Archdiocese of Santa Fe in a second legal battle – this one with insurers | Local News

An ongoing battle with insurers could prolong the resolution of the Santa Fe Archdiocese clergy bankruptcy case.

The Chapter 11 bankruptcy, involving approximately 400 victims, has been going on for nearly 3½ years. The archdiocese and four insurance companies are now embroiled in a legal confrontation, which has given a difficult twist to the high-profile case. The question is how much of a proposed settlement with the victims the insurance companies should pay.

The involvement of insurers should be an essential element in the settlement effort with victims.

The delay in reaching a settlement between the archdiocese and the victims has significant financial implications: Bankruptcy court records show the archdiocese spent $5.7 million in professional fees in the case, including payments for lawyers and financial advisors. This is a sum that will increase if the procedure drags on.

The lawyers met with U.S. Bankruptcy Judge David Thuma on Friday for a status conference, with mediation to continue Monday and Tuesday.

Lawyers for both sides say these sessions will be crucial.

“So it’s ongoing. And the debtors [the archdiocese] remain optimistic that a settlement can be reached, said Albuquerque attorney Thomas Walker, one of the archdiocese’s attorneys.

But Los Angeles attorney James Stang, an attorney for a key victims’ group called the ‘unsecured creditors’ board’, said while he and his clients would like to see progress, they will need to consider alternatives if they do. they feel that the Chapter 11 bankruptcy is won. t lead to a resolution.

Since the archdiocese sued its insurance companies in February, insurers have asked that the lawsuit be moved from the US bankruptcy court to the US district court – a request the archdiocese opposes.

“Why? Delay, delay, delay,” said Aaron Boland, a Santa Fe attorney for one of the victims, of the insurers. “The old adage is, ‘Delay always favors the defense'” because it turns a case into a “battle of attrition,” Boland said.

Court documents describe how the dispute between the archdiocese and its insurance companies became the main obstacle to a settlement with those who accused Roman Catholic priests of sexual abuse in New Mexico parishes. Merit Bennett, a Santa Fe attorney who represents four victims, said that claim is a bad sign.

“Agreement on how to distribute settlement funds among abuse victim claims is not, as I understand it, on the horizon,” Bennett wrote in an email message last week. “So, no, the disputes with insurers do not bode well for a ‘quick resolution’. ”

Mediation must always continue, it is not excluded that a breakthrough can take place.

“There are always discussions. And we hope for a resolution that can provide a solution for the victims,” said Albuquerque attorney Paul Linnenburger.

Disagreement between insurers and the archdiocese has hung over the case for months, another lawyer for the victims said.

Insurance coverage “has been a major battleground since day one, and the recent ADSF [archdiocese] filings seem (to me, anyway) to represent another move in this long-running chess game between insurers and policyholders,” wrote Levi Monagle of Albuquerque, whose company represents about 140 victims, in an e -mail.

Linnenburger, co-lawyer for more than 40 victims, said those who were abused are being “held hostage” while the case drags on. He said in an interview that insurance companies saw the delay as “an arrow in their quiver”.

“It’s certainly a pattern that those of us who are involved in litigation have noticed,” he said of what he called insurers’ effort to stall. “It’s not specific to this case.”

Neither the archdiocese nor the four insurance companies responded to requests for comment.

Insurers and the archdiocese said they agreed in 1996 on a method of paying victims after a series of clergy sex abuse cases in the 1980s and early 1990s. insurers claim in court that the archdiocese failed to honor this agreement.

Court records from recent months show the animosity between insurers and the archdiocese. The archdiocese’s official complaint against its insurers says they “impeded and obstructed” a resolution with the victims. The insurers, the archdiocese’s lawyers wrote, “did not accept or acknowledge their legal obligation to provide coverage” in the case.

The insurance companies – Arrowood Indemnity Co., St. Paul Fire and Marine Insurance Co., United States Fire Insurance Co. and Great American Insurance Co. – say the archdiocese reached a settlement with the committee last year representing victims.

“Insurers did not participate in the negotiations that led to this draft agreement, [and] were not consulted,” the companies said in court documents, adding that the negotiations took place “behind the backs of the insurers.”

The insurers added that the archdiocese “has aligned itself with its creditors [the victims] … with the aim of manufacturing conflicts” in the hope “of obtaining favorable decisions from the bankruptcy court in order to strengthen the bargaining power” vis-à-vis companies.

Further, according to the insurers, sending the case to the U.S. District Court “preserves court resources and spares the archdiocese … additional litigation.”

The archdiocese argued that the bankruptcy court was aware of the case and that the insurance dispute was “at the heart” of the bankruptcy case. Shifting the dispute “will delay the day when insurers will be forced to meet their contractual obligations,” the archdiocesan lawyers wrote.

‘It would be ineffective to introduce a new judge at this stage of the proceedings,’ the archdiocese wrote, calling the insurers’ claims ‘outlandish’ and ‘forum shopping’ – an effort to move the case to trial. more favorable.

Marie T. Reilly, a professor at Penn State Law, said insurance companies have become more aggressive in diocese cases in recent years.

Reilly also said these cases are complex and insurers feel they need more involvement.

“It’s not like a slip and fall or a car accident,” she said. “It’s obviously not a stall tactic. There are a lot of complicated issues involved.

The archdiocese signaled its wishes in a recent court document.

“The sexual abuse claimants have waited more than three years for their claims to be resolved,” the lawyers wrote, “and the artificial insertion of avoidable delays into the reorganization process is not in their best interests.”

After all, the archdiocese said, “this matter is – or should be – coming to an end.”

Comments are closed.