speak to coverage for personal injury "occurring within the policy year." Thus, the City concludes, Defendants' policies insure it regardless of when the act giving rise to liability occurred.
This Court holds, however, that these policies are not ambiguous on this issue. "[A] term is ambiguous only 'if reasonably intelligent men on considering it in the context of the entire policy would honestly differ as to its meaning.'" Id. (quoting Erie Insurance Exchange v. Transamerica Insurance Co., 352 Pa. Super. 78, 507 A.2d 389, 392 (Pa. Super. 1986)
). Each of the policies stated that it provided coverage for liability from incidents occurring "during the policy period." There is no real distinction between this phrasing and "within the policy year." All of the policies involved here were occurrence policies.
All parties agree that the only claim raised by DiNicola that might give rise to a duty to defend is the allegation of malicious prosecution. However, the parties disagree as to when, for the purpose of determining insurance coverage, malicious prosecution "occurs." Defendants argue that the tort occurs when the criminal defendant/malicious prosecution plaintiff is first charged with the criminal offense. The City suggests two alternatives: first, that the tort occurs when the criminal action is concluded; or, second, that the tort occurs at charging, termination of the criminal action, and all points in between.
The Pennsylvania Supreme Court has not addressed this issue. Therefore, this Court must predict how that court would hold. Erie Railroad Co. v. Tompkins, 304 U.S. 64, 82 L. Ed. 1188, 58 S. Ct. 817 (1938); Adams v. Madison Realty & Development, Inc., 853 F.2d 163, 168 (3d Cir. 1988); Charles Alan Wright et al., Federal Practice and Procedure § 4507, at 89 (1982). In so doing, this Court should consider all relevant sources of pertinent state law. Jones & Laughlin Steel Corp. v. Johns-Manville Sales Corp., 626 F.2d 280, 285 (3d Cir. 1980).
The Pennsylvania Supreme Court would first hold that "the determination of when an occurrence happens must be made by reference to the time when the injurious effects of the occurrence took place." See Appalachian Insurance Co. v. Liberty Mutual Insurance Co., 676 F.2d 56, 61-62 (3d Cir. 1982). See also D'Auria, 507 A.2d at 861-62 (following Appalachian Insurance;3 Keystone Automated Equipment Co., Inc. v. Reliance Insurance Co., 369 Pa. Super. 472, 535 A.2d 648, 652 (Pa. Super.) (following D'Auria and holding that place of occurrence is place where damage occurred rather than site of acts causing damage), alloc. denied, 546 A.2d 59 (Pa. 1988).
The court would then hold that the injury manifests itself at the time that charges are filed. The court has recognized that the policy underlying the cause of action for malicious prosecution is the protection of individuals against false accusation. See Kelley v. General Teamsters, Chauffeurs, and Helpers Local Union 249, 518 Pa. 517, 544 A.2d 940, 942 (Pa. 1988). "The hardships, humiliation, suspense, and expense to which an innocent person is subjected in an improper prosecution cannot be compensated for by a mere acquittal." Neczypor v. Jacobs, 403 Pa. 303, 169 A.2d 528, 531 (Pa. 1961). These injuries clearly commence when the criminal charge is filed. A reasonable person in the position of the criminal defendant would presumably be aware of these injuries, as he or she knows of the charges and of his or her innocence. Therefore, following a "time of the injury" rule, the court would hold that the tort "occurs" -- for the purpose of determining whether an occurrence policy provides coverage -- at the time that charges are filed.
This rule is consistent with Appalachian Insurance. Appalachian had insured Liberty Mutual from August 1, 1971 to August 1, 1974 under an occurrence-based umbrella policy. 676 F.2d at 59. On February 28, 1972, female employees of Liberty Mutual filed a class-action lawsuit. The suit alleged that Liberty Mutual had discriminated against them on the basis of gender in certain employment practices adopted in 1965. The lawsuit was settled in 1978. Id. at 58. Liberty Mutual then demanded indemnification, and Appalachian sought a declaratory judgment that it was under no duty to indemnify. The district court granted Appalachian's motion for summary judgment, and the Third Circuit affirmed. It reasoned that the injurious effects of Liberty Mutual's discriminatory practices began immediately upon their adoption, well before the effective date of the Appalachian policy.
Thus, Appalachian had no duty to indemnify Liberty Mutual. Id. at 62-63.
The discrimination claim underlying Appalachian Insurance is similar in important respects to a claim for malicious prosecution. Like the women suing Liberty Mutual, a malicious prosecution plaintiff alleges that the tort against him or her began on a particular date. Neither type of plaintiff alleges that he or she suffered all of his or her harm on that date; both allege that the harm accrued from that date forward. In addition, the injury from malicious prosecution follows even more necessarily from charging than the injury alleged by Liberty Mutual's employees followed from its adoption of the discriminatory policies. Some of the Liberty Mutual employee class members were not affected by the discriminatory practices -- or even employed by Liberty Mutual -- at the time that the practices were adopted. Id. at 58. A malicious prosecution plaintiff, by contrast, is almost invariably aware of the charges against him at the time that they are filed or almost immediately thereafter.
