Bend Judge's Order Blocks Catholic Diocese from Transferring Assets
Order in Place until Hearing on Alleged Victims' Claims of Church 'Shell Game' to Avoid Big Damages
By Barney Lerten firstname.lastname@example.org
Bend.com [Bend OR]
February 3, 2003
February 3 - A Bend judge issued a temporary restraining order Monday, blocking the Bend-based Catholic Diocese of Baker from transferring church property and other assets to its 50 far-flung parishes and missions. The order will be in effect until a hearing on claims by 18 alleged priest sex-abuse victims that the church's financial move is an unprecedented "shell game" bid to avoid possible jury damages of $68.4 million in their joint lawsuit.
"I find that the plaintiffs have established the basis for at least a temporary restraining order, barring the transferring of property for these" parishes and missions, Deschutes County Circuit Judge Michael Adler said after hearing arguments by David Slader, a Portland attorney who represents priest abuse victims, and Greg Lynch, a Bend lawyer representing the diocese.
Slader also informed the judge that two additional plaintiffs had signed onto the case, bringing the total to 18 alleged victims of the now-deceased Rev. David Hazen between the late 1950s and early '70s.
Adler also agreed to allow an amended complaint by the plaintiffs so they could seek punitive damages, currently set at $3.8 million in the joint court action. That pushes the total sought to $68.4 million in the suit, first filed in December 2001.
A hearing date was not immediately set on the plaintiffs' request to permanently enjoin the church from proceeding with the assets transfers, but Lynch said it was likely to be months away.
The judge also took under advisement a request by the diocese to hold separate trials for each defendant, a move opposed by Slader, the lawyer for the alleged abuse victims. But Adler asked both sides to work on "some alternate, middle ground" option in which some of the cases could be consolidated, for efficiency's sake.
Slader had filed a motion to block the church's asset transfers, scheduled for Feb. 10, alleging that doing so in the midst of a lawsuit would violate a state law involving fraudulent transfers (see earlier http://bend.com/ story, http://my.bend.com/news/ar_view.php?ar_id=7737).
Bishop denies move tied to lawsuits
The Most Rev. Robert F. Vasa, bishop of the 100-year-old Diocese of Baker (http://www.dioceseofbaker.org/), has denied the allegations. He said last month that his move to incorporate the individual church parishes and missions last fall, and the subsequent plans to transfer property and other assets to them, were he ideas brought with him from the Midwest's church organization and steps he had contemplated making since he arrived in 2000, long before the lawsuit was filed.
"I don't have the ability to pay (such large damage awards) anyway. The assets are simply not there, so it's not a question of hiding the assets," Vasa told http://bend.com/ and the Bend Bugle last month.
But Slader told the judge that the bishop only acted on such plans last October, almost a year after the joint suit was foiled against the diocese. And the lawyer said he only learned of the matter when another attorney checked a state Web site for information about the Portland archdiocese and stumbled upon the Baker diocese's incorporation filing. (The suit also names Portland's archdiocese and archbishop as defendants.)
The bishop was not in court Monday, as he was in Portland on a long-planned trip, Lynch said. Adler earlier had denied a motion by the diocese, which sought a delay in the hearing until a day Vasa could be in court.
Slader argued that the transfer of church assets to the individual parishes (and, in more rural areas, missions) "would render the diocese insolvent. So the plaintiffs would be facing an empty shell - an organization with no ability to pay damages," should his clients win their abuse case. And that, he said, is illegal, under state law.
"These transfers would have the effect of rendering any judgment won in court meaningless," the lawyer said.
Slader also spoke to probable cause and talked in court of abuse of one plaintiff, an altar boy, after Hazen began work in Pendleton and the two were spending the night at a parishioners' home. He said the bishop at the time, Francis Leipzig, directed the youth to swear on the Bible to keep quiet, and for it to be "a secret taken to his grave."
"The cover-up starts there," Slader said, and Hazen was sent away for counseling, then to Klamath Falls, where parishioners weren't warned about what happened and there were no restrictions on his supervision of children.
"He has a field day,"
These transfers would have the effect of rendering any judgment won in court meaningless.
Attorney for 18 alleged abuse victims seeking $68.4 million
the lawyer said. "He's like a little boy in the candy shop, with the shelves full and the proprietor out of town." The abuse of boys goes on for a decade there, before he's again moved, this time assigned to visit small-town parishes, before he eventually dies of a heart attack.
Now, Slader claimed, "we have a bishop who is trying to secret the property, so that any judgment my clients get is worthless."
Lawyer defends church actions, admits tough fight
Lynch said Vasa's intentions only have been to bring the diocese "into compliance with (Roman Catholic) canon law, the method used in the Midwest and back East" to organize the church so that individual parishes have control over their own assets.
