Snag in Church Abuse Lawsuit Negotiations

Beaumont Enterprise
November 21, 2012

http://www.beaumontenterprise.com/news/crime/article/Snag-in-church-abuse-lawsuit-negotiations-4053922.php

HELENA, Mont. (AP) — Settlement negotiations between hundreds of alleged sex abuse victims and the Roman Catholic Diocese of Helena may have hit a snag with the church's insurers refusing to cover the claims.

The insurers and the diocese are locked in a dispute over the terms and conditions of the diocese's insurance policies that date back to the 1970s — and whether some policies even existed. The sides disagree on how policies apply to the 324 claims of sex abuse stretching back decades by priests and nuns in homes, churches and school across western Montana.

The claims are from two combined lawsuits filed last year against the diocese and the Ursuline Sisters of the Western Province. The plaintiffs, many of them Native Americans, say the diocese and the sisters knew or should have known about the abuse, but covered it up instead of stopping it.

Attorneys for the alleged victims filed a legal complaint in state court on Nov. 14 asking for a declaratory judgment determining the scope and extent of the policies issued by the insurers.

Later that day, three of the diocese's insurers led by Travelers Casualty and Surety Co. filed a separate complaint in federal court asking for a ruling that they have no obligation to defend or indemnify the diocese.

Attorneys for the plaintiffs said Tuesday they object to the federal filing because the original lawsuit is in state court and that is the proper venue to decide state law.

"If the issues become an obstacle to settlement, then it's before a Montana court," attorney Gary Zadick said.

The negotiations with the diocese are still progressing, but the purpose behind the filing is to ensure there is enough money, including insurance money, available to compensate the plaintiffs, attorney Milt Datsopoulos said.

Travelers spokeswoman Jennifer Wislocki said she could not comment on pending litigation.

The alleged victims' complaint says the 13 named insurance companies all issued policies covering the diocese or the Ursulines, and the insurers are now obligated to defend them against the claims.

The complaint by three insurance companies led by Travelers says the insurers have no obligation to defend the diocese or pay out any claims. In a complex legal argument, the insurers claim the dioceses' insurance policies did not actually exist, or else were canceled or lost.

But if the policies actually exist, the insurers go on, they did not include liability coverage unless liability forms were included by mistake — a mistake the insurer did not discover until after the sex-abuse lawsuit was filed.

And even if a judge rules the policies included liability coverage, the insurers' argument concludes, the diocese breached its contract because it did not notify the insurers the abuse was happening.

As a result, evidence has been lost, and victims, witnesses and perpetrators have died, and the diocese forfeited any right to coverage as a result of its breach of policy, the insurers claim.

A hearing updating the status of the settlement negotiations is scheduled for Nov. 4.