In an order, U.S. District Judge Tiffany M. Cartwright wrote that it was "undisputed" that the primary policies issued to Kiwanis International "have not been exhausted." The judge said that the plaintiffs hadn't shown that the excess insurers, Fireman's Fund Insurance Co. and TIG Insurance Co., formerly Transamerica Insurance Co., were likely to be on the hook for coverage any time soon.
"At the time of this suit, less than 80 percent of the primary insurance policy against FFIC's coverage year was exhausted, while only 70 percent of primary insurance was exhausted against TIG's coverage year." Judge Cartwright wrote.
The judge said the plaintiffs had also asked her to consider facts that were not properly attached to their complaint and, even if they had been, could not be taken as relevant.
She said that for the purposes of determining whether excess insurance was likely to be needed, it did not matter that there were other complaints with similar allegations pending that might tap into the primary insurance coverage.
"Plaintiffs cannot show a 'likelihood' of exhaustion by pointing the court to other pending cases involving different parties that may implicate coverage rights in the future," Judge Cartwright wrote.
She also rebuffed the plaintiffs' argument that because they alleged a state trial court wrongly reduced a 2022 covenant judgment resolving the survivors' claims against Kiwanis Vocational Home, more money was actually due, triggering the excess policies.
"Plaintiffs' assertion that the state trial court 'erred' is a legal conclusion not accepted as true at the pleading stage," she wrote, noting that just because the plaintiffs said the amount shouldn't have been adjusted from $65.13 million to $21.25 million, that didn't make it so.
Darrell L. Cochran, who represents the plaintiffs, said he wasn't too concerned with the judge's ruling, noting that there is still "robust" litigation against the primary carriers, which hold $35 million in underlying coverage, according to the judge's order.
"We are supremely confident that we will be able to establish that the primary carriers behaved in bad faith and will be held responsible for all damages as a result," Cochran said.
According to an amended complaint, "scores" of boys placed in the foster home by the state of Washington were physically and sexually abused during the 1980s and 1990s. The underlying litigation was brought on behalf of 20 individuals who reside in Washington, Oregon, Arizona, Virginia, Iowa and Montana, court records show.
They leveled claims against two directors and the nonprofit Kiwanis International in state court suits filed over the past decade. Following a settlement in October 2022, the plaintiffs were allowed to pursue Kiwanis' insurance carriers for payment, the amended complaint said.
The carriers issued policies to Kiwanis International and are accused of breaching their duty to defend vocational home staff leaders against six Washington state court suits and refusing to pay a judgment, court records show.
The Washington federal suit seeks a court order finding the insurers are on the hook for resolving the cases, including covering the judgment against former home director Charles McCarthy and assistant director Guy Cornwell. Both men are accused of perpetrating the abuse, according to court records.
McCarthy died, in part due to the stress of the litigation, the amended complaint said.
Cochran said that due to time limits regarding when child sexual abuse claims could be brought, the plaintiffs' abusers could not be brought to justice. However, he said he is confident he will be able to obtain coverage for their mistreatment.
"They've all been sexually abused, so they have all been dealing with damages that they cope with from that on a daily basis," Cochran said, adding that their injuries have been compounded as litigation "has been stretched out by the insurance companies for a decade at this point."
Representatives of the insurers did not immediately respond to requests for comment Friday.
The plaintiffs are represented by Darrell L. Cochran, Kevin M. Hastings, Christopher Eric Love and Bridget T. Grotz of Pfau Cochran Vertetis Amala PLLC.
United States Fidelity & Guaranty Co. is represented by Everett W. Jack Jr., Nancy Anne Brownstein and Steven P. Caplow of Davis Wright Tremaine LLP.
Granite State Insurance Co. is represented by Benjamin J. Roesch and Gabriel Baker of Jensen Morse Baker PLLC.
Insurance Co. of North America and Federal Insurance Co. are represented by Jeremy Knight and Jonathan Toren of Cozen O'Connor.
Transamerica Insurance Co. is represented by Hari Kumar of Lane Powell PC.
Westport Insurance Corp. is represented by Edward B. Parks II, James P. Ruggeri and Nicholas Ean Yu of Ruggeri Parks Weinberg LLP and James P. Murphy of Murphy Armstrong & Felton.
Fireman's Fund Insurance Co. is represented by John E. Bucheit, R. David Gallo and Todd C. Jacobs of Parker Hudson Rainer & Dobbs LLP and Daniel C. Heath and Peter J. Mintzer of Selman Leichenger Edson Hsu Newman & Moore LLP.
The case is C.C. et al. v. United States Fidelity & Guaranty Co. et al., case number 3:24-cv-05535, in the U.S. District Court for the Western District of Washington.
--Editing by Abbie Sarfo.
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