Insurers in boarding school sexual abuse case will appeal $345M judgment
The alleged abuse took place between 1974 and 1994.
A $345 million consent judgement in favor of 20 former students who were sexually assaulted by a teacher at the Darlington School in Rome, Georgia, was recently upheld on a motion for summary judgement in the Superior Court of Floyd County.
However, according to Darren Penn, this latest order won’t close the book on the dispute.
“It’s been a very long journey, and that journey is not over,” Penn said, noting that the northwest Georgia school’s insurers have already indicated their intent to appeal and one has already filed a notice of intent. “We anticipate the other four will probably file as well.”
Since Penn was interviewed, three more insurance companies have filed a notice of intent.
The alleged abuse took place between 1974 and 1994. The plaintiffs testified that they thought they were alone in their experiences and didn’t know anyone else had been abused until The Atlanta-Journal-Constitution published an article about the abuse. The school followed up with a letter stating that it investigated a report of sexual abuse at the school and confirmed that a student had “an inappropriate and uncomfortable experience with a former faculty member” in the 1980s and asked those who’d been affected to reach out.
The faculty member in question was Roger Stifflemire, who worked as a teacher and dormitory monitor. Each of the plaintiffs alleged they were sexually and emotionally abused by the teacher, who threatened them with penalties including expulsion, if they did not cooperate. One plaintiff who tried to resist was expelled during his senior year and awarded his high school diploma in the settlement.
After receiving the school’s letter, more students came forward with sexual assault claims against Stifflemire.
According to Penn, the case began with pure civil claims, with arguments and motions to dismiss based on the statute of limitation and whether fraudulent tolling applied. However, things then took a turn. “It literally turned into a completely different type of litigation,” Penn said.
The school had several underlying insurance policies, but only one, Lamorak, undertook the defense under a reservation of rights. “All these insurance companies could have done that,” Penn said. “Unfortunately the one company that did provide a defense went bankrupt in the middle of the proceedings, and that’s what led to all this happening.”
According to the consent judgment order, after Lamorak declared bankruptcy, the school reached out to the other insurers with demands for defense, indemnification and coverage but were denied on all fronts.
Penn said he “really has no idea” why the insurers flat-out denied coverage. “The only thing I can go by is reading their letters where they denied coverage,” Penn said. “They raised a number of different points they’re continuing to argue, and we respectfully disagree with their analysis.”
Eight months later, the consent judgment was granted in the plaintiffs’ favor and the school once more sought coverage, assigning all its claims to the remaining insurers, stating the assignment amount “is a direct result of the insurers’ failure to provide a defense and a failure to provide indemnification for the claims brought by the plaintiffs.”
“The ruling found that, as a matter of law, the insurers breached the duty to defend and are responsible for the damages flowing from that duty,” Penn said. “The judge also found that, as a matter of law, the underlying allegations are covered by the policies and rendered judgment accordingly.”
In denying the insurers’ motions for summary judgment, the court found Continental Casualty Co. owed $1 million, Northern Insurance Co. of New York owed $10 million, Zurich American Insurance Co. owed $92 million, North River Insurance Co. owed $10 million, and Philadelphia Indemnity Insurance Co. owed $232 million.
The insurers contested the judgment, raising various issues, including whether the events in question took place during the relevant periods of coverage, whether excess coverage is payable if the underlying insurance didn’t pay, as well as contending the claims were filed too late, that they need to be sued separately, sexual abuse is not bodily injury and that the consent judgment is vague and unenforceable, among other arguments.
The court, however, shot these points down, denying the insurers’ motions for summary judgment on the consent order. Since then, Zurich, Continental Casualty Co., North River and Great American Insurance have filed notices of appeal.
According to Penn, the main issues on appeal are whether the insurers breached their duty to defend and whether coverage applies under the different insurance policies.
Jeffrey Kershaw, representing Continental Casualty Co., said he couldn’t speak to the main issues on appeal; counsel for the other insurers did not respond to request for comment. Great American Insurance Co. is represented by a team from Freeman Mathis & Gary, Philadelphia Indemnity is represented by a team from Bovis Kyle Burch & Medlin, and North River and Zurich American are both represented by teams from Cozen O’Connor.
The case is Eubanks v. The Darlington School, No. 19CV00237, in the Superior Court of Floyd County.
Read the order on motion for summary judgment below.
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