Insurance company claims it's not liable to cover City of Waukegan in suit over wrongful conviction

By Kenneth Lowe | Dec 26, 2013

An insurance company filed a complaint for declaratory judgment earlier this month in Chicago's federal court, asserting it should not be held liable to cover the defense costs of an Illinois city being sued over a wrongful conviction.

Landmark American Insurance Co. wants the court to determine the City of Waukegan’s policy does not cover the costs associated with defending it and some of its employees against a civil suit filed by Juan A. Rivera Jr.

Attorneys Mark J. Sobczak and Don R. Sampen of Clausen Miller P.C. filed the suit Dec. 19 in the U.S. District Court for the Northern District of Illinois on behalf of Landmark, an Oklahoma corporation.

After Landmark declined to cover the costs, the suit states the city agreed to withdraw its tender in a Dec. 5 letter that went on to note its intent “to try to create new Illinois law, through related litigation in which Landmark is not a party, in such a manner as to trigger the Landmark policy” and re-tender the claim in the future.

In seeking a declaration from the court that the City of Waukegan's policy doesn't provide coverage for the defendants in Rivera's suit, Landmark contends it has “the sole discretion to determine whether to assume control of the defense, and because it has not exercised its discretion to defend, it is not so obligated.”

Landmark further argues the incident at the crux of the underlying suit did not take place during the time frame of the policy, which the suit states was effective from November 2002 through November 2003.

The wrongful conviction that spurred this insurance dispute stems from the 1992 death of 11-year-old Holly Staker in Waukegan. Rivera was convicted of the crime and in 1993, sentenced to life in prison. He was exonerated in 2011.

In October 2012, Rivera filed a civil suit against the city and some of its law enforcement employees, claiming police coerced a confession out of him over the course of four nights of “intensive and abusive” questioning.

Rivera alleges in his suit that medical personnel visiting him in police custody on the third day of his detention discovered him hog-tied in a padded cell after having torn out portions of his own scalp, and diagnosed him with “acute psychosis.”

“The Defendants continued to interrogate [Rivera], and they claimed that, in the midst of this psychological break and on the fourth day of their interrogation, [Rivera] confessed to killing Holly Staker,” Rivera’s suit asserts.

Among other claims, the wrongful conviction suit contends police persisted in its interrogation of Rivera, despite being deprived of sleep and having a low IQ, and arrested him in part due to political pressures to blame someone from the murder.

Rivera was exonerated based on data from an ankle monitoring device he had on for a previous crime that placed him in his home at the time of the murder, as well as DNA evidence recovered from the victim’s body that eliminated him as a suspect.

His suit seeks an unspecified amount of damages.

Besides the city, Landmark named the following people as defendants in its complaint for declaratory judgment:  former Waukegan Police Chief Phillip Stevenson and former police officers Lucian Tessman, Donald Meadie, Fernando Shipley, Howard Pratt, Richard A. Davis and David Ostertag.

The insurance company also named Rivera in its action given that he is the plaintiff in the underlying suit, explaining that he is a “necessary but nominal defendant.”

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