OPINION AND ORDER
These consolidated cases represent a dispute among insurance companies about who ends up holding the bag for a five million-dollar settlement of the City of Elkhart’s civil rights liability to Christopher Parish. The wrongful arrest and prosecution of Mr. Parish has caused a deluge of litigation. It began in November 1996, when Parish was charged with armed robbery and attempted murder based on the report of a home invasion and shooting of Elkhart, Indiana resident Michael Kershner. Elkhart Police Department Detective Steve Rezutko was the principal investigating officer. Parish was convicted in June 1998, but in December 2005, an Indiana appellate court overturned the conviction and ordered a new triаl, after which the criminal case was dismissed in December 2006. See Parish v. State of Indiana,
In September 2007, Parish brought a civil action in federal court asserting federal and state law claims for relief. In the first count under 42 U.S.C. § 1983, he alleged that the City of Elkhart and its police had violated his constitutional rights to a fair trial and due process, resulting in Parish’s wrongful arrest, prosecution and conviction. In the second count, Parish contended that the city and county were liable under the Indiana Tort Claims Act for false arrest, false imprisonment and intentional infliction of emotional harm. Parish’s complaint also alleged that Rezut-ko falsely implicated him by staging a phony crime scene, fabricating and tampering with evidence, manipulating and coercing witnesses, and giving perjured testimony.
The case against Elkhart and Rezutko proceeded to trial before Judge Lozano. Parish prevailed, but the jury’s award of only $73,125 in compensatory damages and $5,000 in punitive damages was “astoundingly low for cases of wrongful conviction.” Parish v. City of Elkhart,
One of the defendants in this сase, National Casualty Company, had issued Elk-hart a Law Enforcement Liability policy for the period from 1996 through 2000. The limits of liability under those policies were $1 million. NCC defended Elkhart and Rezutko in the civil case before Judge Lozano but it did so under a reservation of rights. No other insurer contributed to Elkhart’s defense. Ultimately, NCC coughed up the entire $5 million settlement amount plus all of the cost of the defense. This is one of the curious features of this case. Why did NCC pay $5 million when its yearly policy limits were $1 million? When asked at oral argument why NCC would pay $5 million to settle a case where the yearly limits of liability were only $1 million, it had no good an
In this consolidated case, NCC seeks contribution toward the cost of defending the Parish suit and toward the settlement from other insurers who issued policies to Elkhart at various times. This case is greatly complicated by the number of years Mr. Parish’s nightmarish odyssey took to resolve and the number of different insurance companies that insured Elkhart during all those years. The simplest way to understand the intersection between when things happened to Mr. Parish and which company was providing the insurance at the time is through a chart. Here it is:
Insurer_Type of Insurance Term ._ Events _
National Cas. Company Primary LEL_3/1/1996-1/1/2001 Nov. '96 Parish charged
TIG Insurance Co. Excess/Umbrella 6/1/1997-3/1/2000 June '98 Parish __convicted
Markel Insurance Co. Excess/Umbrella 3/1/2000-1/1/2001
Zurich Specialties/ Primary LEL 1/1/2001-1/1/2003 Swiss Re International_
Selective Insurance Co. Excess/Umbrella ' 1/1/2001-1/1/2005
Northfield Insurance Primary LEL 1/1/2003-1/1/2004 Co._
Gemini Insurance Co. Primary LEL 1/1/2004-1/1/2005 Dec. '06 Criminal case _ dismissed
St. Paul Firе and Primary LEL 1/1/2005-1/1/2008 Sept. '07 § 1983 action Marine_filed
Clarendon American Excess/Umbrella 1/1/2005-1/1/2008 Insurance Co._
This consolidated litigation involves three separate pleadings: a first amended complaint by TIG which seeks a declaratory judgment, a counterclaim and third-party complaint by NCC, and an amended complaint by Gemini and Swiss Re also seeking declaratory relief. Now before me are three .motions for judgment on the pleadings — one from TIG Insurance, one from Gemini Insurance Company and Swiss Re International, and the third from St. Paul Fire and Marine Insurance Company and Northfield Insurance Company, in which Clarendon' America Insurance Company has joined. A hearing on the motions was held on May 29, 2015.
