NEW ORLEANS (LA)
WWLTV [New Orleans, LA]
July 28, 2023
By David Hammer
The president of the archdiocese’s fundraising board said he’s worried about how the archdiocese can survive such a long, costly bankruptcy.
High-priced lawyers on both sides of the Archdiocese of New Orleans’ bankruptcy case have created interminable delays and run up “utterly ridiculous” fees, according to a clergy abuse survivor who was a key part of court proceedings that have dragged on for three-and-a-half years with no end in sight.
James Adams is a banker and devout Catholic, who served as president of the archdiocese’s fundraising board, Catholic Community Foundation. He said he’s worried about how the archdiocese can survive such a long, costly bankruptcy.
But he’s also a victim of child sexual abuse who alleges Father James Collery molested him at St. Ann School in Metairie in 1980, when he was 10. Adams was selected to lead a committee of claimants into negotiations with the archdiocese after it filed for bankruptcy protection in May 2020.
He served in that volunteer role for two years, hoping to get a swift resolution after Archbishop Gregory Aymond promised that bankruptcy would help the church pay abuse survivors quickly and fairly. Nothing has been further from the truth, and the lawyers have been raking in the billable hours while 450 abuse claimants like Adams have gotten nothing.
At least 20 dioceses around the U.S. have filed for bankruptcy to stop pending lawsuits claiming church leaders let priests and other employees molest children and kept the allegations quiet for decades. Chapter 11 bankruptcy allows those dioceses to freeze their debts, block testimony in the lawsuits and set a deadline for all claims to be filed.
There were about 450 abuse claims filed under the New Orleans archdiocese’s bankruptcy before a March 2021 deadline. But negotiations to pay those claims have fizzled and the church’s legal bills for the bankruptcy recently topped $26 million, court records show.
“The church seems to think in centuries, not months and years, but I cannot point the finger solely at the archdiocese,” said Adams, who stepped down from Catholic Community Foundation in 2020 when he filed his sexual abuse claim. “It doesn’t look like either side is interested in a resolution in this case. The attorneys, in conjunction with Judge (Meredith) Grabill, seem to take a very long time to get anything done.”
The church’s attorneys at New Orleans-based law firm Jones Walker recently raised their fees to as high as $490 an hour and have collected more than $11 million in fees and expenses so far. But the total cost to the archdiocese now exceeds $26 million because it also must pay hourly fees and expenses for other church attorneys and consultants, plus for the attorneys, accountants and other professionals who represent the church’s creditors.
Three days before the church filed for bankruptcy in May 2020, Archbishop Aymond sent a letter to the Vatican assuring Catholic governing bodies the southeast Louisiana archdiocese’s uninsured costs for settling bankruptcy claims would not exceed the $7.5 million maximum set by church law.
“While the majority of these funds will come from our insurance policies, my advisors do estimate that the archdiocese’s share of these settlements will be approximately $7M,” Aymond wrote April 28, 2020, to the cardinal overseeing the Congregation of Clergy in Rome.
“That statement is either completely dishonest or very naïve,” said Tom Doyle, a former priest who served as an attorney for the Vatican embassy in Washington before he resigned from the priesthood and started advocating for abuse survivors. “The bishops know the costs are much higher because this whole nightmare has gripped the Catholic Church all over the world. What they’re protecting is not the church, but their own twisted ends, their reputations.”
The archdiocese’s legal fees are now more than three times higher than Aymond’s original estimate. Other U.S. dioceses now face clergy abuse settlements in the hundreds of millions of dollars. Local church spokeswoman Sarah McDonald says insurance will cover some of the eventual settlement payouts to abuse survivors, but insurance can’t be used to pay other costs associated with the bankruptcy.
She declined to discuss what the church’s insurance limits are, but she said the archdiocese is “extremely displeased” with what the bankruptcy has cost and how long it’s taken.
“Our decision to file for Chapter 11 Reorganization was specifically to ensure that all survivors of sexual abuse were fairly and effectively compensated,” she said. “The complications that have arisen in these bankruptcy proceedings could not have been predicted, have driven up the cost, consumed valuable time and added to a shared feeling of frustration amongst survivors, claimants and the archdiocese.”
The church says those higher costs and delays are being driven mostly by attorneys representing the claimants and other creditors. Many of the abuse claimants have plaintiffs’ attorneys who will get a cut of whatever settlement payments they receive. All claimants are also represented by attorneys at the creditors’ committee, which reviews the church’s reorganization plans and negotiates how much the church owes.
The two main law firms on the creditors’ committee are New Orleans-based Locke Lord and Los Angeles-based Pachulski Stang Ziehl & Jones. Both firms raised their hourly fees in January, and they have each charged the church more than $3.8 million so far.
Pachulski Stang’s lead partner Jim Stang, for example, is now charging $800 an hour for his time, twice as much as the church’s lead attorney, Mark Mintz, was charging until recently. Partners at Locke Lord, led by Rick Kuebel, Brad Knapp and Steven Bryant, also upped their fees this year to $600 an hour.
Even Adams, who worked with those attorneys as head of the creditors’ committee, called those fees “utterly ridiculous” and said he begged them not to raise their rates. “This is not the time for that,” he told them, to no avail.
Adams reserved his harshest criticism for Judge Grabill. It took her over a year to deny a motion by the church’s creditors to dismiss the bankruptcy case. It’s taken her more than two years to rule on an April 2021 motion by creditors to compel the archdiocese to turn over documents, including financial and personnel files.
