Diocese Motion Denied
By Warren Kitts
Clinton Herald [Clinton IA]
October 22, 2004
CLINTON - A Clinton County District Court judge has issued a ruling which denies a motion to delay a Nov. 1 trial requested by the Roman Catholic Diocese of Davenport. The ruling by Judge C. H. Pelton means the Davenport Diocese could be headed toward bankruptcy as early as today.
Pelton issued his six-page written ruling late Thursday after the diocese requested a 30-day delay of the trial.
The Nov. 1 trial is the first of 15 trials which deal with sexual abuse allegations dating back to the 1950s. John Doe 1A filed the first of the similar cases May 19, 2003, and the rest of the plaintiffs filed their cases shortly thereafter. Pelton wrote in his ruling Thursday the victims contend the diocese has denied them justice for too long and that the motion to continue is "another in a long succession to delay their day in court." Pelton also noted the diocese and its carrier have known since April 15 that the first case is to go to trial Nov. 1 and that the other cases will be tried on a one-per-month basis. Pelton also wrote that a 30-day continuance of the Nov. 1 trial would delay all the other cases.
The judge ruled that "17 months is sufficient time for the Diocese to recognize the insurance coverage dispute and to try to resolve it." Pelton also said the insurance coverage dispute can be resolved before, during or after the first trial. The court recognized the diocese's problem, but finds it not to be prejudicial to the diocese to proceed to the first trial. Pelton stated the court is aware of and has encouraged formal mediation among the parties toward settlement of these cases for the past six weeks.
"It continues to encourage settlement. Whether or not the Diocese seeks bankruptcy is an issue for the Diocese, not for the State trial court," wrote Pelton.
Church officials said they have ruled out going to trial but don't want the settlement with victims to exhaust their assets, limiting payments to those who may step forward in a second wave of claims.
Without time to work out a more favorable settlement, Bishop William Franklin has said the only option would be to file a chapter 11 bankruptcy petition and warned the move could come as early as today. Robert McMonagle, a lawyer for the diocese, said if the settlements cannot be worked out, the bishop will most likely be filing for bankruptcy.
The comments came after Pelton issued his ruling Thursday. Franklin issued a statement following the ruling which stated "This ruling eliminates one of the options the Diocese wished to pursue in order to try to negotiate fair and honorable settlements with all of the claimants." He said the diocese will continue settlement talks but warned there might not be sufficient time to negotiate with the claimants and its insurance company before the Nov. 1 trial date.
A bankruptcy filing would make the diocese the third in the country to take that step in the wake of the sexual abuse crisis in the church, but the first to do so before paying a cent to the victims of sexual abuse. A bankruptcy filing would open diocesan records up to unprecedented public scrutiny while officials craft a plan to restructure the diocese and compensate the victims, whose lawsuits would be frozen.
The diocese says it has $10 million in assets, less than the confidential figure that victims lawyers are seeking. Lawyers for the victims place the diocesan assets at up to $20 million not counting the value of 84 parishes in the diocese.
They are legally separate corporations, according to McMonagle.
Settlement talks fell apart after the diocese refused to allow the victims to hire a financial investigator to perform the audit. Church officials also said they were surprised when an additional 20 claimants stepped forward last month.
In a letter to the diocese's 102,000 parishioners, Franklin said the diocese would continue its ministry and programs while under bankruptcy protection. But he warned of a major downswing that would include staff layoffs and the sale of a retirement home for priests.
Attorneys for both sides stated during the motion hearing Wednesday in Clinton County District Court that bankruptcy would be a long and expensive process.
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