United States Court of Appeals
FOR THE EIGHTH CIRCUIT
___________
No. 11-1277
___________
Genesis Insurance Company, *
*
Plaintiff - Appellee, *
*
v. *
*
City of Council Bluffs; Daniel C. * Appeals from the United States
Larsen; Lyle Brown, * District Court for the
* Southern District of Iowa.
Defendants - Appellants, *
*
Curtis W. McGhee, Jr., *
*
Movant, *
*
------------------------------ *
*
Iowa Leagues of Cities, *
*
Amicus on Behalf of *
Appellant. *
___________
No. 11-1741
___________
Gulf Underwriters Insurance Company; *
Travelers Indemnity Company, *
*
Plaintiffs, *
*
Genesis Insurance Company, *
*
Plaintiff - Appellee, *
*
v. *
*
City of Council Bluffs, IA; Daniel C. *
Larsen; Lyle Brown, *
*
Defendants - Appellants, *
*
Terry Harrington, Defendant in *
member case 1:07-cv-24; Curtis W. *
McGhee, Jr., Defendant in member *
case 1:07-cv-24, *
*
Defendants, *
*
------------------------------- *
*
Iowa Leagues of Cities, *
*
Amicus on Behalf of *
Appellant. *
___________
Submitted: January 11, 2012
Filed: May 11, 2012
___________
Before BYE, SMITH, and COLLOTON, Circuit Judges.
___________
SMITH, Circuit Judge.
-2-
This appeal arises from an insurance coverage dispute. The City of Council
Bluffs, Iowa, and its police officers, Daniel Larsen and Lyle Brown, (collectively,
"the City") sought coverage from Genesis Insurance Company ("Genesis") for § 1983
claims in the nature of malicious prosecution. Genesis filed suit against the City,
seeking a declaratory judgment that its policies provided no coverage for the
underlying actions. The district court1 granted summary judgment to Genesis. The
City appeals, arguing that the district court erred in ruling as a matter of law that the
policies do not provide the City insurance coverage for the claims. We affirm.
I. Background
Terry Harrington and Curtis McGhee filed two underlying civil actions against
the City based on the City's conduct in their criminal prosecutions.
A. Underlying Criminal Actions
In 1977, Harrington and McGhee were arrested for the murder of retired police
officer John Schweer. "Harrington, who was seventeen at the time, was charged with
Schweer's murder and was ultimately convicted [on August 4, 1978], primarily on the
testimony of a juvenile accomplice, Kevin Hughes." Harrington v. State, 659 N.W.2d
509, 514 (Iowa 2003) (footnote omitted). According to Hughes,
Hughes, Harrington, and . . . McGhee . . . went to [a car] dealership with
the intent to steal a beige Toronado. Hughes waited in Harrington's car
while Harrington and McGhee walked around a building to find the
desired automobile. Harrington had a shotgun. Shortly after Harrington
and McGhee left, Hughes heard a gun shot. Then Harrington and
McGhee came running back. Harrington said he had just shot a cop.
Id.
1
The Honorable Robert W. Pratt, United States District Judge for the Southern
District of Iowa.
-3-
Like Harrington, McGhee was convicted of Schweer's murder on May 11,
1978, and sentenced on June 13, 1978. Both Harrington and McGhee received life
sentences.
Following his conviction, Harrington's direct appeal failed, "as did a
subsequent postconviction relief action in which he claimed that Hughes'[s] testimony
was perjured." Id. at 515. "Harrington also unsuccessfully sought habeas corpus relief
in federal court." Id.
In 2000, Harrington filed his second state postconviction relief action. Id.
Harrington requested that his conviction be vacated "based on an alleged due process
violation arising from the prosecution's failure to turn over eight police reports to the
defense during the criminal trial." Id. at 516. "He . . . asserted a Brady violation
occurred in 1978 because these reports contained potentially exculpatory evidence
of an alternative suspect and they had been withheld by the prosecution." Id. at 518.
The Iowa Supreme Court held "that Harrington's due process right to a fair trial was
violated by the State's failure to produce the police reports documenting their
investigation of an alternative suspect in Schweer's murder." Id. at 525. Therefore, the
court ordered that the state trial court vacate Harrington's conviction and grant him
a new trial. Id.
