                                                                                                                           Opinions of the United
1997 Decisions                                                                                                             States Court of Appeals
                                                                                                                              for the Third Circuit


3-21-1997

City of Erie v. Guaranty Natl Ins Co
Precedential or Non-Precedential:

Docket 96-3117,96-3163




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                 UNITED STATES COURT OF APPEALS
                     FOR THE THIRD CIRCUIT

                           ________________

                       Nos. 96-3117 & 96-3163
                          ________________

                     CITY OF ERIE, PENNSYLVANIA

                                  v.

              GUARANTY NATIONAL INSURANCE COMPANY;
            IMPERIAL CASUALTY AND INDEMNITY COMPANY;
                 WESTERN WORLD INSURANCE COMPANY

                                   City of Erie,

                                                     Appellant

         _______________________________________________

         On Appeal from the United States District Court
            for the Western District of Pennsylvania
              (D.C. Civil Action No. 95-cv-00090E)
                       ___________________


                      Argued October 30, 1996

           Before:    SCIRICA and COWEN, Circuit Judges
                     and POLLAK, District Judge*

                       (Filed March 21, 1997)



GREGORY A. KARLE, ESQUIRE (ARGUED)
Office of the City Solicitor
Municipal Building
626 State Street, Room 505
Erie, Pennsylvania 16501

  Attorney for Appellant




*The Honorable Louis H. Pollak, United States District Judge for
the Eastern District of Pennsylvania, sitting by designation.




                                  1
GERALD J. STUBENHOFER, JR., ESQUIRE (ARGUED)
MARCIA H. HALLER, ESQUIRE
MacDonald, Illig, Jones & Britton
100 State Street, Suite 700
Erie, Pennsylvania 16507

  Attorneys for Appellee,
  Guaranty National Insurance Company


RICHARD P. JEFFRIES, ESQUIRE (ARGUED)
ROBERT M. SLOVEK, ESQUIRE
Kutak Rock
The Omaha Building
1650 Farnam Street
Omaha, Nebraska 68102-2186

  Attorneys for Appellee,
  Imperial Casualty and Indemnity Company


PAMELA G. COCHENOUR, ESQUIRE (ARGUED)
NORA BARRY FISCHER, ESQUIRE
Pietragallo, Bosick & Gordon
One Oxford Centre, 38th Floor
Pittsburgh, Pennsylvania 15219

  Attorneys for Appellee,
  Western World Insurance Company


                          __________________

                      OPINION OF THE COURT
                       __________________


SCIRICA, Circuit Judge.


          The issue on appeal involves the interpretation of an

"occurrence" insurance policy under Pennsylvania law,

specifically whether the tort of malicious prosecution "occurs"

when the criminal charges are filed or when the prosecution is

resolved in the plaintiff's favor.




                                  2
                                  I.

             Louis DiNicola was arrested and charged on March 25,

1980, for arson and three counts of second degree murder.       He was

convicted on all counts.    On December 6, 1983, the Pennsylvania

Supreme Court overturned his conviction and remanded for a new

trial.    Commonwealth v. DiNicola, 468 A.2d 1078 (Pa. 1983).     More

than ten years later, on May 23, 1994, a jury acquitted DiNicola

of all charges.

            On December 15, 1994, DiNicola filed a complaint in

federal court charging the City of Erie with, inter alia,

malicious prosecution.    He sought damages under federal and state

law.1    In order to assert a claim of malicious prosecution, a

plaintiff must allege "the defendants instituted proceedings

without probable cause, with malice, and that the proceedings

were terminated in favor of the plaintiff."    Cosmas v.

Bloomingdales Bros., Inc., 660 A.2d 83, 85 (Pa. Super. 1995)

(quoting Amicone v. Shoaf, 620 A.2d 1222, 1224 (Pa. Super.

