In a remarkable 91-page opinion, Lake County Circuit Court Judge Margaret Mullen found that the Illinois Supreme Court and Seventh Circuit have gotten the trigger date for malicious prosecution cases wrong.  She ruled that the filing of the allegedly malicious action is the correct trigger of coverage, rejecting the previously cited Illinois rule holding that the policy in existence when the favorable termination of the action occurs is triggered.

In St. Paul Fire and Marine Insurance v. City of Zion, et al, 10 MR 2227 (5/10/2013), the Court granted St. Paul’s motion for summary judgment, finding that the St. Paul policy personal injury coverage was not triggered because the filing of the allegedly malicious action against the underlying plaintiff occurred before the inception of any of the St. Paul policies.  St. Paul, at *45-6. 

The Court went through the laborious process of analyzing the precedential effect of Security Mut. Cas. Co. v. Harbor Ins. Co., 65 Ill. App.3d 198 (1978) (rev’d on other grounds, 77 Ill.2d 446 (1979), and its often-cited holding that the trigger of coverage for malicious prosecution claims is the favorable termination of the action.  She concluded that the holding is neither obiter dictum nor judicial dictum.  The Court then examined other cases following the “exoneration” trigger rule, the “minority rule,” including the Seventh Circuit decisions, National Cas. Co. v. McFatridge, 604 F.3d 335 (7th Cir. 2010) and American Safety Cas. Ins. Co. v. City of Waukegan, 678 F.3d 475 (7th Cir. 2012) and rejected their reasoning.

In contrast, the majority rule, “the filing date” trigger, rejects the exoneration date because “it could permit a tortfeasor to shift the burden of damages to an unwary insurance company.”  St. Paul. at *32.  The tort is “committed by the insured at filing; not at the time of favorable termination.  The opinion contains a list of all “majority rule” cases on pages 30-31.