706 Fed.Appx. 260 (6th Cir. 2017), 16-4199, Selective Insurance Company of the Southeast v. RLI Insurance Co.

Docket Nº:16-4199
Citation:706 Fed.Appx. 260
Opinion Judge:ROGERS, Circuit Judge.
Attorney:Brian L. Wildermuth, Tabitha D. Justice, Subashi & Wildermuth, Dayton, OH, for Plaintiff-Appellee Michael Dale Prough, Morison & Prough, Walnut Creek, CA, Richard M. Garner, Collins, Roche, Utley & Garner, Dublin, OH, for Defendant-Appellant
Judge Panel:BEFORE: GUY, ROGERS, and KETHLEDGE, Circuit Judges.
Case Date:August 24, 2017
Court:United States Courts of Appeals, Court of Appeals for the Sixth Circuit

Page 260

706 Fed.Appx. 260 (6th Cir. 2017)



RLI INSURANCE COMPANY, Defendant-Appellant.

No. 16-4199

United States Court of Appeals, Sixth Circuit

August 24, 2017


Editorial Note:

Please Refer Federal Rule of Appellate Procedure Rule 32.1. See also U.S.Ct. of App. 6th Cir. Rule 32.1.

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Brian L. Wildermuth, Tabitha D. Justice, Subashi & Wildermuth, Dayton, OH, for Plaintiff-Appellee

Michael Dale Prough, Morison & Prough, Walnut Creek, CA, Richard M. Garner, Collins, Roche, Utley & Garner, Dublin, OH, for Defendant-Appellant



ROGERS, Circuit Judge.

In 2014, police in the City of Barberton, Ohio, agreed to pay $5.25 million to settle malicious prosecution and deprivation-of-due-process claims arising out of wrongful conviction of a man named Clarence Elkins. Two of the City’s insurers— Selective Insurance Company of the Southeast and RLI Insurance Company— now dispute which of them is responsible for the $3.25 million in excess coverage to pay for this settlement. The district court accepted Selective’s contention that RLI’s coverage was triggered when Elkins was first arrested, before the end of RLI’s coverage period, even though the police had probable cause to arrest at that point. However, coverage was not in fact triggered until several months after RLI’s coverage period ended, when police withheld new exculpatory evidence from Elkins’s lawyers, and there was then no longer probable cause. Although Elkins suffered injury during RLI’s coverage period, that injury preceded any tortious activity by the police, and thus was not the result of the tortious activity as required by the RLI policy. The district court accordingly erred in assigning liability to RLI.

In the early morning hours of June 7, 1998, an intruder raped and murdered fifty-eight-year-old Judith Johnson in her own home, and then raped and beat unconscious Johnson’s six-year-old granddaughter, Brooke Sutton. A few hours later, Brooke regained consciousness and wandered over to the house of a neighbor looking for help. Brooke told the neighbor that her grandmother had been killed and that the perpetrator "looked like my Uncle Clarence." The neighbor eventually drove Brooke to her mother’s house, and her mother called the police. At some point, Brooke’s belief that the perpetrator looked like her Uncle Clarence turned into certainty that it was in fact her Uncle Clarence: As Brooke later attested, "I remember telling everyone in the beginning that the person who killed my grandmother and attacked me looked like my Uncle Clarence.... I am not really sure how this quickly went from looking like my Uncle Clarence to being my Uncle Clarence. Whenever it was repeated back to me, it was said like I was sure it was Uncle Clarence so I just got the clue." On the basis of this identification, Barberton police arrested Brooke’s uncle and Johnson’s son-in-law Clarence Elkins on June 8. On June 10, a grand jury indicted Elkins on charges of aggravated murder, attempted aggravated murder, rape, and felonious assault.

Over the next month, Barberton detectives investigated the Johnson murder, but failed to follow up on information that may

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have exculpated Elkins. On June 8, a good friend of Judith Johnson’s told police that six-year-old Brooke had told her that she did not know who the intruder was. However, police falsified the friend’s statements to say that Brooke had confirmed the intruder was Elkins. On June 12, one of Elkins’s friends told detectives that she had seen Elkins on the night of the murder— he had been drinking with his wife and other friends until later in the evening, forty miles from the scene of the crime— providing an alibi. The detectives responded by saying "we got our man, we know for a fact that we have our man." On June 16, DNA testing revealed that a foreign pubic hair and head hair recovered from Johnson’s anal area could not have come from Elkins. Finally, on June 25, Johnson’s daughter— Brooke’s mother— discovered two bloody handprints on a lampshade that had belonged to Johnson, but was told by police to throw the lampshade away. The daughter also found her mother’s bloody glasses, dentures, and a Polaroid camera with bloody fingerprints— all of which had been left behind by police investigators.

On June 29, 1998, the pivotal event for this case occurred: the City of Barberton switched insurance carriers. Like many cities, Barberton maintained both primary and excess liability insurance. On June 29, 1998, the City switched primary carriers from National Casualty Company (NCC) to CNA, and excess carriers from RLI Insurance Company to Selective Insurance Company. Both primary carriers had a duty to defend the City and individual officers in the event of a lawsuit and were responsible for covering up to $1 million in damages. Both excess carriers were responsible for liability beyond the initial $1 million in damages— up to the policy limit— with no duty to defend.

Six months later, Barberton detectives again failed to follow up on information that may have exculpated Elkins. On January 5, 1999, a Barberton police officer arrested a man named Earl Mann for two aggravated robberies. During his arrest, Mann reportedly asked the arresting officer: "Why aren’t you charging me with the Judy Johnson murder too?" Mann also reportedly disclosed to the officer that he had been living with his common-law wife since being released from prison the previous June, in a house that happened to be next door to Judith Johnson’s former residence. Following his training, the officer prepared an inter-departmental memorandum containing this information (the "Mann memorandum" ) and put this memorandum in a bin intended for documents to be shared with the detective bureau. However, Elkins’s criminal defense attorneys were never given the memorandum. The chief of Barberton’s detective bureau— who should have been the one to collect the memorandum from this bin— was terminally ill and later died during the course of the underlying lawsuit without being deposed.

Four months later, Elkins was tried by jury. Elkins v. Summit Cty., Ohio, 615 F.3d 671, 674 (6th Cir. 2010). Brooke Sutton identified Elkins as the perpetrator at trial. To rebut this identification, Elkins’s alibi witnesses testified that they had been with Elkins at the time of the crime, forty miles from Johnson’s house. Elkins’s wife— Johnson’s daughter— corroborated this alibi. Elkins also put forth DNA evidence that the hairs found on Johnson’s body could not have come from him. Nevertheless, the jury convicted Elkins on all charges in June 1999. He was sentenced to life with no eligibility for parole until 2054.

After Elkinss conviction, the evidence against him began to erode...

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