Louisiana Voice

It was just a month ago almost to the day (May 21) that a headline in the New Orleans Advocate proclaimed, “Archdiocese of New Orleans reaches landmark settlement with abuse survivors.”

But wait. It turns out that that announcement of a $180 million settlement (abuse survivors had demanded $1 billion) that would be distributed once the diocese emerged from bankruptcy may have been just a bit premature.

In court documents filed last Thursday (June 19) by two insurance companies indicate that the tentative agreement announced last month may not hold.

U.S. Fire Insurance Co. and International Insurance Co. jointly filed a response and reservation of rights to abuse survivors’ motion to conduct a Rule 2004 examination of Archbishop Gregory Aymond.

A Rule 2004 examination is a bankruptcy discovery tool that allows any party of interest to examine an entity (in this case, the archdiocese) about matters related to the bankruptcy case. Specifically, it allows for the gathering of information about the debtor’s financial affairs, assets and conduct.

Last Thursday’s filing said that neither insurance carrier takes a position on the merits of abuse survivors’ April 30 motion to dismiss and Rule 2004 motion but instead, each is requesting that they be given notice of any depositions noticed and that they be given an opportunity “to attend any such deposition and [to] cross-examine any witnesses.”

“The same day that the motion to dismiss was filed, the certain abuse survivors filed the Rule 2004 Motion. Through the Rule 2004 Motion, the certain abuse survivors seek to take depositions in connection with the motion to dismiss,” the companies’ filing said. “The certain abuse survivors also reiterate several of the arguments made in the motion to dismiss, including the argument that the archdiocese has “conceal[ed] their criminal misconduct inside the bankruptcy.”

That would seem to indicate that the insurance companies, who would normally be expected to provide much of the money to settle the abuse cases, may not be ready to write checks just yet.

Most liability polices specifically state that coverage can be denied in cases of subterfuge or criminal activity.

“…[I]t is essential that the parties have a level information playing field so that all parties-in-interest, including the insurers, can meaningfully participate in this bankruptcy case and can otherwise ensure that their rights are not impaired,” the insurers’ filing said, adding that “nothing contained herein is intended to be or shall be construed as (a) an admission as to the amount of, basis for, or validity of any claim of the archdiocese or certain abuse survivors against U.S. Fire and International under the Bankruptcy Code or other applicable non-bankruptcy law; (b) a waiver of U.S. Fire’s or International’s or any party in interest’s rights to dispute any claim or interest on any grounds; or (c) a waiver of U.S. Fire’s or International’s or any other party in interest’s rights under the Bankruptcy Code or any other applicable law.”

In pure legalese, it was a way of the insurance companies saying they were not committing their companies to any payout, pending a determination of whether or not there was any intent to conceal any criminal activity.