In its recent decision in Genesis Ins. Co. v. City of Council Bluffs, et al., 2012 U.S. App. LEXIS 9577 (8th Cir. May 11, 2012), the United States Court of Appeals for the Eighth Circuit, in a matter of first impression under Iowa law, considered when the tort of malicious prosecution occurs for the purpose of personal injury coverage under a general liability policy.
In 1977, underlying plaintiffs were arrested and convicted for the murder of a retired police officer. Their convictions were vacated in 2003 based on evidence that the prosecution had withheld of exculpatory evidence. Plaintiffs were released from prison and later brought suit against the City of Council Bluffs, the City’s Police Department, and certain police officers. In addition to alleging civil rights violations, their suits alleged the tort of malicious prosecution. The City tendered its defense to Genesis Insurance Company, its general liability carrier for the period January 1, 2002 to January 1, 2003 and for the renewal period January 1, 2003 through January 1, 2004. Genesis disclaimed coverage on the basis that the alleged personal injury offense of malicious prosecution happened when plaintiffs were originally prosecuted, not when their convictions were later vacated.
The Eighth Circuit acknowledged that there was no controlling Iowa law on the issue of when the tort of malicious prosecution occurs for insurance coverage purposes. Looking to case law from across the country, the court observed that “although there is no agreement on when the tort of malicious prosecution occurs for insurance coverage purposes, the clear majority of courts have held the tort occurs when the underlying criminal charges are filed.” The court further noted that in Royal Indemnity Co. v. Werner, 979 F.2d 1299 (8th Cir. 1992), the Eighth Circuit, in addressing the issue under Missouri law, held that a malicious prosecution claim accrues with the filing of suit. The court found no meaningful reason why its decision in Royal Indemnity is inconsistent with Iowa law, explaining that under Iowa law, the occurrence happens when the claimant sustains damages, not when the act or omission causing the damage takes place. Because a claimant is damaged upon the filing of a criminal complaint, observed the court, it necessarily followed that the occurrence happened at that time.
In reaching its decision, the court considered and rejected the insured’s argument that the Genesis policies were triggered based on allegations of “continuing misconduct and continuing personal injury” through the time underlying plaintiffs were released from prison. The court refuted the contention that “the tort of malicious prosecution constitutes a continuing injury,” and concluded instead that a claim for malicious prosecution does not trigger multiple policies, but instead triggers only the policy in effect at the time the charges are filed.