Sanders v. Ill. Union Ins. Co.
| Decision Date | 21 November 2019 |
| Docket Number | Docket No. 124565 |
| Citation | 157 N.E.3d 463,441 Ill.Dec. 542,2019 IL 124565 |
| Parties | Rodell SANDERS et al., Appellees, v. ILLINOIS UNION INSURANCE COMPANY et al., Appellants. |
| Court | Illinois Supreme Court |
Christopher A. Wadley, of Walker Wilcox Matousek LLP, of Chicago, for appellant Illinois Union Insurance Company.
Agelo L. Reppas and Adam H. Fleischer, of BatesCarey LLP, of Chicago, for appellant Starr Indemnity & Liability Company.
Michael Kanovitz, Russell Ainsworth, and Ruth Brown, of Loevy & Loevy, of Chicago, for appellee Rodell Sanders.
¶ 1 In 1994, based on doctored evidence from the City of Chicago Heights Police Department, Rodell Sanders was charged with murder, attempted murder, and armed robbery. Sanders was wrongfully convicted and imprisoned for approximately 20 years before being exonerated in 2014. From November 2011 to November 2014, Chicago Heights obtained primary liability insurance from Illinois Union Insurance Company (Illinois Union) and excess liability insurance from Starr Indemnity & Liability Company (Starr). The primary insurance policy indemnified Chicago Heights for, among other things, damages arising out of the "offense" of "malicious prosecution." At issue is whether the offense of malicious prosecution occurred during the policy period, thereby triggering the insurers' obligation to provide coverage. Based on the policy's terms, we conclude that coverage was triggered when Sanders was prosecuted in 1994.
¶ 3 On December 15, 1993, at around 2 a.m., two people were seated inside of a parked car when a group of men attacked them. The offenders robbed and shot both victims. One victim died. The survivor later provided Chicago Heights police officers with a description of two of the assailants. Officers arrested Sanders in January 1994. Sanders did not match either physical description provided by the surviving victim, and he had an alibi that was confirmed by alibi witnesses. Nonetheless, officers manipulated the evidence to ensure his conviction.1
¶ 4 For example, after the surviving victim described one of the assailants as tall and skinny, officers altered Sanders's photograph to make him appear taller and thinner. Then, officers included that image in a photographic lineup so that the surviving victim would identify him as one of the culprits. According to Sanders, officers engaged in this conduct because they bore a grudge against him and sought to protect the real murderer, who was an important witness for the prosecution in other cases. Upon his conviction in January 1995, Sanders was sentenced to 80 years' imprisonment.
¶ 5 Sanders filed a postconviction petition, and in January 2011 the Cook County circuit court overturned the conviction and vacated his sentence. The appellate court affirmed its judgment in May 2012. Meanwhile, at some point in 2012, Chicago Heights provided Illinois Union and Starr with a notice of claim based on their policies from November 1, 2011, through November 1, 2014.2
¶ 6 The prosecution retried Sanders in August 2013, asking the jury to convict him on an additional theory of accountability. The second trial resulted in a mistrial. The prosecution retried Sanders again in July 2014, and the jury acquitted him. Sanders had filed a federal civil rights action against Chicago Heights in January 2013. After the jury acquitted him, Sanders amended the civil rights complaint to add claims of malicious prosecution.
¶ 7 Illinois Union responded to Chicago Heights' notice of claim in December 2014. At that time, it notified the city that it was declining to provide coverage because no covered events occurred during the policy periods. One year later, Starr similarly sent a declination, claiming that the malicious prosecution did not fall within the policy periods. Chicago Heights asked the insurers to reconsider their decisions, arguing that the date of Sanders's exoneration and his trials in August 2013 and July 2014 were discrete dates of loss.
¶ 8 The "general liability coverage part" of the insurance policy provides:
"The Insurer will indemnify the Insured for Damages and Claim Expenses in excess of the Retained Limit for which the Insured becomes legally obligated to pay because of a Claim first arising out of an Occurrence happening during the Policy Period in the Coverage Territory for Bodily Injury , Personal Injury , Advertising Injury , or Property Damage taking place during the Policy Period ." (Emphases in original).
"With respect to Personal Injury ," occurrence was defined as "only those offenses specified in the Personal Injury Definition." (Emphases in original).
