St. Paul Fire & Marine Ins. Co. v. City of Zion

• Decision Date: 10 September 2014
• Docket Number: Nos. 2–13–1312,2–13–1313.,s. 2–13–1312
• Citation: 18 N.E.3d 193
• Parties: ST. PAUL FIRE AND MARINE INSURANCE COMPANY, Plaintiff and Counterdefendant–Appellee, v. The CITY OF ZION, The County of Lake, Kevin Harris, Mark Curran, Timothy Jonites, and Robert Dever, Defendants (Jerry Hobbs III, Defendant–Appellant; The City of Waukegan, Domenic Capelluti, Charles Schletz, and William Valko, Defendants and Counter–plaintiffs; Illinois County Risk Management Trust, Intervenor–Appellant; and American Alternative Insurance Corporation, Certain Underwriters at Lloyd's London, and Princeton Excess and Surplus Lines Insurance Company, Intervenors).
• Court: United States Appellate Court of Illinois

18 N.E.3d 193

ST. PAUL FIRE AND MARINE INSURANCE COMPANY, Plaintiff and Counterdefendant–Appellee

v.The CITY OF ZION, The County of Lake, Kevin Harris, Mark Curran, Timothy Jonites, and Robert Dever, Defendants (Jerry Hobbs III, Defendant–Appellant; The City of Waukegan, Domenic Capelluti, Charles Schletz, and William Valko, Defendants and Counter–plaintiffs; Illinois County Risk Management Trust, Intervenor–Appellant; and American Alternative Insurance Corporation, Certain Underwriters at Lloyd's London, and Princeton Excess and Surplus Lines Insurance Company, Intervenors).

Nos. 2–13–1312

2–13–1313.

Appellate Court of Illinois, Second District.

Sept. 10, 2014.

Michael W. Rathsack, of Michael Rathsack Law Office, of Chicago, and Kathleen T. Zellner and Douglas H. Johnson, both of Kathleen T. Zellner & Associates, P.C., of Downers Grove, for appellants.

Daniel G. Litchfield, Dennis M. Dolan, and Laura L. Milnichuk, all of Litchfield Cavo, LLP, of Chicago, for appellee.

OPINION

Justice ZENOFF delivered the judgment of the court, with opinion.

¶ 1 The issue in this appeal is whether a malicious-prosecution claim filed by Jerry Hobbs III against the City of Zion and its police officer Kevin Harris triggered coverage under an insurance policy that St. Paul Fire and Marine Insurance Company issued to Zion. Resolution of this issue depends upon whether the occurrence triggering coverage under the policy is the commencement of the alleged malicious prosecution or its termination in favor of the accused. We hold that, under the unambiguous language of the policy, the occurrence triggering coverage is the commencement of the alleged malicious prosecution. Here, that occurrence took place outside the policy period. Therefore, we affirm the grant of summary judgment in St. Paul's favor.

¶ 2 I. BACKGROUND

¶ 3 Hobbs was charged with murdering his eight-year-old daughter and her nine-year-old friend. After DNA evidence excluded Hobbs as the perpetrator, and after Hobbs had spent five years in jail awaiting trial, the charges were dismissed. On December 1, 2010, Hobbs filed a federal action against Zion, Harris, and a number of other defendants. Hobbs v. Cappelluti, 899 F.Supp.2d 738, 752 (N.D.Ill.2012). Hobbs alleged that Harris and the other defendant officers coerced him into falsely confessing to the murders. Among other claims, Hobbs alleged malicious prosecution under Illinois law. Hobbs, 899 F.Supp.2d at 752.

¶ 4 After Hobbs initiated the federal action, St. Paul filed this declaratory judgment action in the circuit court of Lake County against Zion, Harris, Hobbs, and other defendants. In its complaint, St. Paul alleged that it issued a series of insurance policies to Zion for periods covering December 1, 2006, to December 5, 2010,¹ all of which included law enforcement liability coverage. The complaint alleged that, although the State dismissed Hobbs's murder charges on August 4, 2010, which was within the 2009–10 policy period, it filed the murder charges on May 9, 2005, prior to the effective date of the first policy. St. Paul sought a declaration that the allegations of Hobbs's federal complaint did not trigger coverage under the 2009–10 policy, because the occurrence triggering coverage of a malicious-prosecution claim is the commencement of the wrongful prosecution, not its termination in favor of the accused.

¶ 5 Illinois County Risk Management Trust (ICRMT), which insured Zion and Harris when the Hobbs murder prosecution commenced, intervened in the action and filed a complaint in intervention against St. Paul, Zion, Harris, and Hobbs. ICRMT took the position that the occurrence triggering coverage was the favorable termination of the prosecution.

¶ 6 St. Paul filed a motion for summary judgment on its complaint, and ICRMT filed a motion for summary judgment on its complaint in intervention. Zion and Harris sided with ICRMT and opposed St. Paul's motion for summary judgment. In a written decision, the trial court agreed with St. Paul that the occurrence triggering coverage under its policy is the commencement of a malicious prosecution. Accordingly, the court entered summary judgment in St. Paul's favor and against Zion and Harris. The court denied ICRMT's motion for summary judgment. St. Paul subsequently moved for summary judgment on ICRMT's complaint in intervention, which the trial court granted. ICRMT and Hobbs² timely appeal.

