Fox v. Will Cnty.
| Decision Date | 15 August 2012 |
| Docket Number | Case No. 04 C 7309 |
| Court | U.S. District Court — Northern District of Illinois |
| Parties | KEVIN FOX and MELISSA FOX, Plaintiffs, v. WILL COUNTY; EDWARD HAYES; MICHAEL GUILFOYLE; SCOTT SWEARENGEN; JOHN RUETTIGER; BRAD WACHTL; DAVID DOBROSWKI; and UNKNOWN POLYGRAPH EXAMINER. Defendants. WILL COUNTY, Third-Party Plaintiff, v. ESSEX INSURANCE CO.; AMERICAN ALTERNATIVE INSURANCE CORP.; and ST. PAUL FIRE & MARINE INSURANCE CO., Third-Party Defendants. KEVIN FOX, Plaintiff, v. ESSEX INSURANCE CO.; AMERICAN ALTERNATIVE INSURANCE CORP.; and ST. PAUL FIRE & MARINE INSURANCE CO., Third-Party Defendants. |
MEMORANDUM OPINION AND ORDER
Third-Party, Will County, has filed a Second Amended Third-Party Complaint ("SATC") against Third-Party Defendant Essex Insurance Company ("Essex"). Before the Court are Will County's Motion for Judgment on the Pleadings on its SATC as to Count I or, alternatively, as to Count II of its Second Amended Complaint, and Essex's Cross-Motion for Summary Judgment as to Counts I through III of Will County's Second Amended Complaint.
The factual and procedural history of this case has been recited at length at various stages of litigation since 2004. Fox and his wife, Melissa Fox, originally filed this action on November 14, 2004, alleging claims against Will County, detectives employed by Will County, and other parties not named in this action, pursuant to 42 U.S.C. § 1983. The Foxes' claims related to law enforcement activities conducted by the Detectives in connection with the investigation, arrest, and prosecution of Fox, ending in October 2004. The Foxes alleged that the Detectives committed various and wrongful tortuous acts in the conduct of law enforcement activities and alleged violations of Fox's civil rights.
During the relevant period of the underlying litigation, Will County had Law Enforcement Liability insurance coverage with Essex (the "Essex Policy"), American Alternative Insurance Corporation ("AAIC"), and St. Paul Fire and Marine Insurance Company ("St. Paul"). The instant dispute concerns Will County's Second Amended Complaint against Essex for reimbursement of certain amounts paid by Will County to Plaintiffs.
On September 21, 2011, Will County filed the SATC; Essex answered on September 28, 2011. The following facts are taken from the parties' admitted allegations in the SATC and the statements of undisputed material facts submitted in accordance with Local Rule 56.1.1
Will County is a municipal corporation organized and existing under the laws of the State of Illinois. (Essex's 56.1(a)(3) ¶ 1.) Essex is a Delaware corporation with its principal place of business in Virginia. (Id. ¶ 2.) AAIC is a Delaware corporation with its principal place of business in New Jersey. (Id. ¶ 3.) St. Paul is a Minnesota corporation with its principal place of business in Minnesota. (Id. ¶ 4.) The amount in controversy exceeds the jurisdictional threshold of $75,000.00. (Id. ¶ 5.) The Court has diversity jurisdiction over the present action pursuant to 28 U.S.C. § 1332 and jurisdiction to render a declaratory judgment pursuant to 28 U.S.C. § 2201. (Id. ¶ 6.)
On December 20, 2007, pursuant to a jury verdict, judgment was entered in favor of the Foxes. (Id. ¶ 11.) On June 11, 2008, the Court entered an Agreed Order ("Agreed Order No. 1"), awarding the Foxes $1.5 million in "Attorneys' Fees and Related Non-Taxable Expenses for all Plaintiff Kevin Fox's 42 U.S.C. §1983 claims through the dateof [the] Order"[.] (Id. ¶ 12.) The award was expressly contingent on Fox prevailing on post-trial motions and any appeal taken related to his 42 U.S.C. § 1983 claims, and enforcement of the order was stayed. (Id.)
On September 25, 2008, St. Paul paid its policy limits of $1 million in settlement of certain of the Foxes' claims. (Id. ¶ 13.) On October 28, 2008, Will County and others filed a timely Notice of Appeal to the Seventh Circuit Court of Appeals with respect to the underlying adverse judgment, including the 42 U.S.C. § 1983 claims. (Id. ¶ 14.) On April 7, 2010, the Seventh Circuit affirmed in part and reversed and vacated in part this Court's judgment. (Id. ¶ 15.) Following the Foxes' acceptance of remitters, the compensatory damages award to the Foxes was comprised of the following amounts: (1) as to Kevin Fox: $16,000.00 for false arrest, $600,000.00 for malicious prosecution, and $1.4 million for intentional infliction of emotional distress; (2) as to Melissa Fox: $2.6 million for loss of consortium and $150,000.00 for intentional infliction of emotional distress. (Id. ¶ 16.)
