Malicious Prosecution Policy Tied to Time of Wrongful Deed, Not Later

December 18, 2019 / Writing and Speaking

By Don R. Sampen, published, Chicago Daily Law Bulletin December 17, 2019

The Illinois Supreme Court recently held that an occurrence policy for malicious prosecution provides coverage during the policy period in which the wrongful prosecution takes place, rather than the policy period in which the claimant is exonerated.

The case is Sanders v. Illinois Union Insurance Co., 2019 IL 124565 (Nov. 21, 2019). The claimant, Rodell Sanders, as assignee of rights under the insurance policies at issue, was represented by Loevy & Loevy. Scariano, Himes & Petrarca Chtd. represented the insured, the city of Chicago Heights. Walker Wilcox Matousek LLP represented Illinois Union Insurance Co. and Bates Carey LLP represented Starr Indemnity & Liability Co.

During the period 1993 to 1995, Sanders was wrongfully prosecuted and convicted of murder through the Chicago Heights Police Department’s manipulation of evidence. He obtained a vacation of his sentence, retrial and acquittal during the period 2011 to 2014.

In 2015, through a consent judgment, Sanders was awarded a damage judgment against Chicago Heights for $15 million. Of that amount, Chicago Heights agreed to pay $2 million, one of its insurers agreed to pay another $3 million and Chicago Heights assigned Sanders its rights under additional insurance policies issued by Illinois Union and Starr.

Illinois Union issued primary occurrence coverage to Chicago Heights, including for malicious prosecution, from November 2011 to November 2014.

Starr issued excess coverage for the same period. Their policies covered liabilities of Chicago Heights “first arising out of an [o]ccurrence happening during the [p]olicy period … for [p]ersonal [i]njury … taking place during the [p]olicy [p]eriod.” “Personal [i]njury” included the “offense” of malicious prosecution.

As assignee, Sanders claimed the Illinois Union and Starr policies provided coverage and sought recovery of the balance owing on the consent judgment in the amount of $10 million. Both insurers denied coverage for any part of the damage judgment, claiming that the malicious prosecution took place in the 1994-95 time period.

The trial court agreed with the insurers and dismissed the complaint. But the 1st District Appellate Court reversed. It held, over dissent, but consistent with federal court interpretation of Illinois law, that policies in effect at the time of the completed tort, including exoneration, provided coverage. Those policies were written by Illinois Union and Starr.

Based on earlier Illinois appellate decisions, the two insurers took this appeal.


In an opinion by Justice Mary Jane Theis, the Supreme Court reversed the appellate court and affirmed the circuit court. She considered alternative meanings but found that the word “offense” in the policies referred to the wrongful conduct underlying the malicious prosecution. That wrongful conduct was required to take place during the policy period, yet no wrongful conduct could be said to have taken place at the time of exoneration.

The fact that the policies were occurrence-based also weighed into her decision. Since occurrence policies typically cover acts or omissions happening during a policy period, shifting coverage to the time of exoneration would violate the intent of the policies.

Sanders and Chicago Heights, however, argued that all the elements of the tort, including exoneration, must be satisfied before a court could find that the offense occurred. Theis disagreed, saying that satisfaction of all the elements was not required by the language of the policy.

She acknowledged federal court interpretation of Illinois law to the contrary, but said that the federal appeals court relied heavily on Security Mutual Casualty Co. v. Harbor Insurance Co., 65 Ill.App.3d 198 (1978), which the Illinois Supreme Court subsequently reversed on other grounds.

Theis also rejected the argument that Sanders’ retrials in 2013 and 2014 constituted separate triggers for coverage. She did so because, under the policies, all damages arising out of substantially the same personal injury were to be regarded as arising out of but one occurrence. Thus, in her view, the personal injury remained the same throughout the entire time period.

The court, therefore, reinstated the dismissal in favor of the insurers.

Key point

  • Under Illinois law, coverage under an occurrence policy for the offense of malicious prosecution is provided by the policy in effect at the time of the wrongful prosecution.
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