1993)).    It is undisputed that a plaintiff has no cause of action

for malicious prosecution in Pennsylvania until dismissal or

acquittal of the underlying criminal charges.    The statute of

limitations in Pennsylvania for malicious prosecution claims is

two years.    42 Pa. Cons. Stat. Ann. § 5524; Seto v. Willits, 638
A.2d 258 (Pa. Super. 1994).     It begins to run on the date when

1.   His complaint sets forth federal claims under 42 U.S.C. §§
1983 and 1988 as well as state law claims for "false arrest and
imprisonment, malicious prosecution, spoilation of evidence,
intentional infliction of emotional distress, defamation, abuse
of process, willful misconduct, prima facie tort, conspiracy
tort, negligence and gross negligence."



                                  3
the underlying proceedings are terminated in the plaintiff's

favor.   Cap v. K-Mart Discount Stores, Inc., 515 A.2d 52 (Pa.

Super. 1986).

          The City of Erie requested a defense and

indemnification from its insurers, appellees Guaranty National

Insurance Company, Imperial & Indemnity Company and Western World

Insurance Company.   Each insurance company declined coverage on

the ground that the alleged tort had not occurred during the

periods covered by their respective policies with the city.2     The

City of Erie then sought a declaratory judgment in the United

States District Court for the Western District of Pennsylvania

that the insurers were obligated to defend and indemnify it

against DiNicola's action.3

          The parties agree the insurance policies provide

coverage for malicious prosecution suits and are "occurrence"

policies, not "claims made" policies.4   "An 'occurrence' policy

2.   Each insurance company insured the City of Erie at various
times from July l, l980 to January l, l995. Guaranty insured the
city from July 1, 1980 to January 1, 1984. Imperial insured the
city from January 1, 1984 to November 1, 1988. Western World
insured the city from November 1, 1988 to January 1, 1995.

3.   The City of Erie voluntarily dismissed its claims against
two other insurance companies, United National Insurance Company
and Diamond State Insurance Company, in order to establish
diversity jurisdiction.

4.   Guaranty's policies provide that Guaranty "will pay on
behalf of the Insured all sums which the Insured shall become
legally obligated to pay . . . for damage because of . . .
Personal Injury Liability . . . to which this insurance applies
caused by an occurrence within the policy period. . . ." Western
World's policies provide: "We will pay those sums that the
insured becomes legally obligated to pay as damages because of
'bodily injury', 'property damage' or 'personal injury' to which
this insurance applies occurring during the policy period as a
result of a 'law enforcement incident' that takes place in the


                                4
protects the policy holder from liability for any act done while

the policy is in effect, whereas a 'claims made' policy protects

the holder only against claims made during the life of the

policy."    St. Paul Fire & Marine Ins. Co. v. Barry, 438 U.S. 531,

535 n.3 (1978).    Nor are the time periods covered by the policies

in dispute.    But the parties disagree whether the tort of

malicious prosecution occurred, for insurance coverage purposes,

during the periods covered by these policies.

            Guaranty National and Western World moved to dismiss

the case under Fed. R. Civ. P. 12(b)(6), asserting the tort did

not occur during the periods covered by their policies.    They

argued the tort of malicious prosecution "occurs" for insurance

coverage purposes at the time the underlying criminal charges are

filed against the plaintiff.    Because the murder and arson

charges against DiNicola were filed on March 25, 1980, when none

of their policies was in effect, they claimed there was no

coverage.    In response, the City of Erie contended the tort of

malicious prosecution "occurs" when the claim arises -- in this

case, in 1994, when DiNicola was acquitted and when he was first

able to bring suit under Pennsylvania law.    In the alternative,

the City argued for application of a "multiple trigger" analysis

similar to that employed by Pennsylvania courts in asbestosis

cases.   Under a multiple trigger theory, all three insurers could



(..continued)
coverage territory." Imperial's policies provide: "This policy
applies only to acts committed or alleged to have been committed
during the policy period stated in the declarations."



                                 5
be responsible to some degree to defend and indemnify the City of

Erie against DiNicola's suit.

            The district court held the insurance contracts were

"occurrence policies" and that the tort of malicious prosecution

"occurs" when the underlying charges are filed.      Erie v. Guaranty

Nat'l Ins. Co., 935 F. Supp. 610 (W.D. Pa. 1996).      Because the

underlying charges were filed against DiNicola on March 25, 1980

and none of the insurance policies were in force on that date,

the court dismissed the claims against Western World and Guaranty

National.    Subsequently, Imperial was granted summary judgment on

the same grounds.    The City of Erie now appeals.
                                II.

