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$200 Million Claim in|LAUSD Sex Scandal

LOS ANGELES (CN) - Claiming insurers refused to cover its defense costs in the Miramonte sex-abuse scandal, the Los Angeles Unified School District sued for $200 million.

Third-grade elementary teacher Mark Berndt is serving 25 years in prison for 2012 charges that he sexually abused 23 children who were 7 to 10 years old. Berndt was nailed after a photo store employee alerted police after he developed photos.

The district so far has settled claims for a total of $175 million. Dozens of families sued the school district for negligence, claiming it hired Berndt despite his criminal record of child abuse. They claimed that Miramonte students had complained in the early 1990s that Berndt was sexually abusing them, but the school ignored it.

The school district's indifference allowed Berndt to abuse Miramonte students for "over two decades unfettered," the plaintiffs claimed.

The school district claims its insurance policies from 1975 to 2012 covered personal injuries and "expansive" liability, but the insurers "abandoned" it, "forcing it to defend itself" and using hundreds of millions of dollars in public money for legal costs and settlements. The lawsuit filed Sept. 2 in superior court is the Top Download for Courthouse News today.

"Despite the school district's repeated requests for assistance, and despite the fact that the allegations in the underlying Miramonte litigation triggered coverage under the policies, each of the defendants has failed and refused to honor its basic insurance obligations owed to the school district in conjunction with the underlying Miramonte litigation," the complaint states.

The district claims the insurers "failed to conduct a timely, good faith investigation of these matters and instead have engaged in the tactic of avoiding their well-established duties to defend and indemnify the school district."

The school district calls the insurers' investigations a "sham."

"We were expecting them at the time to contribute toward the settlements and they failed to do so and left us with no alternative but to file suit," L.A. Unified general counsel David Holmquist told the Los Angeles Times.

The district seeks declaratory judgment and more than $200 million in damages for breach of contract and tortious breach faith. The 396-page lawsuit alleges 203 counts against more than 20 insurers and re-insurers, including some of the nation's largest: Aetna, Ace, AIG, Allstate, Allianz and Fireman's, among others.

Its lead attorneys are Sean Andrade with Andrade Gonzalez and David Steuber with Jones Day.

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