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Selective Insurance Company of South Carolina v. City of Paris

January 27, 2010

SELECTIVE INSURANCE COMPANY OF SOUTH CAROLINA, PLAINTIFF,
v.
CITY OF PARIS, GENE RAY, JAMES PARRISH, AND GORDON RANDY STEIDL, HERBERT WHITLOCK DEFENDANTS.
ALLIANZ GLOBAL RISKS US INSURANCE COMPANY, PLAINTIFF-INTERVENOR
v.
CITY OF PARIS, GENE RAY, JAMES PARRIS, AND GORDON RANDY STEIDL, HERBERT WHITLOCK DEFENDANTS.
CONSOLIDATED WITH WESTERN WORLD INSURANCE GROUP, PLAINTIFF,
v.
SELECTIVE INSURANCE COMPANY OF SOUTH CAROLINA AND MONTICELLO INSURANCE COMPANY N/K/A ALLIANCE GLOBAL U.S., DEFENDANTS.



The opinion of the court was delivered by: Michael P. McCUSKEY Chief U.S. District Judge

OPINION

This case comes before the court for ruling on (1) the Motion for Summary Judgment (#66) filed by Plaintiff Selective Insurance Company of South Carolina (Selective); (2) the Motion for Summary Judgment (#84) filed by Plaintiff Western World Insurance Group (Western); and (3) the Motion for Summary Judgment (#94) filed by Plaintiff-Intervenor Allianz Global Risks U.S. Insurance Company (Allianz). For the following reasons, Selective's Motion for Summary Judgment (#66) and Allianz's Motion for Summary Judgment (#94) are both GRANTED in full. Western's Motion for Summary Judgment (#84) is DENIED.

FACTUAL BACKGROUND

This case arises out of the arrest, prosecution, conviction and imprisonment of Gordon Randy Steidl and Herbert Whitlock for the 1986 Edgar County murders of Dyke and Karen Rhoads. Steidl and Whitlock were tried and convicted in 1987. On June 17, 2003, this court granted Steidl's petition for a writ of habeas corpus under 28 U.S.C. § 2254 and gave the State 120 days to release or retry Steidl. Steidl v. Walls, 267 F.Supp.2d 919 (C.D. Ill. 2003). The State of Illinois decided not to retry Steidl. Steidl was released from custody in 2004. Whitlock was released from custody in January 2008, based upon a decision by the Illinois Appellate Court. People v. Whitlock, No. 4-05-0958 (Ill. App. Ct. 2007).

In his complaint, Steidl alleged a claim under 42 U.S.C. § 1983 for deprivation of his right to a fair trial and for wrongful conviction. Steidl also alleged a § 1983 Monell claim against the City of Paris.*fn1 Steidl also alleged a state claim for false imprisonment, alleging that he was imprisoned without probable cause by Ray, Parris, Eckerty, and McFatridge. In this claim, Steidl alleged that the acts of the Defendants were willful and wanton. In the facts section of the complaint, Steidl alleged that, in March 2004, Illinois Attorney General Lisa Madigan announced that she would not appeal this court's order vacating Stiedl's conviction and allowing the State 120 days to retry him. Steidl alleged that, at that time, McFatridge made additional false public statements, reciting false evidence in an effort to influence prosecutors to hold Steidl in custody and retry him. Steidl alleged that he was held in custody until May 28, 2004, in part because of McFatridge's public statements.

Steidl also alleged a state law claim for malicious prosecution. He alleged that Ray, Parris, McFatridge, and Eckerty initiated a malicious prosecution without probable cause against him and continued that prosecution without probable cause. Steidl alleged that the prosecution was ultimately terminated in his favor. Steidl alleged that the actions were done in a willful and wanton manner.*fn2

On April 8, 2009, Whitlock filed an amended complaint against the same defendants. The case is before Senior U.S. District Court Judge Harold A. Baker as 08-CV-2055, and contains many of the same allegations, including false imprisonment and malicious prosecution.

The Insurance Companies and Their Policies

There are three insurance companies involved in this case that provided coverage to the City of Paris between the 1986 arrests of Steidl and Whitlock and their eventual exoneration and release in 2004 and 2008. The companies provided consecutive polices: Western from 1985 to 1996, Allianz*fn3 from 1996 to 1999, and Selective from 1999 to 2007.

The City of Paris was insured by Western during the time Steidl and Whitlock were arrested and prosecuted. Western's policy includes a provision a provision in its Law Enforcement Officers Liability insurance policy which stated, "[t]he insurance under this policy shall be excess insurance over any other valid and collectible insurance available to the insured, either as an insured under another policy or otherwise." Because of this provision, Western has argued that it is an "excess" insurer to Selective's and Allianz's primary insurance.

The policy issued by Selective provided several different types of coverage to the City of Paris. Only the Police Professional Liability Coverage and Umbrella Liability Coverage are at issue in this litigation. The Police Professional Liability coverage provided coverage for "personal injury" arising out of "[f]alse arrest, detention, or imprisonment" and "[m]alicious prosecution." The policy stated that the insurance "applies to 'personal injury' only if caused by an offense: [c]ommitted in the 'coverage territory' during the policy period; and [a]rising out of the conduct of your law enforcement activities." Selective's Umbrella Policy provided that it was not triggered unless coverage was afforded by the Underlying Police Policy. The Police Professional Liability policies issued by Allianz were similar to the policy issued by Selective and stated that coverage was provided for occurrences during the policy period.

PROCEDURAL HISTORY

On December 5, 2007, Plaintiff Selective filed its Complaint for Declaratory Judgment (#1) against Defendants City of Paris, Ray, Parrish, and Steidl seeking a declaratory judgment from this court that it has no duty to defend Defendants City of Paris, Ray, and Parrish against two 42 U.S.C. § 1983 lawsuits brought by Steidl and Herbert Whitlock. Selective argued that the occurrences alleged in the underlying litigation occurred outside of Selective's policy period. On March 18, 2009, Selective filed a Motion for Summary Judgment (#66). Defendants filed their Response (#81) to the summary judgment motion on May 13, 2009.

Allianz filed as Plaintiff-Intervenor a Motion to Intervene (#31) on June 6, 2008, noting that Defendant City of Paris tendered the Steidl and Whitlock action to Allianz for defense and indemnity, and that Allianz, like Selective, had been providing a defense to the City of Paris defendants subject to a full reservation of rights. Allianz claimed that the City of Paris was seeking coverage under both Selective and Allianz policies for liability arising out of the same operative facts and that, given the substantial similarity in language between the Selective and Allianz police policies, Allianz's proposed claim for declaratory relief involved common questions of law and fact with Selective's amended complaint for declaratory judgment. Allianz was allowed to intervene and, on August 17, 2009, filed its own Motion for Summary Judgment (#94), asking this court to grant it summary judgment and find that it has no duty to defend or indemnify Defendants because, like Selective, the occurrences alleged in the Steidl and Whitlock lawsuits that gave rise to the litigation occurred outside of Allianz's policy period.

On May 27, 2008, Plaintiff Western filed a Complaint for Declaratory Judgment (#1) against Selective in Case No. 08-CV-2118, seeking a declaratory judgment pursuant to 28 U.S.C. ยง 2201 that Western is an excess carrier to Selective and Allianz and has no current obligation to defend the City of Paris, Parrish, or Ray in the Steidl and Whitlock lawsuits. On August 14, 2008, Magistrate Judge David G. Bernthal consolidated 08-CV-2118 with the instant case, 07-CV-2224. Western filed a Cross Motion for Summary Judgment (#84) on May 27, 2009, asking that this court declare that Western is an excess carrier to the primary carriers ...


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