            The district court had diversity jurisdiction over this

declaratory judgment action under 28 U.S.C. § 1332.     We have

jurisdiction under 28 U.S.C. § 1291.

            Our review of the district court's dismissal of the

complaint under Fed. R. Civ. P. 12(b)(6) is plenary.     We must

determine whether, under any reasonable reading of the pleadings,

the plaintiff may be entitled to relief.    We must accept as true

the factual allegations in the complaint and all reasonable

inferences that can be drawn therefrom.    Nami v. Fauver, 82 F.3d

63 (3d Cir. 1996).   Our review of the district court's grant of

summary judgment is plenary. United States v. Capital Blue Cross,

992 F.2d 1270 (3d Cir. 1993).    We apply the same test the

district court should have used originally.    Summary judgment

should be sustained only if there is no genuine issue of material




                                 6
fact and the moving party is entitled to judgment as a matter of

law.
                                 III.

                                 A.

          Under Pennsylvania law, the general rule is that a tort

"occurs" for insurance coverage purposes when the injuries caused

by the tort first become apparent or manifest themselves.      In the

case of malicious prosecution, it is undisputed that the injuries

caused by the tort first manifest themselves at the time the

underlying criminal charges are filed.

          Had the City of Erie purchased an occurrence policy in

effect on March 25, 1980, when the charges against DiNicola were

filed, the City would be covered.       Likewise, had the City of Erie

obtained a "claims made" insurance policy in effect on December

15, 1994, it would be covered.    But as we have noted, all of the

insurance policies here were occurrence policies, and none were

in effect at the time DiNicola's injury first manifested itself.


                                  B.

          The Pennsylvania Supreme Court has not decided when,

for insurance coverage purposes, the tort of malicious

prosecution occurs.   As a federal court sitting in diversity, we

must predict what the Pennsylvania Supreme Court would do.       In

making this determination, we give proper regard to the opinions

of Pennsylvania's intermediate courts.       The policies underlying

applicable legal doctrine, current trends in the law and




                                  7
decisions of other courts also inform our decision.    Wassall v.

DeCaro, 91 F.3d 443, 445 (3d Cir. 1996).

          Even though the Pennsylvania courts have not addressed

this precise question, other courts have done so.   Although there

is no agreement on when the tort of malicious prosecution occurs

for insurance coverage purposes, the clear majority of courts

have held the tort occurs when the underlying criminal charges

are filed.   Royal Indem. Co. v. Werner, 979 F.2d 1299 (8th Cir.

1992) (applying Missouri law); Southern Maryland Agric. Ass'n,

Inc. v. Bituminous Cas. Corp., 539 F. Supp. 1295 (D. Md. 1982)

(applying Maryland law); Ethicon, Inc. v. Aetna Cas. and Sur.

Co., 688 F. Supp. 119 (S.D.N.Y. 1988) (applying New Jersey law);

S. Freedman & Sons, Inc. v. Hartford Fire Ins. Co., 396 A.2d 195

(D.C. 1978); American Family Mut. Ins. Co. v. McMullin, 869

S.W.2d 862 (Mo. Ct. App. 1994); Patterson Tallow Co., Inc. v.

Royal Globe Ins. Companies, 444 A.2d 579 (N.J. 1982); Muller Fuel

Oil Co. v. Ins. Co. of North America, 232 A.2d 168 (N.J. Super.,

App. Div. 1967); Harbor Ins. Co. v. Cent. Nat'l Ins. Co., 211

Cal. Rptr. 902 (Cal. App. 1985); Zurich Ins. Co. v. Peterson, 232

Cal. Rptr. 807 (Cal. App. 1986).    But two courts have held the

tort of malicious prosecution occurs on the date when the

plaintiff receives a favorable termination of the underlying

proceeding and his claim for malicious prosecution arises.    Roess
v. St. Paul Fire and Marine Ins. Co., 383 F. Supp. 1231 (M.D.