On April 17, 2003, Harrington was released from prison. On September 2,
2003, McGhee was released from prison after entering an Alford plea.2
B. Underlying Civil Actions
In 2005, Harrington and McGhee filed suit against, inter alia, the City of
Council Bluffs and Officers Daniel Larsen and Lyle Brown of the City of Council
Bluffs Police Department. Both Harrington and McGhee brought claims under 42
2
North Carolina v. Alford, 400 U.S. 25 (1970).
-4-
U.S.C. §§ 1983 and 1985(3). According to the district court, Harrington's and
McGhee's "§ 1983 claims seeking damages for constitutional injuries resulting from
their arrests, convictions, and incarcerations are in the nature of malicious prosecution
because [they] essentially allege that their constitutional rights were violated as a
result of the wrongful institution of legal process against them." Gulf Underwriters
Ins. Co. v. City of Council Bluffs, 755 F. Supp. 2d 988, 992 (S.D. Iowa 2010)
(quotation and citation omitted).3
C. Declaratory Judgment Action
The City provided Genesis notice of the underlying civil actions. Thereafter,
Genesis filed suit against the City seeking, inter alia, a declaratory judgment that its
policies did not provide coverage for the underlying civil actions. Genesis alleged
that it owed no duty to indemnify the City in the underlying civil actions because the
claims that Harrington and McGhee asserted related to bodily injury or personal
injury that occurred prior to the Genesis policies.
"Genesis [had] issued two separate, consecutive indemnity insurance policies
to the City. The first policy was effective from January 1, 2002[,] to January 1,
2003[,] and the second was effective from January 1, 2003[,] to January 1, 2004 . . . ."
Id. at 992 (internal citation omitted). The City "concede[s] that Genesis has no duty
to defend." Id. at 1003. But the policies "do clearly implicate a duty to indemnify for
covered losses." Id.
"SECTION I" of the policies, entitled "COVERAGE," provides, in relevant
part:
3
Neither party challenges the district court's characterization of Harrington's
and McGhee's claims in this appeal.
-5-
A. Insuring Agreement
1. Subject to the applicable Limit(s) of Insurance of this
Coverage Part, we agree to indemnify the Insured for the
ultimate net loss in excess of the retained limit for which
the Insured becomes legally obligated to pay because of
bodily injury,4 personal injury, advertising injury, or
property damage which occurs during this policy period
and to which this insurance applies. . . .
2. This insurance applies to bodily injury, personal injury,
advertising injury, or property damage which occurs during
this policy period, provided that prior to this policy period,
no Insured . . . knew that the bodily injury, personal injury,
advertising injury, or property damage had occurred, in
whole or part. If such listed Insured . . . knew, prior to this
policy period, that the bodily injury, personal injury,
advertising injury, or property damage occurred, then any
continuation, change or resumption of such bodily injury,
4
"For 'bodily injuries,' an 'occurrence' is an 'accident.'" Id. at 1004. Because the
policies fail to define "accident," the district court gave the term its ordinary meaning
and defined it, in accordance with Iowa law, as "'an unexpected and unintended
event.'" Id. (quoting Weber v. IMT Ins. Co., 462 N.W.2d 283, 287 (Iowa 1990)). The
district court concluded that because Harrington and McGhee "have not alleged any
injuries arising from any unexpected or unintended events, or from anything that
could reasonably be described as 'accidents'. . . . the Genesis Policies do not provide
coverage for any 'bodily injuries' alleged by [Harrington and McGhee]." Id. "The
Genesis Policies define 'bodily injury' as 'bodily injury, sickness, disease, shock,
fright, mental injury or anguish, emotional distress or disability sustained by a natural
person, including death resulting from any of these at any time.'" Id. (citation
omitted). As a result, the district court concluded that "the Genesis Policies do not
cover [Harrington's and McGhee's] claims for mental injury, mental anguish,
emotional distress or any other 'bodily injuries.'" Id. On appeal, the City has not
challenged the district court's conclusion with regard to "bodily injuries."
-6-
personal injury, advertising injury, or property damage
during or after this policy period will be deemed to have
been known prior to this policy period and will not be
covered hereunder.
3. Bodily injury, personal injury, advertising injury, or
property damage which occurs during this policy period
and was not, prior to this policy period, known to have
occurred by an Insured . . . includes any continuation,
change or resumption of that bodily injury, personal injury,
advertising injury, or property damage after the end of this
policy period.
***
In any event, the bodily injury, personal injury, advertising injury, or
property damage must be caused by an occurrence and the occurrence
must take place in the coverage territory.
