Sanders v. Ill. Union Ins. Co.

• Decision Date: 15 January 2019
• Docket Number: No. 1-18-0158,1-18-0158
• Citation: 2019 IL App (1st) 180158,125 N.E.3d 1071,430 Ill.Dec. 53
• Parties: Rodell SANDERS and the City of Chicago Heights, Plaintiffs-Appellants, v. ILLINOIS UNION INSURANCE COMPANY and Starr Indemnity & Liability Company, Defendants-Appellees.
• Court: United States Appellate Court of Illinois

2019 IL App (1st) 180158

125 N.E.3d 1071

430 Ill.Dec. 53

Rodell SANDERS and the City of Chicago Heights, Plaintiffs-Appellants,

v.ILLINOIS UNION INSURANCE COMPANY and Starr Indemnity & Liability Company, Defendants-Appellees.

No. 1-18-0158

Appellate Court of Illinois, First District, SECOND DIVISION.

January 15, 2019

JUSTICE PUCINSKI delivered the judgment of the court, with opinion.

¶ 1 Plaintiffs, Rodell Sanders and City of Chicago Heights (City), appeal from the trial court's dismissal with prejudice of their second amended complaint pursuant to section 2-619(a)(9) of the Code of Civil Procedure (Code) ( 735 ILCS 5/2-619(a)(9) (West 2016) ). On appeal, plaintiffs argue that the trial court erred in concluding that the insurance policies issued by defendants, Illinois Union Insurance Company (Illinois Union) and Starr Indemnity & Liability Company (Starr), did not provide coverage for Sanders's underlying claim of malicious prosecution against the City ( Sanders suit). For the reasons that follow, we reverse and remand.

¶ 2 BACKGROUND

¶ 3 In the Sanders suit, filed in the federal court, Sanders brought, among others, a claim of malicious prosecution against the City and some of its employees. In it, Sanders alleged that members of the City's police department manipulated and coerced false witness identifications of Sanders as being involved in a December 1993 shooting. Sanders also alleged that members of the City's police department made false statements to prosecutors to encourage his prosecution, fabricated evidence, and withheld exculpatory information in connection with his prosecution for the shooting. As a result, Sanders alleged, he was wrongly convicted of murder, attempt (murder), and armed robbery arising out of that shooting

¶ 4 The Sanders suit ultimately settled for $15 million. Under the terms of the settlement, the City agreed to pay $2 million of the settlement and United National Insurance Company, the City's insurer at the time Sanders was initially charged with the crimes, agreed to pay $3 million. The City also assigned to Sanders its rights to pursue recovery from defendants, the City's other insurers.

¶ 5 Pursuant to that assignment, Sanders became a plaintiff in the present action, joined by the City. In their second amended complaint in the present action, plaintiffs alleged that Sanders was sentenced to 55 years' imprisonment on the murder conviction, to run consecutively to his 25-year sentence on the attempt (murder) conviction and concurrently with his 20-year sentence on the armed robbery conviction. In January 2011, Sanders's convictions were vacated and that ruling was affirmed by the Illinois Appellate Court in May 2012. People v. Sanders , 2012 IL App (1st) 110373-U, 2012 WL 6955490. In 2013, Sanders was retried, which resulted in a mistrial. He was retried again in July 2014, at which time he was finally acquitted.

¶ 6 The second amended complaint in the present action further alleged that Illinois Union issued primary insurance policies to the City that were collectively in effect for the period of November 1, 2010, through November 1, 2014. Starr issued excess insurance policies to the City that collectively were in effect from November 1, 2011, through November 1, 2014.¹ Despite the City's repeated demands for coverage for the Sanders suit, Illinois Union and Starr denied coverage and refused to contribute to the settlement of the Sanders suit. As a result, plaintiffs alleged claims for breach of contract and improper claims practices and sought a declaratory judgment that defendants owed coverage under their respective policies for the claims made in the Sanders suit.

¶ 7 Defendants filed a motion to dismiss the second amended complaint pursuant to section 2-619(a)(9) of the Code ( 735 ILCS 5/2-619(a)(9) (West 2016) ). In it, they argued that their policies did not provide coverage for the claims in the Sanders suit because the trigger for coverage under the policies was the filing of the criminal charges against Sanders, an act that took place before defendants' policies went into effect. Defendants further argued that the retrials of Sanders did not qualify as additional coverage triggers because they were simply continuations of the original 1994 prosecution. In response, plaintiffs argued that because defendants' policies provided coverage for the "offense" of malicious prosecution, the coverage trigger was not the filing of the criminal charges against Sanders but was, instead, the completed tort of malicious prosecution. Here, all of the elements of Sanders's claim for malicious prosecution were alleged to have been met upon his exoneration in 2014. The plaintiffs also argued that, even if coverage were triggered by the wrongful conduct of the City's police officers and not Sanders's exoneration, then the retrials of Sanders, which occurred while defendants' policies were in effect, were additional triggers for coverage.

