Insurance for Wrongful Murder Conviction Questioned in Court
Russell Scott Faria came home to a devastating sight on December 27, 2011: His wife Betsy had been stabbed 55 times. Hysterical, he called emergency services. In his fragile state, Faria believed Betsy may have killed herself, seeing that she was also terminally ill.
When authorities arrived, Faria willingly went to the police station and waived his Miranda rights before speaking with officers. He was questioned at the Lincoln County jail in Troy, Missouri for 40 hours before being released from custody.
About a week later, Faria was arrested. The county filed criminal homicide charges against him.
For almost two years, Faria waited for his trial in jail, because he could not procure bail money. In November 2013, he was sentenced to life in prison.
Meanwhile, Betsy’s daughters were fighting their own legal battle: Pam Hupp, a friend of Betsy’s, was trying to claim her share of Betsy’s life insurance. Days before Betsy’s murder, Hupp had been added to Betsy’s life insurance policy as a beneficiary.
Faria motioned to remand for a new trial given this evidence. In November 2015, Faria was retired in a bench trial and acquitted of the murder charge.
In July 2016, Faria brought a suit against Lincoln County, alleging one officer in particular, Ryan J. McCarrick, had violated Faria’s Fourth amendment rights by arresting him, seizing him and holding him without probable cause. Additionally, Faria’s suit alleged the county conspired to violate his Fourth and Fourteenth amendment rights by seizing him and denying him substantive due process.
Lincoln County held insurance through Argonaut Great Central Insurance Company. The policy stated that Argonaut would indemnify the county when it was legally obligated to pay damages resulting from a covered wrongful act committed during the course and scope of law enforcement activities.
However, the policy excluded claims arising from “dishonest, malicious, fraudulent or criminal act[s].” Argonaut denied coverage.
Lincoln County took the insurer to court. There, Argonaut reiterated the policy’s exclusion and asserted that it had no duty to defend.
However, the court saw things differently.
Scorecard: The court reviewed Argonaut’s policy definition of a “wrongful act,” and concluded that the insurer does have a duty to defend under its policy.
Takeaway: Insurers will not indemnify wrongful acts committed intentionally or with malice. For employers, the best defense is to prevent these acts in the first place through strong policies around employee codes of behavior, including clear enforcement and discipline guidelines. Organizations should also examine policy language and clarify with their broker what may or may not covered to avoid unpleasant surprises. &