The opinion of the Court was delivered by
CLIFFORD, J.
This appeal questions the rights and obligations of the parties under an insurance contract. The insured, Paterson Tallow Co., Inc. (Paterson Tallow), contends that defendants Royal Globe Insurance Companies (Royal Globe) and its subsidiary Newark Insurance Company (Newark) were obligated to defend a malicious prosecution suit brought against them by a former employee. Defendant Newark issued the insurance policy after commencement but before completion of certain criminal proceedings instituted by Paterson Tallow against the former employee. Those criminal proceedings form the basis for the malicious prosecution claim. The trial court denied coverage on the strength of Muller Fuel Oil Co. v. Insurance Co. of North [26]*26America, 95 N.J.Super. 564 (App.Div.1967). The Appellate Division affirmed in an unpublished opinion. We granted certification, 87 N.J. 317 (1981), and now affirm.
I
On June 7, 1969, Paterson Tallow and its executive officers, Morris Lakind and Alan Lakind, commenced criminal proceedings against one James Brown, a former Paterson Tallow employee, by filing a complaint with the Jersey City Municipal Court charging Brown with the theft of several thousand pounds of meat from Paterson Tallow. Brown was indicted by a Hudson County Grand Jury on some of the charges.
On October 6, 1970, while those charges were pending, Paterson Tallow purchased from Newark a three year personal liability insurance policy. The policy contained comprehensive general liability insurance for bodily injury and property damage in addition to coverage for personal injury liability.1 The personal [27]*27injury coverage insured Paterson Tallow against damages sustained by any person or organization as a result of certain “offenses” listed therein. Included among these offenses was “malicious prosecution.”
On March 26, 1971, Brown was acquitted of all outstanding charges against him. On January 31, 1977, he initiated suit against Paterson Tallow and the Lakinds alleging that in 1969 Paterson Tallow “maliciously and without probable cause” had commenced criminal proceedings against him, which were eventually resolved in his favor.2 Because plaintiffs had difficulty in [28]*28finding their insurance policy and identifying the carrier, they undertook the defense of Brown’s action through their own attorney. When the policy was finally located, plaintiffs demanded that Royal Globe and Newark take over the defense of Brown’s malicious prosecution suit. Upon the carriers’ denial of coverage, plaintiffs commenced this declaratory action. Shortly thereafter they settled Brown’s claim.
Plaintiffs sought, inter alia, an order that Newark defend the action instituted by Brown. Defendants denied liability on the grounds that (1) all the acts that were alleged to constitute malicious prosecution took place before the policy was issued in 1970, and (2) even assuming coverage existed, Paterson Tallow had failed to provide the carriers with timely notice of Brown’s claims—a contention the courts below did not address, nor do we, because of the conclusion that there was no coverage. The parties filed cross-motions for summary judgment.
In opposition to defendants’ summary judgment motion, Paterson Tallow asserted that coverage was afforded under the policy because a crucial component of the malicious prosecution offense, namely, termination of the alleged maliciously-prosecuted proceedings in the victim’s (James Brown’s) favor, occurred during the policy period. It pointed out that with regard to coverages A and B (insurance against bodily injury and property damage liability), Newark used the word “occurrence” to describe the liability-creating event. In describing coverage P (personal injury liability), however, the policy referred to damages resulting from specified “offenses.” The use of the word “offense” instead of “occurrence” in describing liability for torts such as malicious prosecution supported its claim of coverage, Paterson Tallow argued, because the “offense” of malicious prosecution could not have been complete until termination of the criminal proceedings in Brown’s favor.