¶ 9 "Personal injury " was defined as "one or more of the following offenses * * * [f]alse arrest, false imprisonment, wrongful detention or malicious prosecution * * * wrongful eviction from, wrongful entry into, or invasion of the right of private occupancy of a room, dwelling or premises that a person occupies by or on behalf of the owner, landlord or lessor." (Emphasis in original). The policy provided that "[a]ll damages arising out of substantially the same Personal Injury regardless of frequency, repetition, the number or kind of offenses, or number of claimants, will be considered as arising out of one Occurrence ." (Emphases in original).
¶ 11 In February 2016, Chicago Heights filed a complaint for declaratory judgment, legal relief, and monetary damages against Illinois Union and Starr. The city sought a declaration that it was entitled to coverage under the insurance policy, thereby requiring the insurers to indemnify it for attorney fees and costs that were paid in excess of the retained limit. Without waiving its right to reassert claims under earlier policies, Chicago Heights focused its claims for coverage on the policies from 2012-13 and 2013-14.
¶ 12 In September 2016, a consent judgment was entered in Sanders's favor in the federal civil rights action for $15 million. Chicago Heights agreed to contribute $2 million, and United National Insurance Company (Chicago Heights' insurer from 1994) agreed to contribute $3 million toward the judgment. Additionally, Chicago Heights assigned its rights against Illinois Union and Starr to Sanders in exchange for his agreement not to seek the remaining $10 million from the city.
¶ 13 Thereafter, Chicago Heights moved the circuit court to voluntarily dismiss its declaratory judgment action without prejudice. In late October 2016, the circuit court granted the city's dismissal motion, rendering all pending motions and outstanding discovery moot.
¶ 14 In November 2016, under section 2-1008(a) of the Code of Civil Procedure ( 735 ILCS 5/2-1008(a) (West 2016)), the circuit court substituted Sanders as a plaintiff in this action. Based on the policy provisions quoted above, Sanders argued that the insurers' denial of coverage to Chicago Heights was "wrongful, unreasonable, and vexatious." Because the city had assigned its rights to him, Sanders asserted that Illinois Union and Starr were required to pay him at least the $10 million that was outstanding from the settlement.
¶ 15 The insurers filed an amended motion to dismiss the complaint with prejudice. Illinois Union and Starr noted that Sanders "was maliciously prosecuted in 1994 resulting in his conviction and incarceration for a crime he did not commit." In their view, his injury predated the effective dates of their policies. Illinois Union and Starr therefore argued that they were neither required to provide coverage for Chicago Heights nor obligated to contribute to its settlement with Sanders.
¶ 16 In January 2018, the circuit court granted the insurers' amended motion to dismiss. The court observed that, under the policy, Illinois Union and Starr had to provide coverage to Chicago Heights for damages for personal injury first arising out of an occurrence during the policy period. The court determined that the policy focused on a requisite act and injury during the policy period, rather than the accrual of a completed cause of action. The court acknowledged that, to prevail on a tort claim of malicious prosecution, a plaintiff must establish, among other things, that the prior proceeding terminated in his favor. But it also noted that the vast majority of courts to consider the issue have ruled that the filing of the underlying malicious suit was the occurrence causing personal injury under an insurance policy. Sanders and Chicago Heights appealed.
¶ 18 On appeal, a split panel reversed. The appellate court majority confirmed that the dispute centered on when the "offense" of malicious prosecution was deemed to occur under the policy. 2019 IL App (1st) 180158, ¶ 17, 430 Ill.Dec. 53, 125 N.E.3d 1071. Offense was not defined in the policy; therefore, relying on Black's Law Dictionary (10th ed. 2014), the majority concluded that the term referred "to the legal cause of action that arises out of wrongful conduct, not just the wrongful conduct itself." 2019 IL App (1st) 180158, ¶ 18, 430 Ill.Dec. 53, 125 N.E.3d 1071. Further, it observed that the list of offenses contained in the policy referred exclusively to legal causes of action by their proper legal names, rather than to the underlying wrongful acts. Id. ¶ 19. Accordingly, the majority ruled that the plain and ordinary meaning of the term offense, as used in relation to the phrase malicious prosecution, referred to the completed cause of action. Id.
¶ 19 The dissent argued that, "[u]nder the clear and unambiguous language of the Illinois Union/Starr policies, the malicious prosecution of Sanders happened in 1994 when he was wrongfully charged with murder; it did not happen in either 2013, when he was retried, or in 2014, when after his third trial, he was acquitted." Id. ¶ 37 (Mason, P.J., dissenting). In the dissent's view, "an ‘offense’ is the wrongful conduct or unlawful act," and...
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