SELECTIVE INS. CO. OF S. CAROLINA v. City of Paris

• Court: U.S. District Court — Central District of Illinois
• Citation: Selective Ins. Co. of South Carolina v. City of Paris, 681 F. Supp.2d 975 (C.D. Ill. 2010)
• Decision Date: 27 January 2010
• Docket Number: Case No. 07-CV-2224.
• Parties: SELECTIVE INSURANCE COMPANY OF SOUTH CAROLINA, Plaintiff, v. CITY OF PARIS, Gene Ray, James Parrish, and Gordon Randy Steidl, Herbert Whitlock, Defendants. Allianz Global Risks U.S. Insurance Company, Plaintiff-Intervenor v. City of Paris, Gene Ray, James Parris, and Gordon Randy Steidl, Herbert Whitlock, Defendants. Western World Insurance Group, Plaintiff, v. Selective Insurance Company of South Carolina and Monticello Insurance Company n/k/a Alliance Global U.S., Defendants.

681 F. Supp.2d 975

SELECTIVE INSURANCE COMPANY OF SOUTH CAROLINA, Plaintiff, v. CITY OF PARIS, Gene Ray, James Parrish, and Gordon Randy Steidl, Herbert Whitlock, Defendants.

Allianz Global Risks U.S. Insurance Company, Plaintiff-Intervenor v. City of Paris, Gene Ray, James Parris, and Gordon Randy Steidl, Herbert Whitlock, Defendants.

Western World Insurance Group, Plaintiff, v. Selective Insurance Company of South Carolina and Monticello Insurance Company n/k/a Alliance Global U.S., Defendants.

Case No. 07-CV-2224.

United States District Court, C.D. Illinois, Urbana Division.

January 27, 2010.

Nancy Katherine Tordai, Hanson, Peters, Nye, Barrington, IL, for Plaintiff.

Gregory C. Ray, Craig & Craig, Mattoon, IL, J. Matthew Anderson, Webber & Thies, Urbana, IL, for Defendants, City of Paris, Ray and Parrish.

Janis M. Susler, Peoples Law Office, Chicago, IL, for Defendant Steidl.

Carrie A. Hall, Ronald Hanley Balson, Michael, Best & Friedrich, LLC, Chicago, IL, for Defendant Whitlock.

OPINION

MICHAEL P. McCUSKEY, Chief Judge.

This case comes before the court for ruling on (1) the Motion for Summary Judgment (# 66) filed by Plaintiff Selective Insurance Company of South Carolina (Selective); (2) the Motion for Summary Judgment (# 84) filed by Plaintiff Western World Insurance Group (Western); and (3) the Motion for Summary Judgment (# 94) filed by Plaintiff-Intervenor Allianz Global Risks U.S. Insurance Company (Allianz). For the following reasons, Selective's Motion for Summary Judgment (# 66) and Allianz's Motion for Summary Judgment (# 94) are both GRANTED in full. Western's Motion for Summary Judgment (# 84) is DENIED.

FACTUAL BACKGROUND

This case arises out of the arrest, prosecution, conviction and imprisonment of Gordon Randy Steidl and Herbert Whitlock for the 1986 Edgar County murders of Dyke and Karen Rhoads. Steidl and Whitlock were tried and convicted in 1987. On June 17, 2003, this court granted Steidl's petition for a writ of habeas corpus under 28 U.S.C. § 2254 and gave the State 120 days to release or retry Steidl. Steidl v. Walls, 267 F.Supp.2d 919 (C.D.Ill.2003). The State of Illinois decided not to retry Steidl. Steidl was released from custody in 2004. Whitlock was released from custody in January 2008, based upon a decision by the Illinois Appellate Court. People v. Whitlock, No. 4-05-0958 (Ill.App.Ct. 2007).

In his complaint, Steidl alleged a claim under 42 U.S.C. § 1983 for deprivation of his right to a fair trial and for wrongful conviction. Steidl also alleged a § 1983 Monell claim against the City of Paris.¹ Steidl also alleged a state claim for false imprisonment, alleging that he was imprisoned without probable cause by Ray, Parris, Eckerty, and McFatridge. In this claim, Steidl alleged that the acts of the Defendants were willful and wanton. In the facts section of the complaint, Steidl alleged that, in March 2004, Illinois Attorney General Lisa Madigan announced that she would not appeal this court's order vacating Steidl's conviction and allowing the State 120 days to retry him. Steidl alleged that, at that time, McFatridge made additional false public statements, reciting false evidence in an effort to influence prosecutors to hold Steidl in custody and retry him. Steidl alleged that he was held in custody until May 28, 2004, in part because of McFatridge's public statements.

Steidl also alleged a state law claim for malicious prosecution. He alleged that Ray, Parris, McFatridge, and Eckerty initiated a malicious prosecution without probable cause against him and continued that prosecution without probable cause. Steidl alleged that the prosecution was ultimately terminated in his favor. Steidl alleged that the actions were done in a willful and wanton manner.²

On April 8, 2009, Whitlock filed an amended complaint against the same defendants. The case is before Senior U.S. District Court Judge Harold A. Baker as 08-CV-2055, and contains many of the same allegations, including false imprisonment and malicious prosecution.

