Chapter Five: Progress Of The Suit, Part 1

June 14, 2005 - Oct. 13, 2005

This civil suit started on June 14, 2005, when the Diocese (as plaintiff) sued seven insurance companies (the defendants) in an attempt to recover 7.7 million dollars expended in a 2004 settlement of 46 claims relating to demands for damages as a result of sexual abuse by clergy or others allegedly under the supervision or control of the Diocese. The defendant companies had provided insurance in the period 1968 to 1986, as follows:

Aetna (now Travelers) (Jan. 1, 1968 to Jan. 1, 1971)
Home (now represented by the Mass. Insolvency Insurance Fund, or MIIF) (Jan. 1, 1971 to Oct. 17, 1979)
North Star (March 29, 1976 to Oct. 17, 1979)
"Gallagher Bassett plan" (self-insurance; Lloyd's; Centennial; Interstate; Colonial Penn) (Oct. 17, 1979 to Oct. 17, 1986)

Prior to 1968, to the best of its knowledge, the Diocese had no coverage. After 1986, general liability policies treated sexual abuse or molestation as an exclusion.

In fact, two of the original defendants were allowed to modify their standing in the suit because their policies contained exclusions for sexual abuse or molestation. Colonial Penn Insurance Company left the suit on May 17, 2006, and Interstate Fire and Casualty left the suit on August 3, 2006. It is my understanding that these two companies were judged to have no duty to defend or repay the plaintiff (the Diocese).

Oddly enough, during the course of the suit these two were replaced by two entirely different companies who became a party to the suit when long-forgotten policies turned up during the long and fitful course of discovery. Thus the number of defendant companies remained at seven. The two who joined the suit about 6 months before settlement are American Home Assurance Co., and National Union Fire Insurance Co.

The first few months of the suit were taken up with serving papers and getting answers from the defendants, who were largely out-of-state. Compliance of the long-arm statute was necessary to establish jurisdiction. Apparently the long-arm statute allows the plaintiff (the Diocese) to get local court jurisdiction (Hampden Superior Court) over the out-of-state defendants.

Next, attorneys for the companies had to be recognized by the court. One of the attorneys for Lloyds was John Egan of Rowe's Wharf, Boston, not be confused with John J. Egan, lead attorney for the Diocese.

In their answer to the service, Travelers made a counterclaim, which was impounded. Another counterclaim came from Interstate. Soon thereafter, a list of the claimants who assented to a stipulated order of the court from Nov. 4 was impounded. In fact, throughout the suit, it was apparent that any documents containing the names of alleged victims were impounded. For example, papers 32 through 37 are not in the clerks office (all had to do with the Nov. 4 order just mentioned).

Oct. 13, 2005 - May 26, 2006

On Oct. 13, 5 months into the suit, the judge issued a scheduling order about interrogatories and other discovery matters. Shortly thereafter, on Oct. 18, the insurers sent their first questions and first document request to the Diocese.

However, we are already into complications, because back on Oct. 6, a week before the judge issued the scheduling order, the Diocese had announced at a status conference that it was reluctant to produce any documents or answer any questions until the Court resolved reservations that the Diocese had about Nixon Peabody.

This law firm was representing the MIIF (who were stepping in for the bankrupt Home Insurance Co.). Mr. Egan, representing the Diocese, suspected that Nixon Peabody had a conflict of interest because in addition to representing insurance carriers such as MIIF, it had also represented several dioceses around the country.

His concerns boiled down to two issues, (1) he felt that, according to Mass. law, the other dioceses had to give their consent in order for Nixon Peabody to be able to represent the MIIF (which consent he had no proof of), and (2) he suspected that confidential information about diocesan legal strategies might be leaked from diocesan lawyers to those defending the insurance company, thus undermining his legal strategy, and the legal strategies of dioceses in general.

