2011 IL App (3d) 090484
Ill. App. Ct.2011Background
- Illinois Farmers Insurance extended defense and indemnity to Stukel under a homeowners policy.
- Stukel was sued for malicious prosecution by Keyser, alleging false statements to police.
- Underlying complaint framed as a civil tort of malicious prosecution; injury alleged as resulting therefrom.
- Policy defined personal injury to include malicious prosecution and defined an occurrence as an accident resulting in injury or damage.
- Policy excluded bodily or personal injury caused intentionally by the insured; Illinois Farmers sought declaration of no duty to defend.
- Trial court found ambiguity in policy terms and granted summary judgment for defendants; appellate review conducted de novo.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether malicious prosecution falls within covered personal injury. | Stukel's conduct caused malicious prosecution, within personal injury coverage. | Occurrence/intentional conduct structure excludes coverage for intentional acts, creating ambiguity. | Coverage includes malicious prosecution; duty to defend exists. |
| Does the policy's occurrence and personal injury language lead to illusory coverage? | Explicit coverage of malicious prosecution should sustain defense; exclusion cannot erase coverage. | Policy language is ambiguous and could negate protection for intentional acts. | No illusory coverage; terms construed in insured's favor; coverage applies. |
| Public policy permitting insured to recover for intentional misconduct under a liability policy. | Public policy does not bar defense since insurer accepted premium and promises coverage. | Public policy generally disfavors insurance indemnifying intentional misconduct. | Policy does not violate public policy; it covers conscious but narrowed intentional torts via malicious prosecution. |
Key Cases Cited
- Outboard Marine Corp. v. Liberty Mutual Insurance Co., 154 Ill.2d 90 (Ill. 1992) (de novo review of insurance coverage; interpret policy as a whole)
- Crum & Forster Managers Corp. v. Resolution Trust Corp., 156 Ill.2d 384 (Ill. 1993) (insurer owes defense if underlying complaint alleges facts within policy coverage)
- Dixon Distributing Co. v. Hanover Insurance Co., 161 Ill.2d 433 (Ill. 1994) (public policy limits on indemnity for intentional misconduct; some intentional torts covered)
- University of Illinois v. Continental Casualty Co., 234 Ill.App.3d 340 (Ill. App. 1992) (insurer's duty to defend based on premium and reasonable expectations)
- Lincoln Logan Mutual Insurance Co. v. Fornshell, 309 Ill.App.3d 479 (Ill. App. 1999) (public policy and coverage limits for serious intentional crimes)
- Cincinnati Insurance Co. v. American Hardware Manufacturers Ass'n, 387 Ill.App.3d 85 (Ill. App. 2008) (defamation and libel coverage as explicit policy language)
- Johnson v. Target Stores, Inc., 341 Ill.App.3d 56 (Ill. App. 2003) (malice defined as intent to commit a wrongful act within personal injury coverage)