(Emphases added.)
The policies define "personal injury" as
injury, other than bodily injury, arising out of one or more of the
following offenses from the conduct of your operations:
1. False arrest, detention or imprisonment;
2. Malicious prosecution;
3. The 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 its owner, landlord or
lessor[;]
-7-
4. Electronic or other publication, transmission, dissemination or
storage of material that slanders or libels a person or organization
or disparages a person's or organization's goods, products or
services; or
5. Electronic or other publication, transmission or dissemination or
storage of material that violates a person's right of privacy.
Personal injury also includes the following offenses, but only with
respect to your law enforcement activities or your departmentally
approved law enforcement activities for others:
6. Assault and battery;
7. Violation of civil rights;
8. Violation of property rights;
9. Erroneous service of process; or
10. Failure of your law enforcement department and its employees to
follow departmentally approved policy(ies) or procedure(s).
(Emphases added.)
The policies define "occurrence," "[w]ith respect to personal injury . . . , [as]
an offense or series of related offenses." And, "offense" is defined as "any of the
offenses included in the definitions of advertising injury or personal injury." "The
Gulf Policies do not define 'false arrest, detention or imprisonment' or 'malicious
prosecution.'" Id. at 1004.
Genesis moved for summary judgment on its declaratory-judgment claim. The
district court granted Genesis's motion, concluding that the City "failed to
demonstrate that there is any genuine issue of material fact as to whether a covered
-8-
injury occurred during the Genesis policy periods." Id. at 1009. In its analysis, the
court addressed whether Harrington and McGhee alleged personal injuries and found
that "the only 'offenses' potentially relevant to [Harrington's and McGhee's] remaining
claims are 'malicious prosecution' and 'violation of civil rights.'" Id. at 1005 (footnote
omitted). As a result, the district court concluded that "to meet [its] initial burden, [the
City] must prove that at least one of the Claimants [(Harrington or McGhee)] is
seeking damages for an injury . . . 'arising out of' malicious prosecution or a civil
rights violation, that 'occur[red] during [the] policy period.'" Id. (citation omitted)
(fifth and sixth alterations in original).
The district court then concluded that "the 'personal injuries alleged by
[Harrington and McGhee] became apparent no later than 1978, the year in which
[Harrington and McGhee] were convicted of murder and given life sentences.
Therefore, these injuries should be deemed to have occurred, for insurance purposes,
no later than 1978." Id. at 1007 (footnote omitted). As a result, the court held that
Harrington's and McGhee's "claimed injuries did not occur, for insurance purposes,
during the Genesis policy periods." Id.
II. Discussion
On appeal, the City argues that Harrington and McGhee alleged violations of
their civil rights in the nature of malicious prosecution. Harrington and McGhee thus
"alleged a personal injury for which coverage is afforded by the polic[ies]." The City
also asserts that Harrington and McGhee "alleged that they suffered injury resulting
from the conduct of the City during the terms of both policy periods. Coverage under
both policies is therefore triggered." According to the City, the district court
erroneously "wrote time limitations into the polic[ies] that simply don't exist by
effectively requiring that injury first occur during the term of the insurance polic[ies]
in order to obtain coverage and then compounded the error by determining that the
personal injur[ies] first occurred in 1978." The City contends that the policies at issue
contain no time limitation and actually "contemplate circumstances in which the
-9-
injury precedes the effective date of the policies and mandate coverage under defined
terms." The City asserts that the district court "failed to follow basic principles of
Iowa law governing the determination of coverage when the policies are ambiguous
in language or application."
"The parties agree that Iowa law governs this diversity action. Under Iowa law,
a court must construe insurance policies to give effect to the intent of the parties."
R & J Enterprizes v. Gen. Cas. Co. of Wis., 627 F.3d 723, 726 (8th Cir. 2010).
The rules of construction of insurance policies [under Iowa law]
are well established. The insurance policy is a contract which must be
construed as a whole. The words used must be given their ordinary, not
technical, meaning to achieve a practical and fair interpretation.
Youngwirth v. State Farm Mutual Auto. Ins. Co., 258 Iowa 974, 140
N.W.2d 881, 883.
If the words are fairly susceptible to two interpretations the one
which will sustain the insured's claim will be accepted. Thus the policy
will be strictly construed against the insurer. State Auto. & Cas.