As he put it, the fact that the Nixon Peabody lawyers represented both insurers and dioceses would hold the interests of the Springfield Diocese "hostage". He also said this (in P.50): "It is thus clear that the positions being advocated by Nixon Peabody attorneys in the present case on behalf of MIIF are directly adverse to the interest of other dioceses since a decision unfavorable to the Diocese of Springfield would negatively effect the legal position of those other dioceses in their efforts to obtain insurance coverage for the abuse claims asserted against them."

Nevertheless, the first set of questions and document requests went out from insurers to Diocese on schedule on Oct. 18. As to the Nixon Peabody issue, the court ordered the Diocese on Dec. 7 to undertake discovery from Nixon Peabody, presumably to clarify whether there was a conflict of interest that would cause the Diocese to make a motion to dismiss Nixon Peabody.

Nixon Peabody provided the discovery by Feb. 13, 2006. This was followed three months later by a motion (P.50) from the Diocese asking the court to disqualify Nixon Peabody, which was filed on May 26, 2006. The judge's decision in the matter arrived two months later (P.62).

Mr. Egan's difficulty with Nixon Peabody predated the suit. He had exchanged letters with Mr. Tanski of Nixon Peabody in January, 2005, about the potential conflict of interest. The following month Egan was informed by a partner of Tanski that an "ethical screen" was the method used at the firm to handle such objections. Also in Feb., Egan informed the United States Conference of Catholic Bishops (USCCB), the Manchester Diocese and the Hartford Diocese of his concerns about Nixon Peabody.

The Manchester situation was a particular concern because that Diocese had claims pending against the New Hampshire insolvency fund, and Egan expected that the Nixon Peabody attorneys representing the Manchester Diocese were likely to be called as witnesses on behalf of the Diocese, and testify against the fund.

As just mentioned, even though the potential conflict of interest was raised by the Diocese on Oct. 6, and then followed by discovery from Nixon Peabody which was provided to the Diocese by Feb. 13, it took three more months for the Diocese to issue a motion asking the judge to dismiss Nixon Peabody, and another two months for the judge to issue a decision. Thus, the whole affair lasted a little over 9 months.

It is not clear why it took so long. But, the length of time needed to resolve the issue, coupled with the fact that the Diocese did not produce any documents to the insurers in the meantime, suggested to the insurers that the motion amounted to a strategic move on the part of the Diocese to delay the progress of the suit (see pg. 2, P.67).

Let us look closer at the issues of P.50 (Motion to Strike Nixon Peabody) and the resolution, P.62 (Memorandum of Decision).


To paraphrase, Attorney Egan felt that Nixon Peabody's representation of the MIIF was problematic on two grounds: confidentiality and loyalty.

Confidentiality, because one could not be sure that legal strategies that were developed and refined by dioceses nationwide by NADA attorneys (National Association of Diocesan Attorneys) would not be leaked within the law firm of Nixon Peabody to those attorneys representing insurance companies (MIIF, in this case).

Loyalty comes into question, because, when lawyers from the same firm simultaneously represent both an insurer and a diocese, they must, according to Egan, obtain the consent of the other party before proceeding. Since Egan had no proof that the Nixon Peabody lawyers had obtained consent from the dioceses in question, (nor was he allowed to undertake discovery on this aspect by the judge) he felt that the duty of loyalty came into question.

It goes without saying that Egan's argument was directed at all lawyers of Nixon Peabody, i.e., he was not claiming that Mr. Transki himself, lead attorney for MIIF, had represented a diocese, but only that another lawyer, of the 600 or so employed by Nixon Peabody, had.

Another aspect of Egan's motion had to do with the so-called affirmative defenses put up by the insurers to answer the original claim for declaratory judgment. Egan listed seven of consequence, and stated that all seven were actually not the type of defenses based on language found in insurance policies.

Instead, they referred directly, he said, to the type of issues that one would expect to find in cases where dioceses were being sued for liability for sexual abuse cases. This proved, wrote Egan, that the positions being advocated by Nixon Peabody on behalf of MIIF were directly adverse to other dioceses, since an adverse decision in Springfield could have ramifications elsewhere, thus undermining the legal strategy of all dioceses.