Fla. 1974) (applying Florida law); Security Mut. Cas. Co. v.
Harbor Ins. Co., 382 N.E.2d 1 (Ill. App. 1978), rev'd on other

grounds, 397 N.E.2d 839 (Ill. 1979).



                                8
                               1.

          Courts adopting the majority rule have cited two major

principles to explain why the tort of malicious prosecution

occurs at the time the criminal charges are filed.5    One common

theme is that the "essence", "gist", or "focus" of malicious

prosecution is the filing of the underlying charges.    Favorable

termination of the criminal action is merely a "condition

precedent" to bringing the action.   See, e.g., Muller, 232 A.2d

at 174-75 ("essence of tort" is making of criminal charge;

favorable termination is "condition precedent"); Freedman, 396

A.2d at 199 (filing of charges is "gist" and "crucial point" of

tort); Harbor Ins. Co., 211 Cal. Rptr. at 907 (element of

favorable termination "is not part of the wrong", but a

"precondition for the cause of action"; "focus" and "gist" of

wrong is institution of underlying suit); American Family Mut.

Ins. Co. v. McMullin, 869 S.W.2d at 864 ("focus" of tort is the

institution of the underlying suit; quoting Harbor Ins. Co, 211

Cal. Rptr. at 907).

          The other theme is that reliance on the "time of

favorable termination" to trigger liability has unwise policy

implications, for it allows tortfeasors with information about

their own potential liability to shift the burden to unwary

5.   In addition, some courts have held the terms of the specific
insurance policies have evidenced the parties' intent to adopt
the majority rule. See Royal Indemnity, 979 F.2d at 1300;
Patterson Tallow, 444 A.2d at 585 n.5; Harbor Insurance, 211 Cal.
Rptr. at 906. We see no clear intent in the language of the
policies in this appeal favoring either the majority or minority
position.



                                9
insurance companies.   As the Court of Appeals for the Eighth

Circuit noted, " ... a contrary rule might well enable plaintiffs

to lull an unwary insurer into extending coverage after they

perceive an impending difficulty from a suit in which they are

already engaged."   Royal Indemnity, 979 F.2d at 1300.   See also

Royal Indem. Co. v. Werner, 784 F. Supp. 690, 692 (E.D. Mo. 1992)

("Under this interpretation an individual who sees that his

lawsuit may spawn a malicious prosecution claim cannot purchase

insurance and shift his obligation to an unwary insurer.");

Harbor Insurance Co., 211 Cal. Rptr. at 910 (Under minority rule,

"tortfeasor could purchase a policy such as this after committing

the tort and thereby enjoy excess coverage for its yet-to-be

unfolded consequences."); Muller, 232 A.2d at 175 ("To hold that

coverage existed in such a case would mean that such a tortfeasor

could purchase coverage a day before the injured person was

acquitted in the criminal proceeding and thus shift the burden of

damages to an unwary insurance company.").
                                2.

          We are not entirely convinced by the first argument.

Under Pennsylvania law, favorable termination is an essential

element of the tort of malicious prosecution.   Cap v. K-Mart
Discount Stores, Inc., 515 A.2d 52, 53 (Pa. Super. 1986).    There

appears to be no basis in Pennsylvania law for holding the

element of favorable termination a mere precondition to suit, or

for treating favorable determination as "less essential" to the

tort than the remaining elements.    For that reason, the argument

that the "essence" of the tort requires adoption of the majority


                                10
rule is not compelling.   See Roess, 383 F. Supp. at 1235

(rejecting majority rule; "There is nothing in the Florida cases

to indicate that one element is the 'essence' of the tort, or

might be otherwise regarded as more important than another

element.").

           The concerns about "the unwary insurer" are well-

founded.   Malicious prosecution is an intentional tort -- the

plaintiff must prove malice in order to prevail.    As a

theoretical matter, of course, a municipality that intends

maliciously to bring criminal charges against a person may shift

the burden of liability to an unwary insurance company even under

the majority rule, by purchasing an occurrence policy the day

before charges are filed. See Roess, 383 F. Supp. at 1235.

Notwithstanding this observation, we believe it is more likely

that an unscrupulous insured would purchase insurance after

rather than before the initiation of a questionable prosecution.

