An Argo Group unit is obligated to defend a Missouri county in a case where its police officers had arrested a man who was subsequently exonerated for his wife’s murder, says a federal appeals court, in affirming a lower court ruling.

On Dec. 27, 2011, Russell Scott Faria’s wife, Betsy, was murdered in their home in Troy, Missouri, suffering more than 55 stab wounds, according to Tuesday’s ruling by the 8th U.S. Circuit Court of Appeals in St. Louis in Argonaut Great Central Insurance Co. v. Lincoln County, Missouri et. al.

He was questioned by police, but released two days later. On Jan. 4, 2012, Mr. Faria was arrested for the murder and eventually sentenced to life in prison. He was later given a new trial to account for newly discovered evidence and acquitted of the murder charge in November 2015.

Mr. Faria filed suit against the county and others associated with his arrest, charging malicious prosecution, among other charges.

Peoria, Illinois-based Argonaut Great Central, an Argo Group unit, had issued an insurance policy to Lincoln County, including its officers and employees, effective Jan. 1, 2012, to Dec. 31, 2013, according to the ruling.

The Missouri Public Entity Risk Management Fund had previously provided liability insurance to the county for the period Jan. 1, 2011, through Jan. 1, 2012.

Litigation ensued as to whether Argonaut had a duty to defend the county in Mr. Faria’s suit. The U.S. District Court ruled it did, which was affirmed by a three-judge appeals court panel, in a divided ruling.

Argonaut had argued it had no duty to defend the county because of malicious conduct exclusions in its policy and because the relevant conduct occurred in December 2011, making the Jefferson City Missouri-based risk management fund the primary insurer.

In addition to charging malicious conduct, Mr. Faria “also alleges the defendants acted recklessly and incompetently during the investigation of Faria for murder,” said the majority opinion, in holding the malicious conduct exclusion does not apply.

“Most importantly, because the standard for the duty to defend this lawsuit is whether there is any possibility of coverage, Argonaut cannot hurdle this high bar based upon the alleged absence of a covered wrongful act,” said the ruling.

The ruling also held that Mr. Faria was questioned by police in December 2011, before Argonaut’s coverage became effective.  Although he charges the county with a constitutional violation based upon his initial “seizure,” allegedly without probable cause, in December 2011, the remaining counts “all involve actions that occurred in 2012,” said the ruling in affirming the lower court’s ruling.

The dissenting opinion states, “It is apparent the first wrongful act was not committed during Argonaut’s policy period, but instead while MOPERM was the county’s liability insurer.

“By ignoring the existence of the alleged first ‘wrongful act’ and instead relying on when most of the alleged misconduct occurred, or when ‘the most pertinent actions’ took place, or when the charges against Faria were filed, the majority has rewritten the terms of the policy.”

The county’s attorney, Neil J. Bruntrager, of Bruntrager & Billings P.C. in St. Louis, said, “We have read the decision and are in full agreement with it. We were surprised that Argonaut had filed this matter in the first place.”

Mr. Bruntrager said, “We think the decision is clear, and while we were in agreement, we were not surprised” by it.

Argonaut’s attorney did not respond to a request for comment.

Last year, a federal appeals court upheld a lower court ruling and ruled a Travelers Cos. Inc. unit and Scottsdale Insurance Co. were obligated to defend a Mississippi county in a case where three men were wrongly convicted of murdering and raping a woman in 1979.