Coverage for Malicious Prosecution Claim Was Triggered at Beginning of Prosecution, Not When Accused Was Released, Illinois Appeals Court Holds

An appellate court in Illinois has ruled that coverage for a malicious prosecution claim under the language of law enforcement liability insurance policies issued to a city and its police officers was triggered at the commencement of the alleged malicious prosecution, not at termination of the prosecution in favor of the accused.

The Case                                                                                   

Juan A. Rivera, Jr., was wrongfully convicted in November 1993 of rape and murder and was imprisoned for 20 years. After DNA evidence excluded Rivera as the perpetrator, he was exonerated of all wrongdoing. On December 9, 2011, Rivera’s conviction was reversed and he was acquitted. On January 6, 2012, Rivera was released from prison.

On October 30, 2012, Rivera filed a federal action against numerous defendants, including the city of Waukegan, Illinois, and six former Waukegan police officers. He alleged that the city and the police officers were responsible for denying him a fair trial and for the loss of liberty that resulted from his wrongful conviction. He alleged a number of claims, including state claims for malicious prosecution and false imprisonment, and due process claims. The complaint alleged that the police officers had repeatedly and continually concealed exculpatory evidence. Rivera also alleged conspiracy, failure to intervene, and intentionalinfliction of emotional distress.

The city and the officers claimed that Rivera’s lawsuit was covered by the law enforcement liability insurance policies issued by Indian Harbor Insurance Company for the years November 1, 2011 to November 1, 2013. They contended that Rivera’s prosecution continued until his conviction was reversed on December 9, 2011, a date that fell within the first policy period, and that he alleged wrongful acts, “including, but not limited to, malicious prosecution, defamation, conspiracy, intentional infliction of emotional distress and failure to intervene,” that fell within the policy periods and that triggered coverage.

Indian Harbor disagreed and filed a declaratory judgment action. The insurer asserted that the “wrongful acts” alleged in Rivera’s lawsuit had “occurred entirely or primarily in 1992, and ceased in all respects prior to the [inception date of its insurance policies].” Indian Harbor alleged that none of Rivera’s claims was covered by its policies, because no “wrongful acts” had occurred within the policy periods.

Indian Harbor moved for judgment on the pleadings. The trial court granted its motion, and the city and the officers appealed.

The Appellate Court’s Decision

The appellate court affirmed.

In its decision, the appellate court explained that the Indian Harbor policies provided that the insurer would pay damages if an insured’s wrongful act occurred during the policy period and resulted in injury, which included malicious prosecution. The appellate court then decided that the initiation of the allegedly malicious prosecution was “the triggering event for coverage” of a malicious prosecutionclaim. In other words, the appellate court declared, the wrongful act was “the filing of the malicious prosecution, not its favorable termination.”

The appellate court added that in an occurrence-based policy, such as the Indian Harbor policies, coverage was triggered by an act or injury that occurred during the policy period; the intent was to insure only for the insured’s acts or omissions that happened during the policy period. The appellate court reasoned that if favorable termination were considered as the trigger for a malicious prosecution claim, liability could be shifted to a policy period in which the insured committed none of the acts or omissions that gave rise to the claim. In the appellate court’s view, this would change an occurrence-based policy “into something similar to a claims-made policy,” and the policy would cover prior acts or omissions that happened to accrue as a cause of action while the policy was in effect.

The appellate court concluded by ruling that all of the acts or omissions alleged to have occurred after the date Rivera was charged were continuations of the same alleged harm, so that there also was no coverage for them.

The case is Indian Harbor Ins. Co. v. City of Waukegan, Nos.  2-14-0293 & 2-14-0315 (Ill. Ct. App. March 6, 2015).