 This counsels adoption of the majority rule.
                                3.

           At the same time, we do not find convincing the

principal argument cited in support of the minority rule.     Under

the minority rule, there is a confluence between the date on

which the tort occurs for insurance purposes and the date on

which the statute of limitation begins to run.     See Cap v. K-Mart
Discount Stores, Inc., 515 A.2d 52 (Pa. Super. 1986) (statute of

limitation begins to run on tort of malicious prosecution at time

of favorable determination of underlying proceedings, when claim

arises).   But these dates need not necessarily correspond.


                                11
Reliance on the commencement of the statute of limitation is not

dispositive in determining when a tort occurs for insurance

purposes.    Statutes of limitation and triggering dates for

insurance purposes serve distinct functions and reflect different

policy concerns.   Statutes of limitation function to expedite

litigation and discourage stale claims.    Bigansky v. Thomas

Jefferson University Hosp., 658 A.2d 423, 426 (Pa. Super. 1995).

 But when determining when a tort occurs for insurance purposes,

courts have generally sought to protect the reasonable

expectations of the parties to the insurance contract.

Appalachian Ins. Co. v. Liberty Mut. Ins. Co., 676 F.2d 56 (3d

Cir. 1982).

            Because of this fundamental difference in purpose,

courts have consistently rejected the idea they are bound by the

statutes of limitation when seeking to determine when a tort

occurs for insurance purposes.   See ACandS, Inc. v. Aetna Cas.

and Sur. Co., 764 F.2d 968, 972 (3d Cir. 1985) (statute of

limitation cases "are not particularly relevant" to determining

what event triggers insurance coverage);   Keene Corp. v. Ins. Co.
of North America, 667 F.2d 1034, 1043-44 (D.C. Cir. 1981)

(statute of limitation cases "are not at all relevant" and "have

no bearing" in case seeking to determine when tort occurred for

insurance purposes); Insurance Co. of North America v. Forty-

Eight Insulations, Inc., 633 F.2d 1212, 1220 (6th Cir. 1980)

(because of differences in underlying policies, statute of

limitation cases not relevant to determining when asbestos-

related tort occurs for insurance purposes); Commercial Union


                                 12
Assurance Co. v. Zurich American Ins. Co., 471 F. Supp. 1011,

1015 (S.D. Ala. 1979) ("cases dealing with the determination of

the date or occurrence of a continuing injury or disease for the

purpose of applying appropriate statute of limitations are not

controlling for purposes of determining insurance coverage");

Southern Maryland Agric. Ass'n v. Bituminous Cas. Corp., 539 F.

Supp. 1295, 1302-03 (D. Md. 1982) (date on which statute of

limitation begins to run not determinative of date when tort of

malicious prosecution occurs); S. Freedman & Sons v. Hartford

Fire Ins. Co., 396 A.2d 195, 198-99 (D.C. 1978) (statute of

limitation "provides little assistance" and "need not determine"

when tort of malicious prosecution occurs).    For this reason, we

do not believe the date on which the statute of limitation begins

to run on malicious prosecution claims should determine when the

tort occurs for insurance coverage purposes.
                                4.

          Except for the need to protect the unwary insurer, none

of the arguments cited in the extensive case law appear to

provide compelling reasons in favor of either the majority or

minority rule.   As we have noted, we believe the unwary insurer

rule is supported by strong policy considerations.    But of

greater significance, we believe that principles of Pennsylvania

insurance law, which determine when a tort occurs for insurance

purposes, argue strongly in favor of the majority position.
                                C.

          The law of Pennsylvania on the timing of the

"occurrence" of a tort for insurance purposes is rooted in the


                                13
decision of our court in Appalachian Ins. Co. v. Liberty Mut.

Ins. Co., 676 F.2d 56, (3d Cir. 1982).     In Appalachian, we were

asked to decide a question of first impression under

Massachusetts law -- when, for the purpose of determining

liability under an occurrence-based insurance policy, the tort of

employment discrimination occurs.     We held "the determination of

when an occurrence happens must be made by reference to the time

when the injurious effects of the occurrence took place."     Id. at

61-62.   We based our decision on our belief that defining the

timing of an occurrence with reference to the moment at which

injurious effects take place would best protect the expectations

of the parties entering into an occurrence-based insurance

contract.    We also noted this rule followed those adopted in

other jurisdictions. Id. at 62, citing Keene v. Insurance Co. of

North America, 667 F.2d 1034 (D.C. Cir. 1981), Eagle-Picher

Indus., Inc. v. Liberty Mut. Ins. Co., 523 F. Supp. 110 (D. Mass.

