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An insurance company facing the prospect of a heavy payout in child molestation claims against the Oakland Diocese has come up with an interesting exit strategy: Maybe the relevant policies never existed. In a suit filed March 3 in U.S. district court in San Francisco, Travelers Casualty and Surety Co. claims that it can’t find any evidence that it was the Oakland bishop’s main insurer between 1976 and 1981, contrary to the bishop’s claims. It’s asking for declaratory relief from paying out money to victims in 52 cases who claim they were abused by priests or other church officials. It also wants to stop providing counsel for the church. Travelers’ lawsuit was filed by Drinker Biddle & Reath attorneys Charles Reid III, John Powers and Cheryl Jorgensen. Reid and Powers were not available to comment and Jorgensen declined comment. A spokesman for Travelers’ parent company, St. Paul Travelers, also declined comment. But an attorney for the diocese said it’s no accident that Travelers’ suit came just days after Alameda County Superior Court Judge Ronald Sabraw, who is coordinating the Clergy III abuse cases, gave notice to attorneys for the insurance companies that they would be required to attend a mandatory settlement conference. “Travelers has been defending these cases for the better part of two years,” said Stephen McFeely of Foley & Lardner. “They haven’t had many copies of the policies, nor had we. It hasn’t slowed them to this point.” “I think [filing suit now is] a stunt by Travelers to justify positions that they may want to take. One might ask why they didn’t file this lawsuit two or three years ago,” he said. Attorneys for both plaintiffs and defendants in the Oakland clergy cases say attorneys for the company remain involved in settlement talks. The Oakland cases are part of Clergy III, a group of about 150 Northern California cases carved out of more than 800 clergy abuse suits filed statewide. The 140 cases consolidated in the San Diego and Santa Bernardino areas are called Clergy II, and the more than 500 cases consolidated in the Los Angeles area are Clergy I. In its lawsuit, Travelers Casualty and Surety Co. v. The Roman Catholic Bishop of Oakland (C 05-00915 BZ), Travelers claims it cannot find copies of primary policies it “allegedly” sold to the diocese covering the years 1976 to 1980. It says it can only provide part of a 1981 primary policy and two “excess” policies issued in 1978 and 1979. Even if the contested policies existed, it argues, they account only for “bodily injury,” not “emotional or psychological injury” that it says is alleged in the abuse cases. Plaintiff attorney Martin Jaspovice, who is leading the Oakland settlement talks, said he wouldn’t be surprised if the insurance companies can’t find the policies because of their age. But he, too, questioned the timing of the suit. “It is rather odd, because it comes in the middle of the mediation process,” he said. “[McFeely's] getting the rug pulled out from under him, it seems to me,” Jaspovice said. If Travelers was indeed the diocese’s primary insurer during the late 1970s, it has good reason to be fearful of possible payouts. At least half of the 52 Clergy III cases against the Oakland church involve alleged crimes that took place during the period that the Oakland church claims it was covered by Aetna Insurance, which was acquired by Travelers Insurance Group in 1996. That would include the time during which former altar boys Bob and Tom Thatcher claim they were abused by former priest Robert Ponciroli at St. Ignatius Church in Antioch. The first Clergy III case to go to trial, Thatcher v. Doe 1 (RG03085045), is also the only case so far in which a judge has cleared the way for punitive damages. Opening statements in that case are expected to begin this week before Judge Harry Sheppard in Hayward. McFeely said he didn’t think the federal lawsuit would have any impact on the settlement talks, adding that the broker who sold the policies has helped reconstruct the church’s coverage over the years. “You don’t ultimately need the policy,” McFeely said. Settlement talks will continue today in Judge David Hunter’s Hayward courtroom. Also this week, opening statements are expected in San Francisco Superior Court for Kavanaugh v. Roman Catholic Archbishop of San Francisco (CGC-03-400003), the second Clergy III case to reach trial.

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