High Court Addresses Trigger Of Coverage For Malicious Prosecution
In an unsurprising opinion, but worthy of a brief mention here, the Montana Supreme Court held in Farmers Ins. Exch. v. Minemyer, No. DA 22-0482 (Mont. July 18, 2023) that malicious prosecution triggers the commercial general liability policy on the risk when the judicial proceeding, that was eventually determined to be wrongful, was commenced.  The court noted that its decision was limited to specific policy language (here, it was the standard ISO commercial general liability “personal and advertising injury” language).

The court held: “So while the ongoing tort of malicious prosecution may span months or even years, for purposes of determining whether or not it falls within a particular insurance coverage period, clarity requires that we determine a specific date constituting the occurrence of the offense. Consistent with the reasoning of the majority of jurisdictions that have considered this issue, we hold that solely for purposes of an insurance policy which measures coverage by the period within which the ‘offense is committed,' the tort of malicious prosecution occurs upon the commencement of the judicial proceeding on which the malicious prosecution claim is based. To hold otherwise would allow a party who did not have an insurance policy covering malicious prosecution when the underlying lawsuit was filed to later purchase coverage and force the insurer to defend and indemnify against a claim of malicious prosecution arising out of the previously filed suit. Such a result has been consistently rejected by the majority of the states who have addressed the issue, and we join them in rejecting such a theory. Because the Farmers CGL Policy did not exist until 2014, and the judicial proceeding on which the malicious prosecution claim is based was commenced prior to the effective policy period, the District Court correctly held that the Insurers had no duty to defend against this claim.” (italics in original).

Appeals Court Looks To The ALI Liability Insurance Restatement For Guidance
Since the adoption of the ALI Liability Insurance Restatement, several courts have turned to it for guidance when addressing whether an insurer has a right to reimbursement of defense costs following a determination that it had no duty to defend.  I have not done a count, but I suspect that this is the Restatement issue that has most frequently been the focus of courts.

The Eleventh Circuit Court of Appeals, in Cont’l Cas. Co. v. Winder Labs., No. 21-11758 (11th Cir. June 13, 2023), turned to the ALI’s Liability Insurance Restatement to conclude that, while insurers had no duty to defend, they also had no corresponding right to reimbursement of defense costs.  An issue between the parties was whether a right to reimbursement was the majority rule nationally.  To answer this question, the court turned to a comment in the Liability Insurance Restatement: “Over the past few decades, the pro-recoupment cases have been viewed as stating the majority position, while anti-recoupment cases have been labeled the minority. But in recent years, several state courts, including several state high courts, have faced recoupment of defense costs as an issue of first impression and have rejected a right of recoupment for the insurer, unless that right is established expressly by contract.” Restatement of the Law of Liability Insurance § 21, cmt. a.