Insurance Coverage Based on Occurrence

October 18, 2017 / Writing and Speaking

By Don R. Sampen, published, Chicago Daily Law Bulletin
[October 3, 2017]

The 2nd District Appellate Court recently held that the time of occurrence, not the time of accrual of a cause of action, triggered coverage for claims based on the withholding of evidence and forced confession.

The insurers, St. Paul Fire and Marine Insurance Co. and Travelers Indemnity Co., were represented by Litchfield Cavo LLP and others. Scariano, Himes and Petrarca Chtd. represented the insured, the city of Waukegan and some of its former police officers. The case is St. Paul Fire & Marine Insurance Co. v. City of Waukegan, 2017 IL App (2d) 160381 (Aug. 1, 2017).

The claimant in the underlying case, Juan Rivera, alleged that he had been wrongfully convicted for the rape and murder of an 11-year-old girl in 1992. Rivera was found guilty on three occasions, in 1993, 1998 and 2009. Each time his conviction was reversed based on trial error, DNA evidence or other reasons.

In 2012, Rivera filed a federal wrongful conviction complaint against the city of Waukegan, its police officers and others. His complaint included claims for malicious prosecution, a Brady violation based on the withholding of exculpatory evidence and a Fifth Amendment violation based on a coerced conviction. The city tendered to its insurers.

The insurers here provided the city with a series of one-year primary and umbrella law enforcement liability policies covering the period from November 2006 to November 2011.

In two earlier cases the 2nd District held that these policies, and/or similar policies of other insurers, were not triggered by Rivera’s malicious prosecution allegations, even though the policies were in effect during his second or third trial. See Indian Harbor Insurance Co. v. City of Waukegan, 2015 IL App (2d) 140293; St. Paul Fire & Marine Insurance Co. v. City of Zion, 2014 IL App (2d) 131312.

The court in the earlier decisions followed what it referred to as the “majority” rule and held that the commencement of a malicious prosecution is the event that triggers insurance coverage. It further held that all the acts and omissions of the defendants after the date Rivera was initially charged in 1992 were nothing more than a continuation of the same alleged harm.

Since the policies involved in the earlier cases were not in effect at the time of the initial prosecution, the court’s earlier decisions also held that the policies provided no coverage for malicious prosecution and certain related claims. In so holding, the court rejected a contrary result reached in National Casualty Co. v. McFatridge, 604 F.3d 335 (7th Cir. 2010).

In the case here, the city sought coverage from two of its insurers, not for the malicious prosecution claim, which already had been resolved, but for the Brady and Fifth Amendment claims.

It urged the 2nd District to abandon the reasoning of Indian Harbor and City of Zion and to look to McFatridge and two federal district court decisions — both titled Westport Insurance Corp. v. City of Waukegan, 75 F.Supp.3d 821 (N.D. Ill. 2014), and 157 F.Supp.3d 769 (N.D. Ill. 2016) — in finding coverage for these two additional claims.

The trial court entered summary judgment for the insurers, and the city took this appeal.

Brady claim

In an opinion by Justice Joseph E. Birkett, the 2nd District affirmed. He initially discussed the doctrine of stare decisis as a basis for the court’s reluctance to abandon its earlier decisions. He further noted that Indian Harbor was based in part on the nature of an “occurrence,” for which the policies provide coverage, as defined by the Supreme Court in Nicor Inc. v. Associated Electronics & Gas Insurance Services Ltd., 223 Ill.2d 407 (2006).

In Nicor, the court established that where a loss involves a single cause, it gives rise to a single occurrence. In Indian Harbor, the 2nd District applied that approach and found that the single cause of Rivera’s alleged Brady violations involving another insurer’s policy was an unbroken and uninterrupted continuum of events.

The city here nonetheless claimed that the slate was “wiped clean” after the first two reversals of Rivera’s convictions, so that the violations claimed in connection with the third trial in 2009 could not be deemed a continuation of his previous convictions.

Birkett disagreed, finding that the second and third trials were continuations of the wrongful prosecution, which increased Rivera’s damages but were not new injuries.

Birkett also observed that the alleged Brady violation, i.e., the concealing of evidence, took place in 1994, well before the effective dates of the policies involved here. He acknowledged that, while the Brady claim did not ripen until the exculpatory material was withheld and did not accrue until Rivera was acquitted, the law enforcement activity that caused the injury nonetheless occurred well before then.

Fifth Amendment claim

Birkett applied a similar analysis to the Fifth Amendment claim based on the forced confession. He noted that the city’s argument, and the two Westport decisions on which it was based, focused on the accrual date of a Fifth Amendment claim, instead of on the misconduct or occurrence. Here, the misconduct involving the confession took place in 1992 when the confession was forced, not in 2009, during the third trial, or in 2012 when Rivera was exonerated.

Thus, according to Birkett, the time of occurrence in insurance law is different from the time of accrual in tort law. And the time of occurrence is used to determine insurance coverage, while the time of accrual is used to determine the statute of limitations for tort purposes. This case, moreover, involved a single occurrence, which occurred long before the policies became effective.

The court therefore affirmed summary judgment in favor of the insurers.

Key points

  • The law enforcement liability policies involved in this case could be triggered only by an occurrence, i.e., wrongful conduct, taking place during the policy period and not by the accrual of the underlying cause of action arising from that conduct.
  • A continuation of wrongful conduct over multiple policy periods presents a single cause, a single occurrence and a single trigger of coverage.
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