Underwriters v. Hartford Acc. & Ind. Co. (Iowa, 1969), 166 N.W.2d
761. This rule is amplified by the statement that the court should
ascertain what an insured as a reasonable person would understand the
policy to mean, not what the insurer actually intended. Goodsell v. State
Auto & Cas. Underwriters, 261 Iowa 135, 153 N.W.2d 458.
Stated otherwise, the climate under which an insurance policy is
examined favors imposition of coverage largely because the carrier drew
the contract and has the expertise in the field. However, if after
construing both the policy in question, the pleadings of the injured party
and any other admissible and relevant facts in the record, it appears the
claim made is not covered by the indemnity insurance contract issued,
the insurer has no duty to defend or indemnify. Hagen Supply Corp. v.
Iowa National Mutual Ins. Co. (8 Cir. 1964), 331 F.2d 199, 203, 204
and authorities cited therein. If such be the case, the words and phrases
-10-
of the policy should not be strained to impose liability that was not
intended and not purchased.
Cent. Bearings Co. v. Wolverine Ins. Co., 179 N.W.2d 443, 445 (Iowa 1970).
"Insurance disputes are particularly well suited for summary judgment because the
proper construction of an insurance contract is always an issue of law for the court."
Modern Equip. Co. v. Cont'l W. Ins. Co., 355 F.3d 1125, 1128 (8th Cir. 2004) (citing
Iowa Comprehensive Petroleum Underground Storage Tank Fund Bd. v. Federated
Mut. Ins. Co., 596 N.W.2d 546, 550 (Iowa 1999)).
The City "has the initial burden of proving that [Harrington's and McGhee's]
disputed claims are comprehended by the policy's general coverage provisions." Id.
(quotation and citation omitted). "Once this burden is met, [Genesis] must in turn
prove the applicability of any exclusion which allegedly precludes coverage." Id.
(quotation and citation omitted). Thereafter, the "burden . . . shifts back to [the City]
to prove, if applicable, any exception to the exclusion." Id.
The City "concede[s] that Genesis has no duty to defend." Gulf Underwriters
Ins. Co., 755 F. Supp. 2d at 1003. Therefore, the only issue is whether Genesis has
a duty to indemnify the City for any judgment that Harrington or McGhee may obtain
against it.
The Genesis Policies are applicable "to . . . personal injury . . . which occurs
during this policy period." (Emphasis added.) The "personal injury . . . must be caused
by an occurrence and the occurrence must take place in the coverage territory." An
"occurrence" is an "offense or series of related offenses." "Personal injury" is an
"injury" which "aris[es] out of," inter alia, the "offense[]" of "[m]alicious
prosecution" or "[v]iolation of civil rights." Therefore, as the district court noted, the
City must prove that Harrington or McGhee "is seeking damages for an injury . . .
'arising out of' malicious prosecution or a civil rights violation, that 'occur[red] during
-11-
[the] policy period.'" Id. at 1005 (citation omitted). Thus, to resolve this appeal, we
must determine when the offense of malicious prosecution "occurs." As the district
court recognized,
Genesis and [the City] agree that the Genesis Policies are
"occurrence policies." Genesis Br. at 8; Defs.' Br. re Genesis at 9.
Occurrence policies "provide[ ] coverage for any acts or omissions that
arise during the policy period, regardless of when claims are made."
Hasbrouck v. St. Paul Fire & Marine Ins. Co., 511 N.W.2d 364, 366
(Iowa 1993) (internal citation omitted). Under an occurrence policy,
"[t]he time of 'occurrence' is when the claimant sustains damages, not
when the act or omission causing the damage takes place." Tacker v.
Am. Family Mut. Ins. Co., 530 N.W.2d 674, 676 (Iowa 1995). Neither
of the sides dispute this basic proposition, but they disagree as to what
it means to "sustain[ ] damage"—i.e., when Claimants' [(Harrington's
and McGhee's)] injuries "occurred," for insurance purposes.
Id. (emphasis added).
"[The Iowa Supreme Court] has not decided when, for insurance coverage
purposes, the tort of malicious prosecution occurs." City of Erie, Pa. v. Guar. Nat'l
Ins. Co., 109 F.3d 156, 159 (3d Cir. 1997). "To predict how the Iowa Supreme Court
would resolve the issues, Lindsay Mfg. Co. v. Hartford Accident & Indemn. Co., 118
F.3d 1263, 1267–68 (8th Cir. 1997), we will consider 'relevant state precedent,
analogous decisions, considered dicta, and any other reliable data.'" HOK Sport, Inc.
v. FC Des Moines, L.C., 495 F.3d 927, 935 (8th Cir. 2007) (quoting Riordan v.
