BatesCarey attorneys Adam Fleischer and Kevin Harris, representing Westport Insurance Corporation, achieved an appellate ruling that a $28 million malicious prosecution judgment is not covered because the injury took place a decade before Westport’s coverage. The Kentucky Court of Appeals unanimously affirmed the trial court’s decision that the claimant’s “personal injury” occurred when he was wrongfully charged in the 1980s and that the claimant’s subsequent incarceration and suffering constitute continuing “damages,” rather than new or continuous “personal injury” occurring throughout incarceration. City of Newport v. Westport Ins. Co., No. 2022-CA-0384-MR, 2023 WL 6522204 (Ky. Ct. App. Oct. 6, 2023) (to be published).

William Virgil sued the City of Newport, Kentucky and other defendants for their alleged role in his arrest and conviction for a 1987 rape and murder he did not commit. Virgil alleged he was wrongfully charged in 1987, after the defendants allegedly coerced another inmate to testify that Virgil had confessed to the crimes, and then withheld exculpatory information at trial and for decades thereafter. Virgil was eventually exonerated in 2015.

The City of Newport was insured by Westport from 1997-2000 and by St. Paul Guardian Insurance Company from 2007-2011.

Both insurers denied coverage, arguing that Virgil’s “personal injury” took place in 1987 when he was wrongfully charged, and thereby not presenting an injury during either insurer’s period. St. Paul filed a declaratory judgment in Kentucky federal court, which did not include Westport. 

In March 2020, the U.S. Court of Appeals for the Sixth Circuit ruled that St. Paul owed a duty to defend because Virgil suffered “physical and dignitary harms” throughout his incarceration, which constituted a triggering loss under the St. Paul coverage. The City then argued that this ruling demonstrates Westport’s coverage was also triggered, and Westport must therefore also defend.

After the Sixth Circuit’s ruling against St. Paul, Westport agreed to participate in the defense under a reservation of rights while also filing a new declaratory judgment in Kentucky state court, arguing that the state court need not follow the Sixth Circuit federal court ruling.

In the state trial court, Westport argued that the St. Paul policy trigger is “injury or damage” that happens during the period, and that the St. Paul policies define these terms to mean “any harm” to any person during the period. Therefore, Westport explained, the St. Paul policies were indeed triggered by the periods of suffering or harm during Mr. Virgil’s continued incarceration, according to the Sixth Circuit.  Westport argued that its own policies, by contrast, were triggered only at the time the “personal injury” “occurred,” or came into existence, which was indisputably at the time of the malicious charging in 1987. The trial court agreed and found that the Westport policies were not triggered.

The appellate court unanimously affirmed the trial court’s finding of no coverage.