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Supreme Court Date: 2020.12.01
11:51:14 -06'00'
Sanders v. Illinois Union Insurance Co., 2019 IL 124565
Caption in Supreme RODELL SANDERS et al., Appellees, v. ILLINOIS UNION
Court: INSURANCE COMPANY et al., Appellants.
Docket No. 124565
Filed November 21, 2019
Decision Under Appeal from the Appellate Court for the First District; heard in that
Review court on appeal from the Circuit Court of Cook County, the Hon. Celia
Gamrath, Judge, presiding.
Judgment Appellate court judgment reversed.
Circuit court judgment affirmed.
Counsel on Christopher A. Wadley, of Walker Wilcox Matousek LLP, of Chicago,
Appeal for appellant Illinois Union Insurance Company.
Agelo L. Reppas and Adam H. Fleischer, of BatesCarey LLP, of
Chicago, for appellant Starr Indemnity & Liability Company.
Michael Kanovitz, Russell Ainsworth, and Ruth Brown, of Loevy &
Loevy, of Chicago, for appellee Rodell Sanders.
Paulette A. Petretti and Darcee C. Williams, of Scariano, Himes and
Petrarca, Chtrd., of Chicago, for appellee City of Chicago Heights.
Justices JUSTICE THEIS delivered the judgment of the court, with opinion.
Chief Justice Burke and Justices Thomas, Kilbride, Garman, and
Karmeier concurred in the judgment and opinion.
Justice Neville took no part in the decision.
OPINION
¶1 In 1994, based on doctored evidence from the City of Chicago Heights Police Department,
Rodell Sanders was charged with murder, attempted murder, and armed robbery. Sanders was
wrongfully convicted and imprisoned for approximately 20 years before being exonerated in
2014. From November 2011 to November 2014, the City of Chicago Heights obtained primary
liability insurance from Illinois Union Insurance Company (Illinois Union) and excess liability
insurance from Starr Indemnity & Liability Company (Starr). The primary insurance policy
indemnified Chicago Heights for, among other things, damages arising out of the “offense” of
“malicious prosecution.” At issue is whether the offense of malicious prosecution occurred
during the policy period, thereby triggering the insurers’ obligation to provide coverage. Based
on the policy’s terms, we conclude that coverage was triggered when Sanders was prosecuted
in 1994.
¶2 BACKGROUND
¶3 On December 15, 1993, at around 2 a.m., two people were seated inside of a parked car
when a group of men attacked them. The offenders robbed and shot both victims. One victim
died. The survivor later provided Chicago Heights police officers with a description of two of
the assailants. Officers arrested Sanders in January 1994. Sanders did not match either physical
description provided by the surviving victim, and he had an alibi that was confirmed by alibi
witnesses. Nonetheless, officers manipulated the evidence to ensure his conviction. 1
¶4 For example, after the surviving victim described one of the assailants as tall and skinny,
officers altered Sanders’s photograph to make him appear taller and thinner. Then, officers
included that image in a photographic lineup so that the surviving victim would identify him
as one of the culprits. According to Sanders, officers engaged in this conduct because they bore
a grudge against him and sought to protect the real murderer, who was an important witness
1
Although municipalities may not prosecute felonies, a person or entity can be liable for
commencing or continuing a malicious prosecution even if they do not ultimately wield prosecutorial
power. Under Illinois law, liability for malicious prosecution “extends to all persons who played a
significant role in causing the prosecution of the plaintiff, provided all of the elements of the tort are
present.” Beaman v. Freesmeyer, 2019 IL 122654, ¶ 43. That Chicago Heights is liable for malicious
prosecution under these principles based on the misconduct of its police officers is undisputed.
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for the prosecution in other cases. Upon his conviction in January 1995, Sanders was sentenced
to 80 years’ imprisonment.
