Indian Harbor Ins. Co. v. City of Waukegan

33 N.E.3d 613

INDIAN HARBOR INSURANCE COMPANY, Plaintiff–Appellee

v.The CITY OF WAUKEGAN ; Lucian Tessman; Donald Meadie; Fernando Shipley ; Howard Pratt; Richard Davis; Phillip Stevenson ; and Juan A. Rivera, Jr., Defendants–Appellants.

Nos. 2–14–0293

2–14–0315.

Appellate Court of Illinois, Second District.

March 6, 2015.

Paulette A. Petretti, Darcee C. Williams, and Parker R. Himes, all of Scariano, Himes & Petrarca, Chtrd., of Chicago, for appellants.

Mark A. Kreger and David A. Argay, both of Kerns, Frost & Pearlman, LLC, of Chicago, for appellee.

OPINION

Justice BURKE delivered the judgment of the court, with opinion.

¶ 1 Defendants, Juan A. Rivera, Jr., the City of Waukegan (City), and former Waukegan police officers Lucian Tessman, Donald Meadie, Fernando Shipley, Howard Pratt, Richard Davis, and Phillip Stevenson, appeal from the order granting the motion of plaintiff, Indian Harbor Insurance Company, for judgment on the pleadings, pursuant to section 2–615(e) of the Code of Civil Procedure (Code) (735 ILCS 5/2–615(e) (West 2012)). Defendants raise several issues, but the crux of the case concerns when coverage for a malicious-prosecution claim is triggered under the language of the law enforcement liability insurance policies that plaintiff issued to the City. Plaintiff contends that coverage is triggered at the commencement of the alleged malicious prosecution, as that is defined as the “wrongful conduct” under the policies. Defendants contend that coverage is triggered at the termination of the prosecution in favor of the accused. The trial court agreed with plaintiff and found that, under the plain language of plaintiff's policies, the policies were occurrence-based and coverage was triggered at the commencement of the prosecution. We affirm, for the following reasons.

¶ 2 I. BACKGROUND

¶ 3 Rivera was wrongfully convicted in November 1993 of rape and murder and was imprisoned for 20 years. After DNA evidence excluded Rivera as the perpetrator, he was exonerated of all wrongdoing. On December 9, 2011, Rivera's conviction was reversed and he was acquitted. On January 6, 2012, Rivera was released from prison. On October 30, 2012, Rivera filed a federal action against numerous defendants, including the City and the six former police officers. In his first amended complaint, Rivera alleged that the City and the police officers were responsible for denying him a fair trial and for the loss of liberty that resulted from his wrongful conviction. He alleged a number of claims, including state claims for malicious prosecution and false imprisonment and due-process claims pursuant to 42 U.S.C. § 1983. The complaint alleged that the police officers repeatedly and continually concealed exculpatory evidence. Rivera also alleged conspiracy, failure to intervene, intentional infliction of emotional distress, and defamation by Officer Tessman. The City and the officers claimed that Rivera's lawsuit was covered by the law enforcement liability insurance policies issued by plaintiff for the years November 1, 2011, to November 1, 2013.

¶ 4 In the policies, which contain identical language, plaintiff agreed to pay “on behalf of the insured(s) all damages resulting from a wrongful act(s), which arise out of * * * law enforcement activities. The wrongful act(s) must occur during the policy period and within the policy territory.” A “wrongful act” is defined, in part, as a “personal injury,” and a “personal injury” is defined, in part, as a “malicious prosecution.”

¶ 5 After Rivera initiated the federal action, plaintiff filed this declaratory judgment action against defendants in the circuit court of Lake County. In count I of its complaint, plaintiff stated that the “wrongful acts” alleged in Rivera's lawsuit “occurred entirely or primarily in 1992, and ceased in all respects prior to the [inception date of either policy].” Plaintiff alleged that none of Rivera's claims was covered by its policies, because no “wrongful acts” occurred within the policy periods. Plaintiff filed a motion for judgment on the pleadings, pursuant to section 2–615(e) of the Code.

¶ 6 Defendants argued, inter alia, that insurance coverage for malicious prosecution is triggered by the termination of the prosecution in the accused's favor. Defendants noted that Rivera's prosecution continued until his conviction was reversed on December 9, 2011, a date that fell within the first policy period. The City noted that Rivera alleged wrongful acts, “including, but not limited to, malicious prosecution, defamation, conspiracy, intentional infliction of emotional distress and failure to intervene,” that fell within the policy periods and triggered coverage. The City contended that plaintiff's duty to defend was triggered because Rivera's suit contained allegations of continuing injury. Additionally, the City argued that granting judgment for plaintiff would be premature because the trial court should determine whether any of Rivera's claims, not just malicious prosecution, trigger plaintiff's duty to defend, and any doubts as to potential coverage must be construed in favor of the insured.