The seven affirmative defenses mentioned by Egan were: 1. The Diocese failed to mitigate, minimize or avoid damages; 2. Diocese's claims are barred by the "known loss" doctrine; 3. Diocese's claims are barred to the extent that the Diocese seeks defense with respect to third party claims which do not constitute "suits" for which there is a duty to defend; 4. The Diocese's claims are barred to the extent that bodily injury or personal injuries were not caused by an "occurrence" within the meaning of the underlying policy; 5. The Diocese's claims are barred to the extent that the costs and expenses do not constitute "damages" within the meaning of the underlying policy; 6. The Diocese's claims are barred to the extent that the Diocese does not seek coverage for damages that it was "legally obligated to pay" within the meaning of the underlying policy; and 7. That the Diocese's claims are barred to the extent the Diocese seeks coverage for occurrences that were not fortuitous [accidental].

Egan listed other positions likely to be advanced in the lawsuit that would also be of concern to dioceses nationwide. Namely, that the insurers would question the intrinsic values of the underlying claims – and also question whether the amounts paid by the Diocese were reasonable. They would debate whether clergy were covered as executive officers or employees under general liability policies, and question even the definition of sexual abuse (whether it qualified as "bodily injury" or not). Egan called these positions and queries directly adverse to the interests of other diocesan clients around the country.

In arguing for disqualifying Nixon Peabody, and for the principle that what effects one unit affects others, Egan stressed the unity of dioceses around the country. For example, he said that all bishops belong to the USCCB. He described the Springfield Diocese as a geographic unit of the worldwide Roman Catholic Church, and he called its corporation sole structure the legal entity through which the religious entity of the Diocese conducts its operations.

When arguing that Nixon Peabody was bound by conflict of interest rules pertaining to simultaneous representation of adverse interests, he compared the relationship of dioceses to that of companies within a trade organization, and also to subsidiaries within a corporation.
He urged the court to consider one diocese as an "alter ego" of another. Under this legal theory, if there is an identity of ownership, then as a "…matter of reality and practicality…" one could ignore that the companies are distinct in legal terms, and, instead, consider one as the alter ego of the other.


- P.62 (Memorandum of Decision and Order) in which the judge rules on P.50.

May 26, 2006 - July 21, 2006

We have just recapped the arguments contained in P.50, a motion by the Diocese to have the representation of the MIIF (Nixon Peabody) dismissed. MIIF is an insolvency fund covering for Home Insurance, which had gone bust.

The judge issued P.62, a decision and order, which was filed on July 19, to solve the issues raised by the Diocese. But first, a couple of other things happened.

On June 6, the Springfield Republican reported that Rev. Richard Meehan had been laicized by the Vatican. This news is significant not only because Meehan's laicization documents were almost certainly among those that became part of a huge tug-of-war between insurers and Diocese, as we shall see, but also, because the article mentions that at that time there were "…seven other priests…" that faced the same possible action. This indicates that there was a considerable amount of material in chancery archives that the insurers could be expected to take an interest in, and indicates as well that the Diocese had a considerable amount of material to protect.

The other event was a June 16 editorial in the Berkshire Eagle about the lawsuit. While Diocesan spokesman have recently implied that the Eagle is anti-Catholic, or, at least, anti-religious, they might feel less sure if they went back and read this editorial, titled "Insurers Must Pay Up". In it the insurers are said to be "clearly stalling" and they are urged to "do right" by the Diocese. The editors also find the willingness of Bishop McDonnell to settle "refreshing", and they compare the situation here favorably to the stonewalling that had occurred in Boston on many similar issues.


In short, the judge declined to dismiss Nixon Peabody. In his explanation, he stated that attorney disqualification was a "drastic" measure, and, while he granted some of the points made by Diocesan attorneys, he found that the objections, taken together, did not rise to a level requiring dismissal.