¶5 Sanders filed a postconviction petition, and in January 2011 the Cook County circuit court
overturned the conviction and vacated his sentence. The appellate court affirmed its judgment
in May 2012. Meanwhile, at some point in 2012, Chicago Heights provided Illinois Union and
Starr with a notice of claim based on their policies from November 1, 2011, through November
1, 2014. 2
¶6 The prosecution retried Sanders in August 2013, asking the jury to convict him on an
additional theory of accountability. The second trial resulted in a mistrial. The prosecution
retried Sanders again in July 2014, and the jury acquitted him. Sanders had filed a federal civil
rights action against Chicago Heights in January 2013. After the jury acquitted him, Sanders
amended the civil rights complaint to add claims of malicious prosecution.
¶7 Illinois Union responded to Chicago Heights’ notice of claim in December 2014. At that
time, it notified the city that it was declining to provide coverage because no covered events
occurred during the policy periods. One year later, Starr similarly sent a declination, claiming
that the malicious prosecution did not fall within the policy periods. Chicago Heights asked
the insurers to reconsider their decisions, arguing that the date of Sanders’s exoneration and
his trials in August 2013 and July 2014 were discrete dates of loss.
¶8 The “general liability coverage part” of the insurance policy provides:
“The Insurer will indemnify the Insured for Damages and Claim Expenses in excess
of the Retained Limit for which the Insured becomes legally obligated to pay because
of a Claim first arising out of an Occurrence happening during the Policy Period in the
Coverage Territory for Bodily Injury, Personal Injury, Advertising Injury, or Property
Damage taking place during the Policy Period.” (Emphases in original.)
“With respect to Personal Injury,” occurrence was defined as “only those offenses specified
in the Personal Injury Definition.” (Emphases in original.)
¶9 “Personal injury” was defined as “one or more of the following offenses *** [f]alse arrest,
false imprisonment, wrongful detention or malicious prosecution *** wrongful eviction from,
wrongful entry into, or invasion of the right of private occupancy of a room, dwelling or
premises that a person occupies by or on behalf of the owner, landlord or lessor.” (Emphasis
in original.) The policy provided that “[a]ll damages arising out of substantially the same
Personal Injury regardless of frequency, repetition, the number or kind of offenses, or number
of claimants, will be considered as arising out of one Occurrence.” (Emphases in original.)
¶ 10 Circuit Court Proceedings
¶ 11 In February 2016, Chicago Heights filed a complaint for declaratory judgment, legal relief,
and monetary damages against Illinois Union and Starr. The city sought a declaration that it
was entitled to coverage under the insurance policy, thereby requiring the insurers to indemnify
it for attorney fees and costs that were paid in excess of the retained limit. Without waiving its
right to reassert claims under earlier policies, Chicago Heights focused its claims for coverage
on the policies from 2012-13 and 2013-14.
2
Illinois Union was the primary insurer. Starr’s policy was a “follow form excess liability policy,”
and thus, its policy relied on the provisions set forth in Illinois Union’s policy.
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¶ 12 In September 2016, a consent judgment was entered in Sanders’s favor in the federal civil
rights action for $15 million. Chicago Heights agreed to contribute $2 million, and United
National Insurance Company (Chicago Heights’ insurer from 1994) agreed to contribute $3
million toward the judgment. Additionally, Chicago Heights assigned its rights against Illinois
Union and Starr to Sanders in exchange for his agreement not to seek the remaining $10 million
from the city.
¶ 13 Thereafter, Chicago Heights moved the circuit court to voluntarily dismiss its declaratory
judgment action without prejudice. In late October 2016, the circuit court granted the city’s
dismissal motion, rendering all pending motions and outstanding discovery moot.
¶ 14 In November 2016, under section 2-1008(a) of the Code of Civil Procedure (735 ILCS 5/2-
1008(a) (West 2016)), the circuit court substituted Sanders as a plaintiff in this action. Based
on the policy provisions quoted above, Sanders argued that the insurers’ denial of coverage to
Chicago Heights was “wrongful, unreasonable, and vexatious.” Because the city had assigned
its rights to him, Sanders asserted that Illinois Union and Starr were required to pay him at
least the $10 million that was outstanding from the settlement.
¶ 15 The insurers filed an amended motion to dismiss the complaint with prejudice. Illinois
Union and Starr noted that Sanders “was maliciously prosecuted in 1994 resulting in his
conviction and incarceration for a crime he did not commit.” In their view, his injury predated
the effective dates of their policies. Illinois Union and Starr therefore argued that they were
neither required to provide coverage for Chicago Heights nor obligated to contribute to its
settlement with Sanders.