Legal Standards
A motiоn for judgment on the pleadings is filed under Fed.R.Civ.P. 12(c) but is “governed by the same standards as a motion to dismiss for failure to state a claim under Rule 12(b)(6).” Lodhottz v. York Risk Services Group, Inc.,
These standards are generally articulated where a Rule 12(c) motion is brought by a defendant seeking the dismissal of a claim asserted against him. Here the motions are brought by third-party defеndants St. Paul, Northfield and Clarendon, but also by declaratory judgment plaintiffs Gemini, Swiss Re and TIG. These látter movants seek not mere dismissal of an opposing pleading but an affirmative judgment in their favor declaring that they had no duty to defend or indemnify Elkhart as to the Parish lawsuit. In this procedural posture, the analysis more closely resembles the summary judgment standard: “the motion may be helpful in disposing of cases in which there is no substantive dispute that warrants the litigants and the court proceeding further,” and where “the movant clearly establishes that no material issue of fact remains to be resolved and that he is entitled to judgment as a matter of law.” Wright & Miller, Federal Practice and Procedure: Civil 3d § 1368, p. 222-23 (3rd Ed.2004). Wright and Miller further distinguish motions under Rule 12(b) and 12(c):
The granting of a Rule 12(b) motion typically merely means that the plaintiff has failed to satisfy one of the procedural prerequisites for asserting his claim for relief. A motion for judgment on the pleadings, however, theoretically is directed towards a determination of the substantive merits of the controversy; thus, federal courts are unwilling to grant a judgment under Rule 12(c) unless it is clear that the merits of the controversy can be fairly and fully decided in this summary manner.
Id. at § 1369 (p. 259). .
There is no dispute that Indiana law governs the construction of the insurance policies at issue here. Insurance policies are contracts, and the coverage is created by the language used to define the policy’s scope. As with other contracts, interpretation of the terms of an insurance policy is a matter of law for the court to decide. Home Federal Savings Bank v. Ticor Title Ins. Co.,
An insurer’s duty to defend is determined based on the pleading of the claims against the insured. Where the pleadings “fail to disclose a claim within the coverage limits or one clearly excluded under the policy, and investigation also reveals the claim is outside the coverage of the policy,” no duty to defend arises. Trisler v. Indiana Ins. Co.,
Gemini Insurance- Company and Swiss Re International SE filed the first of the three pending motions. In their amended complaint, Gemini and Swiss Re seek a declaratory judgment that they had no duty to defend ’or indemnify Elkhart based on the Law Enforcement Liability policies that Swiss Re’s predecessor (Zurich)- issued providing coverage for the period from 2001 through- 2003,' and Gemini provided for the year 2004. Both Gemini and Swiss Re were primary carriers for Elkhart during their respective years. The only remaining defendant to Gemini and Swiss Re’s amended complaint is NCC (who was Elkhart’s primary carrier for the years 1996-2001), following the voluntary dismissal of all other defеndants' in March 2014. [DE 37, 39.]
In their motion, Gemini and Swiss Re contend that they are entitled to a judgment that their policies provide no .coverage for Elkhart because, within the meaning of the- policies, the “wrongful act(s)” that caused Parish’s injury, did not “occur during the policy period,” and because coverage is defeated by the policies’ exclusion for damages arising from fraudulent and dishonest acts. -
Swiss Re’s Law Enforcement Liability Coverage Form provided that:
“The Company will pay on behalf of the “insured(s)” all “damages” resulting from a “wrongful act(s)” which arise out of the law enforcement activities. The “wrongful act(s)” must occur during the policy period and within the “policy territory”.
[DE 35-6 at 3; DE 35-7 at 3.] Gemini’s policy contains this coverage provision:
A. Insuring Agreement
1. We will pay those sums that -the Insured becomes legally obligated-to pay as “damages” because of a “wrongful act” arising out of law enforcement activities by or on behalf of the Named Insured as shown in the Declarations provided always that:
a. The “wrongful act” is committed or occurs during the policy period, and ■ -
b. Such “wrongful act”-took place in - the “coverage territory”.