1981), Deodato v. Hartford Ins. Co., 363 A.2d 361 (N.J. Super.

1976); Peerless Ins. Co. v. Clough, 193 A.2d 444 (N.H. 1963).

            In many tort cases, the date on which the injurious

effects manifest themselves may be easily identified.     But in

Appalachian we recognized the issue is more difficult with torts
causing injurious effects over a period of time.    With torts like

ongoing employment discrimination, for example, we noted the

injurious effects do not occur on a single day.    This makes it

more difficult for courts and for the parties to an insurance

contract to determine when the tort "occurred" for insurance

coverage purposes.   To resolve this issue, we held in Appalachian


                                 14
that "in this type of a case the occurrence takes place when the

injuries first manifest themselves."     Appalachian, 676 F.2d at

62.   We believed this rule, adopted by the Court of Appeals for

the First Circuit in Bartholomew v. Appalachian Ins. Co., 655

F.2d 27 (1st Cir. 1981), was required in order to prevent parties

from insuring themselves for events which had already taken place

or were taking place.    Id. at 63.   The rule solves the inherent

problem in dating for insurance coverage purposes the occurrence

of an ongoing tort, by defining the timing of the occurrence with

reference to a single moment which is usually easy to determine -

- the time at which the injurious effects first became apparent.

           Appalachian involved application of Massachusetts law,

but it has been followed in recent years by Pennsylvania

intermediate appellate courts.   In D'Auria v. Zurich Ins. Co.,

507 A.2d 857 (Pa. Super. 1986), a plaintiff who developed renal

failure in 1979 sued his former physician alleging that his

medical problem had been caused by the physician's negligence

between 1957 and 1963.   The physician's insurers argued they did

not have a duty to defend because the occurrence did not fall

within the coverage period of the occurrence policies, from 1973

to 1982.   Citing Appalachian, the Pennsylvania Superior Court
ruled "[a]n occurrence happens when the injurious effects of the

negligent act first manifest themselves in a way that would put a

reasonable person on notice of injury."    Id. at 861.   The court

held the renal failure was apparent and first manifested itself

in 1963, the tort therefore "occurred" for insurance coverage

purposes in that year, and the insurance companies did not have a


                                 15
duty to defend.    Id. at 862.   This approach was followed two

years later in Keystone Automated Equipment v. Reliance Ins. Co.,

535 A.2d 648, 651 (Pa. Super. 1988).     Thus, under D'Auria and

Keystone, a tort occurs for insurance purposes under Pennsylvania

law at the time when the injuries caused by the tort first

manifest themselves.

             Citing Keystone, D'Auria, and Appalachian, the district

court predicted the Pennsylvania Supreme Court would hold the

tort of malicious prosecution occurs for insurance coverage

purposes at the time charges are filed, because this is the first

moment the injuries manifest themselves and when a reasonable

plaintiff would become aware of his injuries.     Erie, 935 F. Supp.

at 614-16.    We agree.   Although a legal claim for malicious

prosecution does not arise in Pennsylvania until the underlying

charges are dismissed or at acquittal, the injuries caused by the

tort -- incarceration, humiliation, suspense, physical hardship,

and legal expenses -- first manifest themselves and become

evident to a reasonable plaintiff at the time of arrest and

filing of charges.    Therefore, we hold that the tort of malicious

prosecution occurs for insurance purposes at the time the

underlying charges are filed.     Because none of the insurance

policies before the court were in effect at the time charges were

filed against DiNicola, the district court correctly dismissed

the City of Erie's action.6

6.   As we have noted, the City of Erie could have obtained
coverage against liability for DiNicola's claim had it obtained
occurrence-based coverage effective at the time the underlying
charges were filed against DiNicola in 1980, or by obtaining a


                                  16
             We acknowledge the tort of malicious prosecution is

unusual.     Unlike the more commonplace torts involved in

Appalachian, D'Auria, and Keystone, the tort of malicious

prosecution remains legally incomplete until favorable

termination of the criminal proceeding, an event which may take

place years after the initial injury has manifested itself.