The trial court found the ruling of Muller Fuel Oil Co. v. Insurance Co. of North America, supra, dispositive and granted summary judgment for defendants. It noted that in this case, [29]*29as in Muller, the essence of the malicious prosecution action occurred before the effective date of the policy. It observed that the Muller approach has been adopted both in New Jersey and elsewhere. In addition, the court concluded that the use of the word “offense” instead of “occurrence” in describing the personal injury coverage was insignificant. It specifically declined to follow a contrary view taken in Roess v. St. Paul Fire & Marine Ins. Co., 383 F.Supp. 1231, 1233-35 (M.D.Fla.1974). Finally, it found no ambiguity in the policy language. The fact that exclusion (d) specifically excluded from coverage any personal injury resulting from one’s libel or slander committed prior to the effective date of the policy was deemed unpersuasive.
The Appellate Division, in a per curiam opinion, affirmed substantially for the reasons expressed by the trial court, citing Muller, supra.
II
Initially, we must decide whether an insurance policy extends coverage for damages caused by a malicious criminal prosecution when the underlying criminal complaint is filed before the policy’s effective date and the criminal proceedings are favorably terminated thereafter but during the policy period. Courts in other jurisdictions have reached conflicting conclusions. Although the Appellate Division has squarely decided this issue in Muller Fuel Oil Co. v. Insurance Co. of North America, supra, the question remains one of first impression for this Court.
The events in Muller are similar to those here. The Muller plaintiffs filed a criminal complaint against one Thomas Policastro on November 13, 1961. Policastro was arrested the following day and subsequently indicted in May 1962 for issuing a worthless check. In December 1962, while the criminal charges against Policastro were still undecided, plaintiffs purchased a comprehensive liability insurance policy from defendant, Insurance Company of North America (INA). Policastro was acquitted of the charges against him on March 7, 1963. He promptly [30]*30filed a malicious prosecution and false arrest suit against the plaintiffs on March 19, 1963.
Muller filed a claim for coverage under the policy, contending that Policastro’s suit against it did not fully ripen until his acquittal in March 1963. Consequently, the acquittal constituted an “occurrence during the policy period” that entitled plaintiffs to coverage. INA denied coverage on the grounds that the criminal complaint that served as the basis for the malicious prosecution action was filed by the insured before the policy was issued. Plaintiffs then sought a declaratory judgment that coverage existed under the policy.
On appeal from a trial court decision dismissing plaintiffs’ complaint the Appellate Division affirmed, ruling that the “essence” of the malicious prosecution action, the institution of criminal proceedings without probable cause, occurred before plaintiffs had obtained insurance coverage, 95 N.J.Super.
Free access — add to your briefcase to read the full text and ask questions with AI
The opinion of the Court was delivered by
CLIFFORD, J.
This appeal questions the rights and obligations of the parties under an insurance contract. The insured, Paterson Tallow Co., Inc. (Paterson Tallow), contends that defendants Royal Globe Insurance Companies (Royal Globe) and its subsidiary Newark Insurance Company (Newark) were obligated to defend a malicious prosecution suit brought against them by a former employee. Defendant Newark issued the insurance policy after commencement but before completion of certain criminal proceedings instituted by Paterson Tallow against the former employee. Those criminal proceedings form the basis for the malicious prosecution claim. The trial court denied coverage on the strength of Muller Fuel Oil Co. v. Insurance Co. of North [26]*26America, 95 N.J.Super. 564 (App.Div.1967). The Appellate Division affirmed in an unpublished opinion. We granted certification, 87 N.J. 317 (1981), and now affirm.
I
On June 7, 1969, Paterson Tallow and its executive officers, Morris Lakind and Alan Lakind, commenced criminal proceedings against one James Brown, a former Paterson Tallow employee, by filing a complaint with the Jersey City Municipal Court charging Brown with the theft of several thousand pounds of meat from Paterson Tallow. Brown was indicted by a Hudson County Grand Jury on some of the charges.
On October 6, 1970, while those charges were pending, Paterson Tallow purchased from Newark a three year personal liability insurance policy. The policy contained comprehensive general liability insurance for bodily injury and property damage in addition to coverage for personal injury liability.1 The personal [27]*27injury coverage insured Paterson Tallow against damages sustained by any person or organization as a result of certain “offenses” listed therein. Included among these offenses was “malicious prosecution.”