¶ 16 In January 2018, the circuit court granted the insurers’ amended motion to dismiss. The
court observed that, under the policy, Illinois Union and Starr had to provide coverage to
Chicago Heights for damages for personal injury first arising out of an occurrence during the
policy period. The court determined that the policy focused on a requisite act and injury during
the policy period, rather than the accrual of a completed cause of action. The court
acknowledged that, to prevail on a tort claim of malicious prosecution, a plaintiff must
establish, among other things, that the prior proceeding terminated in his favor. But it also
noted that the vast majority of courts to consider the issue have ruled that the filing of the
underlying malicious suit was the occurrence causing personal injury under an insurance
policy. Sanders and Chicago Heights appealed.
¶ 17 The Appellate Court’s Decision
¶ 18 On appeal, a split panel reversed. The appellate court majority confirmed that the dispute
centered on when the “offense” of malicious prosecution was deemed to occur under the
policy. 2019 IL App (1st) 180158, ¶ 17. Offense was not defined in the policy; therefore,
relying on Black’s Law Dictionary (10th ed. 2014), the majority concluded that the term
referred “to the legal cause of action that arises out of wrongful conduct, not just the wrongful
conduct itself.” 2019 IL App (1st) 180158, ¶ 18. Further, it observed that the list of offenses
contained in the policy referred exclusively to legal causes of action by their proper legal
names, rather than to the underlying wrongful acts. Id. ¶ 19. Accordingly, the majority ruled
that the plain and ordinary meaning of the term offense, as used in relation to the phrase
malicious prosecution, referred to the completed cause of action. Id.
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¶ 19 The dissent argued that, “[u]nder the clear and unambiguous language of the Illinois
Union/Starr policies, the malicious prosecution of Sanders happened in 1994 when he was
wrongfully charged with murder; it did not happen in either 2013, when he was retried, or in
2014, when after his third trial, he was acquitted.” Id. ¶ 37 (Mason, P.J., dissenting). In the
dissent’s view, “an ‘offense’ is the wrongful conduct or unlawful act,” and that occurred when
false charges were brought against Sanders. Id. ¶ 40. It also found “[t]he majority’s attempt to
distinguish relevant Illinois authority based on minor differences in policy language ***
unpersuasive.” Id. ¶ 44. Finally, the dissent rejected Sanders’s claim that his retrials constituted
additional triggers for coverage, noting that his initial prosecution and the retrials all arose out
of the same false charges against him. Id. ¶ 49.
¶ 20 This court granted Illinois Union and Starr’s petition for leave to appeal. Ill. S. Ct. R. 315
(eff. July 1, 2018).
¶ 21 ANALYSIS
¶ 22 The question before us is whether the offense of malicious prosecution occurred during the
policy period, such that Illinois Union and Starr were required to provide coverage to Chicago
Heights. The proper construction of provisions of an insurance policy is a question of law that
we review de novo. Valley Forge Insurance Co. v. Swiderski Electronics, Inc., 223 Ill. 2d 352,
360 (2006). Because an insurance policy is a contract, the rules applicable to contract
interpretation govern. Thounsavath v. State Farm Mutual Automobile Insurance Co., 2018 IL
122558, ¶ 17. Our “primary function is to ascertain and give effect to the intention of the
parties, as expressed in the policy language.” Id.
¶ 23 When the terms of a policy are clear and unambiguous, we will ascribe to them their plain
and ordinary meaning. Pekin Insurance Co. v. Wilson, 237 Ill. 2d 446, 455-56 (2010). And as
we have previously observed, the fact that a term is undefined does not render it ambiguous.
Nicor, Inc. v. Associated Electric & Gas Insurance Services Ltd., 223 Ill. 2d 407, 417 (2006).
Rather, ambiguity exists only if a term is susceptible to more than one reasonable
interpretation. Id. As with any contract, we construe an insurance policy as a whole, giving
effect to each provision where possible because we must assume that it was intended to serve
a purpose. Valley Forge, 223 Ill. 2d at 362.
