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Philadelphia, PA (July 12, 2006) - The Pennsylvania Supreme Court has denied Gallagher Bassett Services, Inc. leave to appeal a Superior Court decision reinstating a jury verdict of $2,431,000.00, plus prejudgment interest, for the Roman Catholic Diocese of Greensburg, Pennsylvania.

The Diocese of Greensburg was represented by John Ellison, Timothy Law, and Nicholas Insua of Anderson Kill & Olick, P.C., in Philadelphia, Pennsylvania.  Anderson Kill & Olick is a national law firm with offices in New York, Philadelphia, Washington, Chicago, and Newark, NJ.  Anderson Kill & Olick regularly represents policyholders in disputes against insurance companies, insurance brokers, and third party administrators, like Gallagher Bassett.  In addition, Anderson Kill regularly advises and represents religious institutions with regard to insurance issues, and has previously represented a number of Dioceses in the Roman Catholic Church in insurance disputes.

John Ellison praised the Supreme Court’s decision:

The Pennsylvania Supreme Court has provided finality to the jury’s determination that Gallagher Bassett was legally responsible for millions in damages suffered by the Diocese.  The Supreme Court essentially affirmed the important role that juries play in our society.  This decision paves the way for the Diocese to finally recover under the jury’s verdict.

The jury verdict related to the loss of the Queen of Angels School building, formerly known as the St. Agnes school building, which was located in St. Agnes Parish, Westmoreland County, Pennsylvania.  On February 23, 1999, a structural engineer determined that the school’s structural integrity had failed due to earth movement caused by pyrite, a mineral that unpredictably expands when exposed to air or water.  The Diocese immediately closed the School.  Shortly thereafter, the Diocese provided notice of the loss to Gallagher Bassett, the claims administrator under the Diocese’s insurance program.  Ultimately, the building was demolished, with the exception of a small wing containing six classrooms.

The lawsuit against Gallagher Bassett alleged that Gallagher Bassett had breached its contract to provide services in accordance with its contracts with the Diocese.  From the early 1970’s to the late 1990’s, the Diocese hired Gallagher Bassett to do risk and safety inspections of the buildings of the Diocese, including the Queen of Angels school building.  In addition to those inspections, the contracts obligated Gallagher Bassett to perform the claims administration under the insurance policies.

The Diocese alleged that Gallagher Bassett had not met its obligations under the contracts.  After a week-long trial, the jury found that Gallagher Bassett materially breached its contractual obligation to the Diocese, and the Diocese sustained damages as a result of those breaches.  The judge molded the jury’s verdict of $4.5 million to the sum of $2,431,000, plus prejudgment interest at 6% from August 20, 1999, to the date of the Order.

Despite the findings of the jury, however, the trial judge granted judgment in favor of Gallagher Bassett.  The Superior Court reversed and vacated the trial judge’s grant of judgment for Gallagher Bassett notwithstanding the verdict, and remanded the case to the trial judge for entry of judgment in favor of the Diocese in the amount of $2,431,000 and calculation of pre-judgment interest.  The Pennsylvania Supreme Court has decided not to hear the case, rendering the Superior Court’s decision final.

Judges Joan Orie Melvin, Debra Todd, and Seamus McCaffery sat on the Superior Court panel that heard the case.  The Pennsylvania Supreme Court Order denying leave to appeal was issued per curiam.

For more information, please contact:

John N. Ellison
jellison@andersonkill.com
(215) 568-4710

Timothy Law
tlaw@andersonkill.com
(215) 568-4762

Nicholas Insua
ninsua@andersonkill.com
(973) 642-5864