Late yesterday, on Thursday, July 18, 2019, The Episcopal Church in South Carolina (TECSC) filed multiple motions with the U.S. District Court in Charleston asking the federal court to dismiss motions and counterclaims filed by the Church Insurance Company of Vermont (CIC-VT). In the initial filing on June 11, 2019, TECSC argued that CIC-VT acted in bad faith and secretly funded TECSC’s disaffiliated adversaries in litigation against TECSC.
CIC-VT’s motion for declaratory judgment, filed three days later on June 14, 2019, was “attempting to justify the decision it already made to fund TECSC’s disaffiliated adversaries in litigation against TECSC,” according to the memorandum of law filed July 18 by TECSC. In addition to the motion for declaratory judgment, CIC-VT also filed a counterclaim and third-party complaint in the bad faith action, as well as motions for joinder and consolidation. (See previous blog post here.)
The memorandum of law filed July 18, 2019, explains why CIC-VT’s declaratory claim, pled in both actions, should be dismissed on the pleadings as a matter of law and equity, and also why CIC-VT’s motions for consolidation and joinder should be denied as “moot and futile.”
According to TECSC’s memorandum, as early as 2013, CIC-VT received claims from the disaffiliated adversaries, and initially denied the coverage. In 2015, those adversaries sued CIC-VT for breach of contract and bad faith. In defending against that suit, TECSC notes in the July 18 filing, “CIC-VT took the correct position that ‘only affiliates of The Episcopal Church are eligible for coverage from CIC-VT.'”
But instead of seeking a declaratory judgment to uphold that position, “CIC-VT chose to avoid further litigation of the issues and quickly settle that action,” the memorandum says, and subsequently provided insurance coverage to the disaffiliated adversaries to fund their litigation against TECSC.
The memorandum notes that in its recent filings, CIC-VT makes no mention of these previous proceedings in federal court, and says the omission “intentionally misleads this Court,” which is one of multiple arguments to support the case for dismissal. The filing further asserts that CIC-VT cannot now present the issue of coverage for the court to decide “as if it were an issue for which CIC-VT has taken no position.”
The filing also notes, as additional grounds to support the dismissal, that CIC-VT is not authorized or licensed to transact business or sell insurance in South Carolina, as is required by state law. As a result, the company “should not have filed and cannot maintain any action” in the state.
After laying out the many reasons supporting dismissal, the filing notes that CIC-VT’s motions for consolidation and joinder should be denied as “moot and futile.” In addition, it notes that the denial is appropriate because “the addition of numerous parties to the bad faith action initiated by TECSC against CIC-VT is unnecessary and would unduly complicate and prolong that case and burden and prejudice TECSC.”
This is such a strange affair. No Insurance company pays out money for no reason. It must be the case that EDSC parishes hold policies. If TECSC does not like that, let them get to the bottom of it. Initially TECSC made it sound like EDSC parishes were at fault for receiving payments, but obviously they would not be receiving this without cause. So here we have the TEC entity again suing its own Insurance company.
What makes it even more ironic is that Church Insurance Company of Vermont is one of the three insurance companies owned by the Church Pension Fund of TEC. That is, for all intents and purposes, TECSC is suing another entity of the Episcopal Church.
The part I don’t get is how is it that 815 has let this get so completely out of hand.
Sorry, too early in the morning, not enough coffee. Forgot who we are dealing with. One possible explanation is to allow TECSC to put forward an entire presentation of their case against EDSC without any hindrance from EDSC legal team.
I mean, seriously, does Gay Jennings seem like the kind of CEO who would let a subsidiary in South Carolina sue her own (not to mention everyone else in the company) pension plan, if there were not a very important reason for letting this go forward?
It is too early for you, TJ. You posted this a month ago and it makes sense.
Well, thank you Dr. I must have had a triple espresso that morning….
Could you expound on this theory? I agree it is impossible to conclude this suit isn’t choreographed to some larger purpose. I agree that 815 must be allowing TECSC to sue CPF, and this begs explanation.
In a story coming from TECSC sources it is being conceded that DSC parishes do have ongoing coverage from CIC.
On your first point, when one reads stories coming out of TECSC there is indeed an effort to airbrush the EDSC out of frame, and to seek to claim it is the actual Diocese. I even find the use of the term ‘diocese’ by TECSC unwarranted. To be a Diocese requires commandeering the EDSC, and that has not been legally established.
