Federal judge upholds ruling on TECSC insurance coverage for legal defense
March 5, 2014
A federal judge ruled in favor of The Episcopal Church in South Carolina again on Tuesday, denying a motion to reconsider his decision that an insurance company must provide a legal defense for the local Episcopal Church diocese in the lawsuit brought against it by a breakaway group.
U.S. District Judge Patrick Michael Duffy ruled in January that TECSC’s commercial liability coverage in the policy issued to it by Church Insurance Co. of Vermont provides the local Episcopal diocese with coverage for “advertising injuries.”
A trademark dispute is one of the issues raised in the lawsuit that was filed in January 2013 by former church leaders who have left The Episcopal Church, but continue to claim the right to the name and service marks of the “Protestant Episcopal Church in the Diocese of South Carolina.” Because of a temporary order in that lawsuit, the recognized Episcopal diocese in this region is currently using the working name “The Episcopal Church in South Carolina.”
In upholding his ruling, Judge Duffy also denied the insurance company's request to be allowed to appeal before the claims of bad faith against them are resolved. TECSC is in the process of opening a dialogue with the insurance company in light of the rulings.
The ruling confirms that TECSC has insurance coverage for its legal defense, including costs incurred so far, in the case that is currently pending before Judge Diane S. Goodstein in Circuit Court in Dorchester County. The policy also provides coverage of up to $1 million should any damages be awarded to the plaintiffs in the breakaway group.
That lawsuit has been stayed by the court pending an appeal to the South Carolina Court of Appeals.
At issue in the appeal is TECSC’s right to see important evidence in the case: an estimated 1,200 pages of correspondence between Beaufort attorney C. Alan Runyan and the former bishop of the diocese, Mark Lawrence, prior to November 17, 2012. Mr. Runyan was legal counsel for the diocese prior to that date, which is when leaders of the breakaway group met and purported to “withdraw” from The Episcopal Church. Mr. Runyan now represents the breakaway group.
In seeking the documents, attorneys for TECSC note that any attorney-client privilege that existed prior to the withdrawal should belong to, or at least be shared by, TECSC. Circuit Court Judge Diane S. Goodstein denied TECSC’s request for the documents, prompting the appeal.
On February 6, the 41 lawyers representing the plaintiffs in the breakaway group filed a motion that takes the unusual step of asking the South Carolina Supreme Court to take over jurisdiction of the appeal. The motion cites a wish to have the case expedited, and expresses concerns that they would be “stuck in an appeal” if the group waited the Court of Appeals to rule.
At this time, the Court of Appeals has not issued a ruling, and the Supreme Court has not issued any response to the plaintiffs’ motion.
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