"This is nothing that has been done secretly," the diocese lawyer told the judge. "It's no clandestine move to prevent the litigants from having their day in court, or having access to assets, if they prevail."
In fact, Lynch said the diocese had offered to put off any transfer of assets until after a full hearing on the issue. But Slader, the plaintiffs' attorney, said after the hearing that he had rejected that offer, and instead wanted a freeze on any such plans until the suit went to trial (unless, of course, there are settlements).
Lynch seemed to know he was fighting a losing battle, however, explaining that he'd lost nine arguments with people on the position he was taking on behalf of the diocese - the last on Monday morning, with his wife, a doctor. "I don't care about the law," he quoted her as saying. "The law is not going to resolve this case."
"It affects me also," Lynch said, adding that he can't think of anything more repugnant than child abuse. "But that's not the issue today," the lawyer argued. Instead, he argued, the focus should be on whether the diocese has the legal right to incorporate its various parishes, "so they have the legal capacity to own what is theirs, anyway."
And the lawyer said the suit was brought against the diocese, "not the parishes, many of whom have never heard of Father Hazen."
"These assets are not going to be dissipated," Lynch argued. "They are going to be there. . These incidents go back decades. I'm not going to argue they did or didn't occur. But many may fai,l due to a statute of limitations."
"Mr. Slader has not proved at all - even close - that's there's a reasonable probability his clients will prevail," the diocese lawyer argued. And the church's assets are "not being dissipated. They are simply going to their rightful, legal owners."
"Even if it means somebody may have a difficult time going after assets," Lynch told the judge, "don't get persuaded by the . horror of the acts alleged to have occurred decades ago."
Intent not the issue, plaintiffs' lawyer argues
But Slader argued that if he was sued, for example, and he started divvying up his bank accounts to family members - even for valid reasons - "that doesn't make it better. That doesn't change the fact that I am responding to a lawsuit. . You do not have to prove intent." And the lawyer argued that the issue of statute of limitations is the defendants' burden, not the plaintiffs.
Referring to the church's claim that assets are held in trust for the individual parishes, Slader said, "This one is the first case, as far as we know, in the country to involve this effort by the Catholic Church to use this asset protection strategy to respond to these lawsuits."
"If I set up the trust, and I am beneficiary, I cannot hide behind that trust, when the creditors come calling," he said. "These parishes are no different than the human resources department at Intel, or the water department at the city of Bend," he said. "A non-corporation doesn't have the capacity to own property - only corporations do. . The norms of Oregon law were not complied with in 1903," when the diocese was formed.
Slader didn't dispute that other dioceses, elsewhere in the country, have the type of system Vasa has begun moving the Baker diocese toward.
The Catholic Church has survived the Crusades. It's survived the Inquisition. It's survived its relationship with the Holocaust, and it will survive this.
Bend lawyer for Catholic Diocese of Baker
But he claimed, "The bishop has absolute control. A parish can't decide, 'Let's move to the Lutherans.' They don't have control."
Lynch also touched on the issue of the diocese's insurance. "Some insurers have stepped up to the plate and agreed to cover the organization, but others have said they won't, and "we're going to have to so them."
The diocese's attorney said the claim that the organization would be insolvent after shifting assets to the individual churches is "only due to the arithmetic total. The diocese still has significant assets. Whether or not adequate (to cover potential lawsuit damages) is not the issue at this point," Lynch said. As for the claim by Slader of an "asset protection plan" by the church, the diocese's lawyer said they have "nothing to support that proposition, whatsoever."
Lynch said the alleged abuse victims' argument, taken to its ultimate outcome, would find "every single Catholic person in the Diocese of Baker, every single parishioner, has the legal obligation . to be liable for Mr. Slader's clients' claims. That's the same thing as saying every Boy Scout is liable for the pedophilic behavior of a scoutmaster. That's not what the law said, and it's now that the complaint alleges."
"The Catholic Church has survived the Crusades. It's survived the Inquisition. It's survived its relationship with the Holocaust, and it will survive this," Lynch said. "But it is important, through this process . not to lose sight of the legal prescriptions that apply to the process."
"Others will be victimized, if they don't have a place to worship," he argued, or by the "stigma" associated with the wave of abuse scandals. "As soon as we become bigoted, and start saying, 'Everyone knows the Catholic Church stinks,' we have a real problem."
In fact, Lynch claimed that the plaintiffs' assertions are "a statement that the Diocese of Baker has some relationship, some responsibility for his clients' claims, and that is not the law."
Judge doesn't want 'mini-trial' on church-assets issue
Judge Adler didn't set a hearing date on the permanent injunction, but gave guidelines to the lawyers: "I don't intend for a hearing on the injunction become a mini-trial. I would hope you could stipulate to some issues. . I certainly don't intend to have 18 plaintiffs" involved in that pre-trial proceeding. Lynch noted the Measure 28-related scheduling issues; the courts plan to shut down on Fridays, starting March 1.
