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	Church Sues Ex-Insurer to Cover Payoff By Kevin O'Connor Rutland Herald [Vermont] May 17, 2006 http://www.rutlandherald.com/apps/pbcs.dll/article? AID=/20060517/NEWS/605170360/1004/EDUCATION05 The statewide Roman Catholic Diocese of Burlington is suing its former insurer in hopes of recovering a record $965,000 priest-misconduct settlement it paid last month. The diocese, which currently doesn't have insurance for sexual wrongdoing, has taken out loans to cover its settlement of the civil case of Michael Gay, 38, of South Burlington, versus the Rev. Edward Paquette — the first of 20 child abuse lawsuits against Vermont Catholic clergy. But the diocese says it held a comprehensive liability insurance policy with the United States Fidelity and Guaranty Co. at the time of Paquette's molestation of Gay in the 1970s. As a result, the church has filed a lawsuit in Chittenden Superior Court in Burlington seeking compensation from the insurer. "There's no question we had a Cadillac policy with the highest and best coverage," church lawyer William M. O'Brien said Tuesday. "Unfortunately for us, we cannot locate the actual physical policy, and we've been searching for months." The diocese's former insurer, known as USF&G, has since been acquired by the St. Paul Travelers Companies of Saint Paul, Minn. "We've had communication with the insurance company, and it likewise cannot locate the policy," O'Brien said. "But it is our best belief there would not be an exclusion for sexual misconduct, and we believe the coverage may have been as much as $1 million per claim." The diocese just sent its lawsuit to court. Because the insurer has yet to receive it, the paperwork is not yet public. Spokespeople for the St. Paul Travelers Companies, told of the lawsuit by a reporter, did not offer immediate comment. O'Brien's lawsuit seeks to determine "the exact nature of our coverage," which he said the diocese purchased from Hickok & Boardman Insurance of Burlington. "We are hopeful that the policy will cover not only the previous settlements, but also future claims," the lawyer said. But even if the court agrees, USF&G would be liable only for actions during the time of the policy, which O'Brien believes ran from "at least 1972 to the spring of 1978." "We're hopeful we can convince the carrier that they are at risk, which would avoid the need to pursue it formally with the court," O'Brien said. "But if the parties cannot agree amongst themselves, ultimately the court must make that declaration." The diocese faces 14 more lawsuits against Paquette, who church leaders admit molested boys in two states before he was assigned to parishes in Rutland in 1972, Montpelier in 1974 and Burlington in 1976. The diocese sparked headlines this week by attempting to shield its 128 local parishes from the potential costs of lawsuits by placing each in a charitable trust. But O'Brien said the diocese hadn't sheltered its own Burlington headquarters and accompanying land and assets in a trust and therefore would be able to pay for any future settlements, with or without the USF&G insurance. An insurance windfall, however, would help the diocese pay off its current debt, which totaled $127,947 at the start of its fiscal year July 1 and ballooned tenfold when the church took out a loan last month to cover the $965,000 settlement. Contact Kevin O'Connor at kevin.oconnor@rutlandherald.com.
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