Diocese Warns It Could Go Bankrupt:
Attorney Says Possible 'Adverse Verdicts' in Unsettled Sex Abuse Suits Could Jeopardize Finances

By Guy Kovner
The Press Democrat [Santa Rosa CA]
July 20, 2004

The Santa Rosa Catholic Diocese has been unable to settle 10 sexual abuse lawsuits and could be forced into bankruptcy by "adverse verdicts" if some of the cases go to trial, the diocese attorney said Monday.

"The amounts are staggering," attorney Dan Galvin said, referring to claims by alleged child sex abuse victims in the range of $2 million to

$4 million a case statewide.

Santa Rosa, which already has paid $8.6 million in settlements to victims, has 10 remaining cases among about 115 lawsuits consolidated in Oakland.

Pretrial motion hearings in the consolidated Northern California case started last week and continue today before Alameda County Superior Court Judge Ronald Sabraw, but none involves Santa Rosa lawsuits, Galvin said.

At present, there is no timetable for trials or negotiated settlements of any of the cases, he said.

The suits in the consolidated case come from Santa Rosa and five other Northern California dioceses. More than 500 cases have been consolidated under a similar process in Southern California, many of them filed last year under a state law that suspended the statute of limitations on decades-old sex abuse lawsuits.

The Los Angeles Archdiocese has asked to join a legal challenge to that law that, if successful, would result in dismissal of most, if not all, of the 10 cases against the Santa Rosa Diocese and hundreds more statewide.

Ultimately, Galvin said, he hopes Sabraw will "orchestrate" settlements that leave the diocese solvent.

Galvin said he hopes for settlements that avoid trial and "fairly compensate those victims that deserve compensation and yet not jeopardize the financial stability of the diocese." One of the 10 cases against the diocese is in the process of settlement, he said. He declined to elaborate.

He also declined to say how much the diocese could afford to pay plaintiffs without going broke. He described the diocese's financial condition as "fragile."

If one or more of the 10 cases against the 150,000-member Santa Rosa Diocese went to trial, jury awards could run into the millions and make the diocese a "candidate for bankruptcy," Galvin said, echoing concerns that Bishop Daniel Walsh and other church officials voiced two years ago.

The Archdiocese of Portland, Ore., filed for bankruptcy two weeks ago, seeking protection from multimillion-dollar sex abuse claims, and the Tucson, Ariz., diocese is expected to follow suit by mid-September.

The Santa Rosa Diocese considered bankruptcy in 1999 to cope with a $16 million debt attributed to former Bishop G. Patrick Ziemann's mismanagement. A special fund-raising campaign run by clergy, laity and Walsh raised more than $16 million in pledges, helping with the diocese's financial recovery, church officials said last year.

Santa Rosa still is repaying loans from other dioceses that were obtained during the fiscal crisis, Galvin said.

The North Coast diocese has acknowledged that 16 priests have been accused of sexual misconduct and 59 underage victims have been identified in a scandal that spans four decades.

Seven accused priests have been identified by victims in public disclosures, lawsuits and prosecutions. No others have been identified by the diocese, which, before Walsh's arrival four years ago, had a history of shielding molesters from the law and the public.


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