Sanders v. Illinois Union Insurance Co.
2019 IL 124565
Ill.2020Background
- In 1994 Chicago Heights police fabricated evidence and charged Rodell Sanders with murder and related crimes; he was convicted in 1995 and imprisoned for ~20 years.
- Sanders’s conviction was vacated by postconviction proceedings (2011–12); retrials in 2013 (mistrial) and 2014 (acquittal) followed; a later federal civil-rights settlement produced a $15M consent judgment, with Chicago Heights assigning its claim against its insurers to Sanders.
- Chicago Heights held a primary policy from Illinois Union and an excess follow-form policy from Starr covering “personal injury” including “malicious prosecution” for claims first arising out of an “offense” happening during the policy period (Nov. 1, 2011–Nov. 1, 2014).
- Insurers denied coverage, arguing the malicious-prosecution “offense” occurred in 1994 (initial prosecution), before their policies took effect; Chicago Heights/Sanders argued coverage was triggered by retrials/acquittal/exoneration within the policy period.
- The trial court granted the insurers’ motion to dismiss; the appellate court reversed (majority held offense = completed cause of action); the Illinois Supreme Court granted review.
- The Supreme Court held the policy’s term “offense” refers to the wrongful conduct (initiation/charging) and thus the malicious prosecution occurred in 1994, outside the insurers’ policy period; insurers were not required to indemnify.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| When does the malicious-prosecution “offense” occur for coverage? | Sanders/Chicago Heights: when the tort is completed — favorable termination/exoneration or retrial/acquittal during policy period | Insurers: when wrongful conduct/charging occurred (1994), before their policies | The term “offense” means the wrongful conduct (institution of the prosecution); trigger = 1994, insurers not liable |
| Do retrials in 2013–14 constitute separate occurrences triggering coverage? | Retrials produced new liability exposure and thus separate occurrences | All trials arose from the same fabricated charges — a single occurrence | Retrials arise from the same underlying wrongful act and are one occurrence; no separate trigger |
| Must policy coverage incorporate all common-law tort elements (e.g., favorable termination) before a claim arises? | Coverage should require completion of tort elements (favorable termination) | Policy language does not import tort-elements requirements; focuses on occurrence/offense timing | Policy does not require completion of tort elements; it is occurrence-based and looks to when the wrongful act happened |
| Effect of occurrence-based policy language on shifting liability to later policy periods | Plaintiff: coverage can shift to policy in which exoneration occurs | Insurer: occurrence-based policy intends to cover only acts during policy period | Occurrence-based structure supports insurers: liability follows when the wrongful acts occurred, not when tort claim accrues |
Key Cases Cited
- Valley Forge Insurance Co. v. Swiderski Electronics, Inc., 223 Ill. 2d 352 (Ill. 2006) (insurance-contract interpretation principles)
- Nicor, Inc. v. Associated Electric & Gas Insurance Services Ltd., 223 Ill. 2d 407 (Ill. 2006) (undefined contract terms are not necessarily ambiguous)
- Pekin Insurance Co. v. Wilson, 237 Ill. 2d 446 (Ill. 2010) (give policy terms their plain and ordinary meaning)
- Mitchinson v. Cross, 58 Ill. 366 (Ill. 1871) (malicious prosecution’s gist: prosecutor acted without probable cause)
- Spiegel v. Zurich Insurance Co., 293 Ill. App. 3d 129 (Ill. App. Ct. 1997) (malicious prosecution is bringing a suit known to be groundless)
- American Safety Casualty Ins. Co. v. City of Waukegan, 678 F.3d 475 (7th Cir. 2012) (Seventh Circuit treated exoneration as the occurrence for coverage)
- Security Mutual Casualty Co. v. Harbor Insurance Co., 65 Ill. App. 3d 198 (Ill. App. Ct. 1978) (case relied on in prior federal-court analyses)