Robert Garland and John Tatum were convicted and sentenced in 1991 on federal drug charges. They were later released when, in 1992, Captain Jerry Newton of the Andalusia, Alabama police department admitted to a fellow officer that he had planted the drugs to get a conviction against the pair. Garland and Tatum then sued Newton, the city, and Titan Indemnity -­the city's insurance carrier -- for false arrest, wrongful imprisonment, and malicious prosecution.

In 1998, a federal jury found for Garland and Tatum and ordered the city and Newton to pay each of them $350,000 in compensatory damages and $800,000 in punitive damages -- a total verdict of $2.3 million.

Titan then filed a motion for a declaratory judgment, asking the court to declare that they were not required by the terms of its contract with the city to pay the judgment.

Titan argued it was not obligated to pay the award because its contract with the city covered "an occurrence resulting from law enforcement activities." Fabricating evidence, argued Titan, did not constitute "law enforcement activities," and therefore they should not be required to pay.

Rejecting Titan's position that a police officer who fabricates evidence was not acting within the "scope of his employment" and thus outside of his duties of law enforcement, the U.S. District Court for the Middle District of Alabama noted that state law controlled what "scope of employment" meant.

"Under Alabama law, an employee's acts are within the scope of his employment if the acts are 'so closely connected with what the servant is employed to do and so fairly and reasonably incidental to it, that they may be regarded as methods, even though quite improper ones, of carrying out the objectives of the employment,"' held the court (quoting Alabama case law).

Finding that Newton's actions in fabricating evidence did not have a "private motive," and was "part of his duties to arrest and assist in the prosecution of drug dealers," the court rejected Titan's arguments and required them to pay the judgment.

The court also rejected a "Public Policy" argument advanced by Titan, in which they claimed providing coverage for intentional, criminal acts is against public policy. Finding that the public policy question had already been resolved against Titan in previous case law, the court rejected Titan's motion for a declaratory judgment and granted See: Titan Indemnity Company v. Newton et al., 39 F.Supp. 2d 1336, 1999 U.S. Dist. LEXIS 3106 (02/11/1999).

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