On March 26, 1971, Brown was acquitted of all outstanding charges against him. On January 31, 1977, he initiated suit against Paterson Tallow and the Lakinds alleging that in 1969 Paterson Tallow “maliciously and without probable cause” had commenced criminal proceedings against him, which were eventually resolved in his favor.2 Because plaintiffs had difficulty in [28]*28finding their insurance policy and identifying the carrier, they undertook the defense of Brown’s action through their own attorney. When the policy was finally located, plaintiffs demanded that Royal Globe and Newark take over the defense of Brown’s malicious prosecution suit. Upon the carriers’ denial of coverage, plaintiffs commenced this declaratory action. Shortly thereafter they settled Brown’s claim.
Plaintiffs sought, inter alia, an order that Newark defend the action instituted by Brown. Defendants denied liability on the grounds that (1) all the acts that were alleged to constitute malicious prosecution took place before the policy was issued in 1970, and (2) even assuming coverage existed, Paterson Tallow had failed to provide the carriers with timely notice of Brown’s claims—a contention the courts below did not address, nor do we, because of the conclusion that there was no coverage. The parties filed cross-motions for summary judgment.
In opposition to defendants’ summary judgment motion, Paterson Tallow asserted that coverage was afforded under the policy because a crucial component of the malicious prosecution offense, namely, termination of the alleged maliciously-prosecuted proceedings in the victim’s (James Brown’s) favor, occurred during the policy period. It pointed out that with regard to coverages A and B (insurance against bodily injury and property damage liability), Newark used the word “occurrence” to describe the liability-creating event. In describing coverage P (personal injury liability), however, the policy referred to damages resulting from specified “offenses.” The use of the word “offense” instead of “occurrence” in describing liability for torts such as malicious prosecution supported its claim of coverage, Paterson Tallow argued, because the “offense” of malicious prosecution could not have been complete until termination of the criminal proceedings in Brown’s favor.
The trial court found the ruling of Muller Fuel Oil Co. v. Insurance Co. of North America, supra, dispositive and granted summary judgment for defendants. It noted that in this case, [29]*29as in Muller, the essence of the malicious prosecution action occurred before the effective date of the policy. It observed that the Muller approach has been adopted both in New Jersey and elsewhere. In addition, the court concluded that the use of the word “offense” instead of “occurrence” in describing the personal injury coverage was insignificant. It specifically declined to follow a contrary view taken in Roess v. St. Paul Fire & Marine Ins. Co., 383 F.Supp. 1231, 1233-35 (M.D.Fla.1974). Finally, it found no ambiguity in the policy language. The fact that exclusion (d) specifically excluded from coverage any personal injury resulting from one’s libel or slander committed prior to the effective date of the policy was deemed unpersuasive.
The Appellate Division, in a per curiam opinion, affirmed substantially for the reasons expressed by the trial court, citing Muller, supra.
II
Initially, we must decide whether an insurance policy extends coverage for damages caused by a malicious criminal prosecution when the underlying criminal complaint is filed before the policy’s effective date and the criminal proceedings are favorably terminated thereafter but during the policy period. Courts in other jurisdictions have reached conflicting conclusions. Although the Appellate Division has squarely decided this issue in Muller Fuel Oil Co. v. Insurance Co. of North America, supra, the question remains one of first impression for this Court.
The events in Muller are similar to those here. The Muller plaintiffs filed a criminal complaint against one Thomas Policastro on November 13, 1961. Policastro was arrested the following day and subsequently indicted in May 1962 for issuing a worthless check. In December 1962, while the criminal charges against Policastro were still undecided, plaintiffs purchased a comprehensive liability insurance policy from defendant, Insurance Company of North America (INA). Policastro was acquitted of the charges against him on March 7, 1963. He promptly [30]*30filed a malicious prosecution and false arrest suit against the plaintiffs on March 19, 1963.
