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Hearing Date: October 25, 2011 at 10:00 a.m. PATTERSON BUCHANAN FOBES LEITCH & KALZER, INC., P.S. 2112 Third Avenue, Suite 500 Seattle, Washington 98121 (206) 462-6700 Michael A. Patterson, NYSBA Reg. No. 3615283 Attorneys for the Corporation of the Catholic Archbishop of Seattle Party-In-Interest UNITED STATES BANKRUPTCY COURT SOUTHERN DISTRICT OF NEW YORK : : : : : : : :

In re: THE CHRISTIAN BROTHERS INSTITUTE, et al.,

Chapter 11 Case No. 11-22820 (RRD) (Jointly Administered)

Debtor(s)

REPLY IN FURTHER SUPPORT OF MOTION FOR APPROVAL AND ENFORCEMENT OF SETTLEMENT AGREEMENT BETWEEN PLAINTIFFS AND THE ARCHDIOCESE AND DISMISSAL AS TO THE ARCHDIOCESE ONLY The Corporation of the Catholic Archbishop of Seattle (Archdiocese) respectfully submits this Reply in further support of the Archdioceses motions (the Archdioceses Motions, Docket Nos. 105 and 107; Adv. Pro. Docket No. 16) for an order approving and enforcing a settlement agreement with Plaintiffs in the K.A., et al. and L.W., et al. Adversary Proceedings and dismissal as to the Archdiocese only. On October 18, 2011, the Official Committee of Unsecured Creditors (the Committee) filed a limited objection to the Archdioceses Motion (Committees Objection, Docket No. 120) and Plaintiffs K.A., John Doe, James Doe, T.J. and H.W. filed a response to the Archdioceses Motion (Plaintiffs Response, Docket No. 122).1
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All capitalized terms shall have the meaning ascribed to them in the Archdioceses Motion for Approval and Enforcement of Settlement Agreement Between Plaintiffs and the Archdiocese and Dismissal as to the Archdiocese Only

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PRELIMINARY STATEMENT 1. As provided for in the Settlement Agreements, the Archdiocese seeks dismissal

with prejudice and without costs or attorneys fees to any party as to the Archdiocese only in the K.A., et al. and L.W., et al. Adversary Proceedings. 2. Plaintiffs filed this action in the Superior Court of Washington for King County.

After the Debtors filed a chapter 11 reorganization case in this Court, Debtor removed the Superior Court action to the United States Bankruptcy Court, District of Western Washington by filing a notice of removal pursuant to 28 U.S.C. 1452. Pursuant to 28 U.S.C. 157(b)(5), Debtor transferred the action from the District of Western Washington to this Court. Plaintiffs filed a claim in the Reorganization Case based upon the same facts as the complaint in this action. 3. Plaintiffs entered into a settlement with the Archdiocese that resolves any and all

claims by and among Plaintiffs and the Archdiocese relating to any and all disputes and disagreements among them. Defendant Archdiocese has satisfied their payment obligations under the Settlement Agreements which should be entirely enforced to include dismissal. 4. The Settlement Agreements provide for dismissal in the state court in which this

case originated, and agreement to dismissal of action is unambiguous: the Plaintiff authorizes the dismissal with prejudice of all claims against the Archdiocese and filing of all necessary papers. Despite being provided with the settlement funds, Plaintiffs have failed to provide their agreed upon authorization to dismiss these claims. 5. Accordingly, the Archdiocese respectfully requests this Court order the claims as

to the Archdiocese only, in this adversary proceeding, be dismissed with prejudice and without 2

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costs or attorneys fees to any party by granting the Defendant Archdioceses Motion for Approval and Enforcement of Settlement Agreement and Dismissal as to the Archdiocese Only. ARGUMENT Plaintiffs concede that their claims against the Archdiocese should be dismissed, but instead of specifying any reasons why the relief requested should not be granted, Plaintiffs proceed to offer clarification with regard to certain issues involving the insurance coverage agreements. Further clarification regarding Plaintiffs statements are now required. The

Archdiocese has a long history of settlements with Plaintiffs counsel related to Christian Brothers claims. Through extensive discovery, settlements, and mediations, Plaintiffs counsel has known of the split in insurance policies when past cases have been jointly settled with the Christian Brothers. Moreover, Plaintiffs K.A., John Doe, and James Doe accepted checks on July 8, 2011 issued by the carrier, Maryland/Zurich. It is disingenuous for Plaintiffs and their counsel to deny knowledge of a split in insurance proceeds. The Committee concedes to the terms of the Settlement Agreements, provided that any order(s) approving them do not affect any rights of any party with respect to any assets (including insurance policies) in which the Debtors estates may have an interest. Just like the Plaintiffs, the Committee fails to state any reasons for denying the relief requested in the Archdioceses Motion. Instead, the Committee inaccurately reports to this Court that the Archdiocese entered into separate agreements with the respective insurance carriers either post petition or on the day of filing; this is incorrect. The Archdiocese entered into agreements with the insurance carriers and the Congregation of Christian Brothers/North American Province, to split the insurance 3

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proceeds in good faith, at the time of the mediation during the week of March 16, 2011, with the insurance carriers present. This was several weeks prior to any petition being filed by any Christian Brothers entity. Notably, neither of the named Debtors are a party to these

insurance coverage agreements. Regardless, the timing is irrelevant because neither of the named Debtors in this action are named insureds under the policies in question, nor were they party to the agreement to split the insurance coverage. The Debtors have caused this dispute by apparently misleading the court and the Archdiocese by listing the insurance policies in question as potential assets of CBI.1 It should be pointed out to the Court that two of the five settlements, those with Plaintiffs H.W. and T.J., did not ever involve insurance coverage as to any Christian Brothers entity thereby eliminating any reason to deny the Archdioceses request for dismissal as to H.W. and T.J. in the L.W., et al. Adversary Proceeding. Moreover, all five of these Plaintiffs received funds from the Archdiocese and from the insurers in August 2011. The Committee questions the jurisdiction of this Court to enforce and dismiss the Plaintiffs claims as to the Archdiocese. As described in the Archdioceses Motion, the Debtor removed the state court action to the United States Bankruptcy Court, District of Western Washington 28 U.S.C. 1452, thereby giving that Court original jurisdiction pursuant to 28 U.S.C. 1334(b). Pursuant to 28 U.S.C. 157(b)(5), Debtor transferred the action from the District of Western Washington to this Court. CONCLUSION Based on the foregoing, the Defendant Archdiocese has satisfied their payment
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One Pacific Indemnity policy exists that could arguably implicate Christian Brothers entities, however that is not

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obligations under the Settlement Agreements which should be entirely enforced to include dismissal. WHEREFORE, Defendant Archdiocese respectfully requests that this Court enter an order granting the Defendant Archdioceses Motion for Approval and Enforcement of Settlement Agreement and Dismissal as to the Archdiocese Only and such other and further relief this Court deems just and proper.

DATED this 20th day of October, 2011.

PATTERSON BUCHANAN FOBES LEITCH & KALZER, P.S., INC. __/s/ Michael A. Patterson______________ Michael A. Patterson, NYSBA Reg. No. 3615283 2112 Third Avenue, Suite 500 Seattle, Washington 98121 Telephone: (206) 462-6700 Facsimile: (206) 462-6701 Email: map@pattersonbuchanan.com Attorneys for the Corporation of the Catholic Archbishop of Seattle Party-In-Interest

relevant to these Motions.

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