Diocese of Gallup offers to settle sex abuse claims
By Olivier Uyttebrouck
March 21, 2016
Attorneys in the Diocese of Gallup’s Chapter 11 bankruptcy filed a reorganization plan Monday that contains cash contributions of $21 million from nine sources to settle claims filed by 57 alleged victims of clerical sexual abuse.
An attorney who represents abuse victims estimated Monday that payments would average about $350,000 per claimant, though amounts likely would vary depending on circumstances.
The settlement is subject to approval by U.S. Bankruptcy Judge David T. Thuma of Albuquerque, and a voting process will allow claimants to approve or reject the plan.
Under the plan, insurers are on the hook for at least $13.4 million, or about 64 percent of the total settlement. The Diocese of Gallup would contribute $3 million and may have to sell its chancery offices in Gallup, subject to the terms of a loan agreement with a bank.
In addition to abuse claims, the settlement also would pay for legal and professional costs in the 28-month-old case that totaled more than $3.5 million through Dec. 30.
The two primary law firms have agreed to a $416,000 reduction in fees, the lead attorney for the diocese, Susan Boswell of Phoenix, told a judge Monday.
“It is impossible to overstate the tragedy of the abuse that was inflicted on the children and teenagers of the Diocese” of Gallup, the reorganization plan says in its introduction. “Such abuse was perpetrated by priests or others purporting to do the missionary work of the Roman Catholic Church.”
Boswell outlined major features of the reorganization plan at a hearing on Monday.
“This has been a difficult case,” made more difficult by the scant resources of the Diocese of Gallup, Boswell told Thuma on Monday. Attorneys have repeatedly described the Diocese of Gallup in court records as “the poorest diocese in the United States.”
Gallup Bishop James S. Wall said in a letter to abuse survivors that the plan will allow the diocese to “focus on moving with you toward closure, reconciliation and healing.”
Wall’s letter, filed with the court Monday, will be mailed to abuse survivors along with a ballot, subject to Thuma’s approval at a hearing scheduled for next month.
Claimants could vote on the plan as early as May, said James Stang of Los Angeles, an attorney who represents claimants in the case. Thuma could resolve the case by June, he said.
Under the plan, a reviewer would evaluate and award points to each claim. The point total would determine the amount of money each claimant received.
“I think, if you do the math, it’s going to come out to an average north of $350,000” per claim, Stang estimated.
Many factors could affect the payments. For example, some claimants reached settlements with the diocese before the bankruptcy case was filed, which could potentially reduce their award, he said.
In November 2013, the Diocese of Gallup became the ninth Roman Catholic diocese to file for bankruptcy in response to a growing number of lawsuits filed by people alleging that, as children, they had been sexually abused by clergy members. To date, 13 diocese and two religious orders have filed for bankruptcy in response to the nationwide abuse scandal.
“Nonmonetary” terms of the settlement remain under negotiation, Stang said. Nonmonetary terms often include issues such as records disclosures, apologies and diocesan policies to protect children.
The lion’s share of the cash for settlement – $11.55 million – would be provided by the Catholic Mutual Relief Society of America, a nonprofit that insures many Roman Catholic dioceses. Catholic Mutual insured the diocese from 1977 to 1990, when some of the abuses occurred.
In addition to the cash contribution, Catholic Mutual also would establish a $1.8 million trust fund to insure any future claims filed against the diocese for eight years, or the exhaustion of the fund, the plan said.
Insurance coverage became a major sticking point in the case because at least 17 of the 57 sexual abuse claims predate 1965, when the Diocese of Gallup had no insurance coverage.
The company that insured the diocese from 1965 to 1977, Home Insurance Co., went into liquidation proceedings in 2003.
The 25 sexual abuse claims that date to that period are now covered by the New Mexico Property and Casualty Guaranty Association, which would contribute $1.85 million to the settlement. The association was created by New Mexico state law in 1978 to cover insurance policies issued by defunct companies.
The plan also calls for St. Bonaventure Indian Mission and School, a nonprofit in Thoreau, to pay $550,000 under a separate settlement. That settlement would require St. Bonaventure to purchase property from the diocese that has been subject to an ownership dispute between St. Bonaventure and the diocese.
Other groups contributing money to the settlement include:
• Franciscan Friars of the Province of St. John the Baptist of Cincinnati: $1.85 million.
• Franciscan Friars of the Province of Our Lady of Guadalupe of Albuquerque: $300,000.
• The Diocese of Phoenix: $300,000.
• The Southwest Indian Foundation of Gallup: $515,000.
• The Catholic Peoples Foundation of Gallup: $665,000.
• Parishes of the Diocese of Gallup: $500,000.