Muller filed a claim for coverage under the policy, contending that Policastro’s suit against it did not fully ripen until his acquittal in March 1963. Consequently, the acquittal constituted an “occurrence during the policy period” that entitled plaintiffs to coverage. INA denied coverage on the grounds that the criminal complaint that served as the basis for the malicious prosecution action was filed by the insured before the policy was issued. Plaintiffs then sought a declaratory judgment that coverage existed under the policy.
On appeal from a trial court decision dismissing plaintiffs’ complaint the Appellate Division affirmed, ruling that the “essence” of the malicious prosecution action, the institution of criminal proceedings without probable cause, occurred before plaintiffs had obtained insurance coverage, 95 N.J.Super. at 576, citing Earl v. Winne, 14 N.J. 119, 134 (1953). The court observed that “[t]he tortious act is committed ordinarily by the filing of the criminal complaint with malice and without probable cause” and that “damage flows immediately from the tortious act” because often the accused is arrested and required to post bail and his reputation is adversely affected. 95 N.J.Super. at 576. It went on to contrast the “favorable termination” requirement with the remaining elements of proof:
In addition to the proof of the termination in his favor, “the plaintiff must adduce affirmative proof * * * tending to show the falsity of or want of probable cause for the charge laid against him, or that the defendant did not honestly believe in his guilt.” * * * Thus, although a favorable termination of the criminal proceeding is a condition precedent to institution of the action, the “essence” of the tort is the wrongful conduct in making the criminal charge. ********
Here we have the allegedly tortious conduct and Injury to the accused as a result thereof antedating by more than a year the issuance of a policy in favor of the alleged tortfeasors, although the favorable termination of the criminal proceeding eventuates some three months after delivery of the policy. Thus, the “occurrence” which creates the legal obligation to pay damages precedes the commencement of the policy period, albeit the institution of suit may be delayed, as here, until favorable termination of the criminal proceeding. It would be [31]*31unreasonable to hold under those circumstances, and without more, that the insurance company intended to insure against a malicious prosecution suit, instituted subsequent to issuance of the policy, when four of the five essential ingredients of such an action preceded purchase of the policy—and those four constituted the “essence” of the tort. [Id. at 577.]
The Appellate Division acknowledged the general rule that the “occurrence” for the purposes of determining insurance coverage for a negligent tort is not the time when the wrongful act is committed but rather the time when the complaining party is actually damaged. However, it found this general proposition to be inapplicable to a malicious prosecution claim because “damage begins to flow from the very commencement of the tortious conduct—the making of the criminal complaint. * * * [W]rong and damage are practically contemporaneous.” Id. at 579.
Only a handful of decisions from other jurisdictions have considered this precise issue. Of these, Roess v. St. Paul Fire & Marine Ins. Co., supra, and S. Freedman & Sons v. Hartford Fire Ins. Co., 396 A.2d 195 (Ct.App.D.C.1978), deal most extensively with the problem. They therefore warrant our careful examination and comment.
In Roess the court reached a result contrary to Muller. There the malicious prosecution action arose from a civil suit brought against one Koubek in 1967. The suit, financed by the plaintiff, Roess, challenged the legality of a proposed construction project in the city of St. Petersburg, Florida. In April 1968 a trial court entered judgment in favor of Koubek but denied his application to enjoin future proceedings. Koubek appealed from that portion of the judgment denying injunctive relief. On June 24, 1968, the Florida Supreme Court affirmed the trial court’s decision. In the interim between institution of the appeal and the date it was decided, Roess purchased an insurance policy from defendant, St. Paul Fire & Marine Insurance Co. The policy provided for indemnification against, among other risks, “ ‘personal injury’ caused by the insured, including, by definition, ‘malicious prosecution.’ ” 383 F.Supp. at 1233.
