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Zook v. Arch Specialty Ins. Co.

In an issue of first impression, the Court found that a malicious prosecution claim arises for purposes of triggering insurance coverage when the insured sets in motion the legal machinery of the State, unless the language of the contract specifies otherwise.

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Carl D. Zook filed a personal injury action against MJQ Concourse, Inc. and several of its employees “MJQ” or “the insured” for damages arising out of an incident at the insured’s nightclub.1 Specifically, Zook raised claims of false imprisonment, battery, negligence, malicious prosecution, and malicious arrest. While that action was pending, Zook filed a declaratory judgment action against the same defendants and Arch Specialty Insurance Company “Arch”, with which MJQ had a commercial general liability “CGL” insurance policy. The trial court granted summary judgment to Arch in the declaratory judgment action, finding that the alleged malicious prosecution occurred outside the policy period and that the insurance coverage for Zook’s remaining claims was subject to a $50,000 sublimit imposed by an Assault and Battery endorsement, rather than the $1,000,000 general liability limit.

In Case No. A15A2006, Zook appeals from two orders granting summary judgment to Arch in the declaratory judgment action. In Case No. A16A0467, MJQ appeals from the same summary judgment orders but limits its argument on appeal to the trial court’s ruling regarding the malicious prosecution claim. For the reasons that follow, the trial court erred in finding that the claim for malicious prosecution was not covered by the policy. However, the trial court properly concluded that coverage on Zook’s remaining claims was limited to $50,000.

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