Nevertheless, we see no indication the Pennsylvania Supreme Court

would abandon the first manifestation rule in this case.     Absent

some support in Pennsylvania case law, we are hesitant to take

such a step.    We also note that our alignment with the majority

position assists in the development of a uniform national rule,

an important consideration in view of the interstate nature of

insurance.




(..continued)
"claims made" policy effective at the time when DiNicola filed
his suit against the city in 1994.



                                  17
                                 D.

           The City of Erie argues in the alternative the

insurance policies are ambiguous and should be construed against

the insurance companies.   We disagree.    "Whether an ambiguity

exists is a question of law." 12th Street Gym, Inc. v. General

Star Indem. Co., 93 F.3d 1158, 1165 (3d Cir. 1996) (citing

Hutchison v. Sunbeam Coal Corp., 519 A.2d 385, 390 (Pa. 1986)).

Though the parties here disagree about the terms of their

insurance policies, "[d]isagreement between the parties over the

proper interpretation of a contract does not necessarily mean

that a contract is ambiguous."   Id. (citing Vogel v. Berkley, 511

A.2d 878, 881 (Pa. Super. 1986)).     A contract is ambiguous only

"if it is reasonably susceptible of different constructions and

capable of being understood in more than one sense."     Id.

(quoting Steele v. Statesman Ins. Co., 607 A.2d 742, 743 (Pa.

1992)).

          In this appeal, the parties agree the policies are

occurrence-based and provide coverage for the tort of malicious

prosecution.   It is true the policies do not define precisely

when the tort of malicious prosecution "occurs."    Where, however,

a term is not defined in an insurance policy but possesses a

clear legal or common meaning that may be supplied by a court,

the contract is not ambiguous.   See Fidelity and Guar. Ins.
Underwriters, Inc. v. Everett I. Brown Co., 25 F.3d 484 (7th Cir.

1994) (though ambiguous contracts are construed against maker and

term "accident" is not defined in policy, contract not ambiguous

where term has legal meaning defined by courts); Indiana Gas Co.,


                                 18
Inc. v. Aetna Cas. & Sur. Co., __ F. Supp. __, 1996 WL 701051

(N.D. Ind. 1996) (failure to define term "accident" does not

render contract ambiguous where term may be given legal meaning

by court); Borish v. Britamco Underwriters, Inc., 869 F. Supp.

316, 319 (E.D. Pa. 1994) (failure to define terms "claim" and

"notice" does not render contract ambiguous); Coakley v. Maine

Bonding and Cas. Co., 618 A.2d 777, 782 (N.H. 1992) (where term

is undefined in contract but has been defined by judicial

decision, contract is not ambiguous); Coker v. Coker, 650 S.W.2d

391, 393 (Tex. 1983) (contract not ambiguous if it can be given

certain or definite legal meaning by court).

            Here, the courts of Pennsylvania have provided a clear

legal definition of when a tort occurs for insurance coverage

purposes.    Therefore, the meaning of the policies is not

susceptible of reasonable dispute or differing constructions.

See Triangle Publications, Inc. v. Liberty Mut. Ins. Co., 703 F.

Supp. 367 (E.D. Pa. 1989) (in case seeking to determine when

ongoing toxic waste spill occurs for insurance purposes, failure

of policy to define when tort occurs does not render policy

ambiguous, where rule defining occurrence is supplied by case

law).   To alter the settled rule in Pennsylvania that a tort

occurs when the injuries first manifest themselves would

frustrate the reasonable expectations of the parties to these

contracts.    Moreover, we note that though the question of when

the tort of malicious prosecution occurs has been heavily

litigated over four decades, no court has ever ruled that a




                                 19
contract which fails to define precisely when the tort "occurs"

for coverage purposes is ambiguous.
                                  E.