[32]*32Koubek commenced the malicious prosecution against Roess on October 2, 1970. Roess then served notice upon St. Paul demanding coverage, which was refused. Roess and Koubek ultimately settled the malicious prosecution suit, after which Roess filed suit against St. Paul seeking reimbursement under the policy.
The court began its analysis by noting that under Florida law, favorable termination of the maliciously prosecuted suit was an essential element of the injured party’s cause of action. Turning to the Muller decision and the framework of analysis posed there, the court acknowledged that the only real basis upon which Muller might be distinguished was that Muller involved a malicious criminal prosecution as opposed to malicious civil prosecution. It agreed with the Appellate Division’s conclusion that the “essence” of a malicious criminal prosecution action was the initial filing of criminal charges, but it distinguished malicious civil prosecution, indicating that the essence of that tort could well be the continued prosecution of the suit by the plaintiff. The court commented as follows:
While this difference clearly undermines the rationale of Muller as applied to the facts of this case, it must be recognized as a dubious point of distinction vis-a-vis the contractual relationship between the tortfeasor and his insurance carrier. Logically, as between those parties, it should make no difference as to the coverage afforded by the policy that the malicious prosecution was a criminal case rather than civil or vice versa. By the same token, however, the fact that the Muller rationale loses much of its force when applied in the setting of a maliciously prosecuted civil action suggests that the correctness of the decision is subject to question; and it is the view of this Court that the Muller rule would not be embraced by the Courts of Florida. [Id. at 1234-35.] 3
[33]*33The court concluded by observing that there was nothing in the Florida cases to indicate that one element constituted the essence of the tort, thereby rendering it more important than any other element. Nor could it find any support, at least under Florida law, for the “favorable termination” requirement as a mere condition precedent.
On the other hand the Muller reasoning has been adopted by the highest court of the District of Columbia in S. Freedman & Sons v. Hartford Fire Ins. Co., supra. The facts can be summarized as follows. Plaintiff, S. Freedman Co., hired Pinkerton, Inc. to investigate a string of thefts suffered by the company in 1971. In August 1971 several employees, including one Bunyon, were fired. On May 12, 1972, Bunyon was arrested along with several other former Freedman employees. Thereafter, on May 23, 1972, Freedman expanded its general liability insurance policy with Hartford in order to include a provision for personal injury coverage. The additional coverage afforded by way of this expansion insured against, inter alia, the offense of malicious prosecution, “if such offense is committed in the conduct of the named insured’s business during the policy period.” 396 A.2d at 198 & n.l.
In August 1972, Bunyon was acquitted of the larceny charge and on February 2, 1973 he brought suit, charging Freedman with malicious prosecution and false arrest. Thereafter, Freedman requested that Hartford defend these actions based upon the expansion of Freedman’s personal injury coverage. Hartford refused to defend on the grounds that the alleged tortious conduct antedated the expanded coverage.
On appeal from a trial court decision granting summary judgment to Hartford, the Court of Appeals recognized that prior authority in the District of Columbia held that favorable [34]*34termination of the underlying proceedings was a necessary prerequisite for the maintenance of a cause of action for malicious prosecution. While endorsing this position, the court nonetheless distinguished the date when the action could be brought from the date the offense occurred. Adopting the Muller approach, the court concluded that the gist of the malicious prosecution action occurs when the plaintiff has been improperly made the subject of a legal proceeding. Thus, the court differentiated between the offense of malicious prosecution and the elements that constitute the malicious prosecution cause of action. In denying coverage, the court commented upon the contrary result in Roess v. St. Paul, supra:
Appellant relies upon the conclusion of the Florida District Court, that a third party’s favorable termination in the Florida Supreme Court was the “operative occurrence triggering Roess’ liability” * * * and that since that court decision followed the effective date of insurance coverage, an obligation to defend existed there. The contract at issue here, however, does not speak to the date that liability arises. It promises coverage “if such offense is committed * * * during the policy period * * To the extent that Roess did not consider when the offense occurred, it is irrelevant here. To the extent that it equated the triggering of liability with the time of the offense, there seems to be an error in its logic. As the present case reveals, the third party (here Bunyon) can secure a favorable termination and yet fail to prove that the insured is liable. Clearly, a third-party’s failure to secure a favorable termination before bringing suit for malicious prosecution would not void the obligation of an insurance company to defend against such a suit, if the act alleged did fall within the policy period. Thus, the date of favorable termination cannot be regarded as equivalent to the date that the offense is committed. [Id. at 199 (citation and footnote omitted).]