Among other points, the judge found that Diocesan lawyers had not established that the dioceses are owned by the same legal entity or organization. He emphasized, instead, that each diocese was a separate corporation. This undercut the arguments for the "alter ego" ideas, trade association, and subsidiary/corporation analogies put forth by Diocesan lawyers.

With regard to the corporation analogy, the judge said that "…nothing in the record supports an inference that the dioceses stand in an organizational relationship to each other such that one diocese's liabilities directly affect those of the other dioceses, in contrast to the relationship between parent and subsidiary companies…" (pg. 6, P.62).

The conflict of interest argument also failed because the judge was not convinced that the plaintiff (the Diocese) ever had a working relationship with Nixon Peabody, even though other dioceses had, and even continue to have, a relationship. Thus, the judge refused to see the linkages between dioceses that the Diocesan lawyers were trying to prove.

Similarly, the judge found that the supposed linkages between the NDAA list-serve and the MRPC (Massachusetts Rules of Professional Conduct) did not exist. While the judge acknowledged that the National Diocesan Attorneys Association were free to make representations about the confidentiality of their list-serve or conference materials, he also pointed out that nothing in the MRPC expressly governs those communications, beyond what is already required of attorneys. So, if the attorneys for the Diocese felt forced to "hesitate" before using the list-serve, as they claimed in the motion, that problem could not be corrected by appealing to the enforcement of the MRPC.

Also, the judge noted that there was no evidence presented by the Diocese to prove that the two attorneys in question (out of the 600 or so attorneys at Nixon Peabody) had ever had access to confidential information relating to other dioceses' litigation involving sexual abuse claims.

The judge said that the evidence produced by discovery showed that Nixon Peabody had defended other dioceses against charges of sexual misconduct. But, despite this fact, he pointed out, the Diocese had not established that Nixon Peabody's work for the dioceses in question involved insurance coverage issues (though, he noted, they could have asked this question during discovery).


July 21, 2006 - Oct. 3, 2006

This section deals mainly with the battle over "document production", i.e., the requests of the insurers' lawyers for documents in the possession of the Diocese. We cover the following:

Paper 61 - the Diocesan motion to extend time to respond
Paper 63 - scheduling order for discovery
Paper 67 - the Insurers' emergency motion to compel document production
Paper 69 - the Insurers' statement of anticipated discovery issues
Paper 72 - the Insurers' motion to compel document production
Paper 73 - the Diocesan opposition to insurers' motion to compel

Despite the impressive number of Papers above, the issues about document production were not resolved. That would only happen with Paper 77 on Jan. 3, 2007, when the judge issued a ruling on which documents the Diocese would have to produce, and which ones it could keep in a "privilege" file. That ruling was immediately appealed by both parties, but was upheld on March 20 by Judge Duffly.

But, before considering the decisions of Jan. 3 and March 20, the series of motions listed above will be summarized.

Paper 61

It will be remembered that on Oct. 18, 2005, the insurers sent their first document request and interrogatories to the Diocese. In Paper 61, on July 17, 2006, the Diocese acknowledges that no papers or answers have been sent to the insurers as yet, and explain that they need more time to comply.

Reasons cited are: the large number of claims (over 100); the additional claims for which the insurers seek documentation (probably referring to the "Other Claims", i.e., claims other than the pending claims and those involving the 7.7 million that the Diocese paid out in 2004); the length of time covered by the claims (over 50 years); and the sheer amount of material (the Diocese cites 17,000 pages reviewed and copied, with 10,000 more to go).

The judge had set a deadline of June 30 for the response of the Diocese, and in P.61 the Diocese seeks to push this deadline back to July 21. It is notable that P.61 was filed on July 17. This suggests that P.61 may have been an 11th hour effort to avoid sanctions for not meeting the June 30 deadline, which had already passed.

Paper 63

This scheduling order for discovery is notable because by ordering it the judge solves the problem of what to do about depositions of the victims. He decides that the first phase will include all discovery and document production involving clergy, lay witnesses, insurance employees, etc., in other words, all others affected by discovery other than the victims.