Church of Jesus Christ of Latter-Day Saints, 416 F.3d 825, 829 n. 2 (8th Cir. 2005)).
"Even though the [Iowa] courts have not addressed this precise question, other
courts have done so. Although there is no agreement on when the tort of malicious
-12-
prosecution occurs for insurance coverage purposes, the clear majority5 of courts have
held the tort occurs when the underlying criminal charges are filed." City of Erie, Pa.,
109 F.3d at 160 (citing Royal Indem. Co. v. Werner, 979 F.2d 1299 (8th Cir. 1992)
(applying Missouri law); S. Md. Agric. Ass'n, Inc. v. Bituminous Cas. Corp., 539 F.
Supp. 1295 (D. Md.1982) (applying Maryland law); Ethicon, Inc. v. Aetna Cas.& Sur.
Co., 688 F. Supp. 119 (S.D.N.Y.1988) (applying New Jersey law); S. Freedman &
Sons, Inc. v. Hartford Fire Ins. Co., 396 A.2d 195 (D.C. 1978); Am. Family Mut. Ins.
Co. v. McMullin, 869 S.W.2d 862 (Mo. Ct. App. 1994); Paterson Tallow Co. v. Royal
Globe Ins. Cos., 444 A.2d 579 (N.J. 1982); Muller Fuel Oil Co. v. Ins. Co. of N. Am.,
232 A.2d 168 (N.J. Super. Ct. App. Div. 1967); Harbor Ins. Co. v. Cent. Nat'l Ins.
Co., 211 Cal. Rptr. 902 (Cal. Ct. App. 1985); Zurich Ins. Co. v. Peterson, 232 Cal.
Rptr. 807 (Ca. Ct. App. 1986)); see also Selective Ins. Co. of S.C. v. City of Paris, 681
F. Supp. 2d 975 (C.D. Ill. 2010) (applying Illinois law); N. River Ins. Co. v. Broward
Cnty. Sheriff's Office, 428 F. Supp. 2d 1284 (S.D. Fla. 2006) (applying Florida law);
Coregis Ins. Co. v. City of Harrisburg, No. 1:03-CV-920, 2006 WL 860710 (M.D.
Pa. Mar. 30, 2006) (unpublished) (applying Pennsylvania law); Billings v. Commerce
Ins. Co., 936 N.E.2d 408 (Mass. 2010); Town of Newfane v. Gen. Star Nat'l Ins. Co.,
5
"But [the minority of] courts have held the tort of malicious prosecution
occurs on the date when the plaintiff receives a favorable termination of the
underlying proceeding and his claim for malicious prosecution arises." City of Erie,
Pa., 109 F.3d at 160 (citing Roess v. St. Paul Fire & Marine Ins. Co., 383 F. Supp.
1231 (M.D. Fla.1974) (applying Florida law); Sec. Mut. Cas. Co. v. Harbor Ins. Co.,
382 N.E.2d 1 (Ill. Ct. App. 1978), rev'd on other grounds, 397 N.E.2d 839 (Ill.
1979)); see also Nat'l Cas. Co. v. McFatridge, 604 F.3d 335, 344–45 (7th Cir. 2010)
("[T]he [Illinois] state law malicious prosecution claim depends upon the invalidation
of Steidl's underlying conviction. That offense did not occur, for insurance purposes,
until June 2003, several years after the CGL policies expired in 2000." (internal
citations omitted)); Am. Safety Cas. Ins. Co. v. City of Waukegan, 776 F. Supp. 2d
670, 711–12 (N.D. Ill. 2011) (finding McFatridge controlling and holding that an
arrestee's federal and state law malicious prosecution claims accrued during the
policy period, triggering the insurer's duty to defend, when his underlying convictions
were vacated).
-13-
784 N.Y.S. 2d 787 (N.Y. App. Div. 2004); Consulting Eng'rs, Inc. v. Ins. Co. of N.
Am., 710 A.2d 82 (Pa. Super. Ct. 1998).
