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Risk retention group wins dispute with city over falsely accused prisoner

Risk retention group wins dispute with city over falsely accused prisoner

A risk retention group has prevailed over Waukegan, Illinois, in a coverage dispute involving compensation to a man who was falsely imprisoned for more than 20 years.

Angel Gonzalez was arrested by Waukegan police officers for rape and kidnapping in 1994 and convicted and imprisoned in 1995, according to Friday’s ruling by the U.S. District Court in Chicago in States Self-Insurers Risk Retention Group Inc. v. City of Waukegan, et al.

More than 20 years later, DNA evidence exonerated Mr. Gonzalez, who sued Waukegan and several officers involved in his arrest. Waukegan tendered the case to one of its insurers, Minneapolis-based States Self-Insurers, which filed suit in the District Court on the issue of coverage.

States’ public entity excess liability insurance occurrence policy included “nose”’ coverage that extends coverage to acts committed during the 22 years prior to the policy’s effective date of Nov. 1, 2013, which includes the 1994 and 1995 time period when the events alleged in the case took place, said the ruling.

In denying coverage, States alleged Waukegan was covered under a different policy issued by Lloyd’s of London and St. Paul-based Northfield Insurance Co. 

Lloyd’s of London and Northfield had agreed to pay $270,000 and $630,000, respectively, which they said represented their coverage’s full liability limits.

“According to States, this case is simple,” said the ruling. States concedes the suit is a claim within the meaning of its policy for bodily injury, personal injury and wrongful acts, said the ruling.

It argues, however, that under the prior acts endorsement in its policy, Gonzalez falls within the scope of the States policy’s nose coverage only if Waukegan had no other applicable insurance, which was not the case.

Waukegan’s arguments included that certain of the prior acts endorsement’s conditions are illusory. 

“The States Policy is not illusory because States’ obligations thereunder are neither empty nor optional,” said the ruling, in holding the States policy does not require the risk retention group to defend nor indemnify Waukegan in the suit.



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