BatesCarey Establishes Kentucky Precedent on Malicious Prosecution Coverage Trigger


In a ruling of first impression, a Kentucky state court held that the “personal injury” inflicted by malicious prosecution “occurs” at the time of wrongful charging for purposes of triggering insurance coverage. The court adopted BatesCarey’s argument that the subsequent years of a claimant’s incarceration and suffering constitute resulting “damages” but not new “personal injuries” triggering multiple policy periods. Westport Insurance Corporation v. City of Newport, Kentucky, et al. (Campbell County, KY) (March 4, 2022).

In establishing new precedent on this pivotal issue, BatesCarey successfully distinguished the U.S. Court of Appeals for the Sixth Circuit’s ruling arising from the same underlying claim in St. Paul Guardian Ins. Co. v. City of Newport, 804 F. App'x 379 (6th Cir. 2020). The Sixth Circuit had determined that the underlying claimant’s suffering during his years in prison triggered coverage under policies issued from 2007-2010, roughly two decades after the claimant was wrongfully charged and convicted, because the St. Paul coverage applied to any “injury or damage” that happened during its periods. Significantly, the new Westport ruling recognizes that the Sixth Circuit’s prior decision is applicable only to policies triggered by a claimant’s harm or “damages” suffered during the period, and should not apply to policies triggered by the wrongful act or injury that “occurs” during the period.

Both the Westport and St. Paul rulings arise from an underlying lawsuit filed by William Virgil in 2016 against the City of Newport, Kentucky and other defendants for their alleged role in his arrest and conviction for the 1987 rape and murder of Retha Welch, including charging Virgil without probable cause and coercing another inmate to testify that Virgil had confessed to the crimes. In 2015, after roughly 28 years in prison, Virgil was released based on DNA evidence showing he was not involved in the crimes and the charges against him were later dismissed entirely. 

After Virgil filed suit in 2016, the City of Newport’s insurers from 2007-2013 (Travelers group insurers) filed coverage litigation in Kentucky federal court, arguing Virgil’s incarceration did not constitute “injury or damage” that “happened” during the 2007-2013 policy years and those policies were not triggered. In rejecting the St. Paul position, the Sixth Circuit found that Virgil’s prolonged suffering in prison triggered the duty to defend, joining two other courts which had previously held that the Travelers trigger of “injury or damage” that “happens” during the policy period can be satisfied by the claimant’s suffering, harm and deprivation of rights during years of incarceration.

Following the Sixth Circuit’s ruling in St. Paul, Westport filed its own coverage action in Kentucky state court seeking a declaration that Virgil’s “personal injury” “occurred” only on the single date at the time of charging in 1987, a decade before Westport issued coverage to the City of Newport from 1997-2000. Westport argued that, based on Kentucky precedent going back almost 100 years, the deprivation of rights and suffering of a maliciously prosecuted person constitute “damages” flowing from the malicious prosecution, rather than constituting the injury that occurred at the time of the malicious prosecution. The Westport court agreed.

In finding no coverage for Virgil’s lawsuit, the Westport decision brings Kentucky in line with the majority of courts that have concluded malicious prosecution inflicts “personal injury” which “occurs” at charging, and that later suffering is a matter of damages, rather than a continuous “personal injury” triggering policies issued years or decades later. By giving effect to the crucial distinction between the tortious injury on one hand and the resulting damages on the other hand, the Westport ruling stands as a formative example of the single date of loss trigger, rejecting the policyholders’ frequent efforts to expand the scope and impact of the Travelers-specific ruling in St. Paul Guardian Ins. Co. v. City of Newport, and its predecessor decisions, Ferguson v. St. Paul, 597 S.W.23d 249 (Mo. App. 2019) and Travelers v. Mitchell, 925 F.3d 236 (5th Cir. 2019).

Westport was represented by BatesCarey counsel, Adam H. Fleischer and Kevin F. Harris.