[DE 35-8 at 4J-
Under both the Gemini and Swiss Re policies, coverage is provided for damages resulting from a “wrongful act” occurring during the policy period. The Swiss Re policies define “wrongful act” as “an actual or alleged error or omission, negligent act, neglect or breаch of duty by the ‘insured’ while conducting law enforcement activities, which result in ... ‘Personal Injury’....” [DE 35-6 at 6; DE 35-7 at 6J The Gemini policy’s definition of “wrongful act” is essentially the same: “an actual or alleged error, omission, act, neglect or breach of duty by the insured while conducting law enforcement activities which result in ...” Personal Injury* .... ” [DE 35-8 at 10.] “Personal Injury’’ in both Gemini’s and Swiss Re’s policies is defined to include false arrest, detention or imprisonment, and malicious prosecution, as well as “[violation of civil rights ... protected under 42 U.S.C. § 1981 et sequentia or State Law.” [DE 35-6 at 6; DE 35-7 at 6; see also DE 35-8 at 10.]
Boiling all this language down, the coverage under the Swiss Re and Gemini policies.is for damages resulting from a “wrongful act” committed during the policy period while cоnducting .law enforcement activities. All the wrongful acts by Elkhart law enforcement that injured Parish occurred before his conviction in 1998, and I readily conclude that the “wrongful acts’’ within the meaning of the policy were the police misconduct or possibly their culmination in the filing of charges
Recall that only the wrongful conviction claim remained when Parish settled his § 1983 action. If the “wrongful act” in the Gemini and Swiss Re policies is construed to focus on the accrual of the wrongful conviction claim, based on Parish’s exoneration by the dismissal of the criminal charges in 2006, that would also place the triggering event outside the policy periods, as the later of the Swiss Re and Gemini policies ended as of January 1, 2005. NCC concedes the point: “if the Court agrees that insurance coverage for Parish’s wrongful conviction claim was triggered on the date of exoneration, and no other date, the TIG, Gemini and Swiss Re policies would not be required to contribute to settlement because none were in effect on the date of exoneration.” [Id. at 9.]
So the question is what event triggers insurance coverage in a wrongful conviction claim? Is it the date when the bad police behavior occurred and the prosecution was commenced? Or is it the date of exoneration — a date that mаy be several years down the road as it was in this case — that matters? The answer to these questions is far from clear. This case is governed by Indiana law but I can locate no Indiana case directly on point.
There are two recent Illinois cases that have decided that insurance coverage is triggered in a wrongful prosecution claim under Illinois law when the wrongful prosecution is' commenced, not when the defendant is exonerated. Indian Harbor Ins. Co. v. City of Waukegan,
• This is all a bit academic for the motion filed by Swiss Re and Gemini, because, as I noted above, they win no matter which way the law is. Recall that Swiss Re and Gemini’s policies ran from 2001 through 2004. The wrongful acts by the police started in 1996 and Mr. Parish was wrongfully convictеd in> 1998 — well before either Swiss Re or Gemini were insuring the City of Elkhart. And the exoneration of Parish occurred in 2006 — again, well after Swiss Re and Gemini’s policies lapsed. So whether the Seventh Circuit is correct and exoneration is the date that matters, or whether the more recent Illinois cases are correct and the date the wrongful prosecution was filed is what matters is neither here nor there for our present purposes. Swiss Re and Gemini win either, way because their coverage occurred smack dab in the middle of the two dates. So I will grant Swiss Re and Gemini a declaratory judgment on the pleadings to the effect that they bear no share of liability on the Parish settlement. Because it is undisput
Swiss Re and Gemini might still be on the hook for the costs of Elkhart’s defense if their policies created a duty to defend against the Parish complaint. But even the broader examination of all the Parish complaint’s allegations does not support a conclusion that Swiss Re or Gemini had a duty to defend. The facts pled in support of the Indiana tort claims for false arrest and false imprisonment, and theories of federal constitutional violations all are based on law enforcement conduct that took place long befоre the Swiss Re and Gemini coverage periods (2001, 2002, and 2004). The Indiana tort claim for intentional infliction of emotional distress was found by the Seventh Circuit to have accrued upon Parish’s exoneration in December 2006. Parish v. City of Elkhart,
NCC argues unpersuasively that the Parish complaint “allege[s] wrongful acts that occurred during the Gemini and Swiss Re policy periods.” [DE 82 at 19.] The most NCC can point to are allegations about Elkhart law enforcement policies that may have continued after Parish’s conviction and into the policy periods, but any continuing Elkhart practices did not cause Parish further injury at that point. The argument “conflates continuing harmful acts with the continuing effects of one harmful act” or earlier harmful acts, Northfield Ins. Co. v. City of Waukegan,
For all these reasons, I conclude as a matter of law that the Swiss Re and Gemini policies did not create a duty to defend Elkhart or provide liability coverage for settlement of the Parish matter. And since I am granting judgment in favor of Swiss Re and Gemini for the reasons outlined above, I do not need to discuss their alternative argument, namely that coverage is barred under exclusions for “criminal” acts, “acts of fraud” and “dishonest, fraudulent” acts.