This court, albeit in a case involving Missouri law, has followed the majority
of courts and accepted the insurer's argument "that the 'occurrence' causing the
'personal injury' . . . was the filing of [the fraud] suit [forming the basis of the
malicious-prosecution claim] and that no coverage is provided since the occurrence
arose outside the policy period." Royal Indem., 979 F.2d at 1299–1300. In Royal
Indemnity, we affirmed the district court's grant of declaratory judgment to the
insurer, explaining:
Appellant purchased his policies after he brought the fraud suit
but before it was decided. The insurer argues that the "occurrence"
causing the "personal injury," if any, was the filing of that suit and that
no coverage is provided since the occurrence arose outside the policy
period. Appellant, on the other hand, posits that the relevant occurrence
was the termination of the fraud suit, since under Missouri law no
"personal injury" arises until that time. Appellant relies here on the
familiar rule that a malicious prosecution action could not accrue until
the relevant suit terminated in his opponent's favor. See Euge v. LeMay
Bank & Trust Co., 386 S.W.2d 398, 399 (Mo. 1965); Walkenhorst v.
Lowell H. Liston & Co., 752 S.W.2d 825, 827 (Mo. App. 1988). (There
was a suggestion that Arizona law might be applicable here, but, if so,
there is only a false conflict of laws, since Arizona law is the same as
Missouri's. See Bradshaw v. State Farm Mut. Auto. Ins. Co., 157 Ariz.
411, 417, 758 P.2d 1313, 1319 (1988)).
The cases on this question were analyzed by the district court in
a lucid and well-reasoned opinion.6 As the district judge noted, almost
all of the courts that have considered the matter have accepted the
insurer's argument, even in the face of policy language that offered
stronger support for appellant's position than does that contained in the
6
Royal Indem. Co. v. Werner, 784 F. Supp. 690 (E.D. Mo. 1992).
-14-
policy relevant here. . . . We note, too, that we think it improbable that
the term "personal injury" is used in a technical sense to speak of a time
when a cause of action has fully matured. It is more likely intended to
describe the time when harm begins to ensue, when injury occurs to the
person, that is, in this case, when the relevant law suit is filed.
Id. at 1299–1300 (emphases added).
In the present case, the City virtually ignores this court's holding in Royal
Indemnity, devoting only a passing reference to it in its opening brief. In its reply
brief, the City argues that Royal Indemnity is distinguishable from the present case
because "the law of Missouri and not the law of Iowa was applied [in Royal
Indemnity]." Second, it asserts that "McFatridge, Roess, and American Safety
Casualty are superior precedent to Royal Indemnity under the facts of this case and
Iowa law."
The City, however, has not identified any meaningful distinctions between the
Missouri law that we applied in Royal Indemnity and Iowa law, nor can we find any.
Both Missouri courts and Iowa courts hold that an element of a malicious prosecution
claim is that the action terminate in the party's favor. Compare Wilson v. Hayes, 464
N.W.2d 250, 259 (Iowa 1990) ("To prevail on a claim for malicious prosecution, the
plaintiff must establish each of the following six elements: (1) a previous prosecution,
(2) instigation of that prosecution by the defendant, (3) termination of that
prosecution by acquittal or discharge of the plaintiff, (4) want of probable cause, (5)
malice on the part of defendant for bringing the prosecution, and (6) damage to
plaintiff." (emphasis added) (quotation and citation omitted)), with Walkenhorst v.
Lowell H. Listrom & Co., 752 S.W.2d 825, 827 (Mo. Ct. App. 1988) ("The elements
of an action for malicious prosecution are (1) the commencement of a prosecution
against the present plaintiff; (2) its instigation by the present defendant; (3) its
termination in favor of the present plaintiff; (4) the absence of probable cause for
such a proceeding; (5) the presence of malice; and (6) damage to the plaintiff
-15-
therefrom." (emphasis added)). But as the district court in Royal Indemnity explained,
"the [underlying] suit's inception injures the defendant even though termination of the
suit must take place before the defendant [i.e, the § 1983 plaintiff] can recover
damages." Royal Indem., 784 F. Supp. at 692 (emphasis added).
Royal Indemnity is persuasive precedent from this circuit adhering to the
majority view that "the tort of malicious prosecution occurs for insurance coverage
purposes . . . when the underlying criminal charges are filed." City of Erie, Pa., 109
F.3d at 160. "But of greater significance, we believe that principles of [Iowa]
insurance law, which determine when a tort occurs for insurance purposes, argue
strongly in favor of the majority position." Id. at 162. Under Iowa law, "[t]he time of
'occurrence' is when the claimant sustains damages, not when the act or omission
causing the damage takes place." Tacker, 530 N.W.2d at 676 (emphasis added). "In
a claim based on malicious prosecution the damage begins to flow from the very
commencement of the tortious conduct—the making of the criminal complaint. The
wrong and damage are practically contemporaneous." Cont'l Ins. Cos. v. N.E. Pharm.
