Archdiocese Settles More Sex Cases
Clergy Abuse - the Portland Church Could Exit Bankruptcy in 2007 under a Deal Mediators Say Resolves Nearly 150 Claims

By Ashbel S. Green and Steve Woodward
The Oregonian
December 12, 2006

Eugene -- The Archdiocese of Portland is likely to emerge from nearly three years of bankruptcy and return to normal operations next spring, according to a deal announced Monday by mediators.

The amount of the settlement won't be made public until next week at the earliest, but insurers for the archdiocese will chip in more than $50 million toward the cost to resolve priest sex-abuse claims, said U.S. District Judge Michael Hogan, one of two mediators.

Nearly 150 cases have been settled during more than three months of mediation. About 20 cases remain unresolved. Hogan expressed confidence that most of the remaining claimants would settle, but said anyone who did not agree to deals would have the right to a jury trial.

Although Hogan would not discuss financial details, he said the settlement would not include using schools and parishes as collateral. The settlement also includes a fund for priest accusers who come forward in the future.

The new plan, scheduled to be submitted next week, must be approved by the U.S. Bankruptcy Court as well as a majority of the creditors.

In the meantime, Hogan kept his gag order in place to prevent anyone involved in the bankruptcy, including attorneys, parishioners and priest accusers, from discussing the case until the settlement has been secured.

"We are not going to undermine all this good work that has been done," Hogan said.

Erin K. Olson, an attorney representing more than two dozen priest accusers, took legal action Monday to undo the gag order. In a motion before the 9th U.S. Circuit Court of Appeals, Olson said the gag order violated the free-speech rights of her clients.

Earlier cases cost millions

The Portland Archdiocese settled more than 150 claims for $56 million before filing for bankruptcy protection in July 2004. But lawsuits continued to mount. And on the morning a case seeking $135 million was scheduled to go to trial, Portland became the first archdiocese in the United States to seek bankruptcy protection from priest sex-abuse litigation.

The bankruptcy process is designed to give debtors and creditors time to reach a compromise, but from the beginning the archdiocese and the priest accusers were far apart.

A big dispute was the value of the archdiocese. Priest accusers said archdiocesan assets were worth more than half a billion dollars -- more than $100 million in cash and investments and $400 million in real estate. But the archdiocese said that under canon law, it merely held the assets for the true owners: its 124 parishes throughout Western Oregon.

U.S. Bankruptcy Judge Elizabeth L. Perris largely ruled in favor of priest accusers, saying that the parishes and the archdiocese were legally one and the same, and that the archdiocese was the true owner of 10 test properties chosen by the church. The archdiocese appealed.

The settlement appears to avoid that dispute by relying on funds, real estate and revenue sources clearly controlled by the archdiocese.

"Rough and ready" talks

With the parties at an impasse earlier this year, Perris decided to let more than 100 cases frozen by the bankruptcy go to trial. But in the meantime, Perris appointed Hogan and Lane County Circuit Judge Lyle Velure to try to mediate a settlement.

After more than three months of "rough and ready negotiations," Hogan announced the breakthrough.

Although most financial details have yet to be disclosed, the deal comes on the heels of several large settlements, most recently a $60 million agreement between the Archdiocese of Los Angeles and 45 sex-abuse claimants announced Dec. 1.

Other large settlements include $100 million paid to 87 claimants last year by the Diocese of Orange in Orange County, Calif., and $85 million paid to 552 claimants in 2003 by the Archdiocese of Boston.

Though none of those dioceses sought bankruptcy protection, Portland's lead was followed by the dioceses of Tucson, Ariz.; Spokane; and Davenport, Iowa. Tucson's diocese entered bankruptcy with a ready-made reorganization plan and quickly settled with creditors. Spokane and Davenport remain in bankruptcy.

In Eugene, while Hogan and Velure discussed the settlement, more than half a dozen attorneys and parties to the agreement stood silently in the background, announcing their names but otherwise declining to speak because of the gag order.

In her motion to lift the gag order, Olson argued that it was so restrictive that it did not even allow attorneys to acknowledge that there was a gag order. As an example, she included an excerpt from an e-mail sent to attorneys by the mediators after Willamette Week reported that attorneys couldn't answer questions because of the gag order.

"(W)ho leaked the e-mail to the Willamette Week? Better fess up because if you don't I would not want to be in your shoes. Better not be any more leaks to the press."

The timetable for resolving Olson's motion was unclear, but she said it was imperative for the parties to be able to talk about the details before voting on whether to approve the settlement.

Olson noted that part of the healing process for some victims of clergy sexual abuse is to speak out. And she said opponents and supporters of the bankruptcy plan should be able to voice their opinions.

"The clergy abuse cases and the archdiocese's use of bankruptcy to manage them are appropriate and compelling subjects of public comment and debate," she wrote.

Ashbel "Tony" Green: 503-221-8202;


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