In essence, the Freedman court’s reasoning is identical to that employed in Muller: the offense of malicious prosecution is substantially completed once the complaint is filed, and the favorable termination of the maliciously prosecuted proceedings is merely a prerequisite to the filing of suit.4
[35]*35III
Paterson Tallow contends that Roess, in conjunction with recent authority in this state, requires that we part company with Muller. In this connection, plaintiffs invite our attention to the elements of a cause of action for malicious prosecution as set forth in Lind v. Schmid, 67 N.J. 255 (1975):
A malicious prosecution action arising out of a criminal prosecution requires proof: (1) that the criminal action was instituted by the defendant against the plaintiff, (2) that it was actuated by malice, (3) that there was an absence of probable cause for the proceeding, and (4) that it was terminated favorably to the plaintiff. [Id. at 262.]
See Penwag Property Co. Inc. v. Landau, 76 N.J. 595, 598 (1978).
In Lind we emphasized that a malicious prosecution plaintiff must establish each element set forth above, including the “favorable termination” requirement. We continue to adhere to that position and today’s decision is in no wise at odds with that holding. Rather, our determination focuses exclusively on the time at which the offense of malicious prosecution occurs for insurance coverage purposes. Lind does not answer that question.5 As we have sought to demonstrate, the Appellate Division in Muller and the Court of Appeals of the District of Columbia in Freedman present the appropriate framework.
[36]*36Alternatively, Paterson Tallow seeks to distinguish the policy language in Muller from that in the Newark policy. The INA policy in Muller covered “occurrences” that took place during the policy period, whereas plaintiffs’ policy with Newark covers specified “offenses.” Paterson Tallow argues that the word “offense” connotes an occurrence that gives rise to either civil liability or criminal punishment. Since no liability attached to plaintiffs’ actions until termination of the criminal complaint against Brown during the policy period, they contend that no “offense” was committed until then. We are not persuaded that the suggested distinction between “offense” and “occurrence” requires us to abandon the result in Muller, supra.
Plaintiffs further urge that inasmuch as exclusion (d) in the policy excepts from coverage a defamation claim where the defamatory publication or utterance precedes the policy period, the absence of a similar exclusion for the related tort of malicious prosecution evidences an intent to cover malicious prosecution claims such as Brown’s, based on proceedings begun before the effective date of the policy. Otherwise, the argument goes, exclusion (d) would be mere surplusage. Although this approach has an initial attraction, a careful inspection of the operative language set forth in exclusion (d) belies its validity. That exclusion states that coverage does not extend to acts of defamation “if the first injurious publication or utterance of the same or similar material * * * was made prior to the effective date of the insurance.” That clause simply provides that where there is more than one injurious publication or utterance involving the same or similar material, no coverage exists if the first publication or utterance occurred before the effective date of the policy. The provision is not inconsistent with our interpretation of the coverage for malicious prosecution and is not relevant here.
IV
We hold that for the purpose of determining the existence of coverage under this type of policy, in the absence of any [37]*37qualifying exclusion or exception the offense of malicious prosecution occurs on the date when the underlying complaint is filed. Inasmuch as the complaint in this case was filed before the effective date of the policy, we affirm the judgment of the Appellate Division denying coverage.