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National Casualty Co. v. McFatridge

April 28, 2010


Appeal from the United States District Court for the Central District of Illinois. No. 2:07-cv-02056-HAB-DCB-Harold A. Baker, Judge.

The opinion of the court was delivered by: Bauer, Circuit Judge.


Before EASTERBROOK, Chief Judge, and BAUER and ROVNER, Circuit Judges.

Plaintiffs National Casualty Company and Scottsdale Indemnity Company provided commercial general liability ("CGL") and law enforce-ment insurance to Edgar County, Illinois, via a series of policies. In 2005, Gordon "Randy" Steidl sued Edgar County and its former state's attorney, Michael McFatridge for damages stemming from Steidl's 1986 conviction for murder, which a federal court overturned in 2003. The district court held that National Casualty Company and Scottsdale Indemnity Company have no obligation to defend or indemnify McFatridge or the county under four insurance policies issued in 1989, 1997, 1998 and 1999. The county and McFatridge appeal and we affirm.


In 1987, Steidl was convicted in Edgar County of murder. Eventually, Steidl's appeals entered the federal system under 28 U.S.C. § 2254. In June 2003, the district court granted a writ of habeas corpus based on ineffectual counsel at the trial and sentencing in the state court.

Steidl sued, under 28 U.S.C. § 1983 and Illinois law, a number of officials involved in the prosecution, including Illinois State Police and Paris police officers who had investigated the murders, and former Edgar County State's Attorney Michael McFatridge, who was involved in the investigation and prosecution. Steidl also named the County of Edgar as a defendant and necessary party.

According to the complaint, McFatridge, in cooperation with Paris police, framed and falsely prosecuted Steidl. The complaint says that McFatridge coerced and threatened two key witnesses, induced them to testify falsely, and concealed numerous pieces of exculpa-tory evidence during the trial. Steidl also claims that throughout the post-conviction proceedings, even after McFatridge left office in 1991, he continued to coerce witnesses, lied about the evidence, and engaged in a publicity campaign defending the trial and Steidl's conviction.

Steidl's suit seeks damages for false arrest, false imprisonment, malicious prosecution, conspiracy and intentional infliction of emotional distress. The county tendered the suit to National and Scottsdale, believing itself entitled to a legal defense and indemnification under each of four insurance policies the companies issued. The insurers responded by filing a declaratory judgment action, asking the court to determine that they had no duty to defend or indemnify the county under any of the policies.

There are four separate insurance policies at issue, each in effect at a different time: A law enforcement liability policy issued by Scottsdale Insurance Company was in effect from May 25, 1989, until May 25, 1990. It named "County of Edgar S.D." as the insured. In addition, three CGL policies-two issued by Scottsdale Indemnity Company, and one issued by National Casualty Company-insured Edgar County from July 1, 1997, until July 1, 2000. Each of the three policies covered a one-year period.

Edgar County argued that the policies are at least ambiguous about whether they provide it or McFatridge coverage for liability to Steidl, and should be read against the drafters, in favor of a duty to defend. The district court granted summary judgment for the insurers.

First, the court found no coverage for McFatridge under the law enforcement policy in effect from May 1989 through May 1990 because the state's attorney was not a "Class C" employee under that policy. In addition, while indicating that McFatridge's conduct during the post-conviction proceedings "suggests the possibility of coverage" under the two CGL policies in effect in 1998 and early 1999, the court pointed out that McFatridge left office in 1991. It held that the CGL policies did not cover acts by former officials or employees committed during the policy periods; therefore, McFatridge was not an insured under any of the three CGL policies.

Edgar County appealed the district court's decision and filed this appeal.


In determining whether the insurance companies must provide former Edgar County State's Attorney Michael McFatridge with coverage-a legal defense and/or indemnity-for liability arising from Steidl's prosecution and conviction, we look to Illinois law, which the parties agree governs this dispute. Conn. Indem. Co. v. DER Travel Serv., Inc., 328 F.3d 347, 349 (7th Cir. 2003). We review the district court's grant of summary ...

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