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Sex abuse-related dispute amid diocese’s insurers can proceed

Sex abuse-related dispute amid diocese’s insurers can proceed

A federal court has refused to dismiss litigation filed by a mutual insurer of Catholic parishes and dioceses against an insurer that has refused to defend and indemnify sexual abuse-related claims in a case where complete policies could not be located.

The Omaha, Nebraska-based Catholic Mutual Relief Society of America had filed suit against Charlotte, North Carolina-based Arrowood Indemnity Co., which Catholic Mutual describes as a “runoff manager” to Specialty Insurance Co., according to Friday’s ruling by the U.S. District Court in Minneapolis in The Catholic Mutual Relief Society of America v. Arrowood Indemnity Co. f/k/a Royal Indemnity Co. et al.

According to the ruling, Catholic Mutual had issued insurance coverage certificates to the Diocese of St. Cloud in St. Cloud, Minnesota, for periods during which it was also allegedly covered by policies issued by Arrowood’s predecessor company, Specialty Insurance. The three policies in question cover periods ranging from 1964 to 1973.

“For decades, Arrowood’s predecessor company acknowledged responsibility under those policies for sexual abuse claims filed against the Diocese and Parishes, despite the fact that the complete original polices could not be located,” the ruling said.

In 2011, however, Arrowood began denying claims under the same policies, said the ruling.

Catholic Mutual filed suit against Arrowood seeking a declaratory judgment on the policies and Arrowood’s obligation to contribute to expenses incurred by it in defending the diocese. Arrowood in turn filed a motion to dismiss the case.

“Because Catholic Mutual has standing to bring this case under Minnesota law and has alleged an actual case and controversy that is neither premature nor moot, the Court will deny Arrowood’s Motion to dismiss,” said the ruling.

“Catholic Mutual has standing to seek declaratory judgment for contribution under Minnesota law to determine whether Arrowood, an alleged co-insurer, owes a duty to defend.”

The ruling adds the court must determine threshold questions of “whether the purported contracts with Arrowood exist and whether Arrowood is liable under them.”

But the ruling says Catholic Mutual “has plausibly alleged joint liability and payment of more than its fair share of costs, two issues whose merits can only be decided after the Court determines the threshold question of Arrowood’s liability.”

In November, Catholic Mutual agreed to pay $8.95 million to settle a coverage dispute with the Diocese of Duluth, Minnesota, stemming from litigation over sexual abuse claims against local clergy, according to court documents. 


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