On June 18, 2010, the Foxes filed a Motion for Order Commanding Will County to Pay Judgment against Will County, seeking, among other things, the $1.5 million in attorneys' fees incurred by the Foxes through June 8, 2008, pursuant to Agreed Order No. 1, as well as attorneys' fees incurred after June 8, 2008, costs incurred in the District Court, as well as interest on the attorneys' fees and court costs. (Id.) The Foxes argued that they were entitled to collect additional attorneys' fees under the Civil Rights Act as the "prevailing party" in the litigation. (Id.)
On June 25, 2010, counsel for Essex sent a letter to Will County, stating that "Essex is not responsible for and will not pay plaintiffs' attorneys' fees or other costsincurred to date which may be awarded by the Court." (Id. ¶ 18.) On July 1, 2010, the Court entered an Agreed Order for Partial Enforcement of Judgment ("Agreed Order No. 2"), which included, among other things, the Foxes' attorneys' fees in the amount of $1.5 million through June 8, 2008, as well as district court costs plus interest on those costs, totaling $86,341.20. (Id. ¶ 19.) A meeting was held in July 2010, between counsel for Will County, Essex, AAIC, St. Paul and others, for the purpose of discussing the parties' respective positions relative to Agreed Order No. 2. (Id. ¶ 20.) At that meeting, counsel for AAIC expressed AAIC's proposal for its payment of certain aspects of Agreed Order No. 2. (Id.)
On or about August 2, 2010, AAIC's counsel forwarded an email, along with a proposed Notice of Partial Satisfaction of Judgment, to Will County's counsel that also reiterated AAIC's position and outlined AAIC's proposed payment. (Id. ¶ 21.) If the proposed notice was "OK" with Will County's counsel, AAIC instructed Will County's counsel to forward it to the Foxes' counsel for confirmation that she would execute same upon receipt of AAIC's corresponding payment. (Id.)
AAIC thereafter made its payment to the Foxes on behalf of Will County, and the Foxes accepted it as partial satisfaction of certain defined portions of the judgment. (Id. ¶ 23.) On August 23, 2010, the Foxes filed an Amended Motion for Order Commanding Will County to Pay Judgment, acknowledging that AAIC paid $5,492,539.55 of the judgment on Will County's behalf and agreeing that the amount included, among other things, the compensatory damages, as well as $234,000.00 of the attorneys' fees incurred by the Foxes through June 8, 2008, and all post-judgment interest on those fees. (Id. ¶ 25.)
On September 2, 2010, the Court entered an Agreed Order for Attorneys' Fees ("Agreed Order No. 3"), which awarded the Foxes attorneys' fees and related nontaxable expenses in the amount of $507,824.60 for the time period between June 8, 2008 through April 7, 2010. (Id. ¶ 26.) As of September 2, 2010, all amounts awarded to the Foxes had been paid by AAIC with the exception of the following: $1,266,000.00 in attorneys' fees through June 8, 2008; $82,908.01 in District Court costs; $3,433.19 in post-judgment interest on the district court costs; and $507,824.60 in attorneys' fees after June 8, 2008, coming to a sum total of $1,860,165.80. The Foxes did not pursue Will County for any additional interest associated with attorneys' fees, which were awarded to the Foxes but which were not paid by AAIC. (Id. ¶ 28.) Instead, on or about January 3, 2011, Will County caused $1,860,165.80 to be deposited into a client trust account held by the Foxes' counsel, Kathleen T. Zellner & Associates, in full satisfaction of the outstanding balance of the amount due and owing under Agreed Orders 1 -3. (Id.) On February 23, 2011, the Court entered an Agreed Order for Complete Satisfaction of Judgment of Compensatory Damages, Costs, Attorneys' Fees and Interest consistent with Will County's deposit of funds on January 3, 2011. (Id. ¶ 29.)
Will County seeks recovery of this amount - $1,860,165.80 - pursuant to the Essex Policy in its SATC. Essex disputes that it is obligated under the policy to pay any of this amount. Essex filed a Counterclaim against Will County, seeking a judicial declaration as to its rights and obligations in this matter and now seeks summary judgment thereon.
St. Paul issued Policy No. GP06301134 to Will County for the policy period from December 1, 2003 to December 1, 2004 (the "St. Paul Policy"). The St. Paul Policy includes Law Enforcement Liability ("LEL") coverage with a policy limit of $1,000,000 per occurrence, subject to a $250,000 self-insured retention. (Id. ¶ 30.)
The St. Paul Policy includes a Law Enforcement Liability Protection endorsement, which states in part:
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