Tort of Malicious Prosecution Occurs When Underlying Criminal Charges Are Filed, Circuit Rules

May 31, 2012 | Insurance Coverage

Two people were arrested in 1977 for the murder of a retired police officer and were convicted in 1978.  In 2003, they were released from prison. They then filed suit against the city of Council Bluffs, Iowa, alleging malicious prosecution.

After the city sought coverage from Genesis Insurance Company, Genesis sought a declaratory judgment that its policies did not provide coverage for the underlying civil actions.

The U.S. District Court for the Southern District of Iowa ruled that the “personal injuries” alleged by the underlying plaintiffs had become apparent no later than 1978, the year in which they had been convicted of murder and had been given life sentences. Therefore, the district court found, those injuries should be deemed to have occurred, for insurance coverage purposes, no later than 1978. As a result, the district court held that the claimed injuries did not occur, for insurance coverage purposes, during the Genesis policy periods – January 1, 2002, to January 1, 2003, and January 1, 2003, to January 1, 2004. The city appealed to the U.S. Court of Appeals for the Eighth Circuit.

In its decision, the circuit court rejected the city’s contention that the underlying plaintiffs had suffered injury resulting from the city’s conduct during the terms of both policies.  Instead, the Eighth Circuit adopted the majority view that “the tort of malicious prosecution occurs for insurance coverage purposes . . . when the underlying criminal charges are filed.”

Applying that rule to this case, the circuit court explained that the criminal charges against the underlying plaintiffs had been filed in 1977, and their injuries therefore had occurred, for insurance coverage purposes, in 1977. As a result, the circuit court reasoned, their injuries did not “occur,” for insurance coverage purposes, during the policy periods.

Concluding that the insurance policies were not ambiguous, and rejecting the city’s contention that the tort of malicious prosecution constitutes a continuing injury, the circuit court affirmed the district court’s decision.

The case is Genesis Ins. Co. v. City of Council Bluffs, Nos. 11-1277, 11-1741 (8th Cir. May 11, 2012).

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