Judge: Homeowner's policy for ex-IL lawmaker convicted of child porn doesn't cover $2M judgment for victims

By Scott Holland | Jun 6, 2019

CHICAGO — A federal judge has determined an insurance company isn’t obligated to pay two women who claim they were victims in a child pornography scandal involving an ex-Illinois lawmaker.

Keith Farnham, an Elgin Democrat, served in the Illinois House of Representatives from 2009-2014, resigning his office shortly before being charged with violating federal child pornography laws. On Dec. 5, 2014, he was indicted and pleaded guilty to possessing illicit images and videos. Among those pictured were women identifying themselves as Erin and Fiona, who filed a federal invasion of privacy lawsuit on Feb. 6, 2016

The women say that on Dec. 1, 2016, Farnham executed an affidavit further admitting his guilt and confessing to a $2 million judgment in their favor. However, Citizens Insurance Company of Illinois denied coverage for Farnham in that lawsuit.

Farnham died on June 18, 2017, while an inmate at the Butner, N.C., Federal Medical Center. On Sept. 21, 2017, a Chicago federal judge entered judgment against Farnham for $2 million, and on July 24, 2018, Erin and Fiona filed their first amended complaint seeking a declaratory judgment that a Citizens Insurance homeowners’ policy covered their claims.


Keith Farnham   Loudes13 at English Wikipedia [CC BY-SA 2.5 (https://creativecommons.org/licenses/by-sa/2.5)]

In an opinion issued June 4, U.S. Districy Judge Charles Kocoras said Farnham had a policy with Citizens from Sept. 23, 2013, to Sept. 24, 2014, and the plaintiffs alleged a personal injury caused by an insurable occurrence dated in that window. Citizens countered by saying sexual mistreatment of a minor doesn’t constitute a “bodily injury” caused by an “occurrence,” so far as the policy language is concerned, and that even if it did, exlcusions under the law precludes coverage.

Kocoras agreed with Citizens’ position the invasion of privacy the plaintiffs endured did not result from an accidental occurrence, but rather from Farnham’s intentional actions. He pointed to a 1999 Illinois First District Appellate Court opinion in Hartford Insurance Company of Illinois v. Kelly, in which a panel found “the parties did not intend to include in the definition of ‘occurrence’ inappropriate sexual misconduct of a minor. Indeed, the average person purchasing homeowner’s insurance would cringe at the very suggestion that (the person) was paying for such coverage. And certainly the person would not want to share that type of risk with other homeowner’s policyholders.”

Though the plaintiffs said Farnham’s policy was ambiguous and should be read in their favor, Kocoras found “no ambiguity exists” because of the insistence on "accidental," rather than intentional infliction.

“Although Farnham’s actions were clearly repugnant and crossed every line of human decency, the Plaintiffs have failed to plausibly allege an ‘occurrence’ under the Homeowners’ Policy because the action was not accidental," Kocoras wrote.

Beyond that, Kocoras said Citizens would be protected by a provision known as the Penal Law Exclusion, which does not force insurers to cover criminal acts. The plaintiffs argued that shouldn’t apply because the judgment against Farnham was civil, not criminal, but Kocoras agreed the invasion of privacy was cause by a criminal violation, namely federal child pornography laws.

Kocoras also rejected the plaintiffs’ argument the Penal Law Exclusion only applies if the underlying violation is explicitly outlined in the policy. He said the exclusion “fails to articulate any such limitation, and the plaintiffs do not introduce any case law to support” their interpretation.

In addition to determining the plaintiffs failed to plausibly allege a claim under the policy, Kocoras dismissed the plaintiffs’ request for a declaration ordering Citizens to cover the civil judgment against Farnham.

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