& Chem. Co., 811 F.2d 1180, 1191 (8th Cir. 1987) (quotation, alteration, and citation
omitted). Therefore, "the tort of malicious prosecution occurs for insurance purposes
at the time the underlying charges are filed." City of Erie, Pa., 109 F.3d at 163.
"At the same time, we do not find convincing the principal argument cited in
support of the minority rule." Id. at 161. Applying this rule, "there is a confluence
between the date on which the tort occurs for insurance purposes and the date on
which the statute of limitation begins to run." Id. However, "these dates need not
necessarily correspond. Reliance on the commencement of the statute of limitation
is not dispositive in determining when a tort occurs for insurance purposes." Id. This
is because "[s]tatutes of limitation and triggering dates for insurance purposes serve
distinct functions and reflect different policy concerns. Statutes of limitation function
to expedite litigation and discourage stale claims." Id. Courts tasked with
-16-
"determining when a tort occurs for insurance purposes . . . have generally sought to
protect the reasonable expectations of the parties to the insurance contract." Id.
After reviewing Royal Indemnity and other "relevant state precedent, analogous
decisions, [and] considered dicta," HOK Sport, Inc., 495 F.3d at 935 (quotation and
citation omitted), we conclude that the Iowa Supreme Court would adhere to the
majority view. Applying that view to the present case, "the underlying criminal
charges" against Harrington and McGhee were filed in 1977. Therefore, Harrington's
and McGhee's injuries "occurred," for insurance purposes, in 1977. As a result,
Harrington's and McGhee's injuries did not "occur," for insurance purposes, during
the policy periods—January 1, 2002, to January 1, 2003, and January 1, 2003, to
January 1, 2004.
We also reject the City's contention that "the insurance policies are ambiguous
and should be construed against the insurance companies." City of Erie, Pa., 109 F.3d
at 163. "Whether an ambiguity exists is a question of law." Id. (quotation and citation
omitted). Although the City and Genesis "disagree about the terms of their insurance
policies, disagreement between the parties over the proper interpretation of a contract
does not necessarily mean that a contract is ambiguous." Id. (quotation, alteration, and
citation omitted). "A contract is ambiguous only if it is reasonably susceptible of
different constructions and capable of being understood in more than one sense." Id.
(quotation and citation omitted). Here, the City and Genesis "agree the policies are
occurrence-based and provide coverage for the tort of malicious prosecution." Id.
Admittedly, "the policies do not define precisely when the tort of malicious
prosecution 'occurs.'" Id. But "[w]here . . . a term is not defined in an insurance policy
but possesses a clear legal or common meaning that may be supplied by a court, the
contract is not ambiguous." Id. As explained supra, "the courts of [Iowa] have
provided a clear legal definition of when a tort occurs for insurance coverage
purposes. Therefore, the meaning of the policies is not susceptible of reasonable
dispute or differing constructions." Id. at 164.
-17-
Finally, the City asserts that "there are allegations of continuing misconduct
and continuing personal injury during the terms of the Genesis policies." But we
reject the contention that "the tort of malicious prosecution constitutes a continuing
injury." Id. "Under a 'multiple trigger' approach, an insurance company has a duty to
defend and indemnify if it has issued a policy in effect at any time during the
continuing tort." Id. But
[i]n malicious prosecution cases, there is no interval between arrest and
injury that would allow an insurance company to terminate coverage.
The plaintiff faces incarceration, humiliation, and damage to reputation
as soon as charges are filed. Perhaps for this reason, no federal or state
court has adopted the multiple trigger theory in malicious prosecution
cases.
Id. at 165.
"For the reasons expressed, we predict [that] the [Iowa] Supreme Court would
hold [that] the tort of malicious prosecution occurs, for insurance purposes, on the
date the underlying charges are filed." Id. Because Genesis did not have an insurance
contract with the City in 1977, when the underlying charges were filed against
Harrington and McGhee, it did not have "a duty to defend and indemnify the City
. . . against [Harrington's and McGhee's] suit[s]." Id.
III. Conclusion
Accordingly, we affirm the judgment of the district court.
______________________________
-18-