Insurance coverage

Legal action over NHCS insurance cover could get ‘complex business case’ status

The New Hanover County School Board filed suit in Superior Court against four insurance companies – Netherlands Insurance, Peerless Insurance, Liberty Insurance and Liberty Mutual Fire. John Does 1-14 – survivors of the alleged sexual abuse of former NHCS teacher Michael Earl Kelly, are also named as ‘defendants’ – they are not being prosecuted in the traditional sense, but are included because they have a direct interest.

Related: NHCS sues insurance companies for over $31 million in extra coverage in civil sex abuse case

At issue is the difference between $4 million in coverage that insurance companies say is available and up to $35 million in coverage that the district says should be provided if needed.

Crucially, the board does not admit guilt in the complaint, filed October 27, 2021 – but it is trying to force its insurance companies to set out how much its policies would pay John Does 1-14 if there is a possible settlement or whether the district has been found liable in a trial case.

Although it was filed after the Kelly case, plaintiffs John Doe and NHCS have an interest in seeing NHCS’ lawsuit against its insurers settled. first – since a court-ordered settlement or damages would likely be delayed by the disagreement over the amount of coverage available, and mediation or other negotiations would likely depend on the amount of NHCS could eventually pay.

The insurance case is complex, involving multiple policies from multiple insurance companies, which could make it equally difficult for plaintiffs and defendants to litigate if it is moved from judge to judge with each new hearing.

To that end, the Council asked Paul Newby, Chief Justice of the North Carolina Supreme Court, to use his discretion to designate the case as “exceptional” or “complex business case.” Newby can do so under Rule 2.1, a court procedure reserved for cases too complex to be handled by multiple judges; Residents of the Cape Fear area may recall the complicated civil suit over the fate of H2GO, which involved multiple partners and complex legal arguments and was ultimately designated a case under Rule 2.1.

Attorney Martin Ramey of the law firm Rhin, PC, who is part of the team representing the plaintiffs, confirmed that the plaintiffs had accepted the complex designation and recommended to Superior Court Judge Phyllis Gorham – who is overseeing currently the Kelly civil case – to handle the insurance case. .

Plaintiffs’ attorneys have do not have agreed to combine the files: their file against NHCS and the file of NHCS against its insurers will remain two separate files. However, if Judge Gorham is appointed under Rule 2.1, she will hear both case.

Attorneys at Nexsen Pruet Law Firm, PLLC, representing the four insurance companies, have also consented to a Rule 2.1 designation, meaning there is no objection from either party. in the insurance matter to an appointment under Rule 2.1.