The second phase of discovery (which may require victim depositions), by this order, are scheduled to be conducted only after the first phase is complete and the "dust has settled", as the judge put it.

This order also contains timelines for the commencement and completion of depositions. This schedule appears non-controversial but in the context of the document production difficulties cited below, it takes on critical importance.

Paper 67

This paper offers the clearest narrative of the history of document production by the Diocese. It explains the rationale of the insurers in bringing motions to compel. The schedule of depositions ordered by the judge back in P.63 is looming, and without the papers from the Diocese that the insurers have requested, their depositions will be compromised because they will lack the information needed to conduct them: "The difficulty posed by the Diocese's intransigence is significant and the likelihood of prejudice to the Insurers is immediate."

Paper 67 is an emergency motion and is relatively short compared to the other documents in this series.

Paper 69

In Paper 69 the insurers say more about the 7,700 or so pages that the Diocese has placed in a privilege file. This long document (33 pages) presents very full arguments about why the insurers object to the General Objections and other objections laid down by the Diocese to limit the production of documents.

Paper 72 (not online)

Full it may be, but Paper 69 is supplemented by an equally large paper (Paper 72) consisting of yet more arguments against the Diocesan position, many exhibits, and the formal Motion to Compel.

It is the Motion to Compel (P.72) that the judge responds to in his decision (P.77), not Paper 69. Similarly, when the Diocese responds in P.73 ("opposition to insurers' motion to compel"), they are responding to P.72, not P.69.

Paper 73

Most of P.73 is about the privilege file. In this paper, the Diocese asserts that they have already answered 47 interrogatories (not including sub-parts), and have provided over 60,000 pages of material in response to the request for 76 categories of documents requested by the insurers.

They dispute the claim by insurers that material relating to the 17 claims against Richard Lavigne settled in 1994 has been withheld. It is difficult to see how the claims of the insurers and the Diocese can be so far apart. Probably, the answer lies in the definition of what is considered "relevant", with the insurers having a wider appreciation than the Diocese.


Now that we have a clearer understanding of how these motions interrelate, we turn again to the progress of the suit.

A close reading of P.67 will show that because of the schedule set by the judge, the insurers found themselves on the eve of conducting depositions without the necessary information with which to proceed. This assertion of theirs is without reference to the documents in the privilege log of the Diocese, numbering some 7,700 or so. Even ignoring these documents which were reserved by the Diocese for privacy and other reasons, by the time that P.67 was written, on Aug. 3, the Diocese had not produced a single page of the other, less controversial documents.

P.67, which asked for immediate production and also compensation for court costs associated with bringing the motion, was allowed by the judge on Aug. 9. He also set deadlines for the motion to compel, and for the opposition arguments sure to be filed by the Diocese, and noted that the discovery timetable would be amended to reflect the delay, the responsibility for which he assigned to the Diocese.

We recall that back in P.61 the Diocese had asked for an extension of time, but in the context of what they really needed, the request for a few days more would seem unlikely to have made a difference. They had reviewed 17,000 pages, and had 10,000 more to go, according to P.61. It is unclear why a request for a more substantial extension of time was not made.

Two months later, on Oct. 3, the Diocese was asserting that it had in fact produced 60,000 documents. Apparently their stated position is that this production, so long in coming, had occurred in the period Aug. 3 - Oct. 3.

At any rate, in P.69 and P.72 the insurers make clear their objections to the size of the privilege file, which emerges as the real battleground, despite the fact that the emergency motion to compel was ostensibly about the production of any document, and not the privilege file per se.

In P.73 the Diocese responds in a similar manner, limiting their discussion to what they will not produce, rather than to what they will.

Thus the stage is set for the judge's decision on the privilege file of around 7,700 pages, which he issues on January 3, 2007.


Oct. 3, 2006 - Jan. 3, 2007