A clear majority of courts in other jurisdictions that have considered this issue have held that the tort occurs when charges are filed. See, e.g., Royal Indemnity Co. v. Werner, 979 F.2d 1299 (8th Cir. 1992); Ethicon, Inc. v. Aetna Casualty and Surety Co., 688 F. Supp. 119, 127 (S.D.N.Y. 1988); Southern Maryland Agricultural Ass'n v. Bituminous Casualty Corp., 539 F. Supp. 1295 (D. Md. 1982); Zurich Insurance Co. v. Peterson, 188 Cal. App. 3d 438, 232 Cal. Rptr. 807 (Cal. Ct. App. 1987); Harbor Insurance Co. v. Central National Insurance Co., 165 Cal. App. 3d 1029, 211 Cal. Rptr. 902 (Cal. Ct. App. 1985); S. Freedman & Sons v. Hartford Insurance Co., 396 A.2d 195 (D.C. 1978); American Family Mutual Insurance Co. v. McMullin, 869 S.W.2d 862 (Mo. Ct. App. 1994); Patterson Tallow Co. v. Royal Globe Insurance Cos., 89 N.J. 24, 444 A.2d 579 (N.J. 1982); Muller Fuel Oil Co. v. Insurance Co. of North America, 95 N.J. Super. 564, 232 A.2d 168 (N.J. Sup. Ct. 1967). But see Roess v. St. Paul Fire and Marine Insurance Co., 383 F. Supp. 1231 (M.D. Fla. 1974) (coverage determined by date on which criminal proceedings terminate); Security Mutual Casualty Co. v. Harbor Insurance Co., 65 Ill. App. 3d 198, 382 N.E.2d 1, 21 Ill. Dec. 707 (Ill. App. Ct. 1978) (same), rev'd, 77 Ill. 2d 446, 397 N.E.2d 839, 34 Ill. Dec. 167 (Ill. 1979).
The City proposes two alternatives. First, it suggests that coverage should be determined by reference to the date on which the criminal proceedings are terminated. It points out that no action for malicious prosecution may lie until the criminal proceedings have terminated in the criminal defendant's favor. See Haefner v. Burkey, 534 Pa. 62, 626 A.2d 519, 521 (Pa. 1993). However, the earlier trigger makes more sense. As Kelley and Neczypor make clear, the injury to be guarded against is improper maintenance of a criminal action, not its termination. A municipality such as Erie seeks to insure itself against liability resulting from the allegedly unlawful acts of its law enforcement personnel. It is not seeking insurance against the inability, for whatever reason, of the state's prosecutors to bring a criminal action to a successful conclusion.
The City also proposes the use of a "triple trigger." Under such a system, the duties to defend and, if necessary, to indemnify would run to all of the insurance companies that provided coverage to the municipality between the date on which the criminal action was commenced and the date on which it was terminated. See ACandS, Inc. v. Aetna Casualty and Surety Co., 764 F.2d 968, 973 (3d Cir. 1985); Colt Industries, Inc. v. Aetna Casualty and Surety Co., 1989 U.S. Dist. LEXIS 14496, Civ. Action No. 87-4107, 1989 WL 147615, at *4-5 (E.D. Pa. Dec. 6, 1989), on reconsideration, 1991 WL 97702 (May 30, 1991); J.H. France Refractories Co. v. Allstate Insurance Co., 534 Pa. 29, 626 A.2d 502, 506 (Pa. 1993). However, this theory suffers from the same infirmities as the City's other suggestion. Moreover, the Pennsylvania Supreme Court has adopted the theory only for progressive conditions such as silicosis and asbestosis and, in doing so, has noted, "The insurance policy language and the evidence of the etiology and pathogenesis of asbestos-related disease compel us to reach this result." J.H. France Refractories, 626 A.2d at 506. Although malicious prosecution necessarily continues over some period of time, the time at which the harm to the plaintiff begins can be fixed at the filing of the criminal charges. There is no problem akin to determining the point at which a person's regular exposure to asbestos fibers produce a related ailment. See Ethicon, 688 F. Supp. at 127. Use of the triple trigger would not be appropriate in this case.
The proper standard, then, is to look to the date on which criminal charges were filed. Application of this rule to these motions is straightforward. Defendants have no duty to defend the DiNicola action, and these policies cannot give rise to a duty to indemnify Erie. DiNicola was charged on March 28, 1980. That day is the date on which the tort of malicious prosecution is alleged to have occurred for the purposes of insurance coverage. Guaranty National did not provide any coverage to the City prior to September 1, 1980. Western World did not provide any coverage to the City prior to November 1, 1988. Therefore, the motions will be granted.
An appropriate order will follow.
MC LAUGHLIN, J.
AND NOW, this 19 day of January, 1996, for the reasons stated in the accompanying Memorandum, IT IS HEREBY ORDERED
1) that the Motion to Dismiss of Defendant Western World Insurance Company [Doc. 9] is GRANTED;
2) that the Motion to Dismiss of Defendant Guaranty National Insurance Company [Doc.14] is GRANTED; and
3) that this action is dismissed as to Defendants Guaranty National Insurance Company and Western World Insurance Company.
Sean J. McLaughlin
United States District Judge