In Ferguson v. St. Paul Fire and Marine Insurance Co., the Missouri Court of Appeals, Western District, found that a public entity liability policy covered the injuries sustained by a man that had been wrongfully convicted, notwithstanding that the policy was issued years after the relevant prosecution. The court’s ruling is in stark contrast to the Illinois Supreme Court’s recent decision in Sanders v. Illinois Union Insurance Co., No. 124565, 2019 WL6199651 (Ill. Nov. 21, 2019), the subject of a prior blog, where the court found that it was the policies in place at the time of the wrongful prosecution that provided coverage for the offense. In our earlier blog, we discussed the costly consequences the Sanders decision could impose on policyholders in Illinois. Although reaching an opposite conclusion than Sanders, Ferguson is based on different policy language and, ultimately, does not appear to be inconsistent with the Sanders decision. While certainly a welcomed decision from a policyholder’s perspective, Ferguson and Sanders highlight the importance that policy wording can play in defining the scope of an insurance program and how similar factual scenarios can result in drastically different coverages based on seemingly minor differences in policy wording. A copy of the Ferguson decision can be found here.

Ferguson arose out of the 2005 wrongful conviction of Ryan Ferguson by the City of Columbia (“Columbia”) in Boone County, Missouri. Ferguson was incarcerated from 2005 until his release in 2013. After his release, Ferguson sued Columbia for violations of his constitutional rights and malicious prosecution. Columbia and one of its insurers entered into a partial settlement with Ferguson for $2.75 million and Ferguson ultimately was awarded over $11 million following a bench trial. As a judgment creditor, Ferguson sought equitable garnishment against two of Columbia’s insurers that had denied coverage. The insurers did not dispute liability but challenged the availability of coverage on the ground that none of the policies were in place at the time of Ferguson’s wrongful conviction.

Columbia and its officers were insured by Law Enforcement Liability (“LEL”) insurance policies issued by St. Paul Fire & Marine Insurance Company (“St. Paul”) from October 1, 2006, through October 1, 2010, and insured by a similar LEL policy through Travelers Indemnity Company (“Travelers”, together with St. Paul, the “Insurers”) from October 1, 2010, through October 1, 2011. The policies provided coverage for “personal injury” and “bodily injury” that “happens while [the policy] is in effect ….” The definition of “personal injury” included, among other things, “injury … caused by” civil rights violations and malicious prosecution. The definition of “bodily injury” included emotional distress and mental anguish.

In considering whether the damages awarded Ferguson were for “personal injury” under the policies, the court noted that no Missouri decisions have interpreted the specific policy wording at issue and, thus, the court looked to cases from outside the jurisdiction. The court approvingly quoted the Fifth Circuit’s decision in Travelers Indemnity Company v. Mitchell, 925 F.3d 236 (5th Cir. 2019), which interpreted identical policy language under similar factual circumstances and held that the policy provided “an injury-based trigger of coverage, not an act-based trigger,” and, therefore, the policy covers injuries that occur during the policy period irrespective of when the wrongful act occurred. With respect to Ferguson’s malicious prosecution claim, the court noted that the tort of malicious prosecution involving incarceration “is not completed, and the accrual of injury does not cease, until the criminal proceeding terminates in the victim’s favor.” Accordingly, the injuries sustained as a result of a malicious prosecution are continuous and ongoing and, consequently, the court concluded that Ferguson sustained “personal injury” during each year he was incarcerated as long as the injury was sustained during the policy period.

The court contrasted its findings with Sanders, which involved an “occurrence-based policy” that the Sanders court found to weigh heavily into its decision “that malicious prosecution occurred at the time of prosecution.” In contrast, the policies before the Ferguson court were “injury-based” policies that necessitated a different interpretation. Thus, the Ferguson court concluded that, although reaching a different outcome, its decision nevertheless was consistent with Sanders given the different policies at issue.

The court next turned to whether the damages awarded Ferguson were also for “bodily injury” under the policies. The court stated that the Insurers’ policies “plainly and unambiguously [provide] coverage for injuries sustained during the policy period even though the wrongful act occurs before the policy period.” Since Ferguson was found to suffer emotional distress and mental anguish during each year of his incarceration, the court held that Ferguson suffered “bodily injury” each year.

The court recognized “that it may raise concerns” that its interpretation permitted “coverage for injuries resulting from a wrongful act which occurred before the policy incepted”; however, it held that it was bound by the plain language of the policies. The court concluded that “[a]n insurance company is perfectly capable of providing limitations on its coverage within the language of its policy … and they are also perfectly capable of providing broader coverage than is required by the law regarding specific causes of action.”

In addition to highlighting the significantly different outcomes that can arise under different policy wording applied to similar fact patterns, Ferguson and Sanders are reminders that not all policies are created equal and that policyholders, therefore, must be cognizant of the language used in their policies to ensure that the coverage afforded is in line with their needs and coverage expectations.