Northfield Insurance v. City of Waukegan

701 F.3d 1124, 2012 U.S. App. LEXIS 24014
CourtCourt of Appeals for the Seventh Circuit
DecidedNovember 21, 2012
Docket11-1215, 11-3729
StatusPublished
Cited by58 cases

This text of 701 F.3d 1124 (Northfield Insurance v. City of Waukegan) is published on Counsel Stack Legal Research, covering Court of Appeals for the Seventh Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Northfield Insurance v. City of Waukegan, 701 F.3d 1124, 2012 U.S. App. LEXIS 24014 (7th Cir. 2012).

Opinions

KANNE, Circuit Judge.

Northfield Insurance Company and St. Paul Fire & Marine Insurance Company (collectively, the “insurers”) provided law enforcement liability coverage to the city of Waukegan, Illinois, and its employees acting within the scope of employment. In 2009, Bennie Starks filed a civil rights suit against the city and a handful of current and former Waukegan police officers, among others, alleging that each played a role in his decades-old wrongful conviction. In response, the insurers filed an eight-count declaratory judgment action seeking a declaration that they have no duty to defend or indemnify the city or employees. The district court granted summary judgment in favor of the insurers, reasoning that the disputed insurance policies did not cover the city at the time of the alleged wrongdoing. We affirm.

I. Background

The underlying facts are undisputed. Northfield Insurance Company issued two comprehensive general liability policies to Waukegan, effective November 1, 1991, to November 1, 1995.1 The two Northfield policies at issue contained a law enforcement liability provision, which provided that the insurer would cover all sums for which the city “shall be obligated to pay by reason of errors, omissions or negligent acts arising out of the performance of the Assured’s duties while acting as a law enforcement official or officer in the regular course of public employment.” From November 1, 2006, to November 1, 2009, the city maintained a similar policy with St. Paul Fire & Marine Insurance Company. Like the Northfield policy, the St. Paul Fire policy contained a law enforcement liability provision which provided coverage for “wrongful act[s] ... committed while conducting law enforcement activities or operations.” Both policies covered the city on an “occurrence basis.” And, the policies defined “occurrence” and “personal injury” to include false arrest, false imprisonment, malicious prosecution, and other civil rights violations. Both insurers also provided coverage to the city’s officers and officials acting within the scope of their employment. Evidently, other insurance carriers provided coverage during the intervening years, and those carriers’ duties to defend are being litigated in at least two separate declaratory judgment actions.

In January 2009, Bennie Starks filed the underlying civil suit, which the city quickly tendered to Northfield and St. Paul Fire for a defense. Broadly speaking, Starks alleges that the city and several police officers, among others, unlawfully conspired to convict him of crimes he did not commit. In his complaint, Starks pri[1128]*1128marily seeks damages for false arrest and imprisonment, wrongful conviction, denial of due process, and malicious prosecution. The background of his suit is as follows. In January 1986, a woman reported to the Waukegan police that she had been attacked and raped. Officers quickly arrested Starks, who was then charged and convicted of three counts of sexual assault. Twenty years into his sixty-year sentence, newly surfaced DNA evidence raised serious doubts about his guilt, and on March 23, 2006, the Illinois Appellate Court reversed Starks’s conviction and ordered a new trial. On January 20, 2007, the Illinois Appellate Court issued the related mandate returning jurisdiction to the trial court. At the time Starks’s conviction was overturned, state prosecutors moved to re-prosecute him. But on May 15, 2012, one week before oral argument in this appeal, the state trial court entered a nolle prosequi order effectively terminating any further criminal proceedings against him.2

On November 25, 2009, Northfíeld and St. Paul Fire filed an eight-count declaratory judgment action, 28 U.S.C. § 2201, seeking a declaration that it has no duty to defend or indemnify the appellants for the claims made in Starks’s suit. The action was initially docketed with Judge Coar. In June 2010, the district court denied the appellants’ motion to stay the proceedings pending resolution of Starks’s criminal ease, and in December 2010, it entered summary judgment in favor of the insurers. The appellants filed a timely appeal of both decisions, which we docketed as 11-1215. On appeal, we issued a limited remand so the district court could clearly spell out the terms of the declaratory relief. Northfield Ins. Co. v. City of Waukegan, No. 11-1215, slip op. (7th Cir. Aug. 23, 2011). In the interim, Judge Coar retired, and the case was reassigned to Judge Norgle, who promptly entered a Rule 58(a) judgment in favor of the insurers. The appellants filed a timely appeal of that ruling, which we docketed as 11-3729. On December 13, 2011, we consolidated the two appeals for purposes of briefing and disposition.

II. Analysis

On appeal, the appellants argue the district court erred by (1) granting summary judgment in favor of the insurers; (2) denying their motion to stay the declaratory judgment action pending resolution of Starks’s criminal proceeding; and (3) granting overbroad declaratory relief. We take each argument individually.

A. Summary Judgment

We review grants of summary judgment de novo, viewing the record in the light most favorable to the appellants and drawing all reasonable inferences in their favor. Draper v. Martin, 664 F.3d 1110, 1113 (7th Cir.2011). Summary judgment is appropriate when “the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a).

The question before us is whether the allegations in Starks’s complaint trigger Northfield’s or St. Paul Fire’s duty to defend. To answer that question, we [1129]*1129look to Illinois law, which the parties agree governs this dispute. Nat’l Cas. Co. v. McFatridge, 604 F.3d 335, 338 (7th Cir.2010). Under Illinois law, we compare the allegations in Starks’s complaint with the express language in the insurance policy to determine whether an insurer’s duty to defend has been triggered. Gen. Agents Ins. Co. of Am. v. Midwest Sporting Goods Co., 215 Ill.2d 146, 293 Ill.Dec. 594, 828 N.E.2d 1092, 1098 (2005). “If the underlying complaint alleges facts within or potentially within policy coverage, an insurer is obligated to defend its insured even if the allegations are groundless, false or fraudulent.” Id.; accord CMK Dev. Corp. v. W. Bend Mut. Ins. Co., 395 Ill.App.3d 830, 335 Ill.Dec. 91, 917 N.E.2d 1155, 1163 (2009) (holding the duty to defend is “much broader” than the duty to indemnify). An insurer may justifiably refuse to defend the insured only if “it is clear from the face of the underlying complaint[ ] that the allegations fail to state facts which bring the case within, or potentially within, the policy’s coverage.” U.S. Fid. & Guar. Co. v. Wilkin Insulation Co., 144 Ill.2d 64, 161 Ill.Dec. 280, 578 N.E.2d 926, 930 (1991); accord Lagestee-Mulder, Inc. v. Consol. Ins. Co.,

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701 F.3d 1124, 2012 U.S. App. LEXIS 24014, Counsel Stack Legal Research, https://law.counselstack.com/opinion/northfield-insurance-v-city-of-waukegan-ca7-2012.