Illinois Appellate Court Ruling: Triggering Event for Public Sector Claims Insurance

By Ryan Taylor, Partner at Tressler LLP

An Illinois Appellate Court recently ruled that the Circuit Court of Cook County erred in dismissing a complaint and concluding that policies issued by insurers did not provide coverage for an underlying claim of malicious prosecution. In doing so, the Court also found that the trial court erred in finding that insurance coverage for such a claim was only triggered by the individual Plaintiff’s improper prosecution.  Sanders and The City of Chicago Heights v. Illinois Union Insurance Company and Starr Indemnity & Liability Company, 2019 IL App (1st) 180158 (Jan. 19, 2019).

http://www.illinoiscourts.gov/Opinions/AppellateCourt/2019/1stDistrict/1180158.pdf

The Underlying Lawsuit

The Court’s ruling stems from a case involving a Plaintiff whose convictions for attempted murder and armed robbery were vacated in 2011 before acquitted of the charges in 2014.  The Plaintiff then sued the City of Chicago Heights and a certain selection of its employees for malicious prosecution.  After the lawsuit was settled for $15 million, Chicago Heights assigned the Plaintiff its right to recover monies from its insurers at the time of his acquittal.

The insurers denied coverage and filed a Motion to Dismiss the lawsuit on the basis that the trigger for coverage (Plaintiff’s prosecution) occurred before the policies were in effect.  The trial court granted the Motion and Plaintiff appealed the ruling.

Illinois Appellate Court Ruling

The Court concluded that the language of the policies at issue, when read in context, was plain in providing that insurance coverage was triggered by the “offense” of malicious prosecution “happening” within the policy period and the offense of malicious prosecution only happens once all of the elements of the tort are met – not when the initial charges are filed.

According to the Court, the coverage trigger was the Plaintiff’s exoneration in 2014, which was well within the effective periods of the policies. As a result, the trial court erred in dismissing the complaint and the case was remanded to the trial court.

Potential Coverage Implications

The Court’s ruling signals the importance of judicial interpretations of insurance policies especially with respect to when they are triggered to cover damages for lawsuits and settlements involving public sector claims. 

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Ryan Taylor is a partner at Tressler LLP in their commercial litigation practice and can be reached at rtaylor@tresslerllp.com or 312-627-4032.