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11/07/97 MARSHALL SPIEGEL v. ZURICH INSURANCE

November 7, 1997

MARSHALL SPIEGEL, PLAINTIFF-APPELLANT,
v.
ZURICH INSURANCE COMPANY, STATE FARM INSURANCE COMPANY, CONTINENTAL CASUALTY COMPANY, AND EMPLOYERS MUTUAL CASUALTY COMPANY, DEFENDANTS-APPELLEES.



Appeal from the Circuit Court of Cook County. Honorable Sheldon Gardner, Judge Presiding.

Released for Publication December 24, 1997.

Presiding Justice Greiman delivered the opinion of the court. Zwick and Quinn, JJ., concur.

The opinion of the court was delivered by: Greiman

PRESIDING JUSTICE GREIMAN delivered the opinion of the court:

Plaintiff Marshall C. Spiegel appeals the trial court's entry of summary judgment against him, finding that coverage in insurance policies for malicious prosecution claims does not include coverage for sanctions imposed by a court. We affirm.

In an unrelated federal case, the seventh circuit imposed $34,000 in sanctions against plaintiff pursuant to Rule 38 of the Federal Rules of Appellate Procedure (Fed. R. App. P. 38) for filing a frivolous appeal. Spiegel v. Continental Illinois National Bank, 790 F.2d 638 (7th Cir. 1986). Plaintiff, the beneficiary of a trust established by his father, Oscar Spiegel, filed two lawsuits in federal district court against the trustee, Continental Illinois National Bank, and certain employees of the trustee, disputing the propriety of the trustee's management of the trust. The first lawsuit concluded when the district court granted summary judgment to the defendants and plaintiff did not appeal. The second lawsuit concluded when the district court dismissed the complaint based partially on res judicata from the first lawsuit and partially on the failure of the complaint to set forth a claim for mail fraud, as a matter of law. Plaintiff appealed the dismissal of his second lawsuit. The seventh circuit affirmed the dismissal of plaintiff's complaint and imposed sanctions against plaintiff under Rule 38 of the Federal Rules of Appellate Procedure (Fed. R. App. P. 38) for filing a frivolous appeal. Spiegel, 790 F.2d 638.

Plaintiff then tendered claims for the Rule 38 sanctions to the four defendant insurance carriers, i.e., Zurich Insurance Company (Zurich), State Farm Insurance Company (State Farm), Continental Casualty Company (Continental), and Employers Mutual Casualty Company, based on the policies' coverage for malicious prosecution claims. There is no dispute that the insurance policies at issue afford coverage for "malicious prosecution" under their coverage for "personal injury."

When the insurance carriers declined to cover the claims predicated upon the Rule 38 sanctions, plaintiff filed a four-count complaint alleging breach of contract against each insurance carrier. Plaintiff voluntarily dismissed, without prejudice, defendant Employers Mutual Casualty Company and, therefore, it is not a party in this appeal.

On November 14, 1996, State Farm filed a motion for summary judgment. In its motion, State Farm asserted that plaintiff's claim for breach of contract could be resolved as a matter of law because a cause of action for malicious prosecution was not filed against plaintiff and the insurance policies did not provide coverage to plaintiff for these judicially imposed punitive damages.

On February 5, 1997, the trial court granted summary judgment in favor of State Farm. The order also noted that the other defendants (Zurich and Continental) "made oral joinders to State Farm's motion." Accordingly, the trial court also entered summary judgment in favor of the other two defendants.

On appeal, plaintiff asserts that the trial court erred in entering summary judgment because, as a matter of law, the offense of malicious prosecution is equivalent to the conduct of frivolous litigation for which sanctions were imposed and, therefore, falls within the coverage afforded by the subject insurance policies. We disagree.

Our review of a summary judgment ruling is de novo. McNamee v. State of Illinois, 173 Ill. 2d 433, 438, 220 Ill. Dec. 147, 672 N.E.2d 1159 (1996); Outboard Marine Corp. v. Liberty Mutual Insurance Co., 154 Ill. 2d 90, 102, 180 Ill. Dec. 691, 607 N.E.2d 1204 (1992). Summary judgment is proper where there are no genuine issues of material fact and the moving party is entitled to judgment as a matter of law. Outboard Marine, 154 Ill. 2d at 102. Where no factual issues are raised on appeal, the sole question on review is whether the trial court's entry of summary judgment is proper as a matter of law. McNamee, 173 Ill. 2d at 438.

To establish malicious prosecution, the plaintiff must (1) show that the defendant brought the underlying suit maliciously; (2) show that the defendant brought the underlying suit without probable cause; (3) establish that the former action was terminated in his or her favor; and (4) plead and prove some "special injury" or special damage beyond the usual expense, time or annoyance in defending a lawsuit. Cult Awareness Network v. Church of Scientology International, 1997 Ill. LEXIS 427, No. 80868, slip. op. at 4 (September 18, 1997).

At the time the federal court imposed sanctions against plaintiff, Rule 38 of the Federal Rules of Appellate Procedure provided: "If a court of appeals shall determine that an appeal is frivolous, it may award just damages and single and double costs to the appellee." ...


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