¶ 8 After a hearing on the matter, the trial court issued its memorandum opinion and order, granting defendants' motion to dismiss. In doing so, the trial court found that the language of the policies, in conjunction with existing case law, dictated the conclusion that coverage for a malicious prosecution claim under defendants' policies was triggered by the initiation of Sanders's prosecution, not his subsequent exoneration. The trial court also rejected plaintiffs' argument that the retrials of Sanders were additional triggers of coverage, instead concluding that they were merely a continuation of the original prosecution.

¶ 9 Following the trial court's dismissal of the second amended complaint, plaintiffs filed this timely appeal.

¶ 10 ANALYSIS

¶ 11 On appeal, plaintiffs argue that the trial court erred in dismissing the second amended complaint on the basis that the coverage trigger—the filing of the criminal charges against Sanders—occurred outside the effective dates of defendants' policies. Plaintiffs argue that the language of the policies requires a conclusion that coverage was not triggered until the tort of malicious prosecution was complete, i.e. , Sanders was exonerated, which occurred while defendants' policies were in effect. Alternatively, plaintiffs argue that even if it was the wrongful conduct of the City, and not the satisfaction of the elements of the malicious prosecution, that triggered coverage under defendants' policies, then Sanders's retrials during the effective dates of defendants' policies triggered coverage. For the reasons that follow, we conclude that coverage under the policies was triggered upon the completion of the tort of malicious prosecution, i.e. , Sanders's exoneration, which occurred while the policies were in effect. Accordingly, the trial court's dismissal of plaintiffs' second amended complaint must be reversed and the matter remanded for further proceedings.

¶ 12 Defendants' motion to dismiss was brought pursuant to section 2-619(a)(9) of the Code ( 735 ILCS 5/2-619(a)(9) (West 2016) ), which provides for the dismissal of a complaint on the basis that "the claim asserted against defendant is barred by other affirmative matter avoiding the legal effect of or defeating the claim." In making such a motion, the movant admits the legal sufficiency of the complaint but asserts that an affirmative defense or some other matter defeats the claims contained therein. Van Meter v. Darien Park District , 207 Ill. 2d 359, 367, 278 Ill.Dec. 555, 799 N.E.2d 273 (2003). We review dismissals under section 2-619(a)(9) de novo . Id. at 368, 278 Ill.Dec. 555, 799 N.E.2d 273.

¶ 13 The propriety of the trial court's dismissal of plaintiffs' second amended complaint turns on the interpretation of the insurance policies issued by defendants, namely, whether coverage under those policies is triggered by the initiation of the alleged malicious prosecution or the exoneration of Sanders. Although plaintiffs alleged in their second amended complaint that Illinois Union's policies covered the collective period of November 1, 2010, through November 1, 2014, and Starr's policies covered a collective period of November 1, 2011, through November 1, 2014, plaintiffs' focus on appeal is on defendants' policies covering the period of November 1, 2012, through November 1, 2014, the policies in effect during Sanders's retrials. Accordingly, our focus will be the same.

¶ 14 Our supreme court has summarized the principles governing our interpretation of insurance policies:

"Because an insurance policy is a contract, the rules applicable to contract interpretation govern the interpretation of an insurance policy. [Citations.] Our primary function is to ascertain and give effect to the intention of the parties, as expressed in the policy language. [Citations.] If the language is unambiguous, the provision will be applied as written, unless it contravenes public policy. [Citations.] The rule that policy provisions limiting an insurer's liability will be construed liberally in favor of coverage only applies where the provision is ambiguous. [Citations.] A policy provision is not rendered ambiguous simply because the parties disagree as to its meaning. [Citation.] Rather, an ambiguity will be found where the policy language is susceptible to more than one reasonable interpretation. [Citations.] While we will not strain to find an ambiguity where none exists [citation], neither will we adopt an interpretation which rests on ‘gossamer distinctions’ that the average person, for whom the policy is written, cannot be expected to understand [citation]." Founders Insurance Co. v. Munoz , 237 Ill. 2d 424, 433, 341 Ill.Dec. 485, 930 N.E.2d 999 (2010).

¶ 15 In its policies, Illinois Union agreed to the following:

"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

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