¶ 7 II. ANALYSIS

¶ 8 On appeal, ICRMT and Hobbs, who have filed a joint brief, maintain that the trial court erred in determining that the occurrence triggering coverage of a malicious-prosecution claim under the 2009–10 St. Paul policy is the commencement of the prosecution. They contend that, under Illinois law, termination of a prosecution in favor of the accused is the final element of the tort of malicious prosecution. Accordingly, they maintain, there is no claim for which an insurance policy could provide coverage until the prosecution has been favorably terminated.

¶ 9 The trial court granted summary judgment in St. Paul's favor. Summary judgment is appropriate where the pleadings, affidavits, depositions, and admissions on file, when viewed in the light most favorable to the nonmoving party, show that there is no genuine issue of material fact and that the moving party is entitled to judgment as a matter of law. Pekin Insurance Co. v. Precision Dose, Inc., 2012 IL App (2d) 110195, ¶ 28, 360 Ill.Dec. 171, 968 N.E.2d 664. We review de novo an order granting summary judgment. Precision Dose, 2012 IL App (2d) 110195, ¶ 29, 360 Ill.Dec. 171, 968 N.E.2d 664. Additionally, we review de novo the construction of an insurance policy. Pekin Insurance Co. v. Wilson, 237 Ill.2d 446, 455, 341 Ill.Dec. 497, 930 N.E.2d 1011 (2010).

¶ 10 In construing an insurance policy, a court's primary task is to ascertain the intent of the parties as expressed in their agreement. Wilson, 237 Ill.2d at 455, 341 Ill.Dec. 497, 930 N.E.2d 1011. Courts construe a policy as a whole with due regard to the risk undertaken, the subject matter that is insured, and the purpose of the entire policy. Wilson, 237 Ill.2d at 456, 341 Ill.Dec. 497, 930 N.E.2d 1011. If terms in a policy are unambiguous, courts afford them their plain, ordinary, and popular meaning. Wilson, 237 Ill.2d at 455–56, 341 Ill.Dec. 497, 930 N.E.2d 1011. If terms are ambiguous, they will be strictly construed against the insurer. Wilson, 237 Ill.2d at 456, 341 Ill.Dec. 497, 930 N.E.2d 1011.

¶ 11 On appeal, ICRMT and Hobbs limit their arguments to two sections of the St. Paul policy: the general liability section and the law enforcement liability section. The general liability section provides, in pertinent part, that St. Paul will pay damages for personal injury that is caused by malicious prosecution committed during the policy period. However, as St. Paul points out, the general liability section contains an exclusion for injury or damage that results from law enforcement activities or operations. The policy defines law enforcement activities or operations as “any of the official activities or operations of your police department, sheriff agency, or other public safety organization which enforces the law and protects persons or property.” At oral argument, ICRMT and Hobbs conceded that the law enforcement liability exclusion applies here and that the general liability section cannot provide coverage. Therefore, we turn to the law enforcement liability section.

¶ 12 The law enforcement liability section provides, in pertinent part, that St. Paul will “pay amounts any protected person is legally required to pay as damages for covered injury or damage” that (1) “results from law enforcement activities or operations by or for you,” (2) “happens while this agreement is in effect,” and (3) “is caused by a wrongful act that is committed while conducting law enforcement activities or operations.” The policy defines “[i]njury or damage” as “bodily injury, personal injury, or property damage.” It defines “[p]ersonal injury,” in pertinent part, as “injury * * * caused by * * * [m]alicious prosecution.” It defines “[w]rongful act” as “any act, error, or omission.”

¶ 13 In arguing that the favorable termination of a malicious prosecution is the occurrence that triggers coverage under the law enforcement liability section, ICRMT and Hobbs contend that the section provides coverage for “the wrongful act of malicious prosecution.” Thus, they maintain, coverage is triggered once “all the elements” of malicious prosecution, including favorable termination of the prosecution, are “in place.”

¶ 14 ICRMT and Hobbs misconstrue the plain language of the policy. Unlike the general liability section, the law enforcement liability section does not require that the “offense” of malicious prosecution be “committed” while the policy is in effect. Instead, the law enforcement liability section provides coverage if the “injury” caused by malicious prosecution “happens” while the policy is in effect. Accordingly, in order to determine whether a malicious-prosecution claim triggers coverage under the law enforcement liability section, we need to determine when the “injury” resulting from malicious prosecution “happens,” not when the “offense” is “committed.”

¶ 15 The elements of a malicious-prosecution claim under Illinois law are well established. Cult Awareness Network v. Church of Scientology International, 177 Ill.2d 267, 272, 226 Ill.Dec. 604, 685 N.E.2d 1347 (1997). The elements are (1) the commencement of judicial proceedings by the defendant, (2) a lack of probable cause for the proceedings, (3) malice in instituting the proceedings, (4) termination of the prosecution in the plaintiff's favor, and (5) damage or injury to the plaintiff. Cult Awareness Network, 177 Ill.2d at 272, 226 Ill.Dec. 604, 685 N.E.2d 1347 ; Reed v. Doctor's Associates, Inc., 355 Ill.App.3d 865, 873, 291 Ill.Dec. 948, 824 N.E.2d 1198 (2005). Although a plaintiff alleging malicious prosecution based on a...