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Monday, March 19, 2012

City's Insurer Must Cover Malicious Prosecution Case

In 1989, Dominguez was arrested and in 1990 he was convicted of home invasion and sexual assault.   In 2002, he was exonerated by DNA.  He sued the City for malicious prosecution, wrongful arrest, and wrongful conviction.  From 1989 through 2002, the City had been covered by a variety of insurance policies, provided by a number of carriers.  None of the City's insurance companies would defend the case, however, all claiming that another company was responsible.  The City proceeded to defend the case on its own.  Dominquez was awarded about $9 million for malicious prosecution and concealment of exculpatory evidence.  The City subsequently filed a declaratory judgment action against the insurance companies. 

The question at issue in the district court was which insurance company or companies was responsible for defending the case. The district court concluded that the issuer of the "occurrence" policy in effect at the time Dominguez was exonerated was responsible for defending the City.  That holding was consistent with Illinois state law, but differs from the position taken by most states and by federal law that the "occurrence" is the misconduct, which according to the court would have been the arrest in 1989 and the conviction in 1990.  

The Seventh Circuit affirmed in City of Waukegan v. Interstate Indem. Co., finding that although the City's misconduct occurred in 1989 and 1990, the City's insurance policy did not define the "occurrence" as misconduct by a law-enforcement officer.  Instead, it defined the occurrence as the tort under state or federal law, and, in both, the tort occurs with its last element, exoneration. Until then, Dominguez could not have established "malicious prosecution" or "violation" of section 1983. 

The Seventh Circuit concluded that "[l]eaving Waukegan in the lurch, with each insurer pointing the finger at another, was unreasonable."  Consequently, the City's insurer at the time of exoneration was responsible for defending and indemnifying the City.

 Post Authored by Julie Tappendorf, Ancel Glink


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