¶ 24 The policy in this case provides that Illinois Union and Starr will indemnify Chicago
Heights for damages for which Chicago Heights becomes legally obligated to pay because of
a claim arising out of the offense of malicious prosecution, happening during the policy period,
and taking place during the policy period. Thus, to resolve when the malicious prosecution
occurred, our interpretation of the word “offense” becomes central. The parties have proffered
different meanings of the term. For example, citing Merriam-Webster’s Online Dictionary,
Illinois Union contends that “the term is primarily used to mean something that outrages the
moral or physical senses.” For its part, Chicago Heights refers us to Black’s Law Dictionary
(10th ed. 2014), which provides that an “offense” is a “violation of the law; a crime, often a
minor one.”
¶ 25 Considering the various proposals, we conclude—as another panel of the appellate court
recently did under substantially similar circumstances—that the most “straightforward reading
of this term [(offense)] indicates that coverage depends upon whether the insured’s offensive
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conduct was committed during the policy period.” (Emphasis omitted.) First Mercury
Insurance Co. v. Ciolino, 2018 IL App (1st) 171532, ¶ 30.
¶ 26 In that case, the question was whether an insurance company was required to provide
coverage for its insured in an underlying lawsuit for malicious prosecution. Id. ¶ 3. When the
wrongfully convicted defendant was framed in 1999, the company was not the insurer;
however, it was when he was exonerated in 2014. Id. ¶ 7. Under the policy, the company would
cover a “ ‘ “[p]ersonal injury” caused by an offense arising out of your business *** but only
if the offense was committed *** during the policy period.’ ” Id. ¶ 8. Personal injury was
defined to include malicious prosecution; the term offense was undefined. Id. ¶ 9. The trial
court granted summary judgment in favor of the insurer. On appeal, the court was “not
convinced that the policy’s use of the word ‘offense’ indicate[d] the parties’ intent that
coverage would only be triggered upon fulfillment of all elements of a tort claim under Illinois
law.” Id. ¶ 30. Observing that no language in the policy indicated an “intent to limit the
meaning of ‘offense’ by requiring the completion of tort law elements,” the appellate court
declined to “assume that the policy incorporate[d] tort law.” Id. ¶ 31.
¶ 27 Here, too, we conclude that the word offense in the insurance policy refers to the wrongful
conduct underlying the malicious prosecution. In so ruling, we consider both the meaning of
the word offense and the contractual requirement that the offense must both happen and take
place during the policy period. A malicious prosecution neither happens nor takes place upon
exoneration. See, e.g., Mitchinson v. Cross, 58 Ill. 366, 370 (1871) (“The gist of the action for
malicious prosecution is, that the prosecutor acted without probable cause.”); Spiegel v. Zurich
Insurance Co., 293 Ill. App. 3d 129, 134 (1997) (“ ‘Malicious prosecution’ is the bringing of
a suit known to be groundless ***.”). Further, courts have found that the “ ‘personal injury’ of
‘malicious prosecution’ ” in the context of an insurance policy differs from “the common-law
elements of the tort of malicious prosecution.” County of McLean v. States Self-Insurers Risk
Retention Group, Inc., 2015 IL App (4th) 140628, ¶ 33; see also City of Lee’s Summit v.
Missouri Public Entity Risk Management, 390 S.W.3d 214, 220 (Mo. Ct. App. 2012) (“[I]n the
context of insurance, malicious prosecution occurs upon the institution of the underlying
action.”).
¶ 28 That this is an occurrence-based policy also weighs heavily into our decision. “A typical
occurrence-based policy, containing multiple references to coverage for occurrences or
offenses happening during the term of the policy, reflects the intent to insure only for the
insured’s acts or omissions that happen during a policy period.” Indian Harbor Insurance Co.
v. City of Waukegan, 2015 IL App (2d) 140293, ¶ 33. If we were to deem exoneration the
trigger for coverage of a malicious prosecution insurance claim, liability could be shifted to a
policy period in which none of the acts or omissions giving rise to the claim occurred. That
would violate the intent of the parties to an occurrence-based policy.