The Insurance Companies and Their Policies

There are three insurance companies involved in this case that provided coverage to the City of Paris between the 1986 arrests of Steidl and Whitlock and their eventual exoneration and release in 2004 and 2008. The companies provided consecutive polices: Western from 1985 to 1996, Allianz³ from 1996 to 1999, and Selective from 1999 to 2007.

The City of Paris was insured by Western during the time Steidl and Whitlock were arrested and prosecuted. Western's policy includes a provision a provision in its Law Enforcement Officers Liability insurance policy which stated, "the insurance under this policy shall be excess insurance over any other valid and collectible insurance available to the insured, either as an insured under another policy or otherwise." Because of this provision, Western has argued that it is an "excess" insurer to Selective's and Allianz's primary insurance.

The policy issued by Selective provided several different types of coverage to the City of Paris. Only the Police Professional Liability Coverage and Umbrella Liability Coverage are at issue in this litigation. The Police Professional Liability coverage provided coverage for "personal injury" arising out of "false arrest, detention, or imprisonment" and "malicious prosecution." The policy stated that the insurance "applies to `personal injury' only if caused by an offense: committed in the `coverage territory' during the policy period; and arising out of the conduct of your law enforcement activities." Selective's Umbrella Policy provided that it was not triggered unless coverage was afforded by the Underlying Police Policy. The Police Professional Liability policies issued by Allianz were similar to the policy issued by Selective and stated that coverage was provided for occurrences during the policy period.

PROCEDURAL HISTORY

On December 5, 2007, Plaintiff Selective filed its Complaint for Declaratory Judgment (# 1) against Defendants City of Paris, Ray, Parrish, and Steidl seeking a declaratory judgment from this court that it has no duty to defend Defendants City of Paris, Ray, and Parrish against two 42 U.S.C. § 1983 lawsuits brought by Steidl and Herbert Whitlock. Selective argued that the occurrences alleged in the underlying litigation occurred outside of Selective's policy period. On March 18, 2009, Selective filed a Motion for Summary Judgment (# 66). Defendants filed their Response (# 81) to the summary judgment motion on May 13, 2009.

Allianz filed as Plaintiff-Intervenor a Motion to Intervene (#31) on June 6, 2008, noting that Defendant City of Paris tendered the Steidl and Whitlock action to Allianz for defense and indemnity, and that Allianz, like Selective, had been providing a defense to the City of Paris defendants subject to a full reservation of rights. Allianz claimed that the City of Paris was seeking coverage under both Selective and Allianz policies for liability arising out of the same operative facts and that, given the substantial similarity in language between the Selective and Allianz police policies, Allianz's proposed claim for declaratory relief involved common questions of law and fact with Selective's amended complaint for declaratory judgment. Allianz was allowed to intervene and, on August 17, 2009, filed its own Motion for Summary Judgment (# 94), asking this court to grant it summary judgment and find that it has no duty to defend or indemnify Defendants because, like Selective, the occurrences alleged in the Steidl and Whitlock lawsuits that gave rise to the litigation occurred outside of Allianz's policy period.

On May 27, 2008, Plaintiff Western filed a Complaint for Declaratory Judgment (# 1) against Selective in Case No. 08-CV-2118, seeking a declaratory judgment pursuant to 28 U.S.C. § 2201 that Western is an excess carrier to Selective and Allianz and has no current obligation to defend the City of Paris, Parrish, or Ray in the Steidl and Whitlock lawsuits. On August 14, 2008, Magistrate Judge David G. Bernthal consolidated 08-CV-2118 with the instant case, 07-CV-2224. Western filed a Cross Motion for Summary Judgment (# 84) on May 27, 2009, asking that this court declare that Western is an excess carrier to the primary carriers Selective and Allianz and thus has no current obligation to defend the City of Paris, Parrish, or Ray under its policies of insurance in the underlying litigation.

ANALYSIS

STANDARD OF REVIEW

Under Rule 56 of the Federal Rules of Civil Procedure, a party "may move, with or without supporting affidavits, for summary judgment on all or part of the claim." Fed.R.Civ.P. 56(a), (b). Summary judgment is appropriate "if the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c); see also Celotex Corp. v. Catrett, 477 U.S. 317, 322-23, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986).

Selective's Summary Judgment Motion

Selective argues that it only has a duty to defend or indemnify for occurrences during its policy period of 1999 to 2007. Since the arrest, conviction, and imprisonment of Steidl and Whitlock occurred in 1986 and 1987, Selective's policy period is not implicated. Thus, there is no duty to defend or indemnify Defendants. Defendants counter that the allegations in the underlying litigation allege multiple actions by McFatridge from 1986 all the way through 2004, including actions that occurred during the 1999-2007 policy period. Defendants charge that on at least two separate occasions during the Selective policy period, affirmative actions were taken by McFatridge, as an agent of the City of Paris, to combat the release of Steidl and Whitlock and thereby increasing their likelihood of remaining incarcerated.

Western concedes that only the alleged torts of malicious prosecution and false...