The Episcopal Church in South Carolina (TECSC) today filed a complaint in federal court against its insurance company, the Church Insurance Company of Vermont, saying the company acted in bad faith by wrongfully making secret payments to churches that have sued TECSC, helping to fund their litigation against the diocese.
The complaint, filed in the U.S. District Court in Charleston, seeks actual and punitive damages from The Church Insurance Company of Vermont (CIC-VT), which is a captive insurance company of The Episcopal Church that has provided TECSC with insurance coverage since the early 2000s for diocesan and parish properties.
“Captive” insurance is a form of self-insurance in which a parent group or groups create an insurance company to provide coverage for itself. In this case, The Episcopal Church is the parent company and CIC-VT has a fiduciary duty to The Episcopal Church and its affiliated dioceses and parishes that it insures.
“Such duties include fiduciary duties of loyalty and care to insure risks only for TEC and its affiliates, and to properly process insurance claims only for the benefit of TEC and its affiliates,” the complaint says.
The complaint involves a group led by Bishop Mark Lawrence that announced it was disaffiliating from The Episcopal Church in 2012, and filed a lawsuit seeking to take the identity and property of the diocese and its churches.
According to the complaint, TECSC recently discovered that CIC-VT paid insurance proceeds to at least one of the disaffiliated parishes, St. Philip’s Church in downtown Charleston. This discovery came through an annual report published online by St. Philip’s that said “After spending for TEC legal fees, Loan Amortization, and Capital Expenditures, St. Philip’s incurred a net cash deficit of $79,045. However, roughly half of the TEC Legal Fees were eligible for partial reimbursement from the Church Insurance Co. of Vermont, totaling some $111,749.”
The payments were wrongful because CIC-VT cannot legally insure parishes not affiliated with the Church, the complaint says. The complaint cites evidence that “similar wrongful conduct also occurred with respect to the Lawrence Diocese and/or additional Lawrence Parish Entities” with payments, insurance proceeds or settlements from CIC-VT which have not been publicly disclosed, but will be subject to the legal discovery process in court.
The Episcopal Church in South Carolina, as the recognized diocese of The Episcopal Church, has a trust interest in all diocesan and parish property including “all rights to insurance policies protecting such property and receivable insurance proceeds,” the complaint says.
In August 2017, the South Carolina Supreme Court ruled that diocesan property, along with the property of 29 parishes, including St. Philip’s, are held in trust for The Episcopal Church and TECSC.
“For the last seven years, the Lawrence Diocese and 29 of the Lawrence Parish Entities have unlawfully possessed and controlled and have been misusing, depleting, and diminishing the diocesan and parish property held in trust for TECSC and TEC. They still do today,” the complaint says. “They refuse to accept and obey the final decision of the South Carolina Supreme Court. They are currently opposing its enforcement in the state circuit court, on remittitur. They are also opposing an action pending in this Court seeking an injunction against their ongoing trademark infringement, vonRosenberg v. Lawrence.”
The complaint says CIC-VT has “has enabled and aided and abetted at least one Lawrence Parish Entity in breaching such fiduciary duties, participating by wrongfully paying and misdirecting insurance proceeds to it for the known purpose of funding their litigation efforts against TECSC and TEC.”
Please, please, please, Anglican Ink, publish the response to the complaint whenever Church Insurance Co gets around to filing it.
It says something about TECSC and 815 that. whatever the merits of this complaint might be, it wasn’t settled quietly in a brief meeting in New York between the PB, TECSC and the attorneys for the insurance company.
I am no expert on insurance issues at all. But it does seem to me that if TEC claims that St. Philip’s Church is its parish, then TEC insurance policy has to cover it.
What a mess.
Chances are pretty good that this is a misunderstanding of the actual situation as TECSC refuses to acknowledge that there is *no* SC Supreme Court decision. The judges who has to make the decision has not yet so there is no reason that the parishes can not control the property they own. It is not fact that TECSC owns the property. TECSC just likes to misinform……
Just another practical application of the principles of the Episcopal Church’s “Jesus” movement.
While I was among the first to poke fun at this, I am thinking my sense of humor overran my good sense.
In all probability, the purpose of this legal action has nothing to do with a particular insurance claim paid by Church Insurance of Vermont.
It strikes me, upon reflection, as an attempt to establish some sort of precedent at the federal level in order to interfere with the ongoing state case in South Carolina- to aid in federal appeals (given that no matter how the courts in South Carolina adjudicate the confused set of 5 opinions from the Supreme Court of SC, the decision will be appealed by one side or the other).
The complaint itself appears to be an attempt to establish a lot of “facts on the ground” that are not, in fact, actually on the ground. Specifically the claim that the TECSC, an entity formed in 2013, is the same entity that was the Diocese of South Carolina between the 1700s and 2012. There are numerous other claims within the document that are at least controversial, if not outright incorrect.
Why else did 815 give them permission to bring a lawsuit against the Church Insurance Co of Vermont, which is a subsidiary of the Church Pension Group? Since both the plaintiff and the defendant are TEC entities, under control of General Convention and 815, they can stipulate back and forth to each others claims, get it all on record in a federal court, and then “settle out of court” with the record preserved saying whatever they want it to say.
[…] Read it all. print […]