Insurers in boarding school sex abuse case will appeal $345 million verdict

A $345 million consent judgment in favor of 20 former students who were sexually abused by a teacher at Darlington School in Rome, Georgia, was recently affirmed in a motion for summary judgment in Floyd County Superior Court .

However, according to Darren Penn, this latest order will not end the dispute.

“It’s been a very long journey, and that journey isn’t over yet,” Penn said, noting that the northwest Georgia school’s insurers have already indicated their intention to file an appeal, and one of them already has one Letter of intent submitted. “We anticipate that the other four will likely apply as well.”

Since Penn’s interview, three other insurance companies have filed notices of intent.

The alleged abuse took place between 1974 and 1994. The plaintiffs said they believed they were alone in their experiences and did not know anyone else had been abused until the Atlanta Journal-Constitution published an article about the abuse. The school then wrote a letter saying it had investigated a report of sexual abuse at the school and confirmed that a student had “an inappropriate and unpleasant experience with a former faculty member” in the 1980s, and those affected asked to get in touch.

The faculty member in question was Roger Stifflemire, who worked as a teacher and dormitory supervisor. Each of the plaintiffs said they were sexually and emotionally abused by the teacher, who threatened them with punishments including expulsion if they didn’t cooperate. One plaintiff who tried to defend himself was expelled from school in his senior year and received his high school diploma as part of the settlement.

After receiving the school’s letter, additional students made allegations of sexual assault against Stifflemire.

According to Penn, the case began with purely civil claims, with arguments and motions to dismiss based on the statute of limitations and whether a fraudulent toll was collected. However, then things took a turn. “It literally became a completely different type of litigation,” Penn said.

The school had several underlying insurance policies, but only one, Lamorak, assumed defense under a reservation of rights. “All of these insurance companies could have done this,” Penn said. “Unfortunately, the only company that defended itself went bankrupt in the middle of the trial, and that’s what led to all of this.”

According to the ruling, after Lamorak filed for bankruptcy, the school reached out to the other insurers seeking defense, indemnification and coverage, but was denied on all fronts.

Penn said he “really has no idea” why insurers flatly denied coverage. “The only thing I can rely on is reading their letters denying coverage,” Penn said. “They have raised a number of different points that they continue to argue, and we respectfully disagree with their analysis.”

Eight months later, the consent judgment was entered in favor of the plaintiffs and the school reapplied for coverage, assigning all of its claims to the remaining insurers on the grounds that the assignment amount was “a direct result of the insurers’ failure to provide a defense.” . a failure to compensate the claims asserted by the plaintiffs.”

“The ruling found that the insurers legally breached their duty to defend and are responsible for the damages resulting from that duty,” Penn said. “The judge also concluded that the underlying allegations were covered by the policies as a matter of law and entered judgment accordingly.”

In denying the insurers’ motions for summary judgment, the court found that Continental Casualty Co. owed $1 million, Northern Insurance Co. of New York owed $10 million, Zurich American Insurance Co. owed $92 million $10 million and North River Insurance Co. owed $10 million. and Philadelphia Indemnity Insurance Co. owed $232 million.

The insurers challenged the ruling and raised various issues, including whether the events in question occurred during the relevant policy periods, whether a deductible was payable if the underlying insurance failed to pay, and asserted that the claims were submitted too late. that they must be sued separately, that sexual abuse does not constitute assault, and that the consent judgment is vague and unenforceable, among other arguments.

However, the court rejected these points and denied the insurers’ motions for summary judgment on the consent order. Since then, Zurich, Continental Casualty Co., North River and Great American Insurance have appealed.

According to Penn, the main issue in the appeal is whether the insurers breached their duty of defense and whether the insurance coverage applies under the various insurance policies.

Jeffrey Kershaw, representing Continental Casualty Co., said he could not address the main issues on appeal; Lawyers for the other insurers did not respond to requests 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 the motion for summary judgment below.

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