Slader agreed to draw up the injunction order, which won't prevent the diocese from spending or transferring funds related to "the ordinary course of operations of the diocese and its parishes," such as when a roof repair is needed.
On the punitive damages issue, Slader said "the law is fairly simple," allowing such claims if there are allegations of "reckless behavior" that is a risk "to the health and safety of others." But Lynch claimed the purpose of punitive damages are "to punish, and to educate and change behavior."
"These claims are predicated on incidents decades ago," Lynch said, at a time where there was "a different bishop, a different culture in America for a lot of things. There is no evidence that this bishop or this diocese are even remotely the same, in terms of behavior."
The lawyer for alleged abuse victims is "asking for the opportunity to have imposed against this diocese, in 2003, and this bishop, punitive damages for incidents decades ago," Lynch said, arguing that is not the intent as laid down by the Supreme Court.
Lynch said the diocese wants separate trials due to the varying nature of each alleged incident and victim. "It would be virtually impossible for a jury to separate out (the details) in the same trial that would take weeks or months to try," he said. "To traipse into court 18 plaintiffs - the sheer number of claimants is going to prejudice or have some adverse effect on the jury," the lawyer said, as they would think, "All these people can't be wrong - something must have happened."
I don't intend for a hearing on the injunction become a mini-trial. . I certainly don't intend to have 18 plaintiffs (involved).
Deschutes County Circuit Court judge
not to say they are all lying," Lynch said. "But how many are, and how many aren't? How many jumped on the bandwagon, after the Archdiocese of Portland (handed) out millions? It is a legitimate issue. . The only reason they want one trial is they have one lawyer. .. That's why we filed a motion for separate trials. We want, we deserve, and we're compelled to . have each case resolved on the merits."
Slader, on the other hand, argued that joint trials happen all the time in criminal cases, although he acknowledged that it's rare in a civil case. There are ways, he said, to ensure that jurors deal with and separate out the specific facts of each case. Besides, the lawyer argued, the jurors "are going to know . that he (Hazen) had multiple victims," if the testimony he intends to present is allowed.
At one point, Slader expressed concern that the church would argue, "This was just horseplay, that Hazen just liked to hold children - that he was a big man, a friendly man." But Lynch assured, "I'm not going to say . he was a lovable priest."
Lawyer hopes judge's ruling sends message to churches
Asked after the hearing if the bishop's presence or testimony might have led to a different result from the judge, Lynch said, "No, absolutely not. The judge did what I stipulated to," in ordering a hold on the transfer of church assets to the parishes and missions. "All he did was incorporate that in an order."
"These are people," Lynch said. "This isn't 'the church' doing this."
Slader talked on the courthouse steps after the hearing with Bill Crane, a Portland resident and Oregon coordinator for the Survivors Network of Those Abused by Priests (SNAP - http://www.survivorsnetwork.org/), who was abused as a child by a New Jersey priest.
Asked how long it might take before a jury trial occurs, Slader said, "I'm afraid it may take a great deal of time. This is the first time that a court has had to issue what amounts to a temporary injunction against a diocese, prohibiting transferring any of its assets. I think this is an historic moment, and sends a message to diocese around the country who are being held to account. They cannot avoid responsibility for misconduct by giving their property and assets away."
Slader claimed his law firm's research has found that the taxable assessed value of the Diocese of Baker's property is "in the neighborhood of $19 million. We assume the real market value is substantially greater."
"We try to hold the church accountable for its conduct," Slader said. "The Diocese of Baker should be held accountable, just as it tells its parishioners that they should be held accountable for their actions."
The argument of time passing and the alleged perpetrators' dying doesn't wash with Slader, who has handled abuse similar abuse cases for more than 20 years. "If Enron's crimes did not get discovered until a decade from now, Enron would be responsible" for its wrongdoing, he said.
Crane said it was disturbing to him to hear the church continue to "minimize and dilute the seriousness of what has taken place. . the fruit of the bad seeds that were sewn many years ago."
Vasa has spoken of educational and other efforts to ensure that abuse cases are out of the Catholic Church for good. But Slader said, "I think the steps they (church officials have taken have been superficial, incomplete - not near enough. Baby steps" And looking backward to the crimes of the past, not just forward, is needed, Slader added: "It's not enough to say, 'Never again.' We also must answer the question: What is it about (the church) that fosters this kind of behavior?"
While acknowledging that money is at the center of the fight, Slader said he doesn't accept every would-be plaintiff that walks in.
"If someone comes into our office just because they see dollar signs in their eyes, we show these people the door," he said, adding, "We know how to ask questions" to separate the opportunists out from the alleged victims: "Their experience is real. Their pain is real."
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