¶ 29 Emphasizing that malicious prosecution is a tort, Chicago Heights and Sanders urge us to
find that the policy must have intended for all elements of the tort to be satisfied before finding
that the offense has occurred. But as in First Mercury, here, the language of the policy does
not require that the elements of the tort be satisfied. Accordingly, we cannot read into it the
requirements of a tort claim for malicious prosecution. See St. Paul Fire & Marine Insurance
Co. v. City of Zion, 2014 IL App (2d) 131312, ¶ 22 (observing that “the ‘occurrence’ triggering
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insurance coverage of a malicious-prosecution claim may precede the accrual of the cause of
action”). 3
¶ 30 Sanders and Chicago Heights also highlight decisions from the United States Court of
Appeals for the Seventh Circuit, such as American Safety Casualty Insurance Co. v. City of
Waukegan, 678 F.3d 475, 479 (7th Cir. 2012), which ruled that exoneration was “the
‘occurrence’ ” for insurance coverage of a malicious prosecution claim. We note that the
federal court of appeals relied heavily on Security Mutual Casualty Co. v. Harbor Insurance
Co., 65 Ill. App. 3d 198 (1978), a case that we subsequently reversed on other grounds.
Although we take no issue with the federal appellate court’s attempt to predict Illinois law, we
clarify that the appellate court’s reasoning in Security Mutual does not reflect our approach for
determining when coverage for malicious prosecution occurs under an occurrence-based
insurance policy.
¶ 31 Separately, Chicago Heights and Sanders contend that his retrials in 2013 and 2014
constituted separate triggers for coverage. That claim is foreclosed by the language of the
policy. Under the policy, “[a]ll damages arising out of substantially the same Personal Injury
regardless of frequency, repetition, the number or kind of offenses, or number of claimants,
will be considered as arising out of one Occurrence.” (Emphases in original.) Although another
theory of liability was added during the retrials, the personal injury (i.e., the initiation of a suit
based on evidence manufactured by Chicago Heights police officers) remained the same.
¶ 32 Sanders also argues that our decision in Nicor compels a finding that his two retrials were
separate occurrences that triggered coverage. It does not. In that case, mercury had spilled out
of gas meters and into customers’ homes. Nicor, 223 Ill. 2d at 410-11. In a dispute over
insurance coverage, the company argued that each of the 195 spills into different homes
constituted a single occurrence. Id. at 414. This court rejected that claim, observing that no
evidence established that the spills resulted from a common cause. Id. at 433. Here, by contrast,
Chicago Heights officers’ fabrication of evidence to support unfounded charges against
Sanders was the single cause of all three trials and, thus, the single relevant occurrence under
the policy.
¶ 33 CONCLUSION
¶ 34 We hold that insurance coverage for the underlying malicious prosecution claim was
triggered when Sanders was maliciously prosecuted in 1994. Because the triggering event
occurred more than a decade before Illinois Union and Starr issued their policies to Chicago
Heights, the insurers were not required to indemnify the city for damages under the policies.
3
Our focus remains on the provisions of this contract. Yet it has not escaped our notice that most
courts that have considered this issue also have ruled that a malicious prosecution for insurance
purposes occurs at the commencement of the prosecution. See, e.g., First Mercury, 2018 IL App (1st)
171532; St. Paul Fire & Marine Insurance Co. v. City of Waukegan, 2017 IL App (2d) 160381; County
of McLean, 2015 IL App (4th) 140628; Indian Harbor, 2015 IL App (2d) 140293; City of Zion, 2014
IL App (2d) 131312; see also, e.g., Genesis Insurance Co. v. City of Council Bluffs, 677 F.3d 806 (8th
Cir. 2012); Selective Insurance Co. of South Carolina v. City of Paris, 681 F. Supp. 2d 975 (C.D. Ill.
2010).
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¶ 35 Appellate court judgment reversed.
¶ 36 Circuit court judgment affirmed.
¶ 37 JUSTICE NEVILLE took no part in the consideration or decision of this case.
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Sanders v. Illinois Union Insurance Co.
Combined Opinion