¶ 7 Rivera adopted the City's response to plaintiff's motion and made three additional arguments. Rivera contended that plaintiff's motion was premature because a declaratory judgment concerning an insurer's duty to indemnify was not ripened until the underlying litigation was completed. Rivera also argued that his federal malicious-prosecution claim under 42 U.S.C. § 1983, which the federal court dismissed, might still be viable, if the remedy provided by state law is inadequate, and that federal malicious-prosecution claims “indisputably accrue when the state dismisses all charges against the plaintiff.” Rivera contended that plaintiff could be liable on the federal claim even if the federal court accepts plaintiff's interpretation regarding the accrual of state malicious-prosecution claims. Rivera further argued that the policies covered injury from false imprisonment and that, even if the policies did not cover malicious prosecution plaintiff might be responsible for covering his false-imprisonment claim.

¶ 8 The trial court granted plaintiff's motion for judgment on the pleadings. Based on its findings, the trial court decided that the remaining counts of plaintiff's declaratory judgment complaint were rendered moot.

¶ 9 Rivera filed a notice of appeal (No. 2–14–0315) and the other defendants filed a separate notice of appeal (No. 2–14–0293). We granted Rivera's motion to consolidate the appeals.

¶ 10 II. ANALYSIS

¶ 11 A. Standard of Review

¶ 12 A motion for judgment on the pleadings is similar to a motion for summary judgment, but it is limited to the pleadings. Pekin Insurance Co. v. Wilson, 237 Ill.2d 446, 462, 341 Ill.Dec. 497, 930 N.E.2d 1011 (2010). Judgment on the pleadings is properly granted only if the pleadings disclose that there is no genuine issue of material fact and that the movant is entitled to judgment as a matter of law. Id. In ruling on a motion for judgment on the pleadings, the court will consider only those facts apparent from the face of the pleadings, matters subject to judicial notice, and judicial admissions in the record. Gillen v. State Farm Mutual Automobile Insurance Co., 215 Ill.2d 381, 385, 294 Ill.Dec. 163, 830 N.E.2d 575 (2005). To resolve the motion, the court must consider as admitted all well-pleaded facts set forth in the pleadings of the nonmoving party, and the fair inferences drawn therefrom. Wilson, 237 Ill.2d at 455, 341 Ill.Dec. 497, 930 N.E.2d 1011. The court, however, must disregard all surplusage and conclusory allegations. Teeple v. Hunziker, 118 Ill.App.3d 492, 497, 73 Ill.Dec. 925, 454 N.E.2d 1174 (1983). Since the trial court rules as a matter of law when deciding a motion for judgment on the pleadings, our review of the judgment is de novo. Rico Industries, Inc. v. TLC Group, Inc., 2014 IL App (1st) 131522, ¶ 14, 379 Ill.Dec. 338, 6 N.E.3d 415.

¶ 13 B. Trigger of Coverage for Malicious Prosecution

¶ 14 Defendants argue that the policies promise coverage for the tort of “malicious prosecution.” The tort requires: (1) the commencement of judicial proceedings by the defendant; (2) a lack of probable cause for the proceedings; (3) malice in instituting the proceedings; (4) termination of the prosecution in the plaintiff's favor; and (5) damage or injury to the plaintiff. Cult Awareness Network v. Church of Scientology International, 177 Ill.2d 267, 272, 226 Ill.Dec. 604, 685 N.E.2d 1347 (1997). Defendants maintain that coverage is triggered at the time of termination, because that is the final element for the accrual of the tort, and that therefore plaintiff has a duty to defend.

¶ 15 Defendants rely on Security Mutual Casualty Co. v. Harbor Insurance Co., 65 Ill.App.3d 198, 21 Ill.Dec. 707, 382 N.E.2d 1 (1978), rev'd, 77 Ill.2d 446, 34 Ill.Dec. 167, 397 N.E.2d 839 (1979) (Security Mutual II ), for the proposition that in Illinois coverage is triggered at the time of termination of the underlying prosecution. Defendants additionally rely on Seventh Circuit cases adopting Security Mutual's reasoning. The rationale is that coverage is not triggered until there is a complete tort and that the tort of malicious prosecution does not exist until the person prosecuted has been exonerated of wrongdoing. Security Mutual, 65 Ill.App.3d at 206, 21 Ill.Dec. 707, 382 N.E.2d 1. Thus, defendants argue, because Rivera was exonerated on December 9, 2011, which was during the first policy period, plaintiff has a duty to defend.

¶ 16 The problem with defendants' reliance on those cases is that Security Mutual was reversed by the supreme court in Security Mutual II. In addition, this court recently noted in St. Paul Fire & Marine Insurance Co. v. City of Zion, 2014 IL App (2d) 131312, ¶ 18, 385 Ill.Dec. 193, 18 N.E.3d 193 (citing Wilson, 237 Ill.2d at 455, 341 Ill.Dec. 497, 930 N.E.2d 1011 ), that Security Mutual provides no guidance on...