Motion of TIG Insurance
TIG issued certain excess’ umbrella insurance рolicies to Elkhart for the period from June 1,1997 through March 1, 2000, during which- time NCC was Elk-hart’s primary Law Enforcement Liability carrier. TIG’s motion for judgment on the pleadings contends that “the only remaining claim in the Underlying Lawsuit at the time of the settlement does not trigger the TIG Excess Policies,” and that the remaining claim did not involve “personal injury” within the meaning of the policies. [DE 79 at 2.] TIG reasons that at the time of the Parish settlement, the sole remaining claim was for wrongful conviction, and that
Unlike Swiss Re and Gemini’s coverage based on “wrongful acts,” TIG’s excess policy was “occurrence” based. The pertinent portion of the TIG “Coverage” provision provides: “WE will pay on YOUR behalf the sums that YOU shall become legally obligated to pay as damages because of PERSONAL INJURY, PROPERTY DAMAGE, or ADVERTISING INJURY, caused by an OCCURRENCE to which this policy applies during this POLICY PERIOD.” [DE 1-1 at 11.] TIG argues that the occurrence in question is Parish’s § 1983 claim for wrongful conviction, and suggests that the Seventh Circuit found that claim did not accrue until Parish’s exoneration in December 2006. Parish v. City of Elkhart,
Surprisingly, in its briefing, NCC appears to agree with TIG: “NCC agrees with the moving insurers to the extent that the appropriate trigger date for determining which insurers?, duties of indemnification are triggered is the date of Mr. Parish’s exoneration in 2006 and no other date.” . [DE 82 at 2-3.]. But at oral argument, TIG did an about-face and argued that the. trigger date should be much earlier, relying on the more recent Illinois cases discussed . above—Indian Harbor Ins. Co. v. City of Waukegan,
At bottom, I agree with the Illinois Appellate Court, when it said that what really matters in deciding coverage questions is what the individual insurance policy at issue.actually says. In other words, it is the language of the insurance contract that governs coverage, not some blanket judge-made rule. St. Paul Fire and Marine Insurance v. City of Zion,
In TIG’s policy, “PERSONAL INJURY” is defined to include “False arrest, detention, imprisonment, or malicious prosecution.” [DE 1-1 at 19.] “Occurrence” is defined as “an accident including continuous or repeated exposure to substantially the same general harmful conditions.” With appropriate definitional substitutions, the TIG policy provides coverage for damages because of malicious prosecution caused by an accident during the policy period. Let’s set aside for the moment the question whether anything in this case can be called an “accident” — an issue no one has raised.
