WILMINGTON, Del. — A Delaware bankruptcy judge on Friday ordered insurance companies to pay their share of a settlement with priest sex abuse victims that is the foundation of the Catholic Diocese of Wilmington’s reorganization plan, and he angrily turned aside the insurers’ arguments.
The insurers had balked at contributing $15.4 million toward the $77 million settlement with some 150 abuse survivors until appeals filed by two priests identified by the diocese as child abusers are resolved. Judge Christopher Sontchi replied that he was “flabbergasted” that the insurers would threaten to scuttle the agreement because of a “technicality.”
“While I understand the legal arguments of the insurers, I think it’s one of the clearest examples I’ve seen in my career of someone exerting form over substance,” Sontchi said. “Frankly, it’s the kind of thing that lawyers do that makes nonlawyers have the opinion they do of lawyers.”
The two priests are appealing court-ordered restrictions prohibiting the diocese from using its assets to make any future payments to priests identified by the diocese as pedophiles. The insurers argued that a final order could not be entered until the appeals by the priests are resolved.
Under the diocese’s reorganization plan, the payments are due Sept. 26.
“We’re not the bad guys here. We’re not acting in bad faith,” said Russell Roten, an attorney representing Lloyds of London. “What we’re trying to do is figure out how to deal with a real legal problem. … We are prepared to honor our settlement agreements when we get finality.”
But an angry Sontchi agreed with the diocese and other supporters of the settlement that the appeals by the priests have nothing to do with the provisions of the bankruptcy plan that involve the insurers.
Sontchi noted that the settlement was the result of countless hours of painstaking negotiations over several months, and that the position taken by the insurers threatened to kill it. He ordered them to pay the amounts they agreed to pay by the Sept. 26 deadline.
“I am flabbergasted, disappointed that the insurers would destroy that settlement, blow up this case, on a technicality,” he said, rejecting the insurers’ arguments that he no longer had jurisdiction in the case because of priest appeals.