          Also in the alternative, the City of Erie contends the

tort of malicious prosecution constitutes a continuing injury.

Because, the City argues, the tort does not "occur" on a single

bright-line date, we should adopt a "multiple trigger" theory to

determine insurance coverage.    Under a "multiple trigger"

approach, an insurance company has a duty to defend and indemnify

if it has issued a policy in effect at any time during the

continuing tort.     The multiple trigger theory has been applied in

Pennsylvania in asbestosis cases.      J.H. France Refractories Co.

v. Allstate Ins. Co., 626 A.2d 502 (Pa. 1993); ACandS, Inc. v.

Aetna Cas. and Sur. Co., 764 F.2d 968 (3d Cir. 1985) (applying

Pennsylvania law).    Under the City of Erie's suggested approach,

liability for any tort involving ongoing injuries would be

determined under a multiple trigger instead of the "first

manifestation" rule.

          Courts adopted the multiple trigger in latent disease

cases like asbestosis because the injuries caused by exposure do

not manifest themselves until a considerable time after the

exposure causing the injury.    See, e.g., Keene Corp. v. Insurance
Co. of North America, 667 F.2d 1034, 1046 (D.C. Cir. 1981).

Application of a first manifestation rule, it was feared, would

allow insurance companies facing countless future claims to

terminate coverage during asbestosis' long latency period.      The

entire burden of compensation would shift to the manufacturers


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even though the exposure causing injury occurred during the

periods of insurance coverage. See id.

           In Armotek Indus., Inc. v. Employers Ins. of Wausau,

952 F.2d 756 (3d Cir. 1991) (applying Pennsylvania law), a toxic

waste spill case, we declined to apply the multiple trigger to a

case not involving a latent disease.     We acknowledged we had

applied a multiple trigger theory in ACandS, Inc. v. Aetna Cas.

and Sur. Co., our asbestosis decision applying Pennsylvania law.

We observed, however, that ACandS was informed by "the unique

character of the problem created by the policy language in the

context of diseases with long latency periods", and found there

was "little if any similarity between ACandS, Inc. and the

present case." Armotek, 952 F.2d at 763 (citation omitted).       See

also United Brass Works, Inc. v. American Guarantee and Liability

Ins. Co., 819 F. Supp. 465, 470 (W.D. Pa. 1992) (applying

Pennsylvania law; declining to apply multiple trigger to

hazardous waste tort), aff'd, 989 F.2d 489 (3d Cir. 1993)

(table).   Armotek and United Brass Works suggest that a

continuing injury not involving the risk of a termination of

insurance coverage during a disease latency period will not

warrant application of the multiple trigger to determine

insurance coverage.

           The risk of insurance coverage termination which

justifies use of the multiple trigger in asbestosis and other

latent disease cases is not present here.    In malicious

prosecution cases, there is no interval between arrest and injury

that would allow an insurance company to terminate coverage.       The


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plaintiff faces incarceration, humiliation, and damage to

reputation as soon as charges are filed.     Perhaps for this

reason, no federal or state court has adopted the multiple

trigger theory in malicious prosecution cases.     See, e.g.,

Ethicon, Inc. v. Aetna Cas. and Sur. Co., 688 F. Supp. 119, 127

(S.D.N.Y. 1988) (applying New Jersey law) (since the filing of

charges and the manifestation of injuries are contemporaneous,

the circumstances justifying application of a multiple trigger

are absent).7

          For these reasons, we do not believe the Pennsylvania

Supreme Court would adopt the multiple trigger analysis to

determine when, for insurance coverage purposes, the tort of

malicious prosecution occurs.
                          IV.   Conclusion

          For the reasons expressed, we predict the Pennsylvanbia

Supreme Court would hold the tort of malicious prosecution

occurs, for insurance purposes, on the date the underlying

charges are filed.   In this case, that date is March 25, 1980.
Because none of the insurance companies had insurance contracts

with the City of Erie on that date, none has a duty to defend and

indemnify the City of Erie against DiNicola's suit.     We will

affirm the judgment of the district court.




7.   The court's decision was also based in part on New Jersey
precedent rejecting the multiple trigger in malicious prosecution
cases.



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