This is where the definition of “occurrence” comes into play. There is a “clear majority” of courts that have held that the “tort of malicious prosecution occurs for insurance coverage purposes ... when the underlying criminal charges are filed.” Genesis Ins. Co.,
Because an “occurrence” under the TIG policies includes “continuous or repeated exposure to substantially the same general harmful conditions,”, a series of related acts of police misconduct (which would include рerjured trial testimony or other misconduct after the false charges are brought) constitutes a,, single occurrence. This “restrictive” policy definition sweeps into a single occurrence, all injuries and damage .resulting from one “proximate, uninterrupted and continuing cause,” such as here with the malfeasance of Elk-hart law enforcement. Thomson, Inc.,
In the Genesis-Ins. case, the Eighth Circuit analyzed the insured’s assertion that constitutional claims in the nature of malicious prosecution involved allegations of continuing misconduct and continuing injury so as to warrant a “multiple trigger” approach to insurance coverage across multiple liability policy periods. Citing the Third Circuit’s rationale in City of Erie, the Eighth Circuit rejected the contention that malicious prosecution constitutes a continuing injury and found that multiple triggers are not applicable. Genesis Ins., 677 F.3d at'815-16. “In 'malicious proseсution 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
I am comfortable with this conclusion despite the existence of Indiana cases applying a multiple trigger approach in other contеxts. See Allstate Insurance Company v. Dana Corporation,
So the “occurrence” here dates to 1996 when Parish was wrongly charged in violation of his due process rights, and quite simply TIG was not Elkhart’s insurer at that time. In sum, TIG has dеmonstrated that its policy created no coverage for the settlement of Parish’s § 1983 claim because the “occurrence” that caused Parish’s injury commenced prior to the policy period.
NCC’s pleading seeks contribution not only to the settlement but also to the costs of the defense. TIG’s briefing does not discuss the broader duty to defend, although the motion seeks relief in TIG’s favor on that issue. NCC’s opposition argues several times that Swiss Re and Gemini have a duty to defend but does not similarly expressly argue that TIG does. As always, coverage turns on the policy language, but as a general proposition excess and umbrella policies often disclaim a duty to defend and cоverage for defense costs since those are borne by the primary insurer. TIG’s umbrella policies do not contain any language that would support liability for defense costs. The “Coverage” section refers only to sums Elkhart “become[s] legally obligated to pay as damages.” [DE 1-1 at 11 (emphasis added).] The “Limits of Insurance” are stated in terms of the “ultimate net loss,”
Under “Defense Provisions,” the policy рrovides that TIG “shall not be called upon to assume charge of the investigation, settlement or defense of any claim made or suit brought” against the insured. [Id. at 12.] In a seemingly redundant move, the TIG policy also contains an endorsement adding the provision that TIG “shall not defend or investigate or effect settlement of any claim or suit which is not covered or is specifically excluded by this policy.” [DE 1-1 at 27.] Although TIG retains a right to opt into participation in the defense of any claims it believes might impact it [id.], that option (not exercised here) does not terminate the primary carrier’s defense obligation or expose TIG to liability for the primary insurer’s costs of defense.
This approach is consistent with what commentators on the matter have said: “Regarding excess insurers, the traditional majority view is that an excess insurer is not required to contribute to the defense expenses as long as any primary insurer still has a duty to defend.” IRobert P. Redemann and Michael F. Smith, Law and Prac. of Ins. Coverage Litig. § 4:23 (2015). See also 14 Steven Plitt, Daniel Maldonado, Joshua D. Rogers, and Jordan R. Plitt, Couch on Ins. § 205.61 (3rd ed. 2015) (“Excess insurers had neither an express nor implied duty to share in the defense costs before exhaustion of the underlying policy limits”).
On the record and scant argument before me, I conclude that as an umbrella insurer under this policy language, TIG has no obligation with respect to costs of defense, and the parties, knowing thаt, have not spent time addressing it. The conclusion is bolstered by the strength of my determination that there is no coverage for the settlement itself because the “occurrence” that caused the injury was not within the policy period. For all these reasons, TIG’s motion will be granted as to both Elkhart’s settlement liability and the costs of defense.
Motion of St. Paul, Northfield and Clarendon
Defendants St. Paul and North-field have filed a motion for judgment on the pleadings, in which defendant Clarendon has joined. St. Paul was Elkhart’s primary Law Enforcement Liability carrier for the years 2005, 2006 and 2007, and Clarendon was the excess carrier for those same years. Northfield was Elkhart’s primary carrier in 2003. St. Paul’s policies contained the following provision, in which I have pаrenthetically inserted in italics relevant additional language from the policy’s definition of terms:
We’ll pay amounts any protected person is legally required to pay as damages for covered injury or damage (caused by wrongful acts of false arrest, detention or imprisonment, malicious prosecution, or civil rights violations) that:
• results from law enforcement activities or operations by or for you;
• happens while this agreement is in effect: and
• is caused by a wrongful act that is committed while conducting law enforcement activities or operations.
