American Safety Casualty Insurance Co. v. City of Waukegan, Illinois
678 F.3d 475 (7th Cir. 2011)Words & Phrases
Bad Faith: In GeneralTrial Judge
Judge Virginia M. KendallAppellate Judge
Chief Judge EasterbrookHolding
Insurer which refused to defend on the basis of when malicious prosecution claim was triggered liable for bad faith damages.Fact Summary
"It comes with ill grace for an insurer that steadfastly refused to defend its customer to insist that it is relieved of liabliity because the insured erred in conducting a defense that was thrust upon it." at 483-4.
Date of exoneration was trigger for malicious prosecution coverage.
Insurer that received notice 6 days before trial and filed a DJ within a few months was not estopped to raise is coverage defense. Ehlco rule "applies only when the insurer has enough time to assess the nature of the underlying suit, compare the plaintiff's alleagtions as against the policy's terms and research the governing law so that it can intelligently evaluate the client's request for a defense. In Illinois estoppel is a penalty designed to induce insurers to proctect clients who are at risk, rather than to sit idly by while the underlying suit proceeds. The estoppel doctrine, like the penalty provisions of Section 155, is supposed to discourage unreasonable and vexatious conduct." at 485-6.