restaurant. Instead, he “dared” Lane to come outside. Lane left the restaurant “of [his] own will” (according to Lane’s deposition) for what he assumed would be a fight with Taylor. In the fight that transpired, Lane broke Taylor’s nose and knocked out three of his teeth. Lane later pleaded guilty to a criminal battery charge. Taylor filed a civil suit against Lane and Memtek in an effort to collect damages stemming from the altercation with Lane. American Family Mutual Insurance Company provided liability insurance for Memtek in connection with its restaurant. The policy stated that for purposes
of American Family’s duties to defend and indemnify, “the insured” included not only Memtek but also Memtek’s “employees, . . . but only for acts within the scope of their employment.” American Family filed a declaratory judgment action in which it asked the court to determine that it owed Lane neither a duty to defend nor a duty to indemnify in connection with the incident giving rise to Taylor’s lawsuit. American Family’s theory was that for purposes of that incident, Lane was not an insured within the above-quoted policy provision. Was American Family correct?