Judge Declines to Hear Insurance Companies' Complaints about Defending Helena Diocese in Sex Abuse Scandal

By Eve Byron
Independent Record
March 26, 2013

http://helenair.com/news/local/crime-and-courts/judge-declines-to-hear-insurance-companies-complaints-about-defending-helena/article_dfa7284e-95d8-11e2-82d6-001a4bcf887a.html

A federal judge in Helena has refused to hear a case brought by three insurance companies against the Helena Diocese, saying the matter already is being handled in Lewis and Clark District Court.

Three Travelers Insurance Companies – Travelers Casualty and Surety Company, United States Fidelity and Guaranty Company, and St. Paul Fire and Marine Insurance Company — filed the federal court lawsuit last year, arguing that they weren’t obligated to defend the Bishop in pending state litigation because they weren’t given timely notice of alleged sex abuse by priests and nuns.

The insurance companies also wanted to add a claim based on the recent discovery of a 1994 settlement agreement that allegedly released St. Paul Fire and Marine Insurance Company from any obligation to indemnify the Diocese for future sexual abuse claims and allegedly promised that the Diocese would pay the costs of any future claims.

But Senior U.S. District Court Judge Charles Lovell wrote in a ruling released late Friday that the latter claim would first require determinations of state law, which can be raised in the state proceedings, and that venue also is the proper place for the entire lawsuit — at this point.

“In this case, the insurance coverage issues present questions of state, not federal, law,” Lovell wrote, adding that he may eventually be asked to determine “novel questions” of state. “Travelers disagrees with the court’s determination that the state action is a parallel proceeding. However, a parallel proceeding does not require that precisely the same issues and parties be present in both the state and federal cases.

“It is sufficient if the parallel cases depend upon the same factual circumstances. This Court concludes accepting jurisdiction in this case would result in the unnecessary determination of state law issues and duplication of judicial effort contrary to the interests of comity and federalism.”

In the district court lawsuits, individuals alleged both male and female clergy committed abusive acts, including fondling, forced sodomy and an offer of cash for sex in Helena and other locations throughout Montana from the 1940s into the 1970s. The lawsuits allege that the Helena diocese engaged in a pattern of employing, sheltering and protecting clergy who it knew, or should have known, were engaged in sexual abuse.

The Diocese of Helena has said that it has made many changes to address the issues, and that no priests currently in the diocese are named in the suits. Most of the accused clergy are believed to be dead.

Church officials have agreed to mediation in the cases and to open many of its financial and personnel records in the process.

Attorneys for the diocese asked Lovell to leave the case in the state court for four reasons. Those include the belief that the same issues will be decided in both the state and federal case; the federal court may be required to determine Montana law in the case; piecemeal litigation in two courts could result in inconsistent determinations; and the federal court case was filed only in response to the state court case.

“It is considered generally to be ‘vexatious for a federal court to proceed in a declaratory judgment suit where another suit is pending in a state court presenting the same issues, not governed by federal law, between the same parties,’” Lovell wrote, quoting from a previous ruling. “Further, factors that should be given consideration are avoiding ‘needless determination of state law issues’; discouraging ‘forum shopping’; and avoiding ‘duplicative litigation.’”