Insurance company sues Schaumburg to avoid cost of arrested-cops cases

  • Left to right, Matthew Hudak, Terrance O'Brien and John Cichy.

    Left to right, Matthew Hudak, Terrance O'Brien and John Cichy.

Updated 10/31/2014 2:32 PM

Schaumburg's insurance company, Lloyd's of London, has filed suit against the village and other relevant parties to both clarify and eliminate its liability in pending lawsuits regarding the actions of three undercover police officers arrested last year on drug conspiracy charges.

The plaintiff in the case is Brit UW Limited, the capital provider for Lloyd's Syndicate 2987.


Besides the village of Schaumburg, defendants include former convicted police officers Matthew Hudak and Terrance O'Brien as well as 15 people who've filed suit claiming various forms of mistreatment at the officers' hands.

Not named in the suit is the third arrested former officer, John Cichy, whose criminal case is still pending in court. Hudak and O'Brien pleaded guilty to specific charges and have begun their prison terms.

Attorneys for Brit UW Limited declined to comment on their client's behalf. But Schaumburg Village Attorney Lance Malina speculated that Cichy's less certain status is what kept him out of the lawsuit for now if Lloyd's of London is seeking a relatively quick and simple declaratory judgment in its favor.

The basis of the suit is that the illegal activities attributed to the arrested officers are not covered by the village's insurance policy and that Lloyd's of London has no obligation to indemnify Hudak or O'Brien.

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They and Cichy were accused back in January 2013 of shaking down drug dealers they had either arrested before or enlisted as informants.

Malina said the new lawsuit doesn't necessarily mean Schaumburg and its insurance company are now in an adversarial relationship. Those named as defendants could be viewed simply as the parties responsible for Lloyd's of London's involvement in the cases.

Schaumburg Village Manager Brian Townsend sees the suit as something that protects Lloyd's of London's interests without having any practical impact on the village itself.

Schaumburg already has settled one of the lawsuits filed against the officers, paying plaintiff Justin Holmstrom $5,000 of the village's own money -- not Lloyd's of London's.

While the village is seeking to settle as many of the lawsuits as it can to spare the higher cost of litigation, it is prepared to defend and expects to prevail in all the cases that can't be settled, Townsend said.


Another attorney, Jim Sotos, has been hired by Schaumburg to represent the village in those lawsuits.

In reviewing the cases, Sotos said he took the approach that nothing O'Brien, Hudak and Cichy could say would stand up in court -- whether true or not. Instead, he looked for independent evidence of probable cause for all the searches and arrests the plaintiffs are claiming were unlawful.

Sotos said he found such evidence of probable cause in every case he reviewed, putting the village in strong position to defend itself.

Hudak is serving a 26-year sentence at the Illinois River Correctional Center in Canton, while O'Brien is serving a 24-year sentence at the Menard Correctional Center in Menard.

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