Dr. Seitz,
Let me stipulate that I am just an old guy who spends too much time on the internet commenting on the goings-on in the Anglican world. I do not have access to any inside information that pertains to the legal proceedings in South Carolina. So anything I say is just my personal analysis of publicly available information.
That said, I do have both academic background and practical experience in business and finance (and arts management and some other things), have served as a board member of not for profits, and taught econ.
First, I am scratching my head over why this case has been allowed to proceed- it is essentially as though a car dealership for ABC Motors was suing the ABC Motors Acceptance Corp Insurance Co. But for one division of a company to sue another division of the same company seems like something that a judge would throw out of court and make darn sure the parent company paid every dime of court costs for wasting the court’s time.
The TECSC is recognized by TEC as a diocese- it has representation at GC just like any diocese- so its delegates voted on the board of trustees of the Pension Group (24 of the 25 trustees are elected by GC. Those 24 in turn elect a president for the Pension Group, who is the 25th member). So, they are suing an entity whose board is elected by the same entity that gives TECSC its legal standing.
My concern in this particular case is that it looks almost comical (if you look at the board of directors of the Pension Fund, you would think that the Pension Fund would be fully behind TECSC and it goals and purposes- almost bizarre for TECSC to sue them). And on the face, it is embarrassing to TEC and its leadership. And it clearly could be settled by holding a meeting at 815. So why hasn’t that happened?
Two other possibilities (in addition to my analysis quoted above by Dr. Professional) occur to me-
1) A settlement of the TECSC v Church Insurance of Vermont would amount to a transfer of funds from the Church Pension Fund (or its subsidiary insurance company) to TECSC. Something that they could not do in the normal course of business.
Now, why do that instead of having Trinity Wall Street just donate $X million to TECSC? I dunno. That would seem simpler, and easier to hide, but perhaps there are sufficient restrictions on Trinity Wall Street’s largess that they can’t do that.
2) If we accept the TECSC rumor that Church Insurance is still providing policies to some of the (now) ACNA parishes, it may be that the Church Insurance Companies would prefer to NOT do business with the Episcopal Diocese of South Carolina (ACNA), but some clause in earlier issued policies (a right of renewal, or some such) has left it in legal limbo. By going through the current action, the hope may be to have a judge rule that any such clause is void. Allowing Church Insurance to cancel those policies without concern about later actions against them.
However, being my usual cynical bordering on paranoid self, either 1 or 2 does not preclude any decision or “evidence” presented being used at a later date as precedent or “history” in some future action of the TECSC against EDSC or other entities.
I have been wondering if 2) is the case. If so, going on about CIC doing something that they should not do is outsider talk, uninformed by realities that have to do with EDSC being properly insured.
I think that 2) is one of the points of the Church Insurance Co -Vermont filing that TECSC is trying to have dismissed in the filing cited above. That is, the Insurance Co wants the judge to sort out who it must insure, who it can insure if it wants to, and who it cannot insure, even if it wants to. According to TECSC’s own filing, Church Insurance invited them to join in that action, and they refused. Which makes all of this appear as all out legal war between a TEC diocese (in formation? Missionary? Subsidized?) and its own Pension Fund- and I cannot see how this is of any benefit either to TEC itself or the Church in the universal sense.
That makes sense to me. CIC has some fine print that keeps it from discontinuing customers it had previously served (parishes in the EDSC)? So it asks the court to rule and get TECSC off its back. But, and this is your second point, TECSC either does not understand that or is just being belligerant. I had heard previously that the local legal team in SC (Tisdale et al) and the TEC operatives had wrangled over issues of procedure/approach. Maybe that has festered. If so, it makes for an ugly public presentation. Even big TECSC fans like R Caldwell are left puzzled and unable to know what to say on their blogs.
I must say I do find the situation for TECSC as an entity very strange. People speak as though it is a diocese when its own nomenclature shows that would be formally incorrect. Yet it wants to claim the EDSC’s history as if that is also feasible. It is a TEC entity of some kind with provisional bishops and yet neither a new diocese, an old one, or a missionary one.
PS–could it be that CIC-VT is aware of some reason why they cannot provide coverage to an entity like “The Episcopal Church in SC” and have only therefore done so under duress, after TECSC sued them? Is the problem that TECSC is not a Diocese? Something is going on behind the scenes, that is for sure.
I don’t quite see how TECSC has standing to challenge the decision of the insurance company to settle claims.