“You see the actions of other bankruptcy judges and compare them to Judge Grabill,” Adams said. “It leads me to ask, does she know what she’s doing?”
Grabill has expressed concern about the slow pace of the case, but Adams said she’s not put her foot down the way other judges overseeing Catholic dioceses’ bankruptcy cases have to press for a resolution or question costs.
For example, the Buffalo Diocese filed for bankruptcy two months before New Orleans and has 900 clergy abuse claimants, twice as many as New Orleans. Attorneys’ fees and other professional fees in the Buffalo bankruptcy recently hit $12.5 million there. That’s less than half what it’s cost in New Orleans so far, but it prompted Carl Bucki, the chief bankruptcy judge for the Western District of New York, to begin openly questioning those charges.
“The question is, ‘Where is the money coming from for these legal fees?’” Bucki said, according to coverage of the hearing by The Buffalo News. “I’m just having trouble discerning how an entity can be profitable after paying over $12 million in legal fees, an entity of this size.”
Another bankruptcy judge in New York has been even more direct in his handling of the Diocese of Rockville Centre’s Chapter 11 reorganization. The Long Island diocese of 1.4 million Catholics filed for bankruptcy in October 2020, six months after New Orleans did, and faces more than 600 abuse claims.
Judge Martin Glenn said in a hearing this month at U.S. Bankruptcy Court in Manhattan that he didn’t want to kick the diocese out of bankruptcy, but he couldn’t justify continuing to deny abuse victims their day in court while the settlement negotiations drag on. He gave the church until Oct. 31 to file a new plan for reorganization, including a new, higher offer to victims.
The church had offered to settle for as low as $185 million. As he works on the New Orleans case, Stang is also the lead creditors’ committee attorney in the Rockville Centre case. That committee argued the Rockville Centre Diocese should pay victims $450 million.
Grabill, on the other hand, has repeatedly ruled in favor of the New Orleans Archdiocese in its disputes with creditors. And she blamed a leading plaintiffs’ attorney, Richard Trahant, for delaying settlement negotiations just as they were about to begin in June 2022.
The judge and the U.S. trustee, an official who serves as a neutral in bankruptcy cases, spent the first half of 2022 focused not on resolving the bankruptcy, but on a leak investigation. It found Trahant had disclosed secret information from the case in December 2021 to warn a local Catholic high school, Brother Martin, that its chaplain at the time, Father Paul Hart, had previously performed a sexual act on a 16-year-old girl.
“We had a rocky first year, but we were on a pretty good clip,” Grabill said during a Zoom conference to discuss the leak with attorneys in April 2022. “And then when I saw this, I’m just like, you know, really? You know, I was very, very disappointed.”
Adams said what Trahant did was heroic, saved children from a known predator and had no impact on the committee’s ability to negotiate a settlement with the church. But Grabill said it shattered the trust between the church and the committee, and she used Trahant’s disclosure to remove Adams and three other committee members represented by Trahant and two other plaintiffs’ attorneys who often work with him, Soren Gisleson and John Deneana.
During the April 2022 Zoom conference, Kuebel, the lead creditors’ committee attorney, pushed back on the judge’s assessment.
“But none of this is the reason why this case has been lingering for two years, why it’s cost so much money and why I still haven’t seen a (church reorganization) plan,” Kuebel said more than a year and millions of dollars in fees ago.
He also noted that the internal church documents the archdiocese finally turned over in December 2021 showing Hart had engaged in sexual contact with a 16-year-old “were pretty late arrivers under” a motion the creditors had filed in April 2021 to force the church to hand over its financial and personnel files.
What Grabill said in response to that still upsets Adams.
“Yeah,” she said to Kuebel’s complaint about how slow the church was to turn over the Hart documents. “And we know that that’s what happens in every single case, every single document review. You bombard them with, you know, meaningless documents and then the tough documents always come at the last stages. And good defense counsel, that’s what we do.”
“’That’s what we do’?” Adams said incredulously, emphasizing her use of the word “we” to talk about the church’s defense lawyers. “She’s not a defense attorney. She’s the judge!”
Grabill served as a bankruptcy attorney representing both debtors and creditors before she was appointed to the bench.
Last June, just hours before settlement negotiations were set to begin, Grabill ordered the negotiations stopped and replaced the people who had been working to resolve the case for the previous two years.
Since then, McDonald said the church “requested mediation dates that were set by the mediator and have resulted in some progress and momentum from both sides.”
McDonald blamed some of the higher costs and delays on a “unique” situation where the church must get input both from the main creditors’ committee and from a different committee created to represent the church’s lenders and vendors. But court records show the original committee of creditors chaired by Adams opposed the creation of a separate “commercial creditors’ committee” while the church supported it.
The legal fees paid to the separate attorneys and advisers for the commercial creditors have hit $2.5 million, which Adams said now exceeds all of what the church owes to its vendors.
McDonald said the church has taken four other actions to try to resolve the case as soon as possible.
- “We meet weekly with lawyers for the creditor committees.
- “We have produced hundreds of thousands of documents and communications on all topics (financial, insurance, deferred maintenance, property records, personnel files, internal investigation files) as requested by the committees.
- “We have taken unprecedented step of allowing the committees’ financial experts to talk directly with the archdiocese in an ongoing interview/discovery process to allow for freer flow of information and understanding of the financial condition of the archdiocese.
- “We have allowed for the committee to interview our child protection experts and staff to better understand the strength and ongoing improvement of the current day program that seeks to educate and protect minors and vulnerable adults from sexual and physical abuse.”