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Calvert Insurance Co. v. Western Insurance Co.

decided: April 21, 1989.

CALVERT INSURANCE COMPANY, PLAINTIFF-APPELLANT,
v.
WESTERN INSURANCE COMPANY, DEFENDANT-APPELLEE



Appeal from the United States District Court for the Northern District of Illinois, Western Division, No. 86 C 20389, Stanley J. Roszkowski, Judge.

Cummings, Posner, and Flaum, Circuit Judges.

Author: Flaum

FLAUM, Circuit Judge

This is a diversity action in which Calvert Insurance Company ("Calvert") seeks a declaration that Western Insurance Company ("Western") must reimburse it for the expenses it incurred in defending two police officers and the City of East Dubuque ("City") in litigation arising from the arrest of Richard Moore. The City tendered the defense of the suit to Western, with whom the City had a general liability policy, but Western, because it viewed the allegations in Moore's complaint to be outside the coverage of the policy, refused to defend. Calvert, which also had a policy with the City, undertook the defense and eventually settled the suit.

Calvert then brought this action seeking reimbursement from Western for its expenses in handling the case. The district court, on cross-motions for summary judgment, found that Western was under no duty to defend either the City or the officers and thus granted summary judgment to Western. We agree with the district court that Western was entitled to summary judgment and, therefore, affirm.

I.

This case had its genesis in the arrest of Richard Moore on March 21, 1982. According to Moore, two police officers employed by the City repeatedly struck him in the face and head with fists, night sticks, and other instruments during the course of the arrest. Moore filed a ยง 1983 complaint against the officers in federal district court alleging that the officers employed "excessive and unnecessary" force in the arrest.

The complaint also named the City as a defendant and asserted that the City was liable on two grounds. First, the complaint alleged that the incident involving Moore was but one of a series of ten incidents in which police officers of East Dubuque had violated the civil rights of citizens and that the City "had actual knowledge of the continuing course of incidents . . . [and] through a prolonged course of deliberate indifference or reckless disregard for the civil rights of citizens, including Plaintiff, encouraged, approved of or acquiesced in repeated violations of citizens' civil rights." Second, the complaint alleged that the "Defendant City, with deliberate indifference or reckless disregard for the civil rights of citizens, including Plaintiff, failed to supervise, train and control the Defendant officers," proximately causing the excessive use of force which caused Moore's injuries.

The City tendered the defense of the Moore action to Western, its primary general liability insurer. Western, however, refused to defend either the officers or the City claiming that, given the allegations made in Moore's complaint, there was not even a potential for coverage under the Western policy. The City then tendered the defense to Calvert, the City's excess insurance carrier, who did defend the City and its officers. Moore's suit was eventually settled by Calvert for $6000.

In this action, Calvert seeks to recover from Western the money it expended defending the City and its officers in the Moore case. According to Calvert, Western was under a duty to defend the City and its officers in the Moore case and because it failed to do so, must now reimburse Calvert for its expenses. Western has defended the action by claiming that no potential for coverage existed under its policy and therefore it did not owe the City a duty to defend.

Both sides filed motions for summary judgment. The district court found that, given the allegations of Moore's complaint, there was no potential for coverage afforded to the City or the officers by Western's policy. Thus, the district court granted summary judgment to Western. We agree with the district court that Western did not owe either the City or its officers a duty to defend and, therefore, affirm.

II.

During the period at issue in the Moore complaint, the City was insured primarily by a Comprehensive General Liability Policy ("policy") issued by Western. The policy covered damages that the City became obligated to pay because of bodily injury or personal injury caused by an "occurrence." An "occurrence" was defined in the policy to mean "an accident, including continuous or repeated exposure to conditions, which results in bodily injury or property damage neither expected nor intended from the standpoint of the insured." (emphasis added).

The policy was extended to cover employees of the City, including police officers, through a Broad Coverage Extension Endorsement ("endorsement"). The endorsement only covered employees acting within the scope of their employment, however, and excluded coverage for any acts which violated a penal statute. The policy was also extended by a Municipal Police Indemnity Endorsement ("police endorsement"). The police endorsement indemnified the City for all sums the City had to pay by reason of Section 24, Paragraph 1-4-6 of the ...


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