DE 35-18 at 239-240; DE 84 at 4.
Under this language, it is the “covered injury or damage” that must happen during the policy period, rather than the “wrongful acts” which cause the injury. Of course, the wrongful act and the damage сan be simultaneous, as I believe they
As for Clarendon, it issued éxcess policies to Elkhart for calendar years 2005 and 2006, during the period of St. Paul’s primary law enforcement liability coverage. [DE 35-16, DE 35-17.] Evidently, Clarendon takes the position that if the court grants relief'to St. Paul, then Clarendon would automatically receive the same declaration of no liability for costs of defense or for contribution to the settlement. This is correct since the coverage under Clarendon’s Excess Liability Policy is expressly limited to “injury or damage covered by the underlying insurance,” namely St. Paul’s LEL policy. [DE 25-16 at 4; DE 25-17 at 4.] Because I conclude that St. Paul’s policy provided no coverage for the § 1983 claims Parish settled with Elkhart in 2013, Clarendon is likewise without liability.
Northfield’s policy, which was in place during 2003, provides (with my italicized parenthetical inserts of additional definitional language) that it “will pay those sums that the insured becomes legally obligated to pay as damages because of a ‘wrongful act’ which results in ‘personal injury' (arising from false arrest, detention or imprisonment, malicious prosecution ) ... in the performance of law enforcement activities____” [DE 35-22 at 11, 14.] Further, the insurance “applies to damages only if the damages ... [o]ccur during the policy period.” [Id. at 11.]
So under Northfield’s policy, it is the “damages” that have to occur during the policy period. This language seems to sloppily confuse “damages” with “damage.” The term is not defined but the way it is first used (“sums ... obligated to pay as damages”) sounds like “money damages” and not “damage” as a synonym for injury. (Once again, this is not a point that any party has raised). So the question that needs to be • answеred is when did Mr. Parish suffer “damages” resulting from the Elkhart cops’ misconduct. I think the most sensible reading is that the damages occurred when Parish was wrongly arrested, charged and tried, all based on that wrongdoing. None of that was going on in 2003 when Northfield’s policy was in effect.
All three of these insureds are entitled to judgment as a matter of law concerning the Parish settlement. As I indicated before, NCC’s pleading seeks contribution not only to the settlement but also to the costs of Elkhart’s defense. Northfield and St. Paul’s motion does not address the broader duty to defend. NCC’s opposition clearly argues the point, and the movants address it in reply. I conclude that the lack of coverage is sufficiently clear that there is likewise no liability for the costs of defense.
These insurers’ policies were in effect years after Parish was charged and convicted, during time periods when he was incarcerated and the state appellate process finally yielded Parish a victory and the dismissal of the charges. Nothing happened during these policy periods that could be the kind of “injury or damage” covered by these policies. The police misconduct had happened years before, as had Parish’s trial and sentencing. Even the broader duty to defend is not broad enough to support for these insurers a duty to defend (or to share in the cost of defense) against Parish’s civil rights complaint.
Gemini Insurance -Company and Swiss Re International' SE’s Motion' for Judgment on the Pleadings [DE 69] is GRANTED. ...
TIG Insurance Company’s. Motion for Judgment on the Pleadings [DE 79] is GRANTED.
St. Paul Eire and Marine Insurance Company and Northfield Insurance Company’s Motion for Judgment .on the Pleadings [DE 83], joined by Clarendon America Insurance Company [DE 85], is GRANTED.
SO ORDERED.
Notes
. The Indiana Court pf Appeals has recently examined this same definition of occurrence ' (finding it "typical of commercial liability policies”) . and equated the terms “occurrence” and "accident” with "happening” or "event.” Thomson, Inc. v. Insurance Company of North America,
. Because I agree with TIG on its first argument, I need not discuss TIG’s alternative argument, namely that a § 1983 due process claim is not a covered injury because "personal injury” is defined to include false arrest, detention, imprisonment and malicious prosecution, but does not include due process violations based on wrongful conviction.